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“The reward for taking out Bose, Panasonic, and Samsung was getting to play against Amazon, Google and Apple,”
That’s a common joke at Patrick Spence’s Santa Barbara-based audio giant, Sonos; which is chiefly responsible for the rise of the smart speaker.
An HBA ’98 grad, Spence joined the company in 2012 and took over as CEO, five years later.
But Sonos wasn’t Spence’s first rodeo in the fast-moving world of consumer electronics. For 14 years, Spence was an integral part of RIM/BlackBerry, serving a number of roles before ultimately becoming the Executive Vice President of Sales & Marketing. During that time the company grew from $50 million in revenue to more than $20 billion, and from 150 people to more than 17,000.
In this episode, Spence shares lessons from the highs and lows of his career, his philosophy on technology and innovation, Sonos’ legal battles with Google, and the different outlooks of entrepreneurs on both sides of the 49th parallel.
The Entrepreneur Podcast is sponsored by Connie Clerici, QS ’08, and Closing the Gap Healthcare Group, Inc.
Transcript
You are listening to the Entrepreneur Podcast by the Western Morrissette Institute for Entrepreneurship Powered by Ivey. My name is Eric Morse and I’ll be the host of this session.
“The reward for taking out Bose, Panasonic, and Samsung was getting to play against Amazon, Google and Apple.”
That’s a common joke at Patrick Spence’s Santa Barbara-based audio giant, Sonos; which is chiefly responsible for the rise of the smart speaker.
An HBA ’98 grad, Spence joined the company in 2012 and took over as CEO, five years later.
But Sonos wasn’t Spence’s first rodeo in the fast-moving world of consumer electronics. For 14 years, Spence was an integral part of RIM/BlackBerry, serving a number of roles before ultimately becoming the Executive Vice President of Sales & Marketing. During that time the company grew from $50 million in revenue to more than $20 billion, and from 150 people to more than 17,000.
In this episode, Spence shares lessons from the highs and lows of his career, his philosophy on technology and innovation, Sonos’ legal battles with Google, and the different outlooks of entrepreneurs on both sides of the 49th parallel.
Eric Morse
I think everyone in the audience will know a little bit about Sonos, and in general, hopefully, everybody has a Sonos product in their home. But can you tell us a little bit about their ethos? What is the Sonos ethos? And where do you want to take it? Where what are you kind of see as the vision?
Patrick Spence
Yeah, so you know, we really kind of took the world of computing, and melded it with wireless and what was happening in streaming, as well. And so I often talk about Sonos being the story of software, eating audio, because we took a lot of software engineers, and the fact that all of music was going online was streaming, and downloads and digital, basically. And then, you know, mash that together and took all the complexity of trying to bring all of this stuff together, like Wi Fi, and computers, and all of these to create really, the first smart speaker, and we really focused in the first phase on the home, and filling your home with music was really our first clear kind of mission point. And we've expanded that, you know, we've expanded it to really have an ambition to be the world's leading sound experience company. And so now we do things like work with Audi, to put speakers in cars, you know, and we will work with IKEA to actually they build, you know, speakers, which are more like furniture, like lamps that have sound in them. And so we see sound being a really, really big space and interesting space in which to play. And we kind of take hardware and software and bring it all together to create these amazing products that people love. And we do. You know, when I joined, back in 2012, we were doing about 200 million under 200 million in revenue. And this year, we'll do about 2 billion in revenue. So, you know, I've had the good fortune of being, you know, part of two incredible growth stories. And, you know, hopefully, there'll be some learning today from someone.
Eric Morse
Yeah, well, thanks so much for both, both incredible stories and what fantastic journeys you've been on. I love the idea of software, ate audio, although the audio is fantastic, but one of the things that I love about it is how easy it is to set up. But certainly for me, you know, just connecting it into my stereo and having a play in multiple rooms was was fabulous. So love my system. Thank you, and get the software piece of that. That's pretty good. Alright, so your, your career between blackberry and Sonos a little bit different than the typical Ivey grad?
Patrick Spence
Yes
Eric Morse
Probably a little different than the typical business grad for that matter. So, you know, what was? Was there an early indication, hey, I want to I want to work in a startup, I want to work in tech. You know, where did that come from? What was the inspiration that influenced you?
Patrick Spence
Yeah, no, it really, it's fascinating, right? When you start to look back, so it's been 20, I think it'd be 24 years for me in tech, I can hardly believe it feels like I was at Ivey just yesterday. But both sets of my grandparents were farmers, and very much, you know, I think that's like the ultimate and entrepreneur and kind of, you know, fighting the elements and everything that comes at you. And so I think there's a spirit there that I definitely admire and spend a lot of time with them. And I think one of my uncle's was an entrepreneur and started producing flowers and a bunch of agricultural businesses. And I always kind of looked up to him, because he seemed to have an exciting job. And it was cool and those kinds of things. But I would say, one of the most formative things as I've thought back on my life is we had the good fortune when I was in, I think it was grade three or four that were one of the schools in London that actually received a Commodore PET computer. And, you know, I was able to use that and do some programming. And it really fascinated me like the way it would work and what we could do, and, you know, I was thinking about it, you know, I could create a program which could do addition and like send a little rocket on the screen, and it was the coolest thing. You know, when you think about it now and think about what's possible. It's kind of like oh, My goodness, but it was so cool. And I just wanted to understand, right, like, how it worked and in those kinds of things, so we were lucky enough to, you know, eventually my parents splurge to get one at home. And they spent a lot of time, you know, typing programs and trying to come up with new programs and fun things to do. Interestingly enough, I think I got away from that there's two formative things in my life. One is I think, the technology and my passion and curiosity, quite frankly, around technology. And then team sports. So I played a lot of team sports played volleyball at Western. And I think I got back in touch with the technology side, actually, when I went back to Ivey and we started to get into some programming and some things that we were doing there in management science, and it started to re interest me and like kind of reignite the flame a little bit. And it was fascinating, because all of the forces, you know, of the school were very much like, you know, start in consulting or investment banking or something like that. But I felt like, no, like, the technology is where I belonged. And like you said, it was quite different.
