Zack Zalon of Super Hi-Fi

    We Spoke to Zack Zalon of Super Hi-Fi About How to Build a Successful Service Business

    As part of my series about the “5 Things You Need To Know To Create a Successful Service Business,” I had the pleasure of interviewing Zack Zalon, CEO of Super Hi-Fi. Zack Zalon is an entrepreneur and business leader with more than two decades of experience in digital music and digital consumer products. He is co-founder and CEO of Super Hi-Fi, a Los Angeles-based music technology company that is creating transformative listening experiences for the world’s largest music experience providers.

    Zalon is responsible for the strategic direction Super Hi-Fi, which launched in 2018, and shares day-to-day operating oversight with fellow co-founder Brendon Cassidy. Recently, the company announced it had been granted a broad and critical patent from the United States Patent and Trademark Office for technology that allows its A.I.-driven audio platform to intelligently and seamlessly stitch together music and other audio content in digital delivery channels. Current partners include Peloton, iHeart, The Associated Press, and Universal Music Group.

    Prior to Super Hi-Fi, Zalon served as co-founder and managing partner for We See Dragons, a “S.W.A.T.-style” digital agency that helps some of the world’s largest and most respected brands rapidly bring digital products to life. Brands for which We See Dragons has developed consumer platforms include National Geographic, Johnson & Johnson, Ticketmaster, Comcast, Citibank, Experian, and Madison Square Garden.

    Zalon has always strongly believed in the power of digital music, and under the banner of We See Dragons he led the design and development of innovative digital music experiences for CBS Radio’s consumer music platform, Cricket Wireless’ Muve Music, Sony Music, AOL Radio and Yahoo Launchcast.

    Earlier, Zalon was President of Virgin Digital, the global digital platform for the Virgin Group, helping to build and operate some of the earliest consumer digital music entertainment services, including Radio Free Virgin.

    Zalon’s passion for the music experience has been a constant throughout his career. Early on, he was general manager of Doug Weston’s Troubadour, the legendary Los Angeles live-music venue featuring contemporary music’s greatest names in an intimate and standing-room-only venue. Originally from the East Coast, Zalon now calls Los Angeles home.

    Thank you so much for joining us Zack! Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?

    I’ve been in digital music for a long time. I started out in the mid-90s when the internet was just getting going, building websites for record labels and artists. Eventually, I rose to head up Virgin’s digital music group globally. When Branson sold the Virgin Megastores, my team and I set up a digital agency to build products for other companies. We were really fortunate to develop a host of early digital music services, such as CBS Radio’s platform; AOL Radio, Yahoo Launchcast; and Muve Music for Cricket Wireless. Ultimately, we expanded into other industries and grew into one of the largest closely held agencies in Los Angeles. Some of our projects included Johnson & Johnson’s global diabetes management platform, National Geographic’s mobile apps, financial services platforms for Citibank and Experian, and lots of other companies. But our first love has always been digital music. That’s why we started Super Hi-Fi.

    Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘take aways’ you learned from that?

    I’m not sure if there are many funny mistakes we’ve made, but for sure there have been plenty of mistakes! I think overall, the biggest issue we had was figuring out how to pivot from being a broad, service-based agency to being a product-based company focused on a single category of customers without cratering both companies in the process. For a time, we ran the businesses concurrently, working to tail off our services customers as we built up our Music IP. In hindsight, this was the right choice, but it was pretty chaotic at times as we worked to build our ‘sea legs.’

    Super Hi-Fi stresses the importance of emotion, and how your AI bridges the gaps between songs, maintaining the emotional flow. Emotions are very individual. Even with the same song different listeners will experience different ranges of emotion. How does AI create a uniform “emotional bridge between the spaces”? How does AI create a uniform emotional experience?

    OK, so here’s the thing. Right now, there are two issues that we think are plaguing all of the digital music services. The first is that there is zero differentiation, everyone has the same catalog at the same relative sonic quality, and at around the same price. That’s a recipe for commoditization, and that’s not a healthy spot for anyone to be in. The solution for that is unique experiences, with sonic branding, artist interviews, exclusive content like podcast snippets… similar to what has kept broadcast radio competitive all these years, but with the personalized benefits of digital delivery.

    The second issue is the production quality itself. Think about today’s experiences; there’s a song, then a 5-second gap of silence, then another song at a different volume level, then another gap, then maybe an ad. When did this become acceptable in any way? Those two issues are why we built Super Hi-Fi. Our brand promise is that we bring The Space Between the Songs to life. We do that first by adding in great interstitial content like sonic branding and other elements. Then we make it sound amazing, with perfect volume leveling, song stitching, beautiful-sounding ad insertion. It sounds like a human is mixing the experience just for you, but it’s really powerful AI making these decisions in real-time and at scale. The result is something that has a more emotional impact that gives our customers a competitive advantage by helping them stand out, and as we’ve learned, that drives more listening and more revenue.

