This interview by Marek Mühlberg and Lilith Sylvia Daisy Tamm was first published in CoFounder No 11 in the spring of 2018.
Alissa Vassilkova is one of the founders of Estelon, an Estonian maker of high-end loudspeakers that “deliver sound the way it was meant to be experienced.” We talked with Alissa at a startup conference in Estonia to ask her about how the company that makes speakers costing as much as a luxury car came into being, how to build luxury brands and what makes great loudspeakers great.
How do you build a luxury brand in a small country that no one has ever heard of? It seems a bit controversial.
It is a bit controversial, but look at it this way: first, you need to have a design that is different, so that people will notice you. Then, you have to prove the quality of your products. If what you are doing is unique and special, everyone will hear about it and no one can say that it is bad if it is good. One way or another, people will notice.
Most of our customer base is in Asia and we are from Estonia, so we are perceived as a Nordic brand. It is European quality that is associated with our brand. Estonia has been proven as a strong IT country, so I don’t see a problem in building a brand from Estonia that is luxury and at the same time hi-tech – but it is very tough work.
What were the events that led to your family starting this company?
If we talk about building the brand, then it is important to tell a story.
Our story begins a long time ago. There was a little boy who loved music and tried to play instruments. He also loved radio speakers, which he would open up, take apart and rebuild. Eventually, he gained an education in this field – electroacoustics and ultrasound. In 1983, he was invited to participate in the development of new speakers, which marked the beginning of his career. For a lot of Estonians, the brand name “Estonia” means something – I believe that almost every Estonian has a radio or a speaker from that era. This is the story of my father’s passion.
At the same time, two little girls grew up in a home, where they were surrounded by speakers and other equipment. They played with them and broke them by testing out all the different buttons to see what they would do. At first, I didn’t really understand it all, but by the time I reached high school, I already had an understanding in the field and helped our father with some projects. I even did my thesis on marketing strategies for high-end loudspeakers.
We always knew what our father was working on. During one family breakfast in 2010, he presented a prototype that he had built in the basement of our house, not in the lab where other people and partners could have seen this secret project of his. We were already sort of working in the industry with our father, so that April morning we realised that it was all coming together. It had taken about five years of research and development to get to that morning. Plus, all the earlier experience that our father had built up.
Two days after that breakfast, the company was set up; three months after that, we registered the brand name Estelon. Three more months later, our first prototype was ready and we presented it in the US, in Denver.
What exactly did the research and development of those first five years entail?
Although my father was also working for other companies, he had his own lab where he was developing speakers and he had 20 years of industry experience under his belt, so he knew exactly what works and what doesn’t. He realised early on that a specific speaker shape is needed to ensure maximum quality. He started testing different shapes and materials, calculating what would be necessary, working through the available components on the market and finding the best ones, constantly improving the shape and so on.
Basically, those five years of R&D was learning about materials, shapes, production technologies, researching the market and trying to get the necessary team members together. Finally, it all came together like a puzzle on that morning in April 2010.
How did you ensure that you would get noticed among the thousands of brands at CES?
Originally, we wanted to present Estelon at CES, not in Denver. CES has thousands of exhibitors and 150,000 visitors. We realised that we wouldn’t even get noticed there without introducing ourselves first, so we decided to attend a local show in Denver ahead of CES – the Rocky Mountain Audio Fest.
Luckily, we got the media coverage we needed and received some awards as well. By the time we attended CES three months later, people already knew that our product was something special and new that was worth seeing.
How well-known was the brand in the beginning?
We started with the idea of creating the world’s best product. Firstly, it needed the sound quality that we knew our father could obtain. Secondly, it needed a good design. As it happened, it was a good design – it was originally designed for functionality, so every square centimetre of the design could be explained. Thirdly, was the build quality. Basically, everything had to be perfect. The finishing, packaging and service all had to be done to the highest level.
We focused on the product first. We wanted expert opinions, instead of being the only ones that were yelling that we have the best speakers. Now, everyone says that we have the best speakers. To achieve that, you must have something that others don’t; we wanted industry experts to be saying it. We got really good reviews, recognitions and awards, to prove that we were not lying, because we really do have a good product. This made marketing very easy, since we simply told the truth.
After we gained the recognitions and awards, and had earned our reputation of being an industry leader in innovation, we realised that people expected more from us. Every time we launch a product now, we know that people expect something super-innovative again, which is very challenging.
We became aware that we had become a brand when people knew us and trusted us because of our track record, so we were not a brand from day one. Even five years later, we still have a long way to go. We are not a big local brand, but we are a highend industry brand. If we ask distributors how Estelon is doing in their markets, the answer is always top three or top one. After that, we realised that we had moved from being a technical brand to being a luxury brand. Then we changed our approach a little bit; it became more about service, communication and presentation. We have developed some very good products. I think we should stay with those products now and focus more on branding by making a small switch from R&D to PR.
How did you break through? Do you have any tips to share?
Firstly, go global immediately. Try to go everywhere at the same time. As a global brand, you have to be present. You have to show the US that you are popular in Asia, you have to show Asia that you are popular in Europe and the US and that everyone is writing about you.
Secondly, be patient. It takes time to build a brand – especially a luxury brand. You need to have a story to prove who you are, and people need to trust you. Trust doesn’t happen in a day or even in a year or two. For a global luxury brand, I would say that it takes about 5-7 years to make it.
If you look at all the luxury brands around the world, then statistically it takes about 7-10 years to become a global luxury brand. I didn’t understand that when we started, but it makes sense to me now. You need to show that you have different products and prove that people can trust you by offering very good service. It takes time and a lot of hard work.
To gain a wider audience for your product, you must prove that it’s a globally-acknowledged product. You also have to test it out as early as possible to get potential customer feedback. Discuss it with your distributors – tell them about your plans, show them the design and ask them how many they would pre-order.
Small countries often lack the capital and talent to build something global. How did you overcome this?
You definitely need a global mindset. We always thought that it wouldn’t matter whether we were doing a global brand or an Estonian brand, it would still take 24 hours a day, so it was better to push more and try to go for the global brand. We have been lucky to have people from our family in our team, but also benefitted because it is a very interesting product. It is a very challenging industry and it is challenging to build a brand like this, but we managed to attract many talented people who wanted to work with us. I still receive multiple requests per month from people enquiring about any available positions.
For us, it is about creating an interesting product and an atmosphere in the office where people want to work. Of course, we need to attract people from abroad as well, since it’s a global brand, to understand how people from elsewhere perceive our product.
Were there any rough patches on the road to success?
When we started, we were young and brave and didn’t know what lay ahead of us. Today, I can say that if I had known, maybe I would have given it a second thought. But I’m happy we did it because today I can see that all our hard work has paid off.
Of course, there are moments when you’ve worked for too many days or even years in a row without a break, and you
think to yourself that maybe it would be better to go back to a paid job where you work from nine to five and have your own life. Sometimes it’s tough and you want to take a break, but at the end of the day, when you receive overwhelmingly positive feedback from the customers saying that they love the speakers, then you know that you are doing the right thing. Some customers even send thank-you letters to show their gratitude.
Also, seeing how happy my father is when he achieves success is very important to me; that gives me the motivation to work harder. He is happy when he receives a new award, for example. To me, there is a kind of cooperation within the family, where we help each other to succeed.