BACKGROUND
Rick Alden, the founder of Skullcandy, first came up with his business idea in 2003 on a chairlift in Park City, Utah – he was listening to music when his phone rang. The existing technology required that he take off the earphones, turn off the MP3 player, find his phone, and answer it in order to talk. Rick decided that there must be a better way and Skullcandy was born with a spliced earphone jack that could be used for a phone and an MP3 player at the same time and a switch to go between the two. Since then Skullcandy has been a leading audio brand that reflects the collision of the music, fashion, and action sports lifestyles. Their brand and distinctive logo symbolize youth and rebellion, and embody their motto, “Every revolution needs a soundtrack.” Skullcandy products are sold in the United States and in more than 70 other countries around the world. They pioneered the distribution of headphones in specialty retailers focused on action sports and the youth lifestyle. Through this channel, they reach consumer influencers, individuals who help establish and maintain the credibility and authenticity of their brand. Building on this foundation, they have successfully expanded their distribution to select consumer electronics, mass, sporting goods, and mobile phone retailers.
CHALLENGE
Skullcandy needed controls in place to help manage its coming growth. Before seeking help from Ampleo, Skullcandy’s accounting records were contained within Rick’s personal bank account which his wife maintained for them. In addition, they knew they would need access to capital and needed a partner to assist them.
SOLUTION
Once engaged, Ampleo helped Rick separate the business from his personal finances, and start to track and better control inventory, purchasing, and collections. Over the course of the five years that Ampleo was engaged at Skullcandy, Ampleo provided an outsourced Controller and CFO to help Skullcandy set up its first accounts receivable factoring line, secure equity capital from local angel investors, forecast cash flows and operational growth, and manage revenue growth of over 7200% – often exceeding 300% annual growth rates. Ampleo also helped Skullcandy secure its first traditional bank line of credit with Zion’s First National Bank, just months after completing its first profitable year of operations. Ampleo’s CFO quickly became the CEO’s strategic finance partner, frequently being called into meetings to discuss important strategic ideas or decisions. Once Skullcandy’s growth required a full-time CFO, Ampleo helped in the process by recruiting, interviewing, and presenting management with multiple qualified candidates. When Ampleo presented Rick with two candidates for VP Finance, Rick said, “You can’t leave…you’re my Rent-A-FO”.
CONTINUED SUCCESS
Skullcandy continued its growth and went public in 2011 with a valuation of $500 million. They currently trade on the NASDAQ (SKUL).
