[bhobba]

Hi All

Since it is a bit quiet around here I thought I would post a few observations I have gleaned in recent times about what guys like Bob go through.

I have been posting to Bob's forum for quite a few years now but of recent times have become aware of exactly what manufactures like Bob goes through.  I have developed a good relationship with a guy that lives close to me that does, amongst other things, what Bob does (ie design and build speakers).  I have seen first hand the stress and strain doing that can cause.  He starts at about 10.00 am in the morning and can go though to about 1.00 am the following morning pretty much 7 days a week.  When I visit him the phone constantly runs hot with clients and between that he has to do his speaker building and other stuff.  From what I have seen the Audiophile speaker building business is a bit like what they say about being a Winemaker.  Yes you can make a small fortune that way.  You have to work long hours seven days a week - but by far the most important thing is - start with a large fortune.  It is fairly obvious to me guys in this business do it for the love of it - not the money.  But like the Winemaker there is an upside - the product they produce quite likely is much better and sold at a price often a good deal cheaper than the big boys.   

Now I know this I personally prefer to deal with guys like Bob.  If we don't support them then we will be left with the big boys and their high prices.

Anyway off soapbox now.  And I really would like to hear what others think.

Thanks
Bill

[Phil A]

Bill, I totally agree.  Any business, just running the business side (i.e. accounting, taxes, suppliers) is stress in itself.  Then you have to deal with the start-up and lack of time off.  Things are even harder in an economy like this.  You don't want to take time off and risk losing customers.  Big investment in time, money, etc.

[GBB]

Since it is a bit quiet around here I thought I would post a few observations I have gleaned in recent times about what guys like Bob go through . . .
 
Now I know this I personally prefer to deal with guys like Bob.  If we don't support them then we will be left with the big boys and their high prices.

Anyway off soapbox now.  And I really would like to hear what others think.

This is Bob's circle so I don't want to be too negative.  That said, I think that a lot of small manufacturers are under-capitalized and make up for that fact by substituting their own labor.  They don't price their own labor appropriately and are always at risk of going under.  If you're lucky you can get a great deal buying their products.  If you're unlucky you can lose some money or wait a very long time to have products delivered.  You also might be left with an item with limited resale value.  The fact that SP Tech went out of business and Bob went on to start Aether Audio is consistent with the thin line a lot of small audio companies walk and makes me nervous.

I admire Bob's passion but that's not enough to get me to buy his products.  My audio buying decisions are based on a combination of hearing a sound that I like combined with a price that I find attractive.  The attractiveness of the price includes an assessment of possible resale.  I assume that a small manufacturer has a lower resale value so it has to be priced lower to make a buying decision make any sense.  But even that isn't enough if I don't like the sound.

---Gary

[TONEPUB]

While this may be an unpopular view, the reason I'm just not crazy about the small guys is the reason Gary mentioned, they are all undercapitalized.  And unfortunately, one or two guys working in a garage just don't have the money for R&D like one of the big companies do.  Yes, you pay more money for a set of Wilson's, Focal's or (insert your favorite large speaker company here) but you get more quality control, an engineering department, customer service and support and resale value when you decide to make a change. 

I think when you plunk down $15k for a set of Wilson Sophia's your odds of getting 7-10k when you sell them used is pretty good and should anything ever go wrong with them, you'll be able to get them fixed immediately.

Whether that's worth the extra money to anyone is their call, but I've seen too many of these guys go under and now you have a product with ZERO resale value. 

Again, if you aren't talking big bucks, taking a chance on a small speaker mfr isn't a bad way to get a little extra bang for the buck, but I've yet to see any of the smaller mfrs. make a product at the quality level of someone like Wilson, Focal, Avalon, etc etc.

There really aren't any corners to be cut.  While the small guy doesn't have the overhead that the big guys do, they don't purchase in bulk, so the money you think you are saving buying from one of these guys just goes out the other window, because they have to pay 5-10 times as much for the same teflon capacitor that B&W uses.  So it's really kind of a wash in the end.

[cujobob]

Actually, smaller guys don't have as much product out there which means demand can be up.  Mapletree Audio is a small company..but the resale on their products is tremendous.  Same with Salk speakers.  Overall quality means a lot...and R&D in the speaker business isn't what many people think.  Do you think all of the 'big boys' have better quality research than small business owners like Linkwitz, Geddes, and Bob here are doing?  Brick and Mortar shops have increased costs and also once a company builds a name for themselves, the customers will start paying for that name.  That name is the only reason the resale value remains high.

