Simon Freethy

Simon Freethy bSimon Freethy has one of the hardest jobs in hi-fi. As the Managing Director of Cyrus Audio, he’s got the corporate equivalent of making “that difficult second album” – the one that fans have great expectations for, demanding that it be the same as what came before, but also different and better! His predecessor at Cyrus, Peter Bartlett, took the company from a sub-brand of Mission to a fully-fledged, management-owned British hi-fi manufacturer. Under his stewardship, the concept of compact, half-width, high quality audio was taken to its limit – and very successfully, too. So Simon’s role, announced in October 2012, was a double-edged sword; he had to continue the appeal of Cyrus, yet stretch it to new customers beyond the traditional hi-fi sphere.

“I first got involved with Cyrus back in 2004 when the then Managing director Peter Bartlett was looking at buying the business out of NXT. NXT, which previously had been called Verity Group, successfully got together a whole range of hi-fi brands, centralised their R&D departments, and through that R&D came across flat panel loudspeaker technology. The company raised money in the city to develop that technology and turned itself really from a hi-fi company into a technology licensing business. It then proceeded to sell off its various hi-fi brands. Cyrus was the one it kept to the end because it was the most premium, but management realised eventually they needed to sell it. Peter, as the Managing director, was obviously in the prime position to buy that business but didn’t really have anyone who understood about finance, and my background is in venture capital, managed buy outs and consultancy so I come from that world originally…”

Primarily a money man, you might think that Simon isn’t ideally suited to a role that needs an instinctive feel for the market, but he reveals to me that he’s a long-time hi-fi fan, too. “Yes! In fact, if you can dig out a 2003 copy of Hi-Fi News, you’ll find the readers system section is I think a three page article on me and my hi-fi system at my home and most of which is Cyrus kit. When I was working in the city, we used to look at the subsidiaries of PLCs to see if they would be appropriate to be bought. It was obvious to me with my analysts hat on that Cyrus didn’t fit in NXT. It was too small a deal for us to do as a company, through our management buyout fund, but when I left the city, I wrote to Peter and he said, “funny you should say that, I have been looking for someone like you”. We got together and the rest is history. I put that deal together in 2004 and came on board as a one day a week Finance Director to cover the finance side of things.”

Not only is he a Cyrus fan, but a musician too. “In that article back in 2003 I have this rather large lounge and at one end was a hi-fi system and at the other I had my drum kit and my piano which are the two instruments which I pretend to play when I can. Yes, I am very musical and that’s why getting involved in Cyrus was quite exciting for me in the first place, because I do love listening to music. Music is an emotional experience and the challenge we have as an industry today is to get the message over to people that by listening to music on a compressed MP3 file on a less that decent system, you are squeezing the emotional content out of that whole listening experience.  I know very much from my own personal experience how great a piece of music can sound because I’ve been into that for a long, long time…”

So Simon’s the guy who loved the company so much that he bought it? Doesn’t that have some slightly disturbing precedents, after all hi-fi is littered with failed grand projects? Huntingdon, lest we forget – where Cyrus has always been based – is full of ghosts of once-great ventures that fell by the wayside… “Well, you always think it’s would be great to be involved in a business which is your hobby because you think it’s not like being at work. That’s not quite true; some of the bits of being involved in Cyrus are fantastic and I enjoy, but some other bits are slightly more challenging…”

Historically, an a typically large number of British hi-fi companies were set up and run by people with little or no corporate finance background, so you might say it’s a real boon for Cyrus to have such a safe pair of hands. “My background is in management consultancy and then in venture capital, so I worked for A T Kearney, which is a big American consultancy firm and then in venture capital for a subsidiary of UBS. What I loved about both those jobs was the variety. We went into a company, and saw in quite a lot of detail what it did, and tried to make a difference. You do pick up things from various places and think, ‘that’s a really good idea, why don’t they do that in this particular company?’ But the challenge of actually implementing these ideas is another thing, because businesses are based around people, and people are by their nature different, emotional, non-logical. So you’ve got to take the logic and apply it in a more fluid environment to make things work. That’s a constant challenge…”

