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SEPTEMBER 29 , 2000 VOL. 26 NO. 38 | SEARCH ASIAWEEK


Russell Wong for Asiaweek.
Hoo may be Singapore's free spirit.

Creative's Genius
Sim Wong Hoo transformed the desktop computer into a mean music machine, but he needs an encore. The unconventional Singaporean thinks MP3 may be his next opus
By ALEXANDRA A.SENO

During a modest Chinese restaurant dinner, Sim Wong Hoo leans over the starched white tablecloth in a way that suggests he's about to ask something important: "Do you think the death of Princess Diana is part of a big conspiracy?" he asks, eyes locked on his dinner companion. Such a question from the founder of a globally recognized computer company with annual revenues of $1.3 billion would normally be thought of as unserious. But it is immediately clear the chairman of Creative Technology, who had been reading a book that argues a connection between the royal's car crash and aliens, considers it a legitimate subject of inquiry. "I have not decided to believe or not," he says, after eliciting no opinion from the other side of the table. "But I try any idea once."

Examining the evidence, it is possible to conclude that Sim himself was at one time abducted by aliens. The 44-year-old Singaporean exudes an otherworldly openness of mind seemingly at odds with his background in buttoned-down Singapore. He taught himself to program a computer. His personal net worth exceeds $400 million, yet he plays musical instruments favored by down-and-out street buskers — the accordion and the harmonica (as well as the piano). He responds to unsolicited faxes from students who want his opinion on their science projects. He once wrote an elegant algorithm for piano software that automatically chords left-hand accompaniment to tunes plunked out with the right hand. Then he called it the "Keytar." His recently published book, Chaotic Thoughts from the Last Millennium, contains a chapter entitled "Uses for Saliva" (use no. 7: to ease fungi-related body itches). "If I had the time," Sim muses, "I'd like to concentrate on being an inventor."


Asiaweek Pictures.
Nomad II, records and plays an hour of MP3s.


If he had lots of time, Sim would probably spend it trying to produce a warp drive, a time machine, or Flubber. He is, however, distracted these days by another project — the reinvention of his company. Creative Technology belongs to that lengthening list of computer-industry stalwarts that struck it rich in the '80s and '90s only to lose ground to copycat competitors, crashing profit margins, slowing revenue growth and, perhaps above all, the redefining force of the Internet. Sim made an indelible imprint on the computer industry in 1986 when he created, with childhood playmate Ng Kai Wa, an audio-system-on-a-chip that could be slotted into the motherboard of a personal computer. Up until then, PCs had been all but mute, the aural equivalent of black-and-white TV. Sim's Game Blaster card made them capable of processing stereophonic music and complex sound effects. Computer gamers, especially, enthusiastically embraced the technology because it made games more engaging. Before long, the cards became standard equipment and desktop machines for the first time truly deserved to be called multimedia. Today, nearly three out of every four PCs shipped include Creative's Sound Blaster technology.

That's a tidy business, to be sure, but one which Sim has long known could not alone sustain Creative. Profit margins are under pressure, and it remains unclear whether the 30% growth rate in the company's sound card revenues can be kept up in the long run. Although Creative is still smarting from a disastrous move into CD-ROM drive manufacturing in the mid-1990s, Sim has opened up initiatives on several fronts, all aimed at capitalizing on the Internet and the company's strengths in audio computer technology. The company's E-mu sound synthesizer is widely used by Hollywood filmmakers. A subsidiary, Cambridge SoundWorks, produces high-end speaker systems, while Creative has branched into the manufacture of digital appliances including a popular MP3 player, the Nomad. In addition, Sim supervises a $250-million venture capital fund that has invested in more than 40 companies with promising, and possibly complementary, Internet strategies.


Asiaweek Pictures.
The Video Blaster Webcam Go Plus.


In some ways, Sim appears to be borrowing from a communal script written to help vision-challenged IT companies make the transition to the post-PC, Internet-centric era. Acer, Taiwan's big PC maker, is also rolling out digital appliances, as are consumer electronics giants such as Sony of Japan and Samsung of South Korea. Scattergun investment in Internet companies was a technique popularized by Japan's Softbank and followed, to ill effect, by Japanese cellphone distributor Hikari Tsushin and Hong Kong's Pacific Century CyberWorks. Creative officials, however, believe that by staying focused on audio and multimedia, they can avoid the pitfalls of over-diversification and leverage their expertise into market-leading positions.

