Transcript: Jeff Poggi


The transcript from this week’s, MiB: Jeff Poggi, co-CEO of McIntosh Group, is below.

You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here.


VOICEOVER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio.

RITHOLTZ: This week on the podcast, I have an extra special guest, his name is Jeff Poggi and he is the CEO of McIntosh Group, makers of legendary audiophile equipment.

I’m a bit of a music geek, and when the opportunity came along to speak to the person that’s running one of the most renowned and highly respected audio gear makers that are out there I thought I couldn’t pass this up. If you’re at all interested in CDs or LPs or music generally, if you’re at all any type of a gearhead, gadgethead, audiophile, music fan, well, you are going to find this to be a fascinating behind-the-scenes look at the maker of one of the most prestigious and high-end audio equipment that’s out there.

If you’re not familiar with McIntosh, they are one of the few prints out there that never stopped using tubes even as technology changed, the quality of music that — the warmth the natural sound out of a tube amplifier is unique, their equipment is not only spectacular, it’s beautiful looking, it just has a unique visual feel, and it costs quite a few shekels. Their equipment is eye-poppingly expensive, but for the people who can afford it, they say it’s worth it.

If you’ve never had a chance to check out McIntosh equipment, you should pop into an audio store as soon as they reopen and just be prepared for a live experience, that is what it’s like. I found the conversation very interesting and I think you will also. So with no further ado, my interview of Jeff Poggi, co-CEO of the McIntosh Group.

VOICEOVER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio.

RITHOLTZ: My special guest this week is Jeff Poggi, he is the co-CEO of the McIntosh Group, the legendary audiophile equipment maker. The group also manufactures equipment under the Sonus Faber and Rotel names. Previously, Jeff was at Harman International and the Bose Corporation. He comes to us with an MBA from Duke University.

Jeff Poggi, welcome to Bloomberg.

JEFF POGGI, CO-CEO, MCINTOSH GROUP: Thank you, Barry. It’s great to be here.

RITHOLTZ: So I’ve been looking forward to talking to you for some time, I’m a music buff and a part of a decreasingly sized number of audiophiles but I have to ask you about that. Good enough seems to have taken over the music and audio fields whether it’s iPods or MP3s or streaming, how big is the audience for better then just good enough?

POGGI: Well, it’s an interesting thing, Barry, because the audience for our products have actually been growing every year. Our business continues to expand year-over-year on have done so, well, McIntosh was founded in 1949 so we’re looking at 71 years in and this is going to be our best year ever.

So I think that, you know, the prevailing wisdom that says good enough is good enough, maybe we need to rethink how we are defining good enough because we seem to be finding an awful lot of fans for some authentic high-quality audio systems.

RITHOLTZ: So let’s stay with that ideas that the concept of just good enough in other words isn’t harming the high ends of the spectrum, it really seems to be having its effect on the middle and low-end, is that a better way to describe that?

POGGI: Well, I think that it’s really about — I just try to define things about the customer, like how is the consumer thinking about the domain or the category of product. And if we want to do a look back at the industry and at how do people consume music, we go back to our AM and FM radios, right? That’s where we all started listening to shows and music and that was good enough for a long time.

But you know, we’re still consuming more AM/FM content than any other media but that’s still the massive amount of content that we’re consuming but it’s actually quite low-quality when we think about it.

So I think that as we look at other types of media to consume music whether it was LPs or tapes or CDs, then we started doing digital downloads which only lasted sort of the blip in the eye and we’ve moved on to streaming now, you know, the different media that we’re consuming has changed dramatically over time but there’s always been a fanbase and there’s always been an audience for people who want you know, a true high-performance goose bump-generating emotional feeling to their — to their music and sound and that audience is actually quite large and it seems to continue to grow every year.

RITHOLTZ: Quite interesting, you are an engineer by training, what drew you towards the world of music and audio and sound.

POGGI: Well actually, I think it’s an interesting story that you and I actually have some overlap and because I know you’re a bit of a car nut, and I was actually drawn into music through cars.

When I found a job, I wanted to get into the car industry when I was a couple years out of school and I was a mechanical engineer and I was working in factories and I love building things and how things were assembled, and I thought getting in to the automotive industry would be fantastic.

And I found a job at a company called Harman International that was a factory making loudspeakers in Martinsville, Indiana and was a production engineer and a quality engineer in the factory, and was in charge of assembling loudspeakers for automotive use.

And that was my first real touch into from the space that I ended up spending my entire 25 plus year career in, but really I was attracted for the automotive purpose, but once I got into the science and the design and the technology of loudspeakers and amplifiers and room acoustics and how it all comes together to make great sound in the challenging car environment, it then, you know, opened up my love and appreciation for a really higher-quality home music listening as well.

And that’s really how I got attracted to it, and once I got into the audio business, honestly never looked back. It has been really a fantastic journey that has, you know, been fun from a product development standpoint, of branding, a marketing and also just the overall emotional experience, a very rewarding time.

RITHOLTZ: So let’s stick with cars for a moment, the quality of sound in automobiles has just gone up and up. I have a BMW with a Bang and Olufsen system in it, I think Audi uses them also, Meridian seems to have found its way into maybe it was Lexus, I don’t remember where that shows up…

POGGI: Land Rover.

RITHOLTZ: What’s – Land Rover, what’s going on with the ultrahigh end space in automobiles and what is McIntosh doing, if anything, in that area?

POGGI: Yes, sound system in cars is really – it’s been a fantastic journey over 30 years now from the early 80s when Bose actually first got into the business with Cadillac and Infinity got into the business with the Chrysler Group brands and JBL was involved in Lincoln, and it really sort of exploded in the 80s and into the 90s.