Quality control is up to the particular company.  Many bigger companies are having things made in China where the QC is, on average, quite poor.  Smaller companies often have local cabinetmakers build their cabinets out...which can mean more hands-on QC and also more customization.  You can customize crossover parts in many cases, unique veneer, cabinet damping material, etc.

In the last ten years (I believe), B&W was still using electrolytic caps in their crossovers for some of their mid-level products.  Cutting corners can often be the case on anything but the highest-end designs from a major name company.

For the highest of the high-end...that's not generally where smaller companies focus.  You need a credible history for people to take a flier on your offering when you're selling something that expensive.  Danny Richie just did the design work for a $180,000 offering FWIW...though you don't see that too often.  The whole idea that big companies have better engineering is a myth.

[bhobba]

In the last ten years (I believe), B&W was still using electrolytic caps in their crossovers for some of their mid-level products.  Cutting corners can often be the case on anything but the highest-end designs from a major name company. For the highest of the high-end...that's not generally where smaller companies focus.  You need a credible history for people to take a flier on your offering when you're selling something that expensive.  Danny Richie just did the design work for a $180,000 offering FWIW...though you don't see that too often.  The whole idea that big companies have better engineering is a myth.

From my experience that is all true.  I know someone who had a peek inside B&W 800 speakers which sell for $37K here in Australia and was shocked at the low quality of construction and components - I don't think they were electrolytics (if I remember correctly they were polypropylene and green caps) but they weren't the Mundorf or Duelunds Bob and other small manufacturers I know use - and that is in speakers no where near $37K. 

Thanks
Bill

[TONEPUB]

After visiting my fair share of the "big boys" factories, for the most part that's where I'll still put my money.  And yes I do think that companies like Focal, etc. have much more engineering at their disposal than the garage builders.

[JohnR]

I see pretty high resale value going on for products from the smaller companies. So the generalizations about resale value seem basically untrue to me. I think it's more about the product itself than "large" vs "small."

[jackman]

I see pretty high resale value going on for products from the smaller companies. So the generalizations about resale value seem basically untrue to me. I think it's more about the product itself than "large" vs "small."

John, I agree.  The resale on Salk speakers for example is very good.  It's not fair to lump all small manufacturers (or all large) in the same category.  There are speakers from both groups with good and bad resale values. 

[launche]

I was having this same thought process last night when I was looking at PSB speakers vs a smaller company.  I was saying to myself there's no reason PSB shouldn't make really nice speakers compared to this boutique builder.  I haven't heard PSB speakers in maybe a dozen years.
I like supporting the small manufacturers for a variety of reasons and I think listening has proven many can make a product on par or better than bigger companies.  As always it mostly boils down to whether one wants to pay for the other big company conveniences if they exist.

For all the money and man hours than many be involved in R&D I can't hear how the sound that emerges from the speaker has gotten much better in the few decades.  Uses a bunch of fancy parts, exotic materials and construction techniques is all for nothing if the sound hasn't been noticeably improved upon.

[Aether Audio]

Bill,

Thanks for posting and everybody else… thanks for chiming in.  I know I haven't been around these parts much lately.  Sorry… been busy. 

Anyway, I'd like to share my views on the matter a bit.

I admire Bob's passion but that's not enough to get me to buy his products.

And unfortunately, one or two guys working in a garage just don't have the money for R&D like one of the big companies do.

I think when you plunk down $15k for a set of Wilson Sophia's your odds of getting 7-10k when you sell them used is pretty good and should anything ever go wrong with them, you'll be able to get them fixed immediately.

Whether that's worth the extra money to anyone is their call, but I've seen too many of these guys go under and now you have a product with ZERO resale value.

If you take a look at the big picture, high-end audio is pretty much split into two camps.  There's the "big guys" with all of their marketing and overhead, then there's the rest of us little guys.  The consumer side is split pretty much the same.  Folks that tend to purchase from the big names are pretty much like consumers of any other product wherein their time is usually more limited than their financial resources.  Therefore, they prefer to take comfort in the security and other assurances associated with brand names, rather than spend large amounts of time researching the smaller companies.

