Taylor Guitars: Kurt Listug and Bob Taylor. From $3,700 Shop to Global Icon

0:09 Eight years in, I would have been like, What is going on? We've barely grown in eight years. We're still struggling. Yeah. Somewhere around six years. Maybe it was five I sat down with Kurt and Steve and I said We have a bad habit of not paying ourselves. I want a paycheck every single Friday.

0:27 And I don't even care what that paycheck is. So we did our homework and we decided we can pay ourselves every Friday, and that number was fifteen dollars. Fifteen bucks a week. It's like I want my fifteen bucks. I won. Gosh darn it. I worked two days a day. For a week and I want my fifteen bucks. Welcome to How I Built This.

0:57 A show about innovators, entrepreneurs, idealists, and the stories behind the movements. built. I'm Guy Roz, and on the show today, how Bob Taylor and Kurt Lista cooled their money to buy a tiny guitar shop in San Diego and built one of the most popular acoustic guitar brands in the world. Taylor guitars. One of the surprises Taylor Swift pulled off during her ERA's tour was to play an old guitar that, for many of her fans, was instantly recognizable.

1:35 It's painted bright blue and decorated with orange koi fish swimming around the center and down the fretboard. That guitar is so distinctive that for a time it was on display at the Country Music Hall of Fame. It was the guitar Taylor used to record her album Speak Now. But when it quietly disappeared from its display case right before the era's tour launched, Swifties had a hunch that Taylor would bring it out on stage, and when she did,

2:03 It was a big deal. Especially for today's guests. Because they made that guitar and gave it to her as a gift. And as you will hear, the connection between Taylor Swift and Taylor guitars goes way back.

2:19 Back before stadiums, before sold-out tours, before most people knew who Taylor Swift was. And we'll get there. My guests today, Kurt Listug and Bob Taylor, co-founded Taylor Guitars in the 1970s. The company grew out of a tiny guitar repair shop in San Diego into one of the most respected acoustic guitar brands in the world. Right up there with Martin and Gibson. The brand really took off, at least initially, with the people who mattered most.

2:48 serious musicians, the kind to obsess over tone and balance and how a guitar feels in your hands. Today, Taylor Guitars is a global company with revenue well into the nine figures. But in the beginning, growth was slow. Painfully slow. When Bob Taylor and Kurt Listug started the business in the mid-1970s,

3:08 Every guitar was made by hand. Sales came mostly through word of mouth. It took years just to gain traction. And like fashion and food, the guitar business is also shaped by trends. When Taylor guitar started, disco and new wave were on the rise, and acoustic guitar song were considered boring and old-fashioned. but Taylor Guitars adapt it. experimenting with new designs, new manufacturing techniques, and eventually electronics that made acoustic guitars easier to amplify on stage.

3:41 Through all of it, one thing stayed remarkably steady. The partnership between the co-founders. Bob focused on guitar design and innovation. Kurt ran the business side. We'll hear from Kurt in a minute, but first to Bob, who grew up mostly in San Diego.

3:57 His family moved there when he was a kid, and from early on, he was a tinkerer and a builder. And as a boy He was also getting interested. In music. I started when I was in third or fourth grade about a

4:11 Guitar for three bucks from the kid across the street. And I was in shop classes, metal shop in my junior high. casting aluminum and sand castings after making wooden patterns I was operating a lathe. Eleventh grade.

4:26 Two weeks into it, I had seen a guitar that I wanted to buy. at a store, it costs hundred and seventy five bucks. I didn't have that money, so I thought well heck, I'll just make a guitar. So I Went over to the uh Wood shop and ask the teacher if I could Join late.

4:42 And um I made my first guitar there. And I think you continued to make a a few more guitars in high school. And I I I guess it was around the time you discovered this little guitar shop in a suburb of San Diego. called the American Dream.

4:57 And I think they mainly they did repairs or maybe they sold some supplies. But they also made custom guitars and I guess it it was run by this guy, Sam Radding? Yeah. It was a kind of a hippie setup.

5:11 Uh if someone imagines a hair salon That's how the business was working. He owned it. You got a bench there, like a hairdresser would get a A chair. And I

5:21 Sa That little shop, fifteen hundred square feet of space. And so after high school I went there and showed him the guitars I made. And wiggled my way into having a bench there. And it was a dream come true to me.

5:34 Yeah. And so basically you finish high school. Nineteen seventy three. you get a job at American Dream. Specifically to build custom guitars for people who wanted to buy them.

5:46 That's right. And it was pretty crude. There were actually very few people that were making guitars. on a small scale. Now if you went to Spain, there's a guitar maker on every single corner. Hundreds of thousands of them. But in the US it wasn't a thing. Now, a lot of those people

6:03 had burgeoning Um hippies that were starting to repair guitars and maybe make one, but all guitars were not handmade. Got it. Okay. I wanna bring I wanna bring you in, Kurt, because uh meanwhile you uh also grew up nearby in San Diego. Yeah. And from what I understand, you were a bit of a a hippie. Um, I've seen a photo of you with like super long hair and Uh, you were also getting really getting into music at the time and eventually I guess you

6:30 end up dropping out of college and getting a job at the American Dream. Two, right? Like a ro around the same time that Bob started there. Yeah, I I grew up playing the piano. I just loved music. You know, I absolutely love music and the opportunity to do something with music was exciting to me. And and yeah, Bob came around the same time. It was August of uh nineteen seventy three. And uh he stood out very quickly from everyone else, uh, with his talent and his ability to to get things done and he had a really good work ethic.

6:58 He wasn't just like hanging out to hang out and do a little bit of work like some of the other people. Or like me for that ex for example. I wasn't that good at it. I I think Bob you were eighteen and Kurt I think you were twenty one or twenty two when you guys were were there. And I mean you're so young, so I have to assume that at the time neither of you guys had Big ambitions, you're probably you're thinking this is cool. I'm working at a guitar shop and I'm earning a paycheck.

7:23 Yeah, I wanted to do something that had to do with music and the arts. I didn't want to be behind a desk. Yeah. I still feel the same way today. Right. Right. Alright, so this is the so the first year, seventy three, the both of you are working there. And I guess Bob, I mean

7:40 you start to experiment with like different methods or techniques of making, particularly the neck of the guitar. Explain what a guitar g an acoustic guitar neck was at the time and what you started to do. The guitars that were available at that time

7:58 were kind of hard to play. They had a lot of tension on them being steel strings, so the necks were fat big fat necks to try and make them strong. Not the width of the neck, the thickness of the thing. The g guitar players in those days started calling them baseball bat necks, you know, I mean They were round and thick. Right. So if you had a small small hand, it was hard to play guitar at that time. And a lot of what I did was happy accident. Ignorance is bliss, man. You make the guitar the way you think maybe it should be made. And for me Well the first guitar I made at the American Dream, I just kept shaving the wood off until it felt comfortable in my hand and people were amazed. I made the neck slimmer and then put it in people's hands and they're like, I love this. It feels like an electric guitar, which had slimmer necks. and lower strings and easier to play. Basically you shaved the wood down on the neck to make it easier to grip with your hand. Exactly. And I put the strings lower to the fretboards so they were easier to push down. So go back to those days you have your early rock and roll bands and everything that's happening in Laurel Canyon and uh West Coast country rock music being developed and people are playing electric guitars.

