Chicago entrepreneurs Jason Lucash and Mike Szymczak managed to launch a line of audio products during the recession. Their folding cardboard speakers made Time magazine’s 2009 list of best inventions. National television exposure on the “Today” show and “Shark Tank” soon followed.
Then they did something really surprising.
They moved to California.
The knock on the Golden State is that costs are too high, regulations too plentiful and the attitude toward business is generally unfriendly. Officials from other states enjoy trips to California to try to poach home-grown outfits.
The relocation of OrigAudio, with 12 employees and $3.5 million in 2012 revenue, isn’t exactly a tide-is-turning moment. But it underscores California’s multiple lures.
Lucash and Szymczak landed in Costa Mesa partly because of the region’s huge market, particularly in their core surf and skate crowd. In addition, their Chinese suppliers were significantly closer than in their Illinois days, which reduced transportation costs.
Another key factor in their 2011 move was the Southland’s long history of drawing some of the world’s top talent in product and industrial design.
“A lot of people think of Silicon Valley as the start-up capital of the world,” Lucash said. “But Southern California is where it’s at, especially for technology design. It was a strategic decision for us.”
OrigAudio relies on innovative thinking to produce radical versions of speakers, headphones and golf-ball-size amplifiers, he said, and will need an infusion of talent as it expands.
“Neither one of us is an engineer,” Lucash said. “We’re just marketing guys. We’re more creative, idea generation.”
Since coming to California in September 2011, the company has hired 10 employees and has plans to hire four more before the end of the year.
Design is increasingly important for growing companies looking to keep their edge, said Karen Hofmann, chair of the product design program at the Art Center College of Design in Pasadena.
“Designers used to be there to work on development projects. Now it is much more strategic,” Hofmannn said. “It’s not just ‘What do we make?’ Now it’s more about ‘What are the trends and consumer insights that should inform how we bring products to the marketplace?’”
More than 100 companies scheduled visits to the school during the last year, she said, including BMW Group, General Motors Co., Walt Disney Co., Facebook Inc., Google Inc., Microsoft Corp., Pixar Animation and Tesla Motors Inc.
The product that got OrigAudio noticed in 2009 was a set of foldable speakers made from recyclable materials that resembled a Chinese restaurant take-out box. The Fold and Play speakers retailed for just $14.99.
“That’s one of the reasons we were so successful during the recession,” Szymczak said. “We keep everything very price-sensitive, so that the masses can afford them.
In 2010 came the first of three versions of the Rock-It, which the company bills as the first portable transducer, a device that converts electrical signals into sound and amplifies it.
The device, which includes a piece roughly the size of a marshmallow Peeps candy, turns any surface into a speaker by transferring vibrations. The latest edition uses rechargeable batteries and retails for $19.50. A more powerful version called the Epishock costs $44.99 and comes in a lunch-box-like container labeled “Music Survival Kit.”
OrigAudio’s most expensive product is a set of headphones that can be decorated with whatever design the customer wants. The headphones, called Beets as a dig at the much more expensive Beats headphones sold by Dr. Dre, cost $99.
Missteps have been rare. The company’s very first attempt at foldable speakers kept tipping over until the design was improved.
And after television appearances in 2009, they ran out of speakers before the important Christmas holidays and had to fly more in from China to meet the demand.
“It wasn’t such a bad problem to have,” Lucash said.
The company’s sales goal this year is $5 million, compared with $700,000 in 2010, OrigAudio’s first full year of operation, Lucash said.
“It’s been much more popular than we ever imagined it would be,” he said.