Today, I\u2019m talking with Hanneke Faber, the CEO of Logitech. Hanneke\u2019s still pretty new to the role: she joined the company last October, after the former CEO, Bracken Darrell, left. <\/p>\n<\/div>\n
You might remember Bracken \u2014 he was on Decoder<\/em> back in 2021<\/a>, basically at the height of the covid-19 pandemic-era boom in home office sales, when Logitech was selling mice, keyboards, and webcams as fast as it could make them<\/a>.\u00a0<\/p>\n<\/div>\n Obviously, things have changed since then. Logitech, like so many companies that saw huge pandemic booms, very abruptly saw that growth slow down when the world began to normalize. Bracken left Logitech last June<\/a> to go to the company that owns Vans and Supreme, and Logitech brought on Hanneke<\/a>, a longtime executive with an extensive background in consumer goods at conglomerates like Unilever and Procter & Gamble.<\/p>\n<\/div>\n Listen to Decoder<\/em>, a show hosted by The Verge<\/em>\u2019s Nilay Patel about big ideas \u2014 and other problems.\u00a0Subscribe\u00a0here<\/a>!<\/p>\n<\/div>\n<\/div>\n<\/div>\n Hanneke and I talked about the structural changes she\u2019s already making at Logitech and the changes she intends to make in the future. It sounds like some Logitech products, like its smart home doorbells and cameras, are not long for this world.<\/p>\n<\/div>\n Hanneke says that people often say \u201cthe mouse built this house\u201d inside Logitech, which is a delightful catchphrase I\u2019d never heard before. From there, we talked about how new interface paradigms like voice and AI might upend mice and keyboards and how she\u2019s thinking about the company\u2019s long-term future in a world where traditional PC sales might go down. <\/p>\n<\/div>\n Of course, we talked about whether anyone wants their mouse to be anything more than a mouse \u2014 Logitech is adding AI features and even AI buttons<\/a> to some of its products, and I wanted to know if that\u2019s working.\u00a0<\/p>\n<\/div>\n You\u2019ll hear Hanneke talk about a concept called the \u201cforever mouse,\u201d or a mouse you buy once and upgrade over time with new software features \u2014 features that, of course, might carry a subscription fee.\u00a0Subscription mice! It\u2019s a lot.<\/p>\n<\/div>\n You\u2019ll also hear Hanneke talk about how she plans to grow the business and hit an ambitious carbon footprint reduction milestone<\/a> by the end of the decade as well as where she thinks the company needs to go next. There\u2019s a lot in this one.<\/p>\n<\/div>\n Okay, Logitech CEO Hanneke Faber. Here we go.<\/p>\n<\/div>\n This transcript has been lightly edited for length and clarity.\u00a0<\/em><\/p>\n<\/div>\n Hanneke Faber, you are the new-ish CEO of Logitech. Welcome to Decoder<\/em>.<\/strong><\/p>\n<\/div>\n I am really excited to talk to you. You have been on the job as CEO for seven months now?<\/strong><\/p>\n<\/div>\n Seven months. I started on December 1st.<\/p>\n<\/div>\n So you\u2019re in. You\u2019re settled. You know where the bathrooms are, which is step one.<\/strong><\/p>\n<\/div>\n Yeah, for sure. Although today\u2019s my first day actually in the office in California. I\u2019ve been in Switzerland so far, so you catch me on day one.<\/p>\n<\/div>\n Well, I\u2019m just going to ask you where different things are in that office for the rest of the hour.\u00a0<\/strong><\/p>\n<\/div>\n Logitech is a fascinating company. It\u2019s one of those companies that I think is undercover. When we started Decoder<\/em>, one of our first ideas was that we should talk to more than five CEOs, and Logitech is one of those companies that is just ever-present in the world of technology. It is a partner to the big companies. It\u2019s in everyone\u2019s office. It\u2019s in lots of people\u2019s homes. It\u2019s basically a core fixture of gaming. You play in a lot of spaces.<\/strong><\/p>\n<\/div>\n I <\/strong>talked to your predecessor<\/strong><\/a>, Bracken Darrell, in the middle of the covid-19 pandemic in 2021, when everything was a lot different. Sales were skyrocketing, and he changed his strategy a little bit. Bracken recently left. He now <\/strong>runs Supreme and Vans<\/strong><\/a>, which was a shift. We\u2019ll talk to him about that. You have a background in consumer goods at Procter & Gamble and Unilever. Why jump to Logitech when the job opened up?<\/strong><\/p>\n<\/div>\n Actually, Bracken came from P&G as well, so that\u2019s not so different. But I\u2019ve been really fortunate throughout my career of working in different industries. I worked mostly in beauty at P&G. I actually worked in tech for four years at Ahold Delhaize. I ran their e-commerce business when it was almost nonexistent. We built a really cool online grocery business. And then, for the last six years, I ran Unilever\u2019s global food business.<\/p>\n<\/div>\n So [despite being] different businesses, I think there are some themes that apply to Logitech: a focus on the user and the consumer first; a focus on innovation and product. And then, finally, really global footprints in every job I\u2019ve worked in and a mix of B2B and B2C. All of those things do translate. Of course, this is a new industry and a new company for me, but it\u2019s great to bring a whole bunch of things that I have experience with and learn a few new things as well.