In a significant leadership shakeup at Sonos, CEO Patrick Spence has stepped down from his position after eight years at the helm, following a catastrophic app revamp that resulted in widespread customer dissatisfaction and substantial financial losses. The announcement comes as the company grapples with the aftermath of what industry observers describe as one of the most challenging periods in its history.
The troubles began in mid-2022 when Sonos embarked on an ambitious project to modernize its mobile app infrastructure. The company had accumulated significant technical debt over two decades, with outdated code that increasingly hindered the app’s functionality. The situation became particularly urgent with the planned introduction of the Sonos Ace headphones, which required modern mobile app capabilities and cloud computing infrastructure.
However, the May 2024 launch of the new app proved disastrous, with users reporting numerous issues:
• Missing core features including alarms and sleep timers
• Frequent system crashes
• Slower navigation
• Speakers randomly disappearing from the app
• Complete system failures after updates
The financial impact has been severe:
- $200 million revenue shortfall
- 25% drop in stock value
- 16% decline in Q4 fiscal revenue
- Projected 15% decline during holiday period
In response to the crisis, Sonos has taken several measures, including extending manufacturer warranties for home speaker products and establishing an advisory board for customer feedback. The company also laid off over 100 employees in August 2024 to address the financial fallout.
Tom Conrad, a current board member and former co-founder of Pandora, has been appointed as interim CEO while the company searches for a permanent replacement. Conrad brings significant experience to the role, having served as VP at Snap and product chief at Quibi. Despite the challenges, Conrad has expressed commitment to expanding Sonos’ product line beyond home speakers and addressing the fundamental issues facing the company.
As part of the transition, Spence will receive a comprehensive exit package, including $7,500 monthly payments until June, a cash severance of $1.9 million, and the vesting of his unvested shares in Sonos. He will remain with the company until June 30th in an advisory capacity.
The leadership change comes at a crucial time for Sonos, as the company attempts to rebuild customer trust while maintaining its product development momentum. Despite the current challenges, Sonos has confirmed its commitment to the new app platform, with ongoing work to address bugs and restore missing features. The company has also reportedly delayed several product launches to focus on resolving the app issues.
Industry analysts note that while Sonos has historically been successful in hardware development, releasing well-received products like the Arc Ultra soundbar, the app crisis has highlighted the need for better software development practices and more thorough testing procedures.
Moving forward, Conrad and the leadership team face the dual challenge of stabilizing the current situation while positioning Sonos for future growth. The company’s next major initiative is rumored to be a streaming video player, potentially marking a significant expansion beyond its traditional audio focus.
