It’s almost unanimously referred to as “a sad tale”: the one about how audio cable company Monster helped build Beats, then got cut from a deal that eventually made Dr Dre and Jimmy Iovine billionaires.
Kevin Lee was an executive at Monster, the company built by his father Noel.
It was a young Kevin who was sent to Los Angeles in 2006 to broker the meeting where Dre first tried Lee’s headphones, drawing the famous response from Dre, “That’s the s..t!”
It was also a young Kevin who hurriedly drew up a complicated contract with Dre and Interscope chairman Iovine, reportedly in a panic because he’d already spent millions developing and producing the first line of Beats without his dad’s permission, and wanted to break the news to him with a deal in his hand.
That contract saw everything Monster developed signed over to Beats. A couple of years later, Beats sold 50.1% of its stake to HTC, which cut Monster out of production and Beats bought it back over the next two years.
Last year, Apple bought the lot for $US3 billion in a cash and stock deal. Monster struggles to get recognition for its part in building the legend. (There’s a court case going on in the hope to rectify that.)
So if he’d been a little older or a little wiser, would Kevin Lee now be up some tens of millions of dollars?
The way Lee sees it, it’s not so much a question of what he missed out on. It’s a question of what he would have missed out on had he made a better deal.
“You know what, I grew up in the family business so I’m passionate with my dad about building new businesses and about bringing great sound experiences out of products, so I had no focus other than helping my dad achieve those goals,” he told Business Insider while on his first trip to Australia. “Going into headphones was just a natural evolution for us to do that.
“But you know, Monster’s my father’s company, and I had the honour of developing a relationship and doing the deal with Jimmy and Dre and working with a very small Monster team to drive all the strategy and product execution around Beats for the first three years and (as far as) my role around that… Beats is Jimmy’s company.
“So Jimmy’s got his company, my father’s got his company in Monster and I wanted a chance to do something on my own.”
Maybe it would have been a different response had Lee simply been left in the cold after ending his relationship with Beats, but that was never likely to be the case. A “can-do” attitude is in Lee’s genes. His dad made a career out of unorthodox decisions and getting on with life.
In 1974, Noel Lee quit a job as a fusion design engineer at California’s Lawrence Livermore National Laboratory to pursue his dream of playing drums for a rock ‘n’ roll band.
When his band’s first tour flopped, leaving his family stranded in Hawaii, it took Noel 18 months to earn enough cash gigging to get back home to San Francisco, where he immediately began building his own cables. He was convinced sound quality could be improved with better audio cables.
Working out of out of a garage in California in the 70s, he hand-built the first “Monster” cables on a ping-pong table and sold them door-to-door.
Noel Lee was so confident in his own product, he saved and spent $50,000 in 1979 to show off his cables at the Consumer Electronics Show in Chicago, then had to take out a $250,000 loan to pay for manufacturing the single order of 30,000 cables he received. These days, his company ships some 6000 different products.
He’s worth a reported $100m and gets around on a chrome-plated Segway, because even the toxic levels of radiation he was exposed to at Lawrence Livermore can’t stop Noel Lee.
So it’s not surprising that well before the Beats deal was inked with Apple, his son Kevin had already established his own next big thing.
He now owns his own headphone company, Sol Republic, and it’s making waves. In four years, Lee’s added 100 employees and $US56 million ($73 million) to Sol Republic’s sheet across three rounds of funding by distinguishing itself from Beats with an aim of releasing high quality equipment at low prices.
“Luckily with the original Monster team that all quit … after we launched Beats we had a chance to do it all again, do our own business,” Lee says.
The latest product is the Shadow Wireless set, which will soon retail in Australia for under $200. Lee’s a huge advocate of wireless technology, and says his company has worked tirelessly to bring big sound to lightweight headsets.
“We’re pretty happy that we have a chance to make our own mark,” he says. “And we’re also truly happy that the consumers have identified that they’re definitely looking forward to having good sound and style at affordable prices.”
So, no regrets. There’s only ever been one direction for both Lees.
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