9:19 And acoustic guitars were being played. Down south, back east, and bluegrass and folk music. And I made a guitar that electric guitar players loved because they could play it. Right. But you were I mean, this was a small guitar shop

9:37 In a suburb outside of San Diego. And you come up with this idea and it doesn't it's not like all of a sudden like Nirvana revolutionizes guitars. Like it it would take a while for people to See this innovation. And so I'm assuming at the time The people around you weren't like Oh my God, Bob, you have

9:54 change guitars, right? They were just like, Oh, this is great. Yeah, to put in perspective, guy. The American Dream did thirty thousand dollars a year in sales. So it was like a little speck. So you know, Bob making a guitar with a neck that's more comfortable. Who's he even gonna know about it? Just the few people that come in or the person he made the guitar for. Yeah. So this was a

10:18 This is a very small. shop probably the owner Of the shop. Uh Sam Redding. I well from from what I've read, he it was

10:27 It wasn't doing great. And I guess he decides In nineteen seventy four. he wants to just move on and he goes to his employees, including you guys, and says hey, I want to sell it. Anybody interested in buying My shop.

10:41 Do you guys remember how I mean, di did you and both both of you immediately th put up your hands and say, Ah, we want it? Well w we uh Sam called a little meeting. And I was interested along with With uh my friend. that I've grown up with and and Bob was interested too and

10:58 We each put together a a little plan. And then uh I ta I spoke with my dad and said, Hey, would you Would you mom consider loaning me the money? So that we could do this to buy Sam. Sam wanted I think thirty seven hundred dollars.

11:13 thirty seven hundred for the business. Was that So that seems to me to be really low. Was that was that a lot of money in nineteen seventy four? I'm just 'Cause he he was doing thirty thousand dollars in sales a year. D was that a lot? Thirty seven hundred? Well it's a d you know, it's a different world now too, in terms of finance and values and all that. But his ambitions weren't to grow a business or make a lot of money. He just wanted to work on guitar. So that's what he liked. He wanted some of us to continue it on. And you would take over the lease of the space. Yep.

11:43 Okay, so thirty seven hundred dollars was to buy the name of the business and his tools and equipment I mean when you heard that price. Was that something that you guys could do easily? Not easily we had to borrow the money from our folks, but actually We didn't find out'tw after we bought it that it didn't include the name.

12:00 Did not include the name, okay. We found out as we signed the papers that we weren't getting the name and then uh we weren't gonna have the phone number that we'd count it on either. Because that was Sam, the owner's personal phone number. So you have you would not get the phone number, which was critical at the time because that was how people yellow pages, right? Totally. So Kurt, um how did you get the money? both of you guys I guess went to your parents. What did your your parents I mean you were You said to your parents, hey I wanna buy this guitar shop.

12:34 And they said what I asked them if they consider loaning me the money and And uh my dad's uh Well, who's the best guitar maker there? Which Pretty smart of him.

12:44 And I said, Well that'd be Bob Taylor. He said, Well if Bob Taylor will join you and your friend And be a partner, your mother when I would consider it. So we actually put together ten thousand dollars all together between the other partner, Bob and myself, and we bought it and the rest of the money was our working capital. The other partner was Steve is it S Shemer or Shemer, yeah. Someone I'd grown up with. Okay. And you take over the shop.

13:09 October fifteenth, nineteen seventy four. And it's doing about thirty thousand and sales a year. So it's you know, tough business, but I'm assuming you guys are thinking of ways to maybe generate more revenue. The first challenge is that you don't get the name American Dream. So You had to come up with a new name.

13:29 For what you were gonna call it. Tell me about how you eventually landed on Bob's name, Kurt. I mean how did uh wh why did you guys decide to name it after Bob? Well we actually didn't at first We thought okay, we're gonna sell parts and we want to distribute uh mother pearl inlays and we wanna do repair work and we wanna make guitars and we wanna do all those things and we wanna grow it into a big company. So we need a name that sounds like we're big.

13:57 So we decided to call ourselves Westland Music Company. Westland Music Company, right? Yeah, like like biggest in the West, you know. Then a few years into it when we realized our future was really in in uh making and selling guitars and Bob was really the talent then we We you know, we decided to call the guitars Taylor guitars and we added a little A little tailor underneath the the neck on the little logo we had. But you could have called it Lista guitar or your other partner sh Shemmer or I but why

14:29 I mean I Bob was the guitar maker, so now of course it makes sense. It's also a great name. For a guitar. Yeah. It's as good a name as Martin, as good solid American name. Guy, let me ask you, would you like to buy a Shimmer guitar, a List du guitar, or a Taylor guitar? Let's talk about division of labor now. It's nineteen seventy four. Now you guys are running your own shop. Clearly, Bob, you had the

14:57 Best skills to make the guitars. What was your role gonna be, Kurt? Were you gonna focus on like business operations more, or were you also gonna make guitars and what was Steve gonna do? How did you start to talk about who was gonna do what? Well, Steve was doing finish work, so he continued doing finish work. Finish work means you would he would like do the sanding or the lacquering or lacquering. Got it.

15:21 And uh I was working on Bob taught me how to build guitar bodies. I wanted to work on business. Not that I knew anything about business, but it was what I was interested in, but You know, the only way we could hopefully make any kind of living was to do the work that was there to be done. Which does work on guitars. Yeah. We were serious about that too. We had

15:43 We kept time cards, believe it or not. And every day. Okay. Steve. And I

15:49 Filled out our time sheets. And it was just the three of you initially? Or did you have employees? Well, there was employees, then no employees, then employees. I'd gone to the small business administration and read a bunch of Got a bunch of pamphlets, read a bunch of books. And uh I came to the conclusion that actually we should actually employ everyone rather than

16:11 You know, they're commissioned when they finish work by the end of that year. So Having to pay everybody every week. You know, two and a half months later we were out of money. Right.

16:20 Okay, so you what were some of the things you decided to do? to try and salvage this business because you were doing repair work, you were selling parts, and You were also making custom guitars. Well, we didn't have any sales, uh other than a few people coming in the door. So we'd make a few guitars, we'd hang'em on the wall. I would try to figure out how to advertise them. I'd

16:42 Run little ads like in the uh Daily Aztec, the newspaper for San Diego State. Try flyers. I mean anything we could think of to uh Try to get the word out to gain customers. Yeah, so two years into it, that's when What we decided to do, we're gonna focus on making guitars forget all these other things we're trying to do. Stop doing repair work, stop selling parts. Stop it all. Yeah. Yeah. But that was bringing in money, right? Yeah, well, it it's one of those strategic decisions you make because people would come by and hang out. You know, and we couldn't get any work done if people k would come by and hang out on the couch and

17:21 And that sort of thing, so we decided well okay, we're gonna stop doing repair work and we're gonna shut the door and lock it and and focus on the work in front of us. Was that a hard decision to make because it's like I imagine the repair work was constant revenue, even though the money from guitar sales was bigger. you'd probably still needed the cash coming in from repair, so shutting that part of your business down would have meant At least for some time you would have had less money coming in. Right. Well The money we'd get from guitars was potentially greater. That's what we had to look at. What was our future gonna be? Bob was talented. We made guitars that people liked. Bob and I thought that was the future.