At least in the early innings, the Internet gods do seem to be smiling on the corporate brand. The mention of Napster, the Internet-based MP3 file-sharing program that has made music piracy a household hobby, prompts Sim to burst into one of his characteristic fits of giggles. "You know, it's very good for us," he says of the explosion of MP3 downloading over the Net. Napster is forcing the recording industry to shift its distribution method from physical products — CDs — sold in stores to digital tunes sold online. It is a fundamental change that will alter how music is consumed and promises to open new markets in Creative's own backyard. Sim estimates there are about nine million sound-loving serious game players worldwide. A June poll from U.S. market research firm Media Metrix estimated the number of people playing music on their computers at 40 million. Moreover, some recording industry executives say that online distribution will, by making music more affordable and available, triple the size of the music market to $100 billion over the next several years. "This is the beginning of the second computer sound revolution," says Craig McHugh, president of California-based subsidiary Creative Labs. "Sim wants to make sure we are going to be at the forefront."

A lot of people will be watching how he manages. Sim is a business all-star in Singapore, in the classic poor-local-boy-makes-good mold. The government's ambitious economic development programs call for increasing IT activity, and officials are keen to foster a more entrepreneurial spirit among citizens. Sim is an ideal role model. "To thrive in the new economy, we need technology. Sim is a pioneer but more importantly, he has reinvented himself," says Tan Chin Nam, Ministry of Manpower permanent secretary and a Sim friend. "Singapore needs to reinvent itself." Tan's department regularly showcases Sim at symposia and public events, and talks about producing "more Sim Wong Hoos" out of Singapore.Though low-key and unassuming, Sim does his bit to promote the local agenda. The only two-time winner of Singapore's Businessman of the Year award, he appears often in newspaper photographs and chairs the private-sector body governing the government's centerpiece Technopreneurship 21 project.


Asiaweek Pictures.
Blasterkeey MP3, part synthesizer, part keyboard.


Yet Sim is an atypical offspring of Singapore's regimented educational system. He did not follow a prescribed career trajectory, working instead as a teacher, and as an engineer in a Japanese electronics firm, then on an oil drilling rig in the South China Sea. The 10th of 12 children born to a chicken-egg vendor, he grew up in the kampongs. With no money for toys, he played with ants and improvised board games to amuse himself — an activity he says helped to form his capacity for innovation, his tendency to color outside the lines. In his early teens, his sister gave him a harmonica, which he describes in his book as "a perfect companion" for an intrinsically shy boy and a gift that inspired a lifelong fascination with music. An unremarkable student, he attended Ngee An Technical College and earned an engineering diploma in 1975.

While the princelings of Silicon Valley tend to bond with computers at an early age, Sim was not exposed to the digital world until he reached his early 20s. By reading computer manuals, he learned to set up computer-controlled seismic equipment. He also connected a costly mini-computer to a pair of speakers and wrote his first audio software program so the computer, as he puts it, could "sing." In 1981, after a moment of self-revelation under a starry night sky on an offshore rig, Sim decided he needed a goal: he wanted to make $1 million in five years. After quitting his job, he partnered with school chum Ng Kai Wa and set up Creative in a Singapore shopping mall.

The new company paid the bills through computer sales and training, but before long Sim had his 10-person staff designing his answer to the Apple computer. "The important thing to remember about Sim," says Creative senior vice president and long-time friend Low Ting Pong, "is that he is a wild dreamer." Working around the clock, the team hatched the Cubix CT, a desktop machine with motherboard, audio card and a Chinese-language operating system, all of it developed in-house. The Cubix was a market flop — it typically took two hours to explain all the machine's features — but the audio card technology that started as a Cubix innovation became the Sound Blaster.