They also tend to be more "pragmatic" wherein ultimate performance must be balanced against the other variables and where "fit & finish" is almost always a higher priority than performance.  Industry insiders will tell you that sales of a great looking product that sounds good will far exceed those of a great sounding product that only looks good.  Why?  Because visual acuity is far greater and more consistent from person to person than hearing acuity is.  Sure, the sound had better be good, but by God… fit & finish had better be above reproach.

As an example, we recently sold a pair of speakers to a gentleman that purchased them based on the sound first… this is true.  But, he was very impressed with the finish once he received his pair.  Along the way during production, I assembled a new analysis system that permitted greater scrutiny of the performance of that (and all other) design(s).  Upon taking a closer look, I discovered that a small "tweak" would provide a slightly flatter response in that design, so we implemented it in the pair destined for this customer before we shipped them.

Well, sure enough… upon hearing them he now did not like the sound as well as he did of the original evaluation units.  After some communication, I guided him in how to alter the crossover network so that the response was back to that which he had originally heard and that which was by every other measure… inferior.

My point?  If this whole process had been reversed and applied to the fit & finish such that the evaluation units looked nicer than the purchased pair, I'm virtually certain he would have asked for a refund.  I can also guarantee that if the evaluation units looked worse than the purchased pair, he certainly wouldn't have intentionally put a couple of dings and scratches in them so that they more closely resembled the inferior evaluation units - DUH 

Then there is the other camp of consumers that is typically dominated by folks that are a bit more, shall we say… "Obsessive" when it comes to performance?  These folks are on a quest for perfection and they typically know what they are looking/listening for.  They are also the ones that will comb every periodical and the Internet in search of such components.  THEY are the ones that are willing to take a chance on the "little guys" and risk the associated pitfalls of doing so.  They are usually well rewarded for their efforts too.

In regards to R&D, don't kid yourself.  In big companies, the motto is "shoot the engineer and get into production ASAP."  Overhead runs amok with department budgets that must be maintained, staff payroll and facility maintenance – to name a few.  They are a "flying barn door" with a rocket engine strapped on as the only thing that maintains flight.  Shut the fuel source (cash flow) off for more than a moment and a big crater in the ground is all that's left.  They know this better than anyone though and are well adapted to keeping the fuel flowing.  That often means, "When in doubt – ship it out," where product fixes are actually sold as an "upgraded" version of the model in the next generation… in a year or so.

Think about it.  A small manufacturer typically cannot out-source in the quantities needed to get the good prices from off shore vendors due to the large financial commitment needed for a minimum purchase.  On the other hand, if they build their enclosures in-house, no matter how much attention and detail they bring to the table they're not going to improve upon the fit & finish provided by names like Wilson, etc.  Sure, custom finishes are easier to come by, but the market for that isn't big enough to support more than 2 or 3 companies offering ONLY (or mostly) that.  So, WHAT do they have to offer that gives them even half a chance at competing?  R&D… that's what.  In fact, that's about all they have.  "Build a better mouse trap… yada-yada."  Yeah, right… but it’s the only game we are able to play.

Oh... and the idea that we don't have the capital needed for really good R&D?  Man... it's obvious that you're not into electro-acoustic design.  The "toys" available these days are nothing short of amazing.  I just put together an analysis system comprised of FREE software, a $150.00 sound card, a (used) $200.00 laptop pc and a $600.00 microphone... that BLOWS AWAY the closest analyzer from back in the 80's (a Techron TEF).  The TEF cost $12K back then and I'm just shy of $1K for this whole new system.  It does things the TEF never even dreamed of and that I'm still learning.  Heck... I'll probably never come close to using all of its features.  Oh yeah... and God gave me the brains to know how to use it all for free too! 

So, us "little guys" cater to the "nuts" out there.  Then again, if you ignore their obsession for performance, they might not be so crazy after all.  Let's put it this way:  I'll put ANY of my models up against an equivalent sized model from the big names and let's see which one you think sounds better.  Our products consistently out-perform products from them at a minimum of 2, to as much as 10 times their price.  Also, our customers tend to KEEP their speakers for life and aren't looking at them as a financial investment with the expectation of remaining on the equipment "merry-go-round."  If you're purchasing based on re-sale value, then you've already made either a conscious or sub-conscious commitment to riding the endless revolutions thereof.  You're not REALLY looking to "find the end of the rainbow," so your purchase is just another "commodity."

