Skullcandy’s Success Strategy

Toward the end of an interview with Skullcandy CEO Rick Alden, I asked what advice he would give small-business owners across the country. “Invest at the very last minute,” he said. But his answer just didn’t make practical sense off the top. As any business owner knows, there are startup costs, payroll, infrastructure, inventory … and the list of expenditures goes on and on and on. So I pressed Rick, and then it started to make sense.

Rick Alden is what some would call a serial entrepreneur, and he brings a unique but practical POV to every decision he makes. Skullcandy is his third business. He sold his first two companies, an event-marketing firm and a snowboard binding company, before creating Skullcandy in Park City, Utah, in 2002. Where was the first Skullcandy office? In Rick's basement, just a few floors below his wife and kids. Where did he store his entire inventory of products and prototypes? In his garage. How many employees did Rick use to get Skullcandy off the ground? Initially just himself, and then another guy. OK, this ploy isn’t abnormal for small businesses just getting going. What is abnormal is that with the proceeds of sales from his previous companies, Rick could have easily headquartered the newly found company in an office park, rented a warehouse to store product and hired a larger staff to help get Skullcandy started. But back then — and even now — Rick stuck to his mantra of investing at the very last minute.

Over the past few years — as Skullcandy’s products have become ubiquitous on the ski slopes with core audience — the infrastructure that runs the company has remained lean and mean.

For business travel, Skullcandy employs a “fly cheap and sleep cheap” mantra, which translates to cost savings and, I’m sure, a sore neck or two from cross-country and international travels. However, Rick does insist that his staff members eat like kings on the road. From a staffing perspective, his staff of a few employees has slowly grown to 70. To put that number in perspective, Skullcandy employed just 18 people a little more than a year ago. The garage home office moved to a small space in a business park and, most recently, to a larger office. Why? Because the company needed room for new employees. Skullcandy never makes a financial decision just because. 

It’s fair to say that whether the country is in a bear or bull market, Rick won’t take a private plane to Washington, D.C., if he’s ever called to testify in front of Congress. It’s also fair to say that other companies — large or small — can learn a thing or two from Skullcandy’s business practices. So, if you take Rick’s advice and invest at the absolute last minute, you might be safe during a sour economy. As you look at the headlines, one can only wonder if there would be fewer pink slips during the bad times if companies were more responsible during the good times.

Antonio Neves is the host of Business on Main’s Web series, Cool Runnings, and a correspondent for NBC NextMedia Productions.