And by the mid 90s, luxury brands were really starting to look at the car — the automotive OEM business as an interesting opportunity and that’s where you saw Mark Levinson get involved with Lexus…


POGGI: Which was really the first sort of super premium brand, which then paved the way for others like B&O as you mentioned and Bowers, and the quality of the audio systems in these cars has just gone up really by leaps and bounds over the years.

And there’s a couple of key reasons for that, one of the best things about a car is you know exactly where the listener is going to be, you know, you know the room, you know the size of the room, you know where the listener’s going to be and so you can really do some amazing optimization.

And of course in today’s world, with all the VSP technology we have at our fingertips, you can really do some really precise tuning and optimization that we couldn’t do years ago. Obviously the challenges of the car industry is that while you’re in a car, you’re moving, there’s wind noise and road noise, there’s a lot of reflective surfaces like glass and leather, there’s also absorption with seats and carpets, so it is a really challenging environment to make good sound, but it’s been an area that has been expanding you know, year-over-year and more brands have found their way into it

And I think ultimately, it benefits consumers because they did a fantastic experience in many cases consumers have the best audio system in their car better than even in their house.


POGGI: And with the McIntosh Group, this has been a new area of focus for us. So about three years ago, we made a strategic decision to look at the car industry and see if that could be the next category of products for us to come to market with.

But for the Group, what is most important to us was to find the right partner, we are – let’s say very conservative in our approach, and we are very highly protective of our brand, and want to make sure that the brand DNA is retained in everything we do.

And that really touches all parts of our business, and so if we’re going to partner with a car company, we want to make sure that it’s a true collaborative effort that can have some amazing synergies for both companies and just recently in September, it was announced that McIntosh has been working with the Jeep brand on their brand-new Grand Wagoneer concept vehicle that was unveiled by Jeep the first week of September.

And we’ve spent three years working with them on that vehicle and we have been part of every concept design studio activity that they’ve been doing with working with their engineers on integrating all of the different components to find where they need to go, how big they are, how we are going to integrate them, how you are going to do the tuning, what the industrial design is going to look like, what the UI is going to look like.

It’s been a massive, massive collaborative effort and something we’re really, really proud of. And we think that you know this collaboration between Jeep which is arguably the most American of American car brands, and McIntosh which is you know the most American of the American audio brands, and there — both of those brands being so, I’d say very fan based, they have a very strong passionate following, they have a very good reputation for high quality, high performance products, and we put all these things together and I think it’s going to be quite exciting.

RITHOLTZ: I would not have guessed Jeep first as the automotive parallel of McIntosh, I was thinking somewhere along lines of Bentley or Aston Martin not just to stay with British firms but more expensive ultralux products, am I mischaracterizing who your audience normally is?

POGGI: Well, let me answer that in two fold because there’s a couple different sort of chapters of our automotive journey. As you know, in addition to the McIntosh brand, we also have the Sonus Faber brand, which is our wholly-owned brand of high-end loudspeakers that are handcrafted in Italy.

Sonus Faber has recently announced or I should say Maserati has recently announced their MC20 new high performance vehicle and that vehicle is going to be equipped with the Sonus Faber system which is really, I think an amazing high performance luxury brand to brand match, made in Italy, craftsmanship, attention to details, l look you know frankly, it’s sexy as it sounds in our case or looks as sexy as it drives in Maserati’s case.

So that’s a much more sort of high-end premium to premium match which I think works really well for both brands.

Coming back to the McIntosh question and its partnership with Jeep, you know, McIntosh has a following that is a really passionate following of audiophiles for 70 plus years, but most of the McIntosh buyers are very practical people.

Often times we will hear a story that the McIntosh buyer is the person who saved money for 2 to 3 years to buy their first piece of McIntosh year and it becomes a cherished member of the family and that you know, they are happy to sort of slowly acquire the McIntosh system over many years, as opposed to let’s say a pure high net worth disposable income individual who can drop lots of money on an individual purchase, those we certainly have for McIntosh and there’s many rock stars, movie stars, you know Hollywood rich and famous that are fans of our brand and obviously, they have the means to engage in $100,000 200,000 McIntosh system at once, but they’re really not the average customer.

Our average customers often times are even starting with used gear, right? McIntosh has a really unique attribute in that we have probably the highest residual value of used products on the market.


POGGI: That the brand just holds value for a long, long time which is very odd for audio electronics. Most brands, you know, depreciate very quickly, but if you buy a new piece of McIntosh, you can often sell it three to five years later for very little decrease in your original value, and then we’re seeing people you know use that sale to then buy up to the next product.

And so the used market often become the entry gateway for customers getting into McIntosh. So back to the original sort of notion of is Jeep and McIntosh a good fit, I really do believe it is because I think that this practical view of the world that both McIntosh and Jeep consumer share but that appreciation for really good rugged high-performance products which is what you know, what you get when you buy a Jeep or a McIntosh.

RITHOLTZ: Quite fascinating. Let’s talk a little bit about some of the equipment that you guys make. McIntosh is legendary for still using tubes today to create a much warmer more natural sound than just pure chips, what is it that makes your products such best in class?

POGGI: McIntosh has had a long history of designing and manufacturing really the most high-performance precision audio electronics in the industry, and a big piece of this is frankly our focus on not only design but also manufacturing, and doing both equally as well.

The engineering process and the manufacturing process all take place in Binghamton, New York, at our manufacturing and engineering center that’s been there for close to 70 years, and the engineering and manufacturing teams are working very closely together.

