Reason Studios – Niklas Agevik [CEO]
Back in 2013, I interviewed Propellerhead’s CEO, Ernst Nathorst-Böörst, who talked to me about the genesis of his company and their famous DAW, Reason, which was on its 8th version. Fast forward nearly ten years and much has changed: Ernst has stepped down as CEO, the company renamed itself to Reason Studios, and they released version 12 of their DAW in September 2021. I recently passed by the company’s offices to chat with the new CEO, Niklas Agevik, who shared what it’s been like taking over the business and driving it towards the future.
I left Instabridge after seven years of being CEO, so I wasn’t sure about my next move. Should I create a new startup, join an existing one or return to work for a major corporation? I never seriously considered the latter, but I wasn’t sure of what to do until I met Katarina Bonde, the former chairman at Propellerhead – she described the role in a way that sounded exciting. Basically, Propellerhead had a large customer base that mainly consisted of longtime users, and a trend had developed in the audio community where people raised their eyebrows if someone said they used Reason. So the company wanted to make Reason more relevant to younger producers and that challenge inspired me. I also met with their team and saw that the staff had a lot of passion for its products, which is why you see synths and guitars on people’s desks when you walk around the offices.
– Did you have experience as a Reason user prior to becoming CEO?
No, but I’d heard about the company. Propellerhead wasn’t super famous in Stockholm but it was a well-respected company and I’d seen some of their apps like Figure and Take. But no, I wasn’t a user. I’d spent much of my childhood surrounded by music because of my parents but I never inherited that gene. Then I tried Reason and it really clicked for me because of my background in electrical engineering and digital signal processing. So I’ve had a lot of fun with it since I started, though I’m nowhere as experienced as our longtime staff members.
– The company had a change of name and CEO in 2019. Do you know the story of how those two things coincided?
In 2017, the owners of Propellerhead sold a majority stake to Verdane, a Norwegian investment firm. Marcus Zetterquist, one of the founders, had already left. Peter Jubel was still here, but Ernst Nathorst-Böös wanted to move on after 25 years at the company. So a transition had been planned for a long time but it took two years to settle on Ernst’s replacement.
The name change had been talked about for several years as well. The public didn’t really know about Propellerhead; most people only knew about Reason as a DAW. So we took the name that everyone was familiar with and rebranded the company around that.
– Do you know whether the CEO replacement was a decision from Propellerhead’s management or from the private equity side?
That came from Ernst, who initiated the sale so he could move on to other things. But he stayed on for two years after Verdane bought the company and was eventually like “C’mon guys. I’ve been here two extra years – it’s time for a change “. Having said that, Ernst is still on the board and is very active in the company. I talk to him often and still ask for his strategic input on what we’re doing.
– How would you say your leadership style has differed from his?
I don’t know how Ernst did things as I never worked for him. I joined the company on June 10th, 2019, and June 9th was his last day as CEO.
– Verdane bought about 60% of the Reason Studios in 2017, which caused a lot of chatter in audio forums. Do you know of any changes that took place as a result of the acquisition?
Well, they wouldn’t have bought us unless they already believed in our strategy. Verdane prefers to buy companies who already have great leadership that they can help execute on future plans. For example, our strategy in 2017 was to open up Reason to more users by adding VST support, and Verdane bought us on the presumption that this would help us become a better company. So they didn’t force us into any changes.
– One of Verdane’s partners, Pål Malmros, had said they wanted to see you develop the e-commerce side of your business once the acquisition was done. Has that approach worked for you?
I think what he was referring to was us getting better at packaging and selling Reason online. That’s something we saw potential in with third-party retailers and our store. I’d say our packaging has changed to the point where it’s become easier to buy Reason and to understand what you get from it, especially with Reason+. Prior to that, we couldn’t really sell our new devices as standalone plugins – we first had to convince people to buy Reason. But now when we launch a device like Bassline Generator, you get access to it for $1 and can use it immediately whether you have Reason or not. So in that regard we’ve succeeded on the e-commerce side.
