Jeff Poggi on the Art and Science of High-End Audio

If you're at all interested in c d S or LPs or music generally, if you're at all any type of a gear head, gadgethead, audio file music fan, well you're gonna find this to be a fascinating behind the scenes look at the maker of one of the most prestigious and high ends audio that's out there. If you're not familiar with Macintosh, they're one of the few brands out there that never stopped using tubes, even as technology changed the quality of music. That the warmth, uh, the

natural sound out of a tube amplifier is unique. Their equipment is not only spectacular, uh it's beautiful looking. It it just has a unique visual feel and it costs quite a few sheckles. Their equipment is eye popping lee expensive, but for the people who can afford it, they say it's worth it. If you've never had a chance to check out McIntosh equipment, you should pop into an audio store as soon as they reopen and just be prepared

for a live experience. That's what it's like. I found the conversation very interesting and I think you will also, so, with no further ado, my interview of Jeff Pogi, cocy E of the Macintosh Group VI is Masters in Business with Barry Ridholts on Bloomberg Radio. My special guest this week is Jeff Pog. He is the co CEO of the Macintosh Group, the legendary audio file equipment maker. The group also manufactures equipment under the Sonas, Faber and Rotel names. Previously,

Jeff was at Harmon International and the Bose Corporation. He comes to us with an NBA from Duke University. Jeff Pogy, Welcome to Bloomberg. Thank you, Barry. It's great to be here. So I've been looking forward to talking to you for some time. I'm I'm a music buff and UH part of a decreasingly sized number of audio files. But I have to ask you about that good enough seems to have taken over the music and audio fields, whether whether it's IPO odds or MP three's or streaming. How big

is the audience for better than just good enough? Well, it's a it's an interesting thing because the audience for our products has actually been growing every year. Our business continues to expand year over year and have done so well. McIntosh was founded in so we're looking at seventy one years in and this is going to be our best

year ever. So I think that, you know, the prevailing wisdom that says good enough is good enough, maybe we need to rethink how we're defining good enough because we we seem to be finding an awful lot of fans for some you know, authentic high quality audio systems. So let's stay with that idea that the concept of just good enough, on other words, isn't harming the high ends of the spectrum. It really seems to be having its effect on the middle and low end. Is Is that

a better way to describe that? Well, I think that it's really about I just try to define things about the customers, like how is the consumer thinking about the domain or the category of products. And if we if we want to do a look back at the industry and at how do people can consume music? We go back to our A M and FM radio. It's right, that's where we all started listening to shows and music and that was good enough for a long time. But you know, and we're still consuming more A M f

M content than any other media. Right. That's still the massive amount of content that we're consuming, but it's actually quite low quality when we think about it. Um So, I think that as we've looked at other types of media to consume music, whether it was alps or tapes or CDs. Uh, then we started doing digital downloads, which only lasted sort of a blip in the eye, and

we've moved on to streaming now. Um you know, the different media that we're consuming has changed dramatically over time, but there's always been a fan base and there's always been an audience for people who want, you know, a true high performance goose bump, generating emotional feeling to their to their music and sound. And that audience is actually quite large and it seems to continue to grow every year. Quite quite interesting. You're an engineer by training, what drew

you towards the world of music and audio wents out? Well, Actually, I think it's uh, it's an interesting story that you and I actually have some overlap in because I know you're a bit of a car nut UM and UM. I was actually drawn into music through cars. UH, when I found a job. I wanted to get into the

car industry. When I was a couple of years out of school and I was a mechanical engineer and I was working in factories and I loved building things and how things were assembled, and I thought getting into automotive industry would be fantastic. And I found a job at a company called Harmon International that was a factory making loudspeakers and Martinsville, Indiana, and it was a production engineer and a quality engineer in the factory and UH was

in charge of you assembling loudspeakers for automotive use. UM. And that was my first real touch into UM, you know, the space that I ended up spending my entire plus year career in. But really I was attracted for the automotive purpose. But once I got into UM, the science and the design and the technology of loudspeakers and amplifiers, and room acoustics, um, and how it all comes together to make a great sound in the challenging car environment.

It then you know, opened up my my love and appreciation for a really higher quality home music listening as well. Um and uh that's really how I got got attracted to it. And once once I got into the audio business, UM, honestly never looked looked back. It's been really a fantastic journey that has um you know, been fun from a product development standpoint of branding, a marketing and also just an overall emotional experience, a very rewarding time. So let's

stick with cars for a moment. The quality of sounds in automobiles has just gone up and up. I have a BMW with a bang In oliveson system in it. Uh the I think Audie uses them. Also, Meridian seems to have found its way uh into maybe it was Lexus, I don't remember where that that shows up? What Land, What what's going on with the ultra high end space in automobiles and what is McIntosh doing if anything in that area? Yeah, it sound systems and cars is really

it's been a fantastic uh, jur Ernie. Over thirty years now, from the early eighties when Bows actually first got into the business with Cadillac, and then UH Infinity got into the business with the Chrysler Group brands, and J B L was involved in Lincoln, and it really sort of exploded in the eighties and into the nineties, and by the mid nineties, UM luxury brands were really starting to look at UM the car the automotive o EM business as an interesting opportunity and that's where you saw Mark

