Monster Cable Products, Inc. Business Information, Profile, and History

Company Perspectives:

Already holding over 200 US and international patents, Monster is continually striving to discover and develop new, advanced technologies and designs to meet the needs of the ever-advancing consumer electronics industry.

History of Monster Cable Products, Inc.

Based in Brisbane, California, privately owned Monster Cable Products, Inc. sells a wide range of mostly high-end electronic cabling products. The Monster Cable Home AV division sells speaker cable, video interconnect cables, connectors, splitters, and clamps, as well as in-wall and outdoor speakers and mounts. Monster Car Audio is devoted to speaker cable connectors, audio interconnects, and power delivery cables for automobile sound systems. Monster Power provides power cords for home theater systems, computers, and other electronic equipment. Monster Computer product offerings include printer cables, monitor cables, network cables, and digital and USB cables. Monster THX Products, licensed by Lucas Films Ltd., sells a variety of home theater audio and video interconnects, cables, and speakers. Monster Game focuses on cables made specifically for video gaming systems. Monster Mobile offers cell phone products, including chargers and cases, hand-free headsets, and other audio, video, and power solutions. Monster PowerCells offers rechargeable, alkaline, and lithium batteries. Monster Photo offers rechargeable powercells and lithium powercells, as well as photo cables and camera bags. In addition, Monster offers custom installation services. All told, the company offers more than 4,000 products, which are sold in about 80 countries.

Engineer's Passion for Music Leading to 1970s Business

Monster Cable was founded by Noel Lee, who was conceived in China but born in San Francisco on Christmas Day 1948, prompting his parents to name him Noel to mark the occasion. He attended San Francisco City College before earning a mechanical engineering degree at California Polytechnic State University. Like many second-generation children from Chinese families, Lee at first followed the career path selected by his parents, but he also possessed a rebellious streak. Dutifully he took a job at Lawrence Livermore National Laboratories in 1968, where he worked on laser-fusion experiments and after several years became the program head, no doubt making his parents proud. During his spare time, however, he pursued a musical career, and in 1971 he began playing drums for an all-Asian country rock band called Asian Wood, producing music in the vein of Crosby, Stills, Nash, and Young. In 1974 the band was given a chance to tour around the world, and to the shock and dismay of his family Lee decided to quit his comfortable prestigious job to pursue music full-time.

Lee and Asian Wood first traveled to Hawaii, where they soon learned that their producers were expecting a pure rock band and were disconcerted by their country rock edge. After getting fired from this engagement, Asian Wood responded by virtually overnight transforming itself into a top-40 cover band. It soon found work and played the islands for the next 18 months before breaking up. Lee continued to work for another six months in Hawaii, then decided to return to the mainland to find steadier work. But the time he spent as a professional musician paid dividends, providing Lee with a practical business education as he learned how to deal with some of the less-than-ethical business people that populated the music field.

Back in the San Francisco area, Lee was able to land an engineering position at Lawrence Berkley Laboratory, but he found his assignments unexciting, and directed much of his passion toward his music interests. In fact, he would have gladly taken a job in the audio business, but with his background in laser fusion he was considered far too qualified to hire. He was obsessive about his sound equipment, and because he lacked the money to buy the best available components he looked for ways to improve the quality of what he already owned. He soon realized that speaker cable was the weak link in the system. At the time, cheap zip cords were used as speaker wire and stereo dealers provided as much as a customer needed.

Working at night on a pingpong table in the two-room garage apartment he shared with his wife and son, Lee began experimenting with cables using different grades of copper, methods of winding, and insulation materials. He also added gold-plated connectors to provide better transfer of power from the wire to the speaker. Using his ear as a guide, Lee found the right combination of elements to make a speaker cable vastly superior to typical zip cord, offering a more dynamic and crisper sound. Although he was convinced that he had developed a superior product and desired to launch a company to market it, he faced the daunting task of convincing people, who expected to get speaker wire for free, to pay a premium price for a product they did not think they needed. With a small amount of money drawn from his savings and nothing but a gut instinct for marketing, Lee launched a speaker cable business in 1978. For a name he chose something that he believed embodied the powerful sound that resulted from the use of his product: Monster Cable.

Lee set up a makeshift production line in his garage apartment, hiring three people to begin assembling cables while he worked the telephone to arrange demonstrations at area stereo stores. An important moment came at the Consumer Electronics Show held in Chicago in the summer of 1979. Lee barely had enough money to pay for the trip and was fortunate to convince a vendor to let him set up a demonstration on the edge of his booth. Because, as Lee believed, hearing was believing, Lee's Monster cables were well received by attendees, and he was encouraged to continue his efforts to market them.

Introducing Additional Products in the 1980s

Lee slowly built his business, heavily dependent in the early years on the number of demonstrations he was able to give to store owners, during which he performed a side-by-side comparison of the sound produced by zip cords and Monster cables. As more stores began to carry his products, word of mouth among audiophiles also began to grow, and the business built momentum. In 1980 Lee also introduced a second product, Interlink, an audio cable that moved Monster Cable beyond mere speaker cable. During that same year, Lee was able to move production out of his garage and into a San Francisco facility. In 1983 Lee received a patent on his Xterminator electrical connector. During this early period, Monster Cable also attempted to move into the car audio market but soon abandoned the field to concentrate on home audio. Nevertheless, after five years of effort and exponential growth in annual sales, Monster Cable had established itself. Now Lee's major challenge was arranging the financing needed to buy enough raw materials for the company to produce cable in the quantities demanded by consumers.