<\/p>\n<\/div>\n One of the things that\u2019s really interesting to me about Logitech is that people tend to think of its core products \u2014 mice, keyboards, headsets, webcams \u2014 as commodities, but they\u2019re still technology products. There\u2019s a lot of innovation left in those spaces. Logitech has driven some of that innovation, but then you see other weird things blossom into cultures unto themselves \u2014 mechanical keyboards, for example. There are webcam startups again, which is really interesting. That was not a thing that was happening pre-covid.\u00a0<\/strong><\/p>\n<\/div>\n Do you view the opportunity here as an operational opportunity, as an innovation opportunity, as a \u201cfind new categories and make them grow\u201d opportunity? What is your macro view of the situation?<\/strong><\/p>\n<\/div>\n There are three main tailwinds on our core business. The first one is new ways of working, hybrid working. That\u2019s good for our personal workspace business, the traditional mice and keyboards, because everyone needs multiple setups. And obviously it\u2019s good for our video conferencing business. So the new ways of working post-covid are a real tailwind for us.\u00a0<\/p>\n<\/div>\n Second is gaming. Gaming, just as a space, continues to grow, and especially with new demographics. Almost half of gamers are now women, which is amazing. And older people game. It\u2019s no longer just teenage boys. We see the market continue to grow. <\/p>\n<\/div>\n Wait, can I ask you one question about older people in that context?\u00a0<\/strong><\/p>\n<\/div>\n Yeah. Sorry, older than teenage boys?<\/p>\n<\/div>\n Sure. Is it that a set of teenage boys who were gamers 15 years ago got older, or is it older people are becoming new gamers?<\/strong><\/p>\n<\/div>\n I think we\u2019re seeing a little bit of both, although it\u2019s probably the first trend that is the biggest one. The teenage boys of 15 years ago are now in their 30s and 40s, so that just extends the demographic. New teenage boys are still coming in, and girls, so that\u2019s good. But we\u2019re also seeing older cohorts coming in mostly through mobile, through Candy Crush<\/em> but also Wordle<\/em> and Connections<\/em>. Those are entry points into gaming that make them more comfortable with gaming and may take them to PC and console gaming as well.<\/p>\n<\/div>\n You said there was a third thing. What was the third thing?<\/strong><\/p>\n<\/div>\n The third thing\u2026 of course you can\u2019t do an interview for three minutes and not say AI, but AI is a real tailwind for us as well.<\/p>\n<\/div>\n How do you think AI is a tailwind for Logitech in particular?<\/strong><\/p>\n<\/div>\n In three ways. First, like for any other company, is internal productivity. We\u2019re seeing it on the software engineering side, where coding and testing have clearly become more efficient, but we\u2019re also seeing it on the creative and brand-building side, again, where things are getting more efficient but also sometimes more creative.\u00a0<\/p>\n<\/div>\n More importantly, on the product side, there are two ways in which AI will be a tailwind. First of all, we\u2019ve always been a human-to-technology interface company, and we\u2019re starting to be an interface to the large language models. A couple of months ago, we launched the Logi AI Prompt Builder<\/a>, which is basically a shortcut in our software to ChatGPT. It has millions of unique users already, and it\u2019s just a simpler way for people to use ChatGPT and not get out of their flow when they use all of our mice and keyboards in English-speaking countries. There will be much more to follow in terms of being that human-technology interface.<\/p>\n<\/div>\n There\u2019s a third area that is big on AI, which is in audio and video. We have a big video conferencing business, a headphones business. That\u2019s really machine learning and large data models, and the company\u2019s been at those for a number of years, but we\u2019re seeing the quality of things like two-way noise cancellation or video conferencing equipment that actually knows when to zoom in on you when you\u2019re speaking and not when you\u2019re opening a packet of crisps. Those kinds of things are really important, and I foresee massive quality improvements thanks to machine learning in the years ahead.<\/p>\n<\/div>\n I want to come back to the AI question because I think there\u2019s a lot to unpack there, and there are a lot of obvious opportunities, like you said, in audio and video. And then there are some opportunities that, I think, deserve a little more time around AI prompt building and that sort of thing.\u00a0<\/strong><\/p>\n<\/div>\n But I want to stay focused for a second on you. You\u2019re the new CEO. So covid, work from home, created a massive opportunity for Logitech. I bought a black market webcam at the end of 2020. It was Chinese. It wasn\u2019t even meant for this market.<\/strong><\/p>\n<\/div>\n The previous administration really ramped production. They saw huge growth. Then there was an enterprise push as more and more companies embraced hybrid and remote and refitted all their conference rooms. That all crashed back to earth, and there were a couple of years when the growth was falling. Logitech\u2019s fourth quarter earnings released back in April marked <\/strong>your first quarter of sales growth in over two years<\/strong><\/a>. You also reported growth in your most recent quarter. What is bringing that growth back?