Levinthon get involved with Lexis, which was really the first sort of super premium brand UM, which then paved the way for others like B and O as you've mentioned, and Bowers UM. And the quality of the audio systems in these cars has just gone up really by leaps and bounds over the years UM. And there's a there's a couple of key reasons for that. One one of the best things about a car is you know exactly

where the listener is going to be. UM. You know you you know the room, you know the size of the room, UM, you know where the listener is going to be, and so you can really do some amazing optimization. UH. And of course, in today's world, with all the BSP technology, we have at our fingertips UM you can really do some really precise tuning and optimization that we couldn't do years ago. UM. Obviously, the challenges of the car industry is that while you're in a car, you're moving, there's

wind noise and road noise. UH, there's a lot of reflective surfaces like glass and leather. There's also absorption absorption with seats and carpets, so it's a really challenging environment to make good sound UM. But it's it's it's been an area that's been expanding, you know, year over year, and more brands have found their way into it, and I think ultimately it benefits consumers because they did a fantastic experience and in many cases consumers have the best

audio system in their car, better than even in their house. UM. And with the with the Macintosh group, this has been a new area focus for us. So about three years ago we U we made a strategic decision to h look at the car industry and see if that could be the next category of products for us to come to market with. But for for the group, what's most

important to us was to find the right partner. UM. We are let's say very conservative in our approach, and we are very highly protective of our brands and want to make sure that the brand DNA is retained and everything we do UM and that really touches all parts of our business. And so if we're going to partner with a car company, we want to make sure that it's a true collaborative effort that can have some amazing

synergies for for both companies. And uh, you know, just recently in September, it was announced that McIntosh has been working with the Jeep brand on their brand new Grand Wagoneer concept vehicle that was unveiled by by Jeep first

week of September. And we've spent three years working with them UM on that vehicle and we have been part of every concept design studio activity that they've been doing, working with their engineers on integrating all of the different components, defining where they need to go, how big they are, how we're going to integrate them, UM, how you're going to do the tuning, what the industrial design is going to look like, what the UI is gonna look like.

It's been a massive, massive collaborative effort and and something we're really really proud of and we think that, you know, this collaboration between Jeep, which is arguably the most American of American car brands UM and Macintosh, which is, you know, the most American of American audio brands UM, and they're they're both of those brands being so i'd say, very

fan base. They have a very strong passionate followings. They have a very good reputation for high quality, high performance products. And we put all these things together and I think it's going to be quite exciting. I would not have guessed Geep first as the automotive parallel to Macintosh. I was thinking somewhere along the lines of of Bentley or asked in Martin not just to stay with British firms but more expansive ultra lux products. Am I mischaracterizing who

your audience normally is? Well, let me let me answer that in twofold, because there's a couple different sort of chapters of our automotive German journey UM. As you know, in addition to the McIntosh brand, we also have the Saunas Faber brand, which is our holy owned brand of

high end loudspeakers that are handcrafted in Italy. Um SNAs Farber has recently announced, or I should say Maserati has recently announced their MC twenty new high performance vehicle and that vehicle is going to be equipped with a SNAs Faber system UM, which is really I think an amazing high performance luxury brand to brand match, made in Italy, craftsmanship, attention to details, looks you know, frankly as sexy as it sounds in our case, or looks as sexy as

it drives in Maserati's case. UM. So that's a much more sort of high end premium to premium match, which I think works really well for both brands. UM. Coming back to the McIntosh question and its partnership with jeep UM. You know, McIntosh has a following that is a really passionate following of audio files for sevnly plus years UM.

But most of the McIntosh buyers are very practical people. UM. Often times we will hear stories that the McIntosh buyer is the person who has saved money for two to three years to buy their first piece of McIntosh in the year and it becomes a you know, a cherished member of the family and that you know they are happy to sort of slowly acquire their Macintosh system. Over many years UM as opposed to let's they appear high net worth UM, you know, disposable income, individual cook and

drop lots of money and an individual purchase UM. Those we certainly have for McIntosh. And there's many rock stars, movie stars, you know, Hollywood rich and famous that are are fans of our brand UM. And obviously they have the means to engage in a and a hundred thousand dollars two hundred thousand dollar McIntosh system at once, but they're really not the average customer. A Our average customers often times are even staring with used gear right there.

McIntosh has a really unique UM attribute and that we have probably the highest residual value of the of used products on the market. That the brand just holds value UM for a long long time, which is very odd for audio electronics UM UH. Most brands UH you know, depreciate very quickly. But if you buy a new new piece of Macintosh, you can often sell it three to five years later for very little decrease in your original value.

And then we're seeing people you know, use that that that sale to them buy up to the next next product. And so the used market often becomes the entry gateway for customers getting into the Macintosh. So back to the original sort of notion of his Jeep and McIntosh a good fit. I really do believe it is because I think that it's this practical view um of of the

world that both McIntosh and Jeep consumers share. UM. But that appreciation for really good, rugged, high performance products, which is what you you know, what you get when you buy buy a Jeep or or a Macintosh quite fascinating. Let's talk a little bit about some of the equipment that you guys make. Macintosh is legendary for still using tubes today to create a much warmer, more natural sound than just pure chips. What is it that makes your

products such best in class? Macintosh has had a long history of designing and manufacturing really the most high performance precision audio electronics in the industry UM, and a piece of this is, frankly, our focus on not only design

but also on manufacturing and doing both equally as well. UM. The the engineering process and the manufacturing process all take place in Binghamton, New York, at our manufacturing and engineering center that's been there for close to seventy years UM, and the engineering and manufacturing teams are working very closely together. When you look at a Macintosh product, UM, you see

these big blue, beautiful meters UM staring at you. That's instantly recognizable, the black face, the silver handles around knobs, you know, a Macintosh. When you see that consistency of product over such a long time, to have such a strong visual DNA UM is one of a you know, it's a it's proven the test of time. The fact that uh the audio circuitry that we design UM uses the highest quality components that is a variable available to