18:01 Um, Steve felt a little differently about it, and that's that's one of the uh disagreements we had. We figured out that the real future would be to wholesale our guitars to music stores. Did you guys Bob I'm curious and I t let's Take me back to 1975, right? Uh because from what I understand, the ambition was let's make ten guitars, you know, a month or something like that initially, right? That's exactly what we thought. But at that time I read that it would take you about two months to build six guitars. So

18:33 Just help me understand like why Again, and and some people listening are gonna be like Guy, you're an idiot. What do you mean? Why are you asking this question? But why would it take so long to build a guitar? They're very hard to build. They resist guitars resist the attempt to be made at every corner. Because you're bending wood, literally. Well, yes, and and the humidity changes and so the size of the part changes, and you put the finish on and it wants to fall off and Everything is going wrong with everything. And you know sometimes I say If you were an engineering student and your task for your

19:10 Master's thesis was to design something That wants to fall apart. Just design a guitar. Right. I try and make ten.

19:18 In a month. And four of'em would get ruined somewhere along the way. And I struggle and struggle to try and make it better every day. I really literally would work two days a day. The first day was guitar baking. And then the second day, the evening shift.

19:34 was making some kind of tool. So that the next time I did that job it was a little bit easier. That tool could have been a stick with two marks on it, so I didn't have to get a tape measure out every time and remember the length of something. Or it could have been a little pattern that I could draw on Or some jig that fits on a table saw to put fret slots where they're supposed to be. One Little brick at a time.

19:59 You make something so that it wasn't groundhogs every day for me. I love that idea. You do two days of work every day. Guy, do you mind if I back up just a little bit and tell a story? So we were making these ten guitars in a batch. And we're not getting anywhere at the end of a couple of things. And when you say in a batch, it's like you make one part of the guitar at a time and then you would put them all together at the same time? Yeah we would bend sides for ten guitars, brace tops for ten guitars, then move all ten to the next step. The idea being

20:28 While I have my bench set up to do this work, I want to do a bunch of it because it's gonna be more efficient. And I met an older gentleman that made guitars. One at a time. He would start a guitar and then a couple days later he'd start another guitar. He had this little miniature one man assembly line to where every couple days a guitar would come off the line, another guitar would get started, and five or ten guitars would all move a step forward. And I'd say, Well okay, you wanna make the bridge for the guitar? How many bridges do you make? He goes, Well if I need one, I make one. I go you don't make ten?

21:02 I I don't need ten, I need one. Yeah, but Augie You know, when I make a bridge, I set up and I make all of those. I get almost nine of'em for free. And he just looked at me and he said, Bob What would you rather have? Ten. Half done guitars or one done guitar?

21:17 And that changed my life. It changed how you how you started to make guitars. It chang everything about our company. Changed everything. I couldn't wait. And just walk in the door and go, we're making

21:29 One guitar at a time. That's how cars are made. Same thing. Exactly. They move down the line and and we've run our company that way. That's how I learned about working capital. That's how I learned about just in time. That's how I learned about, you know, cash flow. So That made all the difference for us. It was a huge, huge thing. Yeah. And Kurt, you were you sort of become the public face of this thing of like selling them and going store to store.

21:59 Before you tell me about trying to sell these guitars to guitar shops, what was it about them? Like what was your sales pitch to people when you were trying to explain why they should why guitar sh store should by these acoustic guitars. Wasn't so much a sales pitch, you know, for me. One reason I wanted to learn

22:17 To sell them was cause You know, it's fairly quiet and withdrawn and I thought that's a really good challenge. And We won't be able to make it succeed as a business unless I learn how to do that. And I found out it's actually pretty easy because if you go to take a guitar into a Into a guitar store there

22:35 People working there play guitar. They don't want to hear me play guitar. They would they want to check it out and play it for themselves. So all right, so you you I I read that your first full year in business was really challenging.

22:48 And your second full year in business was also pretty challenging. I mean you were Kurt, you were having success selling these guitars. I think you went up to LA, but it was like thirty, forty guitars. total that you would sell over time, right? And so Once you got paid

23:07 It wasn't much money, right? We didn't get paid. No. Well, yeah, th some of those early trips were were pretty exciting'cause I got leads on stars to call on, went to LA, showed'em guitars. They were receptive. I came back with checks. Three or four checks on that trip. I couldn't believe it. And how much was a guitar? Like how much would a store buy a guitar one of those guitars for? Yeah, you'd get three hundred and something dollars for that. Three hundred bucks you guys would get for a guitar. I think I came home with eighteen hundred something dollars that day. And you know, guys, some of the dealers

23:38 Would buy them just to kinda take pity on me. Or us just to kinda help us out. You know, like okay, here's some young guys trying, you know, I'll buy a guitar and Maybe that'll help you pay the rent this month, that sort of a thing. But I mean you would spend a month or more building one guitar and it would sell for th you get you'd make three hundred bucks. Yeah, it wasn't a very good financial model.

23:58 Yeah, I mean uh even when you adjust for inflation, right? It's it's it Alright, so you The business that you've got is struggling, and I guess around this time You're approached by

24:11 these two brothers, the Rothschilds, who are making um they've got a company called Rothschilds Musical Instruments, and they have an idea For how to help scale your business. What is the Who who were these guys and what was the pitch they made to you? Okay. So you know, our challenge at the time was getting out and

24:28 showing our guitars to more music stores'cause we needed more dealers. And uh they came down as Paul Rothschild and his brother Edward. And they're what they were doing was approaching small brands that didn't have distribution. That made nice stuff. Only guitars or all instruments. Guitar audio equipment too, you know, that that was related.

24:49 And they were putting together a sales force and they were gonna call on Uh music stars nationwide. and then they would distribute them. Exactly. Yeah, they'd buy it wholesale and they'd distribute them. And Paul had been a record producer. He'd produced all the doors albums and You know, Janice Joplin and kinda legendary, right? Yeah. I read about it. Janice Joplin, he produced Crosby Sales and Nash. So he's coming with like a lot of credibility, presumably. You're thinking, wow. These guys are the real deal. Yep.

25:18 Yep, totally. But they were exclusive, you could not sell them anywhere else, they would buy everything from you. Correct. Hey fellas, you make great guitars. We checked them out in the stores. We think they're underpriced. We think they can sell for more. We think we can buy'em from you for the same price you're getting now. And we'll just we'll be selling'em at a higher price and

25:40 You know, the whole thing'll work. And we found out quickly enough that it didn't work. We got a lot of orders at first because they had to outfit themselves with uh sail samples for their eight or ten salesmen that they had. around the United States.

