As many people who’ve followed Valco’s adventures know, last year, meaning 2021, we got hit with a really nasty setback.
On top of costs going up because of corona and us suffering from delivery problems, a big chunk of the headphones had a hidden memory fault caused by a component defect.
A tiny component defect caused thousands of headphones to be returned, customers got furious, probably you too, and we were staring down the death spiral:
Customers get pissed off, sales slam into a wall, and the money runs out.
We wrote a fairly long blog post about it at the end of last year. If you haven’t seen it, you can find it here. In the blog, we went through what happened, why it happened, and what we were going to do about it. Now, a bit over half a year later, it’s a good time to look at those earlier plans and think about how well they actually worked out.
At the end of last year, we had three goals:
- Every single defective pair of headphones gets fixed
- Customer service gets updated
- Communication gets improved
First, we tackled the headphone repairs. Before the component defect, we had always just replaced broken headphones with new ones, because there were so few faulty units. During the summer and autumn, we managed to replace a truckload of headphones with new ones before we had to admit this wasn’t going to work. We ran out of headphones in stock, even the warranty replacements broke, and no money was coming in from anywhere.
And since the chipset manufacturer only compensated us for the defect with replacement chipsets, the only sensible move was to start our own headphone repair operation.
My dear little brother Hannes had already helped us before, among other things by handling warranty returns, so we hired him full-time to repair headphones. Hannes is an engineer and gifted in that special way where he can fix absolutely anything, from a circuit board to a wheel loader.
Hannes was the best possible find for the job. He’s done the work the way only a little brother can when he grew up taking orders from his big brother. During the spring, he repaired ALL the headphones returned to us and sent them back out to customers. Hannes has been helped by his partner Aino, who works with us part-time through her own company.
At the worst of the rush, Hannes was helped by several "subcontractors" around Finland, and we sent them boxes of headphones to repair. Without their help, Hannes would still be drowning in a pile of headphones.
Updating customer service and improving communication
I don’t know if we managed to improve communication enough. There’s always room to sand the rough edges off, but we created, meaning I coded, a few automations that should send the customer a reminder when their unit arrives for service or when a delivery is delayed. After that, customer service saw a pretty major drop in messages along the lines of "where are my headphones".
On top of that, we started using an app called Gorgias in customer service, which lets the minions work efficiently and react quickly to messages. It’s basically a system that gathers messages from different channels into one place, so in theory at least they shouldn’t disappear. The previous email-based system had started deleting messages as spam when thousands of customers were trying to reach us at the same time, which made customers double-extra pissed off.
When the service queue stretched to several months, replying to emails got delayed too. We were doing it sweat pouring off us, but even then we constantly had response times of up to more than a week, which obviously wasn’t much comfort to someone with broken headphones. So yes, thousands of messages came in over a short time, from all over Europe.
We quickly hired three new minions whose only job was to answer customers as fast as possible. Now a one-week delay only happens if someone messages me personally and my ADHD kicks in and I forget the whole thing. Most messages can now be answered almost in real time. Our minions have complete freedom to work whenever and wherever they feel like it, which is why replies may also arrive at very weird hours.
We’ve also opened a Discord server where customers can chat with our minions. It’s not an official customer service channel, but most problems have found an answer there.
Well, that was easy
So the plans were carried out and they worked, but not exactly painlessly. At the beginning of the year, it became obvious very quickly that the Death Star money wasn’t enough for anything. First, my business partner and I put our asses and our lives on the line. We had to take out a loan so we could get past the death spiral. If this company keels over, our family is moving under a bridge.
Secondly, our costs have gone up. This isn’t just about payroll costs. Shipping costs and pretty much everything else have gone up too. At this point we should raise the price of the headphones, but we don’t want to. We’d rather bring out a new model at some point instead. Raising prices would feel unfair to customers.
Lower margins would of course require more sales. Since the products themselves hold up just fine in comparison, the reputation of the defective headphones must still be haunting us somewhere. We don’t have extra money to burn on megalomaniac marketing campaigns, and there wouldn’t really be much point anyway, because delivery problems with the headphones have continued all spring.
Generally speaking though, I’m pretty damn satisfied with myself, and Jani too. As an entrepreneur, it’s easy to preach when everything is going great and tell some business magazine interview how your startup with 10 million in funding is about to revolutionize the IT and internet markets. I’d argue not many have survived near-certain bankruptcy while also increasing costs and telling the public exactly how badly everything was screwed up.
What next?
There’s light at the end of the tunnel now, because for basically the first time in two years, we’ve got pretty much every model in stock and there’s no queue at all in warranty service.
We’ve been working hard to finish the next headphone model, which we currently call by the working title "gaming headphones".
They won’t replace the current VMK20, they’ll come alongside it as a different option. In addition to noise cancelling and a BT connection, the gaming headphones also have a latency-free so-called 2.4 ghz connection with a separate dongle for a computer or a PlayStation, for example. For office use, the headphones also come with a detachable boom microphone.
It’s still too early to promise when the new model will be available.
The best part of all this, though, is that we now have our own headphone repair service. Unlike other manufacturers, we can repair broken headphones even after the warranty period. That’s good for the customer, and also an eco-friendly move since it reduces the amount of electronic waste.
As I mentioned earlier, last summer we replaced a truckload of headphones with new ones. There’s obviously no sense in throwing them away, because they’re nearly unused headphones that become basically like new by replacing the chipset and maybe the ear pads.
Now that headphones only come in for warranty service occasionally, Hannes has gradually had time to fix up those previously replaced ones. Going forward, you can do your wallet an eco-friendly favor in the online store and order like-new, warranty-serviced headphones from us at a pretty nicely discounted price, with a 24-month warranty.
They’ll go on sale as Hannes has time to fix them up, so if they’re sold out right now, it’s worth checking again in a few days.
