“We’re not an Apple licensee, so we have to be careful how we market them,” says Digital Group Audio president Erik Groset, creator of the portable Livespeakr system, designed (but not licensed) for iPhones and iPods. The tiny speakers are built onto a protective cradle that holds the device and flips to both portrait (upright) and landscape (horizontal) modes for movie viewing, to provide a sound system that Apple and its many licensees have so far overlooked. “We saw an empty niche,” says Groset, “but the first hurdles were technical, like shielding the speakers from interference noise that most speakers make when they get near a cell phone.”

Based in Carlsbad, Groset and company vice president Robin DeFay (both aged 25) grew up as friends in San Marcos. “For Livespeakr,” says Groset, “we had no background in manufacturing or engineering, and we did a lot of our own guerilla marketing, like going out to local malls and sitting in front of Apple stores, showing it to people.”

The 15-watt speakers also work with portable DVD players, Walkmans, and other devices, but Livespeakr ($79.99 retail) was specifically designed for Apple products such as the iPhone, iPhone 3G, iPhone 3GS, iPod Touch, iPod Touch 2G, and iPod Classic. “We met with Apple up in Cupertino,” says DeFay, “but we chose not to do the [license] certification for this product. So, we can’t put that it’s made for iPod or say it’s an Apple-licensed product or put certifications on our boxes, so that hurts us in a way.… Licensing didn’t make sense financially, and we wanted to be first to market with a portable speaker system that worked with the iPhone.”

“If we had gone with the Apple licensing, it would have taken another year. But we have some other products in development that we hope to work with them on.”

Investor DeFay spent several years as a professional poker player, and betting on Livespeakr seems to have paid off. Even without Apple’s seal of approval, the duo’s company was already one of five nominees in Wired magazine’s Small Business Program, and Groset has been inducted into the Young Inventor’s International Hall of Fame.