When you look at a McIntosh product, you see these big blue beautiful meters staring at you, that is instantly recognizable, the black face, the silver handles, the round knobs, you know a McIntosh when you see it, that consistency of product over such a long time that such a strong visual DNA is sort of a – you know, it has proven the test of time of the fact that the audio circuitry that we design use of the highest quality components that is available to the industry is an important piece of this.

The fact that we take the sort of the time and effort to wind our own transformers in our own factory, we actually been our own metal or form our own metal for the cases, we have our own paint line that paints the products, we have our own screenprinting area to do the printing.

We have our own printed circuit board and fracturing area where we populate all of the components on the circuit board, of course, you have a very intricate testing system that you uniquely test and identify every product so that we can make sure it meets all of the requirements.

So really having this integrated fracturing process guarantees us that the product that we’re putting out meets all of the requirements for McIntosh so I think it’s really this unique combination of collaborative engineering and design work that goes hand in hand that guarantees that precision and high performance.

And I have to say that that — that culture is probably the one thing that really binds together McIntosh and Sonus Faber. So as our two main brand that we manufacture, Sonus Faber is sort of a peer equivalent to that manufacturing process and design process but for loudspeakers made in Italy. And with Sonus Faber, we have a very old world craftsmanship process for everything from design to sourcing to manufacturing where our engineering team, again is all co-located with the factory and all of our suppliers are local to our factory, know these are very small volume high precision manufacturers that supplies products, and then our own assembly people are hand assembling the product in Italy, were hand populating printed circuit boards and soldering them or hand wrapping leather around cabinets, it’s just a really intricate process that helps us, I think, design product better because we know how to assemble them very well.

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Let’s talk about that design process a little bit. How much of what you guys are creating or improving or updating is in response to the marketplace and how much of it is just “hey, let’s sit down and figure out what we can do on our own using our own expertise and talent to push the envelope to the next level?”

POGGI: Yeah, it’s a balance. You know, different innovation processes, some companies are looking at sort of consumer driven innovation where it’s very much outside in, other companies are very much inside out, whereas it’s sort of that coming out of the R&D technology portfolio and sort of comes to the market, we have a balance of both and we have a bit of a structured product development process that includes, you know, the marketing group, the engineering group, the sales group coming all together along with feedback from key dealers and distributors in the sales channel.

So we are sort of doing that constant sensing of the market to see what’s going on and to bring those sort of key trends in. For instance, examples would be, you know, in the home theater business when Dolby goes from Dolby 5.1 to 7.1 to ATMOS, right? There are different trends that are happening in technologies that we need to be sensitive to make sure that we’re grabbing those technologies and introducing those to our products at the right time with the different wireless technologies and Bluetooth, Bluetooth High Def or you have the different, you know, Wi-Fi.

We have home control system integrations all these technologies are sort of third-party technology that we want to make sure that we’re monitoring and bringing into our products at the right time. But then there’s the stuff the only we can do and one example of that would be the recently released MC901, this is a truly only McIntosh could do this product, it is a 900 watt monoblock amplifier with a retail price of 17,582, right? Because it’s a monoblock, so you have to buy two of them together, but the really interesting piece of it is it combines, we call it a dual mono product so there’s actually two audio outputs, one is tube based, 300 watts of tube based amplification plus 600 watts of solid-state amplification, and it’s designed for a large loudspeaker where you’re going to biamp that product and you are going to use the tube power stage to drive your mid-ranges and tweeters, and you’re using the solid-state to drive your woofers.

It’s really kind of a wacky, crazy product that doesn’t exist on the market anywhere and was something that our technology team, our engineering team came up with and as soon as we launched it, we sold out, and we have been backordered ever since.

Because it’s such a unique — from McIntosh only product.

RITHOLTZ: Quite interesting.

POGGI: So that part of the fun of the engineers, right? To let them loose once in a while to do something that the market doesn’t know is coming.

RITHOLTZ: And the market certainly seems to have responded to that which makes me want to go back to what you mentioned about pulling all the teams together, you mentioned engineering and sales, but you also mentioned marketing, how do you guys market? I want to say the product sells itself but I know that’s not true.

Do you guys advertise? What you do to push the McIntosh brand name in front of the consumers who are likely buyers?

POGGI: Yes, the biggest part of our marketing, we focus a lot on PR, we do try to get — drive the awareness of our new products through various media channels to try to get as much exposure as we can over the last many years, like every other company, we’ve moved from your traditional print advertising to a more digital search CEO activity because that is how people are searching for products these days, you need to be online and available and have your product be discoverable through the digital side, and the social as well.

And we spent — incrementally every year, we spend a little bit more of our budget into the digital social space than a year before, so that becomes a bigger portfolio for us to try to engage and communicate with customers.

But for us, a big part of our marketing is still a bit old school and it’s really about frankly getting butts in seats, right? If I can get you to sit down and listen to a pair of Sonus Faber Olympica speakers or a McIntosh MC6 11 amplifier, I can probably get you to buy it. It is the emotional experience that you get when you listen to a really great audio system is amazing, right? It truly is one of those wow moments, goosebump generating kind, and if you haven’t heard it, you need to hear it, and if you have heard it ,you know what I’m speaking of.

And so a big part of our marketing is really working with our dealers and distributors to do events, to bring people into the stores to get them in front of the product and get them exposed to the product and give them that emotional — that emotional opportunity to engage, because these products may look interesting online, you can get great write ups and reviews and people can know from the hi-fi press can review the product and you can get five-star awards, and it is all great and all absolutely helps, but there’s nothing like actually experiencing that for yourselves and it’s no different than any other passion product, right?

