Latest / The Bob Lefsetz Podcast / Patrick Spence

Transcript

Patrick Spence · The Bob Lefsetz Podcast

• 0:08
  Speaker 1: Welcome, Welcome, Welcome back to the Plot West Steps podcast.
• 0:12
  Speaker 1: My guest today the CEO Somost Patrick Spence publick, good day, Happy,
• 0:19
  Speaker 1: good to be here, Bob. So a hearted COVID nine
• 0:21
  Speaker 1: team effects so much. Well, wow, it's uh, it's sent
• 0:26
  Speaker 1: everybody home almost overnight. Uh. And if you would have
• 0:29
  Speaker 1: asked me, you know, back before Covid if we'd be
• 0:32
  Speaker 1: able to run the company, uh, you know, from everybody
• 0:35
  Speaker 1: working from home, I probably would have had a hard
• 0:38
  Speaker 1: time believing it, quite frankly. And it was incredible because
• 0:42
  Speaker 1: our team you know, just stepped up to really be
• 0:46
  Speaker 1: able to keep the business going UM during that period,
• 0:49
  Speaker 1: and in fact, we kind of threw out the playbook
• 0:51
  Speaker 1: that we had UM and we got re oriented on
• 0:55
  Speaker 1: a few key priorities. The first was supporting our people
• 0:57
  Speaker 1: and making sure that they were set up for success
• 0:59
  Speaker 1: and you know, able to balance kind of the demands
• 1:01
  Speaker 1: of life at that point, UM. And then we got
• 1:04
  Speaker 1: really focused on bringing the joy of Sonos to more homes.
• 1:07
  Speaker 1: So we had a whole bunch of our retailers and
• 1:10
  Speaker 1: distribution channels closed UM. And so what we did was say, okay, like,
• 1:14
  Speaker 1: how can we help people through this period and maybe
• 1:16
  Speaker 1: make life at home a little bit better. Yeah, so
• 1:18
  Speaker 1: getting focused really um, you know at that time on
• 1:23
  Speaker 1: Sonos at Home is what we called it. And we
• 1:24
  Speaker 1: launched a campaign to help people you know, for their
• 1:28
  Speaker 1: home office and how Sonos could help make their home
• 1:30
  Speaker 1: office a little better, make streaming at home a little better, um,
• 1:34
  Speaker 1: you know. And so so we were really trying to
• 1:36
  Speaker 1: just um, you know, play into kind of what was
• 1:38
  Speaker 1: happening and play our role right and kind of get
• 1:40
  Speaker 1: back to our mission to how we get out. Well,
• 1:42
  Speaker 1: let's slow down a little bit on a more granular level.
• 1:46
  Speaker 1: Tell me about the office use in helping people in offices. Well,
• 1:51
  Speaker 1: so you know, as everybody was going home, um, we
• 1:55
  Speaker 1: felt like, you know, we could bring music into people's
• 1:58
  Speaker 1: home offices, and so we I think it was the
• 2:01
  Speaker 1: maybe the one at that point we were saying, hey,
• 2:04
  Speaker 1: like think about putting a one in your home office
• 2:06
  Speaker 1: to have some background music. And we gave some sound
• 2:09
  Speaker 1: suggestions at that point, maybe some a s mr um
• 2:13
  Speaker 1: you know, kind of background music that could help people
• 2:16
  Speaker 1: kind of go through the day, um and navigate their
• 2:18
  Speaker 1: day a little bit with some um, you know, some
• 2:21
  Speaker 1: mood music. Uh. So it wasn't quite so stressful. Okay,
• 2:25
  Speaker 1: so you are the band new facturer. How did you
• 2:28
  Speaker 1: reach the people who have home offices? Well, you know,
• 2:32
  Speaker 1: the good thing about son Nos is that we have
• 2:36
  Speaker 1: all of our customers information from when they actually registered
• 2:39
  Speaker 1: their system. So we reached out to all of our
• 2:41
  Speaker 1: existing customers and then we actually so with with messages
• 2:45
  Speaker 1: basically a tailored campaign that we created, you know, overnight
• 2:49
  Speaker 1: as a result of Covid reaching out to them um
• 2:52
  Speaker 1: and saying, hey, you know, think about putting a sons
• 2:55
  Speaker 1: one in your office, um, and here's what you can
• 2:58
  Speaker 1: listen to, and some recommendations that we had. We reached
• 3:00
  Speaker 1: our existing customers that way, and then we actually went
• 3:03
  Speaker 1: out and promoted the story if you also know us
• 3:07
  Speaker 1: at home across all of the social media channels and
• 3:11
  Speaker 1: all the digital channels out there that we largely use
• 3:13
  Speaker 1: for a lot of our advertising efforts these days. Okay,
• 3:17
  Speaker 1: was there a discount for pre existing users? There was, yeah,
• 3:20
  Speaker 1: so we so in that period we gave some discounts
• 3:23
  Speaker 1: um to people. We created a bundle for streaming for instance,
• 3:26
  Speaker 1: during that period as well, so if people we knew
• 3:28
  Speaker 1: people would be watching more video, so if they wanted
• 3:30
  Speaker 1: at that point to get a playbar or a beam. Um.
• 3:35
  Speaker 1: We put that together with surround sound system and after
• 3:38
  Speaker 1: a discount on that to people as well. UM, so
• 3:40
  Speaker 1: we're really pivoted to try and quickly get people, um,
• 3:45
  Speaker 1: you know and meet their needs kind of where they
• 3:46
  Speaker 1: were at that time and kind of the changes, the
• 3:49
  Speaker 1: dramatic changes in the way that people were spending their
• 3:51
  Speaker 1: time at home. So how effective was that campaign? What
• 3:54
  Speaker 1: kind of percentage results are you're looking at, you know,
• 3:57
  Speaker 1: like direct mail one percent is what targets want a
• 4:00
  Speaker 1: campaign like this to existing customers, Uh, what kind of
• 4:05
  Speaker 1: response to well, well above that? So in that quarter,
• 4:08
  Speaker 1: Baba is the next one. You know, our director consumer
• 4:12
  Speaker 1: sales were up year every year we had an absolutely
• 4:16
  Speaker 1: incredible you know rise. Now, of course we had other channels,
• 4:19
  Speaker 1: physical channels closed at that particular point in time, but
• 4:22
  Speaker 1: we were able to kind of meet customers where they
• 4:25
  Speaker 1: were and at that point we had all these retailers
• 4:29
  Speaker 1: are closing, you know, the main um levels of distribretion.
• 4:32
  Speaker 1: At that point of our sales, we're going through, um
• 4:36
  Speaker 1: through you know, people that weren't us, weren't our stores,
• 4:39
  Speaker 1: weren't weren't our online session weren't weren't That wasn't our
• 4:41
  Speaker 1: online store pre pandemic, And so quickly we're like, okay,
• 4:46
  Speaker 1: what are we gonna do? How you know, and how
• 4:48
  Speaker 1: do we survive this period? Right? Because I think at
• 4:49
  Speaker 1: that point everybody thought, Okay, we're going into recession. It's
• 4:52
  Speaker 1: gonna be a very difficult period. Are people going to
• 4:54
  Speaker 1: spend money? What are they gonna do? And um, So
• 4:58
  Speaker 1: we we went hard in terms of directly to the
• 5:01
  Speaker 1: customers both are existing and then new and sending them
• 5:04
  Speaker 1: to Sons dot com. And we saw year of your
• 5:07
  Speaker 1: growth in that period. We clawed our way back to
• 5:10
  Speaker 1: I want to say, just short of the year before
• 5:13
  Speaker 1: results in that period, and then we actually built on
• 5:15
  Speaker 1: that afterwards and our business really took off. Okay, the
• 5:20
  Speaker 1: references what that was in uh, I think that was
• 5:23
  Speaker 1: our good the quarter last year where the pandemic um
• 5:26
  Speaker 1: you know, really first started. So that was probably our
• 5:29
  Speaker 1: fiscal key three of last year. When you're saying relative
• 5:34
  Speaker 1: to what the year prior, Yeah, to the year prior. Okay,
• 5:38
  Speaker 1: we're talking about quite quarter, correct, That's okay, let's just
• 5:42
  Speaker 1: go back when there's not a pandemic. What percentage of
• 5:46
  Speaker 1: equipment is sold direct by Sonos via third parties. Yeah,
• 5:50
  Speaker 1: uh so direct was about ten percent prior to the pandemic,
• 5:56
  Speaker 1: and what is it now? Um So through last year
• 5:59
  Speaker 1: we reported that it was about of our total sales.
• 6:03
  Speaker 1: Why do you think in a world that everybody is
• 6:06
  Speaker 1: so comfortable buying on Amazon that most of your customers
• 6:11
  Speaker 1: are buying through traditional retail channels? Um, you know, I
• 6:16
  Speaker 1: think people if they're going to buy a TV or
• 6:19
  Speaker 1: buy something else, you know, I think that's a time
• 6:21
  Speaker 1: where people, um will buy through the physical channels. Right. Convenience.
• 6:25
  Speaker 1: We've actually done some research to look at, but why
• 6:28
  Speaker 1: did somebody who is already a Sonos customer purchase at
• 6:30
  Speaker 1: best Buy or Costco? And in some of those situations,
• 6:33
  Speaker 1: they just wanted to get another product today. So there's
• 6:36
  Speaker 1: kind of like the convenience and I want it right now.
• 6:39
  Speaker 1: I'm not even gonna wait for you know, overnight or
• 6:41
  Speaker 1: two day shipping. But then for our um, you know,
• 6:45
  Speaker 1: for our home theater products, there's very much the match
• 6:48
  Speaker 1: of I'm buying a TV, how am I going to
• 6:50
  Speaker 1: make it sound great? Right? And that's where Okay, there's
• 6:53
  Speaker 1: these products from son Nos m whether you're s buy
• 6:55
  Speaker 1: or costco that uh makes sense in terms of purchasing
• 6:58
  Speaker 1: UM in tandem with a TV purchase. And so that's
• 7:01
  Speaker 1: like a compelling a pretty compelling fact. And then the
• 7:04
  Speaker 1: one thing that people underestimate is as well, the what
• 7:08
  Speaker 1: we call our installed solutions channels, the dealers that install
• 7:11
  Speaker 1: UM products in people's homes. And that's been an amazingly
• 7:14
  Speaker 1: resilient channel. You know, it's almost it's been about nine
• 7:16
  Speaker 1: years since I've been at Sonos, and when I first
• 7:19
  Speaker 1: came in, I thought that would be one that would
• 7:21
  Speaker 1: be decimated by a lot of the other channels that
• 7:24
  Speaker 1: exist out there. But I think the UM those partners
• 7:28
  Speaker 1: continue to show their value UM. They continue to solve
• 7:31
  Speaker 1: customer problems and they're a big part of our business
• 7:33
  Speaker 1: as well. And they've been amazingly resilient through the pandemic too,
• 7:36
  Speaker 1: and so that's a big chunk of the business. So
• 7:38
  Speaker 1: we we've got a nice distribution across a variety of
• 7:41
  Speaker 1: the variety of the channels. And I think one of
• 7:44
  Speaker 1: the other things, Bob, is some people may want to
• 7:46
  Speaker 1: hear it, you know, they may want to touch it,
• 7:47
  Speaker 1: feel it, hear it UM because because I would say
• 7:51
  Speaker 1: we have a you know, at this point, I'm pretty
• 7:53
  Speaker 1: surprised by the percentage willing to purchase online, you know,
• 7:56
  Speaker 1: site unseen as well. We launched new products in the
• 7:58
  Speaker 1: midst of the pandemic, are five sub recently Rome and
• 8:03
  Speaker 1: you know, so all of these products people were purchasing
• 8:06
  Speaker 1: site unseen, Sound unheard, which is pretty impressive and says
• 8:10
  Speaker 1: a lot about the brand. Do you know if people
• 8:13
  Speaker 1: who already own a Sonos product are disproportionately or much
• 8:18
  Speaker 1: higher ordering online as opposed to new customers. Yes, we're
• 8:23
  Speaker 1: we were able to tell if you're you know, if
• 8:26
  Speaker 1: you've registered your product to an existing system that you
• 8:29
  Speaker 1: already have, versus being a new what we call a
• 8:33
  Speaker 1: new home um and so into a new home. And
• 8:35
  Speaker 1: so as we see that, we can look at, okay,
• 8:37
  Speaker 1: how are people doing it? And what we see is
• 8:39
  Speaker 1: that existing customers are more likely to buy on Sonos
• 8:42
  Speaker 1: dot com. They've developed a relationship with the brand, um,
• 8:45
  Speaker 1: you know, and then they want to we announce a
• 8:48
  Speaker 1: new product, we make it really easy for them to
• 8:50
  Speaker 1: order on sons dot com. And so that's something that
• 8:52
  Speaker 1: we see. Okay, let's go back to COVID. Could everybody
• 8:56
  Speaker 1: do their job from home with a manufacturing or into business. Yeah,
• 9:01
  Speaker 1: a great question, and it's something that UM was challenging.
• 9:05
  Speaker 1: We ended up having UM probably at the end dozens
• 9:09
  Speaker 1: of people in each of our Santa Barbara and Boston
• 9:12
  Speaker 1: locations that started to come back into the office after
• 9:15
  Speaker 1: the first wave. So immediately what happened right at the
• 9:18
  Speaker 1: start is everybody had to UM and so uh you
• 9:22
  Speaker 1: saw amazing like test rig setups in people's kitchens and
• 9:25
  Speaker 1: bathrooms and basements UM in Boston and some of the
• 9:29
  Speaker 1: pictures were it was just inspiring to see the way
• 9:31
  Speaker 1: people were working to still launch a product. Right we
• 9:34
  Speaker 1: were we were in the midst of trying to launch
• 9:35
  Speaker 1: Beam five and sub and we weren't sure, Okay, are
• 9:39
  Speaker 1: people even gonna launch products in these times? And what's
• 9:42
  Speaker 1: going to happen as we go through this, And the
• 9:44
  Speaker 1: team just did everything they could to keep it on track.
• 9:48
  Speaker 1: And you know, having this test equipment at home, and
• 9:50
  Speaker 1: then we created the conditions in our Santa Barbara and
• 9:53
  Speaker 1: Boston offices where people could be distanced had ppe UM
• 9:58
  Speaker 1: so that they could actually come in and start to
• 10:00
  Speaker 1: use some of the test equipment, do some of the
• 10:02
  Speaker 1: things that they needed to do. And so the reality
• 10:04
  Speaker 1: is there's a number of jobs that you want, um
• 10:08
  Speaker 1: in building these products, to be in the office for testing,
• 10:11
  Speaker 1: for the manufacturing team in China, UM and our partners
• 10:14
  Speaker 1: there and Malaysia. We had to you know, abide by
• 10:18
  Speaker 1: the the local laws and that was a bit of
• 10:20
  Speaker 1: a challenge. But at the same time, the team, you know,
• 10:22
  Speaker 1: made it work. UM. We'd usually have people from Boston
• 10:25
  Speaker 1: and Santa Barbara on the ground in China actually with
• 10:30
  Speaker 1: those bills and those kind of things, but they didn't
• 10:31
  Speaker 1: via zoom. UM. They did a via pictures and FaceTime
• 10:34
  Speaker 1: and all the other tools that are out there, and
• 10:36
  Speaker 1: so that we just figured it out. But it was
• 10:38
  Speaker 1: it was hard to navigate in the early days. UM.
• 10:40
  Speaker 1: But the power of the human spirit in it, in
• 10:43
  Speaker 1: you know, kind of the creativity and just like figuring
• 10:45
  Speaker 1: it out. UM, I think it's pretty incredible. And why
• 10:49
  Speaker 1: are there two offices and what goes down in each
• 10:52
  Speaker 1: respective offer? We actually also have one in Seattle. UM.
• 10:56
  Speaker 1: So we started, believe it or not, in you know,
• 10:59
  Speaker 1: to office is so simultaneously in Santa Barbara and Boston.
• 11:02
  Speaker 1: And the thinking was trying to get the right talent right.