the industry is an important piece of this. Uh. The fact that we take the sort of the time and effort UM to wind our own transformers in our own factory. We actually bend our own metal or form our own metal for the cases. We have our own paint line that pends the products. We have our own screen printing area to do the printing. We have our own printed circuit board manufacturing area where we populate all of the

components on the circuit board. Of course, we have a very intricate uh testing uh uh system that uh you know, uniquely tests and identify every product so that we can make sure it meets all other requirements. UM. So really having this UH integrated manufacturing process guarantees us that the product that we're putting out UM meets all of the

requirements for McIntosh. So I think it's really this unique combination of collaborative engineering and design work that that goes hand in hand UM that that that guarantees that that that precision and high performance. And I'd have to say that that's that culture is probably the one thing that

really binds together McIntosh and Sonas Faber. So as our two main brands that we manufacturer, UM, Sonas Faber is sort of appear equivalent to that manufacturing process and design process, but for loudspeakers made in Italy and with Sona Swaber, we have a very old world craftsmanship process for everything from design to sourcing to manufacturing, where our engineering team again is all co located with the factory UM and

all of our suppliers are local to our factory. You know, these are very small volume, high precision manufacturers that supplies products and then our own assembly people are hand assembling the products. In Italy, were hand populating printed circuit boards, hand soldering them, or hand wrapping leather around cabinets. It's just a really intricate process that helps us, I think, design products better because we know how to assemble them

very well. Let's talk about that design process a little bit. How much of what you guys are creating or improving or updating is in response to the marketplace and how much of it is just, Hey, let's sit down and figure out what we can do on our own, using our own expertise and talent to to push the envelope to the next level. Yeah, it's it's a balance, um.

You know different innovation processes. Some companies are looking at sort of consumer driven innovation where it's very much outside and other companies are very much inside out where it's it's sort of that coming out of the R and D technology portfolio and sort of comes to the market.

We have a balance of both, and we have a bit of a structured product development process that includes, um, you know, the marketing group, the engineering group, the sales group coming all together, um, along with feedback from key

dealers and distributors in the sales channel. So we're sort of doing that constant sensing of the market to see what's going on and to bring those sort of key trends in for instant examples would be you know UM in the home theater business, when Dolby goes from Dolby five point one to seven point one to atmost right, there's different trends that are happening in the technologies that we need to be sensitive to to make sure that

we're grabbing those technologies and introducing those to our products at the right time. UM UH with the different wireless technologies and Bluetooth, Bluetooth High death or UM you have the different you know WiFi, UM we have home control system integrations. All of these technologies are sort of third party technologies that we want to make sure that are monitoring and bringing into our products at the right time.

But then there's the stuff that only we can do UM and one example of that would be the recently released MC nine oh one. This is a truly only Macintosh could do this product. It's a nine watt monoblock amplifier UM with a retail price of seventeen And you need to write because it's a monoblock, so you have to buy drew them together. But the really interesting piece of it is it combines we call it a dual

mono products, so there's actually two audio outputs. One is two based three hundred lots of tube based amplification plus six hundred lots of solid state amplification, and it's designed for a large loudspeaker where you're going to buy amp that product and you're going to use the tube power stage to drive your mid ranges and tweeters, and you're

using the solid state to drive your whoofers. It's it's really kind of a wacky, crazy product that UM doesn't exist on the market anywhere, and it was something that our our technology team, our engineering team came up with and as soon as we launched it, we sold out and we've been back ordered ever since UM because it's it's such a unique fun you know, Macintosh on my product.

But yeah, that's that's part of the fun of the engineers, right to let them loose once in a while, to do something that you know the market doesn't know it is coming. And it certainly seems to have responded to that, which which makes me wanna go back to what you mentioned about pulling all the teams together. You mentioned engineering and sales, but you also mentioned marketing. How do you guys market I want to say the product cells itself, but I know that's not true. Do you guys advertise?

What do you do to the Macintosh brand name in front of the consumers who were likely bias. Yeah, the biggest part of our marketing, UM, we focus a lot on PR. We do try to get drive the awareness of our new products UM, you know, through various media channels to try to get as much exposure as we can UM. Over the last many years, like every other company, we've moved from you know, traditional print advertising to more digital UM search SEO activity because that's how people are

searching for products these days. You need to be you know, online and available and have your products UM be discoverable through the digital side and social as well. And we spent incrementally every year we and a little bit more of our budget UM into the digital social space than the year before, so that becomes a you know, a bigger portfolio for us to try to engage in communicate with customers UM. But for us, a big part of our marketing is still a bit old school and it's

really about UM frankly, getting butts and feet right. If I can get you to sit down and listen to a pair of Sona Sabra Olympica speakers or Macintosh MC six eleven amplifier. I can probably get you to buy it. Um. It's the emotional experience that you get when you listen to a really great audio system. UM is amazing, right, It truly is one of those wild moments, goose bump generating times. And if you haven't heard it, you need

to hear it. UM. And if you have heard it, you know what I'm you know speaking of and and so a big part of our marketing is really working with our dealers and distributors to do events to bring people into the stores, to get them in front of the product, to get them exposed to the product, and give them that emotional uh uh, that emotional opportunity to engage.

