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This past summer, I took my family to Vienna. It was incredible. We spent our days wandering the old streets, stopping for coffee and pastries, visiting museums, and just soaking up the history of one of the most beautiful cities in the world. And one of the things that made the trip so special was the home we booked on Airbnb.
It had tall windows, beautiful old details, and plenty of space for all of us. And being in that home on Airbnb, right in the middle of Vienna, walking distance from so much of the city, made it feel less like a visit and more like we were actually living there. Plus, taking a trip is the perfect time to host your space on Airbnb. Your place, with all of its personal touches and its amazing location, can make someone else's vacation even better.
Your home might be worth more than you think. Find out how much@Airbnb ca host. Eight years in, I would've 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, 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 $15. $15 a week. It's like, I want my 15 bucks.
I want. Gosh darn it. I worked two days a day for a week and I want my 15 bucks. Welcome to How I Built this, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.
I'm Guy Raz. And on the show today, how Bob Taylor and Kurt Lista pooled 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 ERAS tour was to play an old guitar that for many of her fans was instantly recognizable. 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 ERAS tour launched, Swifties had a hunch that Taylor would bring it out on stage. And when she did, 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, no relation by the way, goes way back. Back before stadiums, before sold out tours, before most people knew who Taylor Swift was. And we'll get there. But yesterday, Kurtis Doug 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, right up there with Martin and Gibson. The brand really took off, at least initially, with the people who mattered most, serious musicians. The kind who 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 Listugg started the business in the mid-1970s, 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 songs were considered boring and old fashioned.
But Taylor Guitars adapted, experimenting with new designs, new manufacturing techniques, and eventually electronics that made acoustic guitars easier to amplify on stage. 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. 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. I bought a guitar for three bucks from the kid across the street. And I was in shop classes, mail shop in my junior high, casting aluminum and sand castings after making wooden patterns.
I was operating a lathe, 11th grade. Two weeks into it, I had seen a guitar that I wanted to buy at a store. It cost 175 bucks. I didn't have that money, so I thought, well, how cops just make a guitar?
So I went over to the wood shop and asked the teacher if I could join late, and I made my first guitar there. I think you continued to make a few more guitars in high school, and I guess it was around the time you discovered this little guitar shop in a suburb of San Diego called the American Dream. And I think they mainly they did repairs or maybe they sold some supplies, but they also made custom guitars. And I guess it was run by this guy, Sam Ratting.
Yeah, it was a kind of a hippie setup. 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 chair.
And I saw that little shop, 1500 square feet of space. And so after high school, I went there and showed them the guitars I made and wiggled my way into having a bench there. And it was a dream come true to me. Yeah.
And so basically, you Finish High School, 1973, you get a job at American Dream, specifically to build custom guitars for people who wanted to buy them. 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, thousands of them. But in the US it wasn't a thing. Now, a lot of those people had burgeoning hippies that were starting to repair guitars and maybe make one. But all guitars were not handmade.
Got it. Okay. I want to bring you in, Kurt, because meanwhile, you also grew up nearby in San Diego, and from what I understand, you were a bit of a hippie. I've seen a photo of you with, like, super long hair.
And you were also getting really into music at the time. And eventually, I guess you end up dropping out of college and getting a job at the American Dream, too. Right. Like Ron Saint and the Bob's over there.
Yeah, I grew up playing the piano. I just love music, you know, Absolutely loved music. And the opportunity to do something with music was exciting to me. And yeah, Bob came around the same time, it was August of 1973, and he stood out very quickly from everyone else with his talent and his ability to get things done.
And he had a really good work ethic. 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, for example. I wasn't that good at it.
I think, Bob, you were 18 and Kurt, I think you were 21 or 22 when you guys were there. And I mean, you were so young. So I have to assume that at the time neither of you guys had big ambitions. Probably you were thinking, this is cool.
I'm working to be tar shop and I'm earning a paycheck. 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. All right. So this is the first year 73. The both of you are working there.
And I guess Bob, I mean, you start to experiment with like different methods or techniques of making particularly the neck of the guitar. Explain what a guitar, an acoustic guitar neck was at the time and what you started to do. The guitars that were available at that time were kind of hard to play. They had a lot of tension on them being steel strings.
So the nets were fat, big fat necks to try and make them strong. Not the width of the neck of the thickness of the neck. Yeah, just the thickness of it. The guitar players in those days start calling them baseball bat necks.
You know what I mean? They were round and thick. Right. So if you had a small, small hand, it was hard to play guitar that time.
