Sweetwater: Chuck Surack. How a Customer Service Strategy Built a Billion Dollar Online Pro Audio and Music Company.

[Music] I've always believed everyone in our company, whether it's a sales engineer or the receptionist, is either adding credibility or taking credibility away from our company. And I got to have people always adding credibility. We empower everyone in our company to make the right decision to do the right stuff. If someone would come to our store or phone into the receptionist and say, "My keyboard, you know, quit working," or "they're empowered to replace it." Every employee I hired, I would tell them, "We'll never get chastised for doing the wrong thing. You'll get chastised for not doing the right thing quick enough." [Music] Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. [Music] I'm Guy Raaz, and on the show today, how Chuck Sirac went from mixing music in the back of his mom's VW van to building the billion dollar music and audio equipment giant, Sweetwater. [Music] There are a lot of ways to build a retail business. You can compete on price, you can compete on selection, you can promise faster shipping, bigger discounts, or endless convenience. But Chuck Sirac took a completely different approach. He believed that before anyone bought a guitar, or a microphone, or a keyboard, or a recording interface, they should have a conversation. Not with a chatbot, not with a commissioned salesperson trying to close a deal, but with someone who actually understood instruments and recording gear. Someone who played in bands, or spent time in recording studios, who understood signal chains and synthesizers, and could help a customer figure out not just what they wanted, but what they actually needed. That philosophy became the foundation of Sweetwater. It's a company that's managed to become the largest online retailer of musical instruments and professional audio equipment in the United States, despite competition from retail giants like Amazon and Walmart. Every customer who calls Sweetwater is assigned a dedicated sales engineer. Every one of those salespeople goes through months of intensive training even before they ever answer the phone. And remarkably, Chuck never tried to win by being the cheapest. He truly believed that extraordinary service, not offering discounts, would be the key to building lasting relationships. And over time, it was. And the amazing thing about all of this is that Chuck never set out to build a retail empire. He just wanted to play music, specifically the saxophone. He grew up in Fort Wayne, Indiana, where he still lives and where Sweetwater is still headquartered. After he graduated high school in the mid 1970s, Chuck turned down college, climbed into his mom's old VW van, and spent the next several years playing saxophone with a cover band in bars and clubs across America. We traveled almost every state in the continental U.S. I think I missed a couple out on the west coast, but back then you had a booking agent and they would book you for a week or two weeks in a particular club. And then they'd give you a clue where you're going next week, or sometimes they wouldn't know, and they'd just tell you on Saturday night, get in your bus on Sunday morning and start driving north or start driving south. And you'd call, this would be for cell phones, you'd stop at a pay phone every so often and go, "Where am I going?" And eventually they would tell you. I remember one time I left Charlotte, North Carolina, and he told me to drive north. And next thing you know, I'm in Sudbury, Canada, and just barely in time for a gig that started on Monday night at seven o'clock. Wow, and did you make, I mean, presumably you were making enough money to like stay on the road, but I can't imagine this was a lucrative lifestyle. No, most of the places you played, you got free room and board quite often. You'd stay in the hotel or maybe they had an apartment they rented, you got free food. And you know, I laughed, I said I made about 50 bucks a week. I probably made a little bit more than that, but it barely paid for gas and get into the next location. And that's why I ultimately quit, because I just, I was a decent musician, but I wasn't going to be good enough to be a truly professional musician. Got it, all right. So you're touring around. And from what I understand, I mean, you become like the de facto rotee, right? Like setting up instruments and speakers and making the audio system sound good. And I guess even inventing or like hacking audio gear for gigs. So you were kind of like the sound engineer. Yeah, absolutely. And so a couple of things I would tell you back then equipment was very expensive, hard to get, much different than today. Heavy, really heavy. Heavy, heavy speakers, all that sort of stuff. But I would run the sound system with my right hand as I played my saxophone with my left hand. And so we didn't usually have a sound man out front. I would just run it from the side. You have a mixer. A mixer, right? I would just run it and you play the saxophone with your left hand. Exactly. And then the other thing that was interesting when we were on the road back then, there weren't a lot of standalone recording studios. Most of the recording happened in radio stations. And so we would quite often on Monday morning go to the local radio station and record, you know, this week we're playing at the holiday in or wherever we were playing. And so I got really used to using recording equipment. And through the years on the road, I would gather more and more of that equipment myself. So it's interesting, you guys would have to record little spots on local stations to promote your live shows at these bars or clubs. And as a result of that, you would start to get experience with these recording booths because you would, they would just say, "Oh, go use that booth over there and record your spot and bring us the 8-track cassette of it or whatever it was." Exactly. And also a lot of those radio stations had multi-track recording studios with either 8 or 16-track recorders, so you could record every instrument on its own channel and then mix it and make it sound good. So you kind of, even though you love the sax, it sounds like you're really kind of developing this passion for the technical side of, you know, of setting up a stage and running the chords. And but when you come back home to Fort Wayne, you realize that maybe you could make a business out of this, like have a recording studio. You know, I came back to Fort Wayne, I was really tired of living out of the suitcase and making the quote-unquote "50 dollars a week." But I didn't know what I wanted to do. I really didn't. But I knew I wasn't going to go to college. I also knew that I had a lot of this equipment. And so it was a simple way to make money and just start helping my friends. And so that's really what drove me at first. All right, so you're back in, you've got your VW bus. And I guess you come up with this idea of converting the VW bus into a recording studio or like the engineering booth of a recording studio. Tell me how you came up with this idea. Was it because there weren't any recording studios in Fort Wayne or you knew musicians who wanted to record their music like maybe all of that? You know, I don't really remember. It just sort of naturally happened. I mean, I do remember it wasn't very long after I had the VW bus doing recordings. I started going to all the high schools and middle schools and saying, "Let me record your Christmas concert or your spring concert." And then I just got so, so darn busy recording everybody. And just to like, paint a picture of this. It wasn't like they were recording in the VW bus. You had like the mixers and these are real to real in there. But you would run the cables from the bus into the auditorium where they were recording? Yeah, that's exactly right. I would record their live performance. But I would sit in the bus with my headphones on and monitor it and make sure all the levels are coming in correctly and mix it together and all that. Like an FBI listening booth. I never thought of it that way, but it's kind of like in the movies you see in the 70s. Yeah, there's a show. And then I would be real to real. Okay, so you're recording by the way, what would they do with those real to real recordings? Like why would they? Yeah, that's a great question. So I would take those real to real recordings and then go back to the living room of my 12 by 55 mobile home. And then I would edit all the songs in order to take the extra pauses