'Being employee focused is good business’: Focusrite chairman Phil Dudderidge on its new Pro division, trade shows and the effects of Brexit

Last month, Focusrite announced the launch of its new Pro division, a new dedicated segment of the company tasked specifically with bringing its professional focused products to new markets. Editor Daniel Gumble met executive chairman Phil Dudderidge to find out more...
By Tara Lepore ,

Phil Dudderidge

Adorning the rear wall of Focusrite executive chairman Phil Dudderidge’s office at the firm’s High Wycombe HQ hangs a vast and impressively framed Jimi Hendrix print, flanked by three colourfully decorated Gibson SG guitars. Each has been painted and signed by a multitude of rock and pop luminaries, including the likes of Jeff Beck, Mark Ronson and Corinne Bailey Rae. It’s the first thing one notices upon entering what is an otherwise fairly standard office space. While each piece could sit snugly within a museum display or recording studio foyer, their purpose here it seems is to provide a reminder of Dudderidge’s rock’n’roll past, and in many ways highlights the contrasting sides to one of the industry’s most revered and influential figures.

A public schoolboy born into a family of Quakers, his backstory doesn’t quite fit the mould of the archetypal rock’n’roller, which is precisely what Dudderidge was prior to his time helming world famous console brand Soundcraft, which he co-founded way back in 1973, and later Focusrite. For much of the early part of his career he toured as a roadie and live sound engineer for the likes of Fairport Convention and Led Zeppelin – roles that set the foundations for a career at the cutting edge of sound technology.

What’s more, his reputation as one of the most shrewd and successful businessmen in the global audio business may seem somewhat at odds with his socialist upbringing – he describes himself during our morning together as a “socialist capitalist”, something he claims he would never have imagined calling himself during those formative years.

Yet in spite of these outwardly oppositional qualities, his extensive business acumen and adopted Quaker sensibilities have enabled him to attain a unique position in the market. Under his guidance, Focusrite has become both a prosperous business proposition and one of the UK’s Top 100 employers – it was ranked 68th on the Sunday Times 100 Best Small Companies to Work For 2012 list. On top of that, its move to become a public company in 2014 has allowed Dudderidge to offer his staff a direct stake in the firm. As he puts it, people join Focusrite “not just because they are looking for a job but because they are looking for a career”, such is the high percentage of staff that remain with the company on a long-term basis.

His astute business nous has also lead to Focusrite planting its flag firmly in both the pro audio and MI markets, with products that appeal to customers at either end of the user spectrum. And while its presence has been adequately felt on both sides of the biz for many years now, the company decided to redouble its efforts on the professional front in October with the launch of the new Focusrite Pro division - a dedicated corner of the business aimed at overseeing three product ranges - Red multi-format audio interfaces; RedNet modular audio-over-IP solutions, and ISA microphone preamplifiers and analogue signal processors – to ensure they are hitting the right audiences across the globe.

The division’s launch has also coincided this year with the appointment of a new CEO in the form of former Avid man Tim Carroll, who has been tasked with bolstering the brand’s position in existing markets and developing new strategies to break emerging segments of industry.

Here, Dudderidge tells PSNEurope editor Daniel Gumble about his ambitions for the new Pro division and recaps on some of Focusrite’s 2017 highlights, while also offering his take on the greatest opportunities and challenges facing the business as we prepare to enter the new year…

What made you launch the new Pro division?

It was established within the greater business to bring focus to all aspects of the professional products and the markets they are intended for. Up to now, pro-product marketing has been specific to RedNet. That’s been expanded now to include the Red Series and the ISAs. It’s like creating a separate business unit under the Focusrite umbrella. The benefits will flow from having much better engagement with the markets for which these products are intended. With only the one sales department and one marketing department there was a lot of ground to be covered. In the last 20 years or so we’ve gone from being a very pro-orientated company to being a much more musician-orientated company, as the democratisation of recording has occurred. We’ve played an increasingly leading part in that revolution.

For several years we’ve been developing RedNet and products like the Red Series for professional users, but they weren’t getting the attention they needed and deserved in terms of marketing and sales, so we’re expanding that side of the business. And we’re going to be further supporting distributors in other territories, particularly in the US and Europe. In some cases we’ll be making changes to distribution, so if we’re with a distributor that’s strong in MI but not in pro then we’ll split the arrangements and set up new ones with companies that better address those pro markets.

How long has the division been in the pipeline?

It was a decision arrived at by our new CEO Tim Carroll. We developed RedNet with the top end of the recording market as our focus, but the initial interest and demand came from a slightly different quarter, which was education, performing arts centres, theatres etc. But the potential is much wider than that and exists in all kinds of live and recording applications as part of the Dante ecosystem. We were an early exponent and supporter of Dante and the audio over IP network. Dante has something like 200 licensees now - companies designing products that will run on the Dante network. We are very much at the vanguard of that, and our objective is to make sure that when people think of Dante they are also thinking of RedNet.

