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- [00:01]
A
There's no way an accountant came up with that idea.
- [00:05]
B
It, quite frankly, was never meant to be this big.
- [00:08]
C
The Know youw Gear Podcast the Know youw Gear Podcast is brought to you by Patreon Members Channel members and viewers who like and subscribe. Thank you for making this possible.
- [00:21]
A
So if you watch this podcast, you'll know that I sat down with Gabe, the CEO of Guitar center and had a nice talk about the industry and the future of Guitar Center. And now I'm sitting down with the CEO of Sweetwater, Mike Klim. We spent some time together walking through Sweetwater, their warehouse, their facility. And then afterward we sat down and discussed questions and topics for my patrons. Here's what happened right now, in the current time, right now, the industry's faced with. We're seeing a lot of companies go out of business, right? There's the. It's easy to be doom and gloom. It's just easy. What's your take on the industry right now?
- [00:53]
B
Listen, we're pretty optimistic. It is a weird season. We, you know, you know, this industry is a pretty slow, steady grower. You go back 20 years, pretty, pretty slow single digit growth. The pandemic caused us all to be home creating and perhaps that caused a little bit of pull forward or you know, I made a purchase, now maybe I won't, you know, buy a guitar next year. That's starting to get back to normal. Now we've got, you know, some of the macro, the economic headlines and look, there's some pressure on us as consumers. We see a lot more use of financing and payment terms. So that's not new. We're always trying to offer creativity into getting you the right gear and getting you back to your gig, to your craft. We actually see optimism in and this is interesting, all the AI headlines now we're actually watching a surgeons in creativity and some people are like, is AI going to eat the industry? Are our viewpoint is like, no, it's actually causing people to sit down and make me music that sounds like, oh wait, I'm creative. Oh wait, this is fun. Maybe I should get an instrument and do this the right way. So we're actually seeing some signs of acceleration in the industry. A million students this fall will start a band program, take on an instrument. 60% of them will quit in the first year. So everything I was saying earlier about renting instruments and providing a better quality instrument, like we've got to inspire students to get excited about music. If we can get to that aha moment where oh, this is fun, I could See myself doing this. We're really invested into that, as are many in our industry. And if we can all do that together, we have great optimism for this for the next few years.
- [02:36]
A
I obviously interviewed Gabe, the CEO of Guitar center, and that in my opinion, right now, their strongest suit they. This is my opinion, is that you can trade in gear. My addiction knows no bounds. Okay, all right. If you slow down the economy on me, I'm just going to find new, creative ways to figure it out. Okay, so trading is a thing for me, right? Like, I'm, like, I can't really pull money out of the wallet, but I could take a thing I don't use very much and down and get a thing I will use more or gives me, you know, a dopamine hit for.
- [03:11]
B
A little while at least.
- [03:12]
A
And that's their one advantage to me as an industry. But you guys have gear exchange. Obviously, you're putting the incentive on, hey, if you pick the Sweetwater gift card option, no fees. Was that a strategy for the future for something like this?
- [03:30]
B
And listen, you're spot on. Guitar center is great at used gear. Local stores are great. Richie would have said, hey, that was the thing that was working the most. We aren't trying to be any of that again. We want to be good at what we're good at. Gear Exchange. And maybe we should explain if you haven't experienced it yet, it's a marketplace. On our website, you know, you have a piece of gear, you list it, fellow customer buys it. We're never putting hands on the gear. But with one very unique advantage, which is if you take it as store credit in the form of a gift card, we will waive all the fees. Zero fees. It's not to go compete with ebay or Reverb or other marketplace. So we're not trying to be that big. We're trying to say for our customers, and especially the customers maybe are having a tough time right now. Let's get you a new gear, and let's make sure you can apply all that value of the current gear towards the new as a service. And let's make that available to our customers. And it has taken off. It's really resonating right now. And then you're right. There's also the treasure hunt to it, which is there's a. And I'm the same way. We have all the new gear here, but I still love finding that one unique thing, that vintage thing. And so now that lets us serve those customers as well and keep it within sweetwater.com.
