WEBVTT - Patrick Spence 0:00:08.600 --> 0:00:12.360 Welcome, Welcome, Welcome back to the Plot West Steps podcast. 0:00:12.800 --> 0:00:18.439 My guest today the CEO Somost Patrick Spence publick, good day, Happy, 0:00:19.000 --> 0:00:21.759 good to be here, Bob. So a hearted COVID nine 0:00:21.760 --> 0:00:26.200 team effects so much. Well, wow, it's uh, it's sent 0:00:26.320 --> 0:00:29.080 everybody home almost overnight. Uh. And if you would have 0:00:29.160 --> 0:00:32.680 asked me, you know, back before Covid if we'd be 0:00:32.680 --> 0:00:35.040 able to run the company, uh, you know, from everybody 0:00:35.080 --> 0:00:38.199 working from home, I probably would have had a hard 0:00:38.240 --> 0:00:41.879 time believing it, quite frankly. And it was incredible because 0:00:42.479 --> 0:00:46.080 our team you know, just stepped up to really be 0:00:46.159 --> 0:00:49.479 able to keep the business going UM during that period, 0:00:49.479 --> 0:00:51.920 and in fact, we kind of threw out the playbook 0:00:51.960 --> 0:00:54.880 that we had UM and we got re oriented on 0:00:55.160 --> 0:00:57.440 a few key priorities. The first was supporting our people 0:00:57.640 --> 0:00:59.480 and making sure that they were set up for success 0:00:59.520 --> 0:01:01.760 and you know, able to balance kind of the demands 0:01:01.760 --> 0:01:04.399 of life at that point, UM. And then we got 0:01:04.400 --> 0:01:07.039 really focused on bringing the joy of Sonos to more homes. 0:01:07.160 --> 0:01:10.000 So we had a whole bunch of our retailers and 0:01:10.040 --> 0:01:14.119 distribution channels closed UM. And so what we did was say, okay, like, 0:01:14.520 --> 0:01:16.759 how can we help people through this period and maybe 0:01:16.760 --> 0:01:18.800 make life at home a little bit better. Yeah, so 0:01:18.920 --> 0:01:22.120 getting focused really um, you know at that time on 0:01:23.040 --> 0:01:24.880 Sonos at Home is what we called it. And we 0:01:24.959 --> 0:01:28.399 launched a campaign to help people you know, for their 0:01:28.400 --> 0:01:30.440 home office and how Sonos could help make their home 0:01:30.480 --> 0:01:34.160 office a little better, make streaming at home a little better, um, 0:01:34.200 --> 0:01:36.080 you know. And so so we were really trying to 0:01:36.160 --> 0:01:38.640 just um, you know, play into kind of what was 0:01:38.680 --> 0:01:40.480 happening and play our role right and kind of get 0:01:40.480 --> 0:01:42.520 back to our mission to how we get out. Well, 0:01:42.600 --> 0:01:46.560 let's slow down a little bit on a more granular level. 0:01:46.880 --> 0:01:51.360 Tell me about the office use in helping people in offices. Well, 0:01:51.760 --> 0:01:55.080 so you know, as everybody was going home, um, we 0:01:55.160 --> 0:01:58.600 felt like, you know, we could bring music into people's 0:01:58.600 --> 0:02:01.480 home offices, and so we I think it was the 0:02:01.760 --> 0:02:04.200 maybe the one at that point we were saying, hey, 0:02:04.320 --> 0:02:06.720 like think about putting a one in your home office 0:02:06.800 --> 0:02:09.639 to have some background music. And we gave some sound 0:02:09.680 --> 0:02:13.840 suggestions at that point, maybe some a s mr um 0:02:13.880 --> 0:02:16.000 you know, kind of background music that could help people 0:02:16.280 --> 0:02:18.680 kind of go through the day, um and navigate their 0:02:18.720 --> 0:02:21.320 day a little bit with some um, you know, some 0:02:21.880 --> 0:02:25.480 mood music. Uh. So it wasn't quite so stressful. Okay, 0:02:25.560 --> 0:02:28.639 so you are the band new facturer. How did you 0:02:28.680 --> 0:02:32.760 reach the people who have home offices? Well, you know, 0:02:32.840 --> 0:02:35.960 the good thing about son Nos is that we have 0:02:36.200 --> 0:02:39.359 all of our customers information from when they actually registered 0:02:39.400 --> 0:02:41.560 their system. So we reached out to all of our 0:02:41.560 --> 0:02:45.320 existing customers and then we actually so with with messages 0:02:45.360 --> 0:02:49.240 