Because these products may look interesting online you can get great rite ups and reviews and people can you know, from the High five Press can review the products and you can get five star awards and it's all great, and it all absolutely helps, but there's nothing like actually experiencing it for yourself. And it's it's no different than

any other Passion product. Right. It's one thing to say, boy that that you say you drove a BMW that BMW, Boy, that looks nice, but it's a different thing to get, you know, behind the wheel on a test track and really to you know, put it to its uh it's full potential. UM gives you a different experience and a different appreciation for the product, and so really driving people UH into getting great quality demos is the best way to market our products. Interesting, it's like the old joke

writing about music is like dancing about architecture. Doesn't really convey the full sense of the moment. There was one of my my first mentors, Floyd Tool Dr Floyd Tools from UH. He was the the c c TEO of harmon Um. He said that basically our job is science and the service of art. UM that the job of the manufacturer of products right is to preserve the art

of the creators. And I've that's stuck with me for twenty years now that you know, my responsibility is really too the musicians, to the producers, to the recording engineers, to the people that are creating the art. I'm just trying to do our best work to to make their effort worthwhile. Quite quite interesting, Let's talk a little bit about your title, your co CEO. You don't see a lot of that these days. How does that work. What are the benefits and challenges of having co CEO SU, Yeah,

it's for our business. It works honestly extremely well. UM. So I joined McIntosh Group just over three years ago now as the co CEO. Charlie Randall is my partner UM and Charlie has been with McIntosh his entire career. So he actually started in McIntosh as an intern engineering intern out of our I T and has been there ever since. Has been president of McIntosh for over a decade and UH together we've been co CEOs now for

the last three years. And the way it works for our company is that we are organized really by by brand. So Charlie is running McIntosh, I am running SNAs Faber and Somko. So those are our three main businesses. Um. Everyone knows McIntosh mclabs with all of its products, Sonas Faber being our Italian uh loudspeaker brand, and then Smiko is our distribution company based in the US that distributes many other hi fi audio brands, including Project from Austria

and Rotel Electronics. And we also distribute Basso Continuo, which is a high end Italian hi fi racks um for your gear, as well as our own cartridge brand for turntables, UM Simico for a cartridges. So the co CDEO job works well because, um, we have a very thin group structure. The group basically consists of four people. Charlie and I are two of them, so there's not much group level

work to do. So we're allowed to really run our businesses as our businesses, and Charlie gets to run McIntosh day to day as he always has, and I I have the opportunity to lead the Sona Slab and Samiko business and we can pretty much work independently and then have the advantage of actually use each other as sounding boards and um, you know, appears to collaborate with as

as we as we see fit um. So it gives you, frankly, it gives me a great person to bounce ideas off of two uh, you know, build strategy off of and uh. Then together we sit on the board of directors with our investors and represent the total group level performance. So it's quite quite a good collaborative effort. We both happen to be engineers, we both happen to come from small farming communities, and we both happen to love the Pittsburgh Steelers.

So we've we've got similar backgrounds and and a lot of sort of common shared experiences that we can we can play off of. Quite interesting. So I was having a conversation with a friend about how crazy has been. He owns Park Avenue Audio in Manhattan, and he mentions that he's projecting is actually going to be a better year for the sale of high end audio equipment then he saw in which itself was a record breaking year.

You mentioned something similar, Given all the mayhem of this year and the lockdown and the pandemic, why do you think this is such a ban a year for high ends audio equipment. Yeah, it's It's certainly been the most interesting year of my professional career. And as we were looking at the world in front of us, you know, back in the March April May time frame, it certainly didn't look like a banner year. Uh. McIntosh had to close its factory for six weeks, right because of the pandemic.

Sonna's father had to close its factory for a month because of the pandemic. Um And it's hard as the manufacturer when you build all your own stuff to sell things when your factories are closed. Um. So it looked a little bit dark for a period of time, for sure, But UM, what has happened in the industry is that as people have spent more time at home, UM, they have spent less time or less money as well on

other discretionary purchases. And so what seems to be happening is the money that used to be spent on vacations, on food and dining, on live concerts, on going to the opera or different shows, that discretionary income is being basically used now to upgrade your home. And we see a lot of that industry booming. White goods sales are booming, remodeling projects, home refinancing is booming, and audio and video

is booming as well. As consumers are spending more time in their home, UM, they're investing in their audio systems. And really from June forward, UH, every month this year has been our bust month effort. It's been sort of a record breaking year for the company UM, which is quite amazing and we're we're obviously quite thrilled with that UM and I'm very very happy UM and we hope

UM that meant much of this trend continues UM. And actually it's more than just the hope, because when you start looking at other sort of dynamics that are happening, there's actually a number of things that are very quite favorable for our industry. I think you mentioned earlier that LP sales are are booming, um, and actually they've LP sales are are at a record level this year than they have been and they've been growing now for a decade straight. UM. So if more people are buying records,

they're going to be buying more audio systems. So that trend doesn't seem to be slowing down. It seems to have been accelerated by the pandemic, but it's it's going to be here for a while. But the other trend is as movie theaters and the whole movie industry changes, um,

that's having a really interesting effect on our business too. Um. With AMC announcing its bankruptcy, we know that more consumers are going to be watching movies at home, and guess what, they're going to be putting in more home theaters, which is going to help our business. The latest announcement by Warner Brothers and HBO with the director streaming releases of movies for the next year, that's going to help us as well. So there's gonna be more people, you know,

watching more movies at home. So I think there are some other trends that are really favorable to the to the industry quite interesting. So that's some of the changes that have taken place in Obviously, the shift in in movies and streaming video is pretty significant. What sort of products are you going to make towards that direction? Obviously you've been all audio and and a surround sound either preamp or receiver makes sense. You guys aren't going to

venture towards the video side, are you? No? Uh? The way we are looking at uh, this is the industry has been shifting from a let's say, a traditional what we would call specialty retail store right, which would sell goods uh the consumers, towards a project based business, if you will, the custom installation business or CDIA channel. UM. So, the audio video business really has been moving for a number of years from a retail based environment to a

project based environment. That trend is only accelerating now as consumers are they're doing things more than just audio and video. Of course, they're putting in wireless networks and lighting controls and home controls, safety and security. So stems, and so when they think about investing in their home, they're looking at a variety of different products and and audio and

video becomes part of that. And so one of the big changes for us is how do we provide more products that that fit into that sort of project based business for your home. On the Sona Spather side, we've launched our first line UH in wall and in feeling loudspeakers, things that are going to be permanently built into your home as opposed to your traditional floor standing or bookshelf speakers. So that's been a new development for us that we think will be a very good investment and and be

a good product line for us going forward. UH And likewise, Macintosh continues to expand fit line of audio video processors and multi channel amplifiers that are more designed for customer installation home theater usage. So we think that there's a lot of ways that we can tap into that, let's say, growth of of movie watching or TV watching at home

