Henry Juszkiewicz, Chairman & CEO of Gibson Brands Inc., sat down with me to discuss the Gibson brand and direction, and of course flying private airplanes on a visit to Las Vegas. A Harvard Business School grad and fellow pilot we had plenty to talk about. Henry’s marketing rep brought me out to the Gibson Tour bus in the back of the CES2014 Exhibit.
Ironically, my recording device had been all but lost the next day after the interview when the smartphone met its demise in a Jacuzzi spa. The recording was recently recovered and is here for us to enjoy the interview of one the music industries eclectic suppliers and branding genius. I tried to ask as many questions as possible with our timeframe. Henry Juszkiewicz and his partners acquired Gibson Guitars in 1986 and he has transformed the famed guitar company into a major lifestyle brand.
Ralph Naifeh – What is important to Gibson and you these days?
Henry Juszkiewicz – lifestyle.
RN – Okay, wow that’s big though.
HJ – That’s huge. That’s a very ambitious goal. But if you look at what we’re doing in light of that goal, it’s very consistent. We’re growing very rapidly. Last year, we grew 45%. Over the history, since I have been with Gibson, we’ve been growing in excess of 20% annually. So we continue to grow. We’ve accelerated growth. And the fact is, no one really cares about audio. There used to be a speaker room and electronics retailers, gone. There used to be a great display for AV receivers, gone. So now, audio is six plastic, cheapy speakers in a box.
RN – Which are horrible.
HJ – Yeah. They’re terrible audio, and the consumers have grown to think that that’s it. That’s the big setup. So you spend $5,000 for a big, beautiful video screen, and you spend $199 for cheap, plastic stuff. The balance has been lost of the entertainment value of great sound, so no companies are left standing. Toshiba got rid of their audio. Pioneer’s getting rid of their audio. Everybody’s walking away. The thought process is, “Consumers don’t like audio,” and that’s just not true. They’re just not willing to work and build their own speakers [chuckles]. They have to have the choice. So we love music and audio, and that’s where we want to go.
RN- I like the different brands concept. Plus, you have home this year. I don’t recall that being here last year.
HJ – Which one?
RN – Home. The home systems and–
HJ – No, we have audio. [Onkyo?] actually, – which we’re a major owner of – has another booth at the [?] where all the audio guys are.
RN – That’s under Gibson brand though [crosstalk]?
HJ – Well, it’s a member of the Gibson family. It’s a public company, and we don’t own it out right. But we are one of the largest shareholders. [Got you].
RN – That’s all because of you?
HJ – Yes. Of course, they had to like it too, so [chuckles] a partnership. And then, we bought TEAC. It really invented professional recording for–
RN – TEAC was the old reel-to-reel, wasn’t it?
HJ – Before TEAC, you could not afford to record [?]. They also invented the port-a-studio – remember? – And the cassette tape, four-track. They popularized recording by making really great equipment affordable for the consumer and the semi-pro. So that has a great, great history, and they’re part of our family now. Just in October, we bought Cakewalk, which makes recording software for the PC and whatever. So we are acquiring tools to utilize technology, to enhance a person’s life or their experience with entertainment content, music—
RN – That’s to bridge that gap and making a better experience for the consumers.
HJ – I was just in a panel, and the panel was called The Consumer Experience. Digital Hollywood, I was a panelist. And at the end of the panel, I said, “You should change the name of this panel because really, all you talk about was enhancing the experience of the advertisers [laughter].” Because we had– three guys out of the six were from advertising firms, and they were talking about how to get more money from the consumer. Well, I understand ad guys thinking that way. But where’s the guy that says, “What are you doing to make [crosstalk] the consumer’s life better?”
RN – To get the consumer to buy.
HJ – Yeah, you have to have balance [crosstalk]. You get and you give. Where’s the give [chuckles]? I get the get [chuckles]. But industries tend to look at that way. They look at the guy who writes the check, and that’s the advertiser – primarily – in the entertainment business.
RN – You’re kind of creating your own market. The market’s been in existence, but no one’s-
HJ – We are serving the market. Because what we do is– we can’t make money, unless we make people happy – period. You just can’t.
RN – It’s probably at the niche point right now – the niche market – for playing vinyl, playing LPs.
HJ – Well–
RN – Because that’s a much better sound, and anybody that’s listened to them–
HJ – Well, yes and no.
