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TheStreet Open House

[video] Skullcandy CEO: Innovation Process Similar to Apple

Stocks in this article: SKULAAPLNKE

NEW YORK (TheStreet) -- The first thing Skullcandy's (SKUL) CEO Seth "Hoby" Darling does when he appears at our video set at the ICR XChange conference in Orlando, Fla., is hand me a pair of men's boxer briefs he was given earlier that morning following a spin class hosted by Town Sports International (CLUB). I'm holding on to these for him, of course.

Darling, who looks like he does some serious snowboarding, given the Park City, Utah-based company's proximity to some of the best skiing in the country, is rifling through his backpack to produce a few pairs of headphones to show me (full disclosure -- he gave me a pair of teal Smokin' Buds 2 to try). The briefs were in the way.

It set the stage for one of the most enthusiastic video interviews I did while at the conference this week.

Stylish, yet functional headphones are all the rage these days among consumers, but competition is fierce, especially from Beats by Dr. Dre.

As refreshing as it is to see Darling's level of enthusiasm for the headphone maker, don't let that kid you. Darling, 38, just 10 months on the job as chief executive and the former general manager for Nike's (NKE) Nike+ Digital Sport, has got big plans for Skullcandy for 2014 and beyond.

Here's an edited transcript of the video interview:

Skullcandy's revenue has been pressured by competition, what are you doing to reverse that trend?

Darling: Anytime you look at that category that has become part of that uniform of youth, which is what headphones have become -- you walk out the door its key, wallet, headphones. Anytime you have that you're going to have a rush of competitors come in. We've seen that. We were here early, [we] brought the innovation to the market and really changed the market [by bringing] color, style and really good sound into the market.

And so for us we're going to continue to innovate, we're going to tell those fun young and irreverent stories with great assets like the Derek Rose's and then with Roc Nation so when we can have that great innovation and change the way people think about audio and tell a great story around it.

What exactly does innovation mean in the headphone space?

Darling: What we want to do is make how you take in content more fun. And so one of our platforms that we have, we call our Crusher technology and so we went and talked to a lot of 20-year-olds influenced by music, art, film, sports, and say "Hey what's the most fun you ever had with music and what you inevitably hear is ... I remember my first concert." So we go to our team... how can we make that experience for our consumers? With that our Crusher technology, which is a sensation driver, which essentially recreates what it feels like to be in front of a speaker at a conference.

We want to revolutionize how you think about wearing your headphones.

And the second part really goes to if we know our consumer so well we can solve their problems. And so just as an example we just announced the launch of our sports performance line at CES last week.

And when you go out and watch people whether it's doing Cross Fit, Spartan runs, mud runs... they all have their headphones in, they're rocking, they're having fun [and] three miles in those regular headphones ear buds have fallen out, they're on the side, they're uncomfortable. And so again we went to our advanced engineering team and [wanted] to solve that problem and they came up with technology called sticky gel that's proprietary technology that actually when you get hot or start to sweat [the] tactile material increases by 30% ... [so] it stays in your ear. So that's what we think about with innovation -- to take you to a place that maybe you didn't imagine. That's a little bit how Apple (AAPL) thinks about innovation. We think similar, but also that blend of my background of Nike of how do we know our consumers so we'll we solve a problem.

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