In August 1988, Sim left Singapore to start a Northern California office for his fledgling computer-components business. "He told everybody he would not come back unless he made $1 million by selling 20,000 of our music soundcards," says Ng, now chief executive of Internet telephony company Innomedia. "Everybody thought it was crazy." In 1989, the company had developed the Game Blaster. "That year we knew we had a winner," recalls Sim. During the all-important COMDEX computer trade show in Las Vegas, buyers queued almost nonstop at Sim's booth to order the card. Among the visitors was pop icon Michael Jackson, who was drawn by the high-decibel music and sound-effects emanating from the Creative camp. Shortly thereafter, Sim returned to Singapore, mission accomplished. "He came back with that big order and that photo of him and Michael Jackson," says Low. "He was so proud."

Sim likes to set for himself what he calls BHAGs — "Big Hairy Audacious Goals." One of them was climbing Gunong Tahan, a treacherous mountain 2,187 meters above sea level in Malaysia. "They say you go up it once and you're a hero," says Sim. "You go twice and you're mad." Sim has summited twice, and the madness — let's call it passion — leaks out sometimes. Like Steve Jobs of Apple, Sim is capable of generating his own "reality distortion field" when he is trying to score conversational points. His arms flail, fingers stab the air John Travolta-style. He becomes a Sound Blaster himself, a wet-wired sound-effects machine, imitating the ringing of a telephone, the sound of an engine ("pa-pa-pa-pa") or notes on a piano ("wo-wo-wo-wo"). Hock Leow, Creative's chief technology officer, says Sim fairly burbles with enthusiasm and creativity. "He has many good ideas, but sometimes I have to tell him that I can only do so much and that we have to prioritize."

What he gets worked up about most these days is Creative's Internet-inspired expansion. "I don't mind that people still think of us as the Sound Blaster company, but we are far beyond that," Sim says. Sound cards and audio products account for more than one-third of revenue, but also contributing are speaker systems (11% of sales), graphics cards (20%), DVD and CD drives (24%). Digital appliances such as web cameras and digital music players are in the future expected to minimize the company's reliance on commoditized, low-end video and sound cards.

Perhaps the product that best exemplifies where the company is headed is the Nomad Jukebox, a project to which Sim directly contributed in idea and execution. Just now hitting the market, the Jukebox resembles an early Sony Walkman. In fact, it is a portable, 6-gigabyte hard drive with a simple, stand-alone operating system. The Jukebox's singular purpose: storing, organizing and playing an entire library — roughly 100 hours — of digital music.

It is an unusual, groundbreaking, and risky product. As computing moves off the desktop and into the largely unexplored territory of newfangled personal devices, it's difficult to tell which quasi-experimental products consumers will buy and which they will shun. But like any seasoned entrepreneur, Sim is on a first-name basis with failure. Creative's survival instinct, a function of its aversion to being a one-hit wonder, nearly led the company to ruin in 1995. That year, a foray into the manufacture of CD-ROM drives at a time when prices were plummeting led to a $100-million loss in inventory write-offs. Following the fiasco, Sim lost more than $300 million personally as stock in Creative, which listed on Nasdaq in 1992, plunged to about $3.50 (it is currently trading at about $22). Sim says he was against the CD-ROM move to begin with, and he shrugs off the mistake as "one of those things that happen." The experience has not made him risk-averse nor has it dampened his maverick ways, as the Jukebox proves. "I take pride in being different," he says. "When everybody is going one way" — he gestures in a way that suggests a herd of cattle — "I go the other way. That's where opportunity is."

Sim's colleagues insist their boss is at heart an engineer. But while he is handling fewer chores on the operations side of Creative these days, he still is active in solving problems. He is sometimes asked to intervene, for example, when a supplier is making trouble. "He gets his calls returned because of who he is," says McHugh. Sim is also handy at product pricing, and delights in running the numbers on his 1980s-style Casio calculator watch.

Leading Creative Technology — or any business, for that matter — is all about managing chaos, Sim says, an observation that seems more true in the tempestuous Internet age. "You have to balance chaos with structure. Because of chaos, you can create mutation. Because of mutation we survive, we evolve as a species. If you are very structured, you can't move. If you are all chaos, you crash. This balance is important. It allows variety." The "wild dreamer" leaves one final hint that he has communed with aliens. "The meaning of life? Yes, I know what it is," he says without a smile. But he adds that the public is not ready to learn it and he refuses to share. Perhaps he will in his next book, which Sim is now plotting. We can only hope that saliva is not part of the secret.

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