RN – Depends on your equipment?
HJ – No. I don’t know if I want to tell you the truth, because I’m an engineer [chuckles]. But do you know how Marshall amplifiers were invented?
RN – I stood in front of them, back when Black Sabbath first played (chuckles)
HJ – I know Jim Marshall. He told me how he invented it. So Jim Marshall ran a music store in London, and a lot of the early rockers used to frequent the store. They were buying Fender Twins, which are very small amplifiers. But they were playing really big arenas, and they were too small. So they said, “Jim, we really need a big amplifier.” And he says, “Well, that’s no problem.” He was a big band singer, and he said, “I’ll put my name on it, just like they used to put on the music holders in big bands. We’ll make it really, really bad.”
HJ – And he says, “So lads, what kind of sound do you want?” They said, “We like the sound of the Fender Twin, but they’re not big enough. They’re not loud enough.” So he says, “Let me see if I can copy it and put it in a big box – make it louder. Would that work?” They said, “Oh, yes. Absolutely.” It turns out, the Fender Twin circuit was patented. So he says, “If I put one thing in the circuit that doesn’t do a whole lot, I could defeat the patent.” So he decided to put a diode in– and he exactly counted– every Marshall is an exact copy of the Fender Twin.
RN – Holy cow.
HJ – And he put a diode in to defeat the patent. But it turns out, the diode did something. It clipped the signal, so it caused distortion, and that wasn’t a desired effect.
RN – No.
HJ – No. He wanted the– the Fender Twin is such a clean sound. People listened and said, “That’s not too bad.” So it was actually an accident.
RN – Really?
HJ – It caused a whole different sound, and it was a Fender copy. Did you know that? So that sound – which was an accident – was actually bad audio, because clipping audio is bad. Even musically, people consider it bad. But people heard it on so many tracks that they decided it sounded good. They liked that sound. So vinyl records are highly compressed, because vinyl is a physical media. You have a needle in a groove. And if there’s too much energy, the needle pops out. So you have to compress the sound and change the sound, in order for the needle not to pop out of the groove. So all the mix-down engineers changed the sound in an unacceptable audio way because they have a physical needle.
RN – Is that right?
HJ – Yes, look it up.
HJ – So now, people have heard that sound. And they say, “You know what? That’s a great sound.” But it isn’t a great sound. It’s artificially compressed to keep the needle in the groove, but they’ve come attached to that. Digital guys don’t have any needles, and they can have the full range of sounds. So what people call that “stereo-digital thing” is actually an accurate sound that is what the engineers tried to do in the first place.
RN – Was that what they’re trying to help to get with the speaker?
HJ – Exactly. But this aberration of vinyl and the nature of its mechanical self changed it, and that analog sound is actually a highly compressed sound ..
RN – I just missed that old sound though.
HJ – People got to like it.
RN – You can hear the needle, the clicks, and the beeps.
HJ – People have grown attached to it, and it’s not a bad sound. It’s just not accurate, so music is in the eye of the beholder. Some people think some music is garbage, and other people love it. The fact is, the consumer’s always right. So if they like vinyl, God bless them.
RN- That sounds like Theodore Levitt Marketing Myopia, back in 1960. He was spot on with that – listen to the customer. That’s the market.
HJ – That’s the whole point of marketing–
RN – Sell what they want [chuckles]. Sell them what they want.
HJ – I asked a lot people– I hold a marketing seminar. And I said, “Define marketing for me.” They have a hard time doing it. A lot of them, “Selling stuff to the consumers, advertise it.” I said, “No, marketing is to figure out what the customer likes and give it to him.” And no one ever says that – no one.
RN – Did you read Levitt’s works at Harvard?
HJ – Yes, I’ve read him and think very highly of him.
RN – Did you know him from Harvard?
HJ – I think I had ran into him. At Harvard, they have something called the Executive Program. That’s where very high-level executives will pay enormous amount of money for a boot camp at the school. They have their own building. So Harvard takes all the best professors and puts them in that program, because that’s where they make the most money. Students never get to hang with the really great guys, because all the high-level executives hang with those guys. We always got the B-team at the school [chuckles], believe it or not.
RN – When you were in business school?
HJ – Yes.
HJ – But I did run into them. They’re still part of the campus.
