noise making on a global scale

noise making on a global scale

Technological and marketing nous are helping a fast-growing Tallinn firm make waves in the international high-end speakers market. Colin Donald meets the family team behind its booming success.

In Soviet times, the Silikaltsiidi industrial estate south of Tallinn would have been out of bounds to the prying eyes of visitors, in case the products of the tree-surrounded factory buildings let slip military secrets.

Today a visit with a photographer to Estelon HQ on the outskirts of the Estonian capital also involves a degree of pre-negotiation and deployment of cloths and curtains. This time however the caution is for non-sinister commercial reasons.

I am here to meet Alissa Vassilkova, the business and marketing brain behind the Baltic states’ pre-eminent audio technology manufacturer, along with her father Alfred Vassilkov, the technician whose genius made possible the runaway success of their company Alfred & Partners and their Estelon brand of speakers. Their “high end” [technically top notch] audio firm is putting the finishing touches on their most important product to date, a two-metre high Estelon X-series speaker, called the Extreme, due to launch in May at Munich’s High End Consumer Electronics Show.

These items retail at €150,000 a pair, and the Vassilkovs cannot risk any advance leaks that would alert competitors, or detract from their unveiling.

It seems typical of Alissa Vassilkova, Estelon’s founding partner and marketing supremo, that nothing should be left to chance. The company that aspires to manufacture the best hi-fi speakers in the world aims for purity and precision in everything it does. That includes a tight control of the information, imagery and marketing messages transmitted to the rarefied world of super high-end audio, where six figure prices are taken for granted.

“We are launching the Estelon Extreme at the High End show in Munich on 15 May, though we will have private launch events in some countries before then, probably China, Taiwan and the USA and we are working on the schedule now,“ Vassilkova says.

Costing the equivalent of a super-luxury car, the new Extreme model is the apex of a series that has, in a few short years, seen the 10-employee family start-up celebrated for a perfect marriage of design and function, aesthetics and physics. The result is not just great sound, but an exciting global business proposition whose growth potential has attracted some of the Baltic region’s most savvy angel investors.

One of them is Sten Tamkivi, the partly California-based former general manager of Skype Estonia, a contributor to the initial €130,000 investment that helped to launch the company in 2011, along with the high-profile Finnish investor Jaakko Karo. Tamkivi is now planning a second tranche of funding to support Alfred & Partners’ growth plans, and is rallying support from other wealthy potential backers. Tamkivi tells BQ Baltic: “I’ve been interested in technology and great product design and start-ups with global ambitions for my entire career and enjoyed high-end audio as a hobby. Estelon sits uniquely in the intersection of all these areas.

“When I heard that Alfred was about to launch a new company, as a culmination of all his experience, it was an easy decision to support this.”

He adds that Estelon has made “amazing progress” and has “no doubt that we will see much more awe-inspiring global success in years to come”.

Meeting Alissa Vassilkova in person, it is easy to see how Estelon has made such a big noise in a short time. Those who know the world of high-end electronics, which gathers annually at Munich and the Las Vegas CES [consumer electronics show], will know that charismatic multilingual young women are relatively rare in a business that, to a casual observer, seems dominated by ageing bearded men with pens in their breast pockets, peddling what many see as the ultimate in (rich) boys toys.

Few can be as commercially focused as Vassilkova, who has a parallel career as head of the Centre for Executive Education at Tallinn University of Technology, a job that she says, fits well with her company role.

“We offer consultancy and training courses for managers. It’s all about learning about companies and what kind of problems they might face and then finding solutions.

“I should say a big thank you to that job, for all the knowledge I got from there, I apply it to Estelon. And everything I learn from Estelon I can apply at Tallinn University of Technology. I really get a lot of practice in international business and marketing so those two jobs support each other”.

Understanding business strategy is a skill that perfectly complements knowledge of the technical field. Along with her sister Kristiina, Alissa Vassilkova has been steeped in the science of audio since childhood; as well as bedtime stories they got impromptu lectures on electrical circuitry. Their ears are as well-tuned as a wine-taster’s tongue, or a perfumier’s nose.

“We [children] were always aware of what was happening in the market and what Alfred was doing, and what he was working on. It was because of this interest we made the decision to create Estelon.”