Eric Morse
Yeah, for sure. I mean, I think that that story wouldn't be as unusual today. You know, a lot of our students now have grown up with tech and yes, computers in their homes, you know, for their whole life. Right. Yeah. But back then it Yeah, it was a little different. For sure. Yes. Yeah. Cool. You know, any favorite memories of of that Ivey time that you're with us or Western?
Patrick Spence
Yeah, I mean, most of them involve the Ceeps or the Spoke. Like I do think as you look back, right, you look back on the friendships that you have, and I still am very good friends, were three grads, from Ivey, and we get together, at least annually, you know, and it's just like, we were back at school, and those kinds of things. And so I do think like the relationships and the network that you build, I'm in touch with a lot of different folks from Ivey from time to time. And so that's special, I do think I'm not sure it's done anymore. But 48-hour reports, you know, when we had those deadlines, and like the pressure of that in a group environment, figuring out who would do what kind of working through some of the, you know, some of the issues and different decisions and some of those things, it's so applicable to real life and actually trying to go through and make tough decisions and deadlines and some of these things, I just feel really well set up in the conversations, we had the cases we would go through, and assignments, like that kind of puts you in a great position to solve real world problems. And so I look back fondly on you know, those 48-hour reports for sure. Like, as part of the school was a really interesting and kind of like challenging experience.
Eric Morse
That's great. And I'm glad to hear it as well. Somebody wants to know already, Patrick, if you read all the books behind it,
Patrick Spence
between me and my wife, we have yes, some of them are my wife's. But we have. And it's very funny, because I do an all hands with the entire company every week from here. And I've had that question all times for people there as well, because people actually ask and they're like, is it real? In the background? No, this is real. Books. And we're big readers.
Eric Morse
So yeah, fantastic mine is just an illustration. It's the new entrepreneurship building that they...
Patrick Spence
Just beautiful
Eric Morse
So pretty awesome. All right, let's go back to Research In Motion. You know, you spent 14 years there, variety of roles, obviously, increasing accountability and responsibilities you went, you've kind of been through being first in the market, and then seeing all the big players come in. And, you know, what are some of those lessons that you learned? While you were at RIM that you apply now at Sonos around design, innovation competition? It's a big question.
Patrick Spence
But, ya know, it's a huge question. You know, and I think we started out with a hypothesis, you know, at RIM and really, so I think what you want to find ourselves, particularly as an entrepreneur is some macro trends that are happening that you can ride the wave of, right, and because then it just comes down to like Team, execution, kind of timing as well, we were kind of at the intersection of the world of computing, you know, kind of shrinking, right and becoming something that you could put inside a handheld form factor. So that was a big thing. And we worked closely with Intel to do a 386 processor at that point into, you know, a handheld device, then wireless was getting to a point where you could transmit packets and texts and some data in a way that you couldn't previously. So that was kind of new and upcoming, and today, it's everywhere but this was at a time where, you know, that was brand new. And then email was just emerging at that particular point in time, we'd used it at Ivey a little bit. And what's happening, it's funny to talk about these things in hindsight, given how to use them now. But you know, at the company, we saw the convergence of these trends, and we said, we can put together a solution that's a little bit different; an integrated solution. And Eric, you talked about the simplicity of Sonos, right, and it's very similar is that so at RIM there was a ton of complexity behind the scenes, right, and a ton of different engineering hardcore engineering disciplines that we had to take and meld together to create an experience that then a consumer could actually use right and there was So much complexity into it. But really trying to create it into something that was simple for the consumer was key. And it's exactly the same way at Sonos, which is we have disciplines, such hardcore engineering disciplines like real rocket science that happens, our job is to try and figure out how we take all of that great work, and make it super simple for customers and create a great experience. Right. And so there were two kind of in putting it bringing it to life, there were two academic type theories that I would say, you know, kind of, were important in both cases, one is Clayton Christensen's 'Jobs to be Done.' And really thinking through that, right, as opposed to technology, because what you can find, particularly in technology companies, is sometimes you will find yourself falling in love with a particular technology, right? And you lose sight of why is this important to the customer, right, and let's remember why we're here and what we're doing. And the other is Geoffrey Moore and his great, you know, writing around "Crossing the Chasm" and inside the tornado and some of these technology, adoption curves and kind of how to approach that. And so my entire career has been about being an underdog when you talk about those competitors that were out there, right, in the incumbents that are there. And so, you know, at RIM in the early days, it was like, There's no way you could possibly play in this space, because of you know, Motorola or there's a company called Glenair that did paging, you know, and then, as we moved to phone, there's no way you can play in this space, because of Nokia, and Motorola and Sony Ericsson. Right. And then it's been the same at Sonos, which was like you can't possibly be successful because of Bose and Panasonic, and Samsung, and some of these players. And I always joke with the team, that the reward for becoming the biggest in the home audio space. And you know, kind of like taking out Bose and some of those other players was then we get to play against Amazon, Google and Apple. Right. And I think I think the key, I think the key at the end of the day is, you know, really being focused and staying focused on the consumer and like that job to be done and pushing, like, using your strengths and kind of pushing the experience forward, trying to look at the macro trends that are happening, and how can you intersect those with an experience you think will be valuable to customers? I would say the distractions, you know, at RIM really came when it was much more about chasing competition. And you know, and also some of the incentives from some of the mobile phone carriers that were out there that we you know, we started to chase as opposed to lead. And that's a very important thing. And it's hard, right? It's hard when you have a lot of forces coming your way. And people are like, No, you should do this, or we'll write you a big check to go do this. I think staying true to your mission, and kind of where you need to go and where you think the customer is right and continuing to stay in touch with the customer is extremely important.
