Speaker developers grow fond of their hi-fi design

Offers from venture capitalists to buy the company were turned down when Slab's founders realised their technology was worth fighting for, reports YOKE HAR LEE.

Slab Technology showed its prototype flat panel speakers at the Comdex computer show last year and took the world by surprise - a classic case of a small, unknown New Zealand company with a technological edge so sharp the world cannot ignore it.

Soon after the Comdex trade fair at Las Vegas, there were several offers from venture capitalists wanting to buy the company.

But its founders chose to go ahead alone.

Slab was founded by long-time audiophile Graeme Jones, audio business owner Kelly Waterman and Christopher Lock, who comes from a marketing background with Phillips Electronics. Mr Lock is now chief executive for New Lynn-based Slab.

John Corey came in later, bringing in scientific and engineering input and strategic planning.

Mr Jones and Mr Waterman had been separately involved in searching for the perfect sound system. While Mr Jones had worked on developments in electrodynamics systems (working on low voltage and standard amplifiers), Mr Waterman was interested in using electrostatic systems (using high voltage to move a thin diaphragm producing the sounds).

Several things were clear to the three men - the world would be looking for sleeker-looking, hence flatter, speakers without sacrificing sound quality.

"We started out searching for the perfect hi-fi system dedicated to panel speakers as opposed to box speakers," Mr Jones said.

Mr Lock said: "Graeme's dream is to ultimately be able to produce speaker grills rather than big speaker boxes. But we had to switch to multimedia applications once we started getting noticed."

Mr Jones' quest led him to a novel application of a new material. The application of this material is currently being patented, together with other materials the company has used as part of its research.

Slab's speakers can be "shaped". Hence they are flexible and come in various sizes. They do not need to "breathe", so can be hidden.

Meanwhile, Mr Waterman's company, Axent Audio, had dipped into the GRIF (Graduates In Industry Fellowships, run by Technology New Zealand) scheme using student Simon Weston to develop electrostatic speakers which have so far proven to be an expensive technology.

Mr Weston's research is being extended to help Slab with its product development for a wide range of applications based on flat panel speakers.

Within less than six months, Slab's flat panel speakers will be produced under licence for major companies. Its first licensee is Taiwan's AGC Technology.

Slab's name was coined by Mr Jones as a shortened form of Sound Laboratory. Its contact with the Taiwanese multimedia start-up company, which has contacts worldwide, led to Slab focusing first on multimedia applications, although that was not originally planned.

"Because of the interest, we had to decide to turn into a real operation with a view to finding manufacturers and markets," Mr Lock said.

The company is now positioning itself to be a global designer of panel speaker systems for multimedia and other audio applications.

What surprised Slab's founders was how much interest the speakers drew at Comdex from representatives of Microsoft, IBM, Boston Acoustics and Klipsch, among other global players.

One the most beneficial things the company has done, Mr Lock said, was to work with the company's patent attorneys Pipers to protect its intellectual knowledge.

"It was one of the hardest things we have had to cope with, but without it we would have been doomed. Our customers, especially major companies, are concerned about it. Some won't go for the product until the patents get through to ensure their products are protected."

The company is going through a fast development phase. If all goes according to its business plan, it will need to raise $5 million for the next two years' development.

The distraction of developing the company and putting a price on it for interested venture capitalists proved costly for its founders.

"We lost six months of development time because we thought we could continue doing what we were doing and hoped in the meantime to get an attractive price. We thought if we could sell it we could give something back to our families. That has destabilised the company," Mr Lock said.

The founders have since become more attached to their product. "Our mindset has changed a bit - the interest in our technology has given us the confidence to say this is worth fighting for ourselves. We have learnt in the last month other ways which we can structure the company to do things," Mr Lock said.

Mr Jones said: "Technically we are up to scratch, but the financial side of things has to catch up with the technical development."

Currently, the strategy is to position its technology for global blue chip names through licensing. This will be focused on various technology groups.

Mr Waterman said Slab also wanted to retain all licensing of sales and royalties as well as skunk work (basic research) in New Zealand, reflecting its commitment to keep control of the intellectual base.