In addition to a press release that details seven commitments Sonos is making to its customers following a catastrophic update to its platform and application earlier this year, the company offered an executive for an interview. I spoke with Eddie Lazarus — the company’s chief strategy officer since January 2024, and chief legal officer since January 2019 — for about a half-hour over Zoom. (He also served as chief financial officer from August 2022 to January 2024.)
We touched on what happened, and if it really was just a problem with the app — or a larger problem with the greater Sonos platform. (Spoiler: It was both.) We talked about the findings of the company’s internal review. We talked about whether its initial reaction was enough. We talked about CEO Patrick Spence accepting responsibility for the debacle, and why customers should have faith in him — and in Sonos — going forward. (Not everyone does.)
There aren’t a lot of easy answers here. As anyone with a Sonos system understands — and painfully experienced — there are a million ways to build a Sonos system, from the products themselves, to the home networks being used, and the homes in which the systems live. It was, if you’ll excuse the analogy during hurricane season, a perfect storm of sorts.
Lazarus and Sonos seem to be able to see light at the end of the tunnel, as bug fixes and app updates continue week by week. Whether that light is as bright for customers as it is executives? Only time will tell.
This interview was lightly edited for length and clarity.
What went wrong …
Phil Nickinson: I never felt like we really got a real sort of context for what went wrong. We keep talking about improving the app, fixing the app, but it’s obviously more than an app. There’s also a platform side of the equation. Can you talk a little bit about sort of where things went wrong, or was it just a culmination of everything?
Eddie Lazarus: You started out with exactly the story I would tell, which is, look, we had an app that was not modern. It had been around for a long time. It had actually started to get somewhat buggy. It was written in computer languages that no one really uses anymore. We needed to totally modernize it. We needed to do it — not only the undercarriage of the app, but the user experience side of the app, and the player side as well. So it was a very complex undertaking. And when we rolled it out, you know, we were very anxious to get a modern platform into the hands of our users, but we missed a set of performance issues in our testing that have turned out to be quite stubborn. We’re making a lot of progress towards solving them, and we’re heads down making sure that we solve the rest of them. We also had some missing features, which we knew about. But putting the features back slowed down, because we had to fix all the other performance issues. Now over 80% of those features are now back in play. We’re really pleased. And we’re headed, you know, headed up the scale towards 100.
I get that there are a million different permutations of Sonos systems. There’s no one way to do it, which is what makes it kind of magical. How much of the recovery is that the missing features are back, and how much is just the stability getting back to where it should be?
Eddie Lazarus: On the missing feature side, we’re well over 80% now, which is a great start. We have a little ways to go still. The performance issues have been the ones that have been more stubborn — the stability, or the setup, those are also improving quite a bit. We still have a little ways to go there, and we’re not going to stop with getting to the same level we were at before. The whole idea of this is to make the experience a lot better. One of our commitments is to keep rolling out the updates every two to four weeks, so that the experience gets back to what people expect of us, which is the absolute best, easiest and most reliable system in the world. That’s what we have to be for our customers, and we’re dedicated to doing that.
“We’re not going to roll out another app on an all-or-nothing basis the way we did.”
Obviously Sonos has been watching the commentary and Reddit. But it seemed like the public acknowledgement of what was going on just took a while. Crisis comms are not easy, and you need to actually have some patience in that. I really do appreciate that. But it did feel like it took maybe longer than it should have.
Eddie Lazarus: It took us a little longer than it should have to recognize the scope of the problems. And once we did, the first thing we wanted to do was to apologize to our user base. We’ve let them down. And Patrick did apologize. The next stage is the one we’re going through now, which is we did a very deep introspection, and we wanted to do two things with the commitments that we put out. One is we wanted to get to the root causes and actually make some systemic changes so that this doesn’t happen again. And the second is we have to start the process of winning back our customer trust. And so some of the commitments are around that as well.
We’re going to be establishing these experience metrics up front and every product, make sure we’re not going to launch until we’ve met those metrics, make sure we can test to make sure that the quality is staying consistent once products are launched, more beta testing through a broader array of setups.
People have very sophisticated Sonos systems. Some old products, some new products. I think one of the issues for us was we need an even broader set of setups in order to make sure we’re catching all the experience problems ahead of time. We’re not going to roll out another app on an all-or-nothing basis the way we did. We’re going to do things gradually, so that if there are problems, we catch them early and we can make adjustments before we have all our users on the new system. And internally, we’re going to have a quality ombudsperson, because some of the reflections internally were that maybe we didn’t hear as many of the cautionary voices as we should have, and we want to make sure there’s a highly respected senior person with direct access to senior leadership and to the board, if for some reason our ordinary processes aren’t aren’t working the way they should.
Was it a matter of just not having enough people testing at a large enough scale? Or was it that there are a million different ways to run Sonos, and networking connectivity and just everything that goes into that.