Eric Morse
Yeah, it's so hard to I mean, if you think about it, I love that idea of jobs to be done. Because it's not just jobs to be done today, but jobs to be done tomorrow. And how do you how do you get there first, as as a leader, as you said, is always hard. So you're looking at trends, what else do you doing?
Patrick Spence
You know, trying to think a little bit, you know, there might be hard decisions you have to make about the future in the sense that what you're doing today may not be what you do in the next decade. And so a great example of that is with BlackBerry, we had this great book called "Losing the Signal" on, you know, really this whole experience of BlackBerry that I was one of the contributors to... and it goes into great detail on this. But BlackBerry Messenger, you know, was really was something that had 80 million daily active users, that was really on the upswing, as our hardware business was falling behind and on the downswing. And, you know, we had a moment in time where we could have taken BlackBerry Messenger and put it on iOS devices, Android devices, and the PC. And we, you know, we we didn't have the courage to make that call, because we knew that it was driving, you know, the hardware sales as well. And so we really wanted to do that. And so that's where then you get into another Clayton Christensen, you know, "Innovators Dilemma" situation where you can't move to what you should and would be the next big growth vector, because you are focused on you know, the history and kind of where you've been and what you think you have been in the past. And so in contrast to that, here at Sonos, one of the things that I did that was a bit sacrilegious, to some degree was a partnership with IKEA that I mentioned, where we took our software, and we took some of our basically the insides of a Sonos speaker, and partnered with IKEA to enable them to create furniture that makes sound and those kinds of things, because I want to experiment with things like that. So because, you know, maybe that's more indicative of the future, we will have then, you know, building products ourselves, right, and those kinds of things. And so, I do think that you have to be willing to experiment and be willing to be open to the fact that what you do, you know, today may not be what you do, you know, 10 years from now, as well.
Eric Morse
Sometimes you have to eat your lunch.
Patrick Spence
Yep.
Eric Morse
Yeah. That sounds like some lessons learned there. When you left RIM for Sonos, that had to be an interesting decision on your part. Different space (Yep), technology but different space, different competitors, different technology, both good brands, but what was it that was really exciting about that for you and that opportunity?
Patrick Spence
Yeah. As I've kind of reflected on why I joined, you know, both BlackBerry and as well Sonos, it really boils down to three things that it's one is the mission; you know, and do I feel connected to the mission that the company is on. And the second is the people that are inside the company. And the third is the opportunity... an opportunity, you know, to really learn, grow and contribute in a big way. And do I think the market opportunity is there? So that, that is my criteria for like, why join the companies and I do encourage people to think about what's important to them, and what's their criteria going to be as they think about what they want to start or where, perhaps where they want to work. So for me, you know, I knew I didn't want to go to I had a lot of colleagues from RIM that would go to Apple or Samsung, and something like that. And if you would have been Canadian, having started there, when there were 150 people and really built it, I mean, if you would have cut me, I would have bled BlackBerry at that point, I still do. And so I knew I wasn't going to go to and I just felt like I couldn't after all those years of, you know, selling lots of people on BlackBerry, it just, it just didn't feel right to go to, you know, a competitor or something like that. And I talked to the I had Sonos, and I talked to the founder of Sonos, John (MacFarlane). And I was just intrigued, you know, by what they were doing. And John had had an experience similar to mine, where he had started a company, and it had grown into, you know, billion, multi billion dollar valuation, called Software.com. And then, you know, went through a bumpy patch, and that kind of thing, and Sonos was really the second act for him. And so we kind of bonded over the notion of trying to build, you know, not only great products and products that we're proud of, and you know, we'd be proud, we're proud for our family and friends to use... But you know, something as well, culturally, that would be great and sustainable for the long-term. And so, we really bonded over the way we thought, a lot of companies did things wrong. And the idea that there's a right way to go and build an organization and build a culture and build it for the long term. So that far outlasts any individual. And neither of us, you know, really bought into the fall to the kind of the, what is it like the myth of the founder, you know, compliments like God in some of these things that, you know, kind of appear. And so, I really connected with John, the other members of the team, and it felt like, I could take everything that I had learned at RIM, you know, both good and bad, and help apply that at Sonos. And it was an opportunity for me to take on an expanded role. And John said, he eventually, you know, he wouldn't want to be leading the company, forever. And so that seemed like a, you know, a good partnership. And here we are. So...
Eric Morse
Ah fantastic. chance for you to stretch and learn.
Patrick Spence
Yeah, exactly.
Eric Morse
So I don't know if this is dicey or not, you can tell us as much or as little as you can, I suppose. But you had a major lawsuit against Google, and I'm already getting some questions in here. You know, taking on Google seems intimidating, no matter what the arena. Is there anything you can tell us about that experience? You know, what, what drove that? And, you know, I happy with where we've gone with it?