- [04:47]
A
Yeah, it makes sense. I mean, look, you sell a thousand dollar guitar, seven and a half percent, $75, that's a pedal. You could give that money away or you could get yourself a pedal, you know, I mean, so, so I mean, I get it. The only question to it I have, it's more of a have you considered this or have you tried? And it just didn't work. With companies like Reverb, is there a way to partner with them, saying, hey, offer to pay Reverb's fees for the customer to get a gift card. I mean, that's a big audience to tap into. Have you guys considered that or have you tried that in the past?
- [05:26]
B
Certainly. Could we. Look, we like the kind of growth path that it's on right now here again, there's such a thing as growing it too quickly. We want to maintain a level of trust. We put a lot of energy into even badging the seller, you know, Sweetwater customer since 2007. Or there's a certain community element that sort of avoids some of the feelings on other marketplaces of can I trust it? You know, is this a scam or whatever? So we kind of like the slow and steady growth with it right now. But I'm just telling you, customers are loving it. So it may be taken off from here, but yeah, there's probably a number of good ideas we could talk about there.
- [06:05]
A
How do you decide whether a brand should come in or not?
- [06:08]
B
Yeah, it's a great question. And we have now some 2000 brands a little bit over that. We're actually very thoughtful there. We take our promises very seriously. So when we bring on a new brand and we're investing in them, they're investing in us. We have a high level of trust. We're in it for mutual growth. And so the last thing we want to do is dilute that with a number of other brands. And so there's a certain amount of just integrity in those decisions. We also, we're paying attention to not just clicks and searches, like we know what customers are looking for. That's not on the website, but we're also on the phone with you all day long so we get to hear what are the trends and the brands that maybe we don't. And so we're always feeding that back. And listen, we've added a lot of brands along the way that our customer requests, so we're very open to. But we're just very careful not to grow too quickly in that sense because our brand depends on being the expert. Like when you call in and you ask us questions about products. This is not a call center. This is not like a, you know, have a bunch of inventory and I'm just reading the specs off of my. Like we do real training. Like these companies come in, I know you test and so and we take that very seriously. It's like we need to be an expert. We need to be able to represent that product well. And so the answer is we're adding a lot of product. You know, if there's a brand we're not carrying, good chance we are, we will in the future. But we're just, we do that in a very controlled way to make sure we're protecting the experience here.
- [07:26]
A
To a mid sized business, the guitar industry. If they get Sweetwater, I mean that's the white whale, right? That's, you're, you're good. So I can see. And one thing I, because I've been here so many times, I've done tours, I've seen things. One thing I know you do is there's a saying, it's like a mile wide and an inch deep. You guys aren't like that. It's like if you carry something, you carry it like the whole brand. So I'm very aware that the commitment from you guys plus I get to hang out with all the brands and they all kind of talk, you know, and it's true, like some brands will tell me a lot of the retailers period, but much less the bigger ones. They're selective. This is the, these are the 10 SKUs they want to carry that do well. But you guys tend to like you'll pull almost the whole line of a company in or the mass, you know, majority of it. So I would imagine that's a big problem too when you're vetting a company because it's not just hey, your top two sellers of this send those to us, we'll see how it goes. And I could be wrong. This is part of the question, I guess as far as I know you don't drop ship. Like if it comes from Sweetwater, comes from here or is there some cases where you still have a vendor send direct from their warehouse.
- [08:34]
B
It's very rare for us to drop ship nearly all out of place this one location. And you're absolutely right. And what you find out is, you know, when I say mutual growth and true relationship with the manufacturers, we actually have a heart back for them which is sometimes they want to come on board with Sweetwater. And you know, some of these smaller brands, it's like the last thing we want to do is actually flood them with so many orders that it could actually impact their quality or their reputation. And so it's actually, it's a two way dialogue. And when the time is right and we feel like it's a great partnership, yeah, we tend to go all in so that we can really, really maximize because that's good growth for the industry. When we can help all these brands, you know, grow and raise the whole ocean, that's really what we love doing.
