In the Shadow of Tariffs: JLab Audio's Story
October 2, 2018
- Author: Win Cramer, JLAB Audio
September/October 2018
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JLab Audio was founded in Tucson, AZ, in 2005. The company was more of a hobby at first, than a real business. In 2011, I decided to move the business to California and hire a team of brand builders to help grow the company. We moved to California with a staff of three. We had one customer, four products, and a desire to grow!
Over time we’ve been successful in sharing our story with our customer partners by focusing on one thing only: portable audio. As the brand began to develop, it was a strategic decision not to branch out into a multitude of products. We wanted to focus on what we knew best and do it better than the competition while ensuring the price points were accessible to the masses. I really mean it when I say that I don’t want people to feel embarrassed if they can’t afford the latest Beats by Dre headphones. I wanted everyone to have that same feeling you get when you open something new. You know that feeling: when you want to show off what you just bought because it looks, sounds and feels “cool.” In hindsight the decision of not branching out into multiple products could come back to bite me.
Since 2011 we’ve grown to a team of about 40. We have U.S. offices in Carlsbad, CA, as well as Dallas. We were growing and hiring when others weren’t. We’ve built a team of “ragamuffins” and grown into the fastest growing audio company in America. We don’t outsource our design or customer support to alternative nations. We hire folks in the USA. We’re proud of hiring here. We’re proud of working here. We’re proud that we’re creating products that people enjoy using at an affordable price.
When we begin to evaluate the business as the 10 percent or 25 percent tariffs were enacted, the story turns sour. We’ve already put on hold the decision to bring on two new sales people and we’ve pulled back on our internship program. The uncertainty of not knowing what will happen forces us to pause. Even more chilling would be the cost cutting that would absolutely have to take place if enacted. Since 2011 we have not laid off a single employee. We’ve had to let some go due to performance or “fit” issues, but never have we made the decision to reduce our work force for survival.
For the first time in our history I’m scared about the future versus excited. We’ve built a hell of a team at JLab and the thought of having to cut our work force doesn’t just keep me up at night, it sickens me beyond belief. At the end of the day we’re stuck in the middle of this global game of chicken and it’s our team and our business that’s paying the price.
As for our future, it is unknown. Will our multi-product, multi-national competitors choose to increase prices? Or will they absorb it thinking it is temporary? While JLab Audio is an established company and brand, we certainly don’t have a $1 trillion valuation (like our biggest competitor, Apple) and as such we can’t just eat a 10 percent or 25 percent increase in our cost of goods. More, we have obligations with our customer partners to deliver at the negotiated price. The uncertainly and complication that this has brought to our business and team has not just added stress, but more importantly its shifted our focus. We’re slowing down design ideas, we’ve already delayed new hires, and we’re evaluating current staff. The tariffs are already changing our business – and not for the better.
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