Yes. And a lot of what I did was happy accident. Ignorance is bliss, man. If you don't know.
If someone doesn't come up and tell you this is how a guitar is supposed to be made it, you make the guitar the way you think maybe it should be made. And for me, well, the first guitar I made it to the American Dream. I just kept shaving the wood off till 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 fretboard 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 west coast country rock music being developed, and people are playing electric guitars, and acoustic guitars are being played down south back east in bluegrass and folk music. And I made a guitar that electric guitar players love because they could play it. Right.
But you were. I mean, this was a small guitar shop in a suburb outside of San Diego, and you come up with this idea. It's not like all of a sudden, like, Nirvana revolutionized guitars. 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 changed guitars. Right? They were just like, oh, this is great. Yeah.
To put in perspective, Guy, the American Dream did $30,000 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 going to know about it? Just the few people that come in or the person you made the guitar for.
Yeah. So this was a. This is a very small shop. Probably the owner of the shop, Sam Redding.
Well, from what I've read, he wasn't doing great. And I guess he decides in 1974, 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?
Do you guys remember how did you. Both of you immediately put up your hands and say how we want it? Oh, Sam called a little meeting, and I was interested, along with my friend that I'd grown up with. And Bob was interested, too.
And we each put together a little plan. And then 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 sent $3,700. $3,700 for the business? Was that the.
So that seems to me to be really low. Was that a lot of money in 1974? I just. Because he was doing $30,000 in sales a year.
Was that a lot? 3,700. Well, 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 guitars. 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. Okay, so $3,700 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 after we bought it that it didn't include the name. Did not include the name. Okay.
We found out as soon as we signed the papers that we weren't getting the name. And then we weren't going to have the phone number that we counted on either, because that was Sam, the owner's personal phone number. His brother, actually. His brother's number.
Okay, so. So you have. You would not get the. Which was critical at the time because that was how people.
Yellow Pages. Right? Totally. So, Kurt, how did you get the money?
Both of you guys went to your parents. What did your parents. I mean, you were. You said, your parents, hey, I want to buy this guitar shop.
And they said, what? Well, I asked if they consider lending me the money. And my dad said, well, who's the best guitar maker there? Which is pretty smart of him.
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 and I would consider it. So we actually put together $10,000 altogether 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 this Schemer or. Schemer? Yeah, someone I'd grown up with. Okay, and you take over the shop October 15, 1974, and it's doing about 30,000 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 for what you were going to call it.
Tell me about how you eventually landed on Bob's name, Kurt. I mean, how did that. Why did you guys decide to name it after Bob? Well, we actually didn't at first.
We thought, okay, we're going to sell parts, and we want to distribute motherfucker inlays, and we want to do repair work, and we want to make guitars, and we want to do all those things, and we want to grow it into a big company. So we need a name that sounds like we're big. So we decided to call ourselves Westland Music Company. Westland Music Company.
Yeah. Like. Like biggest in the west, you know. Then a few years into it, when we realized our future was really in.
In making and selling guitars. And Bob was really the talent. Then we, you know, we decided to call it Guitars, Taylor Guitars. And we added a little.
A little tailor underneath the neck on the little logo we had. But you could have called it listed guitars or your other partner, Schemer. But why? I mean, Bob was the guitar maker, so now, of course he's the talent.
Yeah, he's the talent. 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 Listo guitar, or a Taylor guitar?
All right, so let's talk about division of labor. Now. It's 1974. Now you guys are running your own shop.
Clearly, Bob, you had the best skills to make the guitars. What was your role going to be? Were you going to focus on, like, business operations more, or were you also going to make guitars? And what was Steve going to do?
How did you start to talk about who's going to 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. And 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 is work on guitars. Yeah, we were serious about that too. We had.
We kept time cards, believe it or not. And every day, Kurt, Steve and I filled out our timesheets. And it was just the three of you initially, or did you have employees? Just the three of us initially.
Well, there was employees, then no employees, then employees. I go to the Small Business Administration, read a bunch of. Got a bump of books, and I came to the conclusion that actually we should actually employ everyone rather than, you know, they're commission 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, 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 other than a few people coming in the door.
So we make a few guitars, we'd hang them on the wall. I would try to figure out how to advertise them. I'd run little ads like in the Daily Aztec, the newspaper for San Diego State. Try flyers.
I mean, anything we could think of to 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 going to 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, Ye. But that was bringing in money, right? Yeah.
Well, 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, and people would come by and hang out on the couch and that sort of thing. So we said, okay, we're stopping repair work and we're going to shut the door and lock it and then focus on the work in front of us. Was that a hard decision? Because it's like, I imagine the repair work was constant revenue.