Eddie Lazarus: I think the complexity of it was a big piece of it. Maybe not having the breadth of setup. We want to make sure that we give maybe a little more time to the process. And so one of our commitments is to do all of that. To broaden things out, give it a little more air time before we go public with something.
Did you see performance issues on one platform more than another? At the high level, you’ve got Android on one side, iOS on another. But you also have PCs and Macs. And did you see one struggling worse?
Eddie Lazarus: It’s actually varied by which thing, which problem you’re talking about. Some have been a little worse on one, and some have been a little worse on the other. And of course, you have to fix both, which is a little bit why things have taken longer than we would have liked. It would have been nice if we’d said, “Oh, you know, three or four weeks of work, we’ll be done with this, and we’ll be back to where we were. Better.” That’s taking us longer. But we don’t want to introduce a new bug when we’re fixing the old one. So we’re being very careful and methodical about how we’re rolling out the update.
On future products and reparations …
Patrick has said publicly that that part of revamping the app is to prepare for future products, which makes sense. But do you think there was too much focus on those future products, and existing products sort of fell by the wayside.
Eddie Lazarus: I really think it was that we just got taken by surprise. If we had known that we were going to have these stability and performance issues, we never would have launched this app. But we didn’t, and now we’re just heads down to fix it.
Speaking of future products, Patrick had also said publicly there were two products ready to go in the fiscal fourth quarter [July through September] that are delayed. Can you speak to the status of that now? Are we looking at 2025 at this point? Are they going to be out by the holiday season?
Eddie Lazarus: I can’t tell you the exact schedule, but I will tell you we’re not going to launch them until we feel as though the app is at a performance standard that we’re happy with, and that is up to the level that our customers expect and deserve. We’ve made a lot of progress, and we’re rolling out these updates pretty much every two weeks. And as soon as it’s ready, we’re going to launch those products.
“We’re not going to delight our customers until we get this app performing at the level they expect, and indeed to exceed the level that that they expect.”
Patrick also talked on the Q3 earnings call about putting in new programs to support and thank current customers. But I don’t believe I’ve seen that, and the press release that’s coming out talks about an extended warranty. But his wording makes it sound like it’s going to be more than just saying, “Hey, we’re going to cover your products for another extra year.”
Eddie Lazarus: We’re not going to delight our customers until we get this app performing at the level they expect, and indeed to exceed the level that that they expect. But once we have things back where we want them to be, then, then we’ll have an opportunity to truly deliver the kind of delight that Sonos has been known for for 20 years.
So they shouldn’t expect a free speaker in the mail is what you’re saying …
Eddie Lazarus: I don’t think that’s actually the right way to delight customers — to send them something. We actually have to deliver an audio experience over time that no one else can deliver. The rest of it will take care of itself. That’s not to say that we might not run programs, but the experience itself is the ultimate success of this company. And that’s how we’re going to win our customers’ trust back — by showing them that they get more from Sonos than anyone else.
I’m just trying to get the context of what he was saying. He was really saying in that regard, really what he meant is get the experience back to the way you expect it to be?
Eddie Lazarus: And beyond. And that’s not to say that we might not offer customers various things. But we don’t want to be in the upsell business. We want to delight. And to delight customers means driving the experience, and providing them the products that express that experience in magical ways.
Obviously this overshadowed the launch of the Sonos Ace headphones, which was a huge release. But it seems like we’re not talking about the headphones anymore. How does Sonos balance the release of a whole new category — and more is coming — versus still playing catch-up on this old stuff.
Eddie Lazarus: We’ve been very public about the fact that we held off on two great new products because the app wasn’t where it needs to be. And until it is where it needs to be — and hopefully that will be soon — we’re behind? Because we’ve got two products ready to go. So there’s no escaping the fact that we wish those two products were out in the market. But they will be. And when they do appear, people remember just why they love Sonos, because they’re terrific. So are the headphones. We’ve entered a brand-new category. It’s a tough category with a lot of good competitors. And I think if you talk to people, they’ll tell you Sonos headphones stand up to everybody in the category and are better in a lot of respects.
Don’t want to talk anything about this supposed set-top box, do we?
Eddie Lazarus: I don’t have any idea what you’re talking about.
On accepting responsibility …
Patrick took the blame pretty strongly, both in the initial messaging that went out, and then the following week in the earnings call. He said, personally, he moved too fast, pushed people too fast. But he also said, pretty unequivocally, that this new app was going to be easier, faster, and better. And obviously it wasn’t. That’s a pretty huge loss of trust, not just with the customers, I think, but maybe internally as well. Why should we believe anything he says now? Because obviously that wasn’t correct before.
Eddie Lazarus: Well, Patrick has a long track record here at Sonos. He’s been 12 years here. Even the best leaders make mistakes. He’s owned up to that mistake. He asked me to do a totally independent retrospective of what went wrong. Never asked to see it, and it went to the board, and you know, he’s made himself accountable with his bonus promise.