out and then we would turn them into LPs or records. And then they would sell those records. So it was a fundraiser for the school. And it was also an interesting way for me to tell the band director or the choir director, look, it won't cost you a thing. Just let me record them. And then I'll make my money by selling those records or we'll split the profits of selling those records to your parents. Oh, wow. So you would, that's a great idea. So you would just do the recording for free. You see you got church choirs and the schools and these were your clients like who else were you recording? Everyone we've talked about, but it would be choirs and bands and I would record them in their auditoriums or their cafeteria. I did many, many presidents of companies, CEOs of companies. I've gone to their boardroom or maybe the speech they were making. I remember one year I did a, I recorded a speech of the CEO of General Motors. He was down in Defiance, Ohio. And all the way through his speech, he kept referencing the current year and he meant to reference the next year. So he gets all down with his speech and I figured out how to use a razor blade and tape and change all those references that he made. And I was a hero for them and for many, many years I got lots of their recording business because I made him great. Wow. And by the way, this equipment at the time was not cheap. I mean, a real to real. It was a four track recorder. I started on a four track and then I did most of my recording and the VW bus with an eight track recorder. And how did you finance all this equipment? Well, anywhere I could make a few dollars, I would make a few dollars and put them away. And even when I was on the road, I was able to sock in a few bucks away and then with the recording, you know. And those days I was making $22 an hour. Yeah. If I charged for recording, which wasn't very much, but it was enough that every dollar I made would go right back into the equipment. Okay, so I guess that year, 79, It was the year you officially kind of founded this business. You call this CNB audio, which would be, which would become sweet water sound, but CNB, what does CNB stand for? - It was Chuck in my first wife, Brenda. - Okay. And like, I mean, you talk about recording CEOs and church choirs are where you kind of looking to get into like bands and recording musicians who wanted to make records. - Yeah, now I wanted to do musicians making records, but in the early days, I paid the bills by doing all the recording we've talked about. But my goal ultimately was to do music for musicians that wanted to record real albums. - Yeah. - But I needed a location to do that. And for the first couple of years, I didn't have a location. All I had was at Mobile Home. - So it was wherever they were recording, but you really wanted to have a space, build it out, and people who come there rented, recorded, you could engineer it. That's what you were looking to do. - Absolutely, and that started in 1981. - And how did you do that? Where did you find the space? - Well, I found a small house on the West Side of Fort Wayne, and I built basically a two-car garage, but that garage really wasn't recording studio. It looked like a garage from outside, but what was interesting about it, where I built this studio, the house was already there, but it wasn't zoned legally. It was zoned for residential. I had to be careful, and I didn't want to raise the higher of the local zoning officials. - So let's talk about Fort Wayne at the time in 1982, when you've got the studio, because we're not talking about sun studios and Memphis in the '50s, right? I mean, Elvis and Johnny Cash hanging out there. Fort Wayne wasn't like where tons and tons of bands were recording, right? I mean, I can't imagine it was, or am I wrong? - Every city across this country has musicians and bands that want to record, but you're absolutely correct. It wasn't a recording mecca. In fact, all of my friends, all my professional friends would go, or recording studio in Fort Wayne, they just didn't understand it. Why don't you go to Nashville? Why don't you go to LA? You go to New York. - Right. - But I knew that it was possible to be successful there. I didn't know what level I was gonna do, but I knew I could be successful. And we had lots and lots of bands coming in. In fact, I was so busy, we would run from early in the morning to late at night. It was a very good thing. - So you've got this business going, you're running this studio, and I guess there's a real turning point. It happens in 1984, and I want you to tell me about this, because from what I understand, you were invited to a trade show in Chicago, a trade show of musical instruments. And while you were there, you discovered something that would, essentially, I think it's not an understanding to say would actually change your life. - Yeah, it did change my life. I had a friend that owned a local piano and organ store here in Fort Wayne, and he invited me to the NAMM show, and he said, "That means the National Association of Music Merchants." And they have their dealer show once a year up in Chicago. I said, "Y'all go with you." And he was just a friend, and I had bought some synthesizers through his store, so we'd become friends to that. And I went there, and I saw a prototype of a music instrument that just set me on fire, and frankly set the world on fire for a while. And it was called a Cursewile K250. Ray Cursewile, who is a futurist, he's still alive today, still doing some really interesting stuff. But he'd figured out how to record a nine-foot-grand piano and digitize it and put it in memory chips or ROM chips. And back in 1983 and '84, this was unheard of, but not only did it have a recording of a nine-foot-steinway piano, it had an upright bass, it had a 50-voice choir, it had a 45-piece string section, but it was an expensive instrument. And so I saw a prototype, and that is amazing. In my own studio, I have a small six-foot-grand piano that's always in a state of being out of tune because that's what pianos do. They're always getting worse. And I thought, if I could buy this Cursewile K250, I would have a nine-foot-grand piano always in tune, plus 39 other sounds that came with it initially. And so I bought one early on, and then I started reverse engineering how it worked. And I designed my own sounds for it, designed my own software for it, and just took the instrument to a whole other level. This was a very expensive machine at the time, $20,000, which is roughly $63,000, $65,000 today. So this is not no joke of an investment for a 28-year-old guy to buy. Yes, I had a small Yamaha Grand piano and I decided I could sell that piano and put some more money with it, and I could squeak my way barely into a Cursewile K250. And that's what I did. But once you had this thing, it would generate a lot of income for you because you, first of all, you would probably the only one in four ways you had this thing, I would imagine. I was the only one in the Midwest at the time that had one. And so at the end of every one of my recording sessions, I would tell my customers, would you like to hear your music with a 50-voice choir or a 45-piece string section or upright bass? And so I would get a couple more hours of recording time and they would get a better sounding project. I also would throw it in the back of my VW bus and take it down to other recording studios. So one of the real famous studios is down in Anderson, Indiana, where the Gathers used to record. And I would take it down there and do sessions and they would pay me for the day for having it there. I'd take it up to Detroit, other studios like that. So you would play it in the studio? Either I would play it or maybe they'd have another keyboard player that would play it. And so you were not just engineering in the studio. It sounds like you were doing more production work too. Absolutely. I love producing music. I mean, it's really cool because it's like people are well-to-paying you more for more studio time. So that's one thing. But then I guess you start to-- it had the ability to enable the user to make their own new sounds with it, like their own proprietary sounds. We could do that also. We did a lot of that. We would record the strangest instruments-- or not even instruments-- the strangest sounds and turn it into an instrument. It could be a door squeak. It could be rock sitting together. And next thing you know, you put it across the keyboard and it can sound like a music instrument. So you could record into the-- like there