Forty-two years from its birth in Chuck Surack's VW van, Sweetwater, the world's leading online music technology and instrument retailer, officially crossed $1Billion in revenue in 2020, despite a year of tumultuous change for the music industry and the world at large. That's a long way from the company's humble beginning as a customer support unit for Kurzweil.
The company, which is still family-owned, served over 1.5 million unique customers with musical equipment purchases in 2020, up from just under 1 million in 2019. As if these numbers aren't enough, Sweetwater added over 400 new jobs, increasing their employee headcount by nearly 30 percent. That is especially amazing during a pandemic year.
Why another interview with Chuck Surack? Well, for one thing the interviewer gains useful knowledge every time he talks to him. Chuck is a model to anyone who's thinking about building a business, especially in the music products market. He completely understands his customers - he is one of them. Though he runs his business with attention to metrics he's not afraid to take reasonable risks. And finally, he works his butt off, which isn't hard when you love your job as much as Chuck does.
Moreover, at a time when it is critical, he's a thoughtful donor of time and money to causes like the NAMM Foundation, MusiCares, and Little Kids Rock, institutions that are dedicated to helping musicians, both present and future.
What element of COVID has had the biggest impact on Sweetwater's business?
In the past year I've been inspired by the resilience and success of independent musicians, churches, and podcast producers, many of whom went out on a limb to invest in a new reality, rather than fold their tents.
People have had time and they decided they had always wanted to play an instrument and now is the time to do it, so we have seen a lot of beginners. We're now selling a thousand guitars every day and our customer base has increased 50% in the last year.
And truthfully, part of it was luck. Just about the beginning of the pandemic we had completed building a new 500,000 square foot warehouse and fully stocked it with inventory, so the timing was quite fortuitous in terms of having products available. Most bricks and mortar retailers were shut down for about three months and of course that wasn't a problem for us.
It also had a great effect on many of our vendors. In the middle of the pandemic a number of a vendors that make I/O devices were using a particular chip they were sourcing from Asia that wasn't available because of COVID-19 related issues, so we would have to scramble and make sure our customers understood that there was a delay cause of the delays.
Last year you added 400 employees. That's incredible in a year like we have just seen.
At the beginning of 2020 it was tough because we initially had to send a lot of people home because of the state guidelines, but we had to keep the distribution center open. We had a number of sales people working from home and my wife and daughter and I were in the warehouse helping with shipments. Once it was safe to bring people back on campus, we did. Then as the year moved along, and we saw the massive increase in orders we started the hiring phase that we're still in.
What kind of precautions are you taking to help everyone stay safe?
Thankfully we have a large campus, so we're able to spread out pretty easily and follow social distancing guidelines. Our employees wear masks and are encouraged to wash their hands frequently. We've added nearly 100 hand sanitizing stations throughout the buildings and hired additional maintenance staff to increase daily sanitizing efforts. In addition, we've increased the circulation in the buildings so that we're recycling the air more frequently. Fortunately, we have a full-time physician and nurse on-site, and they've been essential for things like contact tracing and ensuring that employees are quarantining or isolating when necessary.
Music Trades says that the COVID pandemic has caused a 9% year over year sales decline in sales across small-ticket accessories, but Sweetwater has had an increase. How have you managed to stay ahead of the trends?
With so many musicians at home the volume of small item sales was off the charts, so logistics have been a huge issue and that required a lot of thought. But, we have always been flexible in our operation and that's important. Sales is not our problem. Making sure we have the products and choosing the best way to get to the customer. Since the beginning of last year we have done a lot of analysis on the best shipping methods to customers in all areas of the country and that has meant that we can get their orders to them in the shortest possible time.
With live music being dormant for the last year, what are your thoughts about MI product marketing in the next 10 years?
Well as I said there has been a huge increase in small items, but also other products like guitars and keyboards. We're now selling more than 1,000 guitars a day and that business has been growing 50% every year.
The market for anything to do with live music like PA Systems, amplifiers, microphone stands, things of that nature was way off last year. But, at the same time the professional musicians that buy from us have been buying various products for doing their live broadcasts on Facebook and other platforms. They can't tour so they are doing other kinds of projects. We expect, as people are able to play live again, sales in the live performance categories will pick back up again.
And that guitar business has thrived despite guitars being such a high touch sale. What do you attribute that success to?
We started selling guitars about 10 years ago and, at the time, I thought that 40% of the instruments we were getting were not ones that I felt good about selling. We set up the Guitar Gallery, which has detailed pictures of each guitar down to the wood grain of the top and back, and we started our 55-point inspection system, so that we could feel good about shipping instruments that meet our standards.
You even bought a PLEK system to improve guitar setup...
Yes. It's a service we offer for any guitar, but we mostly use it for the less expensive guitars because by leveling the frets we can actually make them play more like premium guitars.
Of the changes that you have made during the last year, which ones do you think will remain in place once COVID is under control?
Good question. It's hard to say. There is always going to be live music, so we expect that part of our business will come back and even grow as people play more with their new instruments. There will be a need for the latest in PA systems and live performance gear for all kinds of venues.
Our inventory control and logistics systems will of course be continuously upgraded as higher volumes need to be met.
Of all the business decisions you have made over the last 42 years, which ones turned out to be the best?
That's easy. At a time when many companies are leaning on technology to eliminate personal interaction, we're doing the opposite and are reinforcing our commitment to personal, one-to-one customer service. Our 500+ Sales Engineers are highly trained in the products we carry and their goal is to provide a level of expertise you can't find anywhere else. With many eCommerce companies, it's impossible to get a real person on the phone. We want to talk to our customers and build relationships with them. It may be an investment, but it's been critical to our growth.
Do you have any regrets?
None whatsoever. I always look forward.
Is there any advice you would offer to start-up companies about developing brands?
I often tell young entrepreneurs to remember that it's their dream and not everyone may buy into it right away. That's okay. Keep working hard toward your goals and adopt the mantra that "failure is not an option." It probably won't be easy, but it is possible. Also, stay true to who you are and don't take shortcuts.
Have you thought about expanding overseas?
No, there is a still a huge market that we can tap into in the United States so we're staying focused on serving customers here.
What are you most looking forward to in the next 42 years?
We are so thankful for the role we play in helping musicians make their dreams come true, so I can't wait to see how we're able to impact even more people in the coming years. I hope that those who started learning to play an instrument during the pandemic will continue to play and that they'll experience the joy that music can bring.
Music keeps people centered and less hopeless about the future. I'm really proud of the role we play in that.
Chuck front and centered
Talking to Chuck it is very clear that he is enjoying his business at least as much as he did when he started Sweetwater 42 years ago? We should all be so lucky...