Black Box Making Waves in Music Business : Electronics: BBE Sound developed a microchip that boosts high-frequency sounds in audio recordings, separating them from middle and low frequencies.
Ideas for new businesses don’t grow on trees. More often, they are planted in people’s minds through their experiences and interests over a lifetime.
John C. McLaren Sr. had this in mind when he began searching for a way to start his own business in 1985. He’d spent his entire career in the musical instrument business and wanted it to remain an important part of his life.
It was a warm summer day, he recalled recently, when he brought home to Villa Park a small black box that an inventor was touting as the technology of the ‘90s for audiophiles. It contained a prototype electronic gadget that could enhance the sound of an ordinary stereo system to resemble the clarity of live music.
McLaren handed the plastic box to his teen-age son, John Jr., who was then engaged in his favorite pastime--playing eardrum-popping rock music in the living room.
When the younger McLaren plugged the box into his Yamaha stereo, he was amazed by what he heard. The guitars and drums--once muffled by the vocals--suddenly sprang to life. And what had sounded like a duet earlier, turned out to be a trio.
“Gee, Dad, that’s one killer box,” the elder McLaren recalls his son exclaiming.
The box, manufactured by a Barcus-Berry Inc. division in Huntington Beach, became the basis for a new company that McLaren and a group of investors started six years ago. The company, BBE Sound Inc., developed a microchip that boosts high-frequency sounds in audio recordings, separating them from middle and low frequencies.
BBE Sound supplies the chips to major consumer electronic manufacturers and also includes them in its components for the professional audio market.
McLaren, BBE Sound’s chairman and president, says that unlike similar products on the market, the BBE product is targeted at the high end of the stereo market. He hopes the technology will have an impact on the music industry similar to that of Dolby Laboratories’ noise-reduction system in the 1970s. The Dolby function is offered on virtually every manufacturers’ tape recorders these days.
McLaren and his managers mapped out a strategy that stressed selling BBE’s patents to stereo components manufacturers and recording companies. They decided to make their product, which resembles a videocassette recorder, available to selected electronics retailers.
The BBE product, which retails for $250 and up, plugs into a stereo system.
McLaren, whose background in musical instruments spans 27 years, is a former president of CBS Inc.'s musical instruments division, and group vice president of Yamaha’s musical instruments division in New York.
He said he realizes that he needs to sign up large recording and broadcasting companies for his company to grow and prosper.
“When we began the company, our major goal was to license our patents to the consumer electronics companies,” McLaren said. “Since Japanese companies dominate that market in the world, it’s natural for us to go to them.
“The greatest potential for BBE is to create a new surge for consumer demand for audio and TV products through manufacturers,” McLaren said.
He and other BBE Sound employees courted Asian, U.S. and European stereo components manufacturers. In 1988, the company snagged its first major international client, Japan’s Aiwa Co. Ltd., which last year introduced a line of stereo components and headphones that incorporate BBE’s technology. Aiwa officials told McLaren that they are considering phasing out use of the Dolby system in favor of BBE’s technology.
BBE Sound’s other licensees include International Jensen Inc. of the United States, Goldstar Co. Ltd. of South Korea, TEAC Corp. of Japan, and Nippon Philips, a subsidiary of Dutch-based Philips Industries N.V.
BBE Sound’s sales are expected to reach $4 million this year--a third of that from Japanese customers. Based on future contracts and patent license fees, McLaren is projecting that sales will triple in the next four years.
Tom Mulhern, owner of an audio testing firm in Campbell, Calif., said BBE Sound is becoming an important player in noise-reduction technology.
As with any new product, Mulhern said, the company’s success will depend on the marketing skills of McLaren and his team.
“They’re introducing some very innovative products for guitars and electric bass, which not only offer standard sound capability but also provide a more high-fidelity sound because of the BBE process,” Mulhern said.
McLaren owns 20% of BBE Sound and is the largest shareholder of the company. Other investors include Security Pacific Corp., Shearson Lehman Bros. Inc. and Cruttenden & Co.
McLaren said he’s looking to acquire a musical instruments manufacturer and an audio electronic components maker in the Southwest to raise the profile of his company.
“We’re well-known among Japanese and Korean companies, but we’ve yet to make a significant dent among American manufacturers and consumers,” he said.