Oh… and our products usually sell for at least 50% of their retail price on the used market (and that's a rare find due to the above), and I've even seen them sell for MORE than what I know the customer paid for them when I sold them to him.  Yes… there has been at least one occasion where I KNOW the customer made a PROFIT.  So how's that for an investment?!!! 

Take care,
-Bob

[HT cOz]

There are manufactures big/small/domestic/foreign that make items that are more akin to art.  The other guys just make stuff for consumers.  I value both types of gear as I need the consumer items to get by until I can purchase something to cherish. 

I also like to roll my own gear but that’s a different topic.  By the way nothing gives you a greater sense of how hard it is than to try to build something on your own.

[GBB]

While I can appreciate the craft and love put into a product by a small manufacturer, I still think that many of them (not all) are marginal businesses and that makes buying products from them risky.  For some people the chance to get a deal makes this an acceptable risk;  for others it doesn't make sense.

For me, too many companies seem to follow the business model first articulated on South Park - The Underpants Gnome business model.  For those not familiar with this business model, here are a few links:

http://www.fool.com/news/foth/2001/foth011108.htm

http://www.niallkennedy.com/blog/uploads/sp_gnomes.mov




---Gary

[rollo]

I see pretty high resale value going on for products from the smaller companies. So the generalizations about resale value seem basically untrue to me. I think it's more about the product itself than "large" vs "small."

  Agreed, the product dictates sale not big or small.  AC is a great outlet of where to find the small companies offer. So far they all have some very nice products.PI, Kaplan, GR,Omega,Vista, etc. I would have little ol JC Morrison build me a component anytime. Blair at nNghtshade is another person with which I would trust to build me something. So it takes a month or so.
   When a product delivers we find outabout it and go from there.


charles

[Johnny2Bad]

WEll, I think buying anything, from anyone, is risky. All we do is minimize the risk to an acceptable level and go; you really can't do more than that.


If the product is fundamentally sound, uses standard components, and the manufacturer is forthright and honest, you're at the low-risk level. Some products can be fixed by anyone, long after the OEM is gone, some can't be fixed period. Zero risk is not possible, so don't try to find it.


I think that's true for big manufacturers and small, from boutique to bleeding edge to consumer grade commodity products. Counterpoint, Proceed, Dynaco, B&O or Ariston owners know what I'm talking about, but so do owners of products that are still in business but can't source replacement parts*. Then you have small-scale builders who seemingly don't sleep if a customer has a problem until they find a solution, or large-scale firms who stop support before the product life is over; just look at the problems people who buy all-in-one printer/fax/scanners have with an OS upgrade. Drivers break and never get fixed; the device is perfectly fine but it's also a boat anchor at the same time.


Do your due diligence, assess your needs and your tolerance for risk, and buy accordingly. No two people will have the same answers to those questions.


* Although B&O is still around, they haven't made components for 20+ years, and sourcing cartridges for their turntables is an issue that's not easily solved. So, I consider them the same as the others; they're not broke so it's not fundamentally a money issue, but they're not in the same business as they once were. You can get abandoned anytime.

[Johnny2Bad]

...
Think about it.  A small manufacturer typically cannot out-source in the quantities needed to get the good prices from off shore vendors due to the large financial commitment needed for a minimum purchase.  On the other hand, if they build their enclosures in-house, no matter how much attention and detail they bring to the table they're not going to improve upon the fit & finish provided by names like Wilson, etc.  Sure, custom finishes are easier to come by, but the market for that isn't big enough to support more than 2 or 3 companies offering ONLY (or mostly) that.  So, WHAT do they have to offer that gives them even half a chance at competing?  R&D… that's what.  In fact, that's about all they have.  "Build a better mouse trap… yada-yada."  Yeah, right… but it’s the only game we are able to play.
Take care,
-Bob...

I think it's also true that if you offer a choice to consumers, where standard and "real nice" cosmetics are offered for the same product, and charge the reasonable and true cost for the nicer stuff, people just buy the plain one ... they don't really believe that fit and finish costs as much as it does, fundamentally.