was a memory chip inside of the synthesizer. You could record onto? Yes, that's correct. Which is wild. I mean, today, of course, you could record your iPhone. But in 1984, that was really different. I mean, you're essentially going for-- most people are still using real to real to record a music at that time. And these would be sounds like, yeah, give me an example of a sound you would create. What would you-- how would you do it? Well, being a musician myself quite often, I would just record myself or other musician friends into the instrument. So as an example, I did lots and lots of recordings of my saxophone. So a guitar player, a keyboard player that didn't play saxophone could now get the sound of a saxophone in his music. And we recorded all kinds of things. I did a bagpipes. There weren't bagpipes built into the machine. So I recorded a bagpipe player. I remember one time I brought in a trombone player, a trumpet player, and I played saxophone. And we made a brass section sound. There was not a section of brass in there. That sound ended up being used by Stevie Wonder on his character's album. Yeah. So that sort of segues into my question, which is, you're a guy in four-way, and you start to make your own sounds, right? But how did you, you know, this is pre-internet. This is like the early facts machine. It's like, how did anybody find out that, hey, there's this guy in four-way, in Chuck's Heroic, he's making samples on the Kurzweil. And they're pretty great. Like, here he goes, Stevie Wonder. Like, how would, help me understand how anybody even knew what you were doing? Yeah, great question. There were two ways. The first way is there were a couple manufacturer reps worked for Kurzweil. And they would travel around the country to other music stores, and happen to be one from Southern Indiana, who called on all the stores in the Midwest. And he would see me as a customer, as an end user. And he'd come by and trade sounds with me, and he'd take him to the other music store. So that's one way. But the real way I really made it happen is there was a magazine back in those days called Mix Magazine. Mix Magazine covered recording studios around the country, and they would list their equipment. You know, they have an MCI tape recorder. They have an Atari console, and they have a Kurzweil K250. And anytime I would see that they had a K250, I would immediately either call them or write them, and go, wow, you have a K250, I have one too. And I was open to trade sounds with them. Generally, I found out most of the players were just players. They weren't technical. They weren't into the musical side or the making sounds for it. And they'd go, why don't have any sounds? But I sure would like yours. And it was kind of funny in the early days. They were on a floppy disk. That was a three and a half inch, kind of a semi-rigid disk that the Macintosh used. And I'm running recording sessions, but I'm copying disks on the side. I'm kind of multitasking, and I'm frustrated that people want my disks, but I'm really busy trying to do a recording session. And it took me a while to figure out that there was a great way to do both. You were recording samples onto the floppy disks and selling those to people basically. It sounds like, was it all that? I mean, again, I don't want to minimize what you did, but it doesn't actually sound all that complex what you were doing. You were just the only one doing it. Anybody could do it pretty easily, pretty quickly, but to do it to professional levels where all the notes sounded correct, and it didn't sound much-conized. Yeah, it was a real skill, it was a real art. And I developed a lot of software tools to make my music or my sample sound even better. All right, and were you, I mean, selling the floppy for how much we sang for? Well, initially I gave them away, and I was getting so annoyed that it was getting in the way of winning my recording sessions. So then I started selling them for $5 a piece, which is really funny. I sent out a dot matrix newsletter, and on that newsletter I had a list of all the sounds that I had, and people would send me back to the forum with everything checked off. And I got $2,300, $400 for all the disks. So I guess you become a certain point around this time. a dealer for this machine for the Kurzweil K250. And why was that a good use of your time? I mean, I mean, what made you think I should just start selling these machines for Kurzweil? Actually, I wasn't that smart, but I mentioned the Kurzweil rep kept coming by and getting my sounds, and he would take them to the other dealers up in Chicago and Detroit and Minneapolis. And I kept telling about my relationship with all my friends. And by then I had about 300 friends around the country that had their own Kurzweils. And he kept saying, "Why don't you become a dealer? Why don't you become a dealer?" I said, "Oh, no, I'm too busy running my recording studio." And eventually he talked me into it. He said, "I'll set you up to be a parts dealer." That was in the fall. And by Christmas time I had sent out a newsletter again, "Dall my friends" and going, "Hey, I've just become a Kurzweil dealer. If you want Soundblock A or B or C or D, and each one of them had a bunch of different new sounds in it, I am a dealer for all that, so send me your check and I'll get the parts to you and I'll help you get it installed." So through the month of December I started getting checked after check, because the kind of people that had these machines usually were pretty successful or they were universities and they didn't have a great relationship with their local store. And so I was a little bit the lifesaver for people that had Kurzweil K250s. And I'll never forget it was a couple days before Christmas. My rep friend called me and said, "Hey, Chuck, I really need all those orders that's got to be done by the end of the year. How are you doing?" I said, "Oh, I don't know. I'm really busy. I'm recording Christmas albums. I've got a pile of checks here. I haven't really figured it all out." But I said, "I don't know. It's a couple hundred thousand dollars worth." He said, "Are you serious?" I said, "Yes." He says, "We got to get paid." I said, "No, I have checks from everybody already." So he got in his car and drove up to Fort Wayne and we counted all the checks and ordered all the parts. And I did several hundred thousand dollars of Kurzweil parts. Wow. It is a 1985 to 1986, I think. Exactly. Yeah. I read something that I just, I thought, "So interesting." Because I guess back when he become a dealer, you also become the customer service guy because I'm assuming they would call you up and ask for support or help. But you really started to focus on learning as much as you could about the people you would sell stuff to. Tell me about what you would do. Well, you're absolutely right. And I always have tried to keep track of spouses' names and children's names and their interests, but having a relationship with them over time, you figure all that stuff out. And you would, by knowing a spouse's name or a kid's name, they might call you six months later and you could say, "How is Bill Jr. doing?" And they would probably be blown away that you remembered that. Absolutely. I mean, it's the whole music business from my point of view is all about relationships. It's not a transaction. It's really a relationship for life. Yeah. And that became the genesis of sweet water sounds. All right. So, and I should mention, by this point, you know, you were called sweet water sound and that I've heard different kind of, you describe different variations on the origins of the name. What is this name? What's it come from? So, when I was out in the country, a lot of farmers had little wooden signs by their property. They'd sell bills acreage or Steve's farm or whatever it was. And when I moved into Fort Wayne, I knew I didn't want to be CMB audio anymore. So this is about the second or third year of our business. And I had two acres of land and I had little creek in the backyard and I literally just put a bunch of names on a piece of paper. And I'm thinking about this little creek in our backyard and go water. That's kind of sweet and it became sweet water. And so, I put a little sign. It was about two foot wide and a foot high that said sweet water. Didn't say what it was or anything, but that helped me get past the zoning officials and yet my musician customers could find me. Yeah. Okay. So, you are now growing as a dealer for Kurzweil, but meantime, are you still doing the recording thing? Is this