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Ray J on new headphone line: ‘We’re for the people, we’re for the right prices’

Ray Lee, Co-Founder & CEO of RAYCON and Ray J, Co-Founder and CSO of RAYCON, join Yahoo Finance’s Kristin Myers to discuss breaking into the headphone industry.

Video Transcript

KRISTIN MYERS: Well, we have got two Rays here with us today to talk about their headphones and trying to make a splash in an already crowded space. So let's bring on Ray Lee, co-founder and CEO of Raycon, and Ray J, co-founder and CSO of Raycon. Thank you both for joining us today.

So I'm going to throw this to you, Ray Lee. How important are influencers to your marketing and to your strategy? I was looking at your website a little bit earlier today, and I saw, you know, famous fans. I saw how it's been cosigned by millions on Instagram. So how important is that space in selling these headphones?

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RAY LEE: Yeah. So I think in today's world, obviously, taste-makers and influencers drive a lot of the culture forward. And I think for us, for Raycon, we truly believe that we're at the intersection of great electronics and audio and culture. And that's really where we thrive.

So it's a large part of our strategy. It's definitely a brand differentiator for us. And it's really within the DNA of our company. My great co-founder, Ray J, who's on this call, too, he's a celebrity himself, has always been in that network. So he knows that world very well. And we know how important it is to organically drive a lot of our marketing efforts forward.

KRISTIN MYERS: OK. So Ray J, I'm going to come to you for this one. So I mentioned in the intro that this is already a really crowded space. When we think about headphones, we think about AirPods. We've got Beats. We have-- Samsung also has headphones that are out. So what makes your headphone different? How do you really kind of rise above the crowd here to make sure that people want to go purchase your headphones?

RAY J: Well, I think Raycon, we're on the other side of the spectrum, right? Because our price point is so much different from what's out there with the other brands. We're at 79.99.

So I think our price point, the quality of our products, the different colors you can pick from-- and, you know, it's in high demand, the earbuds, but we've been in the game for about three years. We're going on our fourth year now. So we kind of caught the buzz a little early. But I think our price point and what we stand for is just totally different from the rest of the brands.

Like we're for the people. We're for the right prices. I think people are just paying too much for earbuds and AirPods and things. Raycon has the right price, and we care about our customers.

RAY LEE: I think to add onto that, as well, you know, we like to-- we're a direct-to-consumer brand. So as we've scaled, we've actually been able to have and nurture customer relationships with every single one of our customers, which is-- we expect to be over 2 million customers this year.

So we always like to say internally that our research and development starts with customer experience and pouring through all of our customer feedback that we get every single day. And we make those quick iterations rapidly into our products. And that's really how we have a positive feedback loop with customer acquisition and our product development.

KRISTIN MYERS: OK, so let's talk some of that feedback. Because I decided to go looking for reviews, you know, do my job as a journalist here, and I did find some Reddit threads. They were not as complimentary. Once said, never buy Raycon earbuds. And another Redditor said they were, quote, "The headphone equivalent of the SouljaGame console, which is, I think, really harsh. So talk to me--

RAY J: That is harsh.

KRISTIN MYERS: --about how you would use some of that feedback in improving, you know, some of your product? Because I think overcoming brand loyalty is such a difficult battle, right? So many folks are so loyal, for example, to their Apple products. That's all they are going to purchase-- just a MacBook, their AirPods, their iPhone. They are not going to consider anything different. So how do you overcome that, especially when you see some-- you know, some reviews like that one?

RAY J: Well, I think everybody will get-- you get some negative reviews. But if you look at all the positive comments and the positive reviews we have, I think it outweighs the negative. But for us, it's just like a 1993 Mercedes Benz and a 2020 Benz. Every year, you upgrade. Every six months, you upgrade your product.

So when we started, we were young. We were still trying to find our way. Now that we're four years in, our product is amazing. Like we upgrade every quarter, you know? Every time, we hear one of our customers or one of our big celebrity influencers tell us what they feel about the product, we try to go right into-- right in and make it better. So for us, we're growing. Every year, every six months, our product is getting better and better.

RAY LEE: And like you said, you know, as just as an online brand, the reality is, like, the internet is not the most friendly place, like you mentioned. So, you know, we definitely take things to heart. And I think that's something that, you know, our team, our leadership team across the board and all of our team members, you know, we are definitely really customer-oriented. And we know that we can always be better. And I think that's something that is really important in the process for us.

I think one thing is that because we get this direct customer feedback, we're actually-- you'd be surprised to know that what the majority of the population actually want in earbuds is not having tons of specification stuffed in as in one, like, piece of equipment. It's actually, like, what they actually use on the day-in and day-out. And that's really what we're orienting our product development towards.

So again, I think it takes, you know, 1/2 humility and really taking our customers' feedback to heart and then another half of visualizing and kind of piecing together, OK, this is truly what the customers will use on a daily basis and really love and not just, you know, cooked up by engineers in a white room somewhere by themselves.

KRISTIN MYERS: All right. So I'll be-- going to be very honest. I'm going to try to squeeze two more questions in here with you guys. We're always up against the clock. So Ray Lee, I'm going to come to you for this one. I'm wondering, looking out, you guys said this company has already been around for four years. What's next? Are you guys going to go into other wearables like watches, for example?

RAY LEE: Yeah. I think for us, you know, we see the wireless audio category, it has explosive CAGR. It's still a massive opportunity in-- just in terms of growth potential. We see a lot of leverage short-term to drive revenue and growth.

I think, one, international e-commerce, we really want to excel there. Right now, we're talking with the United States and some regions of Europe. We're really going into Europe heavily. And then also, Asia is obviously another huge market.

KRISTIN MYERS: Right.

RAY LEE: Two, we haven't touched a retail store shelf yet. So there's also a lot of growth opportunities there. And then lastly, like you said, products-- we will be launching new audio products this year. And then after that, of course, you know, electronics, there's so many different categories. So we're planning to move horizontally in the future, too.

KRISTIN MYERS: Ray J, I want to come to you to finish up here. I'm wondering if you can talk to us a little bit on how you think COVID has really been impacting the music industry at large, you know, for a lot of artists that haven't been able to do something like touring?

RAY J: Yeah. It took a hard hit as far as, you know, performing and touring for all the artists that did a lot of hosting appearances and really were able to make a lot of money touching the people, it definitely stopped that. And, you know, my prayers and my condolences to anybody that's been through anything in COVID or lost family members or was affected by it.

For us, we're Adidas' brand, so we're-- you know, we're direct to consumer. So we were able to overcome the adversity that was happening between just the COVID pandemic in itself. For our Raycon brand, but for the music industry, it was a big hit.

It was hard for everybody to try to get back on their feet, but I think everybody stuck together. I think now they have new creative ways to perform, to virtually tap in with-- you know, with your fans. So I think, you know, wherever there's a problem, I think we just have to make some adjustments.

KRISTIN MYERS: All right. Ray Lee, Ray J, co-founders of Raycon, thank you both so much for joining us today.

RAY J: Raycon Global. Thank you for having me.

RAY LEE: Thank you.