• 11:06
  Speaker 1: We we are in a very uh complex kind of
• 11:09
  Speaker 1: space in terms of marrying the worlds of hardware and
• 11:11
  Speaker 1: software together. UM, and we knew we probably couldn't do
• 11:15
  Speaker 1: it um and get all the talent we needed in
• 11:17
  Speaker 1: one particular location. So we've actually started into We added
• 11:21
  Speaker 1: Seattle to the mix about five years ago because we
• 11:24
  Speaker 1: needed to add even more software talent into the company.
• 11:27
  Speaker 1: And that's about two thirds of our engineering team is
• 11:30
  Speaker 1: on the software side, and so we actually have all
• 11:32
  Speaker 1: three offices. And I think Bob, this was a an
• 11:34
  Speaker 1: advantage for us as we went into the pandemic because
• 11:38
  Speaker 1: we've been working in a distributed fashion for years um,
• 11:42
  Speaker 1: and so we already were using Zoom religiously. You know,
• 11:45
  Speaker 1: we would have calls often where teams from all three
• 11:49
  Speaker 1: offices are on Zoom together. UM. We were using Slack,
• 11:52
  Speaker 1: we were using all the tools. We were on the
• 11:54
  Speaker 1: leading edge of using a lot of the tools that
• 11:56
  Speaker 1: some people only found for the first time when they
• 11:59
  Speaker 1: were forced to work from home them. So that transition
• 12:02
  Speaker 1: that probably served us well, UM in that transition. And
• 12:04
  Speaker 1: there you know, being forced to work from home is
• 12:07
  Speaker 1: very different than working from home and choosing to work
• 12:10
  Speaker 1: from home but nonetheless we had the tools, we had
• 12:12
  Speaker 1: the experience to actually make that work. UM, so we
• 12:15
  Speaker 1: kind of know how to how to handle those situations.
• 12:18
  Speaker 1: So if softwares in Seattle, what are the strengths in
• 12:21
  Speaker 1: Boston and Santa Barbara? There we have we have software
• 12:25
  Speaker 1: in all three offices. We have not we have not created,
• 12:29
  Speaker 1: you know, an office and said this is the only
• 12:31
  Speaker 1: place this can be. We've said, you know, talent, we
• 12:33
  Speaker 1: need to find talent, and you can be in Seattle, UM, Boston,
• 12:37
  Speaker 1: Santa Barbara. Uh, you know we have so, so that's
• 12:41
  Speaker 1: kind of the way that we've approached it. And so hardware,
• 12:43
  Speaker 1: you find a lot of hardware people in Boston because
• 12:45
  Speaker 1: of the legacy there of audio companies and um, you know,
• 12:49
  Speaker 1: just some amazing history uh there. And then you'll find
• 12:51
  Speaker 1: hardware and software people here in Santa Barbara as well. So,
• 12:55
  Speaker 1: um in all three and now we we've got a
• 12:57
  Speaker 1: small office in San Francisco as well as we'll find
• 13:00
  Speaker 1: both hardware and software people there. Okay, you talked about
• 13:03
  Speaker 1: this office oriented, home oriented plan when COVID hit. Did
• 13:08
  Speaker 1: you have enough inventory? Um? We did not, um. So,
• 13:14
  Speaker 1: And and as you've probably seen, supply chain has been
• 13:17
  Speaker 1: a huge issue over the past few months, and so immediately,
• 13:21
  Speaker 1: I think not just us, but everybody in the industry
• 13:24
  Speaker 1: and not just consumer electronics, anyone who builds anything immediately
• 13:27
  Speaker 1: went to freeze. You know, let's see what's going to
• 13:30
  Speaker 1: happen here, because our people gonna spend money, you know,
• 13:33
  Speaker 1: job losses, everything closing up, and so everybody froze for
• 13:36
  Speaker 1: a moment um. We saw that great momentum in Sonos
• 13:40
  Speaker 1: at home, so we started to kind of ramp things
• 13:42
  Speaker 1: back up and turn it back up, um and so
• 13:46
  Speaker 1: you know, then we started to crank the engine again,
• 13:50
  Speaker 1: but very quickly demand really started to move up, and
• 13:54
  Speaker 1: we saw even more demand for a products and much
• 13:56
  Speaker 1: more than we could actually um, you know build as well.
• 14:00
  Speaker 1: And so we started, you know, seeing a ton of
• 14:02
  Speaker 1: demand that we couldn't fulfill, you know, really as we
• 14:05
  Speaker 1: got into the the you know, the September October period
• 14:10
  Speaker 1: um of last year, and we've been trying to you know,
• 14:13
  Speaker 1: really catch up if you will, ever since. And so
• 14:17
  Speaker 1: that's been, ah, that's been an interesting learning you know
• 14:20
  Speaker 1: for me and thinking through the UH, I think we'd
• 14:24
  Speaker 1: all kind of been thinking, all right, we know what
• 14:26
  Speaker 1: will happen in a situation like this, and there's probably
• 14:29
  Speaker 1: it was probably time for a recession and some of
• 14:31
  Speaker 1: those things. Yet the injection of all the money into
• 14:34
  Speaker 1: the system, the ability for many of people in our
• 14:37
  Speaker 1: target audience to continue to work from home, continue to
• 14:40
  Speaker 1: have their job, you know, save money on entertainment, travel,
• 14:43
  Speaker 1: all those things actually ended up benefiting us in a way.
• 14:47
  Speaker 1: And so UM we did not know predict that, and
• 14:51
  Speaker 1: I think it's a good lesson in you know, really
• 14:54
  Speaker 1: being mindful that you probably don't know what's going to
• 14:57
  Speaker 1: happen in those situations pretty unprecedented and just having to
• 15:01
  Speaker 1: stay agile UM if you will, through that. So that's
• 15:04
  Speaker 1: been uh, yeah, that's been one of those things that
• 15:06
  Speaker 1: we've learned through this. And have you been affected by
• 15:08
  Speaker 1: the chip shortage? Absolutely, yeah, So that's been something that
• 15:12
  Speaker 1: our team has done a better job than most, you know,
• 15:14
  Speaker 1: in in managing, but certainly it's something that impacts us.
• 15:18
  Speaker 1: Impacts us UM today as well. As we've navigated through
• 15:21
  Speaker 1: UM all of this and the container shortage. You know,
• 15:25
  Speaker 1: the ports have had situations where the staff there UM
• 15:29
  Speaker 1: as well caught COVID right, and so we've had all
• 15:32
  Speaker 1: of these factors. I've never seen a year like this, Bob.
• 15:35
  Speaker 1: As I think back, I've been in you know, smart
• 15:37
  Speaker 1: hardware plus software kind of for twenty three years now,
• 15:41
  Speaker 1: and I've never seen a supply chain situation like this
• 15:44
  Speaker 1: and as many things kind of backing up as they have.
• 15:47
  Speaker 1: And that's why I'm so proud of our team and
• 15:49
  Speaker 1: the way they've managed it, because we've been able to
• 15:51
  Speaker 1: continue to grow and deliver as much as we can
• 15:53
  Speaker 1: to customers. But certainly we've been you know, we've still
• 15:56
  Speaker 1: seen more demand um than we have supplied for, and
• 15:59
  Speaker 1: we still have work to do and making sure that
• 16:01
  Speaker 1: we're able to fulfill all of the customer demand out there.
• 16:04
  Speaker 1: Do you believe after this crisis is over, the just
• 16:08
  Speaker 1: in time philosophy of worldwide manufacturing supply chage chain will
• 16:13
  Speaker 1: change or people just forget about this and we'll go
• 16:15
  Speaker 1: back to the other one. I think it will change
• 16:19
  Speaker 1: based on what I'm seeing right now in the industry, UM,
• 16:23
  Speaker 1: you know, and so I do think there'll be more
• 16:25
  Speaker 1: thought We've we've been more thoughtful in terms of Okay,
• 16:28
  Speaker 1: how are you building more resilience into the system. UM.
• 16:31
  Speaker 1: There are some high hurdles to get over in terms
• 16:33
  Speaker 1: of the capital outlays required to build the kind of
• 16:38
  Speaker 1: facilities and suppliers that we would need in the United
• 16:40
  Speaker 1: States for instance, or let's say North America more generally.
• 16:44
  Speaker 1: But I you know, I think even the government um
• 16:47
  Speaker 1: seems interested in this area. UM, the largest companies that
• 16:50
  Speaker 1: are in these areas are working on it. We're having
• 16:53
  Speaker 1: lots of conversations with our partners. So I do think
• 16:57
  Speaker 1: we have a window of time where we'll see if
• 17:01
  Speaker 1: we can get enough momentum behind the movement of having
• 17:05
  Speaker 1: more localized supply chains, if you will. And it will
• 17:08
  Speaker 1: probably be some you know, combination in between, because not
• 17:11
  Speaker 1: everything from an affordability perspective will make it work. But
• 17:14
  Speaker 1: I do think there are some things and I do
• 17:17
  Speaker 1: think for products like ours, UM, I think Apple's probably
• 17:20
  Speaker 1: in this boat too, like that there's there's probably a
• 17:23
  Speaker 1: way to you know, make it work over time. And
• 17:27
  Speaker 1: so that's something that we're certainly investigating and trying to
• 17:29
  Speaker 1: come out from a variety of angles, and that there's
• 17:31
  Speaker 1: a lot of people in the industry working on the
• 17:33
  Speaker 1: same thing. So I'm kind of optimistic UM that will
• 17:36
  Speaker 1: get a little bit more you know, back more locally
• 17:39
  Speaker 1: and I think that will benefit everybody from a resilience
• 17:43
  Speaker 1: resiliency perspective and hopefully, you know, quite frankly, from overall
• 17:48
  Speaker 1: society and economy perspective as well. So what is the
• 17:53
  Speaker 1: manufacturing design process and how long does it take? Who
• 17:58
  Speaker 1: comes up with a product? You tell me from beginning
• 18:01
  Speaker 1: to end? Yeah, So, um, you know, we're always thinking
• 18:05
  Speaker 1: and working on customer insights, so trying to understand which
• 18:07
  Speaker 1: is fancy term for behavior around customers and what's happening
• 18:11
  Speaker 1: there and kind of what's happening in the industry. And
• 18:12
  Speaker 1: we're trying to marry two things together. So we have
• 18:14
  Speaker 1: a team looking at how customers are using products, and
• 18:17
  Speaker 1: then we have a team looking at technologies and how
• 18:20
  Speaker 1: how do those things potentially come together? And so we're
• 18:24
  Speaker 1: always considering where's that going? And really we spend time
• 18:27
  Speaker 1: thinking about the next five years as we're thinking about
• 18:30
  Speaker 1: what we want to build, and so we'll be looking
• 18:32
  Speaker 1: at a variety of you know, opportunities out there as
• 18:35
  Speaker 1: we think about where does the speaker go from here,
• 18:38
  Speaker 1: where does the soundbar go from here? Where does sound
• 18:40
  Speaker 1: go from here? Um, you may have seen that recently
• 18:42
  Speaker 1: we launched a picture frame that's a speaker with Ikea
• 18:45
  Speaker 1: for instance, And so we're always thinking about what can
• 18:48
  Speaker 1: we do with you know, different form factors and our
• 18:53
  Speaker 1: software to create sound in different and new kind of ways.
• 18:56
  Speaker 1: And so we'll go through and we'll do some work
• 18:58
  Speaker 1: on that. We'll try to think about what it is
• 19:00
  Speaker 1: that we think will fit the market at the right time.
• 19:02
  Speaker 1: We work through um things like all of the design
• 19:07
  Speaker 1: and we start to get an idea on the design.
• 19:09
  Speaker 1: We start to get an idea and we have a
• 19:11
  Speaker 1: design team that works on that and it's looking at
• 19:12
  Speaker 1: materials and finishes and everything that's out there and kind
• 19:15
  Speaker 1: of what's happening in the world and what fits our
• 19:17
  Speaker 1: design language. And then we'll be looking at that technology
• 19:21
  Speaker 1: advanced technology team and what can we be incorporating in it?
• 19:24
  Speaker 1: Is it voices, it ultra wide band, is it Bluetooth? Like?
• 19:26
  Speaker 1: What what should be in the product? And it's what
• 19:29
  Speaker 1: should be in the product in the interests of the
• 19:31
  Speaker 1: customer experience, right and what behaviors we wanted to we
• 19:34
  Speaker 1: want to deliver if you will, um as we're going
• 19:37
  Speaker 1: through that and so so so then we'll start working
• 19:40
  Speaker 1: on what we call a product requirements document which says,
• 19:43
  Speaker 1: here's the thing we're going to build, and we'll have
• 19:45
  Speaker 1: an initial take on a concept with some UM, initial ideas,
• 19:51
  Speaker 1: some designs in terms of what's there, UM, an idea
• 19:54
  Speaker 1: of kind of where it will fit in the market,
• 19:56
  Speaker 1: and we think it can do UM, and we'll start
• 19:58
  Speaker 1: to put that together and usually you know it'll be
• 20:02
  Speaker 1: to market then. UM. In this day and age, which
• 20:05
  Speaker 1: is forever in the in the era of like software
• 20:08
  Speaker 1: moving UM quickly and shipping you know every day that
• 20:12
  Speaker 1: that's usually an eighteen to thirty six month process, depending
• 20:15
  Speaker 1: on what we're building. And so we are we're working
• 20:19
  Speaker 1: very hard in those situations to determine what's going to
• 20:22
  Speaker 1: be popular, what's going to resonate with customers, you know,
• 20:25
  Speaker 1: year and a half, three years you know from now
• 20:27
  Speaker 1: in some cases, which it is a is a high
• 20:31
  Speaker 1: wire act, right because that's a long time away in
• 20:34
  Speaker 1: this day and age in terms of determining, Okay, what
• 20:36
  Speaker 1: is it, what's going to look like, UM, what's gonna
• 20:38
  Speaker 1: fit with people's home decor, how is it going to
• 20:41
  Speaker 1: sound at that particular point in time, UM, what formats
• 20:45
  Speaker 1: are going to be out there at that time? UM,
• 20:48
  Speaker 1: and all of those things, and so it's really like
• 20:50
  Speaker 1: a process UM that takes a lot upfront and then
• 20:54
  Speaker 1: there's a lot of work, but work that we know
• 20:56
  Speaker 1: now after almost twenty years at this we know how
• 20:59
  Speaker 1: to go execute on and from there UM and so
• 21:01
  Speaker 1: it becomes very clear from the product requirements document, Okay,
• 21:04
  Speaker 1: here's what we need to do, and then it's a
• 21:05
  Speaker 1: matter of like managing it UM from that and making
• 21:09
  Speaker 1: sure that we can actually deliver on the vision that
• 21:11
  Speaker 1: we set for the product at the beginning. And we're
• 21:14
  Speaker 1: always doing stage gates and checks and saying, okay, is
• 21:16
  Speaker 1: this living up to the promise of the product that
• 21:19
  Speaker 1: we had envisioned back in the you know, the first day.
• 21:22
  Speaker 1: And so it's really a cross functional team, Bob. This
• 21:24
  Speaker 1: is why I think we've been successful. And what we've
• 21:26
  Speaker 1: done so design, sound UM, Technology, Marketing in their product
• 21:31
  Speaker 1: management UM all working together to try and create something
• 21:35
  Speaker 1: great UM shepherded by you know, a product manager at
• 21:38
  Speaker 1: the end of the day that's going to take the
• 21:40
  Speaker 1: ultimate responsibility for this product and delivering it to customers.
• 21:46
  Speaker 1: Let's just say I stamped my fingers today and there
• 21:48
  Speaker 1: was a big revolution in this sphere, and you had
• 21:51
  Speaker 1: an idea today lock stock and barrel. If you had
• 21:55
  Speaker 1: the idea, how fast could you get it out on
• 21:57
  Speaker 1: the street. Depend depend ends exactly what it would be.
• 22:02
  Speaker 1: You know, like there's some things that can be done
• 22:03
  Speaker 1: through software, So we've gone back and we've increased the
• 22:06
  Speaker 1: functionality of our products through software at times UM and
• 22:09
  Speaker 1: that can be a six month venture, that can be
• 22:12
  Speaker 1: a twelve month venture depending on what we're doing. If
• 22:15
  Speaker 1: it's a new hardware kind of idea, let's say, design concept.