Patrick Spence
Yeah, I mean, it was what it was, after a lot of conversations, you know, with Google about the fact that sort of set the stage, I guess, I would say, you know, we invented this category, which today now is pretty well known and understood as the smart speaker category. So Amazon's jumped in, Apple's jumped in Google's jumped in, you know, so we've had conversations with, of course, people that jump in, you know, and John and I, having been, you know, through this a little bit, and understanding that when you are in a big category, something that's going to be big in the long term, you want to protect your inventions. And that's what we've done through a patents and intellectual property portfolio, we knew people would be coming in, and we want to make sure that we are protecting the inventions and the hard work of all of our people. So you have those conversations with people and we work with, you know, we work with all of those companies and their support their music services and voice services. And we still do, even with Google, but it came to a point where I didn't feel they were taking it seriously. And like I had to stand up not just for, you know, our intellectual property, and Sonos. I also testified in front of Congress for any trust, as well, because I feel like the you know, there's a few large technology companies that have really grown, you know, in great power that can reduce competition, which isn't great for society and upcoming entrepreneurs. And so there's been some companies that, you know, have really had challenges where some of the big tech companies have simply copied what their products have done and they haven't had, you know, patent protections or they haven't really known what they're doing. And you know, and they're done. To me, that's not right. We were thoughtful in terms of making sure that we protected our inventions. And, you know, we felt Google infringed on those inventions. And just this month, the International Trade Commission has agreed with that and said that Google needs to stop doing that. And they need to stop shipping products that infringe on our electoral property. So that's a big win. For us. What, what steeled me in taking the stand is, I mean, entire life experience of just standing up for what's right and watching at times, you know, Jim (Balsillie) and Mike (Lazaridiand) at RIM, really stand up for what's right. And in some of the battles that we had there at certain times, John, you know, as well soon as my parents, right in terms of doing these things, and just a general feeling of, you know, like trying to stand up for everybody that's out there, trying to invent something and make sure that we create, you know, hopefully a basis and really a society where we have more, you know, entrepreneurs and innovators, and they can make a go of it right, without having big and powerful forces, simply copy what they're doing, you know, and kind of suck the oxygen out of the room. So, yeah, it's, you know, it'll be an ongoing battle. As we go through these things. You know, there's still federal court case and damages that will need to work out through that. But I definitely feel a responsibility to do it for both our team and all the people that have put their blood sweat and tears into creating this industry, this category. And then as well, for all the others that are out there trying to break through with their next innovation.
Eric Morse
Well, thanks, Patrick. I think, you know, it's admirable and I think the tech industry in general entrepreneurs, it's a great thing that you're taking that on, and that you have the, you know, the depth of pockets to do that, where some entrepreneurial companies don't. Right, so I appreciate it a lot. So, you know, this takes us a little bit, maybe Canada, US differences. Canada has an interesting history with innovation. We do a lot of innovation, but we don't necessarily scale it. Well. We don't hold on to it. Well, what do you think about Canada, and Canadians in general might do better about establishing global brands?
Patrick Spence
You know, it's interesting, I really think and you know, you're seeing it with Toby (Tobias Lütke), and Harley (Finkelstein) at Shopify, and Dax (Dasilva) at Lightspeed. And there's all sorts of great companies that are, you know, emerging... I think some of it having now really experienced in depth the difference again, huge generalizations, right? We aren't going to make it in this conversation. But I think there's a belief in the United States a bit of like, you know, why not me? And, and I was encouraging, you know, you and I were talking about the C 100, I was encouraging Canadian entrepreneurs, the same thing, like why not you like, there's no, there's no reason, particularly now that the next great company or brand can't come out of anywhere, quite frankly. But in Canada, we have such an educated, amazing workforce, we have everything we need, we have the money now as well. So there's no shortage, and VCs from the US will fund Canadian companies, you don't have to move, you don't have to do these things. Like we have all the tools that we need. And I really think Eric, for everything I see, there's often a lot of hand wringing around, you know, well, can we really do it? Can we not like we almost we have a well placed, or sometimes well intentioned, kind of, you know, questioning of that, but that I don't see with a lot of American entrepreneurs, where they're more like, of course, I can do this, because, like, why not? And from everything I've seen, like, I think I've been inspired by, you know, some of and we saw this a little bit, when we started hiring a lot more people out of the United States to come to Waterloo, we were at Blackberry, like, there's a bit of a spirit of just like, yeah, like, let's give it a go, you know, and, and why not Me? And that's the question, you know, I say to any entrepreneur that's going through is that there's nothing special about being in Silicon Valley these days is there, you know, maybe was in days where we couldn't do this, or we couldn't, you know, collaborate on code or, you know, do those kinds of things. But we've been, both of the companies that I've had the honor of working for have have not been in Silicon Valley, and we've been able to become, you know, world leaders. And I think the more and more companies will be like that, I don't think you have to be there, I think you get a different perspective, and that you can see different things about jobs to be done, I think you can attract different talent. I think it's useful in certain industries in that way. And so I think a lot of it, is just getting on with it. And if you have a good idea, like pursuing it, and you know, and like you can go get the money and all of these things, there is nothing in our way, there is nothing in our way in Canada, of, you know, having a very vibrant entrepreneurial community. And we do to some degree, I think we have a better immigration policy than the United States, for instance, that should also help us right, and those kinds of things. And so it's really a matter of, you know, just the spirit of recognizing that we can, you know, do whatever we put our minds to, to go through it and there's there's there's fewer and fewer barriers than ever before.
Eric Morse
Yeah, I agree with you completely. I Because I think it's why not us? And I think it's a question we need to ask for and more can be done from here. And I think there's some advantages we have in Canada. Yeah, pointed out some of them. And I think, you know, looking out the window in the snow may not be one of them right now. But other than that, I'm looking at your window, it's a little different. Other than that, I think we've got some great advantages.
Patrick Spence
Totally, totally. Yeah.
Eric Morse
Hey, I wanted to say, you know, given that idea of giving back, and you've, you've really helped our students a lot, and the entrepreneurship ecosystem we're trying to create here at Western and, and and Canada, you know, to a larger extent. So what is it that that drives you for that to give back in the way that you do, because you've been so generous with your time, and it is appreciated.