25:55 And At one point we had to come out with a less expensive guitar for them, and we were selling a A guitar to them for$150. Just w how much money we would get. And I would say That's when I figured out not to make love to every guitar that I'm building.

26:11 I'm production minded. I like to get it done. And come out with a good guitar, you know, at the end. And the amount of time that you stroke it isn't The key factor there.

26:23 So if they were selling they were giving you$150. for a guitar and they were probably selling it for maybe three hundred, and then the shop was selling it for maybe what Five hundred? Six hundred, and then discounting it thirty or forty percent, and you know, it's a it's a whole matrix out there. So you were I mean, so I I have to assume that

26:44 You were getting paid less, but were you selling more guitars was was the math? Making sense? No. The math wasn't making sense, but our name was getting out there. And hope rings eternal.

26:57 You know, we weren't as bad as the watermelon truck that lost uh money on every watermelon, so he thought he needs a bigger truck. We you know, we had more sense than that. Not a lot. Not a lot. But we figured Maybe one day we would reach a crossing point a nexus where it could start to work.

27:16 So we still Didn't pay ourselves a salary, we lived for free with family. We did all of that, and it was some time before we paid ourselves money. You know, you mentioned that that when you bought this business in nineteen seventy four, it was doing about thirty grand a year in sales. Were you able to substantially increase revenue by nineteen seventy eight? Four years in?

27:38 A little bit. We ha w sometimes we have to think ahead to be able to think backwards. So um eight years into it We were doing about a hundred and twenty Hundred twenty, hundred and thirty thousand dollars worth of business. So if you back up

27:52 We had Started by ourselves. We did two years with Rothschild. We quit doing business with them, so we were on our own by the time that had it took us Eight years to get up to that.

28:05 Over a hundred thousand dollars. Really slow growth. And you know what I thought about that guy, I'll just I'll just say right now. It was taking forever. And I just said this is my education.

28:17 There are people in College right now. Studying to be an architect and they're paying money. for five years to learn how to do that. They're gonna be a doctor, they're paying they're going into debt, and they're gonna come out of it eight years later. So how's that different for me? Why do I think that as a nineteen year old I'm worth money?

28:35 I'm not worth money. And did you really I mean, that to me seems very Precocious. I don't think I would have been that optimistic. I mean, eight years in I would have been like what is going on? We've barely grown in eight years. We're still struggling and You really thought that way that hey, you know what?

28:53 This is like an education, a free education. Yeah, and the other way I thought is somewhere around six years Maybe it was five, I sat down with Kurt and Steve and I said We have a bad habit of not paying ourselves. I want a paycheck every single Friday.

29:08 And we need to remove the things that keep us from having that paycheck. And I don't even care what that paycheck is. But we have to develop the habit. And so we Did our homework and we decided we can pay ourselves every Friday and that number was fifteen dollars. Fifteen bucks a week. It's like I want my fifteen bucks. I want it.

29:31 Gosh darn it, I worked two days a day. For a week and I want my fifteen bucks. When we come back in just a moment. A purple Taylor guitar shows up front and center. on one of the most popular songs of nineteen eighty five.

29:48 Stay with us, I'm Guy Raj and you're listening. to how I built this. Hey, welcome back to how I built this. I'm Guy Raz. So it's nineteen seventy nine. Five years into the business, and Kirk, Bob, and their partner Steve have ended their relationship with their one distributor, and they have to lay off the small group of guitar makers that were working for them. But meanwhile, the business is actually

30:34 Not doing so bad. That was actually a really good time because we were making so many guitars. We had all these guitars in process. We had one of the best summers ever then,'cause it was still the three of us. We just worked on finishing up all those guitars and selling them and I was calling on all the music stores that Rothschild had opened as dealers. You called the basically the people that they were selling to and now you're selling direct to them. Exactly, because we get the owner registration cards when people when consumers would buy the guitar so we knew who the dealers were. I read that the last year you worked under this this agreement where the this company would distribute your guitars.

31:10 You had eleven people. Uh eight other people helping build the guitars. That year you s you built and sold. four hundred and forty eight guitars is nineteen seventy eight. Uh-huh. The next year, nineteen seventy nine

31:23 Hit to let everybody go, so just the three of you You built and sold three hundred and ninety nine guitars. So actually your productivity went way up. Bingo. Even with eight fewer people. Well, that was also finishing up guitars that had been started when the guys worked for us. Yeah, it was. I'm not sure what it was in next year, but you could see the progression of us getting better at this. Kirk got better at selling, he got better at His Bookkeeping and his finances, I got better at how are we gonna make these things at building a little

31:56 A little factory. Yeah. I mean but still like The other thing I from what I understand is this is nineteen seventy nine. This was like

32:05 a dark, dark period for acoustic guitars. Like the next three, four years. This is the disco era, there's like Punk. And then there's rock. I g from what I read, like people just stopped playing acoustic guitars in the early eighties and late seventies. Well well also, you know, the Saturday night favorite thing, pre-recorded music, so bands weren't getting gigs like they used to.

32:32 And then that led straight into um sampling keyboards. You know, synthesizers. Yes, new wave. So like eighty two was really a low point for the entire guitar industry. I read that even like Martin and Gibson almost went under during that time. I can't speak to that, but their production was very low.

32:50 Sales were very low. But You can't kill a dead man. And we were so small. We didn't know the difference between not succeeding because we didn't know what we're doing.

33:01 Or not succeeding because the market was low. The market could still take the amount of guitars that we were making. And we were aggressive out there showing those guitars, people liked it. And then we started putting pickups in our guitars. Pickups allow allowed you to plug in the acoustic guitar to an amplifier. Yeah, instead of standing in front of a microphone, you could plug it into the PA system. And our guitars started getting used in Pop music.

33:27 We managed to wiggle our way into that by the guitars that we designed. We repeated what was successful and We managed to survive. And so Part of our success is that that bad market brought competitors down to our size.

33:44 Right. For a period of time and we're ready to go when they were ready to go when the market turned around. Alright, so About nine years. into the business is nineteen eighty three.

33:55 I guess you the two of you offer and then agree to buy Steve your third partner out. Tell me what was going on with Steve. I know, you know, he's not here to you know, we're gonna be respectful, obviously, but I think there was tension. W was it the two of you versus Steve or was there tension between the three of you? Tell me what was going on with Steve.

34:15 Bob and I discovered that we saw things pretty much the same way. And Steve had a different perspective on What he wanted to do and what he felt we should do. And Kurt and I like we move fast. We could say, We have to stop doing this'cause it's not working and let's do that. And that that was very hard for Steve to give up.

34:36 Let's say you're uh dating somebody and that you can never agree on what you want to do or what kind of movie you want to watch. So nothing happens. Versus you meet somebody and they're like, Yeah, let's do that. You know, or let's go to that concert together, or let's go to this, or let's plan a trip. It's it's that willingness and agreement. One can stop everything from happening and and the other one it just leads to getting a lot done. And was he game to sell his shares to you? Uh well.