    It has been said “Build a better mousetrap and they will come”. Of course that is only true if the target audience has a desire for that better mousetrap. Do listeners of streaming music perceive and feel those “between the space gaps” to the degree they are desperate for, or at least seeking, the solution you are providing?

    Our best business advice to others has always been that the hardest business ideas are the ones that answer a question that nobody is asking. However, I have to admit that we totally ignored our own advice here. But that didn’t dissuade us, it seems so incredibly obvious that the solution for long-term growth and loyalty for digital music services is differentiation, identification, and high-quality listening experiences, so we built it anyway. And the result has been greater than we could have imagined so far.

    Here’s a great example. Our first commercial test was with 400,000 listeners to a large digital music service. We added our platform, and randomly switched it on and off to measure impact, and what we found is that people listened almost 10% more when Super Hi-Fi was activated. Think about that — no listener was even told we were doing it, we just flipped the switch and, the qualitative improvements drove a huge increase in how long people wanted to listen. And that 10% translates into 10% more loyalty or 10% more revenue. So, the summary answer to your question is that listeners aren’t asking for this, but they most certainly are responding to it in a major way.

    It’s acknowledged that AI is the future. How long do you feel that you and SUPER HIFI will have this market to yourself?

    That’s a packed question, actually. Let’s start with the AI piece. No doubt that advances in AI are driving some incredible services, and across music there are fantastic examples of this all over the place. Music composition AI is a really cool area of science; algorithmic music selection and recommendations are pretty standard at this point; there are amazing AI-based mastering services for musicians and producers. Basically, music-AI surrounds us at this point, and it doesn’t show any signs of slowing down.

    Now, for Super Hi-Fi, our specific category of AI is what we call Computational Music Presentation. 100% of our scientific research is focused on understanding audio content with the same depth as a human, so we can make production and presentational decisions that increase the enjoyment of the resulting listening experience. We basically created the category, and so to your point, we have that to ourselves today. Over time I’m sure others will enter the space, and we do not take our position for granted, so it’s incumbent on us to continue to invest in product innovation as though it is already a highly competitive space. That’s what’s going to keep us ahead. To be clear, we have really strong patents that protect our approaches and our IP, but that’s not enough for us. Our thinking is we have to keep earning our customers, and our biggest responsibility is to bring new, exciting product features to market on a consistent and rapid basis so we can always delight and dazzle our customers, and their listeners.

    Let’s use the jazz genre as an example. Can you explain a bit how you differentiate one music stream from another. Is it the choice of content?

    That’s a great question. Sure, it starts with the music content, and there are lots of great services that program amazing music playlists. We don’t focus on the programming of the music; we focus on bringing that music to life. Let’s imagine that your hypothetical jazz playlist plays a wide range, from old bebop to modern hi-hop influenced contemporary jazz. That would be pretty cool, but realistically it would start out sounding like a mess, with big gaps of silence between the songs and huge volume disparities given the decades of distance between the recordings. The first thing the Super Hi-Fi AI would do is fix that, automatically transitioning the songs in an artful, beautiful way; leveling the volume; getting rid of all the gaps. Now it would sound smooth and consistent like someone really cared about the presentation. Next, we’d work with the service to make sure they had a ton of unique and exclusive content. Perhaps it would be a sonic logo, like a unique station ID, that would occasionally play with various versions to make sure people knew who they were listening to.

    Now let’s add a bunch of liners, audio snippets with in-depth information on an artist or a track but with a specific voice talent that doesn’t sound like anyone else so that it would make the listening experience more of a narrative journey. How about some artist interviews so it all sounded personal and meaningful, and maybe even some service-branded audio jazz news that plays every few hours and that updates automatically every day. Finally, let’s imagine that all of these audio elements weave perfectly into the experience like a human DJ is sitting at a powerful mixing console and crafting a totally-produced delivery.

    So that playlist started out as a disjointed mess, but now it’s a standout example of an amazing sonic jazz experience, something really unique that has an opportunity to build a real relationship with a listener, without sounding like any other jazz playlist that exists now or in the future. It is its own thing with its own voice. That’s how Super Hi-fi differentiates and builds value.

    Can Super Hifi help advertisers target a specific music audience within a genre?