Even though the money from guitar sales was bigger, you probably still needed 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 going to be? Bob was talented. We made guitars that people liked.
Bob and I thought that was the future. Steve felt a little differently about it. And that's one of the 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. Let's take me back to 1975, right? Because from what I understand, the ambition was let's make 10 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 just help me understand, like, why again.
And some people saying are going like, guy, you're an idiot. What do you mean? Why? You ask this question, why would it take so long to build 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're an engineering student and your task for your master's thesis was to design something that wants to fall apart, just design a guitar, right? I try and make 10 in a month, and four of them 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 making, and then the second day, the evening shift 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. 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. God. Do you mind if I back up just a little bit and tell the story? So we were making these 10 guitars in a batch, and we're not getting anywhere at the end of a couple.
When you say 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 10 guitars, brace stops for 10 guitars, then move all 10 to the next step. And the idea being, while I have my bench set up to do this work, I want to do a bunch of it because it's going to 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 want to make the bridge for the guitar? How many bridges do you make?
He goes, if I need one, I make one. You don't make 10. I don't need 10, I need one. Yeah, but Augie, you know, when I make a bridge I set up, I make all of those.
I get almost nine of them for free. He just looked at me and he said, bob, what would you rather have, 10 half done guitars or one done guitar? And that changed my life. It changed how you started making guitars.
It changed everything about our company. Changed everything. I couldn't wait to get home and just walk in the door and door, make them one guitar at a time. That's how cars are made.
Same thing exactly. They move down the line 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. Before you tell me about trying to sell these guitars to guitar shops, what was it about them? Like, what was your sales p to people when you were trying to explain why they should.
Why guitar should buy these guitars? Wasn't so much a sales pitch, you know, for me, one reason I wanted to learn to sell them was because, you know, it's really 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 are people working to play guitar. They don't want to hear me play guitar.
They want to check it out and play for themselves. So. All right, so you. I read that your first full year in business was really challenging, 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 30, 40 guitars total that you would sell over time. Right.
And so once you got paid, it wasn't much money, right? We didn't get paid, no. Well, yeah, some of those early trips were pretty exciting because I got leads on stores to call on, went to la, shot them 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 guitar? Like how much we store by guitar?
Yeah. You did 300 and something dollars for that 300 bucks you guys get for guitar. I think I came home with 1800 something dollars a day. And you know, guys, some of the dealers would buy them just to kind of take pity on me or us.
Just kind of help us out, you know, like, okay, here's some young guys trying, you know, I'll buy a guitar and maybe they'll help you pay the rent. This Month, that sort of thing. But, I mean, you would spend a month or more building one guitar and it was. You make 300 bucks.
Yeah, I wasn't a very good financial model. Yeah. I mean, even when you adjust for inflation. Right.
All right, so you. The business that you've got is struggling. I guess around this time you're approached by these two brothers, the Rothschilds, who are making a company called Rothschilds Musical Instruments, and they have an idea for how to help scale your business. What is the.
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 showing our guitars to more music stores because we needed more dealers. And they came down as Paul Rothschild and his brother Edward. And what they were doing was approaching small brands that didn't have distribution, that made nice stuff.
Only guitars are all instruments. Guitars, audio equipment too, you know, that was related. And they were putting together Salesforce and they were going to call on music stars nationwide and then they would distribute them. Exactly.
Yeah. They buy it wholesale and they distribute them. Paul had been a record producer. He'd produced all the Doors albums.
And, you know Janice Joplin. Yeah, this guy was like, kind of legendary, right? Yeah, Janice Joplin. He produced Crosby, Seals, and Nash.
So he's coming with, like, a lot of credibility. You're thinking, wow, these guys are the real deal. Yep, totally. But they were exclusive.
You could not sell them anywhere else. They would buy everything from you. Correct. And their pitch was that, hey, fellas, you make great guitars.
We checked them out in stores. We think they're underpriced. We think they can sell for more. We think we can buy them from you for the same price you're getting now.
And we'll just. We'll be selling them at a higher price and, you know, the whole thing will 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 sales samples for their eight or 10 salesmen that they had around the United States.
And at one point, we had to come out with a less expensive guitar for them. And we were selling a guitar to them for $150. Guess what? How much money we would get?
And I would say, that's when I figured out how to make love to every guitar that I'm building. 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.