Patrick Spence
Well, thank you for that, that's very kind of you. And I, you know, I feel like I need to do a lot more. And I think you go through certain phases in your career where, you know, like, that is your responsibility, quite frankly, but but I also feel like, you know, I've, I came into it with certain, which I'm sure a lot of students go through right now, which is like, what is what is it like? And can I navigate this world of starting a business and like building a global brand, and some of these things, you know, it can be intimidating, and it can feel like a mystery, right? To some degree, I want to demystify it, you know, for people and help them understand that they can do it, that I'm just, you know, a regular person from a regular town that, you know, had grandparents that were farmers, and my dad worked at Ontario Hydro, and my mother was a nurse, and you know, and I went to Ivey, which is great, you know, as a school, certainly, like on the Canadian context, but when you play globally, you know, there's like, a lot of, well, did you go to Stanford, or Harvard, or all these things, and what I found is like, again, none of that needs to be in your way. And sometimes we can over rotate a little bit on some of the some of the barriers we might set up for ourselves. And so I spent some of my early career, I think it was trying to emulate people that I saw being successful, you know, as a way of, of doing that. And, really, it boils down to like finding your own path. And being true to yourself. It sounds super cliche, but it's true is like, you know, making sure that it's kind of connecting with what you're good at, not necessarily passionate about, but what you're good at. And I just want to help people, you know, find that and kind of find that path for themselves that they feel like, yeah, you know, like, I'm having some success, I'm able to build this, and I understand it, and there's no reason I can't be successful, no matter how successful somebody is, and I've had a chance to meet some really successful people. Like, they're still trying to figure it out, like, you know, I'm trying to figure out what's next. And like, you know, right, if they're on top, how do you stay on top? Right, you know, to your point earlier, right. And so because this is all very precarious, and so nobody has it all figured out. You know, as one early in my career, somebody had said, everybody puts their pants on the same way, right? And so, you know, there, I hope it inspires people to give it a go if they have an idea, right? Or maybe, you know, take that job at the company that maybe their classmates would scratch their heads a little bit up, but that feels like the right one to them. I mean, that was the case with me. And people got people saying, like, where are you going? What's this? Like, what? in Waterloo?
Eric Morse
And so you're farming with berries?
Patrick Spence
Yeah, that's right. But I hope, you know, I hope it inspires people a little bit to maybe take a chance, right, as well. And one other chance I took that, you know, for me, I hadn't really travel a lot. But it was a couple years, what was it? What was it I was probably four years into RIM was starting our business in Asia Pacific and moving halfway around the world, right. And I didn't, you know, and I had nowhere to speak different languages, or all those things, but I did it. And it was one of the best things to do, right, which was put yourself in those situations where you're really stretched, you're out of your comfort zone makes you better, as better as a person better as a leader, and just provide you a better perspective on life. And so I hope to inspire people to do that and help demystify, like what this world is all about.
Eric Morse
Yeah, no, well done. I, I were kind of answering some of the questions in the in the text. And if you have other questions, please, you know, bring them up. But, you know, somebody was asking, you know, do you have any advice for university students, but I think what you just said was, was brilliant that way, you know, anything else that you would add to that or anything else you wish you knew? Before launching your career when you ...
Patrick Spence
Well I do. I do think kind of getting in getting in there. Being curious. Right? So one of the founders of BlackBerry, Doug Fregin he was the guy that came and set up that he was under my desk day one setting up the phone like you know when the computer for me that was there and so there's a degree as well of like, just do what it takes like when I when you know, I starting up or Asia Pacific region, there was a lot of like, dirty work involved and just like, you know, sorts of stuff that I think some people would say, like, well, I shouldn't have to do this or I shouldn't have to do that. And there's you know that that's my emails on our support site sonos.com, you know, today so that customers can email me if they have an issue, right. And I will respond to as many as I can, I can't respond to all of them, but there's many that I do. And so I think the like staying kind of humble about it all, you know, staying curious about what's happening in the company, in the world, with customers, all of those things is really important. And again, you know, follow instinct for most of the people that I know, you know, their instinct is pretty good in terms of situations where, you know, they'll, they'll have a chance to be successful and kind of the path that they're on and those kinds of things, I think it's a lot of times, outside forces and ideas of what we should do that maybe knock us off the path that might be best for us. And so, you know, stay true to yourself as you think about where you're going. And again, it's not about what you're passionate about, because you might be passionate about a sport or you know, other areas, things that really aren't going to necessarily be your career, but it's about finding what you're good at. Right? And we're, you know, we're that how that gets you kind of energized on a day to day basis. And if you can tap into that, I think it's something powerful.
Eric Morse
Thanks. Really great question here from Matthew, in early stages of a startup, and you're building your entrepreneurial idea out there, how do you protect your idea, while also reaching out to those people who can help, you know, grow your idea and make it something worthwhile?
Patrick Spence
Well, that's a, you know, there's there are legal mechanisms like NDAs, you want. So one thing would be if it is something that's truly unique and different is be in the background filing for patents and making sure that you have that covered, because that that will help and then even if somebody were to copy what you're doing, you will have that protection and be able to do it, but I think it's, you know, I think it's tough, because you are starting to meet with partners and those kinds of things. And we, we were very paranoid about this in meeting with Microsoft in the early days, because we were integrating with their email system and so we wouldn't tell them much, you know, in terms of what we were doing, and just tried to, you know, try to provide as little as possible, go through that, because we felt like they could, you know, try and copy what you're doing and those kind of things. And so, you know, it there is no, there's no like playbook on that, you know, you kind of have to figure out you have to figure out the partner you're dealing with, and kind of what you know what the person you're dealing with, and how you can trust them. But at the same time, you know, in the background, I'd highly recommend you be filing intellectual property on your ideas and making sure you're protecting it in that way. And then as you get bigger, you can have NDAs, and those things, but even those are of nominal value to some degree, and just making sure that you've got actual intellectual property filed through patents or copyrights, in some cases, and those kinds of things, I think, is important,
Eric Morse
And work with people you trust. I mean, most people are there to help you.