- [09:15]
A
You guys try not to bring in too many of the exact same things. In other words, the brand, some things are just not unique enough from each other. Is that kind of still fair?
- [09:24]
B
I think that's fair. I mean, you know, in old school retail, you have a grocery store and you can only fit so many things on the shelf. And so there's this about what to carry. I think we live in an Internet world now where every one of those products has some built in demand, if you think about it that way. And so we're happy to stock those products because we know somewhere somebody wants that. And so it's not really this product is better than this other one. It's just it's right for somebody. And so that's why the training matters so much. And that's what Sweetwater's done for four decades now is let's get to know you as a person. What are you actually trying to achieve with this instrument? Oh, I want to volunteer at my church, play on stage, record an album. Like we're asking the right questions. We're getting to know you so that then we can point you into the right instrument or piece of gear and really make sure we're propelling you towards whatever that goal is.
- [10:12]
C
Can I ask a question? Is it if somebody doesn't like their sales engineer, how difficult is it to request a new one?
- [10:20]
A
What's the best advice to the customer is what I'm asking.
- [10:22]
B
Yeah, the answer, you certainly can change. We actually use a lot of science to do the matchmaking and our hit rate's pretty good. And what we're trying to do is because again, it's not a call center. It's not just transactional. It's like, how do we get passion to ignite on that phone? Oh, you play. Oh, you volunteer at your church. And so like, we're actually using a lot of technology to get you to the right place. Look, if it doesn't vibe, then we're happy to make a change. We're, we're also happy to Meet the customer where they are. Another question we get is, does it always have to be over the phone? Of course not. We're happy to email, text, any communication that's comfortable, especially generationally or even, like, look, I'm in the studio. I can't pick up the phone. We're putting a lot of effort into, like, you tell us how you want to interact with and who, and we'll. Right. Size that for each of the customers.
- [11:12]
A
I was having lunch here, just talking to some employees, and a class, a training class was there, and they came out and they were. And I was just talking to myself. You know, I was looking for how do you like Sweetwater? And they were like, yeah, the cafeteria is nice. Like, I didn't know what to expect. And they were like, oh, yeah, I love it. The training's intense. And I go, oh, yeah. And they go, the test is brutal. And I'm like, what do you mean? And they're like.
- [11:32]
B
And you said, let me take the test.
- [11:33]
A
Yeah. And I'm like. And so I ran to Tyler and I said, can I take the test?
- [11:37]
B
And how'd you do?
- [11:39]
A
I. Okay. She might have been being nice. You know, the people in Indiana are just really nice. Okay, that's true. Okay. She said I was hireable, but I was. I think it was a little. My personality, what I did, what you expect. I nailed most the guitar stuff. I was horrible at everything else. Like, I apparently. Don't ask me about keyboards or drums or microphones. Right. That's where I was. And that's what I. And that's when I learned. Because, by the way, at that time, I just believed, because I used to run a dialer system like you guys have. So I'm very familiar with the system. I just assumed, like, all systems that routed correctly. So, like, if I call in and I'm a guitar customer, I got guitar guy, and if I got drum customer, I got drum guy. I had no idea that you made everyone here learn every type of product, basically.
- [12:34]
B
Because what we've learned over years is what really matters is that relationship. Each customer, I have a guy or gal on the inside. No matter what my issue, whether I'm buying something, whether I need support, whether I have a return, I've always got a person, and I have high level of trust and truly nurturing that relationship. And so, you know, these sales engineers that we recruit from all over the country, very few from here in Fort Wayne, True pedigree in music. Before you ever begin, you go through the 13 weeks, you take the test. You go through the 13 weeks of Sweetwater University, which is really legit training. I've never seen anything like it in any industry. Like true expertise. And then as a customer, you get matched up with one of these experts. We use a lot of science to match you up by genre and skill level and instrument. And then getting to know you as a person, not just waiting for the phone to ring, but then nurturing that so that we can really get to know you, push you towards those goals. And so, yeah, we take it very seriously, the training and the testing across all categories to make sure, you know, today I'm playing guitar, but now I want to move into recording. Now I want to move into live. We want to make sure that's a seamless conversation across all those categories.