– I’ve heard that Verdane have 10-year periods for working with their acquired companies before exiting. We’re halfway through that period in 2022, so do you foresee them selling their shares sometime soon?
That’s not how we think about it – we want to make Reason more successful, which is what’ll make us more valuable as a company. It might sound cliché, but we’re not doing anything to plan for a future sale of the company. I come in everyday and think about how to get people excited for Reason and the chips will fall where they may. Sure, we’re owned by Verdane and at some point they may have to sell, but that could have different outcomes: we might be acquired by another company in the music space, or we might work with another private equity firm. We could even IPO to become a public company. So there’s no telling what could happen in the future but our aim for now is just to build a great company.
– I recently looked at some of Reason Studio’s financial numbers and it appears you make €9 – €10 million a year. That seems like a staggering number for a company that only sells music software.
You’ll have to wait until we become a public company to get an answer for that (laughs). But what you see is what you get. We have our shop and Reason, so there’s no hidden tricks to how we earn our revenue.
– In terms of your staff, has anything changed with your hiring strategies after you became CEO?
Not really. We’ve always tried to hire the best people we can find. There’s been a lot of new staff joining us in the last few years but it’s good to get in new blood, and it’s evidently affected things like our marketing campaigns in a positive way. A lot of people apply for jobs with us so it’s great to see that people want to work at Reason Studios. I know a lot of companies in Stockholm that struggle to hire developers and it’s been a bit easier for us because we have the benefit of a fun product and culture.
– Who are some of your lead staff members at the moment?
The core product team is pretty much the same, consisting of people who’ve been here 10 – 20 years, like Fredrik Lundkvist who was one of the first employees. Then there’s David Eriksson our CPO, Marcus Adler our CMO, and Sara Roos our CTO, who all started in the last two years. Sara is also one of the few female CTOs in the whole music industry.
– As you alluded to earlier, Reason’s longtime customer base is quite large. In what ways have you tried to acquire new users without alienating old ones?
In the early days of Propellerhead, we were an underground company that didn’t place much focus on telling the public about our high-profile customers. So we have a lot of noteworthy users but never drew enough attention to them even though new musicians tend to use the same software as their idols. As you can see on social media, we’ve changed that approach. For example, we’ve signed brand ambassadors like Gentlemens Club to talk about how they use Reason.
The other part of growing our userbase concerns our product. Some people have used Reason for 10 – 20 years and want to see specific features added, but we also have to consider the nineteen year old who wants to use Reason as a plugin in FL Studio. So there’s a balance we have to strike between how much we invest in attracting new users versus keeping things exciting for long-time users. I think we’ve done a good job with that given the small size of our team. We know that if people use Reason as a plugin, they’ll eventually want to use it as a DAW too, so developing a plugin is the best thing we’ve done in a long time. Once that happened, we saw Reason receive a lot more user engagement.
We utilized outside developers for certain samplers, but they’re all spec’d and designed in-house, and all the DSP-heavy work on synths like Friktion and Algoritm is done by Peter Jubel, one of our founders. We have a new one coming out in March that Peter has developed, so watch out for that.
– Do you aspire to do any collaborations with other audio companies in terms of plugin development?
We’ve done stuff like with Antares like the Autotune RE, but not much else. Perhaps it’s something we could do more of but there’s so much excitement over our own products that we haven’t had to look elsewhere. I won’t rule it out, but we have no plans for it at the moment.
– Has there been any change on the issue of piracy since you became CEO?
Our privacy protection today is a bit complex in terms of registration keys and such, so it’s something we’re looking at adjusting for a smoother user experience, though I can’t speak to any immediate changes. But we do want copy protection to be much smoother than it is today.
– The Sound Packs debuted with Reason+, which I believe are made by third parties. How did those partnerships come about and how will you maintain the weekly volume?
They’re actually being released daily now, rather than weekly. The creators are people we’ve worked with for several years. The reason we don’t make them in-house is because we wanted outside inspiration; there’s so many different genres in the market, so having the packs made by a new crowd of people ensures we don’t get blinded by our own musical tastes. That said, we might do a few Sound Packs ourselves when we release a new instrument, just to demonstrate its capabilities.