basically a tailored campaign that we created, you know, overnight 0:02:49.600 --> 0:02:52.880 as a result of Covid reaching out to them um 0:02:52.919 --> 0:02:55.200 and saying, hey, you know, think about putting a sons 0:02:55.280 --> 0:02:58.000 one in your office, um, and here's what you can 0:02:58.040 --> 0:03:00.480 listen to, and some recommendations that we had. We reached 0:03:00.480 --> 0:03:03.880 our existing customers that way, and then we actually went 0:03:03.880 --> 0:03:07.000 out and promoted the story if you also know us 0:03:07.040 --> 0:03:10.440 at home across all of the social media channels and 0:03:11.120 --> 0:03:13.480 all the digital channels out there that we largely use 0:03:13.560 --> 0:03:17.200 for a lot of our advertising efforts these days. Okay, 0:03:17.400 --> 0:03:20.640 was there a discount for pre existing users? There was, yeah, 0:03:20.639 --> 0:03:23.000 so we so in that period we gave some discounts 0:03:23.280 --> 0:03:26.440 um to people. We created a bundle for streaming for instance, 0:03:26.520 --> 0:03:28.600 during that period as well, so if people we knew 0:03:28.639 --> 0:03:30.840 people would be watching more video, so if they wanted 0:03:30.880 --> 0:03:35.080 at that point to get a playbar or a beam. Um. 0:03:35.160 --> 0:03:38.080 We put that together with surround sound system and after 0:03:38.320 --> 0:03:40.680 a discount on that to people as well. UM, so 0:03:40.720 --> 0:03:45.040 we're really pivoted to try and quickly get people, um, 0:03:45.080 --> 0:03:46.920 you know and meet their needs kind of where they 0:03:46.960 --> 0:03:48.960 were at that time and kind of the changes, the 0:03:49.040 --> 0:03:51.880 dramatic changes in the way that people were spending their 0:03:51.880 --> 0:03:54.800 time at home. So how effective was that campaign? What 0:03:54.880 --> 0:03:57.640 kind of percentage results are you're looking at, you know, 0:03:57.680 --> 0:04:00.800 like direct mail one percent is what targets want a 0:04:00.840 --> 0:04:05.080 campaign like this to existing customers, Uh, what kind of 0:04:05.120 --> 0:04:08.560 response to well, well above that? So in that quarter, 0:04:08.960 --> 0:04:12.040 Baba is the next one. You know, our director consumer 0:04:12.080 --> 0:04:15.800 sales were up year every year we had an absolutely 0:04:16.080 --> 0:04:19.720 incredible you know rise. Now, of course we had other channels, 0:04:19.720 --> 0:04:22.760 physical channels closed at that particular point in time, but 0:04:22.800 --> 0:04:25.120 we were able to kind of meet customers where they 0:04:25.320 --> 0:04:29.120 were and at that point we had all these retailers 0:04:29.160 --> 0:04:32.160 are closing, you know, the main um levels of distribretion. 0:04:32.240 --> 0:04:36.200 At that point of our sales, we're going through, um 0:04:36.400 --> 0:04:39.000 through you know, people that weren't us, weren't our stores, 0:04:39.040 --> 0:04:41.320 weren't weren't our online session weren't weren't That wasn't our 0:04:41.360 --> 0:04:46.000 online store pre pandemic, And so quickly we're like, okay, 0:04:46.360 --> 0:04:48.040 what are we gonna do? How you know, and how 0:04:48.080 --> 0:04:49.920 do we survive this period? Right? Because I think at 0:04:49.920 --> 0:04:52.240 that point everybody thought, Okay, we're going into recession. It's 0:04:52.240 --> 0:04:54.440 gonna be a very difficult period. Are people going to 0:04:54.560 --> 0:04:58.000 spend money? What are they gonna do? And um, So 0:04:58.560 --> 0:05:01.919 we we went hard in terms of directly to the 0:05:01.960 --> 0:05:04.680 customers both are existing and then new and sending them 0:05:04.720 --> 0:05:07.000 to Sons dot com. And we saw year of your 0:05:07.040 --> 0:05:09.520 growth in that period. We clawed our way back to 0:05:10.160 --> 0:05:13.440 I want to say, just short of the year before 0:05:13.520 --> 0:05:15.800 results in that period, and then we actually built on 0:05:15.839 --> 0:05:19.520 that afterwards and our business really took off. Okay, the 0:05:20.480 --> 0:05:23.159 references what that was in uh, I think that was 0:05:23.200 --> 0:05:26.680 our good the quarter last year where the pandemic um 0:05:26.720 --> 0:05:29.360 you know, really first started. So that was probably our 0:05:29.400 --> 0:05:34.400 fiscal key three of last year. When you're saying relative 0:05:34.480 --> 0:05:38.119 to what the year prior, Yeah, to the year prior. Okay, 0:05:38.120 --> 0:05:42.280 we're talking about quite quarter, correct, That's okay, let's just 0:05:42.320 --> 0:05:46.120 go back when there's not a pandemic. What percentage of 0:05:46.400 --> 0:05:51.040 equipment is sold direct by Sonos via third parties. Yeah, 0:05:50.760 --> 0:05:53.960 uh so direct was about ten percent prior to the pandemic, 0:05:56.000 --> 0:05:59.279 and what is it now? Um So through last year 0:05:59.800 --> 0:06:02.839 we reported that it was about of our total sales. 0:06:03.920 --> 0:06:06.560 Why do you think in a world that everybody is 0:06:06.600 --> 0:06:11.880 so comfortable buying on Amazon that most of your customers 0:06:11.920 --> 0:06:16.479 are buying through traditional retail channels? Um, you know, I 0:06:16.480 --> 0:06:19.240 think people if they're going to buy a TV or 0:06:19.320 --> 0:06:21.440 buy something else, you know, I think that's a time 0:06:21.520 --> 0:06:25.960 where people, um will buy through the physical channels. Right. Convenience. 0:06:25.960 --> 0:06:28.320 We've actually done some research to look at, but why 0:06:28.360 --> 0:06:30.880 did somebody who is already a Sonos customer purchase at 0:06:30.920 --> 0:06:33.520 best Buy or Costco? And in some of those situations, 0:06:33.520 --> 0:06:36.720 they just wanted to get another product today. So there's 0:06:36.760 --> 0:06:39.120 kind of like the convenience and I want it right now. 0:06:39.520 --> 0:06:41.240 I'm not even gonna wait for you know, overnight or 0:06:41.279 --> 0:06:45.039 two day shipping. But then for our um, you know, 0:06:45.080 --> 0:06:47.800 for our home theater products, there's very much the match 0:06:48.120 --> 0:06:50.320 of I'm buying a TV, how am I going to 0:06:50.360 --> 0:06:53.080 make it sound great? Right? And that's where Okay, there's 0:06:53.120 --> 0:06:55.240 these products from son Nos m whether you're s buy 0:06:55.279 --> 0:06:58.400 or costco that uh makes sense in terms of purchasing 0:06:58.839 --> 0:07:01.320 UM in tandem with a TV purchase. And so that's 0:07:01.360 --> 0:07:04.359 like a compelling a pretty compelling fact. And then the 0:07:04.360 --> 0:07:08.160 one thing that people underestimate is as well, the what 0:07:08.200 --> 0:07:11.000 we call our installed solutions channels, the dealers that install 0:07:11.480 --> 0:07:13.960 UM products in people's homes. And that's been an amazingly 0:07:14.040 --> 0:07:16.800 resilient channel. You know, it's almost it's been about nine 0:07:16.880 --> 0:07:19.400 years since I've been at Sonos, and when I first 0:07:19.400 --> 0:07:21.800 came in, I thought that would be one that would 0:07:21.840 --> 0:07:24.560 be decimated by a lot of the other channels that 0:07:24.640 --> 0:07:28.040 exist out there. But I think the UM those partners 0:07:28.040 --> 0:07:31.160 continue to show their value UM. They continue to solve 0:07:31.200 --> 0:07:33.360 customer problems and they're a big part of our business 0:07:33.400 --> 0:07:36.200 as well. And they've been amazingly resilient through the pandemic too, 0:07:36.240 --> 0:07:38.200 and so that's a big chunk of the business. So 0:07:38.480 --> 0:07:41.480 we we've got a nice distribution across a variety of 0:07:41.640 --> 0:07:44.280 the variety of the channels. And I think one of 0:07:44.320 --> 0:07:46.080 the other things, Bob, is some people may want to 0:07:46.120 --> 0:07:47.520 hear it, you know, they may want to touch it, 0:07:47.600 --> 0:07:51.440 feel it, hear it UM because because I would say 0:07:51.800 --> 0:07:53.440 we have a you know, at this point, I'm pretty 0:07:53.440 --> 0:07:55.920 surprised by the percentage willing to purchase