- [13:43]
A
That part of what you're saying, that's a very. And I'm going to mean this with a very corporate speak. Like everybody's like, we take our training seriously. And when I heard you did. 13 weeks of training is expensive investment because of churn, because of all the things you know. Right. You still know if they're going to love this job after they get it. So 13 weeks is a heavy investment to pull up.
- [14:01]
B
It's a big investment. But it goes back to what you said earlier. You're very right. We're in it for the long game. And Chuck would always teach us you're either adding credibility or you're taking away. And we want to make sure that by the time you're interacting with customers, that we've invested that 13 weeks on our dime and said, yes, you're now at the level that the customers are used to when they talk to Sweetwater.
- [14:25]
A
No one's doubting Sweetwater is doing great. Comes across. You wouldn't get free candy away if you couldn't afford it. But have you thought about or considered lowering the guitars that get the 55 point inspection below the $400 threshold? Or maybe creating a 25 point inspection, obviously 55 point inspections for $399 up. Right. Have you, have you guys, have you guys considered maybe some option like that below?
- [14:58]
B
We think about it all the time, 100%. The history and the price point used to be a little bit lower. And then as prices change, we've kind of navigated that. So there's a lot of thoughtfulness that goes in. Some of the original thinking was really like, what are the guitars where we can add value with the photos. In other words, if it's a solid color versus a wood grain and so there's been a lot of thoughtfulness in there. One of the innovation we have happening back there right now is actually using some robotics and some automation and some really, really good test results coming out already. We have 1300 different guitars that we're able to automate with some robotics to make the photos go faster, more efficiently. If that works the way we hope, then there are options available to us to maybe expand that program.
- [15:43]
A
I always kind of took it as, and I think people too took it as a value proposition. Like you want to add value to guitars $400 above by giving the pictures and the 55 points. I never thought about as like a cost analysis. Like, yeah, you just can't. It's not even the price point. It's probably the volume. You sell so many guitars in that price point, that's more employees, more camera time, more unboxing, reboxing just is it. So I never thought about if you automate more that will help you do that. I always thought, you guys, I'm just being honest, picked a number and said if you got this kind of money in your pocket, you get these services and if you don't, you don't. I never thought about it as a logistical issue.
- [16:20]
B
It is literally the opposite. It's okay, what are the types of guitars where we can add value? And then let's back into a price point that generally gets us there. And that's consistent with how Sweetwater thinks about everything. Where can we add value? We never come into a category or a new, you know, category or instrument and say we just want to take market share. It's like if we're going to sell these, what can we do to add value? That's how the guitar gallery was invented, the inspection. And so the price point is where it is because we think we can maximize value in those price points. And so I'm not exactly promising we can lower the price point, but what we can do is scale out towards maybe it's other instrument types. We just want to keep expanding that where we think we can give away more value to customers.
- [17:01]
A
Right. So when you think of other online retailers under other big giants, we know who they all the players are. They all have their own brand of inexpensive instruments. So whether it's over in Europe, that big retailer, the other big retailer in the US and even some of the mid size and small size retailers, when you go, they all offer like a signature brand, like Kirkland, Costco, they all offer the signature brand. And so the question is why doesn't or will you consider or do you consider? Why doesn't Sweetwater have a signature like economy brand or something like that?
- [17:38]
B
The understanding here is we like being good partners with our manufacturers. And so in so many industries you have a private label strategy because you can make more money, you can expand the margin. And we just always felt like it was better to offer great instruments that people want to be real partners with those manufacturers as opposed to just grinding for the last nickel and thinking of them as suppliers. Like we're in it for mutual growth. And so we've just always liked supporting the brands that people wanted. And listen, we do a little bit of with accessories and some things where we think we can add value here. Again, it's because we're on the phone with customers all day long. We're kind of at the front lines knowing what people want. And so we do a lot of co development with manufacturers, a little bit of manufacturing ourselves. But in terms of like instruments and significant big ticket items, no near term plan.