It’s one thing to say that, you say you drive a BMW, that BMW, boy that looks nice, but it’s a different thing to get know behind the wheel on a test track and really to put it to its full potential, it gives you a different experience and a different appreciation for the product and so really driving people into getting great quality demos is the best way to market our products.

RITHOLTZ: Interesting, it’s like the old joke writing about music is like dancing about architecture, doesn’t really convey the full sense of the moment.

POGGI: There was one of my first mentors, Floyd Toole, Dr. Floyd Toole from – he was the CTO Harman, he said that basically our job is science in the service of art, that the job of the manufacturer of products, it’s to preserve the art of the creators and that stuck with me for 20 years now, that you know my responsibility is really to the musicians, to the producers, to the recording engineers, to the people that are creating the art. I’m just trying to do our best work to make their effort worthwhile.

RITHOLTZ: Quite interesting, let’s talk a little bit about your title. You are co-CEO, you don’t see a lot of that these days, how does that work, what are the benefits and challenges of having co-CEOs?

POGGI: Yes, for our business, it works honestly extremely well, so I joined McIntosh Group just over three years ago now as the co-CEO, Charlie Randall is my partner and Charlie has been with McIntosh his entire career, so he actually started in McIntosh as an intern, engineering intern out of RIT and has been there ever since, has been president of McIntosh for over a decade, and together, we have been co-CEOs now for the last three years.

And the way it works for our company is that we are organized really by brand, so Charlie is running McIntosh, I am running Sonus Faber and Sumiko, so those are our three main businesses, everyone knows McIntosh, Mc Labs with all of its products, Sonus Faber being our Italian loudspeaker brand, and then Sumiko is our distribution company based in the US that distributes many other hi-fi audio brands including Pro-Ject from Austria and Rotel Electronics, and we also distribute Basso Continuo which is a high-end Italian hi-fi racks for your gear as well as our own cartridge brand for turntables, Sumiko Phono Cartridges.

So the co-CEO job works well because we have a very thin group structure, the group basically consists of four people, Charlie and I are two of them so there’s not much group level work to do, so we’re allowed to really run our business as our businesses and Charlie gets to run McIntosh day to day as he always has and I have the opportunity to lead the Sonus Faber and Sumiko business and we can pretty much work independently and then have the advantage of actually use each other as sounding boards and you know, peers to cooperate with as we see fit.

So it gives you — frankly, it gives me a great person to bounce ideas off of to you know, build strategy off of and then together, we sit on the Board of Directors with our investors and you know, represent the total group level performance.

So it is quite a good collaborative effort, we both happen to be engineers, and we both happen to come from small farming communities and we both happen to love the Pittsburgh Steelers, so we — we’ve got the similar backgrounds and a lot of sort of the common shared experiences that we can play off of.

RITHOLTZ: Quite interesting, so I was having a conversation with a friend about how crazy 2020 has been. He owns Park Avenue Audio in Manhattan and he mentioned that he’s projecting 2020 is actually going to be a better year for the sale of high-end audio equipment than he saw in 2019 which itself was a record-breaking year. You mentioned something similar, given all the mayhem of this year and the lockdown of the pandemic, why do you think this is such a banner year for high-end audio equipment?

POGGI: Yes, it’s certainly been the most interesting of my professional career, and as we were looking at the world in front of us know back in the March, April, May timeframe, it certainly didn’t look like a banner year, McIntosh had to close its factory for six weeks, right? Because of the pandemic. Sonus Faber had to close its factory for a month because of the pandemic, and it’s hard as a manufacturer when you build all your own stuff to sell things when your factories are closed.


POGGI: So it looked a little bit dark for a period of time for sure. But what has happened in the industry is that as people have spent more time at home, they have spent less time or less money as well on other discretionary purchases, and so what seems to be happening is the money that used to be spent on vacations, on food, on dining, on live concerts, on going to of the opera or different shows, that discretionary income is being basically use now to upgrade your home.

And we see a lot of that industry booming, white good sales are booming, remodeling projects or home refinancing is booming, and audio and video is booming as well, as consumers are spending more time in their home, they are investing in their audio systems and really from June forward, every month this year has been our best month ever.


POGGI: It’s been sort of a record-breaking year for the company which is quite amazing and we’re obviously quite thrilled with that and very, very happy and we hope that much of this trend continues, and actually it is more than just a hope because when you start looking at other sort of dynamics that are happening, there’s actually a number of things that are very favorable for our industry. I think you mentioned earlier that LP sales are booming and actually the LP sales are at the record level this year than they have been and they have been growing now for a decade straight.

So if more people are buying records, they are going to be buying more audio systems.

So that trend doesn’t seem to be slowing down, it seems to have been accelerated by the pandemic but it’s going to be here for a while. The other trend is as movie theaters and the whole movie industry changes, that is having a really interesting effect on our business, too, with AMC announcing its bankruptcy, we know that more consumers are going to watching movies at home and guess what, they are going to be putting in more home theaters which is going to help our business.

The latest announcement by Warner Brothers and HBO with the direct to streaming releases of movies for the next year, that is going to help us as well so there are going to be more people watching more movies at home.

So I think there are some other trends that are really favorable to the industry.

RITHOLTZ: Quite interesting, so that is some of the changes that have taken place in 2020, obviously the shift in movies and streaming video is pretty significant, what sort of products are you going to make towards that direction. Obviously, you’ve been all audio and a surround sound either pre-amp or receiver makes sense, you guys aren’t going to venture towards the video side, are you?

POGGI: No, the way we are looking at this is the industry has been shifting from a, let’s say a traditional what we would call specialty retail store, right? Which would sell goods to consumers towards a project-based business, if you will, the custom installation business or CD channel.


