In the world of high end smart speakers you have leaders such as Sonos, Klipsch, Bang & Olufsen and Harmon Kardon to name a few. While the space is clearly a bit crowded there are two key items that seem to be missing from all of these speakers.

First off, all of these speakers are extremely modern in design and frankly look quite similar to one another. See below for visuals to support this viewpoint.

Source: KingsCrowd Research

Second, all of these speakers utilize smartphone technology that ties to your phone or other smart devices, which doesn’t always lead to the best music listening experience (e.g., phone calls disrupting a song, Alexa getting confused and speaking out when you don’t want her to). Or they have their own operating system, but it’s confusing/hard to use.

Put simply, using a smart speaker can be a friction-filled experience that lacks the seamless nature one would hope from a sophisticated speaker.

Finding a classic design in smart speakers is not easy and finding one that can still operate independently of any other smart device in a simplistic way is not easy with current market options.

If you want a breath of fresh air in design and simplistic functionality, Como Audio is the smart speaker for you. In many ways, Como Audio is paying homage to the past and bringing back high-end quality design, coupled with a premium listening experience.  

Como Audio differentiates from the smart speaker market by offering users a listening experience that is independent from other devices. As you can see below, DeVesto specifically designed his speakers so they have a sleek appearance that doesn’t sacrifice style for quality sound.

Como Audio allows consumers to have more of a stereo-like experience in comparison to other available smart speakers in that the speaker connects to FM radio, various music providers (e.g., Spotify, Amazon Music), any MP3 device, Bluetooth, etc.

It’s an entertainment system that is self-contained rather than getting mixed up in a network of other smart devices such as your phone. For a real music fan, this holds significant value.

Obviously major brands such as Amazon, Google and Apple have driven widespread adoption of smart speakers with 66M smart speakers installed in homes across the US alone as of EOY 2018 and over 90M expected to be installed in 2019.

Sales of smart speakers have grown from $2B in sales to $3B in 2018 alone and are projected to reach $19B in global sales by 2023, with 21% of US adults (53 million people) already owning at least one smart speaker.

The easy-to-use interactive nature of smart speaker technology has driven significant market adoption. However, for true music enthusiast, many of these smart speakers simply don’t fill the gap of the more traditional speaker systems they are used to buying and interacting with.  

That’s why at the high end the install base of smart speakers is growing rapidly as well. Most notably, Sonos has registered 21M in registered devices globally as of 2018, all in that $300+ price band, which is in the same pricing band as Como Audio.

As you can see from 2018 Sonos financials, the company has experienced over $100M in top-line growth over the past 2 years, exceeding $1B in sales during 2018.

Source: Sonos 10K

With fast growing revenues, a higher end client base and strong sales in retail channels such as Best Buy (~17% of sales), Como Audio could be a nice compliment to a business like Sonos, which is looking to continue to expand its product offering and revenues with more differentiated offerings.

Early Traction: In 2017, the company generated almost $1.8M in sales, followed by nearly $2M in sales in 2018 and projects ~$3M in 2019 revenues.

For an early stage startup in what is a competitive space is really astounding and a testament to the teams ability to build great product and maneuver selling in this market. The fact that their average Amazon score is 4.2/5 stars speaks to the quality aspect of the product.

                                    Source: Company data

Global Distribution: Como Audio ships to most consumers in the US and Europe within 72 hours. They work with international warehouse distributors such as Amazon, Barrett Boston, Ludoma Netherlands, and JSI Logistics Shenzhen.

Their international partnerships ensure their customers are satisfied and work together on logistics and direct sales. Como Audio currently has over 300 dealers for their products and is continuing to identify new distributor opportunities.

Experienced Founder: The Founder, Thomas Devestos is a legendary designer and builder in the audio electronics world. His company Tivoli Audio, another high-end speaker was generating over $40M in sales when it was acquired in 2015. He also built a company Cambridge Soundworks as well, also in the high-end speaker category. Needless to say, he is relentless in his pursuit of creating exceptional audio equipment.

Differentiated: With its position in the market as a more traditional, classically designed smart speaker that gets back to the basics of what makes listening to music enjoyable, Como Audio can cater to an audience that really doesn’t have a smart speaker designed for them to date.

Ripe For Acquisition: Companies such as Sonos, which try and take on many similar elements to Como Audio will likely look to acquisition in order to accelerate growth. Como Audio comes with an exceptional book of products and a unique user base that may otherwise be challenging to reach.

As we mentioned Thomas DeVesto, is the Founder and Designer. This is his third company in the smart speaker industry and has spent 40 years pushing boundaries in consumer audio electronics.

DeVesto has served as CEO, Founder, and Designer at Tivoli Audio (2015), which was acquired and Cambridge Soundworks (2000). DeVesto is also recognized as an Audio Hall of Fame designer.

The Director, Bob Brown is an experienced founder and executive. He is skilled in financial management and market development. He has worked over nine years as a general manager, and 10 years in financial management, marketing research, and business development. 

The VP of Product Development Peter Skiera, worked with DeVesto for over 20 years at Tivoli Audio where he was Senior PM. Skiera worked at Cambridge SoundWorks for two years and moved onto B&W/Rotel as their Parts and Service Coordinator for two years before moving to Tivoli.

Como Audio is a Deal To Watch. The founders deep industry experience, past success and current success with Como Audio all help to de-risk the investment from a fall to zero type of investment. 

We also really like the space, and think that their current distribution model is one that scales well. It should also help the team to capture many of the tailwinds supporting the rapid growth of the smart speaker market.  

The downside of Como Audio is that it is a very high end product focused on a more niche segment of the overall smart speaker landscape. While Sonos has had huge success at this price point in the market, it is a bit more of a mainstream product, which may limit some of the upside potential for Como Audio.

Additionally, with larger players in this space it could become a long term deficit for them not to be tied into the Amazon or Google smart tech.   

If you want to invest in the smart speaker market, Como Audio might be a good early stage play. It also provides a nice upside opportunity from the current $10M valuation. If they can continue to grow 20-30% per year, an exit opportunity in $50M to $100M territory to a company like Sonos or Harmon Kardon could be possible.

Additionally, we think the investment provides some downside protection in relation to other similarly value tech startups in this market due to meaningful revenues and a really strong founding team.