you got a lot going on? You're making your sampling, you're putting on discs and you're recording people and you're selling equipment for the Kurzweil machines, the synthesizers. So, I imagine that the recording studio part of your business has to kind of shrink a little. You know, by then I brought on my first employee. And so, we could keep doing the studio thing and he would do some of the sessions. I would do some of the sessions and it just grew from there. But no, I don't believe in shrinking. You're always going forward or backwards. Okay. So, around 85, 86, you become a eventually exclusive dealer in your area for Kurzweil. And so, at what point did you sort of begin to become a person who wasn't a recording engineer, but a person selling studio equipment, musical instruments? Like how how long did that take that transition? Yeah. So, I told you that I became a parts dealer in December and started sending all those parts out to my friends in January and February about March of that year. I got a call from a friend and he said, "Hey Chuck, I want to buy another Kurzweil K250." I said, "Whoa, you already have one. I just loaded it as completely up. You know, you probably have $30,000 in your machine. Why do you want another one?" And he says to me, he says, "Chuck, a Kurzweil had only placed 12 notes at one time. And I hold my fingers up and I go, "Well, I got 10 fingers. What do you mean 12 notes?" He says, "No, no, no, no. He says, "I do orchestrations with full orchestras. And I have to hire an orchestra for a day or two. It's thousands of dollars." He said, "If I had another Kurzweil, I could do 24 notes at one time." And so, I called the rep and he says, "Oh no, Chuck, I told you that to open a Kurzweil as a retail or a new dealer, you have to buy 10. And I'm 10. Yeah, yeah, we have, we have, we have to buy 10. And so eventually over the next couple months, I sold those 10 and over time, I'll sell a lot more." You know, back to your question, by 1990, I do remember one time with the TASCAM recording equipment, probably the most popular brand of recording equipment. The national sales manager came to see me with his rep and they wanted to sign me up for the really basic, basic equipment. And I said, "No, I want to be involved with selling eight tracks and 16 tracks because I've had higher end customers. I've got people that have been buying these 20 to 30 thousand dollars synthesizers." And we went round and round and the sales managers said, "Well, I've never opened up anybody for those higher franchises until you've been established for a while and all that." And I said, "Well, that's really what I need to do, or I don't want to do it because I want to sell the better stuff to my better customers." And so much to their, I don't know, disappointment or chagrin, they went ahead and signed me up. I ordered all the stuff. And then I wrote a newsletter to my 350 customers at the time and said, "I'm getting all this recording equipment. If you need a four track or eight track recorder or a mixing console, whatever, I have it." Took about two weeks and I've got orders for everything that I have coming in already pre-sold. Wow. And I'll never forget this. I called the rep and he was about an hour south of us here in Fort Wayne and I said, "Rain, guess what? I've sold all the stuff. I need to place another order." And he says to me, "Now?" It was like seven o'clock at night and he says, "I'll have to turn the light on." And I said, "Yeah, I guess, you know, it's funny today because any manufacturer's rep today would be thrilled to have any business that would beg for it." But he was kind of upset that I was making him turn his light on at seven o'clock at night to order the biggest order that he'd ever sold. When we come back in just a moment, how Chuck's decision to sell recording equipment and to intensely train his sales staff turns into millions of dollars in sales. Fast. Stay with us. I'm Guy Roz and you're listening to How I Built This. Hey, welcome back to How I Built This. I'm Guy Roz. So it's 1990, just four years after Chuck bought that first Kurzweil and Sweetwater's made about six million dollars in sales. But Chuck's product list is getting bigger. He's operating out of a tight garage and he's barely keeping up with demand. Yeah, by 1990 we were selling quite a few different brands, probably 20 brands of equipment or so. And just helping people with their recording, whether it was synthesizers or recording equipment, we really weren't into the rest of the technology yet. We didn't sell guitars, we didn't sell drums. It was just stuff I understood and I knew, synthesizers and recording equipment. And how are you financing inventory at that time, Chuck? Hand them out in sales from last month and the year and the month before. And then in terms of what you were actually carrying your inventory, it would just grow organically because people would ask you if you had it or would you go to trade shows, did you start going to trade shows and say, I want to sell that, I want to sell that, I want to sell that. All the above, definitely they would ask and if I heard it enough times, I would go, okay, that might be worth looking at. But I also was very careful back in those days what we wanted to carry. I was a little bit arrogant about it. I only wanted to carry the really good stuff. And so there were brands of equipment that I just didn't want to sell to my customers. If I didn't believe in it, if I didn't want to use it myself, I wouldn't sell it. So we tend to specialize on the higher end equipment for a long time. Tell me what a typical, I mean, were you working seven days a week? Was it, I mean, you've got customers ordering, you've got a pretty robust business, you've got to get the shipments out. Obviously, it's not like today, which is next day, everyone expects next day. But still, what do you remember about your lifestyle at that time? Because I think you mentioned your first wife and maybe your marriage had split up by that point. No, she was around for about 20 years. But I would say that was probably a sacrifice by being so engaged in the business and she had other interests. And the way we separated, thankfully, there were no children involved at the time. But no, it was definitely a seven day a week and it was early in the morning to very late at night. I loved what it did though. I mean, I never considered it work. And whether I was selling to a customer or programming our next database updates, I did that for a long time. And all the systems that figured out the UPS shipping in those days and salesman's commission, I wrote all the code for that because I like technology. Yeah, I mean. It's a reading about the story. It's like your growth is incremental. You go from like tiny 200 square foot mobile home to a little bigger place than 5,000 square feet and then by 1991 you got 10,000 square foot place. So this is a robust business. I mean, you're just, was there not a lot of competition? Were there not a lot of businesses doing this kind of work or what explained, you know, really just the growth of this thing at that time? - You know, there were about 5,000 other music stores across the country. So there was lots of competition. Every town has two, three, four music stores. I don't mean this at all arrogantly, but what we really worked hard on is having relationships with our customers. What I heard all the time was, I can't believe you can service me better out of Fort Wayne, Indiana than I can get out of my local store in LA or New York or where it may be. And I never really competed on price. I always wanted to be a fair value, but I didn't try and undercut the local dealer. We just wanted to know the products better. We wanted to make better recommendations. We had this incredible service. You know, we'll fix anything we sell. By that time, the internet is starting to happen. So we had all kinds of online educational tools. Our goal was to always add more value. And so if we sold a keyboard, we would include an extra bank of sounds. If we sold speakers, we would show you diagrams on how to set it up and that sort of thing. - Yeah, I mean, now, you know, there's obviously like content marketing and all this stuff. You were essentially doing that before we called it that. You mentioned the internet, 1994. You got the domain for sweetwater.com. The website was not an e-commerce website. It was an education website, right? - That's all it was for several years. It was strictly education. There was no way to even place an order online. The