• 22:19
  Speaker 1: If it's something that is known quite known, you might
• 22:23
  Speaker 1: be out in eighteen months. But if it's something revolutionary
• 22:26
  Speaker 1: that's going to take new technology, and even though you
• 22:28
  Speaker 1: know the use case that you want to create UM
• 22:31
  Speaker 1: and what kind of experience you want to deliver for customers,
• 22:34
  Speaker 1: if it's taking UM invention right and creating new technologies
• 22:39
  Speaker 1: or implementing them in different ways that UM that have
• 22:42
  Speaker 1: never been done before, that could take you know, thirty
• 22:45
  Speaker 1: six months UM in terms of doing that. So it
• 22:47
  Speaker 1: just depends on how much you're trying to accomplish in
• 22:51
  Speaker 1: the product that you're doing. Because and we have both right,
• 22:53
  Speaker 1: we'll have revolutionary products are bringing out like ARC which
• 22:56
  Speaker 1: is completely different and then we'll do things at times
• 22:58
  Speaker 1: like bring out the one s L which is the
• 23:00
  Speaker 1: one without a microphone. And so in a situation like that,
• 23:03
  Speaker 1: that'll only take us twelve months because we just need
• 23:05
  Speaker 1: to pull the microphone out and we need to make
• 23:07
  Speaker 1: sure that it all works, and we can do that
• 23:09
  Speaker 1: much more quickly now. Legendarily, when Steve Jobs came back
• 23:12
  Speaker 1: to Apple, he thinned the product line. You wanted to
• 23:17
  Speaker 1: make it very obvious, not confusing to the customer. You know,
• 23:21
  Speaker 1: there's thoughts that I've been in retail a long time ago.
• 23:24
  Speaker 1: If you show somebody to products will buy when you
• 23:26
  Speaker 1: show them five, Sometimes they're overwhelmed. They'll leave the store.
• 23:29
  Speaker 1: Needless to say, that is not the philosophy of Apple today,
• 23:33
  Speaker 1: but it's so nos you have varying niches. Do you
• 23:37
  Speaker 1: ever think, well, God, we're putting out too much, we
• 23:39
  Speaker 1: should limit the product line. What are your thoughts there? Yeah,
• 23:43
  Speaker 1: And you know, having come from you know, and growing
• 23:46
  Speaker 1: up inside a mobile phone company, um BlackBerry, you know,
• 23:49
  Speaker 1: really inventing the smartphone, I think there was there's a
• 23:53
  Speaker 1: different mentality, you know there. And one of the things
• 23:55
  Speaker 1: that I think we've been good at and one of
• 23:57
  Speaker 1: the things that I actually manned add UM was around
• 24:02
  Speaker 1: to at least two new products per year. I felt
• 24:05
  Speaker 1: like that was the right cadence. So this is purely
• 24:08
  Speaker 1: like an instinctual call, but I felt like, given the
• 24:11
  Speaker 1: capability of the organization at the time and then the
• 24:13
  Speaker 1: opportunities in front of us and creating things, that was
• 24:16
  Speaker 1: the right thing to do. And you'll notice we don't
• 24:18
  Speaker 1: this is very different than most and consumer electronics. We
• 24:21
  Speaker 1: don't have a TikTok where like every year we refresh
• 24:25
  Speaker 1: our entire product line. That is a classic thing to
• 24:27
  Speaker 1: do from a lot of the tech companies that are
• 24:28
  Speaker 1: out there, and they'll come about the new version of
• 24:30
  Speaker 1: product X, Y or Z, they'll do it every year
• 24:33
  Speaker 1: or every couple of years. We instead focus on building,
• 24:36
  Speaker 1: you know, a few great products and you will see
• 24:38
  Speaker 1: some that we do UM where we'll do a refresh
• 24:42
  Speaker 1: like we did with five, which is a build on
• 24:43
  Speaker 1: the play five UM and the sub last year build
• 24:46
  Speaker 1: on the the original sub right, and so those are
• 24:49
  Speaker 1: things that we'll do, but we'll do those on a
• 24:51
  Speaker 1: five to seven year cadence, and then we'll bring something
• 24:53
  Speaker 1: completely new out like an arc or um a beam
• 24:57
  Speaker 1: when it came out or Rome for instance, and so
• 25:01
  Speaker 1: those products, UM, you know, we we also will bring
• 25:04
  Speaker 1: in the mix. But I think bob the right thing
• 25:06
  Speaker 1: for us and the capabilities we have the customers were
• 25:08
  Speaker 1: selling to. Thinking about sustainability, thinking about building products that
• 25:12
  Speaker 1: last for a while and something you don't have to
• 25:14
  Speaker 1: upgrade every year. UM. You know, I like the cadence
• 25:17
  Speaker 1: of two per year. It gives us the right balance
• 25:19
  Speaker 1: of being able to tell our story. Again, so there's
• 25:22
  Speaker 1: two times a year you'll see s be pretty loud
• 25:24
  Speaker 1: in media and then as well with our advertising, which
• 25:27
  Speaker 1: is when we're telling the story around our new product.
• 25:30
  Speaker 1: But it's all part of the system, right and so
• 25:32
  Speaker 1: so NOS is usually told in a broader way at
• 25:34
  Speaker 1: that time. UM, And it's I think our approach is
• 25:37
  Speaker 1: quite unique compared to UM any other hardware company I
• 25:41
  Speaker 1: can think of. Okay, let's talk about home audio. I
• 25:45
  Speaker 1: want your take on the state of home audio. Just
• 25:47
  Speaker 1: going through a little history. If you go back forty
• 25:50
  Speaker 1: odd years ago, it was really about everyone getting a
• 25:54
  Speaker 1: large home stereo to get closer to the sound. Then
• 25:57
  Speaker 1: we went to the boom box, then we went to
• 25:59
  Speaker 1: the your bud needle. Let's just say, that's not a
• 26:02
  Speaker 1: market you're in. You're in the home audio sphere. What
• 26:05
  Speaker 1: is going on there? You know, I think people it's
• 26:09
  Speaker 1: been interesting. One of the things that that we've seen
• 26:12
  Speaker 1: through this period is I think so I'll go back
• 26:15
  Speaker 1: right to the beginning, and at the beginning, I think
• 26:17
  Speaker 1: really one of the biggest things with son nos was
• 26:19
  Speaker 1: making it easy for people to listen to audio in
• 26:22
  Speaker 1: their home and digital formats, right so at that point
• 26:24
  Speaker 1: downloads you know, eventually would get to streaming, and we
• 26:27
  Speaker 1: kind of democratized that to some degree because it was
• 26:31
  Speaker 1: a it was a much more difficult for people to
• 26:33
  Speaker 1: be really enjoying good home audio in the early days,
• 26:37
  Speaker 1: and so we tried to make that easier than it was.
• 26:40
  Speaker 1: Uh And I think that was the magic through the
• 26:42
  Speaker 1: first phase. Interestingly, you know, as the big tech companies
• 26:45
  Speaker 1: jumped into the space, um then there were these poks,
• 26:49
  Speaker 1: these you know, the small products Bucks or whatever it was,
• 26:52
  Speaker 1: and all of a sudden, those are being given away
• 26:54
  Speaker 1: for free when you subscribe to the New York Times,
• 26:56
  Speaker 1: for instance, are all these other things or they're you know,
• 26:58
  Speaker 1: there's cheap bluetooth products. And I think it brought sound
• 27:02
  Speaker 1: into the home in a different way. And what we
• 27:04
  Speaker 1: tried to do was tell our story on top of that.
• 27:07
  Speaker 1: So if people got a taste of you know, the
• 27:10
  Speaker 1: the Google products or the Amazon products at those those
• 27:13
  Speaker 1: cheap levels, we want to show them there's something better
• 27:16
  Speaker 1: there and something more premium for the longer term. And
• 27:20
  Speaker 1: I feel like we've been successful at that if you
• 27:22
  Speaker 1: look at our growth um kind of over the period
• 27:24
  Speaker 1: that those companies have entered the space, and and I
• 27:28
  Speaker 1: feel good about the fact that we're doing that because
• 27:30
  Speaker 1: we're bringing a better experience. We're bringing open experience right
• 27:34
  Speaker 1: supports all of the different services that there, so you're
• 27:36
  Speaker 1: not trapped in one ecosystem UM and we're bringing better
• 27:39
  Speaker 1: sounding audio um as the way the artist intended it
• 27:42
  Speaker 1: into people's homes in that way, and we're still making
• 27:45
  Speaker 1: it easy versus kind of the traditional audio solutions that
• 27:50
  Speaker 1: were much more niche for people and had to you know,
• 27:52
  Speaker 1: take a bit of a degree to figure out how
• 27:54
  Speaker 1: to use. And so I feel like we're at a
• 27:56
  Speaker 1: point where people are, you know, being thoughtful about the
• 28:00
  Speaker 1: products that they're putting in their home. UM. They're thinking
• 28:02
  Speaker 1: about the longevity, the premium, nous, the openness UM, and
• 28:05
  Speaker 1: I think all of that has benefited us. Now, I
• 28:07
  Speaker 1: would say the thing we push on is, Okay, what
• 28:11
  Speaker 1: you know, what's the future hold as we think about UM,
• 28:14
  Speaker 1: as we think about audio in the home, and one
• 28:16
  Speaker 1: of these things that we've been pushing with Ikea UM
• 28:19
  Speaker 1: and as well with our true play technology. You know
• 28:21
  Speaker 1: that really UM shape sound in the room is UM.
• 28:27
  Speaker 1: You know, do we need to be constrained by the
• 28:28
  Speaker 1: speaker form factor? UM? So this picture frame for instance
• 28:33
  Speaker 1: making sound is a great example, or the lamp that
• 28:35
  Speaker 1: we've done UM with Ikea in terms of making the sound.
• 28:38
  Speaker 1: Because I'm not sure that the future is necessarily dedicated
• 28:44
  Speaker 1: products in the way that they are today. The sound
• 28:47
  Speaker 1: can be integrated into other household products, and certainly there'll
• 28:51
  Speaker 1: be people that that want audio UM in such quality
• 28:54
  Speaker 1: and fidelity they want a dedicated product. But I think
• 28:57
  Speaker 1: for a lot of people, if you can find a
• 28:59
  Speaker 1: way to ring UM great audio into the home and
• 29:04
  Speaker 1: do it in some of the form factors or make
• 29:06
  Speaker 1: it disappear to some degree UM, I think that's going
• 29:09
  Speaker 1: to be even more compelling to millions more people. Okay,
• 29:12
  Speaker 1: let's talk specifically about quality audio. So there's nowhere near
• 29:19
  Speaker 1: the press nor the consumption of this stuff. But there
• 29:22
  Speaker 1: are tweaks will spend a hundred thousand dollars on their stereo,
• 29:25
  Speaker 1: no problem. Uh, there's magazines dedicated to that niche. There's
• 29:31
  Speaker 1: not a mainstream audio magazine anymore. There's sound in video,
• 29:35
  Speaker 1: which is an amalgamation of previous things. So how much
• 29:39
  Speaker 1: will people pay for good sound? And where does Sonos
• 29:43
  Speaker 1: fit in this? We've tried to democratize it as much
• 29:48
  Speaker 1: as possible. So we've tried to say, hey, can we
• 29:51
  Speaker 1: bring let's say, you know, probably with arc or soundbar
• 29:56
  Speaker 1: eight dollars for instance. Uh, you know, are be hitting
• 30:00
  Speaker 1: the point where most people would have to pay or
• 30:03
  Speaker 1: people in the industry would expect to pay fifteen dollars,
• 30:06
  Speaker 1: right Like, we're trying to bring it into um, you know,
• 30:10
  Speaker 1: a lower price point to some degree, but we're still
• 30:12
  Speaker 1: building premium products. And so we want that great sound,
• 30:15
  Speaker 1: kind of want to have it all. We want that
• 30:16
  Speaker 1: great sound, but we want to democratize it um a
• 30:19
  Speaker 1: little bit. There's no doubt of you can still go
• 30:22
  Speaker 1: out and spend tens of thousands of dollars right on
• 30:26
  Speaker 1: creating like an epic home sound system. You could do
• 30:29
  Speaker 1: the Dolby at most in sealing you know, seven dot
• 30:33
  Speaker 1: one dot for um in terms of like a full
• 30:37
  Speaker 1: set up if you wanted, and create just an incredible experience.
• 30:40
  Speaker 1: But that's not where we play. We play very much
• 30:43
  Speaker 1: at how are we helping what we call culture seekers
• 30:46
  Speaker 1: like really fill their homes with music? Do it in
• 30:48
  Speaker 1: an easy way, but not compromise on audio and certainly,
• 30:51
  Speaker 1: I mean, you know, you're getting, um what you pay for,
• 30:54
  Speaker 1: but we want to make sure that it's surprising sound
• 30:57
  Speaker 1: at whatever price point that we're at, so that when
• 30:59
  Speaker 1: people hear a one five and arc, they're like, wow,
• 31:03
  Speaker 1: that sounds great for that price. Your your top of
• 31:07
  Speaker 1: the line really music product is the five correct? Yes,
• 31:11
  Speaker 1: that's correct, Okay, in the present retail price of that
• 31:14
  Speaker 1: is uh four four nine nine. Who are your competitors
• 31:19
  Speaker 1: in that sphere? If anybody? Yeah, you know. The interesting
• 31:23
  Speaker 1: thing is Google took a run at that space with
• 31:25
  Speaker 1: the home Max a couple of years ago, but they
• 31:28
  Speaker 1: discontinued that. Apple took a run at it with home Pod,
• 31:31
  Speaker 1: and um they recently discontinued that. Um, there's there's not
• 31:37
  Speaker 1: a lot of people playing in that space. Bows has
• 31:39
  Speaker 1: a couple of products in that space. UM, but you
• 31:42
  Speaker 1: know five dominates uh really in that space. And I'd
• 31:45
  Speaker 1: say the other interesting thing Bob on that is we've
• 31:48
  Speaker 1: also seen over time, you know, where five would have
• 31:51
  Speaker 1: been maybe the speaker in the living room. I think
• 31:54
  Speaker 1: what we've done with arc and beam are soundbars have
• 31:58
  Speaker 1: actually kind of changed that a little it where maybe
• 32:01
  Speaker 1: instead what you're going to do is have an art
• 32:03
  Speaker 1: or have a play bar that or a beam now
• 32:06
  Speaker 1: under your TV. And now because you can use that
• 32:09
  Speaker 1: as your SONO speaker, do you really need to add
• 32:12
  Speaker 1: another speaker into the room. Um? Is it interesting question?
• 32:15
  Speaker 1: And so I do think we're seeing a little bit
• 32:17
  Speaker 1: of that and that convergence um to some degree, because
• 32:20
  Speaker 1: why not play your music on a beam or arc?
• 32:23
  Speaker 1: It sounds fantastic. Your product mix, how does it breakdown
• 32:33
  Speaker 1: in terms of sales? How much is television, how much
• 32:35
  Speaker 1: is audio, etcetera. Yeah, we we don't break it out.
• 32:38
  Speaker 1: I mean it's pretty even um across the board. But um,
• 32:42
  Speaker 1: you know we also don't forget like amp and port
• 32:44
  Speaker 1: as well, and those are those products which power in
• 32:47
  Speaker 1: ceiling in well speakers, UM, other company speakers as well
• 32:52
  Speaker 1: home theater systems, and so we've got a really good
• 32:55
  Speaker 1: mix across uh, you know, really are three now four
• 32:59
  Speaker 1: with portables, aduct lines and um, you know so and
• 33:04
  Speaker 1: and it's it's for us, it's about the system, right
• 33:08
  Speaker 1: and people you know, people have a mix and match
• 33:10
  Speaker 1: of all of those different products as well. And that's
• 33:12
  Speaker 1: kind of what we're always thinking about, is how do
• 33:14
  Speaker 1: we help customers with what they need next as they
• 33:17
  Speaker 1: think about sound in the home. And that's why we
• 33:18
  Speaker 1: got into home theater, so why we got into portables
• 33:21
  Speaker 1: after as well as good people saw that need. Uh,
• 33:24
  Speaker 1: And so we're always thinking about, Okay, what other categories
• 33:27
  Speaker 1: do we want to get into? Okay, in terms of
• 33:30
  Speaker 1: the traditional audio companies, is that really a completely different
• 33:35
  Speaker 1: vertical at five hundred and it's a completely different customer
• 33:39
  Speaker 1: or is there a competition? What's going on there? You know?
