Tuesday, June 07, 2016


Yesterday, I attended the annual shareholders meeting of Skullcandy Inc., an audio design and manufacturing firm located in the bustling area of Park City, Utah. The receptionist at the front desk told me I was the only shareholder signed up to attend, causing me to feel a bit ill-at-ease. Nevertheless, my experience began in an impressive board room overlooking The Canyons Mountain Resort. Under a layer of transparent glass on the twenty-foot long boardroom table were hundreds of welded metal Skullcandy logos at various angles. The independent auditor from Ernst & Young introduced himself as we settled into the comfortable chairs. A minute later, Hoby Darling (CEO) along with two company directors and a former employee entered the room. They all introduced themselves and shook my hand. Hoby offered to grab me a drink, but I declined his offer, as no one else seemed to have anything. He began the meeting by turning on the live conference call to all shareholders. As the only outsider shareholder present, I mentally developed a couple of questions in case the directors asked me for comments. I marked my ballot on the “Executive Compensation Plan,” and since it was the only one, Hoby personally thanked me for approving his pay after the ballot[s] was read. It felt like I had just signed off on his yearly compensation package of 1.6 Million. Hoby asked me to address the board before the meeting adjourned. My prepared question concerned the issue of excess inventory and what would be done to avoid or limit selling this excess to discount retailers. The board of directors admitted there was a problem of too much inventory coming into North America immediately after the last port workers strike, but they assured me that the problem had been mitigated since then. Hoby then asked me to move to adjourn the meeting, and the second came from the former employee.  

 After the meeting, Hoby asked an employee to give me an all-inclusive tour of the facility. He also told me to pick out whatever I wanted from the company showroom.  I thanked him and followed my tour guide through every room of the business. We began in the digital promotions and team management offices. The offices were mostly open, and the walls which did exist looked like the walls of a swimming pool with blue tile and authentic pool coping along the top. I was shown the executive offices, the workroom where carpenters build custom displays for retailers and the prototype room with busy 3-D printers producing test materials. At the digital promotions area, a few workers watched a promotional video. I recognized the video background music as Cool Ghouls, who had recently played in Boise. My brother Scott knows a few of the members.

The next stop was the product testing room. Ovens, hammers, and other impact devices were being used to physically test each product line. Following that, I was led up to the engineering offices where each product is loosely put together at workbenches complete with a variety of small tools, including soldering irons. The "Custom" room where custom speaker devices are made has a series of blue fur-lined headphones recently used on the runways during New York Fashion Week. The engineering offices also include the packaging engineering workspace where packages for each product are meticulously designed. Next, I was shown the HR and accounts office area where sales people were busy sending invoices and emailing retail sales contracts. Then we went into the audio testing room where competitors’ products are dismantled and studied. This room also has a small but significant (and according to my guide, extremely expensive) imitation human ear. A small box with a metal top and a small hole in the center picks up sound waves identical to a human ear. This tool us used to ensure the full spectrum of audible frequencies can be reproduced using Skullcandy products. All the audio testing is done in a small soundproof area which is encompassed with several feet of soundproofing material. The outside of the soundproof room is covered in sheet metal and hundreds of partially dismantled speaker "drivers". The drivers are able to adhere to the sheet metal because of the interior magnets used to produce sound. The entire wall of the sound room looked like someone's art project. I would have taken a photo, but I'm sure photography in this room was not an option. 

For the final stop, my guide led me up to the top floor which overlooked the 2002 Winter Olympic ski jumping site. This floor is used by the handful of IT employees and contains the break time amenities of every forward-looking business. They include a foosball table, a table tennis table, and a mini skateboard half pipe. My tour guide offered to let me ride the mini ramp, but I declined. Several holes were visible in the wall where skateboards had flown into the drywall. Skateboarders who are supported by Skullcandy enjoy the ramp when they stop by for meetings. Skateboarders Steve Berra from St. Louis and Sean Malto from Leavenworth, Kansas, recently stopped by and enjoyed the ramp. 

I was very impressed with the organization of this small company. All of the employees are happy to be at work. The bicycles in the employee area confirm that most of Skullcandy's employees ride bicycles to work. Many skis and snowboards are also visible throughout the office. I was told that every employee is given a season pass to Park City resort and are welcome to take a break during the day to enjoy a few runs down the mountain.  Skullcandy is gearing up to build a new headquarters about a half-mile away from its current location. From the top floor windows, my tour guide pointed to the new location. I look forward to attending another shareholders meeting at the new location soon.