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.
What can we expect coming from Skullcandy in 2014?
Darling: Really big four primary stories that we're telling this year are around innovation and solving problems. The first one is what I talked about that Crusher technology -- how do we truly drop you into the front row of that concert to revolutionize how you think about audio, how you think about watching a movie, how you think about being in a video game versus just being audio listening.
The second is we started our women's line. Historically there have been other brands that have gone out with a "Shrink it and pink it" mentality. We spent a lot of time with the consumer on whether that was acoustics or whether that was really sizing you don't like. We're going to completely change the sound curve. Men and women happen to hear differently ... women tend to hear mids and highs much clearer and they hear bases much lower. We also took and redid all the measurements on our headphones, applied an antibacterial agent to the cup [that] makes it so the makeup doesn't smear as much and shrunk down the cup so that it's not in your earring. It's going to be out April/May mostly at boutiques [that are] higher end.
The third story is around sports performance and that sticky gel always staying in your ear. And then we have feature that we developed that allows you to bring in ambient sound.
Our last one is the Air Raid Bluetooth speaker.
Skullcandy recently announced a partnership with Toshiba, should we expect more partnerships like this one?
Darling: Toshiba is a great one for us. You take an iconic brand like Toshiba that traditionally is a little bit older when you think of the demographics that it applies to, but has a great product. As they want to age down a little bit, we can bring that fun, young, irreverent creative attitude to their products from a branding perspective and activate around that. Our deals are around laptops, if you think about what kids are using laptops for its not to do PowerPoint to do Excel. They're watching movies, they're playing video games and so the audio becomes really important so we can go in and help them tune their audio to much better than what it had been and give them a competitive advantage in the market so that's a fun one for us.
For the future I think we have such a strong brand and we resonate so well with our consumer that's attractive [to partners] and we have great in-house capabilities around audio, so I think there are more opportunities.
Skullcandy sells in such a variety of retailers from Best Buy to RadioShack to TJ Maxx, does that hurt the brand at all, particularly in a case like the discount retailers?
Darling: Absolutely. At the end of the day a great product and great storytelling are what win and separate us. Part of that is where do you distribute? One of the big things I did was look at that distribution piece ... and with off-price [said] we're doing too much there, it's not great for the brand. So this year we ripped the Band Aid off, we cut that by 60% of what it was. A lot of people hear our revenue has been down pretty significantly. We're going to be proactive and if this is going to be a great brand long term were going to have to make some tough decisions for the short term.
We want to be the best retail partner to those retailers we think tell us a great job telling the story and in some of those that haven't been able to tell the story as well we've pulled back on them.
As far as those long term plans for the company, there's a lot of talk about whether Skullcandy will remain independent or consider a buyout. Any general thoughts you can share?
Darling: This one is actually an easy one for me. Before I came here I was the general manager for Nike+ Digital Sport -- my dream job having been a high school and college athlete. I didn't leave that job just to sell a company. I left it to go really create an amazing and special company. So we're going to go do that.
--Written by Laurie Kulikowski in New York.