UM through the audio space UM. And there's there's a very good trend there and one that we we see nothing but uh, you know, double digit type growth for the next few sers. So it sounds like there's a little bit of an inherent tension between marketing and sales and these projects. Um, as someone who has done a couple of these projects from my own home, I know what it's like to work with a designer and an audio store and say, here's what I want. What technology

makes this work? With equipment like Macintosh, you really want to get those butts in the seats to experience, you know, the sound and the whole emotional moment of that. How do you reconcile the two? Very often in the homeowner is just giving marching orders to an architect, a designer, whoever, whatever.

And then on top of everything else, the Internet is in the middle of all this, and you obviously don't get the same experience, especially with audio from the internet as you would live and in person and in a high end listening environment with top of the line products.

How do you navigate that sort of complex minefield. Yeah, for for us, it's you know that demonstration is still very important, and so we we have a strong program to try to encourage our dealers to set up proper demonstration systems right in their show rooms and even the project based business, there's many of them. Have you know, they're more consumer experience centers. UM they're not retail trade

trade show stores. But um, these experience centers can often house a nice audio video demonstration room, and so we do think that that's still an important piece of this. But the other advantage we have is that, um, we have a very strong brand. Actually we have a you know, two very strong brands, McIntosh and Sona's Father, as well

as the other brands were representing and distribution. But if your brand carries that quality and trust factor, oftentimes the you know, the designer can sit down with a client say you know, I'm going to install a McIntosh home theater for you, and here's the you know, the components that are going to be used. A lot of clients will just trust that it's going to be amazing, right that.

You know, if if you your brand carries that um, that reputation UM for for quality and performance, then you can you can make it a sale without without the demo. I still would prefer the demo because I know that's only going to surprise and delight the customer even more. But um, that's the power of the brand, and that's why the marketing and the pr and the reviews of products is still important because you know, oftentimes consumers are

buying things, uh without actually hearing them first. So let's talk a little bit about vinyl sales. For the first time in decades, there are now more sales of albums in vinyl than in c D s. What do you think this means? Yeah, we saw this coming. Honestly, four or five years ago. The number of albums have been growing for a good decade. A year over year, album sales continue to grow, and over that same period, CD sales have continued to shrink, and so there was you

know of actually we knew there was a crossing point. UM. I think it says two things. One, it says streaming has dominated and streaming has killed CDs, and that the idea of owning CDs in the current generation of consumers is a lost art um, and that that is going to be the main way to consume music going forward. UM. On the LP side of things, I think it's actually a bigger reflection on sort of a I guess a psychological or an emotional sort of change in consumers behaviors.

People that buy LPs and turntables and want to listen to UM. Vinyl frankly want to disconnect from their digital fast paced, uh sort of hyper daily reality. Right. It is so easy to put on a pair of headphones and stream Spotify, your title or your favorite service. Um, you can do that in an instant and then you can jump from song to song, track, the track, album, the album instantaneously into all sorts of mix that being

replaced by a turntable vinyl listening experience. Now you're talking about I have to actually invest in the activity of listening to music. And I really get excited by this because that means somebody is saying listening to music is

important to me. I'm going to spend the time to find the album, you know, dig through the collection to the one I want put you know, clean it off first, put it on the platter, turn it on, sit down, probably grab my favorite beverage and listen for minutes until I have to flip the album and then repeat the process.

People that are doing us are truly engaging with their music more and it's really exciting because when you look at what albums are selling, Um, you have artists like Billie Eilish and Taylor Swift right in the top ten artists. These are new modern young artists that are are selling you know, albums through the roof UM. And to me

that's exciting. It's not just um the Bruce Springsteens, are the Pink Floyds and the Rolling Stones and the Beatles, which have classically always been in the top ten, right because those are people like maybe me buying the albums for the second or third time. UM. But now you've got this whole new group of artists that are really putting their content out on vinyl and it's really creating a whole new experience for a whole new generation of of listeners that I think was very well for the

for the industry, quite quite interesting. And I will make note that when I was in college, that's when CDs really started emerging and they cost to double what albums do, and that situation seems to have reversed. Vinyl LPs are now considerably more expensive, UH than c d s. Is that a function of albums being embraced by the audio file community and there's still some UM negative perception of

the coldness and harshness of compact discs. No, Actually, I think that the UH that price change, which is absolutely true, UM, is more of a function of a basic ask curve of an industry. UH. When albums were dominant and c d s were in their uh infancy, right, the technology cost of producing c ds was very high. People were scaling up factories. You had the technology investment to actually

produce those that was new. There was R and D that you had to amortize into the cost of the CD to produce them, whereas albums were is a very established, uh sort of manufacturing process at that point, and so you had some volume efficiencies. While you fast forward twenty five years in the future and a lot of things have happened to the industry. Now c ds cost very little because the actual capacity is so underutilized. Right, they had all of these factories that built all these c