• 33:41
  Speaker 1: I really think for traditional audio companies, many have tried
• 33:45
  Speaker 1: to bring out Sono's killers over the years, and I
• 33:48
  Speaker 1: think the biggest miss at the end of the day
• 33:50
  Speaker 1: is on the software side. And we started, uh, you know,
• 33:53
  Speaker 1: with a team and software and hardware. UM. I've often
• 33:57
  Speaker 1: said that, um, you know, boring Mark Andresen's turn. I
• 34:00
  Speaker 1: think I see son No says software eats audio because
• 34:03
  Speaker 1: it is the difference. It is where we're born from,
• 34:06
  Speaker 1: and we've married the two, and I just don't. I
• 34:08
  Speaker 1: haven't seen any traditional audio company, you know, really get
• 34:11
  Speaker 1: serious about the software investment to create the kind of
• 34:15
  Speaker 1: experience that we do at Sonos. And so that's why
• 34:18
  Speaker 1: I think we could were the leader in home audio
• 34:21
  Speaker 1: UM and why we've been so successful. Now, does someone
• 34:24
  Speaker 1: go into a store and say, hmm, there's a Keef speaker,
• 34:28
  Speaker 1: here's the son speaker I'm comparing or is it really
• 34:32
  Speaker 1: two different customers? Yeah, I think there's UM. I think
• 34:36
  Speaker 1: there are some people that would be looking for a
• 34:38
  Speaker 1: speaker um, if you will, in those situations, and that's
• 34:41
  Speaker 1: where uh, maybe they're getting help from a blue shirt
• 34:44
  Speaker 1: of s buy and kind of navigating through the different
• 34:46
  Speaker 1: trade offs, if you will. But I also think that
• 34:49
  Speaker 1: there are people that are going to look, let's say,
• 34:51
  Speaker 1: like above, you know, a thousand dollars and above that
• 34:53
  Speaker 1: are very serious into audio UM that you know, maybe
• 34:57
  Speaker 1: would use and purport to power at the products that
• 35:00
  Speaker 1: they purchased, but they'll be looking at speakers from other
• 35:04
  Speaker 1: companies you know potentially there, but I you know that
• 35:08
  Speaker 1: that's not a huge market from what we see today.
• 35:10
  Speaker 1: What percentage of the marketplace do you have in television
• 35:15
  Speaker 1: Beames and subs UM, we're the leader in the you
• 35:20
  Speaker 1: know that we we play primarily in uh seven countries today,
• 35:24
  Speaker 1: you know, so in Western Europe and then North America
• 35:26
  Speaker 1: plus Australia. UM, and we're the leader by dollar share.
• 35:31
  Speaker 1: So when you add up the dollars of ARC and
• 35:33
  Speaker 1: you know Beam together where the leader, UM, we take
• 35:36
  Speaker 1: the revenue of the leadership position and revenue share UM.
• 35:40
  Speaker 1: But overall I haven't looked at it on the category recently.
• 35:43
  Speaker 1: Overall in home audio, we are about nine percent of
• 35:47
  Speaker 1: the annual spend in premium audio today. And who else
• 35:52
  Speaker 1: is in that neighborhood? Uh, you know Bowes would be
• 35:57
  Speaker 1: you know there, UM, J yell a bit because there's
• 36:00
  Speaker 1: some Bluetooth in there. Um, the Samsung with some of
• 36:05
  Speaker 1: their sound bars that they sell with TVs Panasonic a
• 36:09
  Speaker 1: little bit over in Asia and Europe, and then it
• 36:12
  Speaker 1: kind of goes into Europe a little bit. So there's
• 36:15
  Speaker 1: really no one dominant player. Now, explain to my audience
• 36:20
  Speaker 1: why the technology for sons is superior to competitors. It
• 36:25
  Speaker 1: gets back to the software that we've built. So we
• 36:28
  Speaker 1: from the beginning connected the system to the cloud UM.
• 36:32
  Speaker 1: So there's really a few different layers. So there's the
• 36:34
  Speaker 1: connection of the cloud, where we connect you to all
• 36:37
  Speaker 1: the services that are out there, whichever music services that
• 36:40
  Speaker 1: you want to use. UM. We also created obviously the
• 36:44
  Speaker 1: app UM that allows you to control that, and then
• 36:47
  Speaker 1: we created all the software that runs on the products
• 36:49
  Speaker 1: that ties into your WiFi network. And it's the marriage
• 36:52
  Speaker 1: of all of those things. And we took a very
• 36:54
  Speaker 1: complicated situation which you could have put together yourself, like
• 36:57
  Speaker 1: you could do certain things and bring certain l mints
• 37:00
  Speaker 1: together by buying a certain set of speakers, setting up
• 37:03
  Speaker 1: WiFi writer in a certain way, trying to tie into
• 37:06
  Speaker 1: different services, or maybe using proprietary protocols. But we really
• 37:10
  Speaker 1: sweat the details to bring it all together and just
• 37:13
  Speaker 1: make it easy, Bob, so that when you set it up,
• 37:16
  Speaker 1: you can be easily listening to whatever streaming music it
• 37:19
  Speaker 1: is or your music library. And that that is fundamentally
• 37:23
  Speaker 1: different than the way anybody else has really approached the space.
• 37:26
  Speaker 1: And then there's been a number of companies that have
• 37:28
  Speaker 1: come in seeing what we've done, started to copy what
• 37:31
  Speaker 1: we do obviously, and in some of those cases we've
• 37:34
  Speaker 1: had to um enforced the fact that they've copied what
• 37:37
  Speaker 1: we've done. But that is the key at the end
• 37:39
  Speaker 1: of the day, is is sweating the details of creating
• 37:41
  Speaker 1: that experience in the system so that you can add
• 37:43
  Speaker 1: these products on um over time and just make it
• 37:46
  Speaker 1: really easy for customers. So there's a lot of complexity
• 37:48
  Speaker 1: under the covers that we try to abstract from the customer,
• 37:52
  Speaker 1: and that's the secret to success. Actually in any part
• 37:55
  Speaker 1: of the consumer electronics. I would say Bluetooth was a
• 37:58
  Speaker 1: technology that I had a long ramp before it was
• 38:01
  Speaker 1: adopted by the public, and now things have really moved
• 38:05
  Speaker 1: in that direction. A lot of people have no idea
• 38:07
  Speaker 1: that Bluetooth is inherently the president standard, inherently not great audio.
• 38:14
  Speaker 1: So in your particular case, originally Sonos created its own
• 38:19
  Speaker 1: separate wireless network in the home, Hey, how does it
• 38:25
  Speaker 1: do it? Now? Still the same way? And can anybody
• 38:30
  Speaker 1: else equal the sound? There's no equal when it comes
• 38:34
  Speaker 1: to combining the wireless the way that we've created Sonos Net.
• 38:40
  Speaker 1: The wireless network that you talked about which you still
• 38:42
  Speaker 1: get if you use our boost products. So you can
• 38:44
  Speaker 1: still create Sonos net in your home, and some homes,
• 38:46
  Speaker 1: bigger homes actually require that. There's also UM you know
• 38:50
  Speaker 1: straight I P. So if you plug one speaker in
• 38:52
  Speaker 1: you don't have those products, you can actually run on
• 38:55
  Speaker 1: the WiFi network. Today. We still do the work to
• 38:57
  Speaker 1: make sure that that is reliable and the quality, the
• 39:01
  Speaker 1: quality of the sound coming out of the speaker obviously
• 39:06
  Speaker 1: is related to the WiFi network and everything in that.
• 39:09
  Speaker 1: So we we work to make sure that's a really
• 39:11
  Speaker 1: good UM and reliable connection. And I think you'll find
• 39:15
  Speaker 1: that even though we're not perfect, the reliability UM and
• 39:20
  Speaker 1: the consistency of the wireless connection delivers an ongoing quality
• 39:25
  Speaker 1: experience that still UM leads the way you know M
• 39:29
  Speaker 1: versus anybody else out there today. Okay, when you first
• 39:33
  Speaker 1: introduce your products, certainly the play products, you know, they
• 39:39
  Speaker 1: were moderately priced, but when Saunos entered the TV sphere,
• 39:44
  Speaker 1: these were premium products. A sub it essentially eight hundred
• 39:47
  Speaker 1: dollars you know a soundbar and the same price. You know, yamah,
• 39:52
  Speaker 1: there are some companies that's still manufactures something in excess
• 39:55
  Speaker 1: of a thousand dollars for either part of that component.
• 39:59
  Speaker 1: But all day long, most people know a flat screen
• 40:02
  Speaker 1: today comes with inferior speakers, So everyone buys a sound bar.
• 40:06
  Speaker 1: Based on my casual observation, incredible number of people buying
• 40:09
  Speaker 1: something in the hundred and fifty to two hundred dollar range. Okay,
• 40:13
  Speaker 1: are you leaving money on the table? Well, and just apply,
• 40:17
  Speaker 1: you know, appealing to a premium customer. Would so nos
• 40:20
  Speaker 1: ever make it less expensive product? You know, I think
• 40:24
  Speaker 1: the um you know, if you look at what we've
• 40:27
  Speaker 1: done on the speaker side, right, we've and we came
• 40:30
  Speaker 1: in with play five back in the day. We started
• 40:33
  Speaker 1: at the it was actually four hundred when it first
• 40:35
  Speaker 1: came out price point, you know, and then we brought
• 40:37
  Speaker 1: out a three and a one. Uh. We started with
• 40:40
  Speaker 1: playbar in home theater when we came out. We've replaced
• 40:43
  Speaker 1: that with Arc because Delbian, Host and a number of
• 40:45
  Speaker 1: other things felt we felt really compelled to create the
• 40:48
  Speaker 1: top end experience there. But we did bring out a
• 40:51
  Speaker 1: more moderate product in beam Um. So I certainly think
• 40:54
  Speaker 1: there's a lot of opportunity there. Um. We're always watching
• 40:58
  Speaker 1: and trying to figure out, Okay, what's the thing to
• 41:00
  Speaker 1: do and where's the right balance in this. I feel
• 41:02
  Speaker 1: like we get a lot of people that were looking
• 41:04
  Speaker 1: at you know, two hundred two fifty two fifty dollar
• 41:08
  Speaker 1: products to step up a little bit to beam um
• 41:10
  Speaker 1: being at three ninety nine right now, and so um
• 41:14
  Speaker 1: it's something we're always looking at. Bob is like where
• 41:16
  Speaker 1: you know, where does the price experience you know fit
• 41:19
  Speaker 1: and where's the market um in terms of what's there
• 41:22
  Speaker 1: and so um stay tuned in terms of the you know,
• 41:25
  Speaker 1: the next products you'll see from us. Okay, let's talk
• 41:27
  Speaker 1: about you. Originally you grew up in Canada where I
• 41:31
  Speaker 1: was born in Waterloo, Okay, outside of Toronto. And what
• 41:36
  Speaker 1: was your experience growing up? Were you a tech nerd?
• 41:39
  Speaker 1: Were you into electronics? I was so uh in second grade,
• 41:44
  Speaker 1: second grade, third grade? It was second or third grade. Uh.
• 41:47
  Speaker 1: My elementary school was fortunate enough to get a Commodore
• 41:52
  Speaker 1: pet computer. Uh. And I was lucky enough, I think
• 41:55
  Speaker 1: because my math grades were good and there was some
• 41:57
  Speaker 1: qualifying thing. There were four of us that got to
• 41:59
  Speaker 1: actually use it and created a math program. Was my
• 42:03
  Speaker 1: first programming assignment. And then I distinctly remember as well
• 42:08
  Speaker 1: creating a rocket shooting rocket that would go up the
• 42:11
  Speaker 1: screen back with the displays that were just green and
• 42:14
  Speaker 1: off green. UH. And I thought it was the most
• 42:16
  Speaker 1: amazing thing ever. And so I was smitten by that. UM.
• 42:21
  Speaker 1: You know, I grew up in a home we're making.
• 42:24
  Speaker 1: The purchase for a computer was a big big deal.
• 42:27
  Speaker 1: But my parents did it when I was in the
• 42:29
  Speaker 1: fifth or sixth grade. UH ran my own bulletin board system.
• 42:33
  Speaker 1: UM as well back in the days with the slow modems.
• 42:37
  Speaker 1: Did a hockey like I've basically a fantasy hockey UH
• 42:40
  Speaker 1: set up before it became a thing UM, and it
• 42:44
  Speaker 1: was a bit of a nightmare. I had to go
• 42:45
  Speaker 1: input scores like from the paper into that and keep
• 42:48
  Speaker 1: a scoreboard and it was ended up being a lot
• 42:50
  Speaker 1: more work that I thought it was going to be.
• 42:52
  Speaker 1: But UM was I guess on the early edges of
• 42:55
  Speaker 1: UM what was the precursor to the internet. UM. And
• 43:00
  Speaker 1: so that was pretty formative for me. I'd say there's
• 43:03
  Speaker 1: two formative things that I often look at. One was
• 43:05
  Speaker 1: the technology, and I was very interested in computers and
• 43:08
  Speaker 1: tech and where all of that was going. And then
• 43:10
  Speaker 1: the other thing for me was team sports. So I
• 43:11
  Speaker 1: played every team sport there was growing up and just
• 43:16
  Speaker 1: I feel today that's like a huge part of what
• 43:20
  Speaker 1: I put into practice every single day at work is
• 43:23
  Speaker 1: everything I learned from team sports and personalities and how
• 43:26
  Speaker 1: to manage different personalities, um to try and you know,
• 43:29
  Speaker 1: get us to a victory if you will, or just
• 43:32
  Speaker 1: to get people to work together. Um. So I think
• 43:34
  Speaker 1: those are the two kind of most formative things, uh
• 43:37
  Speaker 1: in my life. Okay, And what is your college experience?
• 43:41
  Speaker 1: I went to college I'm sure you've never heard of,
• 43:44
  Speaker 1: called Western in London, Ontario, and I took business there. Okay,
• 43:48
  Speaker 1: so you graduate from college, what's your first job? Yeah, so, um,
• 43:52
  Speaker 1: I've done an internship. I needed the money to finish
• 43:54
  Speaker 1: my last year at university, so I did an internship
• 43:58
  Speaker 1: at IBM in Toronto, works on the think pad, so
• 44:02
  Speaker 1: the very first laptop team that was there, and it
• 44:05
  Speaker 1: was incredible, had incredible experience. I thought I would probably
• 44:08
  Speaker 1: go back um to IBM and worked there for five
• 44:12
  Speaker 1: years and then start my own company. But I saw
• 44:15
  Speaker 1: an opportunity with this company called rim back in Waterloo
• 44:19
  Speaker 1: where I was born, and they had this They had
• 44:23
  Speaker 1: this idea of this mobile product, a pager kind of thing.
• 44:28
  Speaker 1: At that point, and I saw connecting to wireless networks
• 44:31
  Speaker 1: and I thought, huh, like, I've really seen with the
• 44:33
  Speaker 1: laptop the future of mobile computing. And we started to
• 44:37
  Speaker 1: put wireless uh we started put wireless modems into the laptops,
• 44:41
  Speaker 1: and I thought, this is the future. This is gonna
• 44:42
  Speaker 1: be huge, big part of it. But this idea that
• 44:46
  Speaker 1: this company uh in Waterloo of at that point hured
• 44:49
  Speaker 1: and fifty people had, I thought was really interesting and
• 44:53
  Speaker 1: it was massive. So this product at this this time
• 44:55
  Speaker 1: was this huge called the Hamburger product. And you flipped
• 44:59
  Speaker 1: it up and you saw like two lines basically at
• 45:02
  Speaker 1: that point of the screen and had these bubble keyboard keypads.
