Restless retiree rebuilds storied speaker brand

Dave Kelley was on the golf course when he decided to go back to work.

Only a few months into retirement and a self-proclaimed terrible golfer (he’s a 28 handicap at Harbour Trees Golf Club in Noblesville), the 54-year-old Kelley knew he still had something to give to the speaker industry.

The Noblesville man spent more than 20 years working for Indianapolis-based speaker-maker Klipsch Group before retiring in 2015. Before that, he worked for Michigan-based Highland Superstores, selling audio equipment and appliances.

He was on the 13th hole, surrounded by older men who were much better golfers, and he wondered how he was going to spend his free time. He certainly wasn’t passionate about golf—he’d had a membership for years and managed to go only a handful of times a year—so he decided he was going to look for a company to buy, specifically in the audio industry.

After several months and much negotiating, Kelley purchased the KLH brand (the company is privately held, and Kelley declined to disclose details of the sale) on Jan. 3, 2017. He renamed the company KLH Audio and moved its headquarters from the East Coast to downtown Noblesville.

It was just the latest ownership change for the once-dominant manufacturer.

KLH Research and Development Corp. was founded in 1957 by Henry Kloss, Malcolm S. Low and Josef Anton Hofmann and eventually became the largest loudspeaker maker in the world. At its height, it employed more than 500 people and shipped more than 30,000 speakers a year to retailers and distributors throughout six continents, according to a history posted to KLH Audio’s website.

But after changing hands (and names) several times, the company’s production and reputation waned. KLH hadn’t developed any new products since 2004 and was essentially dormant, Kelley said. He purchased the company in hopes he’d be able to again make it one of the world’s top loudspeaker manufacturers.

In a little less than two years, the company has grown to 11 team members who combined have more than 200 years of experience in the speaker industry and have developed more than a dozen new products. (Kelley declined to disclose information regarding sales and revenue.)

Kloss, who was named to the Consumer Electronics Association’s Hall of Fame before his death in 2002, founded the company to design and engineer high-performance but affordable loudspeakers for the masses. That’s what Kelley hopes to continue.

“I’ve been in the business all of my life,” he said. “I love audio. I have a passion for it, but I think it transports all of us. It reminds us of places and times and experiences in our lives that we otherwise might forget.”

Storied history

In the early 1950s, Kloss and engineer Edgar Villchur teamed up to make the first acoustic suspension loudspeaker, called the AR-1, Kelley said.

From there, Low and Hofmann helped finance Kloss to launch KLH Research and Development in Cambridge, Massachusetts, with less than $3,000, Kelley said.

There, Kloss built the KLH Model 5 and Model 6 loudspeakers and designed the Model 8 FM radio, the first small high-selectivity radio (able to clearly zero in on and broadcast specific frequencies at a time bleed-over was a common frustration).

By the late 1950s, Kloss had partnered with engineer Arthur Janszen to design the first full-range electrostatic speaker, called the KLH Model 9, which is highly regarded among audiophiles.

Kloss sold KLH to the Singer Corp. in the early 1960s before going on to launch a handful of other audio companies.

“He was a trailblazer,” Kelley said. “There’s really no one quite like Henry Kloss in the history of our business.”

Kelley moved from Highland Superstore to Klipsch in the early 1990s. At the time, the company operated in Hope, Arkansas, and was relatively small. He took over the sales division, eventually growing the company from selling its products in 10 countries to 116, he said.

He was president of global sales when he left in October 2015 on good terms, he said.

When he purchased KLH, he started assembling a team of qualified and experienced employees. Leadership includes Vice President of Operations Jon Kerns, who has more than 20 years of analytics and operations experience working for companies like Klipsch, Anthem and Paradigm. Greg Topp is KLH’s vice president of sales and has spent 22 years in the audio industry. He worked with Kelley at Klipsch. George Harris, vice president of marketing, also spent part of his career at Klipsch.

Kelley anticipates he’ll continue growing the team, but he’s not yet sure by how many. With the personnel he has now, he can continue to scale, he said.

New products

While KLH now outsources its manufacturing, it designs and develops all aspects of its products, from the speaker parts to the cartons and manuals that ship with it, Kelley said. That design often starts with napkin sketches that evolve into building cardboard samples, he said.

By the end of May 2017, less than six months after finalizing the sale, KLH was shipping the first of its new products, Kelley said.

The team started with bookshelf and floor speakers. And that October at the CEDIA Expo—a premier industry event sponsored by the Custom Electronic Design & Installation Association—KLH launched a variety of in-wall and ceiling speakers and other products. Among them is a voice-enabled amplified key pad, called the VX-1, that retrofits a single-source home audio system to a wireless, multi-source streaming music system. It retails for $199 and can be voice-controlled through Amazon’s Alexa.

The company is also working to rebuild Kloss’ Model 9 speakers. KLH Audio will build 100 sets of the speaker that will be hand-built and sell for $25,000 each, Kelley said.

The new speakers are named after street names in and around the Massachusetts Institute of Technology campus, where Kloss was a student.

Kelley said he wanted to take KLH “back to its roots,” to fill a hole in the market for affordable, quality speakers.

“There are lots of loudspeakers; there are lots of expensive loudspeakers that look good and sound good,” he said. “There weren’t many speakers that were affordably priced that were high-performance … that have the build we have here. It just didn’t exist.”

KLH partners with six retailers (who sell both online and in brick-and-mortar stores), including Crutchfield, World Wide Stereo and Huppin’s.

In Indianapolis, Ovation Audio + Video sells the KLH line at its showroom on East 82nd Street. Owner Chris Cruzan said he first heard the speakers at the 2017 CEDIA Expo and was impressed.

Couple the sound with the team Kelley has assembled (and the fact that headquarters is in nearby Noblesville), and it was a no-brainer to sell KLH speakers, Cruzan said.

“They’re an exceptionally good-sounding speaker, extremely well built,” he said.

The speakers are selling well, he said, in part because they’re priced well. The brand’s flagship electrodynamic three-way, bass-reflex loudspeaker, for example, retails for $649, while its bookshelf loudspeaker sells for $479. And with a little marketing, Cruzan said, they’ll sell even better.

Other retailers have been equally wowed by the rebirthed brand.

“I’m hard to impress at this point in my career, but KLH is not just another speaker company,” Bob Cole, president, CEO and founder of Philadelphia-based World Wide Stereo, said in a media release about KLH’s relaunch.

“It’s got everything you’d expect of a mature, premium brand, but it’s brand new and I think it’s going to be a major player.”•