So if they were selling, they were giving you $150 for a guitar, and they were probably selling it for 300 and then the shop was selling it for maybe what, 500, 600, and then discounting at 30 or 40% and, you know, it's a whole matrix out there. So you were, I mean, so I have to assume that you were getting paid less, but were you selling more guitars? Was the math making sense? No, the math wasn't making sense, but our name was getting out there and hope rings eternal.
You know, we weren't as bad as the watermelon truck that lost money on every watermelon. So we thought, he needs a bigger truck. 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, the nexus where it could start to work. 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 when you bought this business in 1974, it was doing about 30 grand a year in sales. Were you able to substantially increase revenue by 1978? 4 years in a little bit.
Sometimes we have to think ahead to be able to think backwards. So eight years into it, we were doing about 120, 120, $130,000 worth of business. So if you back up, to put context, 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 over $100,000, which is 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. 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 going to be a doctor, they're paying, they're going into debt and they're going to come out of it eight years later. So how's that different for me?
Why do I think that as a 19 year old, I'm worth money? 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. You that way that, hey, you know what?
This is like an education, 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. 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 that habit. And so we did our homework and we decided we can pay ourselves every Friday.
And that number was $15, 15 bucks a week. It's like, I want my 15 bucks. I want it. Gosh darn it.
I work two days a day for a week and I want my 15 bucks. Let me come back in just a moment. A purple paler guitar shows up front and center on one of the most popular songs of 1985. Stay with us.
I'm Guy Raz, and you're listening to How I Built this. Hey, welcome back to How I Built this. I'm Guy raz. So it's 1979, five years into the business, and Kurt, Bob and 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 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 because it was still the three of us, we just worked on finishing up all those guitars and selling them. When I was calling on all the music stores that Rothschild open as dealers, you called the basic of the people that they were selling to. And now you're selling direct to them.
Exactly. Because we get the owner registration cards when pay one consumers would buy the guitar. So we knew who the dealers were. I read that the last year you worked under this agreement where this company would distribute your guitars, you had 11 people, eight other people helping build guitars.
That year you built and sold 448 guitars in 1978. The next year, 1979 hit the Larity Go. So it's just that three of you, you built and sold 399 guitars. So actually your productivity went way up.
Bingo. Even with eight fewer people. Well, I was also finishing up guitars that have been started and the guys work for us. Yeah, it was.
I'm not sure what it was next year, but you could see the progression of us getting better at this. Kurt got better at selling, he got better at his bookkeeping and his finances I got better at. How are we going to make these things? Building a little.
A little factory. Yeah, I mean, but still, like the other thing from what I understand is this is 1979. This was like 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. From what I read, like people just stopped playing acoustic guitars in the early 80s and late 70s. Well, also, you know, the Saturday night favorite thing, pre recorded music.
So bands weren't getting gigs like they used to. And then that led straight into sampling keyboards, you know, synthesizers. Yes, New wave. So like 82 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 the production was very low, 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 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 allowed you to plug in the acoustic guitar 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. 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 for a period of time. And we were ready to go when they were ready to go when the market turned around. All right, so about nine years into the business, since 1983, 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 going to be respectful, obviously, but I think there was tension. Was it the two of you versus Steve, or was it tension between the three of you? Tell me what was going on with Steve. 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 because it's not working, and let's do that. And that was very hard for Steve.
To give up. Let's say you're dating somebod somebody, and 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 the concert together. Let's go do this, or let's plan a trip.
It's that willingness and agreement. One can stop everything from happening, and then the other one, it just leads to getting a lot done. And was he aiming to sell his shares to you? Well, not exactly.
We had a buy sell agreement. And that really saved you a lot of headaches in 1983 when. Well, yeah, because, you know, if 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 to send a letter to Steve, and he got an attorney. And that was a real scary time because we thought, you know, this could be the end of it. But we had a buy sell agreement. We had a good attorney and we bought out his share and 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.
How substantial was it? I mean, you have to take loans out to pay him $30,000. Yeah. We value the business at $100,000 and Steve only 30%.
So we each borrowed $15,000. Okay, so that was a lot of money for you guys to pay him. Right. So we went into debt again.
But we're excited. And then the first year, the business doubled. But what happened? Why?
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 1500 square feet. A bunch of.
That factory had this part, that thing, these magazines, those stuff left over. And it's like, I'm throwing all this away. I'm going to 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. You can't have somebody standing in the way of that. Yeah.
By 1983, 84. So 10 years in, where were you making the guitars? Lemon Grove, California, in our little shop. Still making them in a little shop.
