Monster wants to hook you up. The company, founded by CEO Noel Lee also known as the Head Monster, makes high-end cables to connect any consumer electronics or computing device, headphone and power products. Monster’s products are used in homes, cars and professional environments. Customers include celebrities such as Aerosmith, Ozzy Osbourne and Jennifer Lopez as well as millions of consumers worldwide. With more than 375 patents in the U.S. and internationally, Monster makes more than 6,000 products that are sold in 80 countries.
Lee, 61, founded Monster Cable in 1978 in his family’s San Francisco garage. The company has more than 600 employees and offices in seven countries around the world including the company’s Brisbane, Calif., headquarters and offices in Las Vegas, Ireland, England and Hong Kong.
How did it all begin? Born in 1948 on Christmas day, his Chinese parents named him Noel for the holiday. He graduated from California Polytechnic State University with a BS degree in engineering in 1972 and went to work as a laser-fusion design engineer at Lawrence-Livermore Laboratory in San Francisco. He also toured with the band Asian Wood in Hawaii as their drummer. An audiophile, he began to test different wire options at home varying the thickness, composition and braiding pattern while listening to Tchaikovsky’s 1812 Overture.
The result: a high performance speaker cable he named monster cable because it was so powerful. He can not have known that he also was creating a new industry. The first monster cable was a low-resistance twin-axial stranded design. A few years later Monster introduced the first Bruce Brisson–designed cables that earned a patent. MIT and Monster were granted a shared license.
Having created a superior speaker wire, Lee had to sell to people used to getting speaker wires for free. The challenge was to educate hi-fi experts so they understood that they were missing an important element in providing the best audio experience to their customers. With no money to advertise, sales depended on Lee’s in-store demonstrations. “Hearing is believing” became his motto. To expand the company, he borrowed a portion of a booth at CES in Chicago to demonstrate his product next to standard speaker cables. However, it was at the following CES show, where he received an order for 30,000 cables and the company took off. Today at CES, Monster is known for its annual retailer awards and concert with musicians like Ray Charles, Stevie Wonder, Mary J. Blige, John Legend and Santana.
Monster continues to work with dealers to educate them on using in-store demos. Monster offers presentation tips to help customers choose the right headphones for their needs and also help retailers generate sales and increase their margins.
In addition to wires and cables, the company makes everything from iPod accessories to specialized surge protectors. Monster manufactures connectivity solutions for high-performance audio, video, car audio, computer, console and computer gaming, as well as provides iPod® and iPhone™ accessories and professional audio and sound reinforcement. Monster worked with Dr. Dre and Interscope Geffen A&M Chairman Jimmy Iovine to create the Beats™ by Dr. Dre™ headphone line and recently partnered with Houston Rockets center and China icon Yao Ming to develop co-branded “Yao Monster” CE products for distribution in China.
Lee still oversees product development, marketing and sales and travels extensively. In 2000, he was named “Entrepreneur of the Year” by Ernst & Young and has served on CEA’s Board of Industry Leaders.
In addition to his love of music, he is passionate about cars especially the Ferrari Scuderia Spider 16M—he has three in red, yellow and black. Vision met up with him at CEA’s Industry Forum in October.
How does being a musician and an engineer impact Monster?
Being a musician and an engineer, an audiophile and a geek all kind of came together—it was kind of an unusual combination, but it helped me to market to consumers. I still engineer almost all of the products and work with the design team. I also work on all of the marketing, branding and dealer relationships.
Where do you see technology heading?
Technology for us and for retailers is around connectivity. That could be connectivity around the home or in the same room. We don’t expect the physical connection to go away. We are in the middle of a new generation of wired, wireless and no-new wires.
The retailers are taking the challenge to do a better job of educating consumers about what is possible with connectivity. You have great manufacturers making advanced mobile handsets, advanced computers and advanced TVs, but their platforms are siloed in the retail channel. Not that many have the where with all to produce all of those products so that they can put them together. There are five major manufacturers who do that for the consumer, but then once they get to retail, they don’t talk. If you have a Samsung TV and a Samsung handset and a Samsung digital camera in different sections of the store, they are not talking to each other. That is where Monster plays an extremely important role for the consumer and for the retailer. We talk to all of the products. It all revolves around connectivity.
Headquarters: Brisbane, CA
Products: Cables, headphones, audio equipment
Why was Beats created?
The concept backs up CEA’s audio mantra: great sound matters. Monster has really been an audio company from the beginning. Consumers love music, but they’ve lost their way so to speak. And retailers have lost their way on selling great sounding audio. Big speakers are gone. The way to romance the sale for big speakers is gone. We are looking to bring that back. But you can’t bring that back with speakers because of the physical size and where people listen are diametrically opposed. You can’t take the speaker with you to the gym or on the subway. We say, the headphones are the new loud speaker.
Our first priority is to create headphones that truly sound like speakers but also they sound like the best speakers money can buy.
Musicians want you to hear music the way it is recorded live in the studio or live onstage. They experience music the way they want the consumer to hear it. But they don’t have the headphones to hear it. This is the cornerstone of Monster’s partnership with Dr. Dre and Jimmy Iovine and why Beats was created.
The quality of music has gone down— it’s been down rezed while the quality of video has gone up. What happened in the music business is a tragedy because now the customer never gets to hear what the recording engineer, producer and artist recorded. If they recorded on 190d24 resolution, you will never be able to hear it like that because all of the high resolution sources are dead.