<\/strong><\/p>\n<\/div>\n Product innovation and markets that are stabilizing a little bit post-covid [are contributing to that growth]. I have to say, this company should be very proud of what it did during covid under Bracken. It did a really great job, but obviously it was a bit of a sugar high. That said, the company is 50 percent bigger today than it was pre-covid, so it hasn\u2019t all come crashing down to earth.\u00a0<\/p>\n<\/div>\n I think what we\u2019ve done is we\u2019ve really been focusing on great execution and on things that we can control. There are some things that we can\u2019t control: inflation, consumer confidence, corporate IT budgets for our video conferencing business. But within those constraints, we\u2019ve been growing our share. That was one of the drivers of us getting back to growth in Q4. We\u2019ve been delivering really exciting innovation, and we\u2019ll continue to do those things.<\/p>\n<\/div>\n You called it a sugar high. I feel like the broad story of tech in particular is the sugar high of overinvestment during covid, of competing to hire every single person that existed in the world who could write code and then assuming that those trends would be permanent and we would all stay inside and live our lives mediated through screens on the internet forever. Many companies did not survive that sugar high. Is it that simple, that Logitech just weathered the covid highs and the trends and is back to a stable place now?<\/strong><\/p>\n<\/div>\n We\u2019re not back to where we were in 2019. Again, we\u2019re 50 percent bigger as a company, and the way people work is so different today versus 2019. Virtually every company that I speak to, and I speak to many of them because they\u2019re all our customers, wants to be hybrid. They want their people to come into the office two or three days a week, but they also want to offer the flexibility of working from home or working from anywhere. That is obviously very different from in 2019. We pride ourselves on being a model for ways of working because we sell this stuff, so I think we\u2019re very well positioned to help our corporate customers give people a great experience both in the office and at home.<\/p>\n<\/div>\n You mentioned that you are in the California office today, and it\u2019s your first day there. You moved to Switzerland when you got this job. How are you structuring your time between remote, hybrid, and in person? How\u2019s that working for you?<\/strong><\/p>\n<\/div>\n Sadly, I live on an airplane, it feels like. Logitech is very special in that it is a super global company. We\u2019re on the ground in more than 100 countries, and we have great capabilities around the world. I spend probably 60 percent of my time in offices that are not my own. When I\u2019m in California, or I spent these first seven months [on the job] in our Swiss office, I try to be in the office. But I might also, if I start early \u2014 like today, I started at 6AM \u2014 go back home at 1PM and get some exercise and then work more later on. That\u2019s a level of flexibility that I don\u2019t think we necessarily had pre-covid, which is great.<\/p>\n<\/div>\n Do you ever find yourself in that horrible situation of being alone in a conference room on a video call?<\/strong><\/p>\n<\/div>\n That\u2019s just ridiculous, right?<\/p>\n<\/div>\n That\u2019s my nightmare. If I go to the office and I\u2019m the only one there and everyone else is on a video call, I wonder why we even have an office.<\/strong><\/p>\n<\/div>\n [Laughs<\/em>] Yeah, absolutely. Well, we have this concept of gravity days at Logitech. On the gravity days, everyone\u2019s there so you\u2019re not by yourself.<\/p>\n<\/div>\n What are the gravity days?<\/strong><\/p>\n<\/div>\n It depends on the teams. My gravity days here are Tuesdays and Wednesdays, so I\u2019ll see most of the leadership team. But different teams have different gravity days that they pick themselves.<\/p>\n<\/div>\n And then are you living on a plane just to be in person wherever you need to be?<\/strong><\/p>\n<\/div>\n Yes, and part of that is because I\u2019m new \u2014 and I\u2019m not just new to the company; I\u2019m also new to the industry. I need to meet people, our own people, but very much also suppliers, customers, consumers, investors. There are just a lot of people to meet, and certainly a first meeting, I think, is still best done in person.<\/p>\n<\/div>\n This brings us very neatly to what I think of as the Decoder<\/em> questions. I was listening to the first fireside chat you had for your investors five days into the job, and I heard you say that your style is to be as close to the customer and as close to the people doing the work as possible because they know best. That\u2019s you on planes. But ultimately, you have to make a lot of decisions. What kind of decisions do you want to be making? What\u2019s your framework for making them?<\/strong><\/p>\n<\/div>\n I think company strategy is a great way to set that decision framework. I\u2019ve spent a lot of time in the last six months, first listening, then co-creating that strategy, and then setting the strategy and setting the bar high. If I unpack that a little bit, there\u2019s lots of stuff I don\u2019t know and that we all don\u2019t know, so listening was first. Then we sat down with the leadership team first to really make choices. What\u2019s our goal? For 2031, because that\u2019s when Logitech will be 50 years old, we set a goal of doubling the business and reducing our carbon footprint by 50 percent while retaining really attractive margins.\u00a0<\/p>\n<\/div>\n