    There’s a lot we can do with advertising. We recently announced our first advertising partnership with Target Spot, and there are some fresh examples we’ll be able to show soon. The problem is that today’s listening experiences with ads are often jarring, too loud, and out of context, which ultimately can negatively impact a brand. Target Spot with Super Hi-Fi’s technology can offer our mutual partners a significantly improved user experience. We are able to provide digital music service providers with fully enhanced and customized audio advertising experiences by automatically layering different music genres underneath an audio ad-read, depending on the audience. A service can now have a single audio read, which we can automatically place the right genre underneath it depending on what kind of music a listener is consuming. That’s really powerful and adds a ton of flexibility and customization options for the services that use it.

    Thank you for that. Let’s now pivot to the main focus of our interview. Extensive research suggests that “purpose driven business” are more successful in many areas. When you started your company what was your vision, your purpose?

    Let me start by agreeing wholeheartedly that purpose-driven organizations win on so many dimensions. When we were running our agency, our vice-chairman was Jimmy O’Mahoney, the former Global CEO for Saatchi & Saatchi. He’s one of the founders of the concept that a well-defined organizational purpose can drive meaningful growth and value, and he drilled that idea into our heads constantly. As an example, Jimmy worked side-by-side with A.G. Lafley at Procter & Gamble, helping to craft their global purpose, which Lafley himself credited for much of P&G’s growth over his time as CEO. So this idea is baked into our DNA at this point. Super Hi-Fi’s purpose is simple. We exist to help digital music providers deliver better experiences to their listeners. We do that by “activating the space between the songs.” That’s it. Every choice we make, every dollar we spend, every line of code in our platform, it’s all based on that simple premise.

    What do you do to articulate or demonstrate your company’s values to your employees and to your customers?

    I think the only way to demonstrate this is to keep delivering on all of our product promises. We have a pretty singular goal, which is to keep developing our platform with features that continually enhance the listening experience in new ways. So long as we keep delivering, and so long as our product roadmap keeps upping the game, our company values will keep being pretty evident to anyone that works with us.

    Do you have a “number one principle” that guides you through the ups and downs of running a business?

    Yeah, it’s Focus. I have a tendency to get super excited about all kinds of possibilities, and it’s focus that keeps me grounded. Staying focused is great for helping me to know what NOT to do, and that’s half the battle. There are fewer distractions; we know more clearly where to spend our energy, what product features to invest in, and what kinds of companies we want as customers.

    Can you tell us a story about the hard times that you faced when you first started your journey? Did you ever consider giving up? Where did you get the drive to continue even though things were so hard?

    For sure. We had the idea for Super Hi-Fi for a while and spent well over a year developing our first working prototype. We were really excited, and we set up meetings with almost every major digital music service to demo the product. At every meeting, people were kind of blown away by what the system could do, but nobody could figure out how to integrate the technology. After a year or so of pitching, we were left with literally no customers. By that point, we had spent almost two years on the product, spent significant personal capital funding it, and had absolutely nothing to show for it. And we had some hard conversations between us wondering whether we should throw in the towel and turn back to our digital agency business.

    But here’s the thing. We knew, deep in our bones, that our vision for the future of digital music experiences was the right one, we were totally convinced that this was the defining set of characteristics of tomorrow’s services. So we doubled down. We went back out to the markets, but this time we shared our vision and not just our tech. This time we told a story of how better listening experiences matter, how treating listeners like customers and not only as subscribers, would grow the industry. And this time, we found people who shared our vision, and when they shared it, they also started licensing our technology to help them bring that vision to life.

    So, how are things going today? How did your values lead to your eventual success?

    I would say that we’ve shifted into second gear now. Our story hasn’t changed, but it seems like the market is coming to our story and starting to realize that there are better ways to entertain listeners. Where 2108 was all about learning how to be a business, 2019 was the first real stage of our growth. We ended the year with amazing partnerships with customers like iHeart, Peloton, Napster, Target Spot, and Universal Music Group. We announced 2 essential patents were approved during the year. We delivered a host of product updates, and as of November, we were generating over 250 million monthly transactions with our AI. And most importantly, we are in the middle of our biggest integrations so far, which we hope to be able to announce early in the year. But to be clear, we aren’t even close to where we want to be; there’s so much opportunity, and we are laser-focused on our continued growth.

    Based on your experience and success, what are the five most important things a founder or CEO should know in order to create a very successful service based business? Please share a story or an example for each.

    I’ll caveat this by saying for Super Hi-Fi we aren’t really a service business anymore. We’re probably 90% platform technology, with the rest being services we support our customers with. That said, our agency experience has been almost exclusively service-based, leading up to this point, so we have a ton of experience running a pure service-based business. So my list of five is based directly on that.