We added a little space. 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. But you'd have to also train and apprentice everybody, right? I sure did, yeah. It must have felt kind of overwhelming, right?
Because on one hand, I imagine at this already by the mid-80s. I know a 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. Right. Am I right about that? Yeah.
I was on the production line for almost 20 years of our business. That must have just been, like, overwhelming and stressful. Guys, this is my jam. This is what I do.
That never stressed me out. It didn't. Okay. No.
It's what I do. Loves. Give it to me, Kurt. Were you stressed about that, though?
I mean, it was one guitar 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 be a problem. Well, that's true.
And we made decisions early on, too, like not riding motorcycles or things like that. You did, really? Yeah. You have to.
I mean, we'd be out of business if something bad happened. Yeah. I lived a careful life because I thought, if I break my wrist on a little motorcycle fall, we're out of business. Fair enough.
All right. I want to talk about what I think could be a maybe difficult, I don't know. But this happens in 1985, 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 kind of look funky. And it was a way to get the guitars in the hands of more prominent, you know, musicians. And I guess Kurt or probably 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 part of that was, at that time, acoustic guitars were very out of fashion and kind of associated with, you know, hippies and the hippie movement. Granola guitars. Yeah. So we thought, let's try some different electric guitars.
Come in a lot of different colors. And then the Prince guitar came about. And I got a call from a salesperson named Glenn at a music store in Minneapolis, and they serviced Prince. He got all his gear from him, and they said, you know, Prince is looking for 12 string.
He's tried a few guitars and hadn't found anything. He likes. And you guys make color 12 strings. Would you be willing to make one?
But here's the deal. You're going to make something and it can't say Taylor on it because 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 he made it.
Yeah. Those electric guitars are those weird shapes. Those are custom made guitars for him. So we talked about it.
We decided we're going to make a jumbo 12 string and it's going to be purple because, you know, that was his colors. And it's going to have the same kind of treatment on the top. Like flames around the sound hole. Like you put on a heart rock.
Yeah, it's kind of hot roddish. Describe it. Yeah. So we got the guitar done and.
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 made it on spec. And then cool thing is, it led to a relationship with him, you know, over the years.
And then he would order a guitar. She must have said, Taylor, you know, later on, is that purple guitar he made for him the same one used in the Raspberry Beret video? Yeah. You know, things like that don't directly impact sales.
It's more like an impression. And all the impressions add up over time. Okay, I want to stick to the 80s for a moment because I know that by 1988, so this is now, what, 14 years in, you break a million dollars in sales for the first time. Yeah, finally.
Finally. Big deal. Now you're starting to feel some momentum. I mean, from what I gather in 1988, that year, that you are doing a million dollars in sales, you're making eight guitars a day.
And I hear that. I'm thinking, so you're selling all the guitars. Right. There was demand.
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. 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 the way up till now and each.
I mean, this was not automated. This was all. It was like table saws and hand saws and lathing machines. Like.
Right. Like every. It was entirely handmade. Yeah, we had a.
We had a fair amount of specialized cutting tools that I would make. It wasn't until 1989 that we were able to really get modern using computerized cutting machines. Right. In other words, imagine I'm bending a guitar side and I'm doing it over a hot 4 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 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, the first step, they're going to 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 making seats and dashboards, it's loaded with people, right? Yeah. And it's the same with a guitar.
We can make these parts on machines, but we have to put them together by hand. I'm curious because we're going to get to the 90s in a second here. But at this time, right. This is still the late 80s.
You've broken a million dollars in sales compared to Martin. You're still small. I mean, Martin was founded in 1833 or something like that. It's been around for so long as an old company, and it's obviously a venerable, widely respected brand.
I mean, this is like what Elvis played and Johnny Cash and everybody villain. I mean, they play Martin guitars, right. Hank Williams. So this is a storied brand.
Absolutely. And you guys are kind of upstart brand at this time. Even 14 years in. Absolutely.
We made it through the disco age. They also made it through the civil war, you know what I'm saying? Right, Exactly. And they're still family owned.
Yeah, yeah. And 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 bluegrass music or folk music.
So we became symbiotic with 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. 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, looking at them and saying, we have an opportunity. Okay, so this is the late 80s and something is going to happen because anybody, I mean, you know, my age or, you know, anybody sort of over 40, let's say now, will have remembered a time when MTV actually was relevant and played videos and music and watch it.
1989, 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, we should get the one Grammys for. And this is going to. Even though it wasn't like MTV Unplugged sponsored by Taylor, 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. This was the opposite. What, what did the MTV Unplugged thing mean for, for your business?