ds that now there is no more demand for. So the cost of that is down dramatically because you have an oversupply of capacity and an under under demand. Whereas albums actually the capacity dried up and um, the we lost a lot of production capacity for albums when when CDs were booming. And so now that album sales are growing again, UH, manufacturers actually now has to start investing back into making albums again. And and so you've got a reinvestment curve that's going to drive some costs. So

there's there's that dynamic which is fundamental. But then I think there's a second piece on top of that which really gets more to the marketing angle, where uh, in albums as they traditionally were, they are a source of art and inspiration. Right. There's more content when you buy an album because you have the five page or six page booklet right with all the lyrics of the music and art and uh, you know, different content that they

can deliver to you. And so I think that artists are investing more into the album to try to make it something that has a higher value, um, and they're for it's going to have a higher price now. The I guess the third dynamic if I was to think about this, was the fact that artists can make from a royalty perspective. Their royalty rates on physical sales of albums are much much higher right than a streaming service.

And so artists are actually really promoting LPs right now because their whole financial world has been thrown upside down by streaming. Because they're not selling as much physical media c ds as they used to be, they've had to either two or more, which obviously in the last twelve months is impossible, or they have to produce albums as their physical media to try to make up for that that you know, lost c D royalties. So you you mentioned people like Taylor Swift and Billie Eilish. What sort

of changes are taking place in music? How does change eaging music taste effects the way you think about the equipment that you guys are are creating. UM. You know, honestly, we do not believe that the musical styles or genres or people's musical preferences have any bearing on the equipment

that we are producing. UM. It kind of goes back to the common I made earlier that our job is to give people the best possible experience when they're listening to their music as possible, and I want them to get those goose bumps, to have that emotional moment, whether it's a tender moment or it's a dynamic, you know, violent moment, depending on the type of music that they're they're listening to. UM, they should enjoy that in the

best possible way. And therefore, you know, if our equipment UM is able to give them extremely high fidelity performance, high dynamics, great sound quality, low distortion, amazing sense of space and imaging. Regardless of whether you're listening to wrap, classical,

rock and roll country, I don't think it matters. So my stereotype as to who the audio file component purchaser is, it tends to be somebody who's more of a classical music fan who wants to hear the nuances between the third violinist and the second viola and really capture the full spectrum of a of a big orchestra. Is that just, you know, a tired stereotype? Is that long past? As to who the purchasers of Macintosh equipment are, I don't think it's an old stereo type. I think it's just

five percent of the population. UM. I think that there's a lot of people that are passionate classical musical fans and that they really can get extreme value from a high quality audio system, and that for all the reasons you you just describe, because of the level of detail and dynamics that you can really get and there's an appreciation for the are in a very strong way. UM. But I do believe that that's a that's a small part of the population. I would say it's if I

drew a parallel back to the car industry. Um, you know, BMW makes the the the M M three and they also make all the three series. Well, the M three is only less than five percent of the population of those vehicles, but they advertise it all the time and they use it as their performance halo. But most people don't, you know, don't go there. They just drive around to the grocery store and back and they're their three stories. Um,

so they don't don't really use it for that. And I think maybe that's a similar parallel where you don't have to be a classical musical fan to get all the enjoyment out of a high quality loudspeaker um system, high quality audio system. You can enjoy it for what you do, and it's going to give you an immense set of pleasure, um, whether you're listening to you know, classic rock or not. I am a huge classic rock

san and that is my my go to genre. And I can promise you that I much enjoy listening to uh, you know, Bruce Pinksteen and Pink Floyd and I led Zeppelin on my Macintosh and sona spaper system much better than you know, my Apple. I wouldn't doubt that for a second. You know what's kind of fascinating is that we when I was younger, your entertainment options were far more limited than they are today, and and the thought of having friends over having a listening party for a

new release was was not uncommon. Today. I have so many different ways to listen to music, but I find myself doing much less of Let me just stop for forty five minutes and listen to an album straight through, as opposed to having something playing in the background while I'm I'm doing something else. So the question I want to get towards is is the LP is the album still the sort of entertainment events that it once was?

And if it's not, how long is that audience going to continue to engage age and that sort of behavior. I think that the way I see that dynamics between consumers engaging in albums, let's say, versus streaming UM is streaming becomes the first choice for convenience. Right, that's just easy to access, easy to use. UM I can take it anywhere with me, and it's great for music discovery. Right.

I can find new artists so quick and fast when I when I do searches and it can give me recommendations of what artists are similar to others, And that, honestly is such a great power that we've never had in the industry that I think it's a super benefit because it's introducing people to many more types of music and many more artists and maybe they would have found on their own, let's say in the old days, um.

But then if they really attached to something, they're going to go out and buying a physical copy of it, right, and then exploring that same content that they had on the streaming service. But then inn LP UM or possibly a c D or s a c D if they still enjoy those. But that's how I see the dynamics. So I do see the the album or the vinyl experience not as a everyday listening experience. I see that

as a special moment in time, right. It's it's it's it is a time that you're investing with your music. That it's something you you you you have to sort of plan for because um, it's not a five minute, instantaneous um sort of response. So I think that that the fact that LPs are growing um year over year is really good because it's saying more consumers are willing to spend more time with their music and that they're getting more value out of that. Um, that that experience.