But beyond that, one thing I think you can say about Patrick is he doesn’t hide from the fact that he and the executive team as a whole made a mistake here. And so these commitments are part of the process. It’s not the end of the process, but part of the process of saying, “I’ve looked at this. We got some root-cause analysis. We’re going to change the way we do things, and the proof will be in the pudding. We can do things differently, and we can make sure that we don’t let our customers down again.”
It’s just really fascinating to think that somebody somewhere was saying, “Guys, this isn’t working. We haven’t done enough testing.” And somebody was throwing up red flags, and obviously they weren’t listened to.
Eddie Lazarus: I don’t think that’s quite accurate. Having interviewed a couple of dozen people, the biggest problems with the app were a complete surprise to us. We knew that some of the features were missing. We thought we would work through that after the launch, on a schedule, and that we would be telling our customers, “This is when you can expect this to be back operating.” But the performance issues were surprising and very unpleasant.
“This is about making sure that our customers know we’re never going to go through this experience with them again.”
Patrick had also talked on the earnings call about costing $20 million to $30 million on the bottom line because of all this. Do you see it coming in lower? Do you see it coming in higher?
Eddie Lazarus: So the $20 million to $30 million was not like a lost revenue number or anything like that. That was for the programs that we’re going to run, associated with winning back the trust of our customers. But really, as our commitments I hope show, a lot of what’s involved here is not about the dollars and cents. This is about making sure that our customers know we’re never going to go through this experience with them again. Because we’ve looked deeply at what caused it. We are setting out some very specific measures where we’re taking to make sure it doesn’t happen again. And we’re beginning to start the rebuild of trust process with the extra warranty, with this consumer advisory group that we’re going to have, with the fact that we’re going to continue to roll out improvements every two to four weeks, and these this is going to go on beyond September and October and into into our next fiscal year, showing the customers that that we’re a trusted brand again.
In the press release it was said that the executive leadership team isn’t going to take a bonus for fiscal year 2025 “unless the company succeeds in improving the quality of the app experience and rebuilding customer trust.” How are you going to measure that? Or is somebody going to say up or down, “All right, cool. You did it.” Or, “No, you didn’t.”
Eddie Lazarus: It’s a great question. We’re going to be working with our board of directors — which ultimately sets the compensation standards for the executive leadership team — and our compensation consultant to make sure that we have objective standards by which we’re measuring this. It wouldn’t be appropriate to set up a bonus promise where you can game the system. So this will have to be objective metrics. Exactly what those should be? We’re going to get advice from experts and put it in place.
So enjoy, I guess, measuring latency and all that good stuff. And uninstalls. And …
Eddie Lazarus: Interestingly, as a non-technical person one of the things I’ve been quite interested in is that there are actually a lot of objective performance criteria with respect to our user base. And one of the heartening things is we’re seeing the improvements in those objective criteria. Now that has to translate back into consumer sentiment. Because they have to see it, and they have to see it on a daily basis, and we have to keep driving those metrics up. So that every time they turn Sonos on, they’re reminded, “Hey, this is easy, simple, reliable. I just want to hear my music. There it is.”
The way forward …
The seven courses of action in this press release are good things. Better focus. More testing. More gradual change. The ombudsperson. Are those things that Sonos should have been doing all this time?
Eddie Lazarus: A lot of these things that were things that we had. Some of them we didn’t. We didn’t have an ombudsperson. We didn’t have a customer advisory board. These are things that are starting. We have a very rigorous beta testing process — but we learned with something this complex it wasn’t good enough. We’ve got a great team. And they went back and they said, “OK, what improvements should we make? We have a good product development system. But again, it broke down here.” So we had to go back to basics and said, “OK, we’re never going to release another product that hasn’t met some pre-established customer experience standards.” And we’re Sonos, so we make those ambitious. It’s not as if all this stuff was novel to us. It’s just when you make a bad mistake, you have to strip it all down to the bare bones and build it all back up.
Looking at the stock price, basically, it seems like it’s bottomed out, and now it’s starting to climb back up a little bit. Is that something at the executive level is thought about at all? Or it’s really just, “we’ve got to fix this.”
Eddie Lazarus: The performance of the company as a whole will improve when we get things back on track and we’re rolling again. And so that’s job No. 1 for everybody at the company.
Is there anything else that’s being done that maybe isn’t talked about as much as you would like?
Eddie Lazarus: I think we’re making every effort to be as transparent as possible as we go through this process. We had [Sonos chief innovation officer] Nick Millington in Reddit doing an AMA last week, and I think you can expect us to be out talking about where we are, both the progress we’re making, and what people can expect and what we haven’t yet accomplished. And so that’s definitely one commitment that’s not in the press release. But to me, that’s a very important aspect of what we’re doing.
Any sort of ETA when you think we’re not going to be talking about this ever again — three months, six months, nine months?
Eddie Lazarus: I don’t have a schedule, but I’ll tell you what I look forward to is when people start talking about the app and say, “You know what? It’s better than it ever was.”