POGGI: So the audiovideo business really has been moving for a number of years, from a retail-based environment, to a project-based environment that trend is only accelerating now as the consumers are — they are doing things more than just audio and video of course, they are putting in wireless networks and lighting controls and home controls, safety and security systems, and so when they think about investing in their home, they are looking at a variety of different products and audio and video becomes part of that.

And so one of the big changes for us is how do we provide more products that fit into that sort of project based business for your home.

The Sonus Faber side, we launched our first line of in-wall, in-ceiling loudspeakers, all right? Things that are going to be permanently built into your home as opposed to your traditional floorstanding or bookshelf speakers, so that has been a new development for us that we think will be a very good investment and a good product line for us going forward.

And likewise, McIntosh continues to expand its line of audiovideo processors and multichannel amplifiers that are more designed for custom installation home theater usage. So we think that there’s a lot of ways that we can tap into that, let’s say growth of movie watching or TV watching at home through the audio space and there’s a very good trend there, and one that we see nothing but you know, double-digit type growth for the next few years.

So it sounds like there’s a little bit of an inherent tension between marketing and sales and these projects as someone who’s done a couple of these projects for my own home, I know what it’s like to work with the designer and audio store and say here’s what I want, what technology makes this work, with equipment like McIntosh, you really want to get those butts in the seats to experience, you know the sound that and the whole emotional moment of that, how do you reconcile the two very often the homeowner is just giving marching orders to an architect or designer whatever.

And then on top of everything else, the Internet is in the middle of all this and you obviously don’t get the same experience especially with audio from the Internet as you would live and in person and in a high-end listening environment with top-of-the-line products.

How to you navigate that sort of complex minefield?

POGGI: Yes, for us, it’s, you know, that demonstration is still very important and so we have a strong program to try to encourage our dealers to set up proper demonstration systems right in their show rooms, and even the project based business, there’s — many of them have either more consumer experience centers, they are not retail trade show stores, but these experience centers can often house a nice audio video demonstration room.

And so we do think that that’s still an important piece of this. But the other advantage we have is that we have a very strong brand, actually, we have two very strong brands, McIntosh and Sonus Faber as well as other brands we’re representing in distribution, but if your brand carry that quality and trust factor, often times, the designer can sit down with a client and says, you know, I’m going to install a McIntosh home theater for you, and here’s the – you know the components that are going to be used, a lot of clients will just trust that it is going to be amazing, right?

If your brand carries that reputation for quality and performance, then you can — you can make it a sale without the demo, I’d still wish for further demo because I know that’s only going to surprise and delight the customer even more, but that the power of the brand and that’s why the marketing and the PR and the reviews of products is still important because oftentimes, consumers are buying things without actually hearing them first.

RITHOLTZ: Amazing. So let’s little bit about vinyl sales, for the first time in decades there are now more sales of albums in vinyl than in CDs, what you think this means?

POGGI: Yes, we saw this coming honestly four or five years ago, the number of albums have been growing for a good decade, year-over-year, album sales continue to grow and over that same period, CD sales have continued to shrink and so there is, you know, eventually we knew there is a crossing point.

I think it says two things, one that says streaming has dominated and streaming has killed CDs and that the idea of owning CDs in the current generation of consumers is a lost art and that the bath is going to be the main way to consumers that going forward.

On the LP side of things, I think it’s actually a bigger reflection on sort of I guess, a psychological or an emotional sort of change in consumer’s behaviors, people that buy LPs and turntables and want to listen to vinyl frankly want to disconnect from their digital fast-paced sort of hyper daily reality, right? It is so easy to put on a pair of headphones and stream Spotify or Title or your favorite service, you can do that and instead and then you can jump from song to song, track to track, album to album instantaneously and do all sorts of mix, that being replaced by a turntable vinyl listening experience, now you are talking about I have to actually invest in the activity of listening to music and I really get excited by this.

Because that means somebody it saying listening to music is important to me, I’m going to spend the time to find the album, you know, dig through the collection for the one I want, clean it off first, put it on the platter, turn it on, sit down probably grab my favorite beverage and listen for 25 minutes until I have to flip the album and then repeat the process.

People that are doing this are truly engaging with their music more and it’s really exciting because when you look at what albums are selling you have artists like Billy Eilish and Taylor Swift, right, in the top 10 artists, these are new modern young artists that are selling, you know, albums through the roof. And to me, that is exciting, it’s not just the Bruce Springsteens and the Pink Floyd and the Rolling Stones and the Beatles which have classically always been in the top 10, right? Because those are people like that in on buying the albums for the second or third time but now you got this whole new group of artists that are really putting their content out on vinyl and it’s really creating a whole new experience for all new generation of listeners that I think bodes very well for the — for the industry.

RITHOLTZ: Masters in Business is brought to you by T. Rowe Price, delivering a strategic investing approach with a long-term perspective to help advisors and their clients feel confident through a variety of market conditions. Since 1937, T. Rowe Price, invest with confidence.

Quite interesting, and I will make note that when I was in college, that’s when CDs really started emerging and they cost double what albums do and in that situation seems to have reversed, vinyl LPs are now considerably more expensive than CDs, is that a function of albums being embraced by the audiophile community and there’s still some negative perception of the coldness and harshness of compact discs?

POGGI: Actually, I think that that price change which is absolutely true is more of a function of a basic S-curve of an industry, when albums were dominant and CDs were in their infancy, right? The technology cost of producing CDs was very high, people are scaling up factories, you have the technology investment actually produce those, that was new, there was R&D that you have to amortize to the cost of the CD to produce them, where as albums were very established sort of manufacturing process at that point and so you had volume efficiencies.