• 45:05
  Speaker 1: You still tried to hold it like this, but it
• 45:07
  Speaker 1: was something else. And I thought, huh, this is pretty
• 45:11
  Speaker 1: interesting because I've seen that mobile computing angle. This is
• 45:14
  Speaker 1: wireless coming into it, um and so uh, this is interesting.
• 45:19
  Speaker 1: And I went and met Mike and Jim, the two
• 45:21
  Speaker 1: co c e o's uh down there, and I was like, wow,
• 45:25
  Speaker 1: this is uh something something special it's happening here. I
• 45:29
  Speaker 1: just got that feeling. Um. I think my mom thought
• 45:32
  Speaker 1: I was crazy. All of my classmates thought it was crazy.
• 45:35
  Speaker 1: Most of them were going off to you know, big
• 45:37
  Speaker 1: established companies, to investment banks, to those kind of things. Um.
• 45:41
  Speaker 1: And my dad who worked at the the hydro electric
• 45:44
  Speaker 1: company in the province. We were in Ontario for thirty
• 45:47
  Speaker 1: one years. UM, he was my biggest supporter and saying
• 45:51
  Speaker 1: go for it, like you know, this may not work
• 45:53
  Speaker 1: out or whatever the case is. There You've got this
• 45:55
  Speaker 1: gut feel on this company and the people there. And
• 45:58
  Speaker 1: I was really, um just felt go out to be
• 46:00
  Speaker 1: part of it. Um, And so I jumped to join
• 46:03
  Speaker 1: this company called rim Um that nobody had heard of,
• 46:06
  Speaker 1: and uh we brought out. So it was after it
• 46:09
  Speaker 1: was about a year after I joined. Year what year
• 46:12
  Speaker 1: was that I joined? Ninety eight? And so really you early, yeah,
• 46:16
  Speaker 1: really early, hundred fifty people and you do you get stock? Yes?
• 46:20
  Speaker 1: I did? Did you ride it up and write it down? Well?
• 46:25
  Speaker 1: So I wrote it. My friend told a very funny
• 46:28
  Speaker 1: story at our wedding, you know, when our stock was
• 46:31
  Speaker 1: up to you know, we went public at five what
• 46:33
  Speaker 1: our stock was up to about fifteen? Um, you know
• 46:36
  Speaker 1: he called me and I was like, it's getting kind
• 46:37
  Speaker 1: of high. You know. It turns of where it ended
• 46:39
  Speaker 1: up running up Bob to like a hundred eighty two
• 46:41
  Speaker 1: hundred dollars. It turns where it was. UM. But you know,
• 46:45
  Speaker 1: like so I I I did you know again better
• 46:48
  Speaker 1: than I ever expected. UM. I feel very fortunate in
• 46:51
  Speaker 1: terms of what's there. But I certainly didn't get out
• 46:53
  Speaker 1: on top, that's for sure. So you live and learn
• 46:56
  Speaker 1: through that stuff. Did you make enough money at RIM
• 46:59
  Speaker 1: that the aically you wouldn't need a job again? No? No, okay,
• 47:03
  Speaker 1: it wasn't that fortunate. Go back to and what you're
• 47:07
  Speaker 1: doing there. So when I joined UM, I was our
• 47:10
  Speaker 1: first product manager UM. There were a couple of people
• 47:14
  Speaker 1: that they had brought in UM at a senior level
• 47:16
  Speaker 1: VP level, and I was starting to sell the precursor
• 47:21
  Speaker 1: to BlackBerry, pitching it, trying to get the story down
• 47:24
  Speaker 1: with the precursor to what's a T and T wireless today? UM,
• 47:29
  Speaker 1: it was Bell South wireless date at the time, this
• 47:31
  Speaker 1: is a this is a long time ago now, as
• 47:33
  Speaker 1: I tell it, UM and tried to we were really trying.
• 47:36
  Speaker 1: They had this will show you the difference, right. So,
• 47:39
  Speaker 1: what we started to believe at RIM was we needed
• 47:42
  Speaker 1: to tie it to email systems, and specifically to Microsoft's
• 47:46
  Speaker 1: email system because it was you know, that was the
• 47:48
  Speaker 1: future and there's going to be a lot more email users.
• 47:51
  Speaker 1: UM Bell South precursor to a T and T at
• 47:54
  Speaker 1: that point, was like, no, paging is the future, and
• 47:55
  Speaker 1: it's all about paging and you guys, you know, we
• 47:57
  Speaker 1: need to be able to do uh. They had this
• 48:00
  Speaker 1: future which was text to voice for instance, and so
• 48:02
  Speaker 1: it would call you and it would sound like Freddy
• 48:05
  Speaker 1: Krueger was calling you. Was just like there was some
• 48:07
  Speaker 1: it was fun, but it was it was not, you know,
• 48:09
  Speaker 1: something that you could see really taking off, and so
• 48:12
  Speaker 1: they wanted to go down that path to give us
• 48:14
  Speaker 1: a big contract to do that. I helped them in
• 48:16
  Speaker 1: terms of trying to market and sell UM and understand
• 48:19
  Speaker 1: the products and train up their sales team. And then
• 48:22
  Speaker 1: but in the background, you know, we were doing our
• 48:24
  Speaker 1: own thing, and so we made it. We we took
• 48:26
  Speaker 1: a huge chance for a startup in purchasing airtime from
• 48:30
  Speaker 1: Bell South in the United States and Rogers in Canada
• 48:33
  Speaker 1: so that we could put together a package and say,
• 48:35
  Speaker 1: for at that point thirty nine dollars a month, you
• 48:38
  Speaker 1: can get the hardware and the service that allows you
• 48:42
  Speaker 1: to connect to your work email right and receive it
• 48:45
  Speaker 1: on this product, UM, and so that was like that
• 48:48
  Speaker 1: was the bet and that was the BlackBerry, which came
• 48:50
  Speaker 1: out like a year after I had started. And what
• 48:52
  Speaker 1: I started doing BOB during that period, as I said,
• 48:55
  Speaker 1: it was, I was just it was crazy, like I
• 48:58
  Speaker 1: was so young. UM didn't know what I was doing
• 49:00
  Speaker 1: at all. But they gave me the chance to start
• 49:03
  Speaker 1: working with the banks and brokerage is UH in New
• 49:07
  Speaker 1: York City in particularly, kind of got in there with
• 49:09
  Speaker 1: UM some of the people that we were selling with,
• 49:13
  Speaker 1: and I started to seed all of the senior people
• 49:16
  Speaker 1: there with blackberries. So I gave them succeeding give giving
• 49:18
  Speaker 1: them basically blackberries to start using. And I would give
• 49:22
  Speaker 1: one to uh, you know, like an influential executive, but
• 49:26
  Speaker 1: I also give one to their administrator, their secretary, if
• 49:29
  Speaker 1: you will, And so they could communicate back and forth
• 49:32
  Speaker 1: and they absolutely loved it. And then the secretaries would say, oh,
• 49:36
  Speaker 1: you need to get you know, you need to give
• 49:37
  Speaker 1: this one one and need to give this one one
• 49:39
  Speaker 1: and like and all of a sudden, we created this
• 49:41
  Speaker 1: ground swell at all the banks of brokerages in New
• 49:43
  Speaker 1: York City of having to have a BlackBerry and UH.
• 49:48
  Speaker 1: It was absolutely incredible to see the kind of viral
• 49:51
  Speaker 1: nature um of that as well, and so uh it
• 49:55
  Speaker 1: was incredible. I did our first, um big corporate deal.
• 49:59
  Speaker 1: So our first big one was with mary lynch uh
• 50:02
  Speaker 1: for and it was for a thousand blackberries, which now
• 50:05
  Speaker 1: sounds like so small in the grand scheme of things,
• 50:07
  Speaker 1: but it was so massive for us as a company.
• 50:09
  Speaker 1: Our stock price went up like on the day we
• 50:12
  Speaker 1: announced that deal, even though I mean financial materiality, it
• 50:15
  Speaker 1: wasn't that material um, but it was such an exciting
• 50:18
  Speaker 1: time in terms of, you know, just watching the technology
• 50:23
  Speaker 1: really take off and people being so excited to use
• 50:26
  Speaker 1: at people being so passionate about it. Um. I just
• 50:29
  Speaker 1: feel so fortunate to you know, have played a role
• 50:34
  Speaker 1: in two different you know, technology companies that have built
• 50:38
  Speaker 1: products that people actually absolutely loved and you know use
• 50:41
  Speaker 1: religiously and have raved about the needless say, there was
• 50:44
  Speaker 1: an evolution at BlackBerry, and seemingly from the street it
• 50:49
  Speaker 1: appeared that the Palm Trio was ahead of BlackBerry with
• 50:53
  Speaker 1: a phone. How did we ultimately get a phone in
• 50:55
  Speaker 1: our Blackberries? Yeah? I think the technolog as you start
• 51:00
  Speaker 1: to evolve in that way, and it made sense and
• 51:02
  Speaker 1: the wireless network. So it was the next generational wireless
• 51:04
  Speaker 1: networks Bob, that was super important to that. Right. We
• 51:06
  Speaker 1: were writing on a data only network early on UH,
• 51:10
  Speaker 1: and then as we got to the two point five
• 51:12
  Speaker 1: G networks UM, we were able to actually put voice
• 51:16
  Speaker 1: into there, and at that point is just another app
• 51:18
  Speaker 1: that you can put in there. Another radio became pretty
• 51:20
  Speaker 1: easy to do that UM. And I think people miss
• 51:24
  Speaker 1: the fact that we integrated it all very well. We
• 51:27
  Speaker 1: tied into the back end of people's Microsoft Exchange or
• 51:31
  Speaker 1: I think at that point Lotus notes in terms of
• 51:33
  Speaker 1: the email services they were using companies like Palm and
• 51:36
  Speaker 1: other companies. They didn't do the software work often on
• 51:39
  Speaker 1: the back end to tie into those systems and think
• 51:42
  Speaker 1: about the encryption and do all of that. And so
• 51:44
  Speaker 1: in a way, it's not dissimilar to sons where you
• 51:46
  Speaker 1: would find that you know here at Sonos, you look
• 51:49
  Speaker 1: at some of those traditional audio companies, they don't have
• 51:51
  Speaker 1: the software that ties it into what's important to day
• 51:54
  Speaker 1: to customers. Some of those hardware companies that were there
• 51:58
  Speaker 1: earlier than us, like a Poem for instance, didn't do
• 52:00
  Speaker 1: the work and didn't have the expertise to tie it
• 52:02
  Speaker 1: into what mattered to users at that particular point in time. UM.
• 52:07
  Speaker 1: And so you know, we were able to um out
• 52:10
  Speaker 1: went over them. We were able. We were told we
• 52:12
  Speaker 1: could never be successful. And I think this is part
• 52:14
  Speaker 1: particularly of you know, being small town in Canada as well.
• 52:18
  Speaker 1: People thought we were crazy that we were going to
• 52:19
  Speaker 1: take on you know, Motorola and Glennair and these other
• 52:23
  Speaker 1: paging companies in the early days. And then as we
• 52:25
  Speaker 1: started incorporate phone, they said there's no way you could
• 52:27
  Speaker 1: take on Motorola, Nokia, Sony Erics and some of those
• 52:30
  Speaker 1: companies at that point. Um. But we did, and you know,
• 52:34
  Speaker 1: obviously became very successful. What was the feeling inside the
• 52:37
  Speaker 1: building when the iPhone launched two thousand seven, Yeah, so
• 52:42
  Speaker 1: there was UM. I think that I think the public
• 52:46
  Speaker 1: and there's a great book that I contributed to called
• 52:49
  Speaker 1: Losing the Signal by um Sean Silkoff and Jackie McNish
• 52:53
  Speaker 1: that goes through you know, all of this and and
• 52:55
  Speaker 1: I think it's probably the best you know, history of
• 52:58
  Speaker 1: BlackBerry lesson, if you will. But there was a perception
• 53:02
  Speaker 1: that we you know, we were arrogant about it or
• 53:05
  Speaker 1: not concerned about it. But we absolutely were so we
• 53:07
  Speaker 1: saw it for what it was in terms of a
• 53:09
  Speaker 1: threat and some of those things, and saw the innovation
• 53:11
  Speaker 1: that was there. Um. Yeah, I think it's fair to
• 53:14
  Speaker 1: say that we were all Apple fans, and many of
• 53:16
  Speaker 1: us were Apple users as well. You know, at that
• 53:18
  Speaker 1: point in terms of looking at it, um they you know,
• 53:22
  Speaker 1: we one of the one of the biggest mistakes and
• 53:25
  Speaker 1: one of the things I try to counsel others on
• 53:27
  Speaker 1: and even you know, I think we've put into action.
• 53:30
  Speaker 1: Here was one of the steps that we took, which
• 53:32
  Speaker 1: was Verizon came to us. You'll recall that the first
• 53:35
  Speaker 1: iPhone UM was an a T and T exclusive and
• 53:38
  Speaker 1: a T and T and Apple had worked on that.
• 53:39
  Speaker 1: So Verizon came to us and said, hey, we need
• 53:42
  Speaker 1: a response, and you know, like let's do something together
• 53:45
  Speaker 1: to do that. And yeah, they waved a big check
• 53:47
  Speaker 1: in terms of building a product called the Storm, and
• 53:50
  Speaker 1: you know, we went and we created our first touch
• 53:52
  Speaker 1: screen product. We didn't build on our strengths. Instead, we
• 53:55
  Speaker 1: were responding to what Apple had done and we brought
• 53:59
  Speaker 1: a Storm and pretty much overnight when we brought that
• 54:02
  Speaker 1: product out, Um, we threw away. You know, at that point,
• 54:06
  Speaker 1: twelve years of hard work in building the brand and reliability,
• 54:10
  Speaker 1: and people could count on their BlackBerry UM as a response,
• 54:13
  Speaker 1: you know, and and you know, in the interests of UM,
• 54:16
  Speaker 1: you know, really trying, I would say at that point
• 54:18
  Speaker 1: the financials right and the money that was there. So
• 54:21
  Speaker 1: to me, that wasn't the right response. UM. It would
• 54:24
  Speaker 1: have been like us responding at Sonos to Google and
• 54:27
  Speaker 1: Amazon launching pucks by launching our own twenty nine dollar puck.
• 54:30
  Speaker 1: That's not what we do, that's not where our strengths lie.
• 54:33
  Speaker 1: But that's what we did. And that was you know,
• 54:35
  Speaker 1: that was that was to me one of those things
• 54:38
  Speaker 1: that sent us down the wrong path at RIM. But
• 54:40
  Speaker 1: we were concerned about the iPhone, UM impressed by you
• 54:44
  Speaker 1: know what they've been able to UM, you know, to
• 54:46
  Speaker 1: pull off UM. You may recall that too, is about
• 54:50
  Speaker 1: two to three years post iPhone, BlackBerry continue to grow
• 54:53
  Speaker 1: like crazy, right, And so there was also through their
• 54:56
  Speaker 1: some period I would say from some people of denial
• 54:58
  Speaker 1: and of like, oh, the touch screen will never catch on, right,
• 55:01
  Speaker 1: So there was some of that in the organization, but
• 55:03
  Speaker 1: I think much more was like no, no, the touch
• 55:05
  Speaker 1: screens makes sense and it will happen over time. Um,
• 55:09
  Speaker 1: but we uh we obviously um, you know, didn't make
• 55:13
  Speaker 1: our pivot and the way we needed to um and UM.