And so I think that these two very different mediums actually cohabitat together co you know, survived together in a very interesting way and can actually help each other. I'm gonna uh sell me an upgrade my home system. I have a couple of different ways I listen to music just for background. In the kitchen, we have a Sona streaming system outside a so Nance system that I have

hooked up to a blue Sound vault drive. In the den, I have a Hotel home theater preamp driven by a Class A amp going through Bowers and Wilkins speakers being w speakers. What what should I do? And a Rotel c D player? What should I do? If I want to upgrade that system to the next level? You know, I uh, I would want to know more things about your room and your room size before I was to be presumptuous to define it for you, but um, you know, I think that um, it's it's really about your level

of enjoyment, you know. And we have obviously a wonderful range of products at Sonas Faber. Our entry level product for your loudspeakers goes from our Luminus series that are starting at around two thousand dollars for a floor standing pair of speakers all the way up to our Aida which is you know, a hundred and dollars UM. So it's really all about the physical size of the room. UM. That's a big part of of how you would size your loudspeaker, and also about the UH you know, the

overall sound quality that you'd like to achieve. And depending on those specifications, there's lots of choices that I think can be amazing UM. And then the Macintosh amplifier family and pre amplifier and CDs and turntables all scale in a very similar way where we offer consumers the ability UM to UH everything. Our renewest McIntosh turntables actually is a full integrated yet that as the amplifier D class amplifier built into the turntable with a Bluetooth Apptex receiver

in it. So if you wanted to just have one piece of electronics, you could buy UH this product and actually do your streaming and your LP playing all from one and all you need is a pair of speakers. So so it's a very flexible product line that has lots of different solutions. UM. But I'd want to know a lot more before I give you specific recommendations, all right, So so let me flip the question on. You tell us about the system that you have at home. What

do you enjoy your favorite classic rock albums? On? What? What's that system look like? Oh? Yeah, thanks, it's uh, it's I guess my third child, if you will. UM, the I have sonas Farber Olympica Nova fives, which we just launched about a year and a half ago. Really a fantastic flour standing a loud speaker, and I have

a full McIntosh set of electronics behind that. UM, a C tube pre amplifier, the m T five McIntosh turntable, uh, the m c T s, a c d CD player because I one of those old old guys that still has a rack of hundreds of CDs and I actually pick them out sometimes. UM, and an MC two which

is a stereo amplifier driving the whole thing. UM. And for streaming, I added in projects stream box that's to Ultra, which is a fantastic little streaming box that allows me to connect with ruined title Cobus and do all my my streaming interesting. I too, am one of those old school c D users, but I recently started moving them

all to a hard drive in a lossless fashion. It's the Blue Sounds Vaults, and my plan is to eventually just put a few thousand discs on that and then just keep them shelved in the basement where I don't have to hunt for exactly the one I'm looking for it. I'll just be able to scroll and find it and theoretically have full CD quality sound. Let me throw a curveball at you. And espresso machines are the MP three audio of coffee makers discuss. I disagree. I think espresso

machines are fantastic for their convenience and speed. Um. And I have one in my home and I think it's fantastic. Um. I you know, I think it's It's a fun copy to me is a really fun topic. I very much enjoy it. I love nothing more than when I'm in Italy to go to a proper barista and get a proper espresso and and really enjoy it standing up at the bar with the colleagues and chatting, which is the only way to do it. Um, but honestly, it's not something I have the time or patience to do myself.

And I think it's one of those wonderful things in life where everybody has their they're thing that they're willing to, you know, go that extra quality step and and really put the time and effort into doing it just right. And if you wanted to come over and make me a proper espresso, I would happily enjoy it, but I don't have the time to do it myself. Now I have to imagine that that sort of comments is what

a lot of people who are audio purchasers say. Yeah, that that's a nice system, but I just want convenience. I don't want expense, I don't want complexity. Just just give me a simple sort of thing. And on the coffee side, the technology has advanced to the point where you could get practically those sort of instant coffee convenience.

Take a look at something like the Brevel Oracle Touch, where they literally do everything from the grinding to the tamping to you know, your job is to to move the container of steam mill to pour it into the shot of espresso, which seems to be worth it for the for the improvement in quality both fields coffee and audio. The law of diminishing returns kicks in as as the price goes up. But this really seems to be something that the technology has advanced dramatically over the past couple

of years. So I'm going to steer you in that direction. So I was just so amused that that you were not as ritualistic and obsessive about your coffee as I assume you are about your your sound systems. And to me, that's part of the same continuum. It's it's how much do you want to spend an effort, energy and time

for that next level up in quality. Yeah, I love this, uh, this kind of conversation because I think it applies to so many different aspects of life, and I think it, frankly, is what makes the world go round because each of us have our own sort of passion areas that we're willing to you know, we're willing to do whatever it takes to get that perfect level of performance, and in other places we we shortcut um. You know. I I've been accused of being unsophisticated because I don't wear a watch.

I've just never been a watch player, and a lot of people are in a similar domain with watches where you can get these amazing time pieces which which I really can appreciate from it afar, but they just don't fit you know, my DNA A right. And plus every one of us walks around with a phone in our pocket, which gives you precise atomic set time. Um So, so watches have become um as much decorative as as anything. Um So, I know I only have you for a limited amount of time. Let me jump to my favorite

questions that I ask all. I guess so we mentioned video earlier. Tell us what you're streaming these days? What's your favorite Netflix or Amazon Prime or or podcast? What's keeping you entertained? Oh yeah, so there's there's some great stuff that we're uh, we're engaging with. So with the family, we are absolutely in love with Ship's Creek. Um that's I don't know if you've ever enjoyed that, but it's a it's a wonderful program that we discovered too late,

and so we're trying to catch up. Um And that's that's our family entertainment. My wife and I are watching Go Mora, which is an Italian uh sort of crime you know, mob drama, that's that's that was produced, you know, in an Italian and I think I'm watching that to to help me with my you know, my Italian for my my Souna's father team as well. So that's that's great. Um,