35:02 Not exactly. We had a buy sell agreement. And that really saved you a lot of headaches in nineteen eighty three when Well yeah, because you know if It it it provided a path to For a partner to be bought out or to sell his shares as opposed to having to dissolve the business and sell off the assets. So then I got back from being out on the road and we hired an attorney. And uh to send a letter to Steve and uh he got an attorney and that was a real scary time.

35:31 'Cause we thought, you know, this could be the end of it. Mm-hmm. But we had the buy sell agreement and we had a good attorney and We uh bought out his share and uh we went back to our families and borrowed that money after just having a few years earlier paid off the loans from buying the shop in the first place.

35:50 How substantial was it? I mean I mean you had to take loans out to pay him. Yeah, we'd we'd value the business at um hundred thousand dollars and Steve thirty percent. So we borrowed fifteen thousand dollars. So that and that was a lot of money for you guys to pay'em, right? A lot of money. So we went into debt again, but We're excited and then That first year the business doubled. But what happened? Why?

36:14 It just felt like the brakes were off. We could decide on things, just run with it, make changes quickly. I see. I'll give you an example. Yeah. I'm trying to build a factory. We have fifteen hundred square feet. A bunch of that factory had This part, that thing, these magazines, those s stuff left over, and it's like

36:33 I'm throwing all this away. I'm gonna make room for what our business actually does, which is make guitars. And then You have a partner says, Oh no, you're not throwing that away. No, I want that there. We needed to move forward.

36:46 Ya you can't have somebody standing in the way of that. Yeah. By nineteen eighty three, eighty four. So you're ten years in.

36:55 Where were you making the guitar? Lemon Grove, California in our little shop. Yeah. Still making them in the little shot. Okay, but you were making each guitar. So there was and presumably there were people that you had to bring on to help you, Bob. Mm-hmm. But you would have to also train and apprentice everybody, right? I sure did, yeah.

37:16 It must have felt kind of overwhelming, right? Because I th on the one hand, I imagine at this already by the mid eighties, I know word of mouth is getting around People are getting excited and interested in your guitars. And You're limited in how many you can make because you, Bob, you have to touch every single guitar. that is being sold. You have to see it and inspect it.

37:37 Right? Am I right about that? Yeah, I was on the production line for almost twenty years of our business. That must have just been like overwhelming and stressful. Guy, this is my jam. This is what I do.

37:49 Yeah, it never stressed me out. It didn't. Okay. No. I just do those. Give it to me. Kurt, were you stressed about that though? I mean It was one guitar at a time that had to be great. People had expectations. And it was one Bob. He was the guy. Like if he got hit by a truck, that would have been a problem. Well, that's true, and we made decisions early on too, like not riding motorcycles or things like that. You did really? Oh yeah, yeah, you have to. I mean, we'd be out of business if something bad happened. Yeah.

38:19 I lived a careful life because I thought if I break my wrist j on a little motorcycle fall We're out of business. Yeah. Fair enough. All right, I want to talk about what I think could be maybe a pivotal, I don't know, but this is this happens in nineteen eighty-five, which I think is just so cool. You started to make like specialized guitars, I guess you had a technique where you would use watercolors and you could paint the wood and it would

38:43 kinda look funky and It was a way to get the guitar in the hands of more prominent. you know, musicians and I guess Curt or Bob, one of you guys wanted to get a guitar in the hands of Prince. Well we were trying anything and everything to sell guitars and uh

39:03 Part of that was at that time Um, acoustic guitars were very out of fashion and kind of associated with uh, you know, hippies and the hippie movement. Granola guitars. Yeah, so we thought, you know, let's try something different. I mean electric guitars. Come in a lot of different colors. And then the Prince guitar came about when I got a call from uh

39:26 Salesperson named Glenn. At a music store in Minneapolis. And they service Prince. Uh he got all his gear from'em. And they said, you know, Prince was looking for a twelve string. He's tried a few guitars and hadn't found anything.

39:40 he likes and you guys make killer twelve strings, would you be willing to make one, but here's the deal. You're gonna make something and it can't say Taylor on it,'cause he won't play anything. That's an implied endorsement by having the brand name on it. So every guitar he played had to be custom made for him without anyone knowing who made it. Yeah, those electric guitars with those weird shapes, those are custom made guitars for him. So um we talked about it and we decided we're gonna make

40:05 A Jumbo twelve string and it's gonna be purple'cause you know, that was his color. And it's gonna have the same kind of treatment on the top. Yeah, kinda hot rod is to describe it. Yeah. So we got the guitar done and uh And Glenn put it in the green room before a show. And Prince came in and looked at it and loved it. And bought it. We we made it on spec.

40:30 And then uh cool thing is it it led to a relationship with them. You know, over the years and Then he he would order guitars from us, I said Taylor. You know, later on. Is that purple guitar that you made for him the same one used in the Raspberry Beret video? Yeah. And you know, things like that don't directly impact sales, it's more like an impression.

40:49 And all the impressions add up over time. Mm-hmm. Okay, I want to stick to the eighties for for a moment'cause I know that By nineteen eighty eight, so this is now what fourteen years in. You break a million dollars in sales for the first time. Yeah, finally.

41:05 Mm. Finally. Big deal. Now you're starting to feel Some momentum. I mean I I from what I gather In nineteen eighty eight, that year, that you are doing a million dollars in sales, you're making eight guitars a day. Mm-hmm. And I hear that and I'm thinking, so you're selling all those guitars, right? There was demand. You each guitar you were making was basically spoken for. Well there's always a back and forth between the number we're making and the number we're selling.

41:32 And really that's the story of the company is the balance between How many a day we want to make? How many a day we can sell. You know, all all the way up till now. Mm.

41:44 And each I mean This was not automated. This was all it was like Table saws and hand saws and lathing machine like right like every It was

41:56 Entirely handmade. Yeah, we had a we had a fair amount of uh specialized cutting tools that I would make. It wasn't until nineteen eighty nine that we We're able to really get modern using Computerized.

42:11 Cutting machines. Right. In other words Imagine I'm bending a guitar side. And I'm doing it over a hot

42:18 four inch pipe. with a barbecue lighter inside it to make it hot and I'm steaming and moving and steaming and working. Well when I'm done. That side it risks having been broken. It might not fit in the mold perfectly, or I can make a machine that's that shape that automatically bends it. It does something in one minute.

42:38 that I do in a half an hour. And it's a better part. And now they're consistent. Yeah. We still have way more people working by hand than we have machines. It's not an automated factory. And if anybody here has ever gone through a car factory,

42:54 The first step They're gonna be stamping car parts. And there's not even a person in there. It's all robots. There's one guy in a control room. But by the time they're

43:04 Making seats and dashboards, it's loaded with people. Right. Yeah. And it's the same with the guitar. We can make these parts on machines, but we have to put'em together by hand. I'm curious'cause I wanna we're gonna get to the nineties in a second here, but At this time, right, this is still the late eighties, you've broken a million dollars in sales. Compared to Martin, you're still small. I mean Martin was founded in eighteen thirty-three or something like that. It's been around for so long. It was an old company.

