Logitech is one of those ubiquitous companies — it’s been around since 1981, selling all kinds of important things that connect to computers of all shapes and sizes: mice, keyboards, cases, cameras, you name it. When Bracken Darrell took over in 2013, he restructured the company around growth, started making acquisitions like Blue microphones, and invested heavily in software. In fact, the last time I talked with Bracken, it was the end of 2019, and he laid out a vision of Logitech as a software and services company in addition to its hardware business.
Unfortunately, 2020 happened, and the pandemic sent a huge number of people to work from home, and suddenly, Logitech keyboards and mice and webcams were the hottest things around. I actually had to buy a Logitech webcam on the gray market in 2020 — demand was just that high. And now, 20 months into this thing, Logitech is making new products specifically designed for working from home.
Bracken and I talked about that, how the company met that demand, whether that changed his plans, and how the supply chain issues around the world affect his business. We also talked about how he manages Logitech’s relationships with other tech giants: Logitech is one of the few companies with close access to Apple’s tightly controlled ecosystem, and it, of course, has to sell products through Amazon, which has a long history of undercutting its own vendors.
And we had to talk about the decision to kill the Harmony remote line, the growth Logitech has seen in products for creators and streamers, the mess that is USB-C, the metaverse, and more. Bracken even told me what his favorite mechanical keyboard switches are. This one has everything.
Bracken Darrell, CEO of Logitech. Here we go.
This transcript has been lightly edited for clarity.
Bracken Darrell, you are the CEO of Logitech. Welcome to Decoder.
Thank you for having me.
The last time you and I had a chance to talk to each other was 2019. I had you on our other show, The Vergecast. You were just acquiring a company called Streamlabs. You were talking about becoming a software and services company. Then 2020 happened, and we all went home. I bought a Logitech webcam for a 300 percent black-market markup.
Oh, I’m sorry.
It was impossible to get, but it was great. It was worth it.
But just tell me about that moment in the business for Logitech; you were on a trajectory to become a larger kind of software and services organization, then everyone had to work from home. Demand for things like keyboards and mice and webcams shot through the roof. The PC industry experienced a little bit of a renaissance. Tell me about that moment and managing through that early part of the pandemic — it seemed really challenging.
It was really surreal. Around March 8th, I was in New York. We had just given an investor meeting. We kind of forecasted what we were going to do over the next several years. Of course, this COVID thing was being talked about, but it wasn’t a big deal. Then I flew home, and literally the next Monday we shut the office down. Everything was closed.
For the next month, we had a very good outlook for the year. We expected to grow 8 to 10 percent. We’ve been growing at or near double digits for the last five or six years, and along this trajectory there are these long-term secular trends: video’s going to take over audio. Gaming’s going to become the biggest collection of sports in the world. Streaming and creating is going to be the next big, big, big thing — even bigger than gaming. The mouse and the keyboards are going to do just fine.
What happened was all those businesses went through the floor. They just dropped out of existence. Our sales completely collapsed for the first month or two after COVID, but we knew it was temporary. We knew it wasn’t going to stay like that. I don’t think people knew what was going to happen yet. Our retail business had disappeared. We knew people were buying for working at home, but we sold mostly through retail.
The toughest part of that individual moment was: what do we do now? A lot of people started cutting costs and conserving cash. I had a discussion with my head of operations; people have to work from home, but we won’t have enough inventory to supply them if COVID comes roaring back. So I said to him, “What do you think about making a big inventory bet?” He said, “Yeah, I think you’re right.”
We made a very big inventory bet and we’re lucky we did. We grew 74 percent last year because we had the inventory to sell.
So that was an early bet. You were assuming that work from home was going to be here for real. People are going to need mice and keyboards. That’s a hardware business — you have to actually make the stuff and stock it to sell. How early did you actually make that bet? What’s the timeframe between the decision to increase inventory and selling it?
We have to make that bet a minimum of two months…