Five years ago, Singaporean entrepreneur Ryan Lee was a 29-year-old with a maxed-out credit card, an office in his brother’s living room and a vision to make it big from something small. Today his brainchild, Xmi, has created a new genre of small speakers, turning this niche market into a global brand sold in stores in 80 countries.
While portable music players have been around since well before the Sony Walkman, the age of iPods and digital content on the go has spurred a growing demand for small speakers. Xmi developed the audio technology to deliver high-quality sound with pocket-size speakers and packaged them with built-in rechargeable batteries and an expandable base. No longer tethered to the nearest electrical outlet, people can use the speakers to play their favorite music at the beach, listen to podcasts in any room at home, or give laptop presentations an audio boost at work.
Xmi says it turned a profit in its first year—and every year since—and that last year it nearly doubled its revenue to $23.2 million. This year it says it expects sales to climb to $38.4 million, but it declines to give a profit forecast.
The backdrop to Lee’s success is a Singapore that’s reinventing itself. After decades of building its manufacturing sector, which created a demand for risk-averse workers who spent long hours on an assembly line in return for a steady paycheck, the country has focussed on becoming more innovative. Over the past 15 years the government has worked to remake the country into an entrepreneurial hub—encouraging critical thinking in schools, cutting red tape for businesses and offering aid to start-ups. The number of new businesses registered each year in Singapore grew 48 percent over a decade, to 53,700 in 2010, according to the Accounting & Corporate Regulatory Authority.
Lee’s story began as a child growing up with a large world map on his living room wall. “Every time we walked past it, my dad would say, ‘This is us … this is the world. Don’t ever let your dreams be limited to our shores.’” So he went to Australia, getting a BA in economics and finance from RMIT University and earning a master’s in economics from Melbourne’s Monash University in 2002. He then worked as a business development manager at the Singapore research firm that created Zircon, one of the first Palm-based PDA smartphones, before spending a year in Mongolia with an electronics-distribution firm.
It was after Lee returned again to Singapore, as a regional manager for Qool Labs, a Singaporean maker of digital technology products, that the idea for X-mini speakers was born. He launched Xmi in 2006, using his savings and borrowing nearly $20,000 from his brother, Reuben, who had been working as a private equity lawyer in London and had just moved back to Singapore. Headquarters was Reuben’s three-bedroom condominium close to downtown.
Ryan created a prototype, then used his credit card to hire staff in sales and design. He quickly knew he had a winner, receiving so much positive feedback from inside the industry that he was confident his speakers would sell.
He then made the critical decision not to launch the X-mini in Singapore and instead sold the speakers in Western Europe through distribution channels he secured largely through contacts in the electronics business. “We knew we needed to manufacture in huge quantities,” says Lee. “The company wouldn’t survive as a business if it had to depend on Singapore’s small consumer population.”
In its first year Xmi recouped the initial investment and generated a $550,000 profit. Then it began selling globally, including in Singapore, which now accounts for 5 percent of its revenue. The country’s advantages, such as its mix of cultures and languages, helped Xmi establish global sales networks and bridge the cultural gap in dealing with suppliers in China, says Lee.
(This story appears in the 17 February, 2012 issue of Forbes India. To visit our Archives, click here.)