“It’s proof of our enormous brand traction”: Jaybird founder on his USD$95m Logitech deal

Jaybird

Judd Armstrong almost quit the entrepreneurial game when he ‘maxed out’ a credit card starting his first business – but a ‘kick in the pants’ put the Queensland native back on course. While that business survived to make a USD$2m dollar profit, Judd’s follow-up venture, Jaybird, has made waves globally. In April, this year, he sold the wireless headphone brand to Logitech for $USD95m (USD$50m upfront, the remainder upon meeting set targets).

Born out of Judd’s ‘passion for active living’, the Utah-based company is the 3rd top premium wireless headphone brand in the USA for market revenue share, having sold over 2 million Bluetooth headphones.

Despite being available in 34 countries, Jaybird only launched in Australia at the end of August, its product range available exclusively through JB Hi-Fi and Apple. Asked why it took so long to launch Jaybird in his home country, the founder and CEO said he lacked the ‘bandwidth’ necessary to break into the local market

“We really wanted to launch in Australia but we wanted to get it right,” he explained. “Our biggest consumer following is in the US, which has roughly ten times our population. Once we came into the Logitech fold, we were able to get the conversation happening with JB Hi-Fi, which represents 50% of the headphone market in Australia and New Zealand.”

“I’m fascinated by what makes consumers tick”

While Jaybird is a headphone market leader, its founder once had modest ambitions. Judd initially contemplated a career in landscaping and graphic design but was encouraged by his father to strive for ‘something with greater opportunities’. Later, while studying Indonesian at college, he considered becoming an interpreter, which led him to undertake an International Business degree at Griffith University on the Gold Coast.

“The course introduced me to the amazing world of marketing,” Judd said. “I became fascinated with understanding consumers – what makes them tick, what matters most to them – and the products and messages that satisfy their needs.”

After completing his degree in 1996, Judd moved to the US with his wife, who hails from Utah. Four years later, while living in Salt Lake City, he founded ZEROP to capitalise on the shift away from paper medical records towards electronic medical records.

“It was a service for insurance companies and law firms aimed at increasing the turn-around of records with real-time status reporting and keyword searching,” he said.

“I started the business on a USD$35,000 credit card, which I maxed out! With no money for the business, I had to call my wife and ask her to make a transfer through Western Union. Anyway, I was kind of traumatised by the experience, so I took up a full-time job at a call centre to make ends meet.

“One day, an attorney called me to express interest in using ZEROP. He didn’t end up signing with the business but it gave me the kick in the pants I needed to make a proper go of it. I operated the business out of my one-bedroom apartment but over time we gained enough customers to make it sustainable. I feel we really disrupted the medical record system – it used to take three months to retrieve medical records but we brought that down to less than three weeks by going digital.”

“Jaybird slowly took over my time as interest grew”

By the time Judd sold ZEROP to its competitor, MediConnect Global, for $2 million in July 2006, he’d been quietly developing Jaybird for around six months.

“I was out jogging one morning when I thought, ‘Man, I wish I could run unencumbered by headphone wires’,” he said.

“I couldn’t let go of the idea, so I started searching for someone to help me design wireless headphones that not only sounded great but were small, sweat-proof and a secure, comfortable fit. Signal performance was also critical: no one wants cross-body interference. Likewise, people want to be able to leave their phone in their bag and walk across the gym without the signal dropping out. I ended up contracting out the design work to a handful of people, which was how Jaybird was born. The name comes from the expression ‘naked as a Jaybird’. Going wireless is liberating; it’s like stripping down.

“At the time, I was quite involved with stock trading and options trading but Jaybird slowly took over as interest in the brand grew. I was working with a tight budget but the proceeds from ZEROP gave me the cash boost I needed to pursue Jaybird seriously. After we partnered with a major retailer, Amazon came on board with. Later, we were embraced by Best Buy – the biggest retailer in the US – and Apple. By 2014, we’d become the third top premium wireless headphone brand for market revenue share in the US behind Beats and Bose.”

“The brand has resonated with active people”

While ZEROP and Jaybird belong to vastly different industries, Judd said it wasn’t difficult shifting between the two, noting that his success with the medical data company gave him the confidence to ‘go after bigger fish’.

“Both businesses were an exercise in understanding a gap in the market and knowing how to fill the gap with the right mix of product and brand experience,” he explained. “As an entrepreneur, you can succeed in any industry as long as you know how to position yourself and differentiate, are frugal with expenses, optimise revenue and surround yourself with specialists. With Jaybird, that meant partnering with designers and people with connections to key retailers and supply chains.”

“We’ve had this amazing run because the brand has resonated with our core demographic. Like them, we’re active people with a passion for gear that plays to our lifestyle. Every single year we’ve been in business, we’ve made a profit – we’ve never made a loss. While Jaybird is based in the US, our success has been driven from the Sunshine Coast since 2007, when my wife and I returned to Australia. We’re not bound to any one place – we hire where the talent is. Skype has made virtual business possible and operating virtually has really benefitted Jaybird.”

“Logitech value or substantial mindshare”

Judd said it wasn’t a tough decision to sell Jaybird to Logitech (“honestly, it had grown too large for one guy to own”), nor was he particularly concerned his baby would be swallowed up by the parent company.

JuddArmstrong“The sale to Logitech was proof of our enormous brand traction,” he explained. “With their resources, Logitech could quite easily produce an excellent wireless headphone product but they understand Jaybird has substantial mind share – we’re trusted and relied upon by our core demographic.

“Logitech values this, together with our product offering and dedication to continuous innovation, so they’re happy for us to operate as an independent brand. We’re still the same Jaybird – same brand, same team, same office – but now we have access to much better logistical, people and R&D resources.  It’s an arrangement that suits us and our core demographic.

“We’ve had 50% year-on-year growth since 2010 and part of the Logitech deal is contingent on Jaybird’s continued growth of 50% each year. Fortunately, there’s been great synergy with Logitech. We’re collaborating with their sales and marketing team to optimise the larger retail accounts and continue growing brand awareness. Of course, we continue to develop our product roadmap and produce innovations that really add value to the brand.”

“We want people to wear Jaybird t-shirts”

Jaybird’s ongoing mission, Judd explained, is to be what Hoover and Dyson are to the vacuum: “the go-to or pedestal product in our category”. To achieve this goal, the brand will continue to rely on grass roots, word-of-mouth marketing.

“While some brands pay big names to endorse their products, we’ve taken a more authentic and organic approach to growing our customer base,” Judd said.

“We partner with people who are passionate about active living and have stories to tell; whose strengths play to the strengths of Jaybird; and who use our products religiously, whether it’s at the gym, out running or while cycling. We want these ambassadors to convince their mates they need our products and when people think of our brand, we want them to think, ‘Yeah, these guys are just like me – I want to associate myself with them. I wouldn’t wear a Samsung t-shirt, because that’s a bit vanilla, but I’d definitely wear a Jaybird tee.’”