V-Moda: Obsessed with fashion and quality. Profits? Not so much.

By Adam L. Penenberg , written on November 11, 2013

From The News Desk

The first thing Val Kolton, founder and CEO of V-Moda, an audio accessories company widely lauded for combining high quality with high fashion, did after receiving his first batch of 33,000 headphones from Chinese factories eight years ago was to test them. Sixty units later the former DJ and business school grad came to the inescapable conclusion that no two headphones sounded alike.

Kolton was aghast. He had plowed every cent of family money into designing and manufacturing this first lot of headphones. Nevertheless, he shipped them back to China to be remanufactured so each set would sound exactly like Kolton had designed them. This wiped him out financially. To survive the six months between sending back and receiving his shipment of product, and pay for remanufacturing, Kolton borrowed money from his brother, an Air Force pilot, and snuck into hotels for free breakfasts while working at an electronics store in Los Angeles selling speakers for $6 an hour.

Ultimately the risky move paid off, as the company today touts a line of acclaimed headphones, a portable amplifier that double as a digital audio converter, aluminum smartphone cases and ear plugs that owe as much to high fashion as they do wearable tech for the Paris-Milan-New York-Rodeo Drive crowd. (In fact, in Italian the "Moda" in "V-Moda" means fashion.) While I am no judge of what is hot and what is not on the runways, I can attest to the sublime audio quality of the company's headphones and its $600 portable amplifier cum digital audio converter, which transforms the music emanating from a laptop or iPhone into something you'd hear out of a high-end audiophile's dream system. They have, as Kolton puts it, "Vibrant bass, vivid midrange, and vivacious highs."

Recently, Kolton, 36, bounded into my office at New York University. He had been spending the day bouncing from one tech publication to another, demoing a new product that is still under wraps. He himself comes in European styling, especially after he relocated the business from LA to Milan, Italy. His hair is pulled back in a pony tail and he's wearing a Dolce Garbana jacket in a reddish-black tint, Prada shoes with spiky soles, a Moschino shirt emblazoned with computer code, a Cesare Paccioti belt, and sporting two watches -- one a vintage Casio calculator, the other a Diesel wrist clock from the 80s.

Kolton's obsession with combining fashion with quality, which he prizes over sales and revenue, comes at a steep price. After being in business more than eight years, the company is barely profitable. "This year we made money," Kolton tells me. "The previous few years we lost money. We take too long to make new products. We plow money into R & D. If we make money once every four years, I’m happy."

He designs each product himself, and can only concentrate on one a year, on average. Even something as simple as an iPhone case becomes an epic design challenge. He whips the back of the aluminum case and it sounds like a sword being unsheathed. It took months to get the sound just right, he says. He wanted users to think of Samurai warriors. Meanwhile, he patented the "click" mechanism of his Cross-Fade headphones so when they unfold they sound like a bank vault opening and closing.

Kolton is so attuned to sound that he doesn't even own a stereo anymore -- he can't stand the idea that he has to stand in the exact perfect place in front of two speakers to get the maximum sound. Pointing to my two desktop Audioengine A5 speakers he sniffs, "If you turn your head the sound isn't as good."

He brags that there is nothing logical about last year's V-Moda product, the Vamp Verza digital audio converter headphone amp. It sprang from Kolton's dismay over the dismal quality of most digital music. As he sees it, we went from 1970s vinyl with its timeless analog and acoustic properties to the 1980s Walkman, which worsened the sound quality. CDs were better but then the Napster fueled world of MP3s meant the onset of what he calls "The Great Compression." He set out to change that.

Kolton spent millions on research and development and took three years to perfect it. He blew through so much money he had to sell his house, and used his frequent flier miles and points to live in hotels. In the end the Vamp Verza has received stunning reviews but at a retail price of $600 few have bought one.

After his experience in 2005, when his first shipment of headphones didn't make the grade, Kolton has adapted more of a lean startup methodology to product ideation by crowd sourcing early testing. For the V-Moda Cross Fade M-100 headphones, which I have been using, Kolton elicited feedback on early prototypes from headphone freaks at music festivals. Each step of the way he made slight adjustments until he felt confident enough to pay for an initial run of 200 headphones. Then he waded into forums dedicated to high end headphones, offering to send demos to 120 commenters while dispatching another 50 to DJs and 30 to editors, all in the name of eliciting feedback.

As the information rolled in he made more small modifications--altering the finish and coloring process on the black models, for instance. Believe it or not, the color of the foam on the headphones can alter the sound quality. "If you buy two t-shirts, a white and black, the white one is probably softer. Go to a store and feel a cashmere sweater or cotton t shirt and you'll find that they’re different. Music vibrates so the color makes it vibrate differently."

Kolton also tracks every review of his products on etailer sites like Amazon and compares them to other brands.

Being the highest rated headphone is his obsession. Profits? Not so much.

"My financial advisor tells me I'm crazy," Kolton says, "because I take so many risks. But I can make only one perfect product at a time and I make it either because people tell me they want it or I want it."

Image via V-Moda