technology was there. We just didn't implement it. Because I really wanted to talk to the customer first. I want to make sure it's the right product for the customer. - And what's amazing to me is virtually all of your business was just it was a mailing list you had and then you had this very nice but simple kind of, I guess, two, three page, not catalog, but document that you would send to people and you'd have your sales reps calling people. But you didn't actually become a catalog, physical catalog business until, like, red 1997. - That's correct. - You know, we started, as you said, with the top matrix, couple, three pages. And then eventually went to a real catalog, which was, I don't know, six to 700 pages most of the time. And by then we've gotten pretty professional. It wasn't full for color. A lot of times though, it didn't even have prices. Again, we wanted the customer to call us. There was no order form. You know, as an example, when we started selling keyboards, you know, it's not just buying a keyboard. You probably need a stand for it. You might need a sustained pedal for it. You might need cables to hook it into other things. All that stuff does take some expertise to explain it to the customer. - Well, you're saying as, oh, I want people to call in because then we can help them figure out what equipment they need to buy with other equipment and how to connect them. - Absolutely. - That's a lot of time, right, on the phone with somebody. So I imagine by the time you launched a catalog in 1997, you've got a significant number of people manning the phones. - Yeah, we've probably had 20 people or so around that time. But our whole deal was that one-on-one relationship. And so we know the first call or two with the customer would be a very long call. Our average talk time was 20 to 30 minutes. Because we would start to develop a relationship, understand how they're gonna use it, what they're gonna use it with. And that caused the customers to be very loyal and very sticky. You think about the other places they would call and the other store would just quote a price and we would spend time engaging with the customer. And at the end of the day, the customer would go, you know, I just felt more comfortable at Sweetwater. - Yeah, I mean, it's really cool because it's like, every time I go into a restaurant or a shop and I walk out and I treat it really well and it was a great experience. I know that business was managed well because the employee there, it's not their business, but if they treat it that way, you know that their boss is a good boss, that they're doing a really good job teaching that person, how to do it. But oftentimes you walk out of a place and it just sucks. And I think to myself, it's not that employee's fault. This place is not managed well. How did you get these 20 people to learn how to forge those relationships with customers over the phone? - We spend a lot of time training, but you're absolutely right. Customer service is just so critical. More critical today than it's ever been. - Yeah. - And those days I knew how important it was and it was just the right thing to do. But we started very humbly, you know, at first we met at a little breakfast place. - You would meet them yourself. - Oh yeah, absolutely. And I would meet with the whole team every Tuesday morning and every Thursday morning and we'd spend an hour, hour and a half, sometimes two hours and we would dock through things, we'd role play, we'd practice conversations, what we call the perfect conversation. And how do you handle situations like this? And we did that for a week after a week after a week. And it was just really important. I wouldn't let anybody get on the phone talking to a customer until I felt they could do a reasonably good job at it. - Would the sales rep have their own customers? Or could you just call and get anybody on the phone? - You know, I had so many customers for my early days that I couldn't handle them anymore and I was also starting to run the rest of the business. And so I started handing my customers off and then they got more referrals and they all came to all the sales engineers came to us with a background of being somewhere. So they had their own friends and their own relationships. - God, and you said a word, I'm gonna just double click on that, sales engineers. These are, this is a term you guys use. They're not trained engineers, but you call them sales engineers because what they also have the technical know-how on how to help people solve their problems. - Yeah, unlike myself, most of them come to us with a four year music technology degree. And then we put them through what we call Sweetwater University. And Sweetwater University is 13 weeks of eight hours a day where they're learning all kinds of stuff. They're learning products specifically, they're learning technologies, but they're taught by 80 different teachers over those 13 weeks and they're not allowed to talk to a customer until they're through that whole process. - That wouldn't be formalized, I think, for another several more years, right? - A couple more years, but even in early days, I say we started at the restaurant, and then we, at our location, we had a place called the Blue Diamond Lounge and we had training in there several days a week. And I'm not sure exactly when we start, really formalizing it, but it was pretty formal early on. - And did you like it? One of the things that I find fascinating about, especially good sales reps is they often have a script, right? And so there's like, they will know what, the five or six things the customer might say, and there's all kinds of ready responses, were you guys able to develop those kinds of techniques as well? - You know, we didn't really do that so specifically because every conversation was different, but what we did do is what we called the perfect conversation. And that really meant that we weren't gonna negotiate the price until the selling was done. I wanted the customer to understand where the right place to buy it. I wanted the customer to understand it's the right product. And once we get through all of that, then eventually we'll talk about a selling thing, but for me to quote a price, which is what all my competitors did, you'd call around and go, "I want a Yamaha this," or a Gibson that, they would just quote a price. And to me that's silly because I don't know how the customer's gonna use it or what else they wanna use it with. And so I was not gonna quote a price until the selling was done, were the right place, and it's the right items for them. - Okay, by the late 1990s, you guys, you hit about 12 million in sales, it's amazing, right? You've got a very good business. And you get approached by your attorney and an accountant and they're saying, "Hey, big business here in Fort Wayne, you might wanna take some money at the table." What, tell me the story. - Yeah, that's exactly what happened. And every dollar that we made went right back into the company and growing it in more inventory and the next sales people we'd hire and all that. And so I really didn't have any money. And I was compelled by the thought of having some money. I'm thinking, "Well, maybe we've reached our limit, maybe 12 million dollars is the limit." - "Nor Fort Wayne, Indiana, how big can you get?" - That's right. So we entertained, and they were good people out of Chicago, the William Blair Capital Company. They're still around today. - They bought how much of the business? - About 80% of it. - In the late 90s. So you get a check, which I'm sure it was nice. And you could feel like, okay, I've got some security here. But you stayed on running. They didn't intervene, they didn't get involved. You just got it all. - Not at all. Okay. - Yeah, once in a while they'd have some comment. But basically, they let me run it. I mean, it was a good business when they bought it, and they let me keep running it like it was. - Okay, by 2000, so you got, you're own 20% of it. You're now able to buy stuff online, right? But I imagine most people are not ordering through the internet. Yeah, they're not clicking. They're still calling you or faxing you orders. - That's absolutely correct. It took several years later, really the success of Amazon is what got people comfortable buying online. - Yeah. - Yeah. 