One of the fastest-growing privately held companies in Orange County can be traced back to a motorcycle mishap in an industrial park 43 years ago.
That’s when Barry Andrews’ bike broke down within sight of a budding entrepreneur named Pat Quilter, owner of the Quilter Sound Co.
Quilter was making amplifiers in a 400-square-foot shop in Costa Mesa.
Andrews was a cabinet maker with a busted two-wheeler.
They joined forces and added Andrews’ brother, John, to oversee the company’s finances.
QSC Audio Products LLC was born.
At first it ran on “youthful optimism and negative cash flow,” according to company lore.
Four decades later, QSC has reached $150 million in sales for the 12 months through June, a 43% increase from two years earlier.
The gain secured the No. 62 spot on the Business Journal’s list of fastest-growing private companies based here (see related stories, this page, 3, 6; Special Report, page 31; list starting on page 41).
QSC makes and markets a variety of professional audio products that range from digital signal processors to equipment for professional disc jockeys.
The Andrews and Quilter partnership got it this far. They announced plans to step away from day-to-day operations about a year ago, when they brought in Joe Pham as chief executive.
The owners, who remain on the board of directors of parent company QSC Holdings Inc., picked a top executive with local credentials.
• Headquarters: Costa Mesa
• Business: audio equipment
• Founded: 1968
• Annual revenue: $150 million
• Two-year increase: 43%
• Notable: No. 62 on this week’s Fastest-Growing Companies list
Paper Boy
Pham was a paper boy for the Orange County Register growing up. He went to University of California, Los Angeles, for bachelor’s and master’s degrees as well as a Ph.D. in electrical engineering.
He was with New York-based consulting firm McKinsey & Co., and came back to OC to become chief strategy and technology officer at QSC. Pham moved into the top job seven years later.
QSC employs about 350 people, an increase of 22% over the past two years, according to Chief Financial Officer Jatan Shah.
At its beginning, QSC stuck to amplifiers.
Then it jumped on a new trend.
“In the ’90s, the industry was changing, and a lot of the amps would get integrated into speakers,” Shah said.
QSC expanded its product line.
“It took the company a bit of time to make a full commitment to start the speaker business,” Shah said.
It eventually moved onto “powered” speakers, which come with built-in amplifiers.
“This is where a lot of success came,” Shah said.
Another chunk of revenue comes from permanent installation services for movie theaters, performance venues, churches and stadiums.
Theaters
The company counts theaters as a key market. It got its foot in the door in the 1980s, thanks to a joint venture with San Francisco-based Dolby Laboratories Inc. QSC provided amplifiers for Dolby’s processors.
Dolby initially put its brand on the amplifiers, but as QSC’s presence expanded, Dolby left QSC’s name on the products and marketed it separately.
QSC continued to build its brand on its own in the cinema industry over the decades.
It helped the company that more multiplex theaters sprang up, and other parts of the professional market shifted to digital audio technology.
“We had the product that met the needs of the specific area,” Shah said. “We only do professional audio, not consumer equipment.”
The tight focus on the professional market means the QSC brand isn’t a household name.
Right Places
But it’s well known in the right places, according to Pham.
“Companies have to be really clear on their strategies, where you compete and where you don’t,” Pham said. “If you play in the consumer business, you’d better be known. But we’re not too concerned about that.”
QSC competes with the professional divisions of companies such as Framingham, Mass.-based Bose Corp., a well-known name thanks to its consumer advertising.
It also goes up against as Stamford, Conn.-based Harman International Industries Inc.
“Their consumer division and automotive division—those are not the segments we compete with,” Shah said. “The pro business is where we compete.”
QSC has deep roots in Orange County. Not only were its founders born and raised here, but “we continue to be here because we have talent here,” Shah said. “We’ve got 350 people in the company, and most of them—320— are here.”
“Work hard, have fun,” describes the company atmosphere, Shah said. “A lot of people come in shorts. We work hard, but it’s quite the relaxed environment.”
Mostly Made Here
Most of QSC’s manufacturing takes place in an 81,000-square-foot facility in Costa Mesa, next to a 51,000-square-foot headquarters. The company has research and development teams here and in Colorado.
Some manufacturing is done in China through contractors who have been working with QSC for 10 to 15 years, according to the company. The company counts on a base of local suppliers for metal parts and wood.
The push for international business has recently gained traction.
“About eight years ago, the split (for sales) was 75% U.S. and 25% international,” Shah said. “Today, we are 55% and 45%.”
QSC opened an office in Hong Kong last year, QSC Asia Ltd., to act as a “hub for Asia.”
It also is holding workshops here to create a global mindset within the company.
