New Thiel COO Juggling Brand Legacy With Need to Grow Business

"Everything is on the table,” Bob Brown, interim chief operating officer for Thiel Audio, told Consumer Electronics Daily Tuesday about the company’s ongoing transformation following last fall’s departure of Kathy Gornik, co-founder and president. Product, personnel and distribution will all be under scrutiny as the new company tries to mesh Thiel’s audiophile legacy with 21st century lifestyles and realities, Brown said. “Too often the high-end audio business has been resistant to change,” Brown said. “I don’t think the business has to be this dead. The world has changed,” he said. “It’s adapt or die."

Despite the “interim” title, Brown, former Lenbrook America CEO and a member of the Thiel board, said the appointment has no defined period of time or end date and the company isn’t seeking another executive for the position. “Maybe interim is not a good word,” Brown said. His role is an active one where “a lot of operational things will be reviewed, analyzed and compromised,” Brown said, “as opposed to just going to board meetings.” Brown remains on the board of CEDIA and is the export manager for ZVox Audio, he said.

On how Brown envisions positioning the new Thiel, he referred to a “resurgence in two-channel audio” and the need to support the “cult following” of the Thiel loudspeaker brand while staying true to the legacy built by founders Jim Thiel and Gornik. At the same time, Brown emphasized the need to “exploit and grow and define ourselves around that heritage with new ownership and a new company.”

Brown joined Thiel earlier this month and one of his first moves was to bring in former Thiel dealer Stephen DeFuria as national sales manager. The move “has been applauded everywhere because he was such a Thiel person,” Brown said. “We didn’t push the envelope there and hire a mass-market guy or a guy who didn’t understand high-end audio distribution or product,” he said. DeFuria is positioned “right in the wheelhouse of what a sales manager of Thiel should be,” Brown said, and future direction on the sales side will evolve through dealer feedback, he said.

Feedback is likely to be tough in the early going, if the reaction from Pflanz Electronics, Sioux City, Iowa, is an indication. General Manager Scott Pflanz told us he’s had no communication from Thiel for more than a year since National Sales Manager Ken Dawkins left the company, and that spelled trouble to Pflanz. “I've literally had zero communication from them, and whenever I lose communication with a manufacturer that tells me something’s wrong,” he said. Pflanz didn’t hear from Thiel at CEDIA or CES about making appointments, he said, and “when you don’t hear from them, you tend to forget to sell them.” The store has sold a couple of pairs of Thiel speakers it had on the floor, but hasn’t reordered, he said.

Brown sent an introduction letter to dealers Monday promising to listen to feedback and expressing a commitment to the brand, but Pflanz is taking a wait-and-see attitude before making a commitment. “I have a customer who wants a pair of 2.7s,” he said, “but I told him to hold off. And I'm in hold mode,” he said. Pflanz has been steering customers that might have bought Thiels to B&W speakers instead, he said. The letter indicated to Pflanz that there’s a backorder problem, and the company’s first priority is to fill existing orders. Brown told us, “Production is going on right now as we speak” at the company’s Lexington, Ky., facility.

Brown will walk a fine line between staying true to the high-end two-channel legacy of the Thiel brand and becoming relevant to a new generation of audio enthusiasts. It’s a tightrope he’s had to walk over the past decade as the industry has shifted, he noted, and both industrial design and product application will be up for review. Brown’s top targets at the outset are wireless and industrial design.

A major challenge for Thiel -- and other high-end audio companies -- is to educate and bring some of the MP3 generation into high-performance audio. He is convinced that there’s an audience that wants better sound than “the computer approach” but the challenge is to reach that customer through social media or other means. “High-end audio companies need to understand we're living in a wireless world,” Brown said. “Instead of resisting that change, they need to adapt to that change and show how music can be delivered wirelessly through high-end, terrific loudspeakers,” he said. It’s too early to talk about products that are still in concept stage, but work is under way, he said.

