Sonos’ CEO Sounds Off About Big Tech Behaving Badly

BThe U.S. Senate could vote before August recess on a bill to curb anticompetitive behaviour by tech companies like Amazon, Google and Meta. Patrick Spence is the chief executive officer of Sonos. This measure would safeguard the company that makes premium sound systems as well as other small-businesses.

The legislation will stop dominant players “from being able to simply leverage their power and balance sheets to destroy competition,’’ says Spence, a tech-industry veteran known for sounding off about Big Tech.

The Antitrust Bill would prohibit companies like Amazon and Google from favoring their products or services. Major tech company-funded advocacy groups have spent millions of dollars on advertising to oppose the bill, claiming it would destroy popular resources such as Google Maps. “They wouldn’t be spending millions and millions of dollars to stop us if we didn’t have momentum,’’ noted Sen. Amy Klobuchar (D., Minn.), the bill’s primary backer, during a Senate speech on July 19. They hope that the legislation will also quickly be approved by the House.

Spence says Sonos is a small company that offers soundbars, amps, wireless speakers and other related services. It has survived despite the threats of large rivals. The company fought Google’s rise in smart speakers by lodging a complaint with the U.S. International Trade Commission. The ITC banned Google’s import of products that had five Sonos patents in January.

Both companies remain at odds. A Google spokesman tells TIME that the company works hard to support the customers that it shares with Sonos, but “Sonos is now claiming to own technology that was developed by Google.”

Born and raised in Canada, Spence once dreamed of becoming the country’s prime minister. Spence earned an honours degree at the University of Western Ontario, in business and administrative. He joined RIM soon after the launch of the BlackBerry by the Canadian small-scale company. The device propelled the company’s growth, and by 2007—the year Apple released the first iPhone—RIM was the world’s largest smartphone producer. Spence eventually led regional and global marketing as well as sales worldwide. He was appointed chief commercial officer at Sonos in 2012 Since 2017, he has served as CEO of Sonos. He also took Sonos public in the next year.

Even as he does battle with bigger competitors, Spence is comfortable with Sono’s place in the tech industry food chain. “Being the underdog keeps you focused on innovating, competing, and serving customers uniquely,’’ he adds, while seated near shelves crammed with Sonos products at the company’s Santa Barbara, Calif., headquarters. recently interviewed Spence (47) about possible Google settlements, expansion plans and how to deal with supply chain issues.

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The following interview was edited and condensed for clarity.

How will your ITC victory help remove tech giants’ threats to other smaller players?

It sends a message that they can’t just copy what startups are doing and will have to either pay a licensing fee or not be in the market. We’ve invested heavily in intellectual property, and we are willing to fight Google. The ITC cost millions. That’s been a good avenue for us to enforce that intellectual property. But it doesn’t change the rules of the game for startups in the way the pending antitrust legislation does.

In late June, the U.S. Customs Service ruled Google had violated the ITC’s importation ban by still infringing on certain Sonos home audio patents. Do you think that Google will eventually reach a licensing agreement with Sonos to resolve the issues raised by both of these decisions?

We remain open to a settlement, but that’s up to them. I’m not going to comment on talks with anybody. We’ve always been open to licensing our patents and today have licensing agreements with a couple of companies. Future licensing agreements are still possible. For our inventions, we should receive compensation.

Is there anything you are most grateful for in your 14-year tenure at RIM?

I initially was product manager for RIM’s Interactive Pager, the precursor to BlackBerry. There were about 150 employees, so titles didn’t really matter. I was given the opportunity to move up in my career and work in a fast-paced setting. Each year, I had a new job. It was the company I grew up in.

In late 2008, RIM introduced an alternative to Apple’s iPhone known as the BlackBerry Storm, its first touchscreen device. You subsequently said that short-lived move didn’t focus on RIM’s strengths and customer needs. What did the Storm’s failure teach you about the best strategy for Sonos to compete effectively against corporate giants?