At this point, Simon is effusive. He’s obviously fascinated with the corporate side of his job, and a real details man, interested in process. “Yes, the best companies are a fine balance; you’ve got to have some kind of inspirational leader at the top, but they can’t be the heart and soul of the business because if that person goes, the business still needs to carry on. You need to be able to set up a systemic culture; you’ve got to put systems in place because you can’t have a business that is just reliant on one, two, three or four key individuals that the business would fall over if they disappeared. So you have to take the good things that they know and do, embed that into the processes of your organisation, and therefore create a culture which replicates what these guys do…”

You can’t stick rigidly to the systems approach, says Simon, “because then as a business you don’t grow and change, so you’ve got this constant see-saw of ‘this is a great system lets implement it, let’s do this’ but then if somebody comes along with a new idea, have they got the creative freedom to make a change? Because you don’t want to stifle creativity. That’s the constant battle, and on one is never sure where the equilibrium lies. I am much more for a collegiate style and I want to feel everyone is involved. If the business is a success that’s great, I don’t have to be a success, I’m not so egotistical that I need to be seen to be the person that’s driving that.”

This gets to the nub of Cyrus Audio’s problem – if you can call it that – “how to build on success?” Admittedly, it’s a nice problem to have, but it’s one that has required a lot of thinking on Simon’s part, along with his team. “First you have to look at what sort of business you are, analyse what type of customer you are serving, and where these customers sit in the landscape of the whole market. So having done that exercise we ascertained there were broadly speaking three customer groups. Enthusiasts who are our current base. They are people who are massively into hi-fi, really into the technology; it is their hobby and they spend a lot of money on it. As a group of people they are probably getting smaller and they are getting older, and whilst there are still a lot of those people overseas we can reach, focusing purely on that group as a business isn’t necessarily a route to growth.”

He continues, “therefore, we need to look at where the growing segments in the market are. And we have determined those people are what we call ‘Entertainment Seekers’ who are affluent people who love music, and are trying to buy a ‘fit and forget’ music solution. They’re not into listening to AB comparisons with seventeen different amplifiers, which an enthusiast would want to go and do, and enjoy. Finally, you’ve got what we call Enlightened customers, who are a younger audience, probably never owned a CD in their lives, their music is mostly digital their world revolves around their laptop or their iPhone or iPad, but importantly, they’ve suddenly realised that actually the music they get out of their laptop doesn’t sound that great and that they could have a better experience…”

The question that then presents itself is, how then does Cyrus create products that appeal to those markets. And then how do they market and sell them. “It’s no good just making the products slightly different, it’s how you sell them and where you sell them that has to be slightly different as well”, he says. “We sat here and said, well we have a fantastic brand, it has a really good reputation and is well known in the market place. And as a result of that, a very loyal fan base of core customers who’ll keep coming back and buying products. Yes, it would have been easy to just sit there and say we’ll keep bringing out slight variations of new products and sell it to those people, but that wouldn’t be a good long term strategy. We needed to bring more people into the brand. The challenge is now, to set some slightly different parameters. We told all the guys in R&D to use all your existing technology, but make it appeal to this market and that market – and that’s how we came up with Lyric, and Cyrus ONE.”

The next challenge for Simon is to reach new customers, beyond the company’s transitional markets. I suggest that it’s not just one that Cyrus faces. “We want to widen the message that listening to music is an emotional experience, a great human pleasure. I mean, why do people trade up and go and eat at better restaurants? It’s the same self gratification that motivates people trade up to get better hi-fi systems. The problem is a lot of people know about gourmet restaurants because they’re all over the TV, but few know that actually if you bought a better hi-fi system you get a similar emotional reward.”

Simon expands on this, pointing out that the number of people who listen to music is higher than ever.  Music has become much more accessible, because you can steal it for free or because you can listen to it for a very small monthly cost. “The ability to call up any track you like on your phone is fantastic. So the market is large, but the way people consume that has diffused across many different media. The hi-fi industry was always very technology led, and that in the early days was how to make things sound better. Then that technology morphed a bit into how to make this music easier to consume. Therefore, those products became less identifiable as hi-fi, the technology being much more into “let’s make this easier to use”. The core essence of – hang on a minute, what we’re trying to do is to make it a better music experience – got lost in the pursuit of convenience. We’re trying to re-centre the ground and say we can give you the convenience, because we can buy in convenient solutions like Bluetooth off the shelf, but it’s the way we stitch them into our technology which makes the music sound great.”

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