While you fast forward, you know, 25 years in the future and a lot of things have happened to the industry, now CDs cost very little because the actual capacity is so underutilized right, they had all of the factories that built all the CDs that now there is no more demand for, so the cost of that is down dramatically because you have an oversupply of capacity and an underdemand.

Whereas albums actually, the capacity dried up and on the — we lost a lot of production capacity for albums when CDs were booming, and so now that album sales are growing again, manufacturers actually now has to start investing back into making albums again.

And so you got a reinvestment curve that can is going to drive some costs, so there’s that dynamic which is fundamental but then I think there’s a second piece on top of that which really gets more to the marketing angle, where in albums as they traditionally were, they’re a source of art and inspiration, right? There’s more content when you buy an album because you have the five page or six page booklet, right? With all of the lyrics of the music and art and you know different content that they can deliver to you and so I think that artists are investing more into the album to try to make it something that has a higher value, and therefore it’s going to have a higher price.

Now, I guess the third dynamic if I was to think about this was the fact that artists can made of from a royalty perspective, their royalty rates on physical sales of albums are much, much higher, right? than a streaming service, and so artists are actually really promoting LPs right now because their whole financial world has been thrown upside down by streaming, because they’re not selling as much physical media CDs as they used to be, they had to either two or more which obviously in the last 12 months is impossible, or they have to produce albums as their physical media to try to make up for that lost CD royalties.

RITHOLTZ: So you and you mentioned people like Taylor Swift and Billy Eilish, what sort of changes are taking place in music, how does changing music taste affects the way you think about the equipment that you guys are creating?

POGGI: You know, honestly we do not believe that the musical styles or genres or people’s musical preferences have any bearing on the equipment that we are producing, it kind of goes back to the comment I made earlier that our job is to give people the best possible experience when they are listening to their music as possible.

And I want them to get those goosebumps, to have that emotional moment whether it’s a tender moment or if a dynamic the no violent moment depending on the type of music that they are listening to, they should enjoy that in the best possible way.

And therefore you know, if our equipment is able to give them extremely high fidelity performance, high dynamics, great sound quality, low distortion, amazing center space, and imaging regardless of whether you’re listening to rap, classical, rock ‘n roll country, I don’t think it matters.

RITHOLTZ: So my stereotype as to who the audiophile component purchaser is it tends to be somebody who’s more of a classical music fan who wants to hear the nuances between the third violinist and the second viola and really capture the full spectrum of a — of a big orchestra is that just you know a tired stereotype, is that long past as to who the purchasers of McIntosh equipment are?

POGGI: I don’t think it’s an old stereotype, I think it just five percent of the population, I think that there’s a lot of people that are passionate classical musical fans and that they really can that extreme value from a high quality audio system, and that for all the reasons you just described because of the level of detail and dynamics that you can really get and there’s an appreciation for the art in a very strong way.

But I do believe that that’s a small part of the population, I would say that it’s, if I drew a parallel back to the car industry, you know, BMW makes the M3 and they also make all three series, while the M3 is only less than five percent of the population of those vehicles, but they advertise it all the time, and they use it as their performance halo but most people don’t go there, they just drive around to the grocery store and back in their 3 series.

So they don’t really use it for that and I think maybe that is a similar parallel where you don’t have to be a classical musical fan to get all the enjoyment out of the high-quality loudspeaker system, high-quality audio system, you can enjoy it for what you do and it’s going to give you an immense set of pleasure of whether you are listening to classic rock or not.

I am a huge classic rock fan and that is my go to the genre and I can promise you that I much enjoy listening to you know, Bruce Springsteen, and Pink Floyd and Led Zeppelin on the my McIntosh on Sonus Faber systems much better than my Apple earbuds.

RITHOLTZ: I wouldn’t doubt that for a second, you know, what’s kind of fascinating is that we — when I was younger your entertainment options were far more limited than they are today and the thought of having friends over, having a listening party for a new release was not uncommon.

Today I have so many different ways to listen to music but I find myself doing much less of let me just stop for 45 minutes and listen to an album straight through as opposed to having something play in the background while I’m doing something else. So the question I want to get towards is, is the LP — is the album still this sort of entertainment events that it once was, and if it’s not, how long is that audience going to continue to engage in that sort of behavior?

POGGI: I think that the way I see the dynamics between consumers engaging in albums let’s say versus streaming, if streaming becomes the first choice for convenience, right? That is just easy to access, easy to use, I can take it anywhere with me and it is great for music discovery, that I can find new artists so quick and fast when I do searches and it can give me recommendations of what artists are similar to others, and that honestly is such a great power that we never in the industry that I think it’s a super benefit, because it is introducing people to many more types of music and many more artists than maybe they would’ve found on their own, but in the old days, but then if they really attached to something, they are going to go out and end up buying a physical copy of it, right? And then exploring that same content that they had in the streaming service but then in LP or possibly a CD or SACD if they still enjoy those, but that’s how I see the dynamic.

So I do see the album or the vinyl experience not as a everyday listening experience, I see that as a special moment in time, right? It is a time that you’re investing with your music, that is something you have to sort of plan for because it’s not a five-minute instantaneous sort of response.

So I think that the fact that LPs are growing year-over-year is really good because it’s saying more consumers are willing to spend more time with their music, and that they’re getting more value out of that experience. And so I think that these two very different mediums and actually co-habitat together, co-survive together in a very interesting way and can actually help each other.

