In 2007, after work one day, the couple built their first pair of SleepPhones on their kitchen table. Wolfe soldered a pair of speakers and Lai sewed them into a stretchy headband. Their invention was a success and Lai began to share it with patients who struggled to sleep.
For the first five years, SleepPhones was a hobby that the pair pursued in addition to their day jobs. After selling out of their homemade stock in just a few months, they saw a potential full-time business opportunity. The couple began to hire employees to help manage demand.
Headquartered in Erie, Pennsylvania, SleepPhones is an example of how a small business can be truly global in the digital age from sales to partnerships to suppliers.
On the manufacturing side, Sleep- Phones maintains control over their end products with the help of 20 full- time and 5 part-time employees who support a global supply chain of components, plastics and packaging from Erie to Asia.
“We are trying to make the best product in the world, we are going to be sourcing from the best places in the world to find what we need,” Lai explained, though her company sources hyper-local whenever possible. “Plastic manufacturing is one of the largest industries in Erie, and we source package and printed material less than a mile down the road,” said Lai.
SleepPhones has shipped products to customers in over 80 countries worldwide with the UK, Canada and Australia leading the way. “It’s ridiculously easy to ship through the U.S. Postal Service,” suggested Lai. “Fifteen to 20 percent of what we sell goes abroad,” she added.
As the team professionalized its operations and manufacturing, it went from homemade headphones to a business with global dealer and supplier relationships.
In non-English speaking countries, distributors play a large role in helping to localize SleepPhones in specific markets around the world including Japan, Singapore, Germany and Belgium.
Lai explained that she authorizes distributors to tailor online marketing and Google AdWords campaigns to their region, boosting sales by trusting local expertise.
With customers, distributors and suppliers worldwide, an open global internet is essential for SleepPhones to succeed.
“The internet has been absolutely critical. It’s amazing the number of connections we are able to make now compared to before internet. I can’t imagine not having it for doing what we’re doing,” stressed Lai.
Technology, said Lai, also allows SleepPhones to maintain contact with its partners and customers without relying on costly trips to each market.
Lai points to several challenges SleepPhones has faced taking their business global. Currency fluctuations following Brexit directly impacted SleepPhones exports, causing them to terminate a potentially high-profile entry into the UK market because the company “couldn’t make the numbers work anymore.”
Tariff and other trade barriers anywhere along her global supply and export chain also hurt, whether those tariffs are on products coming into or going out of the United States. “Even though we are doing a lot of value added in the United States, tariffs [on U.S. imports] can still hurt us,” said Lai.
Lai also noted the importance of protecting the integrity of her product and keeping close tabs on suppliers. “In global trade, we see knockoffs out there,” she said, “so we want to protect our intellectual property and make sure that our suppliers are honest.”
Trade agreements remain confusing for small businesses to comprehend fully, but Lai notes that certain provisions could be extremely helpful. In particular, she points to the importance of minimizing paperwork and not having to pay duties on packages under a certain value is tremendously valuable for a small business.
Connecting with the right people is a tremendous help in overcoming those initial hurdles, especially when you don’t have a business background, advised Lai.
Government websites and the Small Business Administration have provided significant support, shared Lai. “We’re fortunate here in Erie Pennsylvania to have a strong [Small Business Association] group and a whole network of business help communities, including an export assistance programs.” State-funded programs can also provide great tools, such as market research and distributor information, for little to no cost.
Lai advises entrepreneurs to take on global markets, even if it is a bit more work upfront.
“Having that diversity in your footprint is only going to help you as a company, said Lai. “Instead of blaming globalization as you grow, you really have to embrace it, learn it, and leverage it. It could be a significant part of your business.”