First and foremost, this multilingual (Estonian, Russian, English, Spanish) former ballroom dancing champion and keen cross-country skier is an astute and practical businesswoman and “sort of a workaholic... if I have a normal working day I feel it’s not enough, I need something more.”

She and Estelon owe a lot to Alfred Vassilikov’s 30-year experience, having been trained in the competitive tradition of Soviet science and engineering, where brilliant ingenuity and hard graft compensated for lack of resource.

The synthesis of this solid science with the best of contemporary north European design and manufacturing tradition, and projecting it via a skilled practitioner of modern marketing and strategising, has proved a killer combination.

After years of painstaking development, financed by family savings and grants for innovation, patents and export programmes from the agency Enterprise Estonia, the company is confident that it has come up with what it claims to be the perfect blend of form and function, form and material - the latter a crushed marble composite which is “a special recipe that took us five years to develop”. All the manufacturing is done in Estonia, though some specialised processes, like the application of paint – “the same used in Formula 1 racing cars” is subcontracted elsewhere. The top of the range colour, a deep red that darkens at certain angles, “contains some kind of stone from Africa” and costs extra.

Vassilkova claims modestly that marketing Estelon takes no special skill: “A great product is half the battle, if you make that you don’t have to lie about it. The function is really good and the design is interesting, though as with art objects it’s a question of taste whether people are going to love them or hate them.”

Even the delivery process is minutely thought out. Estelon speakers come in custom-made, ingeniously-designed cases with detailed instructions on how to easily unpack and install these bulky and very heavy objects.

First unveiled to the world at the Rocky Mountain Audio Show in Denver in 2010, the speakers have been hailed as something new in the hi-fi world, allowing which music can be heard with crystalline clarity, without the extraneous sonic “colouration” added by high-end systems of equivalent price deliberately or inadvertently.

The heavily-patented curvaceous design is at once functional, distinctive and unique, described by the British magazine Hi-Fi News as “deftly bridging the gap between radically bizarre and the domestically acceptable”, and as “having the curves of Sophia Loren”.

Alfred says with a smile that the tops are sloped to stop women putting flower vases on top of them.

The “feminine” shape of Estelon’s speakers, enhanced by the sleek coloured finishes might be described as iconic if that word didn’t imply mass-recognition that Estelon has no aspirations to achieve.

“We will never be a mass market product” Alissa says, a touch proudly.

Why not? Because it doesn’t need to be. With prices ranging from €17,000 to €150,000 for a pair, this is a high product for the very wealthy, a niche market on a very high shelf.

“It’s true we are selling to the super rich, but they tend to be very intelligent people, we want to associate our product with these very intelligent people at the top of the market.”

So not the vulgar rich? After all there is always a demographic – a growing one – of customers who will buy expensive status symbols because they are expensive. Vassilkova prides herself on the discernment, and status, of her customers, and the dialogue that they enjoy with the company. If we look at the customers, the ones that know about sound, they are impressive people in very good positions.

“We have managed to attract two different markets,” Alissa explains.

“The high-end audio market, and the high-end lifestyle market. This is the reason why we have got so much attention because it really was different from what was on the
market before.“

Vassilkova leafs through some glossy magazines, one in Portuguese, one in Chinese, aimed at the international jet set, depicting Estelon speakers in their various alluring colours dotted around luxury interiors, amidst ads for luxurious yachts, Aston Martin cars, and Rolex watches.

Although these speakers will always make a strong statement due to their sheer size and weight (between 49kg for the XC and 86kg for the Model X Diamond), the fact that they also look cool, and not like something that has escaped from a physics lab, gives these speakers a powerful appeal for those with trained ears and deep pockets.

“If you look at high-end speakers, mainly they are variations on a theme: boxes, boxes or boxes, often the design worked simply to emphasise the very high technological specifications. So we conceived our range more as sculpture or a piece of art. This was our goal as well, do something different and enter the luxury market.“

“There are other people who don’t do boxes but their designs are still quite technically-led. We think this is more like art and people respond as they would do to a piece of sculpture.”
Judging by their sales, and the numerous industry awards, the gamble that connoisseurs of sound would respond to these space-age shapes and textures is paying off. Estelon speakers now sell in 28 countries, via a network of 14 different distributors. Just as they are shy about showing the model designs, the Vassilkovs are super-cagey about their sales figures and profit margins, considering such information to be commercially advantageous to competitors: “We try not to share this very sensitive information, it could harm us,” Alissa says politely.