Patrick Spence
That's right. That's a that's a very good point, I would say, through my career. And again, actually, like, you know, having lived and worked in Asia, and that as well, in Europe, you know, not only are most people deserve to be trusted, and but I think we're much more similar than sometimes people make, you know, make different countries and different people out to be and, you know, largely people are out there trying to do a good job and raise a family, you know, and lead a good life. And if anything, like you know, I think it should encourage people that most people are for that, and you'll probably have an instinct if somebody is not, you know, not that way, right? We all live and learn on that.
Eric Morse
So yeah, yeah, for sure. Not sure. We talked a little bit earlier about, you know, as a non tech student getting into tech, and it's question here. Do you have advice for non technical students and maybe how to break into the industry?
Patrick Spence
I did a lot of early work. So early on (at) RIM. I was... I think I was the only non engineer that was there. Yeah, pretty much. And so I did a lot of work, you know, at night reading and understanding. And so... And even to this day, like on new technologies that are coming into our industry, I have a well curated list of like podcasts, but as well, people I follow on Twitter that write, and they're doing research and those kinds of things. And so I think you have to do a little more work on technology and trends and some of those things. But what I've found is, you know, over a period of time, if you stay curious, and you stay, you know, continuing to stay up on what's happening, like you almost will catch up in a way because certain aspects of the technical education, technology, education or engineering, like will be dated as well, right. And so there comes a point where it almost like crosses over if you're staying there, but you have a little more work to do, coming up. And I would say get started in like a product management type of job, if you can, because then you'll be at the intersection of both engineering and marketing and some of the expertise that you built on the business side. And so you can bring some of that into it. But it's good to force you into working with engineering and some of the technologists and understanding their perspectives. And that's a whole art in itself is working with those folks, as well. But I would encourage you to do it and kind of you kind of you have to put yourself out there, which is a good thing. But try to step into product management, if you can, you may have to do product marketing, then into product management. But there's really no reason you can't over time. Get into you know that those kinds of disciplines. And I've seen both engineers and non engineers be successful in those roles as well. So,
Eric Morse
yeah, well, this is a tough question. Probably something you haven't had to deal with. But most entrepreneurs and most leaders that I know, have at some point in their career, do you have any advice on dealing with impostor syndrome?
Patrick Spence
I... do have any advice on it? I think, you know, how I mentioned that everybody's still, you know, trying to figure it out is probably the case, right? I would look at certainly when I was at Ivey and in early days of career, I would look up at people like Jim (Balsillie) and Mike (Lazaridis) or, you know, somebody like a Steve Jobs are at that point, you know, and you're like, oh, they must have it all sorted out and know exactly what's going on and be on top of it. And you'd learn over time that they don't. And Eric, I'm sure you've seen this, too, is everybody everyday is trying to just like figure it out, right. And like, you know, and understand. And, of course, we're creating direction we have, you get more experienced as you go. And so you start to understand, and you start to pattern match. And so you can understand different scenarios and situations, and you get better at how to build relationships, interact with people and some of those skills. But still, you know, I want Sonos to be here, you know, long after I'm gone, and be something that is growing, you know, relevant and a great place to work. And so I'm always thinking about that and thinking about, okay, what are we going to do? And what's next? And what could disrupt us and some of these things? And so I think the the reality is, is that, you know, if anybody looks like they have it all together, it's only perhaps like, at a moment in time, or you're seeing one aspect of that particular moment in time or where they are. And they, you know, I assure you, they do not have it all together, in going through there. And that's, that's why I say as well, like the whole notion of why not you, right? Like, why not us? Why not anybody in Canada, because I think it just again, just huge generalization. But I think for some reason Americans are better at being able to say, like, kind of put that out of their mind and be like, Yeah, I can go and do this. And they will go and do it. And they're no different. Like, it's no different whatsoever. So it's almost like, you know, you have to realize that, that most people are like that. I guess if they're not they're probably narcissistic or ...
Eric Morse
so yeah. know exactly what to say that exactly. All good leaders that I know have a little bit of that in them because they want to get better. They they know they don't know it all right, with Andy, Andy Groves, Intel, right, managing through paranoia, because he was always worried about stuff. And yeah, yeah, I agree with you. I think it's something you just have to understand, hey, everybody goes through that. And it's about what are you doing to get through it? And why not you? I love that.
Patrick Spence
Yeah, don't let it freeze you to your point is that look like? So I work every day to like, earn the honor to have the job that I have, right. And I'm always working towards that. And it was great. One of our board members, you know, when I was appointed CEO, one of our board members said, you know, you're not ready, and you will figure it out, right? No one's ever been at this point. No one is, no one is ever ready. No one's ever ready to start a company. No one's ever ready to be a parent. But we all figure it out, right, as we get into these things. And so, you know, there are what millions of people that have done this, you know, ahead of you and you will figure it out, you know, as well. So...
Eric Morse
Yeah, so all those books behind the top top three books you'd recommend, either to students today or just that, you know, really top of mind for you that made an impression.
Patrick Spence
Yeah. Oh, so this is a tough one. But "Self Renewal" by John Gardner is a good one. That's, I think, from the 60s. So that's a good one. "The Courage to be Disliked," is another one by Japanese author (Fumitake Koga and Ichiro Kishimi) and that's really good for people that are, you know, people pleasers as well, and I think like getting into Ivey, like, do all the things we do we you know, like, it's a lot of people that have done everything, quote, unquote, right. And so I think that's a good one to be reading. I love Shoe Dog by Phil Knight, which is a great one from an entrepreneurial perspective. And if you Yeah, and that's a good one for if you think you know, somebody has it all figured out. But there's also another good one for from an entrepreneurial perspective is Yvonne Chouinard, the founder of Patagonia, it's called "Let My People Go Surfing." You want to talk about developing a different type of outlook on business and culture and those kinds of things? That's it's a fantastic book. If we had more companies like that, I think we'd be much better off. So yeah,
Eric Morse
I haven't read that one.