More than sound, aesthetics are critical to the success of a loudspeaker brand today, Brown noted. “People hear through their eyes first now,” he said, quoting a colleague. “You have to capture them with their eyes first before you get a chance to capture them with their ears,” he said. At Lenbrook, Brown worked with an industrial designer from outside of the audio industry who “hadn’t been brainwashed enough” to want to do speaker design the way it had always been done. As a result, he created some “very interesting stuff,” Brown said. Although not all the designs were adopted, Brown was able to see the consumer electronics world “through a non-CE guy.” He hopes to bring the same viewpoint to Thiel. Through curves and shaping, there are “a lot of ways” to do speaker design, Brown said, and “the larger the speaker, the more important industrial design is.” Brown mentioned Sonus Faber as a competitor that has done a good job of creating large loudspeakers with “beautiful industrial design."

Bill Gibson, owner of House of Stereo, Jacksonville, Fla., supports the idea of a wireless Thiel product. “That’s the direction things are headed,” he said. Gibson is “cautiously optimistic” about the ownership changes, being gun shy after Harman took over high-end brands Mark Levinson and Revel “and things weren’t what we signed up for,” he said. A long-time Thiel dealer, Gibson has had $100,000 years with Thiel and annual revenue as low as $20,000, he said. The last couple of years have been “light,” through no fault of the manufacturer’s, Gibson said, blaming the economy instead. He had difficulty securing a few subwoofers from Thiel when they first began shipping, but overall, supply has met his demand, he said. On what he'd like to see from Thiel under new ownership, Gibson said, “a lower priced speaker.” He doesn’t want to diminish the brand but believes he could do a reasonable amount of business at the $2,000-$2,500 price point. He'd also like to see more frequent product turnover. “A 10-year life cycle is too long in this day and age,” he said.

With DeFuria in place as national sales manager, Brown will focus on overhauling Thiel’s infrastructure including personnel, engineering and customer service, “starting from scratch,” he said. “We're not saying, ‘how do we tweak this,'” Brown said. “We're saying, ‘what should this department look like?'” There’s “nothing that isn’t being reviewed” Brown said in what he said would be a “slow, painful process.” As part of that process, dealers and distributors who have stuck with the brand “deserve to be heard,” he said.

Distribution in the age of e-commerce remains a sore point among Thiel specialty audio dealers after former Thiel management added Amazon to its ranks of online distribution following agreements with Audio Advisor and Crutchfield. “They're not all continuing,” Brown said of the e-tailers, declining to say which would stay or go. “I'm not here to discuss Kathy’s management of the company,” Brown said on Gornik’s decision to broaden distribution online. “Businesses get down and people make decisions in the heat of the battle that turn out not to be the best for distribution of the brand,” he said. “We're revisiting everything,” Brown said, “and particularly Internet distribution.” Those decisions will be made in coming weeks, he said.

Calling himself an “Ace Hardware kind of guy” who appreciates service, Brown said he wouldn’t buy a $14,000 pair of loudspeakers over the Internet, referring to Thiel’s most expensive model, because of potential servicing issues or other circumstances that might arise. “I don’t know if we've reached the point where that’s a good idea,” he said. “You have to make sure the people you're doing business with understand the care and handholding that goes with selling products at this price altitude,” he said. “It just can’t be shipped and serviced properly,” he said, saying the scenario isn’t good for the retailer, brand or consumers.

On whether Thiel might produce a more affordable product line to grow its audience, Brown said the company needs to focus on “sensible extensions” of the brand but needs to “get current distribution straight” before adding product. The most recent introduction was a $4,000-per-pair model that’s still too premium for online distribution, he said. “I could go to China tomorrow, get a $500 soundbar and have them throw Thiel’s name on it,” he said, “but that would be a stupid thing to do.” He referred to other high-end brands that “extended down-market” and “killed their brand legacy.” Thiel would like to grow and extend the brand, he said, but “over time” and in a way that respects the history of the brand.

Brown conceded e-commerce is here to stay, and Thiel has to work out a way to work within the system. He referred to early Internet days at NAD when “we didn’t want anything on anybody’s website,” which he called a “crazy idea.” Now e-commerce is “ubiquitous and it would be a stupid thing to resist that,” he said. Manufacturers need to align brands with distribution and acknowledge that the retailer has two means to represent a brand: on his website and on his showroom floor, Brown said. “You can’t separate the two,” he said. “You have to go overboard to support the store with good photography and make sure you're represented on his website. That’s the portal through which more people see him versus his showroom.”