Jimmy Iovine and Dr. Dre and I got together and said, “Let’s build the ultimate headphone because what is the use of supplying great content, if you don’t have anything to listen to it on?”
The introduction of Beats bringing together the talents and commitments of a visionary music icon like Jimmy Iovine and a legendary and relevant artist such as Dre and the world-class audio innovations of Monster, was unlike anything that had come before to reach the masses and put the Beats product on the map.
The marketing horse power of Interscope and Jimmy Iovine was essential. Audiophile headphones exist today at a $2,000 price point. We recently launched DiddyBeats with P Diddy. When Diddy does something, people drink the vodka and wear the clothes. You need a relevant artist to promote it.
We just announced with LeBron James a new headphone called PowerBeats for sports enthusiasts. For the teen market, we have JustBeats with Justin Bieber. Justin will be educating young kids that the quality of sound is important to your understanding of music. My favorite new Beats by Dr. Dre product is the BeatBox. This is a game changing iPod dock that sounds just as great as Beats Studio headphones.
Do you think the holiday season will be big?
It’s going to be huge. We are promoting headphones with retailers as the first choice as gifts for stocking stuffers. If you want to be a cool parent, bring home a pair of great sounding headphones.
How competitive is it today?
If you don’t have a brand today, you are done. Not only are you a commodity, but there are a lot of in-between brands that have been minimized or are going away because the retailer can direct source. You can get global sourced out, you can get direct sourced out—there are a few percentage points of what the dealer is going to make over what the manufacturer makes for the same product. Because of the labor costs and what it costs to make something in this country, it is not competitive. If a big retailer goes to China, everybody else has to do that. Where does that leave middle manufacturers like us? We were the last major cable brand to leave the U.S. as far as our manufacturing goes and we manufactured in the Bay Area. You have to be insane, right?
Do you think manufacturing can come back to the U.S.?
I don’t think that type of manufacturing will come back. Even the great European brands and technologies are all owned by the Chinese now.
How can you get people to focus on good sound?
First you have to demonstrate it. We are holding sessions with recording engineers, and we are working with select retailers to educate their sales people on how to sell and how to present higher audio. We focus on great sound and on the great quality audio experience that CEA talks about. We work with our 300+ storefronts to raise awareness for the whole audio industry. We hope independents will do it. We have done a lousy job of selling audio as an industry. We didn’t go where the consumer was—portable and mobile.
Do you work with partners to package content?
Imagine this—in the world of 3D, we are still listening to stereo on TV. I’m hoping that in the future, there will be renewed interest in 5.1 surround. We are working with several major movers and shakers in the entertainment industry and will have some exciting announcements soon. One project I can talk about is our upcoming release of Miles Davis’ legendary Sketches of Spain in HDS surround. I have been in the studio remixing this classic and it’s been a personal thrill.
What other markets interest Monster?
We are very active in Europe, South America and Canada. The future and most difficult mountain to climb is China.
What makes China so difficult?
Consumer electronics is pretty chaotic over there. Chinese consumers are very different from western consumers. Style, store, what you see in the store and merchandising is all different. Here we make the aisles wide so that people have a line of sight and can see the merchandise. If you go to a Chinese store, there are no sight lines. You can’t see past anything. There are flags hanging on the wall; it’s cluttered; there are narrow aisles. Once you understand how retail works there, you can understand why so many retailers have had a challenging time.
Why did you partner with Yao Ming?
We were talking about how difficult it was to do business in China. We don’t have a brand there and it’s all about pricing and distribution in China. To build a brand in China, you have to spend megabucks. It’s just too expensive. So I said, let’s see if we can partner with Yao Ming. We found out that he loves technology. He would love CES! Yao is totally unique. I would say there is no equivalent to Yao in the U.S. Our launch was a total partnership between us, Yao and our retailers. He extended personal video invitations to come see the launch event. This just happened in July.
Can you talk about your first CES?
CES scared me to death. I was just a young entrepreneur working out of my garage when I attended CES for the first time. I didn’t have a booth, so I had to borrow a table from somebody’s 10x10 booth. Just to be there was so overwhelming. At that time in Chicago, you had the Blackstone [Hotel] where all of the tiny companies were located. It was so exciting. I had no idea because as an engineer, you went to engineering trade shows. Talk about boring! CES is such an important entity.
When did you start the retailer awards?
It was 25 years ago. The first ones were really small. They were audiophiles with about 600 people at Caesars. Now everyone goes to it. We were the first to make music a CES event as opposed to just a party. I felt that CES was so much about audio and video, TVs and computers—we sell the stuff that people enjoy, but we were not showing any of the content. Today about 5,000 guests attend. It is for our core dealers and a great way to give recognition to those that represent our brand well.
What is your biggest challenge going forward?
I would say staying relevant to the consumer and to the retailer. We are really good partners with our retailers, and we want to become better partners and collaborate even more. As far as our business is concerned, accessories continue to be a very relevant part of the business. Our challenges are marketing and hardware.
Where do you see Monster in five years?
Our product philosophy is always lead and never follow. Our product managers innovate and buy new technologies. Monster is a leader in product innovation and design. We have been recognized at CES with Innovations Awards and that has really helped us. As far as the future, we’re looking forward to significantly extending the Monster brand. In many ways Monster has indeed come full circle. I began this company with a commitment to make music sound better through better cables. While that commitment is just as strong today, Monster’s product offerings continue to grow in exciting new ways.