online, you know, 0:07:56.000 --> 0:07:58.760 site unseen as well. We launched new products in the 0:07:58.800 --> 0:08:03.679 midst of the pandemic, are five sub recently Rome and 0:08:03.840 --> 0:08:06.000 you know, so all of these products people were purchasing 0:08:06.040 --> 0:08:10.120 site unseen, Sound unheard, which is pretty impressive and says 0:08:10.160 --> 0:08:13.240 a lot about the brand. Do you know if people 0:08:13.280 --> 0:08:18.880 who already own a Sonos product are disproportionately or much 0:08:18.960 --> 0:08:23.720 higher ordering online as opposed to new customers. Yes, we're 0:08:23.840 --> 0:08:26.040 we were able to tell if you're you know, if 0:08:26.080 --> 0:08:29.120 you've registered your product to an existing system that you 0:08:29.240 --> 0:08:33.040 already have, versus being a new what we call a 0:08:33.040 --> 0:08:35.360 new home um and so into a new home. And 0:08:35.360 --> 0:08:37.400 so as we see that, we can look at, okay, 0:08:37.440 --> 0:08:39.040 how are people doing it? And what we see is 0:08:39.080 --> 0:08:42.559 that existing customers are more likely to buy on Sonos 0:08:42.559 --> 0:08:45.760 dot com. They've developed a relationship with the brand, um, 0:08:45.800 --> 0:08:48.680 you know, and then they want to we announce a 0:08:48.679 --> 0:08:50.480 new product, we make it really easy for them to 0:08:50.559 --> 0:08:52.600 order on sons dot com. And so that's something that 0:08:52.679 --> 0:08:56.600 we see. Okay, let's go back to COVID. Could everybody 0:08:56.640 --> 0:09:01.280 do their job from home with a manufacturing or into business. Yeah, 0:09:01.640 --> 0:09:05.240 a great question, and it's something that UM was challenging. 0:09:05.280 --> 0:09:09.199 We ended up having UM probably at the end dozens 0:09:09.200 --> 0:09:12.120 of people in each of our Santa Barbara and Boston 0:09:12.200 --> 0:09:15.120 locations that started to come back into the office after 0:09:15.160 --> 0:09:18.160 the first wave. So immediately what happened right at the 0:09:18.160 --> 0:09:22.200 start is everybody had to UM and so uh you 0:09:22.240 --> 0:09:25.480 saw amazing like test rig setups in people's kitchens and 0:09:25.600 --> 0:09:29.200 bathrooms and basements UM in Boston and some of the 0:09:29.240 --> 0:09:31.199 pictures were it was just inspiring to see the way 0:09:31.200 --> 0:09:34.200 people were working to still launch a product. Right we 0:09:34.200 --> 0:09:35.760 were we were in the midst of trying to launch 0:09:35.840 --> 0:09:39.880 Beam five and sub and we weren't sure, Okay, are 0:09:39.920 --> 0:09:42.680 people even gonna launch products in these times? And what's 0:09:42.679 --> 0:09:44.280 going to happen as we go through this, And the 0:09:44.320 --> 0:09:48.040 team just did everything they could to keep it on track. 0:09:48.320 --> 0:09:50.760 And you know, having this test equipment at home, and 0:09:50.800 --> 0:09:53.760 then we created the conditions in our Santa Barbara and 0:09:53.760 --> 0:09:58.480 Boston offices where people could be distanced had ppe UM 0:09:58.640 --> 0:10:00.280 so that they could actually come in and start to 0:10:00.320 --> 0:10:02.080 use some of the test equipment, do some of the 0:10:02.080 --> 0:10:04.720 things that they needed to do. And so the reality 0:10:04.840 --> 0:10:08.480 is there's a number of jobs that you want, um 0:10:08.480 --> 0:10:11.680 in building these products, to be in the office for testing, 0:10:11.840 --> 0:10:14.680 for the manufacturing team in China, UM and our partners 0:10:14.720 --> 0:10:18.200 there and Malaysia. We had to you know, abide by 0:10:18.200 --> 0:10:20.400 the the local laws and that was a bit of 0:10:20.440 --> 0:10:22.800 a challenge. But at the same time, the team, you know, 0:10:22.840 --> 0:10:25.800 made it work. UM. We'd usually have people from Boston 0:10:25.800 --> 0:10:30.200 and Santa Barbara on the ground in China actually with 0:10:30.240 --> 0:10:31.760 those bills and those kind of things, but they didn't 0:10:31.800 --> 