Under pressure they concede that their strongest markets at present are East Asia, but the US is also a hot market for them. The bottom line is that its growth trajectory is spectacular; the firm claims to be doubling its sales on an annual basis and is seeking more manufacturing space, and preparing to recruit additional staff. The sales reach is built up by tireless, jet lag-defying person-to-person contact at high-end trade fairs, where the combination of the speakers themselves and Alissa’s energetic presence has opened many doors.

“Most of our distribution deals are negotiated at trade shows, you get contacts there, and you learn who the distributors are. The audio equipment industry is a very big industry but on the other hand the high-end is a very small part of it. So you really have to work to find those high end distributors, but while it is important to make those contacts, what is more important is to make a good product.”

I ask Vassilkova about the Estonian national brand, and whether that yet has any meaning for overseas markets, as say, Sweden and Denmark have for the design of household furnishings. She says that, in the eyes of faraway markets, the Baltics are mixed up with the Nordic countries, though oddly, the Estonian brand is big in South Korea: “Estonia is really popular there, and seems to feature on TV shows, it’s surprising how much they know about us, and say ‘wow, you’re from Estonia!’. Interestingly, the Asian markets invariably prefer Estelon’s more expensive, glossy coloured finishes to the matt black and white ones that are preferred in European markets.

What is next for Alfred & Partners once May’s launch is out of the way? The attention they have received, and the growth they have achieved suggests that they might be ripe for a lucrative takeover and assimilation by one of the bigger US or European high-end hi-fi players. Are Alfred and Alissa committed to remaining a proud, independent
Estonian company?

“For now yes, but in the future who knows? For us it’s a family business and we always want to be a part of that. For me it’s something special because it was my Dad’s dream that he wanted to create this, and I’m so happy to be a part of it. This is not the kind of start-up where you aim on making it big in five years and then sell up.”

The way she says this, and the warm family feeling that has made it possible, are enough to convince me that Alissa does not have a secret sell-out plan under wraps.

From state-owned firm to soaraway success

Estelon, the trading name of Alfred & Partners, is very much a family affair, based on the decades of experience that Alfred Vassilkov (55), a graduate of the elite [then] Leningrad Electrotechnical University.

After graduation he spent 30 years working in sound reproduction mainly for the state-owned Soviet company RET, founded in 1935, whose Tallinn-made “Estonia” radios were considered the best in the USSR and famous beyond its borders.

Says Alfred: “They were quite expensive by Soviet standards, but of course that meant they were still quite cheap. Tallinn was the home of the Soviet Union’s highest quality technical engineering which included amplification.

“There was no advertising and no consumer choice, and demand was always greater than supply. Within the parameters that the company was given, the sound quality was quite good, and they were built to last. Speakers built 30 years ago still work!

“After the collapse of the Soviet system, the writing was on the wall for RET: Everything collapsed, it was a crazy time, one of our factories was closed under orders from Moscow.

We had been happy to be bankrolled by the state to produce something, but when they opened the door to the rest of the world, we saw the great difference in quality”.

Since he ceased to be a state-sponsored technician, Vassilkov has worked for various companies including RET’s post-Soviet successor company Audes, and others, dreaming of making the perfect speaker.

“You know crazy scientists,” says his daughter (27) “They always want to do something better than before, which is why he started testing components and playing around with cabinet shapes. Estelon was born without compromises. We didn’t set ourselves the usual price limitations, we just made the product as good as we could, with the best possible components, or we developed our own, without looking at the cost. Only when the speakers were ready did we make the financial calculations. Luckily the price point we needed fit perfectly into the market when we made comparisons with competitors. The decision to start the company was taken “around the breakfast table”, and after the prototypes were unveiled, the first models were shipped in February 2011.

As well as Alfred and Alissa, the company also consists of Alissa’s sister Kristiina who works on finance and investor relations, Alfred’s brother Valeri, a brilliant mechanical engineer, and his wife Marina who helps with the accounts and administration.