- [18:30]
A
A definite upward trend is it was used to be ones or twosie. Now it's dozens and dozens of people having guitars made in Asia with high specs, you know, bone nut locking, tuning keys, Alnico 5 pickups, stainless steel frets, roasted necks, just throwing every spec that would make, you know, it's a, it's a laundry list of the, the good stuff at this crazy low price point. And there, and that's where I saw like, you know, some of the other retailers looking like maybe that's probably what they were addressing. Right. Because a new guitar player, the laundry list of specs is the selling point. You know, without the personal part, without the knowledge behind it. Just you take like buying a tv, how many pixels does it have? You know, right. How big? How many inches is it? It's. Oh, this has all these things. This one just says, oh, it's a brand name. So is there, is there a thought into the concern of what that starts chopping out that market? Right. Because you're, you're, I, I by the way, champion you sticking with the vendors, you know, and the, in the brands, you know. Right. The ch you, you work with. I think that's great. Not to compete with them by the way. I'm, that's definitely my take. I, I don't think it's a good idea to compete with the people you're working with. However, this is a growing thing. If you don't know it's this, like I said, just throwing the specs and, and, and then the only thing the Other the brands have to offer is the brand name.
- [20:02]
B
So I think, I think it just. Sweetwater's in it for love of the game. We're in it for lifelong journeys with customers. We want to stand behind every sale. It's not about making money on this one transaction. We want to work with brands that first of all are trustworthy, that are making a good product, a product that people want. We want to know that those companies are going to be around a year from now, five years from now, so that the support is there, the warranty is good. Does that make sense? Oh, yeah. Some of these companies, I worry, are importing, they're hitting the price points, hitting the specs, but then if something goes wrong with that instrument, is the company still there to support? So we've just decided to invest in the partners where we know we can deliver an experience for that customer because we're going to be with you for a long, long time. And we need you to have that trust and loyalty in our brand.
- [20:47]
A
Okay, that makes a lot of sense. So bright, you're more in the long haul. You're linking long game. So short game, I'm going to sum it up, and if I'm wrong, correct me. Short game, get that fast sale. Long game, get that customer to stick with you. So even though you could probably excite them with that spec sheet and cheap price, you're probably also taking a chance that something goes wrong in that transaction.
- [21:09]
B
And you lose the price, which is how Sweetwater has grown for now. Four decades, 12 million customers telling each other, hey, I had this great experience. And so we win by giving away more value and we win by developing that trust and that word of mouth. And so there's a lot greater opportunity for us getting a great instrument in your hands.
- [21:27]
A
There's something that happened recently, this year that really got me thinking, and it was when Marshall Guitars got purchased earlier this year for a billion dollars. Okay. And when they were discussing this valuation, they were essentially assigning, and these are generic numbers, 300 million to the AMP division. That means like 700 million was to the Bluetooth speakers, headphones, refrigerators. And that's important because a billion dollar company is a titan in this industry, right? I mean, you know, and now that company is outside of our industry. Does that make sense? They're growing. Like you go to the airport, there's a Marshall Bluetooth speaker for sale, Right. They can go outside the industry to get bigger. And this is not sweet guitars, this is sweet water. Right? And so I notice, like on your, on Your website. You guys are cameras now. You guys are, I mean, you know, hi Fi audio. So I'm curious, like, is there. Obviously there's. I think you guys look like you're going outside into other endeavors. And so I'm one, curious how that's going and two, what's kind of the logic behind that, is it.
- [22:37]
B
No, it's good. First of all, we've carried some amount of hi Fi and cameras for a long time. We just never really promoted it. And that kind of goes back to. We have these relationships with customers. If we can take care of existing customers with the products, we're very happy to do that. Even though we're not going out to market and really kind of broadly promoting those categories. What we're finding out, what's really interesting to me is there's a real trend going on right now that we would just refer to as musicians or creators. And you have so many of us that grew up aspiring to be on a stage playing live music. You know, our heroes were rock stars. And now we're in a world where you're the hero to so many.
- [23:14]
A
Yeah, I wouldn't say that, but I appreciate the compliment.