0:10:34.360 via zoom. UM. They did a via pictures and FaceTime 0:10:34.400 --> 0:10:36.000 and all the other tools that are out there, and 0:10:36.040 --> 0:10:38.199 so that we just figured it out. But it was 0:10:38.320 --> 0:10:40.719 it was hard to navigate in the early days. UM. 0:10:40.920 --> 0:10:43.360 But the power of the human spirit in it, in 0:10:43.640 --> 0:10:45.720 you know, kind of the creativity and just like figuring 0:10:45.760 --> 0:10:49.800 it out. UM, I think it's pretty incredible. And why 0:10:49.840 --> 0:10:52.600 are there two offices and what goes down in each 0:10:52.640 --> 0:10:56.640 respective offer? We actually also have one in Seattle. UM. 0:10:56.679 --> 0:10:59.440 So we started, believe it or not, in you know, 0:10:59.480 --> 0:11:02.800 to office is so simultaneously in Santa Barbara and Boston. 0:11:02.880 --> 0:11:06.040 And the thinking was trying to get the right talent right. 0:11:06.120 --> 0:11:09.360 We we are in a very uh complex kind of 0:11:09.400 --> 0:11:11.640 space in terms of marrying the worlds of hardware and 0:11:11.679 --> 0:11:15.480 software together. UM, and we knew we probably couldn't do 0:11:15.520 --> 0:11:17.200 it um and get all the talent we needed in 0:11:17.240 --> 0:11:21.920 one particular location. So we've actually started into We added 0:11:21.960 --> 0:11:24.280 Seattle to the mix about five years ago because we 0:11:24.320 --> 0:11:27.560 needed to add even more software talent into the company. 0:11:27.600 --> 0:11:30.240 And that's about two thirds of our engineering team is 0:11:30.240 --> 0:11:32.160 on the software side, and so we actually have all 0:11:32.200 --> 0:11:34.800 three offices. And I think Bob, this was a an 0:11:34.840 --> 0:11:38.520 advantage for us as we went into the pandemic because 0:11:38.559 --> 0:11:42.440 we've been working in a distributed fashion for years um, 0:11:42.520 --> 0:11:45.360 and so we already were using Zoom religiously. You know, 0:11:45.400 --> 0:11:49.319 we would have calls often where teams from all three 0:11:49.360 --> 0:11:52.760 offices are on Zoom together. UM. We were using Slack, 0:11:52.800 --> 0:11:54.600 we were using all the tools. We were on the 0:11:54.679 --> 0:11:56.680 leading edge of using a lot of the tools that 0:11:56.880 --> 0:11:59.040 some people only found for the first time when they 0:11:59.080 --> 0:12:01.520 were forced to work from home them. So that transition 0:12:02.000 --> 0:12:04.800 that probably served us well, UM in that transition. And 0:12:04.840 --> 0:12:07.480 there you know, being forced to work from home is 0:12:07.559 --> 0:12:10.120 very different than working from home and choosing to work 0:12:10.120 --> 0:12:12.240 from home but nonetheless we had the tools, we had 0:12:12.280 --> 0:12:15.120 the experience to actually make that work. UM, so we 0:12:15.200 --> 0:12:17.559 kind of know how to how to handle those situations. 0:12:18.120 --> 0:12:21.560 So if softwares in Seattle, what are the strengths in 0:12:21.600 --> 0:12:25.160 Boston and Santa Barbara? There we have we have software 0:12:25.280 --> 0:12:28.800 in all three offices. We have not we have not created, 0:12:29.040 --> 0:12:31.040 you know, an office and said this is the only 0:12:31.080 --> 0:12:33.840 place this can be. We've said, you know, talent, we 0:12:33.880 --> 0:12:37.679 need to find talent, and you can be in Seattle, UM, Boston, 0:12:37.800 --> 0:12:41.160 Santa Barbara. Uh, you know we have so, so that's 0:12:41.200 --> 0:12:43.400 kind of the way that we've approached it. And so hardware, 0:12:43.600 --> 0:12:45.720 you find a lot of hardware people in Boston because 0:12:45.760 --> 0:12:48.960 of the legacy there of audio companies and um, you know, 0:12:49.040 --> 0:12:51.960 just some amazing history uh there. And then you'll find 0:12:51.960 --> 0:12:55.319 hardware and software people here in Santa Barbara as well. So, 0:12:55.679 --> 0:12:57.360 um in all three and now we we've got a 0:12:57.440 --> 0:13:00.680 small office in San Francisco as well as we'll find 