Gibson’s Cesar Gueikian Sheds Light on Changes Afoot at the Iconic Company

by Christian Wissmuller • in
  • April 2019
  • Upfront Q&A
• Created: April 4, 2019

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In late October of last year, after a long period of what appeared to be dark days for Gibson Brands (culminating with the company filing for bankruptcy in the Spring of 2018 and then going through a complete corporate restructuring), it was announced that a new leadership team was officially in place. Alongside new CEO and former president of Levi Strauss James “JC” Curleigh is Cesar Gueikian as CMO, Christian Schmitz as CPO, Kim Mattoon as CFO, and Nat Zilkha as chair of Gibson’s board of directors.

MMR recently chatted with Gueikian about the many significant changes over at the legendary guitar brand, new initiatives to work more efficiently with MI dealers, and the importance of playing to your strengths.

All right, so first and foremost, can you just briefly talk about how you landed at Gibson and where you were previously?

Yeah. So I’ve been in the private-equity business for 20 years, buying and restructuring, fixing companies that were in trouble. And my sort of road to Gibson is I’ve known the company and I’ve known the prior ownership for maybe about 10 years.

Did you work with them or you just knew of them or…?

Just out of passion for the brand. I’m a player. I’m a collector. I’ve got about 80 guitars or so, 60 of which are Gibsons. I’ve helped the prior owners just because I love Gibson.

Got it.

And so, when I saw them making some of the decisions that they made – primarily around the businesses they acquired – issuing debt, and then some of the problems really started coming through and materializing and showing a little bit of distress on the bonds, I started buying them. Then I brought a friend of mine in who’s at a firm called KKR. He’s our Board chairman now, Nat Zilkha. He and I played in a band together, and we’re business guys, so we’ve been doing deals like this, where we buy companies and fix them together. Anyway, the short version is we ended up acquiring control of the debt. And when the prior owners were unable to refinance that and pay us back, you know, we ended up owning the company.

Okay, that makes sense. And that’s kind of, I think, what many understood. But for our readers, for MI dealers, what should they know? What are the key three or four bullet-points that they should know about the new and upcoming model lines? What changes at the company are going to impact a potential business partnership?

Well, the first thing I would say is that you can’t make product decisions just to make product decisions. It has to serve a purpose. And our objective is to look to learn from 125 years of really owning, you know, the share of sound across music genres, and looking into the future and asking ourselves, “What do we need to do? What kind of conditions do we need to set up the company to own the share of sound for the next 125 years?” And then, once you know where you’re going, then we go down to the level of, “Okay, what is it that we’re making?” Right? So it’s protecting our core, which is guitars, right, and really getting rid of anything that were distractions.

So I think a lot of people have been asking us – whether it’s JC or myself: do we still own Philips, do we still own Pioneer, do we still own Onkyo and TEAC? And all of that’s gone. We are a guitar maker. That’s what we’re showing everybody here.

That’s the thing that was just confounding for me in previous years, where it was just, like, who wouldn’t want to be one of the two most iconic electric guitar brands? Why is that not enough? Why do you also have to be a consumer electronics brand and all the rest? Like, who cares?

Yeah, exactly. So if our quest is to own the share of sound for the next 125 years and we want to do it by protecting our core, then that means looking at our portfolio of guitars and saying we want to be the most relevant, played, and loved musical instruments company in the world. Relevant, played, and loved. As far as game plans go, it’s simple, but those are often the best game plans – the ones that are not these 220-page manifestos.

And so then the line serves that purpose. We’re leveraging our iconic past and bringing those classics back that everybody loves, which are so much a part of our DNA, and then learning from that and evolving it into the future with our portfolio of contemporary guitars.

There are a lot of people I talk to who love Gibson instruments and who were once Gibson dealers and had stopped – maybe because of the minimum order requirements, or the culture at the company, or whatever other reasons. What prior demands on the part of Gibson, or other sorts of things that MI retailers maybe felt were unreasonable are being addressed?

That’s a very good question. What we’re doing – and it’s something that we’ve discussed with all of our dealer base at NAMM – is moving away from that. So we’re setting new commercial conditions which are really meant to create better conditions for the success of our dealers, which means better success for Gibson as a company.

At points in the past decade-plus, it almost seemed like there was an antagonistic relationship between Gibson and…

There was.

Just from a fundamental standpoint, conceptually, who does that benefit? It doesn’t benefit the dealers or the brand.

No, that is just partnership relationship 101. That’s not rocket science. And so that’s an easy fix. So our contracts have changed. We have a brand new way of doing business. It’s made it a lot easier to do business with us.

Are you reaching out to former dealers to say, “Hey, you know, there’s a new sheriff in town and things are going to operate differently around here?”

Absolutely. And there are new ways of doing business with us. But a lot of those dealers are wanting to come back, and we want to bring them back.

That’s fantastic.

And they’re all centered primarily around creating a modern relationship where we not only allow them to promote that they are a Gibson dealer on their website – we encourage that, we promote that, we give them the information. We give them the style guide. We feed them all the photographs of the entire line. We feed them the entire spec sheets. They will be able to download all of that from one place. Our contracts are going to be online for an online signature. The application process is going to be done online. There’s no more reauthorization.

That all seems like good, common-sense practices. The things that’ll help them succeed ultimately help you succeed.

Exactly.

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