When Jeremy Andrus (MBA 2002) joined headphone-maker Skullcandy in 2005, the company had more board members than employees. At the time, the team consisted of founder Rick Alden, a trio of graphic designers, and a customer service rep-turned-shipping guru.
Before officially signing on—and perhaps as one final measure of due diligence—Andrus met this group for a modest sushi dinner that marked the company’s two-year anniversary. The experience left him confused, but intrigued. “I didn’t really know what the business did, but I was enamored with the brand.”
Six years later, Andrus was named CEO of what is now an industry leader with close to $300 million in revenues, 350 employees, and its own stock ticker, SKUL, thanks to the company’s IPO on NASDAQ in July 2011. Skullcandy designs, markets, and sells beat-bumping, stylishly innovative headphones and accessories in over 70 countries across the globe.
Andrus’ widely-publicized success story is a far cry from his first dance in the media spotlight. In 2002, he became the poster child for unemployed business school graduates when BusinessWeek featured him in an increasingly famous article, “Mom? Dad? I’m Home!”
“A reporter interviewed me, but I didn’t know for what until I saw the magazine on a newsstand in the Dallas airport. I opened it up and there was a centerfold photo of me sitting on my parents’ couch looking depressed.”
Although not entirely accurate—Andrus was running a start-up at the time—the article portrayed the bleak realities facing many recent MBAs in 2002. The dot-com bust and September 11 had created a weakened economy and young graduates across the country were searching frantically for work.
Andrus had the option of returning to management consulting or real estate, two fields he explored before HBS, but he failed to fall in love with either and refused to allow a poor job market to funnel him back into roles he did not want.
After pursuing an entrepreneurial opportunity at a small company in Dallas, Andrus returned home to Park City, Utah, to become VP of Operations at Skullcandy, which had $500,000 in revenues at the time. The budget was tight, so Andrus took no salary during his first two years. Instead, he accepted equity in a company that was “splitting pennies in half” and moved back into his parents’ basement.
Still, he remained upbeat about the future.
“We were doing things that were just so incredibly different that it was either going to fail pretty quickly or it was going to be a big hit,” he said.
Skullcandy entered the headphones market when it was still a small category. The first generation iPod had been released but was only in its adolescence. Meanwhile, electronics giants like Sony and Panasonic were producing dull, all-black products with no individuality. Skullcandy’s approach was to bring “color, character and performance to an otherwise monochromatic space.”
“These were well respected consumer electronics companies, but not companies that got our customer excited,” Andrus said.
Skullcandy headphones are bold and defiantly chic. They are just as much a fashion statement as they are a listening device. While the sound quality is unmistakable, it is the personal expression associated with throwing on a pair of Skullcandy Mix Masters that has propelled the company’s success.
That success, Andrus explains, is a product of Skullcandy’s own culture.
“We built lifestyle into consumer electronics, and we were able to do it because the culture of the business was not a consumer electronics culture,” he said. “We were guys who loved to snowboard, who loved action sports, who loved music.”
Skullcandy’s Park City “office” is a reflection of its inhabitants. The facility is a skateboarder’s paradise—completely devoid of carpet—and employees wheel from room to room along concrete corridors, stopping occasionally for a quick, company-sanctioned ride on the half pipe.
The company’s pioneers initially targeted customers much like themselves, focusing on the snow, skate, and surf communities, pushing products in independent retail outlets that catered to these active athletes. While this segment remains the company’s core audience, the brand has achieved much broader appeal. Today, Skullcandy is endorsed by a wide range of celebrities, including Chicago Bulls point guard Derrick Rose and supermodel Kate Upton.
Due to Skullcandy’s ingenuity, the area surrounding a person’s head has become an exciting piece of real estate. As sales of portable music players, smartphones, and tablets have surged, that property value has shot through the roof. Skullcandy’s headphones range in price from $20 for its minimalist Ink’d earbuds to $300 for a pair of tub-thumping, over-ear Mix Masters. While competitors like “Beats by Dr. Dre” have come into the market, Skullcandy has persisted, and if anything the new entrants have helped grow the pie for everyone.
In Andrus’ first five years at Skullcandy, the company increased its revenues to $160 million, doubling between 2008 and 2010, one of the most tumultuous periods in retail history.
TAKING THE HELM
When action sports entrepreneur Rick Alden stepped down as CEO in 2011 to pursue a new venture, Andrus was the obvious candidate for Skullcandy’s top job. As President and Chief Operating Officer since 2008, he was personally responsible for much of the company’s success.
“Rick gave me the chance to be his right-hand man from the beginning,” Andrus said. “The more the business grew, the more it became clear that while we had different skill sets, we had the same vision for the company. It got to the point that we were completing each other’s sentences. But we never talked about succession—we talked about building a business. So it was a long and natural transition.”
Andrus had been CEO for just four months when he rang NASDAQ’s opening bell to commemorate the company’s $190 million IPO. Surrounded by a spirited troupe of fellow employees, Andrus waved to the crowd, a pair of white Skullcandy Aviators perched proudly around his neck. This was a major accomplishment, but Andrus had not forgotten how his team got there.
“The day after I returned from NASDAQ, I made it my commitment that this business, our culture, would not change because we’re a public company,” Andrus said. “We’re doing a pretty good job so far, but I always think we can do better.”
Skullcandy has continued to grow at a blistering rate under Andrus. He has moved product development completely in-house, overseen two acquisitions, and opened a series of new offices around the globe. Through the expansion, he has focused intently on maintaining the company’s authentic, down-to-earth culture.
“One of the things I am most proud of is that I can go into any of our offices—Shanghai, San Clemente, Zurich—and feel like I am walking into Skullcandy,” Andrus said.
While nothing could have prepared him perfectly to become a public company CEO, Andrus credits HBS for teaching him the business theory and interpersonal skills to build a successful enterprise. More than anything, he believes in following one’s passion. His advice to current MBAs is to be patient and not to settle for the first opportunity that presents itself.
“I guess I’m living proof that your first job out of business school is not necessarily your last job,” he said. “It’s a starting point. It takes time to maneuver your career into something that you really enjoy and inspires you every day.”