If they do bite and pay extra, all you've really done is baited the picky, sometimes unreasonable customer who expects far more than you've offered to provide ... for some reason they seem to think they deserve custom product at commodity prices, so that in the end, you probably didn't want that particular business in the first place ... the old 90-10 rule comes back and bites you.


Not everyone has good taste ... that's not something to lose sleep over; it's just part of who we all are. But, I also think you can do a lot with very little cosmetics-wise if you either have good design sense or hire for it.


Good proportions and a little effort in something as simple as choosing knobs, adding a little cabinet accent, or designing the silkscreen panel markings can go a long way at the same per-unit cost as the ordinary. Engineering types tend to be performance-oriented and not aesthetic-orented, and if it's a one-man show sometimes you need to get outside help there. It's my personal opinion that it will pay off in sales if you do. Just make 'em all the same; no super-finish options.

[wywires]

While this may be an unpopular view, the reason I'm just not crazy about the small guys is the reason Gary mentioned, they are all undercapitalized.  And unfortunately, one or two guys working in a garage just don't have the money for R&D like one of the big companies do.  Yes, you pay more money for a set of Wilson's, Focal's or (insert your favorite large speaker company here) but you get more quality control, an engineering department, customer service and support and resale value when you decide to make a change. 

I think when you plunk down $15k for a set of Wilson Sophia's your odds of getting 7-10k when you sell them used is pretty good and should anything ever go wrong with them, you'll be able to get them fixed immediately.

Whether that's worth the extra money to anyone is their call, but I've seen too many of these guys go under and now you have a product with ZERO resale value. 

Again, if you aren't talking big bucks, taking a chance on a small speaker mfr isn't a bad way to get a little extra bang for the buck, but I've yet to see any of the smaller mfrs. make a product at the quality level of someone like Wilson, Focal, Avalon, etc etc.

There really aren't any corners to be cut.  While the small guy doesn't have the overhead that the big guys do, they don't purchase in bulk, so the money you think you are saving buying from one of these guys just goes out the other window, because they have to pay 5-10 times as much for the same teflon capacitor that B&W uses.  So it's really kind of a wash in the end.

Not surprising from a mag publisher with revenue targets.

[kingdeezie]

There is a small amount of truth in what TONEPUB has written.

As one of many victims of the Line Source/AV123 crapfest; I would have say that working with smaller companies has its risks.

I had originally ordered LS9's, and waited 18 months to get LS6's in a veneer color that I wasn't crazy about. However, the boat was sinking pretty fast at that point, and I took what I could before I was left with nothing to show for it.

However, on the other hand, I've worked a couple of time with Bill from Response Audio to great success.

Incidentally, he built me a pair of custom external crossovers for those same LS6s, that turned them into speakers I sorted resented given the circumstances, to speakers I truly enjoy now.

He also took a preamp I bought from someone else that was his, and checked it out immediately when I had an issue with my system. (turned out it was not his preamp).

I think it can go both ways, and as a regular joe who just buys this stuff, I tend to look not so much at the name, but the features and quality I can get versus the price.

I wanted a Pass Labs 250.5 amplifier after hearing it, I threw out the money for it, and couldn't be happier. For that I gladly pay the money.

[Big Red Machine]

Gee, I lean toward the small guys because I know their heart and soul is in the product and I'm not funding some large machine which needs high margins to stay afloat.  I'd rather get a boutique amp or speaker from someone who really cares and personally handles my product during the build than from a high volume automated manufacturer who doesn't have my best interests in mind.  I anticipate more shortcuts from the big guys than the small guys.  Quality?  Can't tell me Wilson's have more quality than Salks, especially in the sound area.

I have a little experience in R&D, having run a 100 person $26M organization.  I see more gimmicks than sound engineering from some of these large companies due to the marketing pressure they are under to keep their margins up.

[catastrofe]

Gee, I lean toward the small guys because I know their heart and soul is in the product and I'm not funding some large machine which needs high margins to stay afloat.  I'd rather get a boutique amp or speaker from someone who really cares and personally handles my product during the build than from a high volume automated manufacturer who doesn't have my best interests in mind.  I anticipate more shortcuts from the big guys than the small guys.  Quality?  Can't tell me Wilson's have more quality than Salks, especially in the sound area.

I have a little experience in R&D, having run a 100 person $26M organization.  I see more gimmicks than sound engineering from some of these large companies due to the marketing pressure they are under to keep their margins up.

+1