Monster Cable developed something of a cult following among audiophiles and high-end retailers, who were a bit disconcerted in 1987 when the company launched a mass-market product. This move was just a hint at the ambitious plans Lee had in store for Monster Cable. Mostly he pursued product areas directly related to cable and connectors, but that did not prevent him in 1989 from starting Monster Music, a small music label. In the early 1990s Monster Cable returned to the car audio market to stay and it also introduced a new line of standard speaker cable as well as its first speaker product: the Persona One, a three-way speaker that could be plugged into a Walkman, television, or personal computer. This product was part of an effort to position Monster Cable in the home office and photography markets, to further move the brand outside of its traditional high-end audio store channels. During this period, the company began to enter the home theater market by acquiring a license from Lucas Films Ltd. to offer cables under the highly regarded THX label, which indicated that equipment met a high standard of quality. But the company did not neglect its original focus, in 1992 introducing the M series of high-end cables. Moreover, Monster Cable expanded globally, especially in Asia, where it entered markets such as Japan, Hong Kong, Singapore, Malaysia, Korea, and Taiwan. Taiwan proved to be a sore point for the company, however. It allowed its Taiwanese distributor to file the trademark, but after the agreement was terminated the distributor began making and selling cables under the Monster label. Only then did Monster Cable realize that under Taiwanese law the filing party owned a trademark. After a lengthy legal battle, the matter was finally settled out of court to the satisfaction of Monster Cable.

Launching the Dealer Program in the Early 1990s

A key element in the success of Monster Cable was the innovative dealer program Lee developed over the years and formalized in 1993 as the M4 Dealer Success Program. The four "Ms" were Mix, as in product mix; Merchandising, including displays; the "Monsterization" training program; and Management commitment. The roots of M4 grew out of Lee's efforts early on to view the selling of his product as if it were a machine. Just as he had done with his home sound system, he looked to enhance throughput, but instead of delivering more power to the speakers to achieve better sound, he now wanted to move more products to consumers in an effort to make more money for himself. Again, he looked to strengthen each link in the chain, to create greater throughput, and soon realized that he had to find a way to have a greater impact at the point of purchase. Unlike most marketers, he did not try to motivate the top 20 percent of salespeople who generated 80 percent of the sales. His idea was to motivate the 80 percent of salespeople whose performance was pedestrian, assuming that the top earners would take care of themselves. M4 consisted of simple concepts that even the worst of salespeople could use to drive up sales of Monster cables. The first M, Mix, simply meant that

In the early 1990s Monster Cable generated $20 million in annual sales, but by the end of the decade that number reached $100 million. One of the company's chief problems during this run-up was lack of production capacity, a situation remedied by the opening of a new manufacturing facility and distribution center in 1998. Growth also was achieved by continuing to add products. In 1998 Monster Cable introduced a line of power products, including heavy-duty power cords with gold connections and enhanced surge protectors.

The company continued to bring out new products during the 2000s. It began selling a line of cable dedicated to gaming systems such as XBOX, PS2, and Gamecube. In 2001 Monster Cable launched its Monster Mobile division, offering products for use with cell phones and digital cameras. In 2003 the company added its dedicated Monster Photo product line as well as its Monster Signature Series Power line. The company also ventured a little far afield in 2004 with the introduction of high-tech furniture, a spinoff called M-Design run by Lee's son, Kevin Lee. The furniture was designed to hide large subwoofers. It also made an $8,000 Action Couch, which vibrated the seat cushions in conjunction with a movie's sound effects.

In 2004 Monster Cable increased its profile somewhat by paying $6 million for the naming rights to Candlestick Park, where the San Francisco 49ers National Football League team played. The facility was renamed Monster Park, rather than Monster Cable Park. Although Monster.com, the online employment site, received some benefit as well, Lee explained that his main goal was to help bolster San Francisco's recreation and parks budget, which received $3 million from the deal. He was less tolerant, however, of Monster.com's use of the word Monster in its own name, although the two companies came to an accommodation. Lee's attorneys also filed trademark infringement suits across the country, taking on parties such as the Monster Garage television show produced by the Discovery Channel, and Walt Disney's movie, Monsters, Inc., as well as obscure business ventures. Settlements were reached with the major companies, while many of the small players were allowed to pass after the company made a public display of taking action, more a warning to larger companies than anything else.

Offering 4,000 products and recognized as the gold standard in an industry it essentially invented, Monster Cable was well positioned to enjoy continued growth. Ironically, some of that growth would be achieved through the introduction of new wireless products, which were becoming increasingly popular and, because of digital technology, more viable. The health of the company's founder, however, was not as robust. Lee suffered from degenerative nerve damage, which he said was the result of radiation exposure from his days involved in laser-fusion research. Lee was unable to walk very fast and relied a great deal on a small fleet of Segway Human Transporters to move around his 700,000-square-foot headquarters and manufacturing facility.

Principal Divisions: Monster Power; Monster PowerCells; Monster Game; Monster Mobile; Monster Car Audio; Monster Photo; Monster Computer; Monster THX Products.

Principal Competitors: Belden Wire and Cable Company; Cobalt Cable; JPS Labs LLC; Liberty Wire & Cable, Inc.

Chronology

• Key Dates:
• 1978: Noel Lee founds the company.
• 1980: The company offers its second product.
• 1987: The company enters the mass market.
• 1994: The M4 Dealer Success Program is formalized.
• 1998: A new headquarters and manufacturing facility opens.
• 2001: The Monster Mobile division is launched.
• 2003: Monster Photo products are offered.