• 55:17
  Speaker 1: The rest is history. One of the two owners were
• 55:19
  Speaker 1: the two founders of your company, went on and said, well,
• 55:23
  Speaker 1: Blackberries had a very thin data profile and they dismissed
• 55:28
  Speaker 1: the iPhone saying, you know, they're gonna hog so much
• 55:31
  Speaker 1: data it will never play out. Now, factually that happened,
• 55:35
  Speaker 1: but ultimately shifted people to WiFi and then uh networks
• 55:41
  Speaker 1: became more robust. Was there you know, any wake up
• 55:45
  Speaker 1: during that transition period? Not not really that that was
• 55:49
  Speaker 1: one thing so you hit on it, and that was
• 55:52
  Speaker 1: Mike Lazaridi's who is the father of BlackBerry. And you know,
• 55:56
  Speaker 1: one of the things that Mike was so good at
• 55:58
  Speaker 1: was understanding physics and understanding the fact that really in
• 56:02
  Speaker 1: the early days that airtime we bought from Bell South
• 56:05
  Speaker 1: and Rogers, nobody was using that for anything. They didn't
• 56:07
  Speaker 1: think it could be used for anything. So we got
• 56:09
  Speaker 1: it cheap, um. And but it was nationwide and Mike
• 56:12
  Speaker 1: had realized, hey, we could actually do an email service
• 56:16
  Speaker 1: over this narrow band wireless network. And so you know
• 56:21
  Speaker 1: that that was a strength in that situation. But then
• 56:23
  Speaker 1: when it came to three G and saying, hey, there's
• 56:26
  Speaker 1: gonna be video, there's gonna be radio streaming all of
• 56:29
  Speaker 1: the things that we're seeing today. You know, we're now
• 56:31
  Speaker 1: five g um. You know, Mike almost couldn't get it,
• 56:35
  Speaker 1: you know, couldn't get there in terms of this is
• 56:37
  Speaker 1: going to work from a physics perspective and what it
• 56:39
  Speaker 1: would mean to battery life and a bunch of the
• 56:40
  Speaker 1: trade offs that people would have and the displays and
• 56:43
  Speaker 1: those kind of things. And so we spent time trying
• 56:46
  Speaker 1: to convince or Mike did in particular, trying to convince
• 56:48
  Speaker 1: um any T and T for instance, like that that
• 56:51
  Speaker 1: three G wasn't the future and instead we should focus
• 56:53
  Speaker 1: on to an f G. And like, here's why in
• 56:55
  Speaker 1: the late the physics case, which after the CEO of
• 56:58
  Speaker 1: A T and T has spent twenty billion dollars in
• 57:00
  Speaker 1: Spectrum doesn't really want to hear because they need to
• 57:02
  Speaker 1: make that work. They've they've just met their career on
• 57:05
  Speaker 1: making three G work. What they want to hear is,
• 57:08
  Speaker 1: here's the three G phone you know you could sell
• 57:10
  Speaker 1: in your network. And so even though you know Mike
• 57:12
  Speaker 1: had like great physics argument. The business reality of what
• 57:17
  Speaker 1: a needed at that time was completely different, and so,
• 57:19
  Speaker 1: um so we missed it. How long did you ride
• 57:23
  Speaker 1: the wave at BlackBerry? When were you done? Um? So?
• 57:29
  Speaker 1: How long did it? Was? Fourteen years? I wrote it,
• 57:31
  Speaker 1: And I mean, you know, if you would have cut me,
• 57:32
  Speaker 1: I would have led BlackBerry. Um. I started our business
• 57:36
  Speaker 1: in Asia Pacific. Um So, I started our offices there
• 57:39
  Speaker 1: and through those countries and built the team there. Came
• 57:42
  Speaker 1: back I lead our our relationships with all the carriers
• 57:46
  Speaker 1: and our sales teams in North America and then eventually
• 57:49
  Speaker 1: going went over to Europe, Middle East, Africa, ran that
• 57:51
  Speaker 1: out of England, and then I ran our global sales
• 57:54
  Speaker 1: and marketing team. And so I mean I was I
• 57:58
  Speaker 1: was in um you know, and I grew up with
• 58:01
  Speaker 1: Jim and Mike right uh and and everybody there, and
• 58:03
  Speaker 1: I knew most of the people there and so and
• 58:05
  Speaker 1: as a Canadian, I was incredibly proud right of what
• 58:08
  Speaker 1: we had built. But um it got to a point
• 58:11
  Speaker 1: where it was the It was early twelve where Jim
• 58:15
  Speaker 1: and Mike handed um the reins to a new CEO
• 58:19
  Speaker 1: who was one of my colleagues to to that point,
• 58:21
  Speaker 1: and we just disagreed on what needed to happen at
• 58:24
  Speaker 1: the company at that particular point in time. And I
• 58:28
  Speaker 1: think that to me was like a moment where, um,
• 58:32
  Speaker 1: where I just said, okay, like, if I'm not aligned
• 58:34
  Speaker 1: to where we're going and what we're trying to do,
• 58:36
  Speaker 1: I think it's probably time for a change. Um. And ironically,
• 58:39
  Speaker 1: like you know, and the world works in mysterious ways. Um,
• 58:44
  Speaker 1: I got a call from John McFarland, the founder of
• 58:46
  Speaker 1: Sons at that time, and we had Sons in our
• 58:48
  Speaker 1: house in England, and Bob I must have sold you know,
• 58:51
  Speaker 1: dozens and dozens of other people on so nos to
• 58:55
  Speaker 1: that point. And when I when I had set it
• 58:57
  Speaker 1: up in our house in England, I had I had
• 58:59
  Speaker 1: said to myself, Wow, that was so easy. And it
• 59:02
  Speaker 1: reminds me so much of the magic of BlackBerry in
• 59:04
  Speaker 1: the early days, and so um, you know. So, so
• 59:08
  Speaker 1: John had reached out and even when I was at BlackBerry,
• 59:12
  Speaker 1: Steve Jobs through an executive recruiter, like they had their
• 59:14
  Speaker 1: own executive recruiting team, had reached out and said I
• 59:16
  Speaker 1: want to talk to you about iPhone sales whatever. And
• 59:18
  Speaker 1: I said no, I said no, I'm you know, loyal
• 59:21
  Speaker 1: to BlackBerry into rim and you know, this company and
• 59:24
  Speaker 1: those kind of things. So I wouldn't talk. But you know,
• 59:26
  Speaker 1: and part of it is probably being naive and just
• 59:28
  Speaker 1: having grown up inside the company. But I wouldn't talk
• 59:30
  Speaker 1: to people and John, you know, but John called John
• 59:33
  Speaker 1: was It was different with John because I also just
• 59:35
  Speaker 1: wanted to talk to a founder who had built something
• 59:38
  Speaker 1: special that I used and loved and was selling to
• 59:41
  Speaker 1: other people. So I agreed to talk to John, and
• 59:45
  Speaker 1: um we were on vacation um in France, was with
• 59:49
  Speaker 1: my family, and I said, Okay, this is gonna be
• 59:52
  Speaker 1: you know, an hour That ended up being two hours.
• 59:54
  Speaker 1: The next day, we we flew back to Lendon that
• 59:57
  Speaker 1: night and the next day I spent another two three
• 59:59
  Speaker 1: hour talking to John. And we were just so aligned
• 1:00:03
  Speaker 1: on because he had a company prior that had really
• 1:00:07
  Speaker 1: you know, risen and done to some amazing things and
• 1:00:10
  Speaker 1: then didn't have a good end. And you know, I
• 1:00:13
  Speaker 1: obviously at BlackBerry we were having challenging times, and I
• 1:00:15
  Speaker 1: think he and I were both so aligned on building
• 1:00:19
  Speaker 1: a company for the long term and not you know,
• 1:00:22
  Speaker 1: cutting the corners, not doing the kind of things that
• 1:00:25
  Speaker 1: we had seen sometimes that um, you know, I think,
• 1:00:28
  Speaker 1: uh it was kind of the downfall, right and some
• 1:00:30
  Speaker 1: of those things. And so I was just uh, I
• 1:00:34
  Speaker 1: was super interested, um in terms of the conversation, and
• 1:00:37
  Speaker 1: it was happening right at the time that I was
• 1:00:39
  Speaker 1: having a disagreement on strategy with the new CEO at
• 1:00:42
  Speaker 1: m Okay, what was the pitch? Was the pitch come
• 1:00:45
  Speaker 1: in at this level and you have a potential of
• 1:00:48
  Speaker 1: being CEO. That's exactly it. It was, you know, come
• 1:00:51
  Speaker 1: come in, you know, joined the team now, um and uh,
• 1:00:56
  Speaker 1: you know me be my right hand person and have
• 1:00:58
  Speaker 1: a chance. You know, John was very clear, if I
• 1:01:00
  Speaker 1: don't see myself as CEO forever UM in this and
• 1:01:03
  Speaker 1: so you know, come and join the group. And we
• 1:01:06
  Speaker 1: sat we sat together in the same office, you know,
• 1:01:10
  Speaker 1: for the first was that like probably two three years.
• 1:01:13
  Speaker 1: Then we actually moved offices, but um, so we sat
• 1:01:16
  Speaker 1: in the same office and spent so much time together
• 1:01:19
  Speaker 1: going through it and just you know, really the debating, um,
• 1:01:24
  Speaker 1: trying to figure out, you know, where to go, how
• 1:01:26
  Speaker 1: to maneuver everything going on in the industry, and how
• 1:01:29
  Speaker 1: to build a company the right way and putting the
• 1:01:31
  Speaker 1: effort into culture and the effort into the people and
• 1:01:33
  Speaker 1: the recruiting and some of those things, which UM, yeah,
• 1:01:36
  Speaker 1: I learned so much from John, and I think he
• 1:01:38
  Speaker 1: learned so much from he's just a sponge from other
• 1:01:41
  Speaker 1: people and other founders, but as well from what he
• 1:01:43
  Speaker 1: went through in UM software dot com and everything they
• 1:01:46
  Speaker 1: did the first time around UM that we had a
• 1:01:49
  Speaker 1: really really tight relationship and a really shared view of
• 1:01:53
  Speaker 1: trying to build something that would outlast both of us.
• 1:02:02
  Speaker 1: So how did the decision to make the handoff transpire?
• 1:02:06
  Speaker 1: And when it transpired did John disconnect? Where did you
• 1:02:10
  Speaker 1: continue to give input? Does he still give input these days?
• 1:02:13
  Speaker 1: So this is this is the incredible thing, you know. UM.
• 1:02:16
  Speaker 1: So John's wife, Patty UM, you know, came down with
• 1:02:20
  Speaker 1: cancer UM and so he obviously was you know that
• 1:02:24
  Speaker 1: that was a big focus for him. And she's fine,
• 1:02:27
  Speaker 1: UM today she's battled that thankfully. And so that was
• 1:02:31
  Speaker 1: you know, distracting a little bit. But I'll tell you
• 1:02:33
  Speaker 1: the number one thing was UM that I had seen
• 1:02:37
  Speaker 1: and I had rung the bell around voice and said, John,
• 1:02:41
  Speaker 1: like this voice thing, there's something to this and we
• 1:02:43
  Speaker 1: need to be on top of voice and be figuring out,
• 1:02:45
  Speaker 1: you know, how voice interacts with our speakers and what
• 1:02:48
  Speaker 1: the strategy is here, and John was like, Nope, not
• 1:02:51
  Speaker 1: gonna happen, not gonna happen. And you know, so eventually
• 1:02:53
  Speaker 1: I had the conversation with him of like, now you know,
• 1:02:56
  Speaker 1: now you're you're kind of like some of the people
• 1:02:58
  Speaker 1: at RIM of like the it said no, no, the
• 1:03:00
  Speaker 1: iPhone isn't going to be a big threat, right, you know,
• 1:03:02
  Speaker 1: and and some of that, and I said, like, you know,
• 1:03:04
  Speaker 1: we need to be thinking about how this plays out.
• 1:03:06
  Speaker 1: And so to John, that was one of the most
• 1:03:07
  Speaker 1: important things. To John, one of the most important things
• 1:03:10
  Speaker 1: that anybody could have is a sense of where things
• 1:03:13
  Speaker 1: are going and what the future looks like. And do
• 1:03:15
  Speaker 1: you see that? And he said, you see it better
• 1:03:16
  Speaker 1: than I do. And so I think now is the time, um,
• 1:03:19
  Speaker 1: to hand the reins to you. And Bob. This is
• 1:03:22
  Speaker 1: the most incredible thing and the most important thing, and
• 1:03:24
  Speaker 1: probably the most unique thing is that I said to John,
• 1:03:27
  Speaker 1: stay stay on the board. You know, you own a
• 1:03:29
  Speaker 1: big chunk of the company. Stay on the board, um,
• 1:03:32
  Speaker 1: you know, and why you'd be part of it because
• 1:03:34
  Speaker 1: I think it will be a shock to the organization
• 1:03:35
  Speaker 1: for you to just step away. And he said, Patrick
• 1:03:38
  Speaker 1: he said, if I'm going to hand the reins to you,
• 1:03:40
  Speaker 1: I'm going to hand the reins to you. I've seen
• 1:03:42
  Speaker 1: this go badly so many times, and there's going to
• 1:03:44
  Speaker 1: be things that you want to change that I will
• 1:03:46
  Speaker 1: disagree with, and like it'll just be bad for both
• 1:03:49
  Speaker 1: of us, uh in going through this. And John literally
• 1:03:52
  Speaker 1: stepped away, Bob, like he just he left one day
• 1:03:56
  Speaker 1: and if anybody would contact him, he'd say, talk to Patrick.
• 1:03:59
  Speaker 1: And at the same time time you know today, you know,
• 1:04:02
  Speaker 1: more than four years later, like four and a half
• 1:04:03
  Speaker 1: years later. If I called him right now because I
• 1:04:06
  Speaker 1: needed something, I needed his advice or help or something
• 1:04:08
  Speaker 1: like that, he would answer like that, um, and he
• 1:04:09
  Speaker 1: would be willing to help me. Um. And I mean
• 1:04:12
  Speaker 1: it is just having talked to a lot of people
• 1:04:14
  Speaker 1: that have gone through these kind of transitions, it was
• 1:04:17
  Speaker 1: the most incredible gift that um, you know, he could
• 1:04:20
  Speaker 1: give me to set really me, but all of sons
• 1:04:23
  Speaker 1: up for success because we didn't need to change some things,
• 1:04:25
  Speaker 1: and we did need to move on certain things and
• 1:04:27
  Speaker 1: do things differently. And he was so right because you know, Um,
• 1:04:31
  Speaker 1: we made the transition in January and at the February
• 1:04:34
  Speaker 1: board meeting. There are a bunch of things I was
• 1:04:36
  Speaker 1: doing that I know would have been a huge debate
• 1:04:39
  Speaker 1: between John and I. Uh so, uh, he was absolutely right,
• 1:04:43
  Speaker 1: and I can't you know, I can't thank him enough
• 1:04:46
  Speaker 1: for like making that decision and making the transition the
• 1:04:50
  Speaker 1: right way. You know. The perception was that SOS was
• 1:04:54
  Speaker 1: behind on voice and it might be the death of
• 1:04:57
  Speaker 1: the company, that you were late to market. How did
• 1:05:00
  Speaker 1: you catch up there? Yeah? So, um, this was you
• 1:05:05
  Speaker 1: know from my rim experience. Like one of the things
• 1:05:08
  Speaker 1: again that I don't think that I think too many
• 1:05:10
  Speaker 1: companies do is respond in some way. So there was
• 1:05:13
  Speaker 1: a faction of people that would say, we need to
• 1:05:15
  Speaker 1: go do our own voice system, we need to make
• 1:05:17
  Speaker 1: our own Alexa Google assistant. I said, no, like that
• 1:05:20
  Speaker 1: is not Amazon has ten thousand people Alexa. We are
• 1:05:25
  Speaker 1: a at that point company, Like this is not gonna work.
