[Photo: Mr Ryan Lee, founder and CEO of local electronics firm XMI, with his three-year-old company's flagship product: X-mini portable speakers which can be linked together to create a stereo boom box. XMI raked in almost $5 million in revenue last year thanks to the popularity of the speakers.]

By Francis Chan

THE master plan was to become an investment banker, but events in the form of the dot.com bust and the Sars outbreak put paid to that dream. Enter plan B - an electronics start-up.

Not the most obvious leap, but one that self-confessed tech geek Ryan Lee, 32, was more than keen to try after a few years of honing his skills.

Mr Lee eventually formed XMI in August 2006, which raked in almost $5 million in revenue last year thanks to its hugely popular X-mini portable speakers.

The tiny speakers, or what techies refer to as capsule speakers, are each about the size of a dumpling. They can be plugged into a wealth of gadgets, including music players like iPods, laptops and even mobile phones.

The X-mini proved an instant sensation when it hit stores in 2007. Revenue was around $800,000 that year, allowing XMI to recoup all its start-up expenses within two months of the product's launch.

Mr Lee had founded XMI with just $30,000, but the finance graduate, who also holds a master's degree in economics, hit the ground running and was able to get the firm fully operational by January 2007.

'It wasn't like I founded XMI with $1 million. I started the company with almost nothing,' said Mr Lee, who is also XMI's CEO.

'I used my own savings and of course (got by) with the help of my Amex credit card. I was using Amex to pay my staff during the initial nine months when we were still making the product.'

While much of XMI's huge success is due to a new generation of tech-friendly consumers snapping up clever gadgets, Mr Lee also credits the experiences he gained working for multinational technology firms.

'Markets were soft when I came back from Melbourne in 2001 and 2002,' said Mr Lee, a graduate of the Royal Melbourne Institute of Technology and Monash University.

'But I had an offer from a friend to work in a company that was doing R&D for PDA, or personal digital assistant, phones, and that was how I got into this trade.'

Mr Lee said his affinity with technological innovations meant he felt right at home in the field of research and development.

'I've loved gadgets since I was 12 years old, so I thought it was great to be able to work in a company which manufactured PDA phones,' he added.

Mr Lee clocked stints at blue-chip technology firms like Zircon and Sony before deciding in 2006 to go out on his own, simply because he wanted to have a go at creating his own product.

But his leap into the unknown came with some pretty solid guidelines on how to make a strong product innovation commercially viable.

'Now you can have the greatest product ever, but if no one wants to use it or if the price point is so high that no one wants to buy it, then it's a weak product because it doesn't bring benefit to consumers on a larger scale,' he said.

Mr Lee said a sense of pragmatism was needed to ensure that his new product, whatever it turned out to be, would be accepted by the mass market.

'I could have done PDA phones because I still love them, but we had to be realistic and start something where there were not too many big players and which still had a substantial market share for us to bite a little piece off,' said Mr Lee.

'We had to get into a certain genre of product, get a grip on our own niche and not worry about the bigger players.'

Mr Lee said he turned to portable speakers because he saw a void in that particular market segment, where larger players like JBL and Altec Lansing did not have a presence.

'The universal nature of the X-mini means it can fit just about anything...There are over a billion electronic products being used across the world that you could attach an X-mini to and get better sound,' he said.

The first two years were primarily a journey of constant 're-investment' into the company's sales channels, branding and product development.

But the X-mini has since become a global phenomenon, selling in 45 countries across the Americas, Europe, the Middle East, Africa and the Asia-Pacific region.

The speakers - which are manufactured in China and retail for less than $50 each - are also sold in-flight to passengers of over 30 airlines.

'There is an evident need for good portable speakers, especially when there has been a growing trend of portable multimedia devices over the past 10 years,' said Mr Lee.

He said that the decision of big brands to hold back on new product launches and reduce marketing amid the downturn will help create a level playing field for smaller, innovative firms. Product design will continue to be XMI's way to stay competitive.

'The difficult part of this is that whatever money we make, we need to throw it all back into the company, to keep building up the fundamentals of the business,' said Mr Lee.

'And of course, if we get less money, everything we do carries more risks.'

XMI, which employs 14 people here, mainly in sales and product development, will introduce at least five new models this year.

And despite the downturn, Mr Lee remains upbeat about prospects, forecasting revenue of $12 million for this year.

'We didn't expect the company to grow this fast but we're still more conservative with our forecast for this year. Before the crisis, we were actually targeting $17 million for 2009,' he said.

Mr Lee expects a further jump in revenue by the end of the second quarter, when the new generation speakers are launched.

This article was first published in The Straits Times.