43:35 And it's a obviously a venerable, widely respected brand. I mean they're you know, this is like what Elvis played and Johnny Cash and Bob Dylan. I mean they they they played Martin guitars, right? Hank Williams. So this is a storied We made it through the disco age. They also made it through the Civil War. Right. You know what I'm saying? Right. Exactly. Yeah. And they're still family owned. Yeah. Yeah. And we we're doing something different. We're making a different kind of guitar that they didn't make. Martin was still making a traditional guitar that you played in bluegras music or folk music. So we became symbiotic with

44:20 A couple styles of music. One was Acoustic guitar tracks in pop music. You know, so like when a band like the Goo Goo Dolls was really popular, they're all playing acoustic guitars, right? And they're playing our guitars. So We were chasing Martin as far as Venerability as far as brand.

44:41 But Truly. They were starting to actually chase us a little bit because We had the red ball that they wanted and they had the blue ball that we wanted. But you were definitely looking

44:55 looking at them and saying, We have an opportunity here. Okay, so This is the late eighties and something is gonna happen 'Cause anybody I mean, you know, my age are, you know Anybody sort of over forty, let's say now. Will have remembered a time when MTV actually was relevant and played videos and music and everybody watched it.

45:16 Nineteen eighty nine they launched this thing called MTV Unplugged, which would be Unplugged series of concerts. The most legendary one, of course, is Nirvana's MTV Unplugged. And Eric Clapton. And Eric Clapton, sorry, yeah, which I think he won Grammys for. And this is going to even though it wasn't like MTV unplug sponsored by Taylor.

45:36 It was going to bring about a renaissance in acoustic guitars, right? For like all of a sudden acoustic guitars Like the disco era was disastrous. opposite. What what if the MTV unplugged thing mean for y for your business.

45:54 Well, the world changed. And we started growing like crazy. Were you able to get your guitars into the hands of some of those musicians? Yes, we weren't as aggressive as other people have been. Our goal without artist relations is to help.

46:10 Artists get their music played. We're sort of l like the pit crew for them. And their race. But um Getting our guitars into the hands of artists

46:20 Takes Going to those shows. You need to be backstage during You know, the MTV Video or the the Grammys or those types of things. You have to develop relationships.

46:32 And we try and honor that relationship. Alright, so I read that in nineteen ninety, so you're sixteen years in. I guess there was this feeling you had about forty employees at the time and And I guess there was this feeling that the two of you had that you didn't have a professional company, that you didn't have a professionalized

46:49 work for us and that Y you hired a consultant to kinda help you guys Uh, maybe I don't know if this is the right description, but turn you into like an adult. Run business is that Fair to say?

47:02 Yeah. Somewhere Back then. I read That when you have maybe uh

47:08 A founder. run company where you're making something. Most companies get sold. at around forty five or fifty employees, that's when the owner is starting to feel like they're just babysitting all day long. Tell me what do you mean by that. What was the challenge that you would face on a day to day basis? Your

47:26 Just I don't know. Employee. Well, you don't really have an HR department, people that decide that they want to make guitars. They're not really thinking of them of themselves as a professional guitar maker, they're thinking themselves more as a uh Hey, this could be a cool job.

47:46 You know, you go into a department and they're all cutting up or laughing or choking and I walk in and go, Yeah, it might be nice if maybe during the day would be how to build guitars. Right.

48:01 The problem's not with them, the problem's with me, us, our company. We have to learn how to become a good employer. We had to be able to offer better benefits. And so I wanted to get to where I felt like I deserved good employees. Yeah, I mean it seems to me that

48:17 'Cause you guys both got into this business'cause you wanted a job after high school, right? Like it wasn't like you were any different from the people who were now working for you. You were a couple of guys were like, This sounds like a cool job and But You didn't really begin to care about it until you owned the thing. I'm gonna say this. This is for me.

48:36 I made a commitment early on based on The experience That I had Being Poorer than a church mouse.

48:44 Yeah. For the first five or six years that we made guitars. And no one had ever heard in San Diego of such a thing as even being a guitar maker. They'd say, What do you do? Well I make guitars. I Oh really? Do you do that in your garage? No, I'm trying to build a factory. Oh, how's that working out? I'd be like Not very good. I was embarrassed. So that became a secondary goal.

49:05 That was every bit as important to me as the quality of the guitar and the market share we had. I wanted people to say, Oh yeah, I worked for that company and I retired from it. It was a incredible career for me. And that's sort of what I felt during that time. Now I want to make this job a career for the people who want it to be a career.

49:30 Let me come back in just a moment. Another Taylor enters the picture. This one, probably the most famous tailor. in the world. Stay with us, I'm Guy Raj and you're listening to how I built this. Welcome back to How I Built This, I'm Guy Raz.

50:06 So it's the early nineties and acoustic guitars are becoming popular again. And in a bit to drive growth for Taylor guitars, Kurt launches an ad campaign. One of the ads I've seen, this in the early 90s, it's very unusual is g you put these in guitar magazines, and it wasn't even a guitar in the ad, it was a tree. It's a tree, and it says, you know, here's a tree, it's a piece of wood, it can become a coffee table.

50:31 in one pair of hands, in another pair of hands it can become a sweet sounding guitar. Right. Some trees have all the luck. So right, a very unusual kind of uh. Tell me about that. Approach. We were lucky in being approached by a San Diego agency that had some ideas

50:47 And it was not focusing on features of the guitars or artists who played them. It was really Telling the story about the brand. And the love of the guitars. That really made an impact on the industry. They were also

51:04 Double page ads, which people weren't doing. Mm-hmm. And we had also started a quarterly magazine, which we still do today. Wooden steel you started this. Yeah, wo wooden steel, yeah. And that proved to be a good I'm assuming a good investment because it's a it doubles as a catalog. Yeah, exactly. And it grew to over three hundred thousand circulation, which is bigger than in the guitar magazine. Yeah. Um

51:27 In two thousand two. You broke ground on a factory in Ticate in Mexico to increase capacity. And I'm curious, I mean You know, It's interesting because a lot of people think that

51:40 inexpensive products from China. Have been around forever, but it really they haven't. I mean, in the nineties, it wasn't as common, certainly not in the eighties. There was a shift in the nineties when China became a member of the World Trade Organization. A lot of US companies and other European companies started to move production to China and manufacture in China. Дідю гайз о старт то сі е shift.

52:04 in sort of cut rate acoustic guitars coming into the US market from Asia? Absolutely. We saw that shift. We've seen a lot of people copy our guitars, but you pick'em up and it's like this is not a Taylor guitar. All right. I know you're gonna say that, but if I don't know anything about guitars, I'm like, hey, I can just get this off Amazon for eighty bucks, you know, I don't care where it's made. But I can get yours for two hundred and fifty bucks. Or let's just say I can get one for two hundred dollars from Asia and yours for two fifty. What is it About your guitar that sounds better.

