What can we, as business owners and builders, learn from the Gibson Guitar bankruptcy?
Some of you may know that I’m a musician. One-time member of AFM Local 580. And while I’ve never owned a Gibson, I do have some insights into what went wrong, and why they are now in the mess they are in. They are claiming acquisition debt, but they made other, more disastrous mistakes, and these, I believe, are the ones we can learn from.
What Gibson did wrong #1:
They messed with their signature model. The Les Paul was THE Gibbie to own. Until they started adding things customers didn’t want, like auto tuning machine heads. That’s NOT what a Les Paul WAS in most players’ minds. It was fine to add those ditties to OTHER models, but NOT to the Les Paul.
What we can learn #1:
Customers/clients come to expect certain things when it comes to “signature” products and services. Don’t disappoint or annoy them by changing these too much. Want to add some new shiny bit? Do it in a DIFFERENT package, or offer it as a supplemental service. Who knows? Your “new” creation may become tomorrow’s “signature” piece. But for now, until the new starts outselling the old, don’t kill the goose with the golden egg.
What Gibson did wrong #2:
They tried to become a “lifestyle” business – dabbling in all sorts of music related stuff like recording equipment, studio software, mixing boards, etc. – and making guitars took a backseat to all this. They went from 100% guitar making, 100% of the time, to 25% guitar making, 100% of the time. They gave up, in essence, the thing that made them great in the first place to try and woo more customers. And they did it so quickly that no one really had a chance to adjust. In 2015, Gibson made guitars. In 2018, Gibson made headlines by filing for bankruptcy.
What we can learn #2:
Expansion is great. Growth is wonderful. But make sure you are prepared for it, and take it a step at a time. Oh, and don’t leave behind the things that got you to the point where you CAN grow.
What Gibson did wrong #3:
They claim that the lack of “guitar gods” like Jimi Hendrix and Eric Clapton means that today’s newer players don’t often see or know who is playing and therefore have no true inspiration to draw from. So, no new audience for their signature products.
What we can learn #3:
Firstly, I call BS on Gibson’s excuse that they can’t sell guitars because there are no more idols out there. Country music, jazz, blues, alt/indie rock, folk – all have some pretty big names in the guitar strumming business. Gary Clark, Jr., Ray LaMontagne, Alan Doyle, the new guys in Greta Van Fleet, just to name a few. Gibson, to my knowledge, has never approached or featured any of the non-rock axers on the scene because they seldom looked outside US/UK rock music for inspiration. And, they are STILL selling over 170,000 guitars a year, making roughly $300 million off guitar sales.
So, first thing to learn, I guess – have a broad appeal because your niche can collapse on you or at least not be what it once was.
Secondly, if you DO find your niche isn’t what it used to be, or never was, find or make a new one. There are millions out there who need whatever you and I have to offer. They just don’t know we exist. (Like the 18 yar old I recently met who had never HEARD of a Gibbie, but knew all about Martins…)
Thirdly, we all want to be millionaires, but let’s be reasonable and real here – a decent living not only IS possible in our field, but maybe SHOULD be all we can ask for. You WILL tap out your market’s price range. (I mean really?? $300 mill isn’t ENOUGH??? $2000 for a BASIC model guitar??)
Like Jeff Goldblum’s character in Jurassic Park says, “they were so busy finding out if they COULD, they never stopped to wonder if they SHOULD” or something like that. I see so many new people in the business/digital marketing field that have been promised 6, even 7 figures, for following this or that guru. I see guys upping rates 6 times a year. And I see guys wondering why they can’t sell that 10K website development package to anyone. Keep your wits about you, gang, and business will be better than ever.
You won’t be hitting any sour notes, unlike our friends at Gibson.