'Cause I remember the first, I'm sorry, I didn't buy it with this view water, but in like 1996, I bought my first portable recording machine, which is a Morant's PMD222. It's the most expensive thing I ever purchased in my life and I was like, this is $800 or something. It was so expensive, I was so nervous buying it. I think I bought it from B&H in New York through the catalog at the time. But yeah, I would not have, even in 1999, I was not ready to buy things online yet. - Right. - But you could, you made that, that was available. - Yep, and the advantage we had in those early days is we had great relationships with our customers, so they trusted us. And trust is a big thing in our industry. I don't mean this to sound as negative, but a lot of music stores, it's kind of hard to trust them. And we had already proven that we had a good, solid basic grounding of ethics. And so customers are comfortable buying things early from us or buying things online early from us. Okay. Let's go back to the Sweetwater University because I think this is really begins around 2001. And it's a training program where you have these people who are just gear heads, right? They love this stuff. Yeah, most of the people that we hired had music technology degrees or maybe they'd been on the road to the musician for a long time. But what we really look for were people that had fire in their belly. So I'm going to really interested in a company that was growing fast and would do the right thing for the customers. I'm curious, why did they need 13 weeks of training? There's a lot of subject material. And I can say we taught it with 80 different teachers, a couple hundred classes. We taught every technology, but then also a lot of specific brands and products and that sort of thing. So you would teach them how to work and operate virtually everything you sold? Absolutely. If you can't operate it, don't know how it works. I don't know how you could sell it. So they're like tech support too in some ways. They are. So it's like, this is a valuable person. Like you're investing a lot of money and time in this person. Well, 13 weeks before they ever make a dollar for our company. And then we continue to invest in them. I mean, Sweetwater University was just getting you off the ground. You would still as a sales engineer meet two times a week. Every Tuesday morning and every Thursday morning for continual training as new products come out, new technologies, that sort of thing. I mean, there's a sort of a stereotype of a good sales rep, right? Who somebody's just aggressive and just relentless and just closing the sale, closing, closing, closing. But you're bringing in people who were actually not coming from sales. These were people who were like music gear nerds. Absolutely. And we never wanted them to close, close hard as you've described. We wanted them to present the right options to the customer and jointly with the customer figure out if it's the right thing for them. I've always preached that I never wanted to sell customer more than they really needed. There were many times a customer would call in for a very expensive thing. And I would find out that that was too much for them. And they really should buy a less expensive thing, but get all the other accessories to go with it. I've always believed everyone in our company, whether it's a sales engineer or the receptionist, is either adding credibility or taking credibility away from our company. If someone would come to our store or phone into the receptionist and say, "My keyboard, you know, quit working." They're empowered to replace it. I mean, we might ask a question or two, but they're empowered to replace it. They're never to ask a manager. They never would use the excuse, "Well, I have to get management approval." No, if you want to replace it, you replace it. And the worst case from our point of view, we'll get it back, we'll fix whatever's wrong with it, we'll turn around and sell it as a demo or a used instrument. So it's not a lot of skin off our back, but it's the right thing to do for the customer. So it sounds like you discourage, like, cover your ass type of employees. Yeah, we would never. Every employee I hired, I would tell them, you'll never get chastis for doing the wrong thing. You'll get chastis for not doing the right thing quick enough. So how would you retain people? Because the amount of money you're investing in an employee is so high that like, you really don't want people to leave. We don't want people to leave, but they want to stay. There aren't many opportunities like this. You know, you could go work at one of our competitors, but it's just going to be a more traditional music store. I guess you could go back on the road as a musician, but to have a professional job like this, where frankly, in your first year, you're probably going to make $75 to $85,000 in your second or third year, you're well into six figures. You know, if people are making nearly a half a million dollars now, wow, and that'll keep you. Yeah, that's a lot of money. In Fort Wayne, Indiana. I remember when I was hiring young people years ago, I would tell them the deposit on your house out in LA or some other big cities would buy your whole house in Fort Wayne, Indiana. Amazing. Anyone listening to that who is like starting their life for Wayne, Indiana. All right, so you've got, you're running the business. It sounds like you're happy. The business is growing, but your investors get scared.com bubble bursts. And anyone who remembers that time, it's a blood bath, right? It's like venture funding just dries up because a lot of venture firms are just getting killed. You guys weren't, because you're not a.com company, really. Right? You were okay. The bubble didn't really affect your business that much at the time, or did it? No, not at all. So we grew through that period just fine. But the way those capital firms work after about five years, they want to flip the company and move on to something else. Okay, so five years they decide we're going to sell already percent to a new owner. And you're aware of this. But what did you, what was going through your mind? It was a mutual decision. It was about four and a half years in. They start talking about it. And I raised my hand. I said, "You know, I'd like to buy the business back. I love what we're doing. I want to buy it back." By the way, how much were you doing in sales by 2001? I don't know. In the 20 million range or something. Maybe even more, I'm not sure. And they kind of laughed and scoffed at me because they figured out that I didn't have that much money to buy it back. And I said, "No, no, I think I can pull it off." And they said, "Prove it." And so my best friend, who was an attorney, and I went to about 18 different individuals in Fort Wayne and said, "We want to buy the company back. Would you loan me 50? Would you loan me 100? One guy loan me a million dollars." Let's break this down for me. You want to buy the company back, which we will learn was a very, very smart decision. But you didn't have the cash to do it. So you had to borrow money from. And borrow. You weren't asking for investors. You were asking for loans. Right. High interest loans, right? Yep. 12 percent. 12 percent. And can you tell us how much you had to raise? You know, I don't know that I remember, but $67, $8 million in that range. Right. Well, what I will tell you is I didn't have any money myself. Oh, you didn't? Even though you got cash from the sale? I mean, really? Because during that period, my wife and I got divorced. Right. And I gave her all the money. I kept the business. Which kind of funny at the time, I tried to keep her as a partner in the business. And my attorney said, "No way, I will not let you do that. Give her all your cash and you just keep the business." Which was, you know, a really smart, wise move. But I literally had no money. I did have the inventory. And so I was able to pledge the inventory and borrow money from. We went to 18 friends. 17 of them said yes. And they did it because they had known me for several decades now and it trusted me and knew I was going to stand behind everything. If you didn't have personal cash and you took borrow it, that's a lot of stress. And that's like sleepless nights kind of money that you have to raise. It was, but I've always, my whole life, I've always said failure is not an option. But what I will tell you during the four and a half years that William Blair people had the company, the one thing they did put in place was some good structure. So we had to do monthly reporting and all that sort of stuff. And that allowed me to understand the totality of the business and where I thought it could really go. And so that probably gave me some confidence through the process. They imposed discipline on the on the business. You know, and the other thing I would add, I've been able to grow this whole thing. I didn't go to college. I didn't have any business degree. Didn't have, you know, a lot of that stuff. I taught myself almost everything I've done. And that four years was a great education where they taught me how to professionalize the business. Okay, so you've got now you've taken over the business back. You've got some debt. But turns out the business is growing and the cash flow is good and you can actually repay these loans faster, but I guess within two years, two and a half years, yes. Two and a half years. You are now the owner full owner again of this business. 