0:13:00.679 --> 0:13:03.760 both hardware and software people there. Okay, you talked about 0:13:03.840 --> 0:13:08.360 this office oriented, home oriented plan when COVID hit. Did 0:13:08.360 --> 0:13:13.400 you have enough inventory? Um? We did not, um. So, 0:13:14.040 --> 0:13:17.160 And and as you've probably seen, supply chain has been 0:13:17.200 --> 0:13:21.400 a huge issue over the past few months, and so immediately, 0:13:21.559 --> 0:13:24.000 I think not just us, but everybody in the industry 0:13:24.000 --> 0:13:27.120 and not just consumer electronics, anyone who builds anything immediately 0:13:27.160 --> 0:13:30.280 went to freeze. You know, let's see what's going to 0:13:30.360 --> 0:13:32.960 happen here, because our people gonna spend money, you know, 0:13:33.480 --> 0:13:36.280 job losses, everything closing up, and so everybody froze for 0:13:36.320 --> 0:13:40.199 a moment um. We saw that great momentum in Sonos 0:13:40.240 --> 0:13:42.000 at home, so we started to kind of ramp things 0:13:42.080 --> 0:13:46.160 back up and turn it back up, um and so 0:13:46.760 --> 0:13:49.640 you know, then we started to crank the engine again, 0:13:50.080 --> 0:13:54.240 but very quickly demand really started to move up, and 0:13:54.280 --> 0:13:56.360 we saw even more demand for a products and much 0:13:56.360 --> 0:14:00.160 more than we could actually um, you know build as well. 0:14:00.160 --> 0:14:02.560 And so we started, you know, seeing a ton of 0:14:02.559 --> 0:14:05.840 demand that we couldn't fulfill, you know, really as we 0:14:05.920 --> 0:14:09.640 got into the the you know, the September October period 0:14:10.160 --> 0:14:13.720 um of last year, and we've been trying to you know, 0:14:13.840 --> 0:14:17.559 really catch up if you will, ever since. And so 0:14:17.640 --> 0:14:20.280 that's been, ah, that's been an interesting learning you know 0:14:20.320 --> 0:14:24.440 for me and thinking through the UH, I think we'd 0:14:24.480 --> 0:14:26.640 all kind of been thinking, all right, we know what 0:14:26.720 --> 0:14:29.320 will happen in a situation like this, and there's probably 0:14:29.360 --> 0:14:31.520 it was probably time for a recession and some of 0:14:31.520 --> 0:14:34.000 those things. Yet the injection of all the money into 0:14:34.040 --> 0:14:37.080 the system, the ability for many of people in our 0:14:37.760 --> 0:14:40.240 target audience to continue to work from home, continue to 0:14:40.240 --> 0:14:42.960 have their job, you know, save money on entertainment, travel, 0:14:43.000 --> 0:14:47.560 all those things actually ended up benefiting us in a way. 0:14:47.680 --> 0:14:51.240 And so UM we did not know predict that, and 0:14:51.720 --> 0:14:54.120 I think it's a good lesson in you know, really 0:14:54.360 --> 0:14:57.880 being mindful that you probably don't know what's going to 0:14:57.960 --> 0:15:00.960 happen in those situations pretty unprecedented and just having to 0:15:01.000 --> 0:15:04.200 stay agile UM if you will, through that. So that's 0:15:04.240 --> 0:15:06.680 been uh, yeah, that's been one of those things that 0:15:06.720 --> 0:15:08.960 we've learned through this. And have you been affected by 0:15:08.960 --> 0:15:12.080 the chip shortage? Absolutely, yeah, So that's been something that 0:15:12.320 --> 0:15:14.760 our team has done a better job than most, you know, 0:15:14.840 --> 0:15:17.960 in in managing, but certainly it's something that impacts us. 0:15:18.000 --> 0:15:21.120 Impacts us UM today as well. As we've navigated through 0:15:21.600 --> 0:15:25.400 UM all of this and the container shortage. You know, 0:15:25.440 --> 0:15:29.600 the ports have had situations where the staff there UM 0:15:29.640 --> 0:15:32.040 as well caught COVID right, and so we've had all 0:15:32.080 --> 0:15:34.680 of these factors. I've never seen a year like this, Bob. 0:15:35.200 --> 0:15:37.880 As I think back, I've been in you know, smart 0:15:37.960 --> 0:15:41.360 hardware plus software kind of for twenty three years now, 0:15:41.760 --> 0:15:44.120 and I've