• 1:05:30
  Speaker 1: And so, you know, so I said, we need to
• 1:05:33
  Speaker 1: co opt what these companies are doing and they have
• 1:05:35
  Speaker 1: a strategy around why they're doing these things. Let's go
• 1:05:38
  Speaker 1: talk to Amazon, let's go talk to Google, and we
• 1:05:41
  Speaker 1: can just like with streaming services, we can be Switzerland
• 1:05:45
  Speaker 1: in this and we can offer all of the voice
• 1:05:47
  Speaker 1: services that are out there, there'll be more. You know,
• 1:05:49
  Speaker 1: It's not gonna be one that's going to satisfy everybody,
• 1:05:52
  Speaker 1: So how do we go and do that? And kudos
• 1:05:54
  Speaker 1: to our product team that very quickly came up with
• 1:05:57
  Speaker 1: a way to basically retrofit and figure out how to
• 1:06:00
  Speaker 1: put voice on microphones in a son nos Play one right,
• 1:06:03
  Speaker 1: which we rebranded as one and got out very quickly,
• 1:06:06
  Speaker 1: so that Bob was like a twelve to sixteen months
• 1:06:09
  Speaker 1: development cycle, which was our fastest on record. Nobody thought
• 1:06:12
  Speaker 1: was possible. Um our team did an incredible job to
• 1:06:15
  Speaker 1: do that. It meant a lot of hard engineering work
• 1:06:17
  Speaker 1: both on our side and Amazons to actually make it work,
• 1:06:20
  Speaker 1: but it wasn't you know. I think it's really important
• 1:06:23
  Speaker 1: that we looked at it in a way of partnering
• 1:06:25
  Speaker 1: with these companies as opposed to building our own and
• 1:06:28
  Speaker 1: trying to you know, outdo Amazon or Google, um at
• 1:06:32
  Speaker 1: something like that. And so that was that was the strategy.
• 1:06:35
  Speaker 1: It's kind of taking the momentum of those services and
• 1:06:38
  Speaker 1: bringing them into the Sons ecosystem. Okay, perception from the
• 1:06:42
  Speaker 1: outside was that you were essentially the first licensee when
• 1:06:46
  Speaker 1: you approach these two companies, Amazon and Google, were they
• 1:06:49
  Speaker 1: willing to license their technology and what was their perception
• 1:06:53
  Speaker 1: and status? Yeah, thankfully we um. Dave Limp at Amazon
• 1:06:57
  Speaker 1: absolutely fantastic in terms of thinking about this and his
• 1:07:01
  Speaker 1: his respect for Sonos, and I think Bob at Google
• 1:07:04
  Speaker 1: to like so many of the people that were involved
• 1:07:06
  Speaker 1: in the executives all had and loved son Nos and
• 1:07:08
  Speaker 1: saw the fit. And so I think we were in
• 1:07:11
  Speaker 1: a unique position. We've been working with these companies before
• 1:07:14
  Speaker 1: on music services, you know, cloud, a variety of different things,
• 1:07:18
  Speaker 1: and so we had good relationships with the companies and
• 1:07:21
  Speaker 1: they you know, my my impression was their goal was
• 1:07:26
  Speaker 1: to get their voice services out in as many products
• 1:07:30
  Speaker 1: as possible, as many places as possible, and and that
• 1:07:34
  Speaker 1: was right, like, that's what they wanted to do, and
• 1:07:36
  Speaker 1: so um, we just gave them a path to be
• 1:07:39
  Speaker 1: able to do that. And having you know, some of
• 1:07:41
  Speaker 1: the most important and affluent homes out there, Um, it
• 1:07:44
  Speaker 1: seemed like a golden opportunity. And so it worked. Okay,
• 1:07:48
  Speaker 1: let's talk about the lawsuits. Tell me the thinking and
• 1:07:52
  Speaker 1: play out what happened. So um, you know, we we
• 1:07:58
  Speaker 1: obviously have nineteen years at this point of hard work, blood,
• 1:08:02
  Speaker 1: sweat and tears that people have poured into building the
• 1:08:06
  Speaker 1: experience that you see today on so noes inventing a
• 1:08:10
  Speaker 1: whole bunch of things that we've patented, and and again
• 1:08:12
  Speaker 1: that's a that's a lesson. John and I both had
• 1:08:15
  Speaker 1: equally learned from our first go round. Right So at
• 1:08:17
  Speaker 1: RIM you I'm not sure if you'll remember, but there
• 1:08:20
  Speaker 1: was a massive lawsuit where basically twenty three lawyers in
• 1:08:25
  Speaker 1: Chicago had a patent and sued RAM basically tried to
• 1:08:29
  Speaker 1: shut RIM down UM and it did shake us down
• 1:08:33
  Speaker 1: for six d and twelve million dollars UM. When you
• 1:08:36
  Speaker 1: know that that was a lot of money for us
• 1:08:38
  Speaker 1: UM at that particular point of time, because we hadn't
• 1:08:41
  Speaker 1: patented and hadn't like kind of ticked and tide things,
• 1:08:43
  Speaker 1: And so I never wanted to be in like that position,
• 1:08:46
  Speaker 1: even from a defensive side of it. And so early on,
• 1:08:50
  Speaker 1: you know, John had made the decision to start patenting,
• 1:08:53
  Speaker 1: and I was a huge advocate of that. So we
• 1:08:54
  Speaker 1: were patenting all of the inventions that we had because
• 1:08:57
  Speaker 1: we knew this was going to be a big category
• 1:08:59
  Speaker 1: someday and we would get giants jumping into it. And
• 1:09:02
  Speaker 1: so UM you know, and so one of the things
• 1:09:06
  Speaker 1: that transpired was we tried with Google to be able
• 1:09:10
  Speaker 1: to say, hey, look like you are you are copying
• 1:09:13
  Speaker 1: what we do, like you can see it, you can
• 1:09:15
  Speaker 1: see it and experience the marketing all of these things.
• 1:09:18
  Speaker 1: We put our patents out there, Bob. That was the
• 1:09:19
  Speaker 1: other thing that we did. It was around the same
• 1:09:21
  Speaker 1: time Tesla. Did I think we were like maybe two
• 1:09:24
  Speaker 1: or three months ahead, is just putting our patents out
• 1:09:26
  Speaker 1: on our website saying here's where they are. You know,
• 1:09:29
  Speaker 1: innovation is fine, but don't copy um what we're doing.
• 1:09:32
  Speaker 1: And so we're just making people aware. And so it
• 1:09:35
  Speaker 1: got to a point with Google where I didn't feel
• 1:09:37
  Speaker 1: like they were taking it seriously, that they were infringing
• 1:09:40
  Speaker 1: on our intellectual property. And so UM we decided that
• 1:09:43
  Speaker 1: we needed to take the next step, which UM, I think,
• 1:09:48
  Speaker 1: which you know, we're actually now close. It's been a
• 1:09:51
  Speaker 1: it was what January of last year, August thirteen, will
• 1:09:54
  Speaker 1: actually hear from the I T C on this UM
• 1:09:56
  Speaker 1: is are they infringing you know the patents that UM
• 1:09:59
  Speaker 1: we had there and did they copy what we invented?
• 1:10:02
  Speaker 1: And I felt it was important. I felt it was
• 1:10:04
  Speaker 1: important for all of the people at Sonos that have
• 1:10:06
  Speaker 1: put um all that work into the products and inventing
• 1:10:09
  Speaker 1: these things. I thought it was important for standing up
• 1:10:12
  Speaker 1: for smaller companies, you know, in the face of what
• 1:10:15
  Speaker 1: has been called efficient infringement, where these big tech companies
• 1:10:18
  Speaker 1: just copy what smaller companies do and drive them out
• 1:10:20
  Speaker 1: of business. UM. And we were in the position where
• 1:10:23
  Speaker 1: we could afford to do it from you know, we
• 1:10:25
  Speaker 1: had the dollars because we've gone public, and you know,
• 1:10:27
  Speaker 1: we had a strong intellectual property, you know, portfolio, and
• 1:10:30
  Speaker 1: so I felt a duty in that way to our people.
• 1:10:32
  Speaker 1: But as well to this notion that you've got to
• 1:10:35
  Speaker 1: stand up to these big tech players and UM, you
• 1:10:39
  Speaker 1: know you're not. You can't let them trample all over
• 1:10:41
  Speaker 1: the inventions that you've made. And so um, you know,
• 1:10:45
  Speaker 1: we're full steam ahead on that. UM. I testified at
• 1:10:48
  Speaker 1: Congress as well around the antitrust and dominant platforms as well, because,
• 1:10:54
  Speaker 1: like I was saying, I've been in this the whole
• 1:10:56
  Speaker 1: technology space for twenty three years, and I remember the
• 1:10:59
  Speaker 1: days of Microsoft and Intel and the dominance that they had.
• 1:11:03
  Speaker 1: Microsoft and Qualcom actually created a company called Wireless Knowledge
• 1:11:06
  Speaker 1: to basically destroy rim and UM. But it was very
• 1:11:10
  Speaker 1: different at that point, Like, you know, it wasn't something
• 1:11:13
  Speaker 1: where they were willing to undercut price and you know
• 1:11:16
  Speaker 1: sell you know, give things away, right to to basically
• 1:11:20
  Speaker 1: undermine other companies and those kind of things. And so
• 1:11:23
  Speaker 1: it was important to me to testify at Congress and
• 1:11:25
  Speaker 1: share our experience with the dominant platforms and the way
• 1:11:28
  Speaker 1: that they're um, you know, using their muscle if you will,
• 1:11:31
  Speaker 1: because I think it's important for the country and for
• 1:11:34
  Speaker 1: the future of innovation and entrepreneurship that we make sure
• 1:11:39
  Speaker 1: that there's not a situation where it's you know, it's
• 1:11:41
  Speaker 1: too much power in too few hands. Okay, how much
• 1:11:44
  Speaker 1: does it cost to sue Google? Um should be available
• 1:11:49
  Speaker 1: in our public records, but it's yeah, it's tens of
• 1:11:52
  Speaker 1: millions of dollars. Okay, let's just say hypothetically you lose
• 1:11:58
  Speaker 1: and they can continue to do with their away. Would
• 1:12:01
  Speaker 1: that affect the future of sons? No? Um. The other
• 1:12:07
  Speaker 1: thing I would say is one, just like on a
• 1:12:10
  Speaker 1: more technical note, you know, we've you can only sue
• 1:12:13
  Speaker 1: on five patents. We have a hundred and five that
• 1:12:15
  Speaker 1: they are violating. So um, there's a lot more to
• 1:12:18
  Speaker 1: go in this battle until you know where we are.
• 1:12:22
  Speaker 1: We're confident about where we are. But also the other thing,
• 1:12:24
  Speaker 1: Bob is that it wasn't and this was very important
• 1:12:27
  Speaker 1: to me, is that it's a very small group of
• 1:12:29
  Speaker 1: people that are involved in this matter. So it takes
• 1:12:31
  Speaker 1: a certain amount of my time and I try to
• 1:12:33
  Speaker 1: be disciplined about that. Eddie or chief general counsel obviously
• 1:12:36
  Speaker 1: him and a few of our inn electoral property people
• 1:12:38
  Speaker 1: very focused on it. And then outside Ferns that's why
• 1:12:40
  Speaker 1: we pay the money UH in terms of going through it.
• 1:12:42
  Speaker 1: But I also said to the company, we cannot let
• 1:12:45
  Speaker 1: this take away from us continuing to drive innovation and
• 1:12:48
  Speaker 1: bring at least two new products out every year and
• 1:12:50
  Speaker 1: drive the business and get into more homes. And so
• 1:12:53
  Speaker 1: we've successfully been able to do both UM and so
• 1:12:57
  Speaker 1: I am not by no means like would I rely
• 1:13:01
  Speaker 1: on that as the only way forward for so nos
• 1:13:04
  Speaker 1: like we have to continue to compete and win UM
• 1:13:07
  Speaker 1: and we've shown we can do that too. Okay, let's
• 1:13:09
  Speaker 1: talk about the big software issue where it came out
• 1:13:12
  Speaker 1: and it appeared to customers that you were not going
• 1:13:15
  Speaker 1: to support old products with new software, and then ultimately
• 1:13:20
  Speaker 1: to the point where like, I have a lot of
• 1:13:23
  Speaker 1: stuff on son Nos one, but for the room I
• 1:13:27
  Speaker 1: have to download Sonos two. Ye, So walk us through
• 1:13:31
  Speaker 1: all that. Yeah. So, after by that point sixteen years
• 1:13:35
  Speaker 1: of shipping products UM and then looking at what we
• 1:13:38
  Speaker 1: wanted to deliver for the new products as well, we
• 1:13:42
  Speaker 1: came to basically a point where we couldn't support the
• 1:13:46
  Speaker 1: processor and memory and the limitations that we had on
• 1:13:50
  Speaker 1: those early products three early products UM that were was
• 1:13:55
  Speaker 1: required to do things like Debbiamo's music, Debbie atmos UM
• 1:14:00
  Speaker 1: and some of the other things that we have planned
• 1:14:01
  Speaker 1: and coming that we we UM that we're using with
• 1:14:06
  Speaker 1: ARC and new five, New sub and now as well
• 1:14:10
  Speaker 1: roam and so it was hard and we had lots
• 1:14:13
  Speaker 1: of you know, we spent so much time trying to
• 1:14:15
  Speaker 1: figure out the right way to work through these kind
• 1:14:18
  Speaker 1: of things, and we thought we did the right thing
• 1:14:19
  Speaker 1: and trying to get out in front of it. We
• 1:14:20
  Speaker 1: flubbed the messaging in a in a big, big way. UM.
• 1:14:24
  Speaker 1: But we're trying to alert people of like, hey, this
• 1:14:26
  Speaker 1: is coming and give people a chance to get their
• 1:14:29
  Speaker 1: system to S two if that was the right thing. UM.
• 1:14:32
  Speaker 1: So that was tough. We you know, um, it was
• 1:14:36
  Speaker 1: a communications issue. It was a it's a technology issue,
• 1:14:39
  Speaker 1: and what a technology life cycle issue? You would say
• 1:14:42
  Speaker 1: that we have to walk people through and thankfully, um,
• 1:14:45
  Speaker 1: a lot of our customers you know, continue to stick
• 1:14:47
  Speaker 1: with us through that. But we certainly flubbed the communications
• 1:14:50
  Speaker 1: up front where we said, okay, like we almost gave
• 1:14:53
  Speaker 1: the impression. I got a lot of emails, um, people
• 1:14:55
  Speaker 1: my emails on our customer support site so people can
• 1:14:57
  Speaker 1: email me directly. And I got a lot of emails
• 1:14:59
  Speaker 1: from people who thought that meant their products for stopping,
• 1:15:02
  Speaker 1: you know, in May of last year when we communicated
• 1:15:05
  Speaker 1: it in the end of January, which is not the
• 1:15:07
  Speaker 1: case and never been a plan to be the case.
• 1:15:09
  Speaker 1: So yeah, so it's um, it's really about trying to
• 1:15:14
  Speaker 1: how you balance I guess I would say from a
• 1:15:16
  Speaker 1: you know, from a company perspective, is how do you
• 1:15:19
  Speaker 1: make sure you are inventing the future and do everything
• 1:15:23
  Speaker 1: you need to do to create great new experiences in
• 1:15:25
  Speaker 1: the future, but not you know, not stranding the customers
• 1:15:29
  Speaker 1: that have invested in the technology um of the past.
• 1:15:32
  Speaker 1: And and look, I mean the reality is there's not
• 1:15:34
  Speaker 1: many companies like ours where the products from fifteen years
• 1:15:37
  Speaker 1: ago still work. So I don't think a lot of
• 1:15:40
  Speaker 1: companies get caught up in these kind of situations. UM,
• 1:15:43
  Speaker 1: but it's something that, UM, you know, it's important to
• 1:15:46
  Speaker 1: us to make sure we're continuing to service those customers.
• 1:15:49
  Speaker 1: And so yeah, so there's some customers, it's not that
• 1:15:51
  Speaker 1: many at this point, but there are some customers that
• 1:15:53
  Speaker 1: will run in like an S the first version software
• 1:15:56
  Speaker 1: and then the second version software. But most customers have
• 1:15:59
  Speaker 1: been moving to S to the new software. Okay. And
• 1:16:04
  Speaker 1: you know this came up because unlike a phone, people
• 1:16:07
  Speaker 1: buy home audio or tievs that they expect it to last.
• 1:16:11
  Speaker 1: It's not a fungible item that you discard. So how
• 1:16:14
  Speaker 1: long do you plan to support these legacy products? Um?
• 1:16:20
  Speaker 1: You know, as long as we can. And the only
• 1:16:22
  Speaker 1: thing that trips us up is if something gets changed. Um.