those are the two shows that I'm watching regularly. And then um uh, the other thing that I enjoy uh privately is books on tape by I do a lot of listen listening to books on tape and I just finished the Iliad, which I had never read or listened to previously, So that that's been pretty interesting. Tell us about your early mentors who helped shape your career. Well, it all, well, it all starts with I think my mom,

uh is she Uh, She's a fantastic lady. Single mom, raised myself and my older sister, just you know, really hard working, uh sort of small tarn a small town, uh you know, sort of. I'd just call it country farm, hard working values, truth, honesty, hard work. I'll started there. And my first uh, one of my first bosses, Paul Nate from Harmon great sales executive. He I attribute him

to really helping me. Um. I can remember the moment where I went from being an engineer to going into the sales group, which I can still remember a Dilbert cartoon about this, saying, you know how insulting that is for an engineer to move into sales. And he actually sold me on the benefits of going into sales as an engineer to learn about customers and to learn about what the customers want, the need to how to how

to help them. That if you you understood your customers and you listen to them, you will be a better engineer, you will be a better product developer, and then it would be an important skill for you to develop. And um I was really an important sort of moment for me, and he was a great mentor for me in that regards. And also just uh, to teach the skills they don't

teach you in engineering school. You know about person building, relationships with people, customer relationship management, influencing skills, all of the soft things that really, over the course of a career end out being probably more important than the hard technical skills that you learn in school all those years ago. So Paul was really a fantastic mentor for me um early on in my career. Interesting, tell us some of your favorite books. What what are you reading now? What

what are some of your all time favorites? This is how a passionate reader usually multiple books going on at any given time. UH. My most recent reads this year I fell in love with Simon sin Um start with Why was the first book he put out probably a decade ago, really wonderful book. Uh. He did a couple others after that. Leaders in the Last Infinite Game was his most recent one, and it's really a great content

to help companies. I think really remember sort of more of a personal truth and keep grounded and why we as businesses exist um, which is much much more than profit and loss. UM. So Simon Sinek, I have to say as a really highly regarded and one of my my latest reads UM all time favorites. UM. I go back to Stephen Covey seven Half at the Highly Effective People, probably the most influential book on me in my entire life. UM.

Still have a copy right and back at my desk. UM. Really a great foundational book I think for for young people that about how to approach the world. UM. Some of the more business focused books like Jack Welsh's book Winning UM Ram Suran Larry Bossy's book Execution really sent a core managerial books of you know, how to run a business or a company. I think those were fantastic. UM. John Maxwell's got a bunch of books on leadership, uh five Level Levels of Leadership that I think was a

spectacular book on leadership UM. And actually another book I just reread, UM Clayton Christiansen, famous innovation author from that had passed away last fall, his book The Innovator's Dilemma UM, which was written probably fifteen twenty years ago. Now, UM, which I read a long time ago. I reread just sort of an honored his passing. That's a fantastic list to start with. What sort of advice would you give to a recent college graduate who was interested in a

career in the audio industry. The advice I'd give to a recent college grad would be find find a career that you love, find something that you are passionate about, and do it with conviction. UM. Don't chase promotions, salaries, titles. Be true to yourself and what makes you happy, because in the long run, you're going to be way more successful if you if you follow, uh, follow the things that are really interesting to you. That's sort of you know,

you're emotionally connected with UM. That's foundational. I would also encourage them to UM learn about emotional intelligence early. It's not a topic that they teach in universities UM, and it's usually not something as young people were very good at. UM. Usually we're as a young person, you're out to prove yourself and what your own abilities are and what your

contributions can be UM. Really being reflective on on what you're good at, what your colleagues are good at, where your weaknesses are in being humble UM and recognizing that teams win championships, not individuals UM. I think that's the foundational sort of spirits that I think set everybody apart. I don't think anything in business has ever been done by one person, or at least not anything that's worth anything, let's say, or anything of of a sort of material impact.

You really do need a group of people to get something done and and really building those those sort of team skills UM, I think are critically important early on in your career. And our final question, what do you know about the world of audio and audio file equipment today that you wish you knew twenty or so years ago when you were first ramping up in this business. UM. You know, the audio file or audio industry is a it's a very small, hobbyist industry with lots of really

super passionate people. And UM, I think that the thing I've learned the most over the years is that our business is less about competing with other audio file firms or other audio firms, and it's more about growing the

entire industry. We together as a community of audio companies. UM, if we do a better job getting those butts and seats, getting more consumers to come two dealers and listen to the gear, regardless of the brand that it is, we're going to build a bigger basic consumers for everyone, and

that's gonna effectively grow the industry across the board. And so I think that building of a collaboration amongst companies together to build the industry UM is something that's really important to me today, UM, but not something I was aware of many years ago. Quite fascinating. Jeff, thank you for being so generous with your time. We have been speaking with Jeff Pogi. He is the co CEO of

Macintosh Group. If you enjoy this conversation, well be sure and check out any of the other four hundred or so such conversations we've put together over the past six and a half years. You can find that at iTunes, Spotify, wherever you usually feed your podcast fix. We love your comments, feedback and suggestions right to us at M I B Podcast at Bloomberg dot net. Give us a review on Apple iTunes. Be sure to sign up for our daily reads at Rid Halts dot com. Check out my weekly

column on Bloomberg at Bloomberg dot com slash Opinion. Follow me on Twitter at rit Haltz. I would be remiss if I did not thank the crackstaff that helps us put these conversations together each week. Nick Falco is my audio engineer. Michael Boyle is my producer. Mike Batnick is my head of research. Attica val Bron is our project manager. I'm Barry Riholtz. You've been listening to Master's Business on Bloomberg Radio.