Local technology company an Apple iPod superstar
Feb. 1, 2005Charleston Regional Business Journal
By Sarah G. McC. Moise
Jeff Grady, president and CEO of Digital Lifestyle Outfitters located on King Street in Charleston, is a leading designer and manufacturer of iPod accessories. From cases to sound systems, DLO’s products can be found and purchased at more than 1,000 major retail locations online and worldwide.
Demand for Apple’s iPod digital music player translates into a demand for DLO’s products. After all, Apple sold 4.5 million iPods in the 2004 holiday quarter, and profits for the three months leading up to Dec. 25, 2004, were $295 million, up from $63 million in the same period in 2003.
Jeff Grady started DLO three years ago, out of his home in Durham, N.C. Unemployed in 2001 after the dotcom bust, Grady found a way to capitalize on his one disappointment with Apple’s great new toy. “It’s such a portable product, you need to wear it. But the first iPod didn’t come with a case, just ear buds and a connecting cable.”
Grady hired Case Logic, a manufacturer of CD cases, to make a prototype neoprene iPod case. But after launching his e-commerce Web site, www.everythingipod.com, Grady found that supply couldn’t keep up with demand. “I watched them struggle with getting the product right and realized I was behind the 8-ball,” he says.
While outfitting his own iPod, a factory owner in Taiwan found DLO’s Web site and solicited the company about making a similar product. “I had never done business overseas before, but I said if he could show me a similar product with faster turnaround on orders, I would use his factory,” says Grady.
Two days later, the factory owner e-mailed pictures of perfect cases he was able to make in a matter of days.
With more than 125,000 iPods sold in Apple’s first two months of sales, DLO’s market was on fire. Online retailer MacWarehouse began buying the neoprene cases to include with iPod purchases in order to gain a competitive advantage.
DLO added 12 new products sourced from Asia, including car chargers, connection kits and leather cases. It also began reselling accessories from other retailers.
“I was building the go-to Web site for iPod accessories, and big retailers started coming to me instead of buying from 10 different vendors,” Grady says. In April 2002, CompUSA was Grady’s first major retail account. He did $1 million in business with them the first year, putting 12 products in every one of CompUSA’s 250-plus stores.
After patenting his flagship product, the TransPodFM, an iPod car deck with FM transmitter and charger, Apple and Best Buy signed on, boosting sales to $4 million for the 2003 fiscal year. Taking the new company seriously, Apple began working with DLO for product testing and development. Now in its third generation, DLO has sold more than 250,000 TransPods and has 30 different products and 50 variations sold in almost every big box and computer retailer store.
Grady’s latest invention, the iBoom, is the first and only boombox designed for iPod and iPod mini. “We’ve sold 15,000 to 20,000 iBooms since it debuted in November, and response was incredible,” says Grady, who expects to sell more than 100,000 units this year.
The iBoom has put DLO on the cover of MacWorld and the company also has been featured in Wired magazine and the Wall Street Journal. iBoom’s fourth quarter sales made up 40% to 50% of DLO’s business last year.
iBoom is the only one of its kind on the market, and Grady attributes its success to both timing and necessity. And it is the only truly portable speaker system for iPod. Other systems have small watt speakers meant for indoor use, but the lightweight, battery-powered iBoom can be carried between barbecues and the beach, and it comes with FM radio.
In 2004, Grady decided to keep his 35-employee warehouse in Durham, but wanted to move his executive office. He chose Charleston over Austin, Texas, and Wilmington, N.C., for its proximity to the water and its devoted efforts to lure knowledge based companies.
“Jeff Grady is a real entrepreneur,” says Ernest Andrade, director of the Charleston Digital Corridor. With Andrade’s help, Grady found a new office on the peninsula in a matter of days and was able to briefly use the corridor’s “touchdown space” during the move. DLO is expected to be featured in the March issue of Entrepreneur magazine, focusing on the company’s relocation to Charleston and the assistance it received from the Digital Corridor.
Having picked Grady to be a board member for the Digital Corridor, Andrade says, “Jeff comes with a lot of value. In addition to moving his company to Charleston, he gives first-hand experience of knowledge-based companies in North Carolina. And with the high growth of his company and dealings with Apple, he’s able to provide us his perspective with the industry moving forward.”
Grady says that while Apple has brought DLO big business, it’s definitely not serious business. “We all love playing with this stuff. You have to be passionate about it, and it’s always fun to come in to work where you get to create new toys.”
What’s next for DLO?
Digital Lifestyle Outfitters saw a 500% growth from 2003 to 2004. So what’s next for the company?
“We have a whole new line of accessories for the new iPod shuffle,” says Jeff Grady, DLO’s president and CEO. “Apple just announced it at the Macworld Expo in mid-January. It’s going to be hot.”
Smaller and lighter than a pack of gum, the smallest version of the iPod will have 512 megabytes of storage and cost $99. A one-gigabyte version, which holds 240 songs, will sell for $149.
“It’s a different paradigm in digital music,” explains Grady. “There’s no display; it’s super light, super small. It’s a different price point for iPods, $99 compared to $250 for the cheapest version of iPod Mini.”
Apple has been hinting and fueling the rumors of its new product for months, and Grady and his team, including the new vice president of marketing and design, Andrew Green, (formerly of Griffin Technology, a large computer accessories retailer) have been in the war room thinking of ways consumers will use the new iPod shuffle.
While he’s not ready to reveal his new products, Grady says, “We’re months ahead of most accessories retailers. We’re well past idea generation, we’re already in the prototype and testing process.”