Patrick Spence
It's a great one.
Eric Morse
Yeah. John's (Gardner) that's a classic. I think that's before your time, man. (Yeah) All right. Good one here from Eduardo, what criteria should I look for? When I start when I start hiring my founding team, or those first several people around me?
Patrick Spence
You know, it depends what your skill set is, right, and what you kind of what you're pursuing, I guess, you know, as a as a business. So it's highly dependent. Just trying to think if there's something fundamental, so I'm very specific, whether it's, you know, we just happen to go through this for board members but as well, for a couple of different positions on my team, I try to get very specific on what it is that I'm looking for, experience or skill set wise, and then you're looking for point in time. So I would say, if you're looking for people that are... if this is the first company you're founding, ideally, you find somebody that has been through a startup experience and can kind of bring that in and complement, you know, your idea and where you're going with that. Because if you're all in the same boat, in terms of like, trying to figure out how to do this, it's probably, you know, you're going to reinvent the wheel a little bit, or have to learn lessons that people have already learned. So I might index more on that. And then you'll hear from everybody, you know, try to hire somebody that's better than you know, you in the particular domain, and you have to get smart in whatever domain it is that you are doing. And so whatever domain you're hiring for, like, let's say, if it's sales, right, you need to have a little bit of knowledge in that particular area. So you have to do a little bit of work, you have to talk to some people in that area. I would say, you know, and ask for it. But it's hard. It's very, because I think that question is very situation dependent. In, you know, in going through who you're going to hire in a particular moment in time. So...
Eric Morse
I mean, you know, people that have the same values you do, but that complement your skill set and help you in the direction you're trying to go. Right.
Patrick Spence
Yeah, I think the mission, part of it's pretty important is like, do they believe in the idea that you're talking about, and because that can be a powerful factor, you know, to really rally people if they're going to believe in you. I mean, you have to get them on board if they're going to join. But if they're really behind the idea, and they're willing to kind of put that same level of energy and commitment into it, I think that's, you know, that's really the key. versus, you know, are they somebody that's just, you know, taking it because they just wanted a job or, you know, need a different job. So, to your point about values, and that I think the mission is really important there too, and their alignment with it.
Eric Morse
Yeah yeah... I agree. Interesting question, what successful strategies have Sonos implemented during the pandemic?
Patrick Spence
That's hard to believe it's still, you know, we're still in it, I guess, an endemic at this point. But it was so scary in those first few weeks as well because, you know, we've been waiting, really, I think most companies have been waiting for like a recession to come. Things had been very good for a while. And so we threw out our playbook. I know, there's other companies that did this, too. And I said, Okay, what's most important right now, and it was support our people, make sure we're on strong financial footing. Because in a business like ours, right, with inventory, building things, so that you can quickly have major problems. And then third, can we bring more joy to customers. And so those became like the three things that we just rallied around and supporting our people. So we started to do things where we gave something called care time, and people can take time off to look after their, you know, their kids or relatives, like whatever they need to do. And we try to provide as much flexibility as possible. And we took some really hard actions to get ourselves on strong financial footing, which were difficult but necessary. And then we, you know, we kind of, we threw out all our marketing campaigns, we did new ones, which really focused on trying to bring, you know, a little joy and a little music to people while they're stuck at home. And so we ended up kind of coming up with some campaigns that were super effective on that. And it felt really, that was a great thing to rally the company around is how, you know, even though it's nothing compared to, you know, the kind of impact that of course, healthcare workers and others had to be able to find your way to contribute at least a little bit, and try to help make life better for people while they're stuck at home was a really powerful, you know, kind of rallying cry for our people. And I shifted, you know, I used to do an all hands with the team once or twice a month, and then I shifted to doing it every single week. And I also produced a video every Friday, I just recorded video was on my mind and trying to keep people connected and you know, those kinds of things. And so I really amped up the communication as well over that period. And, you know, when we've been able to weather it better than most and had a pretty, you know, successful couple of years, in spite of all the challenges and it just shows you the, you know, like the power of the human spirit and ability prevail because people just have done tremendous work to keep us on track launching products, and these are physical products. And so we've got people in the middle of the night doing zoom calls with our facilities in Malaysia and China and checking the production line and all of these things and It was incredible in terms of watching how people really rose to the occasion. Now, I would say, because we've been in it for a couple of years, certainly to like people are, I think Adam Grant said it well, languishing, right. In terms of this, it's been tremendous. People have been great. So
Eric Morse
That's great. So more communication on your part, you know, a twist of the mission a little bit, maybe to say, we're bringing joy into people's lives, you know, in a, in a tough time, and (yep), rallying people...
Patrick Spence
In supporting our people making sure, right, like we try to give our people, you know, try to help them through this period, be more flexible. You know, I would say in those kinds of things, but, and we did move some products around. So we moved some products around based on what we thought would be happening and what might be more appropriate when. So we made some of those decisions as well, which were hard and are fundamental to what we do,
Eric Morse
How is supply chain been? Have you been affected? Or you were integrated? Or how (Yeah)
Patrick Spence
I mean, across? Yeah, I've been, you know, in the tech sector for 24 years, and it was the worst I've ever seen it. And it continues, you know, and it's gotten a little better in terms of where we are today. But I've never seen it the way that it was, it was just, you know, it was a situation where everybody stopped over night, when the pandemic struck us, like many just said, okay, don't produce any more, we don't know what's going to happen, and we want to preserve cash. And everybody was doing that, that builds anything. And then, you know, two months later, there's injection, you know, you know, money injected in the economy. And it's like, okay, we, you know, we as a society are figuring this out to some degree, and people are spending and everything flipped the other way. And it's been, it has been very, very difficult. And our team has done a phenomenal job to be able to come up with parts. When we build, the board that goes inside a speaker will have different components on it, what have you. And we will have, we will usually have maybe one or two different components for each part of the board. And we're talking 300-400 components that are part of a board. And now we will have six or seven of those boards for each product because of the different suppliers and trying to make up for gaps that are there in those kinds of things. And so we've had a reengineering team that's done just tremendous work and trying to make sure that we can continue to ship products. But it's unprecedented. Never seen anything like it. And it's the good news is it's getting a little better. So...