• 1:16:26
  Speaker 1: You know, if a service, for instance, isn't gonna support
• 1:16:28
  Speaker 1: or it's going to change something in the architecture, um,
• 1:16:32
  Speaker 1: you know, those kind of things. So we're continuing to
• 1:16:33
  Speaker 1: support it. UM. I don't see any reason why we
• 1:16:35
  Speaker 1: can't continue to going forward. So uh, yeah, we'll support
• 1:16:39
  Speaker 1: as long as we can. And is there any trade
• 1:16:41
  Speaker 1: in trade up program for there is Yeah, so there is. Um,
• 1:16:45
  Speaker 1: there is a trade in program off for customers that
• 1:16:49
  Speaker 1: want to move to S two products. Okay, so how
• 1:16:52
  Speaker 1: long are you going to do this? Do what run? So? Nos? Oh,
• 1:16:58
  Speaker 1: as long as they'll let me. Absolutely, we have the
• 1:17:01
  Speaker 1: best team in the world. Uh, it is so much fun.
• 1:17:05
  Speaker 1: In terms of the company, I think we have so
• 1:17:08
  Speaker 1: much opportunity in front of us. We have some amazing
• 1:17:10
  Speaker 1: products on the roadmap. Um. I just feel extremely blessed
• 1:17:15
  Speaker 1: um to have the opportunity to do it. And uh yeah,
• 1:17:19
  Speaker 1: I mean as long as you know, as long as
• 1:17:21
  Speaker 1: I feel like I'm contributing and leading in the right
• 1:17:24
  Speaker 1: way too, and we're heading in the right direction, Um,
• 1:17:27
  Speaker 1: then you know I'm I'm in. So you have a
• 1:17:29
  Speaker 1: good record as a seer. Where's it all going? M hm? Where? Yeah,
• 1:17:36
  Speaker 1: it depends where it is if we're talking about Okay,
• 1:17:40
  Speaker 1: let me break it down first. In terms of Sons,
• 1:17:43
  Speaker 1: these are essentially home audio products also aligned with TV.
• 1:17:47
  Speaker 1: Do you ever invented envisioned sons broadening their landscape in
• 1:17:52
  Speaker 1: terms of their purview their products? Absolutely, Bob, I think
• 1:17:56
  Speaker 1: the I think the system we've built and that the
• 1:17:58
  Speaker 1: connectivity to the cloud in the systems that are there, Uh,
• 1:18:01
  Speaker 1: the ideas we have around future products, the opportunity and
• 1:18:05
  Speaker 1: all of audio UM, there's just so much opportunity out there.
• 1:18:09
  Speaker 1: I I do see us broadening absolutely over time. And
• 1:18:12
  Speaker 1: I've said I think we have an opportunity to play
• 1:18:14
  Speaker 1: in all the different areas of audio. So there's no
• 1:18:16
  Speaker 1: reason we can't UM over the long term. The most
• 1:18:19
  Speaker 1: important thing to me is doing it in a way
• 1:18:21
  Speaker 1: that brings something unique to the table. Right, So something
• 1:18:24
  Speaker 1: like Rome, how is that different than other Bluetooth speakers.
• 1:18:27
  Speaker 1: We've got things like sound Swap Um, there's a different
• 1:18:30
  Speaker 1: way that we've integrated the voice services, those kind of things,
• 1:18:33
  Speaker 1: and that it's kind of connected together, right, And so
• 1:18:35
  Speaker 1: each product you're getting with so no nos makes the
• 1:18:38
  Speaker 1: experience better. And this is something we watch pretty carefully,
• 1:18:40
  Speaker 1: is like our Is that true? So as people get
• 1:18:42
  Speaker 1: more and more products, how do they feel about the system,
• 1:18:44
  Speaker 1: and they feel they get even they become even bigger
• 1:18:47
  Speaker 1: advocates over time, and so I think we have a
• 1:18:50
  Speaker 1: lot of opportunity right across the whole audio spectrum over time,
• 1:18:53
  Speaker 1: and who knows where it goes from there to me.
• 1:18:56
  Speaker 1: To me, the biggest thing is are we building a company,
• 1:18:58
  Speaker 1: you know, in a team that's adaptable, uh, you know,
• 1:19:02
  Speaker 1: and building something that fundamentally is going to be enduring
• 1:19:04
  Speaker 1: over the long term. Let's talk about the room. When
• 1:19:07
  Speaker 1: what the room is a very small unit and you
• 1:19:10
  Speaker 1: set it up and turned on, you were literally shocked
• 1:19:13
  Speaker 1: by the quality of the audio and most portable stuff
• 1:19:18
  Speaker 1: is adequate ad best? Okay, what was the thinking and developing?
• 1:19:24
  Speaker 1: And also but the price. A lot of the reviews
• 1:19:26
  Speaker 1: will say the price is significant, you know, and they're
• 1:19:29
  Speaker 1: how hard to sell is it? Is this a portable item?
• 1:19:32
  Speaker 1: Is there people buying on sound quality? They're just buying
• 1:19:34
  Speaker 1: on price point they you know, for us, anytime we're
• 1:19:40
  Speaker 1: gonna do something has to have that different experience. So
• 1:19:42
  Speaker 1: it is different in this sound um, the build quality,
• 1:19:46
  Speaker 1: the functionality as well that we have and it's hard
• 1:19:49
  Speaker 1: to make it sound that good in that form factor.
• 1:19:51
  Speaker 1: But uh, you know, Giles, Chris and the team do
• 1:19:53
  Speaker 1: an incredible job at doing that. And I hope that
• 1:19:56
  Speaker 1: every product we have, as people turn it on and
• 1:19:59
  Speaker 1: listen to it, um, they'll be surprised by the sound
• 1:20:02
  Speaker 1: that comes out of it. Whether it's Ark or whether
• 1:20:04
  Speaker 1: it's Rome. Uh So there's a lot of debate. To Bob,
• 1:20:07
  Speaker 1: you may remember, you know, Bluetooth was a sacred cow.
• 1:20:11
  Speaker 1: It's us for a long time, long time, and so
• 1:20:13
  Speaker 1: putting Bluetooth in a product and being able to do
• 1:20:15
  Speaker 1: that and still live up to our quality standards was
• 1:20:18
  Speaker 1: a big deal. UM. So we worked through that and
• 1:20:21
  Speaker 1: figured out how we could do it and how we
• 1:20:22
  Speaker 1: could do it better, um, which we're proud of. And
• 1:20:26
  Speaker 1: I don't get too caught up. Like from a price perspective,
• 1:20:29
  Speaker 1: it's very it's a very good deal for what you get,
• 1:20:32
  Speaker 1: and we feel good about that. And there's some people
• 1:20:34
  Speaker 1: that will want, you know, that twenty nine dollar product
• 1:20:37
  Speaker 1: um from Google or Amazon, and maybe that's sufficient for
• 1:20:40
  Speaker 1: what they need. But um, as you probably can tell
• 1:20:43
  Speaker 1: from how long it takes to get one these days. UM,
• 1:20:45
  Speaker 1: there's a lot of people that are very, very happy
• 1:20:49
  Speaker 1: with Rome, and it kind of arrived. You know, we
• 1:20:53
  Speaker 1: did do some last year at this time. We did
• 1:20:55
  Speaker 1: do a little bit of tuning of our roadmap and
• 1:20:57
  Speaker 1: moving things around, and so Rome was one of those
• 1:20:59
  Speaker 1: things is that we tried to accelerate. UM and I
• 1:21:02
  Speaker 1: think it's arrived at a really good time as the
• 1:21:04
  Speaker 1: world starts to reopen. Okay, let's talk about audio. Used
• 1:21:11
  Speaker 1: to buy a stereo, Now people buy television audio, okay,
• 1:21:16
  Speaker 1: and audio is ubiquitous in general. Where is the audio
• 1:21:21
  Speaker 1: landscape going? Do you mean from a format perspective or
• 1:21:25
  Speaker 1: how do you think about it? I mean everything? You know,
• 1:21:27
  Speaker 1: if we look at streaming services, the story today is lossless,
• 1:21:32
  Speaker 1: and then even Dolby atmost and then there's another issue,
• 1:21:36
  Speaker 1: the highest standard of Amazon and Apple services won't play
• 1:21:41
  Speaker 1: on so go on. So so I think we we
• 1:21:46
  Speaker 1: start with the customer and what do they what do
• 1:21:48
  Speaker 1: they value? Right? We've not been that company that tries
• 1:21:51
  Speaker 1: to put every logo or new standard on the box,
• 1:21:54
  Speaker 1: if you will. Um, you see companies like that, and
• 1:21:56
  Speaker 1: you see their boxes with just like the gobbling gup
• 1:21:58
  Speaker 1: of every logo andvery new standard, and so you know,
• 1:22:02
  Speaker 1: sometimes we've been accused of being a little slow on
• 1:22:04
  Speaker 1: that front and looking at it, but we're thoughtful about
• 1:22:06
  Speaker 1: what's happening in each space. And so even going back
• 1:22:08
  Speaker 1: with soundbars, you know where Dolby was really the precursor
• 1:22:13
  Speaker 1: to atmost was really taking off from streaming services, and
• 1:22:16
  Speaker 1: we said, that's where we're going to focus as opposed
• 1:22:17
  Speaker 1: to delivering DTS right because DTS was very much about
• 1:22:21
  Speaker 1: the old school blue rays right that would have that technology,
• 1:22:24
  Speaker 1: and so UM, we try to stay focused on what
• 1:22:27
  Speaker 1: customers are doing. We we obviously support Dolmie Atmost with
• 1:22:30
  Speaker 1: our arc product, and there's a lot of people that
• 1:22:33
  Speaker 1: would tell you that the best way to listen to
• 1:22:35
  Speaker 1: Delby Atmost out loud with one product would be arc Um.
• 1:22:40
  Speaker 1: So we're watching, you know, carefully, pretty interested around what's
• 1:22:44
  Speaker 1: happening with Dolbie Atmost music. You know, with lossless, the
• 1:22:49
  Speaker 1: reality is, from what we've seen, is that a lot
• 1:22:51
  Speaker 1: of customers just can't tell the difference or don't you know,
• 1:22:54
  Speaker 1: aren't that into it in terms of what's there. And
• 1:22:56
  Speaker 1: so the real question with Delbie Altmost music will be
• 1:23:00
  Speaker 1: is it what people want at the end of the
• 1:23:01
  Speaker 1: day and is it filling some need that they they
• 1:23:05
  Speaker 1: are feeling they're missing today. I definitely see it and
• 1:23:07
  Speaker 1: enjoy it when we're watching um, you know, watching streaming
• 1:23:12
  Speaker 1: Netflix or videos or whatever the case may be. And
• 1:23:15
  Speaker 1: there's a real place for that and I think the
• 1:23:18
  Speaker 1: you know, I think we're starting to see it certainly
• 1:23:19
  Speaker 1: seems like the industry is getting behind Delobie atmost music
• 1:23:22
  Speaker 1: in a way that is going to make it um
• 1:23:25
  Speaker 1: the next standard. But at this point, a lot of
• 1:23:28
  Speaker 1: it's the industry talking to itself, and I want to
• 1:23:29
  Speaker 1: see what consumers do. Okay, So depending on how you
• 1:23:34
  Speaker 1: call it, they call him the thing stocks or the
• 1:23:36
  Speaker 1: big five. You know, we have Facebook, Apple, Microsoft, etcetera.
• 1:23:43
  Speaker 1: You intersect with these companies, Hey, do you ultimately believe
• 1:23:47
  Speaker 1: since you went to Washington there will be effective government
• 1:23:51
  Speaker 1: relations or in also government uh changes here? And you
• 1:23:56
  Speaker 1: also believe that the sphere is more abu or can
• 1:24:01
  Speaker 1: an interloper come up in triumph? Uh? The So I
• 1:24:07
  Speaker 1: do believe that the government is going to take action.
• 1:24:09
  Speaker 1: I think it's the probably the only bipartisan issue we
• 1:24:12
  Speaker 1: see right now that's out there. And both sides, for
• 1:24:15
  Speaker 1: for different reasons, are seeing the what the results are of,
• 1:24:20
  Speaker 1: you know, having too much power into few hands fundamentally,
• 1:24:23
  Speaker 1: and so I do expect to see more. Lena Khan
• 1:24:25
  Speaker 1: being you know, chairperson of the FTC is a big move,
• 1:24:28
  Speaker 1: and you know, I think that it's a whole new era.
• 1:24:30
  Speaker 1: Tim Wu at the White House, So you're getting people
• 1:24:33
  Speaker 1: that have been talking and writing about these things for
• 1:24:35
  Speaker 1: a long time into positions of power to actually affect change.
• 1:24:39
  Speaker 1: And I think it'll be good for society, quite frankly.
• 1:24:42
  Speaker 1: And there's a lot of people that talk about the
• 1:24:44
  Speaker 1: fact that even maybe some of these companies spinning out
• 1:24:47
  Speaker 1: certain businesses may actually be better for everybody involved, right,
• 1:24:49
  Speaker 1: and maybe foster more innovation. There's always the danger of
• 1:24:53
  Speaker 1: like regulatory capture and um situations where the rules are
• 1:24:58
  Speaker 1: put in favor of the incumbents it and they can
• 1:25:00
  Speaker 1: actually solidify their positions. So we have just have to
• 1:25:03
  Speaker 1: make sure that you know, that doesn't come to pass.
• 1:25:05
  Speaker 1: But um, I'm encouraged by what I'm seeing, uh, fundamentally
• 1:25:08
  Speaker 1: on that front. And then also on the flip side, Bob,
• 1:25:11
  Speaker 1: you know, like we're continuing to innovate, We're continuing to
• 1:25:13
  Speaker 1: do everything that we can right and that you know,
• 1:25:15
  Speaker 1: as I said, that's super critical to us being successful
• 1:25:18
  Speaker 1: in the future. Um, certainly I hope that there'll be
• 1:25:21
  Speaker 1: other companies that challenge the ones that are out there today.
• 1:25:24
  Speaker 1: I think, you know, again, it's it's a short period
• 1:25:28
  Speaker 1: of time, a grand scheme of things. But I've been
• 1:25:29
  Speaker 1: in technology for twenty three years. I will tell you
• 1:25:32
  Speaker 1: the dominant position and the way that the companies that
• 1:25:35
  Speaker 1: are there today act and how quickly they move to
• 1:25:39
  Speaker 1: jump into any new potential threat is unprecedented. Right. So
• 1:25:45
  Speaker 1: last year, you know, Google basically doing everything they could
• 1:25:48
  Speaker 1: to jump in front of Zoom, right with the video
• 1:25:50
  Speaker 1: solutions or another great example we saw last year, you know,
• 1:25:53
  Speaker 1: Google Photos went from being free to starting to charge
• 1:25:57
  Speaker 1: after they've driven all the photo products that you have
• 1:25:59
  Speaker 1: to pay for out of the market, right, And so
• 1:26:01
  Speaker 1: they went and did that, and those are those are
• 1:26:03
  Speaker 1: things that um, we didn't see as much in the past.
• 1:26:06
  Speaker 1: And so those kind of things I worry about in
• 1:26:09
  Speaker 1: terms of driving you know, the up and comers out
• 1:26:13
  Speaker 1: of the market. That so there's something there. But I also,
• 1:26:16
  Speaker 1: you know, fundamentally believe that there will be some sort
• 1:26:19
  Speaker 1: of change in the system. Is it Ai, is it blockchain?
• 1:26:23
  Speaker 1: Is it you know, something we don't even see today
• 1:26:25
  Speaker 1: that also helps hopefully you know, another company or a
• 1:26:29
  Speaker 1: new set of companies emerge. Well, Patrick, I think we've
• 1:26:33
  Speaker 1: covered it. We've come to the end of the feeling
• 1:26:35
  Speaker 1: we've known. I think we have a great overview of
• 1:26:37
  Speaker 1: Sons and its place in the market. Thanks so much
• 1:26:41
  Speaker 1: for taking the time. Thanks Bob, I've enjoyed it until
• 1:26:44
  Speaker 1: next time. This is Bob left set