Jan. 9 (Bloomberg) — Gibson Guitar CEO Henry Juszkiewicz discusses the future of the guitar business and how he's evolving a 120 year old brand with Elevation Partners Co-Founder & Managing Director Roger McNamee and Bloomberg's Cory Johnson and Alix Steel on Bloomberg Televisions' "Street Smart." (Source: Bloomberg)
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For American companies, for musicians and for anyone connected to the entertainment business, Gibson Guitar stands as an example of how to build better products and a better company.
After the rock boom of the 60s, the musical instrument business fell off by the end of the 1970s. Gibson Guitar fell on hard times. Fender, then owned by CBS, was turning out the worst guitars and amps in the business. That is not all bad since many new companies, smaller and more nimble were able to get themselves established during that time.
Both of those brands were rescued by people dedicated to the brand, to quality products and a quality customer experience.
Gibson Guitars today are better than the one's built 50 years ago. So are Fender guitars. Henry Juszkiewicz rescued Gibson and obviously is still committed to the brand. He calls it his life's work.
We have a special guest and the CEO of Gibson guitars.
Henry, you guys were there with technology announcements and not just plain old great guitars.
Yes. Our theme at the show is back to the future. This is our 120th year of making guitars in the united states. That is the back. We have a bunch of new stuff and innovation of the future.
One of the things that has always excited me about what you did at Gibson. The US guitar industry, no one was making great guitars.
They shipped mostly manufacturing out of the US. you were the first person I saw as an investor who decided to do a made in USA strategy at the core of what they were doing.
It has worked hugely.
I do not know how many guitars i bought from you in the last 20 years. I have at least 10 Gibson's. I have acoustics as well as electrics, bases, at least 10 in maybe 12. a huge fan of Gibson guitars. At the same time, part of what i love is that the best ones you have ever made are in recent years. The notion that we can make the best of something that is a work of art, it makes me proud.
I am curious if that is still working for you as a strategy echo do you have to now go to low-price?
We have brands made overseas. The whole world respects the craftsman we have. I have seen these people every day and the dedication and skill and passion they put into the instruments.
Since i have been there, we have actually built three factories in the US. we increased employment every year and we are extremely competitive in manufacturing. The thing i love about that is it suggests we are in a time where people genuinely want to buy American.
Everybody wants to learn how to play an instrument or what you're doing dovetails so well with what Apple has done with iPads. I carry these great instruction programs when i want to learn a new lick. I travel with my guitar and bring my iPad.
He has a guitar in the green room.
I always travel with guitar. But you do not have the travel guitar in my life.
One of your competitors does. We can talk about that. I have thoughts.
We have Steinberger.
I know. I only travel with small acoustic.
How many dealers do you have today compared to 10 years ago?
A lot fewer. Our industry, like many, is going through a consolidation phase. Guitar center is becoming the WalMart of the musical instrument business.
There are some really great independence still, but the marginal guy's have mostly gone away.
How do you foster growth in that environment? You have an expanding business.
It is really about the customer. We focus on you. We deliver wonderful, joyful products. We will – they will find us.
Is there – if there is any truth of that, it has to be true. Nobody needs a third guitar. The beauty of the industry – I hope my wife is not watching. I am saying, the product, the turn on investment so high, these are not just great things. They look and feel beautiful.
He was talking about that earlier.
The music program getting cut. The economy not doing as well. Are you able to get new and younger customers? How do you do it?
Class in fact, surprisingly, some of our more expensive guitars are bought by young customers. We have been very consistent.
If you look at statistics over the last hundred years, you would be shocked how consistent it is. We are not a growth industry. We are single digit growth.
We have been really consistent throughout different times of popular music and media and rock 'n roll is the staple.
I wonder in terms of getting along with dealers, i talked to some dealers and they talk about issues where you want them selling a certain kind of guitar, to be a Gibson dealer, they have to take everything.
You might have someone who wants to sell a lot of the lower end phones and someone else wants to sell the high-end ones, and you're not providing them with the choices they want for their inner – inventory.
Is that a difficulty you guys have?
The issue is, a dealer is a relationship to us. We want them to like us and like our brand. We have at the Epiphone only stores. We have custom shop stores. Everyone has to represent us.
It certainly goes against providing our consumer with a consistent presentation and experience. Every store have to have a consistency to it.
I spent years in the private equity business. One of the things that drove me crazy is how most people involved have no interest taking a good business and making it better. I think what you and your partners did on Gibson is exactly the model for how private equity should be done.
People were passionate and they go in there and see the assets and business and say, how do i make it better than it has ever been before?
Not just how i get the cash generating in my pocket, but how do i make the cash 10 times as big and make customers happy?
I tip my hat to you.
I wish there were more people like you doing those kinds of transactions in my world.
I am privileged to do what i do.
By Stephen Pate, NJN Network