Eric Morse
Good. Good to hear. Yeah. Good question here on Sonos Radio HD, where does it go from here? Do you see it as competitive with the other services that your users use?
Patrick Spence
So Sonos Radio HD is our, you know, really our streaming service a couple of years ago, we had some radio stations and that were on the system. But we felt like it wasn't really great for the experience. And we could do better, especially for users that didn't have a streaming service. But what we found is that most of our users will have a streaming service like Spotify or Apple Music or something, and they will listen to Sonos Radio as well. So there's times where they want to listen to on-demand and a particular artist and those kinds of things through Spotify. And then they also will listen to Sonos radio. And so we've been ... I think it's the third most listened to service on our system right now coming out of nowhere, basically. And we've really tapped into some unique artists and some unique ideas and playlists. So Kareem Abdul-Jabbar just did a station for us impulse records for jazz, right. And so we've been able to tap into some neat stuff. And so I expect us to continue to do that. It's also been a fun outlet for a lot of our people. So we've run stations that our people internally have led, and we did one for Pride Month for that one of our ERGs did, and for Black History Month and these kinds of things. And so it's been a fun way to kind of bring the brand to life. And so I expect you'll see more on that front. And I think it's very complementary to what our friends at Spotify, Apple, Amazon, Google are doing on the music service sprint.
Eric Morse
Okay, just a follow up on that piece. And it was from the question, you know, their underlying question, in some ways was how do you balance the software and hardware improvements without becoming competitive with those partners, that you really do need to be successful down the road?
Patrick Spence
I think most in the sector recognize now that it, you know, we're both competitors, and as well, partners, and so, you know, like, that happens in certain areas. And so, you know, most people are pretty aware of it, and, you know, they don't really, I don't think there's really much concern, you know, and we try to complement we're not trying to replicate what Spotify is doing. They're not trying to replicate what we're doing. So I think there's, you know, I think there's like some overlap, but not that much on that much.
Eric Morse
Okay. Great question here. What was the most difficult situation you're faced, as CEO of Sonos?
Patrick Spence
Em... most difficult? Probably the, you know, in the early days of the pandemic making a decision to say goodbye to about 10% of our people. So that was to get on the right financial footing and go through that. And that, you know, there's nothing harder than, you know, having to say goodbye to people in your company. And you know, that's, yeah, that's certainly the hardest thing I've had to do.
Eric Morse
Yeah, yeah. We kind of started out early, very first question, talking a little bit about the future. Anything else about the future of Sonos or major trends that you see that that could affect Sonos? And how you think about the future?
Patrick Spence
Yeah, I know, there's some really big ones happening now. You know, I keep saying it's a golden age of audio. So we're seeing, you know, more music created and going online. But podcasts as well. I mean, just like, you know, podcasts are going through the roof, and lots of listening, audiobooks, some of the social audio as well, like with Twitter Spaces and Clubhouse and some of that that is picked up. So we're seeing more and more audio. So that golden age of audio is a big driver that we've seen, and people are listening more and more engagement looks really good. The... I call it Hollywood at home where we're seeing more and more this year, it's gonna be over $20 billion spent in creating streaming content to go to the home. And so we play in that because we create sound bars and home theater products, which create great sound and theater like sound in your home. And so that's been a that's a huge one that I think is going to continue, even as people might return to the theater as well, in those kind of things like everybody is, is really enjoying like all of this great content, and it does it it looks like Netflix, Roku, HBO, everybody, Apple is just spending more and more money creating this content. So I think that's going to continue to be a big one. And then the great reshuffling is the other thing with a lot more people working from home and in different locations and all of these things is that if you're at home, it can be lonely at times, especially if your home all day long. And so music plays a great role. And we can play a great role in the home there. And so I think all of those trends are playing, you know, in our favor. Audio today is about an $80 billion a year market, and we will do $2 billion this year. So there's a lot of room for us to grow, we feel like we're in about 10% of the homes that we you know, ultimately should be in. So we got a long, long way to go on that front. And every day we're trying to, you know, fill more homes and keep it keep it moving. So...
Eric Morse
All right. Well, I have one more question. So if something else doesn't pop up here, we'll, we'll we'll leave it with you for this, you know, kind of greatest lesson learned that had an impact on your journey. And maybe your lesson that you leave with the audience today.
Patrick Spence
The I definitely go back to be true to yourself, right. You know, in terms of the, you know, I think early in our careers, we can have a, you know, almost because maybe it is imposter syndrome, or what have you, you think there's a way that you should show up, or you should lead or you know, that there's a proper way of doing it. And, you know, I think it has to be authentic to who you are. And you know, kind of what you learned how you develop relationships with people. And so I would ask people to, you know, be true to themselves in terms of where you're with, they're choosing to start or where they're choosing to work, who they're choosing to work with all of those things, and then you know, going... going to work and feeling like okay, this is a place that, you know, I can I can bring, you know my best and I feel like I'm... I can do what I was meant to do. And I feel comfortable kind of in my own skin. I think it's really important and and I think everybody has something to offer and you know, bring into the world and is unique in their own way. And so embrace it, you know, embrace what you're uniquely good at, find what you're uniquely good at, over time and, you know, pitch in but but stay true to yourself, you know, and I think you'll you'll find your path, and you don't have to try and be something that you're not at the end of the day.
Eric Morse
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