RIM had the right to build the next-best BlackBerry. It was not an answer to the iPhone. Storm cost us a decade’s worth of customer loyalty, and our reputation as a great company. I was paranoid about Sonos’ response to competition threats. When Amazon and Google jumped in with small $25 speakers, there was a faction inside Sonos that said, ‘We can build a better $25 speaker than those companies.’ I said, ‘That’s exactly what we’re not going to do because I’ve seen this movie before.’ So we didn’t respond by competing directly with those companies and betraying everything we’re about. We leveraged the services of these companies, including offering them their voice assistants, on an innovative Sonos speaker, which can be used by multiple assistants.

Big tech solutions can be a mile in width and an inch in depth. To monetize your data in different ways, big tech companies will want to have all of it. Our company is a mile wide and an inch deep. We’ve upped the game on privacy and speed. We decided to run the Sonos voice assistant in your home instead of sending it all over the internet. It is how we value our customers. Because we are unique in the market, this allows us to continue growing and navigate giants.

What did your management experience at RIM influence your Sonos leadership style?

RIM believed that being involved with everything was a sign strength and leadership. Sonos was the first company I worked for. I realized that leadership is about getting the right people in the right places. Nine of my direct report are specialists in their respective fields. During weekly one-to-one chats, I ask, ‘How can I help you be successful and us move forward?” Every six months, we agree on priorities. RIM also encouraged me to act as the leaders I’d read about. Jack Welch does not reflect who I really am. I’m now much more comfortable bringing up things I learned through team sports growing up, such as how we should work together.

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You’ve described your current supply chain woes as crazy. Sonos anticipates that its current supply problems and shortages of component parts will continue through 2022, which ends Sept. 30, 2018. What are the consequences of these shortages on your industry and Sonos in general?

Any consumer electronics company faces a challenge in finding the right components. There are usually two options of circuit boards for every product. Because of the shortage, we’ve had to build seven different circuit boards to use in some products, and that probably implicates dozens and dozens of suppliers. If we didn’t do that, we wouldn’t be shipping product. It’s a heroic effort on the part of our engineering teams.

Sonos has been a company that focuses on music and filling homes with it. However, you recently entered the automotive arena with a sound system installed in Audi’s latest electric mid-size SUV. You are now diversifying into cars. What other areas might you explore?

Autonomy will make cars more entertaining hubs. Audi may be our first step, but there are many future possibilities for cars. It is our goal to go wherever people hear sound. There are a lot of areas where we don’t play today. There are many opportunities in cafes and offices.

You have fulfilled your commitment to launch at least two products a year, a track record that Sonos didn’t achieve consistently before you became CEO. How did you accelerate product launches?

When we didn’t have that goal, our last product had taken three years to ship. To pursue other ideas and prototypes, we invested in 2 more teams. We also organized our entire business around these moments. The forcing function helped get us to the point where we say, ‘Here’s something great we can build and not get caught up in being perfect, the enemy of great.’ If you go for perfection, you’ll never ship anything. This was an important cultural breakthrough. One of our first employees, who then led our software team, was my chief product officer. I wanted to make culture changes. To lead the initiative and to get our product team on the right track, I named him chief product officer. He was instrumental in getting us to the point of introducing at least 2 new products per year.

Sonos’s ability to invent new strategies to beat bigger and more powerful competitors may become harder. Sonos must do something different to continue introducing two new cool products every year.

We’re investing more in research and development to make sure we’re pushing the envelope on new concepts, ideas, and partnerships. My number one job involves helping people accept the changes taking place. It is my job to ensure that people adapt. Leaders must push their colleagues beyond their comfort zones to achieve the next great innovation. For many businesses, complacency is the enemy.

Is resilience important? It is so crucial for leaders in business to be resilient.

We face challenges every day that we can’t see coming. These macroeconomic headwinds will affect how we navigate the coming months. It is important to be able to bounce back and understand these challenges. You must also use your energy to remain calm and resilient.

Six times per week, you do a beach exercise at 5:30 am. What does this do to help you rebound from work-related crises?

It is almost meditation-like when I exercise. It prepares me mentally for any challenge that may come my way. It is crucial to incorporate this mental element into my morning.

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