never seen a supply chain situation like this 0:15:44.200 --> 0:15:46.600 and as many things kind of backing up as they have. 0:15:47.080 --> 0:15:49.400 And that's why I'm so proud of our team and 0:15:49.400 --> 0:15:51.320 the way they've managed it, because we've been able to 0:15:51.360 --> 0:15:53.640 continue to grow and deliver as much as we can 0:15:53.680 --> 0:15:56.840 to customers. But certainly we've been you know, we've still 0:15:56.880 --> 0:15:59.520 seen more demand um than we have supplied for, and 0:15:59.840 --> 0:16:01.440 we still have work to do and making sure that 0:16:01.880 --> 0:16:04.280 we're able to fulfill all of the customer demand out there. 0:16:04.480 --> 0:16:07.840 Do you believe after this crisis is over, the just 0:16:08.000 --> 0:16:13.120 in time philosophy of worldwide manufacturing supply chage chain will 0:16:13.200 --> 0:16:15.720 change or people just forget about this and we'll go 0:16:15.760 --> 0:16:19.040 back to the other one. I think it will change 0:16:19.080 --> 0:16:23.359 based on what I'm seeing right now in the industry, UM, 0:16:23.680 --> 0:16:25.760 you know, and so I do think there'll be more 0:16:25.760 --> 0:16:28.120 thought We've we've been more thoughtful in terms of Okay, 0:16:28.160 --> 0:16:31.320 how are you building more resilience into the system. UM. 0:16:31.360 --> 0:16:33.760 There are some high hurdles to get over in terms 0:16:33.840 --> 0:16:37.360 of the capital outlays required to build the kind of 0:16:38.040 --> 0:16:40.840 facilities and suppliers that we would need in the United 0:16:40.880 --> 0:16:44.120 States for instance, or let's say North America more generally. 0:16:44.560 --> 0:16:47.160 But I you know, I think even the government um 0:16:47.280 --> 0:16:50.840 seems interested in this area. UM, the largest companies that 0:16:50.920 --> 0:16:53.800 are in these areas are working on it. We're having 0:16:53.800 --> 0:16:56.840 lots of conversations with our partners. So I do think 0:16:57.480 --> 0:17:01.000 we have a window of time where we'll see if 0:17:01.040 --> 0:17:04.879 we can get enough momentum behind the movement of having 0:17:05.320 --> 0:17:08.240 more localized supply chains, if you will. And it will 0:17:08.280 --> 0:17:11.080 probably be some you know, combination in between, because not 0:17:11.200 --> 0:17:14.239 everything from an affordability perspective will make it work. But 0:17:14.560 --> 0:17:17.000 I do think there are some things and I do 0:17:17.040 --> 0:17:20.399 think for products like ours, UM, I think Apple's probably 0:17:20.400 --> 0:17:23.919 in this boat too, like that there's there's probably a 0:17:23.960 --> 0:17:27.119 way to you know, make it work over time. And 0:17:27.160 --> 0:17:29.960 so that's something that we're certainly investigating and trying to 0:17:29.960 --> 0:17:31.960 come out from a variety of angles, and that there's 0:17:31.960 --> 0:17:33.399 a lot of people in the industry working on the 0:17:33.440 --> 0:17:36.560 same thing. So I'm kind of optimistic UM that will 0:17:36.640 --> 0:17:39.520 get a little bit more you know, back more locally 0:17:39.600 --> 0:17:43.200 and I think that will benefit everybody from a resilience 0:17:43.600 --> 0:17:47.840 resiliency perspective and hopefully, you know, quite frankly, from overall 0:17:48.119 --> 0:17:53.159 society and economy perspective as well. So what is the 0:17:53.359 --> 0:17:58.520 manufacturing design process and how long does it take? Who 0:17:58.560 --> 0:18:01.000 comes up with a product? You tell me from beginning 0:18:01.000 --> 0:18:05.000 to end? Yeah, So, um, you know, we're always thinking 0:18:05.040 --> 0:18:07.840 and working on customer insights, so trying to understand which 0:18:07.920 --> 0:18:11.399 is fancy term for behavior around customers and what's happening 0:18:11.440 --> 0:18:12.960 there and kind of what's happening in the industry. And 0:18:12.960 --> 0:18:14.600 we're trying to marry two things together. So we have 0:18:14.600 --> 0:18:17.760 a team looking at how customers