100%. Yes. And that must have felt pretty great. It felt awesome. Meantime, this company is continuing to grow and you guys introduced free shipping, I think, early, like 2003. It's been a long time, yes. Which is expensive. It was expensive, but it just became accepted. And we wanted to take that question out of it for a customer. What does ship it to you for free? It's fine. Okay. So let's talk about the growth of this business. I mean, it is now you've got a catalog, right? We're in the 2000s now. It's not really going to become primer. I'm imagining today, overwhelming majority of your sales are online. Yes, they are. I mean, we have a great local store, but most of it's online. Yes. But in 2005, 2006, when you now have the full owner, I imagine it's still catalog, mostly catalog. Yes, it is. And so how did you see, what do you remember about imagining what this could be like where this is going? You know, by then, we started to have enough credibility with our customers and our vendors. I should back up. Our vendors in the early days, they didn't understand when I was operating out of my house. They'd never heard of such a thing before. And many of them wouldn't do business with us. And I remember going to trade shows and begging them to do business. I tried to explain to them how we were different. And now, no, you're just a mail order. You're just a catalog. You're just going to low ball and hurt our other dealers. So it took a while to get their credibility. Eventually, they started coming one by one and wanted to do business with our company. Because you weren't competing on price, you were selling customer service and support. Absolutely. But it was unheard of to most of those manufacturers or those reps that we were working with. They didn't understand that people would pay more or pay the same price if they got a better value or got great customer service. And I would say that we had to be in the ballpark with the price. We couldn't charge dramatically more. But if I could charge the same price as your local store, and I would include a free bank of sounds or something extra that really didn't cost us a lot, but gave extra value to the customer. Even down to technical support and warranty, we offered a two-year warranty on everything we've done. We've done that for a long, long time. Most of the manufacturers offer a one-year warranty. Most of the local stores at best honor that one-year warranty. I want to do a two-year warranty. Most instruments will break in the beginning, an infantile failure. And if they do, they're covered into the factory warranty. And if they are going to break on month 13 or 14 or 15, I don't like that. I would not have wanted to sell that to the customer. So I will cover that next second year. And it's really been a relatively small amount of things we've had to cover, but it gives the customer much more confidence. Yeah. You mentioned it earlier. Anywhere you go today, especially if you're used to great customer service, most places you go, you're disappointed. And so it can be a huge differentiator and it does not cost that much. But it's the right thing to do. When we come back in just a moment, a Chuck's idea of service leads him to start buying other businesses in four-wayne, all while growing sweet water into the billion-dollar company. It is today. Stay with us. I'm Guy Ross and you're listening to How I Built This. Welcome back to How I Built This. I'm Guy Ross. So it's the mid-2000s and Chuck decides to start getting involved in other businesses, things like aviation and cars. His goal is to grow more jobs for four-wayne, which he does. And meanwhile, he's expanding sweet water's reach and introducing new product lines, including actual musical instruments like guitars. You know, the most fascinating part to me, and I don't remember exactly the year, but we were selling lots of technology, recording equipment and all that. And I kept having customers ask about buying guitars from us. I had a lot of musicians that worked for me that played guitar. And so we finally took on a guitar called Go Dan out of Canada. And it's a guitar that had technology built into it. It could talk to computers and other things. And we thought we'd start with this high-end guitar first. And I kept hearing from customers, "Why don't you sell Gibson? Why don't you sell Fender?" and all that. And then I'd also hear from my friends, "Well, you can't sell guitars online." And that's what the manufacturers would think. But we did it by the same kind of stuff we've talked about. We brought every guitar in and we did our own quality control on it. Which you go, "Well, why do you need to do that?" You would think they're all made perfect. Well, they're not. They're, you know, summer made by Mary on Monday and Bill on Friday. And if we would take every guitar, we'd do a 55-point check as we called it. And make sure everything on the guitar is perfect. Then we would take really high-quality pictures and show those pictures online. We'd weigh the guitar. Different guitars. We'd different. They have different moisture in the wood and that sort of thing. And then you can now see those online at three o'clock in the morning and your pajamas and decide you want this one. Because it weighs three ounces less than that one. We place your order. The next morning we'll call you and say, "Thank you for the order." And oh, by the way, don't you want an extra set of strings? You need an amplifier, all those sort of things. But we went from no guitars to selling over 1,000 guitars every day. Wow. I know this as somebody who's ordered so much stuff from Sweetwater over the years that you get a bag of candy. And I think a letter, like you, you, no, it wasn't handwritten, but you have a letter in there, did for a long time. Yeah. A candy's just our sweet little way of saying thank you. We've done it for, I don't know, four decades now or something. It's not a very expensive. And it just a nice way to say thank you. Okay. Let's talk about four-waying because you've gotten into a lot of other businesses to combine. We'll talk about them all. But it started with flying. You wanted to, I guess when you turned 50 in 2008 around then, you wanted to learn how to fly helicopters, which would lead you to getting into that business. Like, I think you've had like 12, 13 other businesses. And they're all based in, they're all around sort of four-waying area. Yeah, most of them are around four-waying. There's actually about 25 of them today. Wow. But helicopters, I was at an air show at a local airport and I saw a guy flying his personal helicopter. And I said, "Oh, Pete, that is so cool." And he said, "Well, you should do it." I said, "No, I'm 50. I'm too old." And he said, "No, no, no. I have a friend in his 60s that got its helicopter rating." So I went home and started working on my wife. And that Christmas, she got me an FAA log book and had a fly helicopter. And by August, I had my helicopter rating. And eventually, you would start a helicopter charter business out of this. Okay, I want to just mention a couple of businesses you have. I'm more a an Italian restaurant four-waying. Yes. You've got a live music venue there. Okay, not surprising. You've got a cafe there. Aviation company, helicopter charter flights, charter helicopter companies. A car dealership. You've got an optometry shop that sells glasses and does eye care. Tell me about this because these are a lot of businesses that it doesn't seem like you really need to do them. I mean, sweet water will get there. Eventually, it became enormous. But even as you were sort of acquiring these businesses, were you doing it just to diversify your business portfolio? Tell me what all of this is about. Don't need any of it. But I love our community. And there were just lots of opportunities that became available. So as an example of the 25-6 businesses we