How has the company benefitted since going public in 2014?

Joining the AIM market has helped us grow up in our approach to the business, which was one of the objectives for me as founding shareholder. It’s allowed us to achieve various goals for myself and our management team and also for the employees. We have a share option scheme that embraces all employees, so those who were with the company prior to the IPO in 2014 have benefitted from being option holders and converting those options into shares, which they’ve either held or sold. As I approach what might be regarded as a normal retirement age, it’s enabled me to release some capital without selling the business.

Focusrite was voted of the UK’s Top 100 employers by the Sunday Times in 2012. What makes the company such an attractive proposition for its employees?

The credit goes to the staff themselves. The employees are very much the essence of the business. From a financial point of view, the business is more successful because the employees are fully engaged and feel a sense of ownership of the business. Some people sense that more than others. Sometimes share options can feel a little bit remote – which before the IPO was a legitimate concern – but with the IPO we’ve brought value to the options that people in some cases had held for 15 years. That was one of the most important things, that it wasn’t just me taking money off the table but that everybody else was seeing the benefit of their endeavours over and above their salaries.

Is that focus on staff something you’ve always had a strong focus on?

I come from a socialist family, so I think of myself as a socialist capitalist. I didn’t in my younger days expect to be described as a capitalist but I can’t deny it now! I believe that being employee focused is good business. My parents were Quakers and when I was growing up I learned about Quaker businesses in the 19th century, and they all had a benign capitalism in that they wanted good working conditions. It’s that engagement with the employees and feeling that they are as much a part of the company as the shareholders, and that they should be shareholders. But we had this great vibe before that, when people didn’t know if their options were going to be worth any money, because for them to have any value there needed to be either an IPO or a trade sale. I didn’t like the idea of a trade sale because I’ve seen too many situations where companies have been bought and a couple of years later…where are they? Where’s TC Electronic today? Tannoy? Soundcraft? It’s a brand now, not a company. The people we used to employ at Soundcraft before we sold it to Harman in 1988, we had about 350 people in the UK and the numbers grew after that. When I left the company continued to grow, but where is it now? I’m very proud of the fact that [Soundcraft] has survived and appears to be doing well. But I do think there is a growing and changing community under our roof here – we have people come to us not just for jobs but for careers.

How valuable are trade shows to the business these days? It seems many companies are scrutinising their commitment to them more closely than ever.

They are very expensive. Frankfurt seems to have lost its way. I think they’ve had to make adjustments following the financial crisis in 2008. I don’t know when other companies started cutting their expenditure, but we continued to invest increasingly in trade shows from 2009 onwards. We still do but the orientation of our spend is different. Our marketing budget is higher than it ever has been, in line with the growth of the business. And we have to continue to invest to achieve the growth of tomorrow, but how we spend our budget, digital marketing, traditional print advertising and exhibitions has changed hugely.

As we move into new markets like post, broadcast and installed sound, ISE, IBC, NAB and InfoComm are becoming more important. With Messe, if they hadn’t messed with the layout it would have been easier to carry on doing what we were doing, but by changing the hall arrangements, various distributors chose not to exhibit and that eventually included us. We still exhibit in Prolight+Sound, but we’ve found not exhibiting at Musikmesse over the past two years hasn’t made a difference, because we actively service our distributors internationally and our dealers at a local level in the UK, Germany and the US.

Phil Dudderidge and rock legend Robert Plant at London’s RAK Studios

What are the big growth areas for Focusrite?

We are still growing the Scarlett range with double digit growth every year, because the market is growing still and it’s been supported very well by music education. Lots of schools are incorporating music production as part of music education. It’s really helping drive the market, and is a market in and of itself. We’ve also been looking at the market above $500 and we’ve taken market share with the Clarett range. And RedNet is growing very fast.

What are the challenges facing the business in 2018?

Brexit has to be the greatest concern. I’m not overly worried because we are not manufacturing in the UK, so we’ll have the same trading arrangement between Europe and China as we do now, but maybe cutting out the UK stage. Being a British company, ultimately profits flow back to the UK and since the referendum the fall in the value of the pound has been beneficial in terms of profitability, but it’s increased our costs as well. All of our manufacturing costs are denominated in dollars, so our costs have gone up but our dollar revenues have also gone up. But I’m fearful of the overall impact on the UK economy and what that will mean to UK customers, musicians and others to be in work, to be able to afford to buy our products.

However, I think musicians are relatively immune from macro economics, certainly at the entry level. They are very driven and if they need to buy something to record their music they will and they’d rather do that than go down the pub or buy a new shirt. And so it proved during the recession in 2008 – our business grew from 2008 onwards and we didn’t get deflected by taking defensive postures. I said, OK, when we’re forced to do something we will, but we won’t take any pre-emptive action. We’re fortunate in having a global business; I don’t think the world will be affected by Brexit, but I think the UK will be affected by Brexit.