This story is part oral history and part business startup tutorial on how to revive once-mothballed audio brands using only U.S.-based design, engineering, labor, technology, and materials. More specifically, it’s about audio industry veterans, Rick Santiago and Ted Moore, who purchased the rights to two brands from their former employer with a vision of taking them into the 21st century.
Santiago and Moore co-founded Indy Audio Labs in 2008, shortly after leaving Indianapolis-based Klipsch. Santiago and Moore said they saw the gaps in the audio/video hardware offerings of that time, which if done right, could allow their designs to “leapfrog” existing brands by embedding remote connectivity features, modern design architecture, and improvements in silicon that enable amplifier designs to perform better. The problem, however, would have been a lack of brand recognition for their creations, if they started from scratch.
“There was no real KickStarter back when we started,” Santiago said.
But the burgeoning business partners remembered that Klipsch still owned the Aragon and Acurus brands, but really wasn’t doing much with them.
“We thought that if we could get those brands, then we could re-invigorate them with new products and new technology paradigms,” Santiago said. “We’d have name recognition to at least allow us a conversation starter with folks in the industry that knew these brands.”
So about a year after founding their company, Santiago and Moore purchased the Acurus and Aragon brands from Klipsch, in the hopes that the respected amplifier brands could give them the jumpstart they needed.
“At least now, if you come out with viable products that are true to the brands’ values of good amplification, low noise, and low distortion, then you can add your secret sauce to them, you’ve got a compelling story to tell dealers,” Santiago said.
Wanting to embrace the history of the brands and designs as much as possible, the business partners talked to the audio engineer who designed 90 percent of the existing Acurus and Aragon gear, and then “got in under the hood” to learn even more. They also contacted customers who owned the brands to get their feedback. This turned out to be an important step, because part of Klipsch’s sales agreement was a stipulation that Indy Audio Labs must assume all customer service on Acurus and Aragon purchased before the sale.
“Fortunately, our due diligence showed that the products were fundamentally reliable,” Santiago said. “Most customers just wanted an owner’s manual for a product that they were buying in the after-market channels.”
A secondary benefit of talking to legacy customers was the opportunity to learn why some products fail after 10 to 20 years.
“We took it as an opportunity to fix specific vulnerabilities to gain an extra five years out of a product,” Santiago said. “We had a laundry list of the aspects of the old product that were least robust, and we tried to address them. Then we were able to put a five-year warranty on the new products, with the expectation that we were going to go 10, 15, or 20 years, or as long or longer than the old ones.”
|Until they found Key Electronics in Jeffersonville, IN, Indy Audio Labs founders Ted Moore (left) and Rick Santiago (right) were a little discouraged in their search for U.S.-based manufacturing partners.
Moore acknowledged that the most difficult decision was building an amplifier before having an AV processor available for dealers. But the rationale was that it would be more feasible to resurrect and redesign an amplifier line with a strong reputation first, in the hopes that those sales would help fund development of the processor. The downside of this approach was that the company wouldn’t have a processor to help sell its amps, at first. But there was a side benefit, as well.
“In retrospect, with all of the churn with Dolby, DTS, and HDMI, what we could have come up with back then would have become quickly obsolete and had a very short life,” Moore said.
The company first introduced new amplifiers, including Aragon’s flagship 400W monoblock Iridium design, and the 8008 (mk III), a 200W-perchannel dual monoblock amplifier using the same no-compromise, high-value approach perfected by original owner Mondial Designs, in the mid-1980s. The company also launched the Acurus A2000 amplifier series as a more value-priced offering, the Acurus Aries 2.1 integrated amp, and Acurus Scorpion multi-zone amp. Sales of those amplifiers, in turn, helped finance production of the company’s latest release, the ACT 4 home theater processor.
“What we have now with the ACT 4 is that it incorporates Atmos and DTS-X and our expression of it, which is really unlike anybody else’s. It’s really excellent timing, and we’ll get a fairly long life out of those products, and finally the companion piece for our amps.”
Featuring Dolby Atmos and DTS:X, a color touch-sensitive front display, and remote connectivity, the ACT 4 was designed without any baggage of a previous AV processor to hold it back.
To get the line built, Indy Audio Labs wanted to avoid overseas manufacturing, wary of the growing costs and competitive threats associated with that approach.
“We were a little discouraged initially in our search for partners, and were kind of wondering what we were going to do,” Moore said. “Then one of our former colleagues at Klipsch told us about Key Electronics in Jeffersonville, IN, so we drove down there. Their factory was immaculate and unlike anything we’d seen at that time. They already provided circuit board assembly for medical-and military-grade equipment clients, so it was clear that they knew what they were doing.”
The next step was giving them a project to quote. Key quickly came back with a price that was comparable to a price that the partners had already been quoted by a Chinese company.
Santiago explained that efficiency was what helped Key remain price competitive. “It’s the material, the labor, and the overhead (‘burden’) that directly reflects the efficiency of the operation,” he noted. “Key is very efficient.”
|The circuit boards are made by machines or by soldered by hand at Key Electronics, and this enclosure contains finished goods for the company.
The search for U.S. partners didn’t stop there, however. Indy Audio Labs also had to research metal fabrication companies, electronics parts suppliers, metal powder coating suppliers, and anodization providers, that could supply products at fair prices and with updated machinery to help keep their efficiency high.
It wasn’t easy and some companies that the partners met with didn’t survive the Great Recession. But, as a result of their research, Moore and Santiago connected with an Indianapolis-based company called IMC, which had recently reinvested in equipment and resources for efficient manufacturing, and Indy Metal Finishing, which anodizes all of the company’s aluminum in a Brownsburg, IN, facility where they also work with race car parts.
Not to minimize the roles of those last two companies, it’s really the partnership with Key that has been most essential to Indy Audio Labs. That relationship allows Santiago and Moore to handle all engineering, design, marketing, and production of prototypes, with Key handling all pilot runs and production, eventually shipping all finished products out of its facility.
“I think we are a little tighter coupled with manufacturing than most companies in our industry,” Moore said.
Santiago noted that proximity makes that relationship easier, as well. “We’re down there typically once a week when we’re launching a product,” he said, “and we have people building our products that close the loop in terms of product improvements. We get feedback from our manufacturers, where we can ask them about different wiring or board placement that is very useful. We also own our own test equipment, and those tests are part of our intellectual property. How we run through tests, how we match transistors for discrete amplifiers and things like that, is all part of our secret sauce.”
The software that Indy Audio Labs writes for its products is delivered to Key as a file that gets loaded directly onto a chip. And because Key has such vast capabilities for creating circuit boards, those don’t have to be outsourced, either.
“We can fabricate our own boards for just about anything and don’t have to finger point at a supplier for giving us a bad board,” Moore said.
And the ACT 4, which returns to CEDIA this year as a shipping product, was designed in a way that allows Santiago and Moore to keep up with changes that they foresee on the horizon.
“We should be good for a while,” Moore said, “but you have to be ready to move quickly when new technology comes along. You can take a small engineering team and make things happen a lot quicker than other companies with a large bureaucracy. The same is true with us on the manufacturing side. I think we’ve surprised a few folks.”
Jeremy Glowacki is editorial director for Residential Systems.