- [23:16]
B
I want to be a YouTube star. Right. And the lines are becoming blurry. The reality is it's a lot of the same gear. Right. It's the same innate human creativity. I want to express myself. It may no longer be on a pointy guitar and that kind of moves us towards, okay, well what is the gear then that rounds out that and it tends to be out towards cameras, the lighting and so forth. So, yeah, it's an expansion, but it's a natural expansion. And again, it's just taking care of these existing customers that are, you know what, I played music, now I want to be maybe out on social media, trend towards short form video. A lot of this fueled by the pandemic, as we were all home and in some cases musicians needed to find a revenue stream online. And so it was just a natural extension.
- [24:05]
A
This is my thing about you guys and your growth projection, which has just been astronomical. Right. To say the least. Right. I mean, in 2019, your warehouse was half the size as it is now. And no, actually in 2019, your warehouse was the same size as the warehouse that you have on the other side of the country. And now you have a warehouse that's twice the size.
- [24:25]
B
That's probably right.
- [24:26]
A
And here you guys are growing like crazy.
- [24:28]
B
So I've been here 22 years, I've watched a lot of that growth. When I started it was a $4 million website. And so I've gotten to see many years of that growth. And what you find out is it starts with heart. Chuck Sirack founded this company to take care of musicians, to actually care about the human beings, because it's just the right thing to do for humans. And we surround that with this obsession over detail. Like, I've never seen anywhere. Every single detail. Why did this one customer have a bad experience? Why did we fail on this one detail? We surround that with adding more value. We win by giving away value. This guitar gallery, this inspection, this tech support, the warranty, the candy, and then true relationships, like actually building a system around that so that we can get to know you one to one, store that in our system and make sure that experience flows through the website, all the marketing. And then we surround that with the expertise and then into innovation. And so there's a playbook there. And then again, as we move from category to category, Chuck never wanted to go into a category if we weren't adding something new. And that's an important point. Like, it's not just we want to grow at all costs and get like, this company really is in it for love of the game. And so when we moved into guitars, it was, let's do this inspection. Let's do this guitar gallery. Some of our most exciting growth right now is actually with educators and band and orchestra instruments. And here again, we're now renting instruments. Not just selling, but we're renting nationwide. And we're doing it by putting a better quality instrument into that student's hand. Upgraded mouthpiece, ligature case. And so every time we move towards something, it's how can we add value that didn't exist before? And if we do that, the industry grows. We create new musicians. We're actually fueling the future. And so I love that about this culture. It's not just about how do we win in a business sense, but how do we just actually grow the musicians for love of the game.
- [26:26]
A
But you are absolutely winning. That brings me to you, which is a funny thing, because one of my favorite things, since we both know Jack, Jack Higelbotham. One of my favorite things about Jack is he's COO of purest runs SE now. In 1985, he started sanding guitars. You know, he's sanding guitars at prs. I love that. Right? Didn't you love that? Sanding guitars now, you know, 40 years later, I'm running stuff. Right. That's an interesting thing because so Chuck. Chuck moves on Right. Okay. And they got to fill your seat. This is a big company. It's a billion dollar behemoth. Right. So you know, like obviously the ex COO of some tech companies coming in and then here's you and you can tell me. But it's all started. My understanding is I know you start here 2022 years ago you built the website. Is that something to effect like that.