are using products, and 0:18:17.760 --> 0:18:20.400 then we have a team looking at technologies and how 0:18:20.440 --> 0:18:24.000 how do those things potentially come together? And so we're 0:18:24.040 --> 0:18:27.640 always considering where's that going? And really we spend time 0:18:27.840 --> 0:18:30.480 thinking about the next five years as we're thinking about 0:18:30.480 --> 0:18:32.760 what we want to build, and so we'll be looking 0:18:32.760 --> 0:18:35.800 at a variety of you know, opportunities out there as 0:18:35.840 --> 0:18:38.200 we think about where does the speaker go from here, 0:18:38.240 --> 0:18:40.240 where does the soundbar go from here? Where does sound 0:18:40.280 --> 0:18:42.720 go from here? Um, you may have seen that recently 0:18:42.760 --> 0:18:45.679 we launched a picture frame that's a speaker with Ikea 0:18:45.720 --> 0:18:48.240 for instance, And so we're always thinking about what can 0:18:48.320 --> 0:18:53.040 we do with you know, different form factors and our 0:18:53.080 --> 0:18:56.159 software to create sound in different and new kind of ways. 0:18:56.240 --> 0:18:58.080 And so we'll go through and we'll do some work 0:18:58.119 --> 0:18:59.919 on that. We'll try to think about what it is 0:19:00.080 --> 0:19:02.800 that we think will fit the market at the right time. 0:19:02.960 --> 0:19:07.280 We work through um things like all of the design 0:19:07.359 --> 0:19:08.960 and we start to get an idea on the design. 0:19:09.000 --> 0:19:11.040 We start to get an idea and we have a 0:19:11.040 --> 0:19:12.840 design team that works on that and it's looking at 0:19:12.880 --> 0:19:15.439 materials and finishes and everything that's out there and kind 0:19:15.480 --> 0:19:17.560 of what's happening in the world and what fits our 0:19:17.560 --> 0:19:21.360 design language. And then we'll be looking at that technology 0:19:21.359 --> 0:19:24.040 advanced technology team and what can we be incorporating in it? 0:19:24.119 --> 0:19:26.760 Is it voices, it ultra wide band, is it Bluetooth? Like? 0:19:26.800 --> 0:19:29.080 What what should be in the product? And it's what 0:19:29.119 --> 0:19:31.680 should be in the product in the interests of the 0:19:31.720 --> 0:19:34.639 customer experience, right and what behaviors we wanted to we 0:19:34.680 --> 0:19:37.160 want to deliver if you will, um as we're going 0:19:37.160 --> 0:19:40.320 through that and so so so then we'll start working 0:19:40.400 --> 0:19:43.480 on what we call a product requirements document which says, 0:19:43.520 --> 0:19:45.440 here's the thing we're going to build, and we'll have 0:19:45.480 --> 0:19:51.680 an initial take on a concept with some UM, initial ideas, 0:19:51.760 --> 0:19:54.800 some designs in terms of what's there, UM, an idea 0:19:54.840 --> 0:19:56.160 of kind of where it will fit in the market, 0:19:56.240 --> 0:19:58.720 and we think it can do UM, and we'll start 0:19:58.760 --> 0:20:02.560 to put that together and usually you know it'll be 0:20:02.640 --> 0:20:05.800 to market then. UM. In this day and age, which 0:20:05.800 --> 0:20:08.200 is forever in the in the era of like software 0:20:08.200 --> 0:20:12.120 moving UM quickly and shipping you know every day that 0:20:12.119 --> 0:20:15.600 that's usually an eighteen to thirty six month process, depending 0:20:15.600 --> 0:20:19.560 on what we're building. And so we are we're working 0:20:19.640 --> 0:20:22.639 very hard in those situations to determine what's going to 0:20:22.720 --> 0:20:25.520 be popular, what's going to resonate with customers, you know, 0:20:25.800 --> 0:20:27.800 year and a half, three years you know from now 0:20:27.840 --> 0:20:31.560 in some cases, which it is a is a high 0:20:31.600 --> 0:20:34.399 wire act, right because that's a long time away in 0:20:34.400 --> 0:20:36.399 this day and age in terms of determining, Okay, what 0:20:36.480 --> 0:20:38.760 is it, what's going to look like, UM, what's gonna 0:20:38.760 --> 0:20:41.680 fit with people's home decor, how is it going to 0:20:41.760 --> 0:20:45.280