– In 2014, Propellerhead launched the Discover platform as a place to share and remix music. It was renamed Allihoopa in 2016 and eventually became its own company before shutting down in 2018. Do you know why the project shuttered?
It was before my time, but it was sad that we had to close it. Reason Studios couldn’t internally fund the building of a social network, so Allihoopa was spun off as its own company in order to attract external investors. When we couldn’t get the outside money, we had no choice but to close it down. It was a shame, but even if those things were exciting in their own right, we got a bit distracted by building mobile apps and social networks and didn’t invest enough resources in our main product: Reason. The product team now has Reason as their main focus and are working to make it better.
– But you decided to reacquire the apps Take and Figure, correct?
Yes, those will be around, but I want to stress how focused we are on Reason. We’re more focused than we’ve been in the last decade – certainly since Reason 5. We’ve put all our resources into making Reason better and that’s been my main priority since 2019. We introduced hi-resolution graphics, which was a huge investment that we’d put off for a long time. The browser update was another huge change since we fixed our old ways of reading files. Other things like VST compatibility and M1 support aren’t the most exciting features to announce, but we needed to do those to keep Reason relevant.
– Reason 12 was recently released last year. What response have seen to the latest version thus far?
I think Reason 12 was a fantastic update and the reception was mostly positive. Unfortunately, a small number of people experienced some crippling bugs that prevented them from using it, which obviously isn’t okay. We needed to fix that, so we’ve been releasing updates to Reason 12 almost every six weeks; there’s another one one in beta right now. So I’d say Reason 12 is almost where we want it to be, but we have one or two more updates to go.
People forget it now, but Reason 12 fixed two of the most requested features: hi-res graphics, which people were screaming about, and the slow browser speed.
– People have also been talking about your first price increase for Reason in 20 years – from $129 to $199 for a version update, and $399 to $499 for the full version. What was the thought process behind that?
No-one likes price increases, but I think we had the wrong price-tag for the value we delivered. You get 59 devices with Reason 12 – Mimic alone is a $100 product. So if you look at what our competitors charge, $499 is a steal. Show me a plugin bundle with 59 devices for $499. Again, I understand that people don’t like price increases, but we were underselling Reason at the previous price and that’s why we made the change.
– One of the most noticeable changes for longtime Reason users is that Rewire is gone. Will you reconsider that or is it a permanent removal?
It’s safe to say that Rewire is gone permanently. It was an old technology that had to be replaced with VST support, which is more modern. I know there’s a small community of people who love Rewire, but what we’ve seen is that 99% of people prefer VSTs. For every version of Reason that we release we’ve done interviews with our users, in addition to sending out a big survey once a year. The survey revealed that hardly anyone used Rewire – VSTs is what people said they wanted, so too many resources would have been consumed to continue supporting Rewire. That’s why we had to make the change – it was about making the DAW work for most people.
– It typically goes two years between most of your numbered Reason updates. Will that interval continue?
Yes, I think it will. But we aren’t thinking about Reason 13 yet, as there’s enough work to do with Reason 12. We’re offering a significant number of free updates, of which M1 and VST3 support will be a part.
– Wrapping up, I’d like to ask about the Propellerhead Balance interface, which appears discontinued. Why was that shelved?
We realized that we’re a software company who thrives on making and releasing our products in a timely manner. Being a hardware company is a completely different ballgame where it takes years to execute a product release – there’s one year of spec’ing things, one year of building things and another year to bring the product to market. That just wasn’t in our DNA. But we did a fantastic job with Balance and many people in our office still use it. Many producers still swear by it too, so it was a shame we had to close it down, but it just wasn’t worth the effort compared to working on things like Reason and our instruments.
– Thanks for talking to me Niklas. What does the future hold for Reason Studios?
I think we’ll be doing more of the same. Our road-map is published on our blog and shows what we’re planning to do. We’ll be making Reason better with VST3 and M1 support, as well as more instruments, effects and Sound Packs in Reason+.