- [27:26]
B
Partnered with Chuck early on. At that point in time we were selling over the phone still to this day the way we like it, where we can get to know you. But Chuck had a vision to this is 2003 is still early days of E commerce. And so we built out that website not really to be like to sell online like in the kind of Amazon transaction way, but to really use the Internet to meet new customers, to sort of funnel into that experience. Still works that way today. If you buy an order online, we're going to interact with you and find out do you want to have a sales engineer? Can we help? Can we push along the journey? And yeah, I just, I fell in love with that. And when you run the e commerce website, you get to kind of see how all the parts work and shipping and pricing. And so I just built that up over 20 years and yeah, in 2021 when. And by the way, we can talk about that. When Chuck came to the decision to bring investors in had nothing to do with money. What you find out about Chuck is a wonderful man and a heart for this community and some philanthropy and some things he was doing. He was already spending his time there. And the pandemic kind of brought him all the way back into the business. As you know, we sell the things you need to stream from your home, school, business, church, you know, bucket list. Always wanted to play guitar. So our business took off. Chuck says, wait a minute. I was trying to, you know, spend my energy into doing some other good in in the region. Brought him to the decision to bring an investor so that Sweetwater could be on solid ground so that he could go back and invest some of that energy. And that's so cool to see. He's living his best life right now, just having just wonderful impact. And that's how I got into the seed is you. You know, I'm the digital guy. I know how to get us into this next generation with AI and how do we keep growing the company but more importantly, how do we protect the magic and the culture and everything he built for four decades here? Because we do. We win in unique ways by giving away more Value. And there's a lot of things here that you can mess up if you brought in some outside leadership. Our investors believe in that. They're very supportive of that. They understand this is in some ways a very expensive business model. We give all that value away. And so the transition has been very good.
- [29:47]
A
So I took it as promotion. Within is an attempt to preserve culture, because if you bring somebody out to lead, you're going to change everything. And so that's why. And you know, let's be honest, it's just so cool when that happens. I mean, congratulations to you. Obviously, it's well earned.
- [30:06]
B
Thank you.
- [30:07]
A
But, you know, everyone's felt the pain of the, oh, we're pulling from outside in. And you know that there's people here that can do it. And so I'm first. Congratulations again. But also at home at heart, I'm always pro the small shop. I think it's insightful for them to see this because that's essentially what you've done, is you've captured the small shop mentality and you've just figured out how to expand it. That's what I see.
- [30:34]
B
I think that's right. And thank you. And you know, it's a company built up of musicians. I'm a musician. We understand the customers and the product well. We talk about this a lot, though. Sweetwater has really specialized in online sales and developing relationships, which is different than what independent stores do, what other brick and mortar stores do, even what Amazon does. And we really believe, like, if we're really all in it for the right reasons and we really want to grow creativity on earth, we're all playing a different part. And so, listen, local stores are very important for our ecosystem.
- [31:10]
A
I agree.
- [31:10]
B
That's where probably you and I both grew up. Getting hands on gear, falling in love with gear. And so we actually have a heart for that. People are like, oh, big Sweetwater. You know, we don't think about competition, quite frankly. Honest to God, I don't think in 22 years I've ever heard Chuck talk much about, like, we need to go beat a competitor. It really is. He had a word for it, kaizen. It's a phrase that means, how do we just come in and get incrementally better every day? Sort of like a game of golf where it's like, not playing each other's scores. I'm just playing my own score. And how do we come in and just get a little bit better? And I think that's the culture. And to your point, it's like not towards, like, one big goal, but how do we do that towards the thousand little things we're going to do today? Like, like, literally every detail matters, and how do we just make it one notch better? And if we do that, then we bring the ocean up. Then independent stores win, too. The brands win, and so hopefully we're playing a part to grow the whole pie.
- [32:04]
A
This is a question they always ask. I already know the answer. You're gonna.
- [32:09]
B
Let's hear it.
- [32:10]
A
Everybody makes the face. Is Sweetwater considering opening stores? Right. I'm sure you should. I.
- [32:17]
B
What should we do?
- [32:19]
A
You know what? You should never listen to me, but since you asked. No, what you said today is what I seen. I've confirmed it many times. Like, that's why you guys. Look, you guys let me run through this place like crazy, you know, a couple of times now. And, you know, there was no, don't look in this room. Don't. Right.
- [32:36]
B
It was just, you guys, so many brands that they have to sort of invent their story. And we just, like, we just pull back the curtain and say, listen, this is who we are. It's all real.
- [32:46]
A
This is my observation. The way you set up the system is, I don't know how many reps you have now. 400? Something like that. Okay. More. It's a beehive. More so than a dragon. Right?
- [33:01]
B
Interesting.