RN – It’s just amazing, the companies– some people just can’t think that way. The “listen-to-the-customer” concept has been around a long time. Marketing Myopia first publication was 1960 and it seems to keep evolving or being rediscovered. Which is good.
HJ – The guy’s brilliant. I’ve read a lot of his– he writes a lot of papers for Harvard Business Review. And really, he was very influential to me. Because I read it when I was a student, when the heart of his work was taught and discussed. Absolutely–
RN – Very impressed with him. May I ask you a few airplane questions?
HJ – Sure.
RN – I want to recap some things. You have the Diamond Aircraft. Do you own the Diamond [crosstalk]–?
HJ – Yes, Diamond 40 XLS.
RN – The 40?
HJ – Yeah. I got all the stuff. So I got– what do you call it? – something vision, where you have a three-dimensional–
RN – Synthetic Vision Technology part of the Garmin G1000 Integrated Avionics System …
HJ – I had the top-end garment.
RN – The Garmin, yeah. Because you had the upgrades.
HJ – Yeah, so I got all the upgrades to your plane.
RN – When did you first fly? Actually, what motivated you to fly? What got your interest, and when did you first actually take the–?
HJ – The whole idea of being free, and just going up in the air. It’s really a sense of freedom, and then became– actually, it was a lot of work – learning – because you’d have to apply all the FAA stuff. So I learned a lot of stuff, and then became a challenge. It was an intellectual challenge to master all the stuff you had to know when you went up in the plane. But it’s been difficult. I travel so much. I only did it for recreation. I enjoyed every minute I was in the air, but the overhead of maintaining the plane and doing all this stuff– I rarely fly today. I still have the plane, but I don’t have a chance to fly. I just don’t have the time.
RN – I have a lot of friends that are international pilots. One of them has a plane here in town. When they get here, they love going in the small plane and getting away.
HJ – Yeah, you can actually feel the air.
RN – Yes that is one of the best feelings you get flying small private aircraft.
HJ – The Diamond is enough of a plane that you have a real sense of flying like pilots of old did, and yet, enough automation that it’s safe [chuckles]. Because in the old days, if you’ve got lost – boom!
Yeah, because [crosstalk] radio. You had mentioned – I think, last time – about the Embraer Phenom. Now, you use that. Is that owned by the company or–?
HJ – No, no. I just lease it.
RN – You lease it when you need it?
HJ – Yes. It’s a fantastic plane.
RN – Is it the 100 or 300?
HJ – I usually do the 100, because it’s usually one or two passengers. Yeah. So the average business– I know the guys who lease them out. The average flight is one and a half guys. Even the Gulfstream, it’s hugely a single passenger to maybe two people on the average – which I find really hard to believe for such expensive equipment. We usually have four people in–
RN – four passengers
HJ – Yeah, but it’s a fabulous plane. It’s comfortable, but I can’t justify buying it.
RN – But you’re using it for business needs as the situation arises?
Absolutely, there are a lot of– when you go into second-tier markets– say, you’re going to even Cleveland.
RN – The airport as well, congested and time consuming.
HJ – If I go to Cleveland, [on commercial] I’m going to have to overnight it. And then, I’m going to have to spend hours dealing with airport, security, and stuff. It’s a fairly short flight. You can do a Phenom back and forth in roughly an hour, each way. And you have the flexibility of changing the time of the business meeting, or– and you can work on the plane, which is really hard to do when you’re flying commercial. The average lease cost is about two to three times first-class fare, if you load the plane. That’s easy to make up on an executive level. So a lot of times though, I’ll use it for deals.
RN – For–?
HJ – Business deals.
RN – When going to negotiate with somebody from another company?
HJ – Yeah. Where there’s millions of dollars at stake, and time is of the essence.
RN – I’ll just say multi-million. Actually, you answered the rest of questions I wanted to follow up with you on from the first time we met. I know you fly the Embraer Phenom 100s and sometimes 300s for business own a Diamond 40 XLS . But I was falling short when I was trying to write my first story, and I didn’t want to publish inaccurately. When I first came here to Gibson, the marketing guy says to me, “Come in and meet the CEO. He flies.” I had no idea I was going to get all of this. Thank you so much!
Oh my goodness look who just came onto your tour bus, its Christopher Lloyd! Well that explains the car. You will have to tell me about this next time.
RN – Henry, thank you for everything. We can do this again next CES2015.