RITHOLTZ: I’m going to do – sell me an upgrade, my home system I have a couple of different ways a listen to music, just for background in the kitchen, we have a Sonus streaming system, outside a Sonance system that I have hooked up to a Bluesound Vault drive, in the den I have a Rotel home theater preamp driven by a Class A amp going through Bowers and Wilkin speakers, B&W speakers, what should I – and a Rotel CD player, what should I do if I want to upgrade that system to the next level?

POGGI: You know, I would want to know more things about your room and your room size before I was to presumptuous to define it for you, but you I think that if it’s really about your level of enjoyment, and we have obviously a wonderful range of products at Sonus Faber, our entry-level product for the loudspeakers goes from our Lumina series that are starting at around $2000 for a floor standing pair of speakers, all the way up to our Aida which is you know, $120,000 so it’s really all about the physical size of the room that’s a big part of how you would size your loudspeakers.

And also about the – you know, the overall sound quality that you’d like to achieve and depending on those specifications, there’s lots of choices that I think can be amazing, and then the McIntosh amplifier family and preamplifier and CDs and turntables all scale in a very similar way where we offer consumers the ability to of everything – our newest McIntosh turntable actually is a fully integrated unit that has the audio amplifier D class amplifier built into the turntable with a bluetooth aptX receiver in it.

So if you wanted to just have one piece of electronics you could buy this product and actually do your streaming and your LP playing all from one, and all you need is a pair of speakers. So it’s a very flexible our product line to have lots of different solutions, but I’d want to know a lot more before give you specific recommendations.

RITHOLTZ: All right, so let me flip the question on you, tell us about the system that you have at home, what do you enjoy your favorite classic rock albums on, what’s that system look like?

POGGI: Yes, thanks, it’s I guess, my third child if you will, I have Sonus Faber Olympica Nova 5s, which we just launched about a year and a half ago, really a fantastic floorstanding loudspeaker, and I have a full of McIntosh set of electronics behind that, a C2700 tube preamplifier, the MT5 McIntosh turntable, the MCT500 SACD CD player because I am one of those old guys that still has a rack of hundreds of CDs and I actually take them out sometimes, then an MC462 which is a 400 watt stereo amplifier driving the whole thing.

And for streaming, I added in a Pro-Ject Streambox S2 Ultra which is a fantastic little streaming box that allows me to connect with Rune, Tidal, Qobuz and do all my streaming.

RITHOLTZ: Interesting I too am one of those old-school CD users but I recently started moving them all to a hard drive in a lossless fashion, it’s the Bluesounds Vaults and my plan is to eventually just put a few thousand discs on that and then just keep them shelved in the basement where I don’t have to hunt for exactly the one I’m looking for, I’ll just be able to scroll and find it and theoretically have full CD set quality sound.

Let me throw a curveball at you, Nespresso machines are the MP3 audio of coffeemakers, discuss.

POGGI: I disagree, I think Nespresso machines are fantastic for their convenience and speed and I have one in my home and I think it’s fantastic, I — you know I think it’s a fun, coffee to me is a really fun topic, I very much enjoy it, I love nothing more than when I’m in Italy to go to a proper barista and get a proper espresso…


POGGI: And really enjoy it standing up at the bar with a colleague and chatting which is the only way to do it, but honestly it’s not something I have the time or patience to do myself and I think it’s one of those wonderful things in life where everybody has their thing that they’re willing to you know go that extra quality step and really put the time and effort into doing it just right.

And if you wanted to come over and make me up proper espresso I would happily enjoy it but I don’t have the time to do it myself.

RITHOLTZ: Now I have to imagine that that sort of comments is what a lot of people who were audio purchases say yeah that that’s a nice system but I just want convenience, I want expensed, I don’t want complexity, just give me a simple sort of thing and on the coffee side, the technology has advanced to the point where you can get practically those sort of instant coffee convenience, take a look at something like the Breville Oracle Touch where they literally do everything from the grinding to the tamping to your job is to move the container of steamed milk to pour it into the shot of espresso which seems to be worth it for the for the improvement in quality, both fields, coffee and audio, the law of diminishing returns kicks in as the price goes up, but this really seems to be something that the technology has advanced dramatically over the past couple years.

So I’m going to steer you in that direction. So I was just so amused that you are not as ritualistic and obsessive about your coffee as I assume you are about your sound system and to me that’s part of the same continuum, it’s how much do you want to spend in effort, energy and time for that next level up in quality.

POGGI: Yes, I love this kind of conversation, because I think it applies to so many different aspects of life and I think it frankly is what makes the world go round because each of us have our own sort of passion areas that we’re willing to you know we’re willing to do whatever it takes to get that perfect level of performance.

And in other places, we short cut. You know I been accused of being unsophisticated because I don’t wear a watch I’ve just never been a watch player and a lot of people are in a similar domain with watchers where you can do these amazing timepieces, which I really can appreciate from afar, but they just don’t fit the you know my DNA.

RITHOLTZ: Right, plus everyone of us walks around with a phone in a pocket which gives you precise atomic set time so watches have become as much decorative as anything.

So I know I’ll have you for a limited amount of time, let me jump to my favorite questions that I ask all my guests.

So we mentioned video earlier, tell us what you are streaming these days, what’s your favorite Netflix or Amazon prime or podcast, what’s keeping you entertained?

POGGI: Yes, so there are some great stuff that we’re engaging with, and so with the family we are absolutely in love with Schitt’s Creek, that’s – I don’t know if you have enjoyed that, but it’s a wonderful program that we discovered too late and so we’re trying to catch up on and that is our family entertainment.