- [33:02]
A
And so when you say, look, I. I'm not an actor. When you say, oh, we care about the customer, I can roll my eyes. I have no reason to. Is it because I'm not Right. The reason I'm not rolling my eyes is. I mean, I get it. That's what the reps are doing. They're making relationships. You're, like I said, a beehive. You're making hundreds of thousands, if not millions of millions of relationships. And the reason I like talking about this and why I'm happy and thank you for letting me talk to you today is this isn't world domination through economics of scale. This is something. Right. Repeated a thousand times.
- [33:39]
B
It, quite frankly, was never meant to be this big. It really was. How do we just care for these musicians? How do we take care of one customer at a time, one detail at a time? We come in every day. We do that with passion and precision. The growth will follow, the money will follow. It was never about. We must hit this financial goal. And I think that's testament to this business model is like, when you're in it for that sincere relationship, you know, it shows.
- [34:06]
A
Sure. Well, there's one takeaway here today, you vibe like a small business. You personally, you vibe. It's weird. It's. It's great. It's great.
- [34:17]
B
You know, weird in a good way.
- [34:19]
A
It's weird in a good way. You know, it's, it's. You know, I think the. Maybe this is the best way to explain it. It's the first time I walked in the physical store here, the music store here. It's 40,000 square feet, it's full of all this dream gear, and it's in a place where like, it doesn't need to be. Right. Like that store, your store is so epic. It deserves to be in downtown Manhattan or on.
- [34:45]
B
It is actually the largest musical instrument store in the country.
- [34:49]
A
And. Right. And I'm trying to say, you see this? I stutter when I don't want to say what I want to say. Right. It's just because I love Fort Wayne. I've been here many times. I told you the people. You're not going to hate on Fort Wayne though, are you? No, I'm not hating on Fort Wayne. I'm just saying, does Fort Wayne deserve a 40,000 square foot store? Maybe not. Right.
- [35:08]
B
But it's in our backyard and we love supporting and it's a destination store. And the amount of people, even today we walk out there that drive in from states away.
- [35:16]
A
Sure.
- [35:17]
B
Because where else are you going to find, you know, across the parking lot is a warehouse full of, you know, thousands of products. And so you come in and say, hey, I want to compare this, you know, boutique amplifier to this one. No problem. We'll ship them up from the warehouse, we'll set you up in the demo room for half a day. Like not many places you can do that. And so we get people from all over. Anyway, I get your point, which is we love that compliment. This feels like a old school mom and pop customer service.
- [35:42]
A
Yeah.
- [35:42]
B
Like, and we love it.
- [35:43]
A
Just you defending it right now proves my point. There's no math that makes that business sense wise. There's no way an accountant came up with that idea. Right. There's no way somebody went, hey, here's a great idea. Let's make a giant store in a city that's beautiful. But you know, like I said, it's not a major metropolitan place that, you know, it's equivalent like a Bass Pro shop, you know. Right. And that to me is the testimonial of the mindset that somehow exists here. And that's why I kind of secretly like it that you guys are winning because. Because these are the ideas that you tell yourself that win, and then so many times more than not, they're not the ideas that win. The ideas that win are the very.
- [36:28]
B
Accountant type answers when you find out it's. It's from actual heart.
- [36:32]
A
Well, Mike, I appreciate this so much. This was. He gave us an amazing amount of time today. Took us on a tour, hung out with us today. I know your time is extremely valuable. I appreciate it in every way, especially being candid tonight. And so thank you for coming.
- [36:46]
B
Super fun, you know, we love sharing it. Love having you out.
- [36:49]
A
Yeah. Thank you. And on that note, I just want to thank all you guys for your time. Until the next time, know your gear. Excuse me?
- [36:56]
C
You keep covering your face with your hands because you're not used to the cameras being over here.
- [37:00]
A
Okay? I won't do that. This ain't like a news interview. This is a proprietary. I understand. Have you guys considered maybe some automate more that will help you down there? And that's where I saw, like, you know. Right. You still know if they're gonna love this job after they get it, have more margin. And again, we know the shipping costs and.