    #1. Service-based businesses are hard, so you have to love it. When you’re supplying services of any kind, you don’t really own anything except your relationships, and you effectively start from zero every year. It can be so rewarding to help people to grow their businesses, to develop new products or new marketing strategies. Still at the end of the day, your customer is going to own every single thing you hand them, and all you’ll be left with is the feeling of accomplishment you’ve generated along the way. So yeah, you better really love your work, because there are lots of other ways to generate revenue that are more predictable, higher margin, and more scalable.

    #2. You can go wide, or you can go deep, but you can’t do both, so choose wisely. As a service business, you can choose to service a wide variety of industries, but you’ll have to offer a very narrow set of services. Or, you can service a very specific industry and offer a much deeper set of options. As an example, let’s say you want to go wide, you want financial services customers plus health care, sports, and entertainment. That’s fine, but it will be next to impossible to win there unless your offering is extremely specific, something that works well across all of these industries, something very targeted like social media posting optimization. Alternatively, you can choose a very specific industry to service — the more specific, the better. Let’s say that you only service pharmaceutical companies. In this scenario, you can offer a much deeper set of offerings, perhaps marketing, website development, go-to-market strategy, industry-specific analytics. This second scenario is probably the better choice, it lets you focus and develop real expertise, but I’ve seen both work well.

    #3. As the great David Baker once told me: With customers, you will always start as a Liberating Force, but you’ll always end as an Occupying Force. Whatever your service business, it’s unlikely you’ll avoid this, so go into every deal secure in the knowledge that at some point, your customer is going to want to end the relationship. If you keep this in mind going in, it’ll make it a lot easier to help your customer when the transition time comes, and you’ll make sure everything ends on a good note. I’ll share that almost all of our word of mouth recommendations were from former customers, so just because a business relationship ends doesn’t mean that there isn’t more business to be earned from that relationship over time.

    #4. Try to stand for something specific and be yourself. There are a million services firms, the only real way to stand out is to stand apart. Analyze your purpose as a business and live it fully in every choice you make. Don’t try to be like everyone else, you’ll blend into the landscape. Be yourself, so that businesses think only of you when they have a problem that they’ll know only you can solve.

    #5. Do your best work every time, and always try to make a difference. Marc Benioff, in his recent book, suggests that “innovation can’t advance in a positive direction unless it’s grounded in genuine and continued efforts to lift up all humanity.” I’d listen to him if I were you.

    None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?

    I can’t even begin to list the number of people who have helped me, influenced me, guided me. I’d use your entire article listing names that I’m grateful to. But there is a primary lesson I’ve learned through the years when it comes to asking for help from others, which is never to limit perspectives because you never know who might have that ‘a-ha’ idea for you. One of my most trusted confidants runs a media company, another is a VC, another runs a large trucking company, another has a real-estate investment fund. And another is my wife. I get amazing guidance from each of them, they’re all incredibly accomplished in their own way, and I never stop being amazed at how much smarter than me they are, and how much I can learn from them. Never limit your options when it comes to asking for help or advice, you’ll only be limiting your potential in the process.

    You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)

    There’s an amazing YouTube video by Derek Sivers called How to Start A Movement. Go watch it, like right now, it will change how you see things. Basically, he suggests that it’s not really the person who has the idea that matters; it’s the first follower of that idea that makes all the difference. I buy that lesson completely. So to your question, I’m not starting a movement, but I am one of the followers, and the movement I’m following is the idea that we can all contribute in some way to helping to solve the problem of homelessness. The issue of the homeless is pretty terrible, it’s bad for those who are homeless, it’s bad for those that aren’t, and we’ve got to do something to mitigate the problem.

    At this moment, I’m helping to produce an international symposium on Homelessness, which we’ll hold in LA in May. We have support from dozens of contributing organizations, including the United Way, the LA Public Libraries, the Institute of Global Homelessness, the USC Initiative to Eliminate Homelessness, and countless private companies with a similar interest in helping to understand and solve the issue. I think the problem is so multi-layered, and there’s no magic bullet. But if we can get enough of the right people involved, we stand a much better chance of easing the issue than if we just sweep it under the rug or try to attack the issue with incremental steps.

    How can our readers follow you on social media?

    My only real social media involvement is on LinkedIn, it’s a fantastic tool for connecting with others in my industry, or those that are really interested in what Super Hi-Fi is doing specifically. People can look me up under my name, or under Super Hi-Fi.