52:33 why would I choose that guitar over a cheap Factory made one and you know, from China. The most obvious thing you're going to notice is what it is that we excel at and built our company on, and that's the playability of the guitar. Go back to the necks, the string height, all of that. We invented that.

52:53 So people are going to notice that and then they're gonna like the sound. The sound's more vibrant. And that's In a way it's hard to copy, in a way it's not. For example, if I try to make a guitar That sounds like a Martin guitar, which sounds different than our guitars. If I try to make that It always turns out to sound like my guitar. Like your mom's spaghetti, no matter how much she tries, it just keeps tasting like her spaghetti.

53:17 And then the other part of that is the brand. Kurt built the brand. Our guitars lived up to that brand. And people wanna be associated with that brand. So we do have a little pricing power in that we can make that guitar there. And it's

53:31 To me, it's offering those guitars to people that get into the brand and a lot of times they don't move up from that. That's their guitar for life. It's All the guitar they need. I I there are I I've spent so much time looking to see which guitars are played by which

53:49 artists I love and so I'm not gonna mention some of them'cause they don't all play your guitars. But um You have Jason Maraz and uh Zach Brown, Dave Matthews. Katie Parry.

54:02 And most importantly Taylor Swift. She plays Your guitar's not surprisingly'cause her name is Taylor, but How Did that relationship begin? I have to hear the story from the horse's mouth.

54:16 Because this is This is a big deal. So our receptionists Rang my desk. And she said, Bob, I've got a guy on the phone who's called a couple of times and When was this? Do you remember what year?

54:26 I'm gonna say Taylor's thirty five, she was fourteen, twenty years ago. Okay, first record came out in two thousand six, it was I think it's named Taylor Swift. Okay. So it was just right around then, just kinda just before then. So yeah, I picked up the phone. And hi, my name's Scott Swift. I know

54:44 that every dad thinks their daughter's special, but my daughter really is. And I sent a cassette tape with some of her music on it and He's also calling record companies. He's But he's calling thinking maybe.

55:00 You guys could also be part of a promotional thing with the And so I listen, it's like yeah, it's great. I well, we have a Trade show coming up. We have a little stage at the trade show. She could play at that trade show. Where was this uh convention? Anaheim, California. Anaheim, okay, the convention's there. So you have Taylor Swift. She comes out. Sitting on a stool playing some songs that she wrote. Nobody's in the room. I literally walked out into the foyer Th all these trade show and I'm like Guy.

55:29 Do me a favor. Come in here and sit down. I got a girl that's playing. I don't have anyone to listen to her. I don't have a crowd. Can you please I'm embarrassed. Can you come see her name is Taylor Swift. I need a crowd come in. And I'm like, Bob, I don't have time. I'm like going to see Jason Maraz down the road. I filled that room with people. And she plays and people are like, Wow, she's good. And then the next time she played in our booth was a couple years later and it kinda closed down the convention center just getting her in and out. And then she released her album called Fearless. That was her second album. Yeah, that has love story on it. I know this'cause I've seen her in concert, so I've been talking about the airshore and is she ran a contest in the United States and picked it was a radio contest.

56:12 And two. Winners from every state one. And they all got to bring a guest, and she paid for their airflights and their hotels. To come out and get a two hundred person Private concert from her.

56:26 At Taylor Guitars. In San Diego, in El Cajon. Yeah, in our factory here in El Cajon. And so she had her album release here at the factory. We set up chants. There was a big We've had a pretty close relationship with her for all that time. She also um has split her her guitar playing between Taylor guitar and Gibson guitars, so she uses those now too. We are the first and the longest, so a lot of people just think of her as playing two other guitars.

56:55 Her most famous guitar. Which she brought on stage. During this last tour, I think is the guitar a koyfish guitar you guys made for? Well what happened is we started a uh

57:09 We started a series called The gallery series and the first guitar I made I named it Living Jewel, and I had coi fish swimming around it. And we had this relationship with Taylor and her birthday is just before Christmas, and I took that Guitar out.

57:25 And sent it to her for her eighteenth birthday slash Christmas present. And she loved that guitar. I remember she called me on the Christmas morning. But um She played that guitar and she put it in the country music hall of fame in her display and then it disappeared out of there before the Eris tour and all of her fans you know, started online talking about what happened to that Koifish guitar. What happened to the Koifish guitar. It's not there anymore. I wonder if she's gonna bring it out.

57:53 And her dad actually wrote me on the first concert when she brought it out. And uh sent me a little video of just People going nuts. When she pulled that guitar,'cause all her fans follow every move she makes. All of these tiny little like And nuances.

58:11 They knew everything. It was crazy. Yeah, they know the Kansas City Chiefs now too. Yeah, exactly. You know? Exactly. They know the stats they're playing fantasy football. Yeah. Exactly. Yeah. Yeah, she's a force Yeah. Truer words were never spoken. Than the words that Scott Swift said to me on the phone that day, which is every dad thinks their daughter's special, but mine really is. She is.

58:34 You know, I'm curious uh there's so many questions I have about guitar, sir, because it's not It's not like a subscription it's like diapers where you're buying them every week, right? Or or you know, or shaving cream, right? It's a product that most people probably buy once. Obviously, if you're a very good guitarist, you might buy a few guitars, maybe more than that. Uh but most people buy one guitar. And the other thing is to what extent does this industry just depend on cyclical trends. Is it cyclical? I mean I we've talked about the disco era, the MTV unplugged era. I mean it seems like there's things that are out of your control, that there are just gonna be periods of time when people aren't interested in acoustic guitars and when they are interested in acoustic guitars. Or am I wrong about that? You're right about that. Yeah, I th I think that's true. Also, you know, if people get into guitar

59:24 They buy more guitars. And we call that GAS. That's an acronym for guitar acquisition syndrome. Where they're buying and selling guitars. I got this one, I got that one, they're looking for the new one. So there's that hobby. Correct in that If somebody bought

59:42 Uh one of our full size guitars that we make in in our Ticati Mexico factory. That's really enough guitar to last them their whole entire life. And so we wonder about this too, because Guy, we make Seven hundred and something guitars every day. Like where where do they even go?

1:00:02 You know, sometimes people say, Man, I see your guitars everywhere. I go well Yeah, we've made two million guitars. You're bound to see one. Yeah. Yeah, but but you're right, Guy. You know, what is the What's gonna happen as the baby boomers who came back to who really grew the guitar market all get older and die off? Are younger people gonna come in and take up the guitar? Mm-hmm. I know that by the two thousands, I think by two thousand two you cleared fifty million dollars in sales. Is there I mean, uh I'm jumping ahead for a sec here, but

1:00:33 In terms of sales now. Are most of your sales direct to consumer through your website or is it still Mainly through Retailers. Yeah. The direct sales is very small. Interesting. So it's like run it's almost like running shoes. Like like running stores still have a lot of pull a lot of weight.

