August 23, 2006

How I Did It: Jeff Grady, President, Digital Lifestyle Outfitters

Patrick J. Sauer  /  Inc. Magazine

2006 Inc 500 Ranking #3

In 2001, divorced, unemployed, and with few good prospects for the future, Jeff Grady made what seemed like a self-indulgent purchase: He spent $399 on a new gadget called the iPod. He loved the device and wanted to protect it with a case. When he learned none were available, Grady made his own. It turns out other iPod fans wanted one, too, and Grady started a company–Digital Lifestyle Outfitters–to meet that demand.

Smart move: The company sold $84 million worth of cases, boom boxes, and other iPod accessories last year.

"I started a company that sold licensed and logoed college athletic wear and sold it to Total Sports, where I went to work. I was 28 and I was going to be rich. Two years later, I was a dot-com casualty. During the five months I was unemployed, I would wake up, load songs onto my MP3 player, work out at the gym, and then look for a job.

I was close to being completely tapped out, but I went ahead and bought one of the first iPods ever produced. I designed a case and figured that I could get these made and sell them. I understood markets from my e-commerce days of producing NCAA Final Four T-shirts and the like. I called a buyer of Apple accessories to inquire about making cases and the person wasn't even familiar with the iPod. Ten minutes later, I got a call back with an order for 2,000 cases, sight unseen.

I had zero product. At that point, the only case I'd made was my own. I started a website and within one month had 3,000 more orders. A few months in, a guy e-mailed me from Taiwan in need of a case. He told me he had a factory and could make them if need be. I said if you can deliver 5,000 pieces in two weeks, the business is yours. Five years later, he's still one of our sourcing partners.

We essentially invented the space of iPod accessories and were the first to market with a case, a boom box, a docking station, and systems to play it through your car or television. We also have products for cell phones and other players. We have over 100 different products and plan to introduce 20 to 30 a year.

Speed is extremely important. There's a big difference between being a leader and being a copycat. Being the first to market gives us the chance to test our product, see what works and what needs tweaking. Sometimes we have up to a year before the competition puts out a similar item, which means we are already on to a more sophisticated offering by then. We want to be constantly killing off our products.

I am generally a hands-off manager, but I have my soapbox issues. One of the big ones is that our brand is everything, so we have to keep establishing it. We don't have an elevator pitch, we have a three-word pitch–Digital Lifestyle Outfitters. We aren't Nike, where we can just put a Swoosh on everything. We need to keep stressing our name and our logo until everyone knows it. Then we can drop the name and just be a logo.

I am remarried with a two-year-old daughter. We moved DLO from Durham, North Carolina, to Charleston, South Carolina, because I wanted my people to feel like it was a vacation after every workday. It's a waterfront community that's driven by a desire for leisure activity. Our lifestyles are better down here, meaning I get in a lot of boating and golfing.

On my iPod? Here's a random shuffle: "Red Morning Light" by Kings of Leon, "Bowlegged Woman" by Widespread Panic, "Galang" by M.I.A., and "What If" by Coldplay.