Nura negotiated a unique sponsorship-for-equity deal with NZ Rugby - with the additional twist that NZR holds 66 per cent of the stake in the high-end headphone maker, with the other 34 per cent controlled by the Players Association. Still / Supplied
NZ Rugby's 2019 decision to take $20 million worth of shares as part of its latest deal with Sky TV has not proved a winning investment. At least so far.
Last year, the union took a $15.9m impairment in its annual accounts to reflect the pay-TV provider's sharemarket dive, and its holding is worth only around $3.5m today.
But another NZR equity play seems to be turning out better. In October 2020, the union took a stake in Melbourne-based high-end headphone maker Nura as part of a new sponsorship deal.
Financial terms weren't disclosed, but indications are that the privately held Nura is on the up. Another investor, NZGCP partner Blackbird Ventures, which lead an earlier A$21m raise for the five-year firm, valued Nura at A$100m around the time NZR bought in.
Talking to the Herald last month, Nura chief operating officer and investor Morgan Donoghue says the company's valuation is now "more than A$100m but less than A$200m."
In return for handing over a stake to NZ Rugby, Nura gets All Blacks appearing in its ads, and wearing its cans and buds in pre-game photo op - or whenever they listen to anything. The same goes for the Black Ferns, the men's and women's Sevens teams and the Maori All Blacks.
Donoghue pitches Nura's product as the best for any music or podcast lover, with its surgeon-developed, personalisable audio that can compensate for poorer hearing in one ear than the other.
"As an example, we were at Jazzy Jeff's house two years ago, there's a guy there called DJ Mell Starr. He lost his hearing in 9/11 and hadn't heard out of his left ear in 20 years. And then he put on these headphones. We've got this footage of him hearing for the first time in 20 years and crying," Donoghue says. (The moment is included in the video above).
Such emotional investment is engaging, but Donoghue notes that our top-flight rugby players are also literally invested.
"New Zealand Rugby owns 66 per cent of the shareholding in Nura and the New Zealand Rugby Players Association and other 34 per cent," he says.
"So it was also a joint venture with them - which, you know, in these tricky times they've been going through [with the NZR board and the Players Association at loggerheads over a potential investment by US private equity firm Silver Lake], getting the players' union on board can also be quite complicated."
The All Blacks aren't the be-all and end-all of Nura's promotion, which also features a welter of DJs and musicians.
Getting the team onboard was a way to jump-start the Nura brand.
"We're competing in a headphone market which is dominated by some very, very big players. You look at Apple, you look at Sony, you look at Bose, they're all massive companies," Donoghue says.
"We knew we had to get something to try and push us up in our brand recognition. And the All Blacks are obviously globally recognised.
"So I went and just had a conversation with the Rugby Union. And it took a year and the support of a whole lot of people on the board and internally. And we did a deal, which is predominantly based on swapping equity in our company for the sponsorship."
Nura has an unusual backstory.
Around five years ago, its founder, Kyle Slater (one PhD) and Luke Campbell (two PhDs) met while working at Melbourne's Royal Victorian Eye and Ear Hospital.
According to company lore, the pair became fascinated with the idea of automatically measuring a person's hearing to deliver the perfect music experience.
Slater grew up in a family of musicians, but his fascination with technology led him to become an electronics engineer and eventually to PhD work in psychoacoustics and music perception at the Bionics Institute on hearing implants.
Campbell trained as an ear, nose and throat surgeon, specialising in hearing sciences, but also developed an interest in coding firmware.
Slater and Campbell enrolled in a business accelerator programme offered by Melbourne University, where they decided to build a new type of headphones.
The founders pioneered a way to automatically learn your hearing by measuring activity in your ear, past the eardrum, all the way to the hearing organ called the cochlear.
Nura was born, and the pair embarked on a Kickstarter campaign that raised A$2.4m as just over 7000 people ordered a pair of their first headphones - which have a distinctive earbud that sits inside an over-ear cup. A smartphone app syncs with the cans, and delivers hearing tests to both ears that are used to calibrate the headphones as singals are bounced off your eardrum.
All Blacks-obsessive Donoghue has deep roots in the NZ music scene and, more recently, it's digital technology scene. He's a former label manager for EMI New Zealand, an alumnus of Auckland DJ software global success story Serato and, on top of his Nura role, is MD of Auckland-based DJ-equipment outfit InMusic, which employs around 60 - and got in the national spotlight in September last year as Jacinda Ardern hit the turntables during a campaign stop at its headquarters.
Donoghue initially did an epic commute, flying to Nura's Melbourne office each week. But the pandemic put paid to that.
"I wear glasses, and they give me 20/20 vision. Our headphones give you '20/20' audio," Donoghue says.
At just over $500, Nura's headphones don't come cheap, but on a par with the top consumer product from the likes of Bose and Sony. And Apple's over-ear AirPods Max, released last year at $999, have helped shift the centre of gravity.
Nura has also blazed a trail by introducing a headphones-by-subscription system that lets you access its product for $10 or $15 a month.
And after an interim product, the NuraLoop, which had a cable between two earbuds, the company has just released its first true wireless earbuds, NuraTrue (just over $300) - for which Wellington creative agency EightyOne created a new spot featuring All Blacks Ardie Savea, Caleb Clarke, Brad Webber and Ofa Tuungafasi, as well as cameos by several real-life All Black staff.
Again there's a distinctive design - the NuraTrue are much larger than most wireless earbuds.
The UK's Tech Radar was sold, finding NuraTrue offered "unbeaten levels of customisation that allow the earbuds to be tuned to your ears exactly. The accompanying app even analyses how well the buds fit into your ears.
"The end result is outstanding audio performance that reveals superb levels of detail in your music, and a wide soundstage that enables every instrument to sing."
It added, "Highly personalised noise cancellation, an IPX4 water-resistance rating, fast charging, and support for hi-res audio only sweeten the deal."
"High-res" audio is one of the areas where Donoghue sees Apple giving Nura a leg-up.
Streaming audio and digital music in general had a bad rap from audiophiles. The ground-breaking guerilla services like Napster made music very easy to share online by highly compressing the audio to reduce file size. And the first street-legal stabs at streaming too a similar.
But streaming quality improved, and this year Apple introduced "lossless" or uncompressed audio for iTunes, whiile Spotify promises "CD quality" Spotify HiFi this year.
All the major music services are moving in the same high-res audio direction - which means there's more reason to splash out on a pair of high-end headphones. And that's music to Donoghue's ears.
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