1:00:51 in the running shoe business. It sounds similar to guitars, like you need to go to the shop and really Talk to the people there and but you're saying the majority of your sales by far are still through retailers. Absolutely by far. When we say the majority, we we're not saying fifty one percent. We're saying ninety percent. Ninety plus percent. Ninety plus percent. You know the thing about direct sales Even like Nike. You know, I read in the last year how they had really pushed their own

1:01:16 Direct sales and then They took that so far and now they're going back and, you know, embracing retailers again. So Yes. Except for Hoka got in while they were gone. Right. Right. Yeah. There's not just one way of doing it. Yeah. Right. They're d I think Nike Nike's doubling down on on wholesale again. because they've seen uh how it's been successful for other brands. I I wanna ask you about a very anomalous weird period in the history of Taylor Guitar's history of every business, which is Covid. And it's interesting, you know, we've done

1:01:49 Some businesses on the show now over ten years have done a lot, but there are a few that we've done that were really crushing it. During Covid, there's one in particular, I'm not gonna mention the name, but they're they're having some chall major challenges now because they bought way too much inventory. in the post Covid period thinking that that was the new normal. How did you guys I know that guitar sales went up like by an order of magnitude during Covid, like crazy numbers. Like you and you guys had your own

1:02:17 you're you know, fully integrated. You have your own production facilities. What was the demand like for you and how did you deal with it? A thousand guitars a day. Yeah. Yeah, just like stop and think about that for a second. Yeah, we're still recovering from it. The up and down of Covid and inflation and and you had to hire tons of people probably quickly. Yeah. Yeah, we did and we were tight you know, we were ripping boards off the wall to make guitars out of, you know. And

1:02:47 It was good. We knew that it wouldn't last. We tried our very utmost to protect us ourselves. We really tried for a soft landing and it it uh It wasn't exactly. Kurt and his sales team. Got on the phone and spent four months canceling.

1:03:05 From our end. Fifty million dollars worth of orders. Knowing that those aren't real orders. They weren't gonna be real. No. And if we actually made the guitar and filled the channel with all those guitars Then the retailers are gonna we're gonna have a big problem and we wouldn't be able to sell guitars'cause they'd be overloaded. That's what happened with other companies that made too much stuff. Yeah. And you know the last several years have been

1:03:29 at least as hard as any other years going all the way back to the beginning. Why? Because uh costs just ratcheted way up. But guitars you can't just raise the price. What's gone up? I mean you've got wood, you've got Labour. Okay. All the labor, all the overhead. Yes, and wood always costs more. The very best day to buy wood is today. Because tomorrow it's going to be more. Yeah. Because there's less of it.

1:03:56 We're doing things about that, but we have to have another show in thirty five to a hundred years. To see how that turned out. Right. You guys have planted all these trees in Cameroon, but they take like seventy years to mature, right? These ebony trees? Maybe a hundred. And then also in In Hawaii, but we can use that word in Thirty years from now. Ca wood.

1:04:17 You know, all our costs are up due to inflation, but that doesn't mean that Products that are price sensitive, you can just raise the price. To make the same margin that you were. It just doesn't work that way. You know,

1:04:30 I'll I'll just say it here. We go into a taco shop down here, buy two burritos and two Coke's. And you ask yourself, How how did I just spend forty one dollars? Right. So That's what happened to our profit. Yeah. Yeah. Forty one dollar lunch.

1:04:47 Of a couple of burritos. Those costs have moved throughout all of society and into our manufacturing process. Yeah, for sure. Um, and I mean you you guys have made some pretty big changes to the business over the past few years. Because I know, Kurt, I know you stepped down as CEO I think in twenty twenty two, and then you promoted your head of guitar development, Andy Powers. Uh he became the new CEO. Uhhuh. Yeah.

1:05:12 And I'm curious about this other thing you decided to do around that time, uh, which was you created an ESOP and and for people who don't uh know what it is, it's it's an employee stock ownership plan. Um Cliff Bar did it, um New Belgian Beer did it, I think um like King Arthur Flowers and Eesop company. Bob's Red Mill, which means it's employee owned. It really does give the employees I mean a they have a stake now in the business. They're not just like paid a wage. They actually have real equity in the company. And so they're they're incentivized to increase the value of the company because if the company ever gets sold, they I mean I think when Cliff Bar was sold, they g I don't know how many millionaires were created by that sale to Mondelez. Yeah. And so all your shares were sold to the employees. They were sold were both on the board, we're co chairs of the board. And I work every day. I still come in all the time. Yeah, we work for free. We work for free.

1:06:06 It was the best. Choice. Of all the choices. And I I always One of my sayings is invest in the inevitable.

1:06:15 And one thing that's inevitable is I'm gonna die. Yeah. That's inevitable. And so I'm going to sell this company My shares of it by accident when I die are on purpose before that. Unless you're in real estate.

1:06:27 Yeah. And so knowing that that's going to happen allows us a chance to Do it in the best way. Yeah. When you guys think about the journey you took, you know How much of of where you guys got to today, the success that you have had, do you attribute to the work, the grind,

1:06:47 And how much do you think has to do with just luck and good fortune? Uh I wanna put that to Kurt, to you first. Luck and good fortune. Well, there's a little bit of that and as they get older I see more of it. I'm less maybe

1:07:04 We're lucky when we started that um there weren't as many guitar brands. And obviously we worked very hard. We've kept our relationship from blowing up. Well, I think that we're lucky that we have good enough chemistry And I've been very happy.

1:07:20 With my partnership with Kurt and the work that we've accomplished together. And I could tell you that right now I could still work. But I can't work like I did then. Yeah.

1:07:31 You know. Well you know what, maybe I could. I just don't want to. It's nice to be able to take a nap in the afternoon if you want. Yeah Bob, I think you are seventy and Kurt maybe you're seventy two. Seventy three. Seventy three. Okay.

1:07:45 I mean I I know you're still involved in Taylor, but Now you're not operationally involved in the day-to-day, you've got more time on your hands, what are you doing? Well, I love being here.

1:07:56 I want to be here as long as I can. We still have a lot of responsibility here. And make sure the things stay on track. Um I have a car hobby. And uh My wife.

1:08:07 Is president ever local B Sean Freeze Club of San Diego and Wow. The Bichard Freeze Club. Yeah, and she uh, you know, bought this good little dog and and trained it and she's known her handler and she's been to the Westminster competing. Wow. So she's got the leash and the perfect U shape and she's like walking and the dog is trotting. Exactly. Yeah, the whole deal. She's been there and Yeah, the dog has uh over seventy thousand Instagram followers. The dog? That's incredible. Yeah, it's amazing. Pause. It's Kurt Listig and Bob Taylor, co-founders of Taylor Guitars.

1:08:49 Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And if you're interested in insights, ideas, and lessons from some of the world's greatest entrepreneurs, sign up for my newsletter at guyros.com or on Substack. This episode was produced by Alex Chung with music composed by Ramtina Rablui. It was edited by Neva Grant with research help from Mermel Wood. Our engineers are Patrick Murray and Maggie Luthar. Our production staff also includes Casey Herman, Chris Massini, John Isabella, Sam Paulson, Carrie Thompson, Catherine Seifer, Nor Gill, and Elaine Coates. I'm Guy Roz and you've been listening to how I built this.

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