My wife and I are watching Gomorrah which is an Italian the sort of crime no mob drama that was produced in Italian and I think I’m watching back to the to help me with my, you know my Italian for my Sonus Faber team as well so that’s great, those are the two shows that I’m watching regularly and then the other thing that I enjoy privately is books on tape, I do a lot of listening to books on tape and I just finished the Iliad which I had never read or listened to previously so that’s been pretty interesting.

RITHOLTZ: Tell us about your early mentors, who helped shape your career?

POGGI: Well, you know, boy, it all starts with, I think my mom, if she — she’s a fantastic lady, single mom, raised myself and my older sister, I just don’t know really hard working sort of small time — small town sort of I just call it country farm hard-working values, truth, honesty, hard work and it all started there, and my first — one of my first bosses, Paul Mace (ph) from Harman, great sales executive, he – I attribute him to really helping me, I can remember the moment where I went from being an engineer to going into the sales group which I can still remember a Dilbert cartoon about this saying you know, how insulting that is for an engineer to move into sales, and he actually sold me on the benefits of going into sales as an engineer to learn about customers and to learn about what the customers want, the need, to how to help them, but if you understood your customers and you listen to them, you will be a better engineer, you’ll be a better product developer, and then it would be an important skill for you to develop.

And that was really an important sort of moment for me and he was a great mentor for me in that regard and also just to teach the skills they don’t teach you in engineering school know about building relationships with people, customer relationship management, influencing skills, all the soft things that really over the course of the career end up being probably more important than the hard technical skills that you learned in school all those years ago.

So Paul was really a fantastic mentor for me early on in my career.

RITHOLTZ: Interesting, tell us some of your favorite books, what are you reading now, what are some of your all-time favorites?

POGGI: I’m a passionate reader, usually multiple books going on at any given time, my most recent read this year I fell in love with Simon Sinek, “Start with Why” was the first book he put out probably a decade ago, really wonderful book, he did a couple others after that “Leaders Eat Last” “Infinite Game” was his most recent one and it’s really a great content to help companies, I think really remember sort of more of a personal truth and keep grounded and why we as businesses exist which is much, much more than profit and loss.

So Simon Sinek, I have to say is really highly regarded and one of my latest reads, all time favorites and I go back to Stephen Covey, Seven Habits of Highly Effective People, probably the most influential book on me and my entire life, still have a copy right in the back of my desk, really a great foundational book I think for young people to think about how to approach the world.

Some of more business focused books like Jack Welch’s book, “Winning” Ram Charan and Larry Bossidy’s book, “Execution” really set a core managerial books of how to run a business or a company, I think those were fantastic, John Maxwell got a bunch of books on leadership, “Five Levels of Leadership” that I think was a spectacular book on leadership and actually another book I just reread, Clayton Christensen famous innovation author from that had passed away last fall, his book “The Innovator’s Dilemma” which was written probably 15 or 20 years ago now, which I read a long time ago, I re-read just sort of in honor for his passing.

RITHOLTZ: That is a fantastic list to start with, what sort of advice would you give to a recent college graduate who was interested in a career in the audio industry?

POGGI: The advice I would give to a recent college grad would be find a career that you love, find something that you are passionate about and do it with conviction, don’t chase promotion, salaries, titles, be true to yourself and what makes you happy because in the long run, you are going to be way more successful if you follow — follow the things that are really interesting to you that sort of you know, you are emotionally connected with.

That is foundational, I would also encourage them to learn about emotional intelligence early, that’s not a topic that they teach in universities and it’s usually not something that young people were very good at, usually we’re, as a young person, you are out to prove yourself and what your own abilities are and what your contributions can be, really being reflective on what you’re good at, what your colleagues are good at, where your weaknesses are and being humble and recognizing that the teams win championships and not individuals.

I think that is the foundational sort of spirit that I think sets everybody apart but I don’t think anything in business has ever been done by one person, at least not anything that’s worth anything let’s say, or anything of sort of material impact, you really do need a group of people to get something done and really building those sort of team skills, I think are critically important early on in your career.

RITHOLTZ: And our final question, what you know about the world of audio and audiophile equipment today that you wish you knew 20 or so years ago when you were first ramping up in this business?

POGGI: You know, the audiophile or audio industry is a – it’s a very small hobbyist industry with lots of really super passionate people and I think that the thing I’ve learned the most over the years is that our business is less about competing with other audiophile firms or other audio firms, and it is more about growing the entire industry.

We together as a community of audio companies, if we do a better job getting those butts in seats, getting more consumers to come to dealers and listen to the gear regardless of the brand that it is, we are going to build a bigger base of consumers for everyone and that is going to effectively grow the industry across the board.

And so I think that building of a collaboration amongst companies together to build the industry is something that’s really important to me today but not something I was aware of many years ago.

RITHOLTZ: Quite fascinating. Jeff, thank you for being so generous with your time, we have been speaking with Jeff Poggi, he is the co-CEO of McIntosh Group.

If you enjoy this conversation, well, be sure and check out any of the other 400 or so such conversations we’ve put together over the past six and a half years, you can find that at iTunes, Spotify where ever you usually feed your podcast fix.

We love your comments, feedback and suggestions, write to us at, give us a review on Apple iTunes, be sure to sign up for our daily reads at, check out my weekly column on Bloomberg at, follow me on Twitter @Ritholtz.

I would be remiss if I did not thank the crack staff that helps us put these conversations together each week, Nick Falco is my audio engineer, Michael Boyle is my producer, Mike Batnick is my head of research, Atika Valbrun is our project manager.

I’m Barry Ritholtz, you’ve been listening to Masters in Business on Bloomberg Radio.


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