Pumping up volume: fast-growing digital music company M-Audio attempts to broaden its reach in manufacturing products for home and professional recording studios.

To call the work environment at M-Audio casual is an understatement. Shorts and T-shirts are the norm, and, taking a cue from the boss, shoes apparently are optional. But inside the cluster of low-slung buildings that serve as headquarters for the Arcadia digital music company, behind the dreadlocks, tattoos and eclectically decorated workstations, is a business that's managed to nearly double its size for three years running.

And in the past year alone, M-Audio, which makes computer sound cards and a broad range of hardware and software for home and professional recording studios, has increased its workforce to 140 from 80.

Tim Ryan, a California Institute of Technology graduate who literally started M-Audio Out of his garage in 1989, said a new product line consisting of speakers, microphones and other accessories geared toward a higher-end market will lift revenues to $44 million this year from $24 million in 2001.

That type of growth is bringing challenges unlike Ryan has experienced in his management career -- including making M-Audio a possible target for a buyout. But Ryan, 46, who owns the company along with a partner, says he has no plans to give up the reins.

Humble beginnings 

M-Audio, which serves as its own distributor and has offices in Europe and Asia, markets products nationally through BestBuy, Fry's Electronics, Circuit City and Guitar Center. A strong performance last year earned Ryan, who launched the company 14 years ago, a 2002 Ernst & Young Entrepreneur of the Year Award in the media/entertainment category.

"There's been a blurring of what is professional and what is hobbyist. These tools have become available to everyone," said George Petersen, editorial director of audio magazine Mix. "(M-Audio) has done a great job serving both the professionals and the hobbyists."

Strong customer support in what can be a complex technical environment has been hallmark of M-Audio's business strategy, with Ryan himself estimating that he answers up to 600 e-mails a day.

That's a far cry when he started the company with $28,000 and one assistant.

"I learned how to be a businessman when that $28,000 ran out," said Ryan, who previously was involved in starting a digital synthesizer manufacturer and a software developer that are no longer in business.

MusicSoft, as M-Audio was called in the late 1980s, developed software for mixing music on PCs -- only Ryan's timing was bad given that a major shakeout would leave a few dominant players in the industry.

"We were too late. When I realized it was dead, I pivoted 90 degrees to a hardware company," he said.

Ryan began working with Music Instrument Digital Interface, or MIDI, in which various instruments are able to interact and, in effect, play with one another. In 1991, the company changed its name to Midiman and its first product was a MIDI converter that changed the sound of an instrument a musician was playing into a digital format. "It was very popular, but it was a bit of a flash in the pan," said Ryan.

By 1997, Midiman was making a variety of low-cost accessories like MIDI controllers, sound cards, monitors and mixing consoles and was riding the burgeoning home recording market to become among the largest manufacturers of MIDI products in the world.

Then, as now, the company manufactured its products in Taiwan and shipped them to the United States.

"Until a year ago, computer sound cards remained M-Audio's biggest selling product," Ryan said. "The company sells about 100,000 of the cards, which retail for between $200 and $1,000, each year."

Into hardware

About 18 months ago, M-Audio switched gears again. Through partnerships with established manufacturers, the company distributes professional level microphones, speakers and monitors, some of which are sold under the M-Audio brand name and some not. It's through those partnerships, most notably with microphone maker Groove Tubes, that Ryan sees the potential for growth.

But he also recognizes the pitfalls.

"We've got some very substantial bites that could basically double our growth in the next six to eight months. I don't know how to support that," Ryan said. "I'm not a financial guy, that's not my forte. I need to find people who can take us from $50 million to $300 million (in annual revenues) in three years."

M-Audio is taking on entrenched competitors like JBL in the studio monitor market, and more than a dozen companies, including AKG Acoustics, Electro-Voice and Shure Inc., with its line of microphones.

Ryan, who owns M-Audio with the company's lawyer, Tom Turner, said he has been talking to several venture capitalists about a deal to help fund the next stage of growth. He says he wouldn't be averse to taking the company public, but has spurned outright buyout offers from investors.

RELATED ARTICLE: PROFILE

M-Audio

Year Founded: 1989

Care Business: Manufacturer of digital audio recording and playback products

Revenues in 2001: $24 million

Revenues in 2002: $44 million (projected)

Employees in 2001: 80

Employees in 2002: 140

Goals: To become a $1 billion company.

Driving Force: The demand for top-quality digital audio equipment for the professional musician or hobbyist