have now, every one of them has a general manager running it. And then he or she has a whole staff of people working for them. And so it's created a lot of jobs and a lot of opportunity for our community. And you acquire these companies when they're going to go out of business? Or like, what's the story? Because you're not starting them, right? All the above. Some, you know, we're in distress modes. There's been others like sweet cars. We started from scratch, you know, 15 years later. What kind of cars you guys sell? All kinds of one and two, three-year-old higher-end cars. So Lamborghinis, Ferrari's, Porsche's, Mercedes, all that sort of stuff. There are a lot of people buying Lamborghinis in four-way. We do. Believe it or not. And about 50% of our sales are local and the other 50% go around the country. But these were brands that were not sold in four-wayne at a new dealership. And we just found a way to bring these one or two-year-old cars that have a little bit of depreciation taken out of them. And now we can sell those kind of cars to four-wayne. What happened to the modest Midwesterner? Draven there, Lamborghini? In four-wayne? There's quite a few. And I went to a car show this weekend. I bet there were eight or nine Lamborghinis. I think we sold most of them. But it was fun to see. Yeah. Okay, so a lot of this is around four-wayne and bringing jobs to four-wayne. Outside of sweet water, I'm just curious. How many, what's the name of the company that oversees this? It's not called Sweet Waters. No, it's Sirac Enterprise. Sirac Enterprise. Okay. How many roughly, how many employees do you think Sirac Enterprise is overseas? Yeah, we have about 700 right now, 700. And it sounds like if I imagine you're a businessman, you want these to be sustainable. But that's not really, it's more about you grew up in four-wayne, and you've got the money, and you want to support four-wayne now. Yeah, I've been very blessed. My wife and I have been so, so blessed. And we just want to do everything we can to help our community. All right, so coming back to Sweet Water, during these years, E-commerce is taking off. Like Amazon and Walmart got huge online. And I should say, Sweet Water does sell on Amazon, like other third-party sellers. But Amazon has gone after a lot of other competitors in big markets, like Toys R Us, right? But not Sweet Waters. Why do you think that is? I mean, Amazon could just decide to undercut you by, you know, by selling the same things you do, but for like 10% less. They could. And I'll tell you the reason we're on Amazon is access to customers. But that being said, Amazon has decided that there are other markets that are much easier to get into and to be an expert at. And I've mentioned it multiple times, but the expertise that we have and the investment we make in our people, to offer, they don't want to have people. I mean, it's hard to call Amazon and talk to them on the phone. We encourage people to talk on the phone. We have those sales engineers and tech support people that really understand the products. And I think people are comfortable buying little inexpensive things on Amazon, or if you know exactly what you want. But when you have any question or anything like that, you'd be more comfortable buying that sort of technology from Sweet Water. It's interesting. Yeah, and again, I mean, I'm not, you know, I buy tons of stuff on Amazon. I just bought a foam roller for my thoracic spine, right? Cheap purchase. Yeah, you're absolutely right. And we've had many big companies trying compete against this and they've gotten in the business and out, whether it's Circuit City or Best Buy or. Now, we're not in IE. We have to compete against Amazon. So that's one of the reasons that two years ago, we opened a warehouse in Arizona. We can now ship to Nevada or California in one day shipping. Can't quite do the four hours or whatever, two hours now that Amazon's about to do, but most of our customers will wait one day to get the product. And the other thing about being in Indiana, we can reach 38% of the United States in one day. Yeah. And FedEx and UPS both have big warehouses or distribution centers, one in Indianapolis, one in Louisville right down the road from us. So we can get to a big part of the country right away. And what we can't get, we'll get out of Arizona. Okay, let's get to 2019. By this point, you guys are selling about 35,000 products on your website, huge number of 70,000 customers a month. That year, you're going to do around a little over $800 million in sales. And you build an enormous warehouse, distribution center, 580,000 square foot distribution center. I think it opens in February of 2020 in four way, to-- Yes it did. You know, for growth. And that's exciting. It's high tech. You've got 580,000 square feet and then, bam, COVID, a week or two later, the world shuts down. You know what was amazing? We knew that warehouse was coming. Nobody knew COVID was coming. In fact, during the fall, We had ordered all kinds of inventory in anticipation of filling that warehouse up. We wanted it to be full. And fortunately all that stuff came in in January and February and early March and now our warehouse is full. And then COVID happens and the world stops including myself and guitar center and many of our other competitors were told they couldn't ship anything. You can have employees in your building or anything. It didn't take very long and our governor said no no, mail order is good. We want mail order to stay in business. So they gave us permission to open and my wife and myself and my daughter who was 13 at the time and the local police chief and a whole bunch of others came in and we started packing boxes because I was desperate to take care of our customers because they were still buying equipment. And they were at home wanting to get more equipment. We were selling equipment for streaming church services. We were selling guitars for first time owners and our business that you grew by 40%. You were quoted I guess a retrospective article about COVID by an Indianapolis magazine. You said I was somewhere between panicked and trying to inspire those around me. Yeah, I would tell you that six months combination of COVID and Black Lives Matter was the hardest year in my 47 years of being in business and I was stressed and immobilized me for six months. Yeah, I just in every day was tough. I just didn't know what tomorrow would bring and it took me about six months to get through it and by September I met with the whole leadership team of our company and I said I'm choosing not to participate and we're moving forward. That's participating in what? Just the whole world of where it was at that time when the Black Lives Matter thing came out, you know, to me it was just awful. I've been a big supporter of every person. I don't care what the color of your skin is. And I think the Black Lives Matter group of the people behind that were not necessarily good and strong. I believed in the movement. I believe in all bunch of stuff but not the kind of rhetoric that was being thrown about. You felt like it was divisive. It was very divisive and you know, soon as you supporter Black Lives Matter, then the police. I remember very clearly putting a very small innocuous statement and I got a call immediately from the police department. And I thought, no, no, I bought you guys all lunch last week. So I love the blue lives as much as I love the Black Lives as I do the yellow lives and the white lives and so on and so forth. But I just chose to not, you know, that time I had 40 years of being in business and I knew what my track record stood for and what I believed in and I just wasn't going to get stuck in that anymore. Do you make political statements? Do you get involved in political issues or do you just kind of like to stay out of it? I try really hard to stay out of it. And it's interesting because I think a lot of companies have re-evaluated this and have kind of gone back to this view which is the role of a business is to be a good employer, to be good to its customers to make great products, to offer good value. But not to run the country or run policy like that is not the role. I mean, you know, you look at the 60s and the Vietnam more. I don't think Pepsi or Coca-Cola had a position on that. You know, they personally may have that they didn't as business didn't come out saying anything about that. Well, I think the challenge or what was different is that we had the internet. The internet empowered so many people to have a voice so they drove it and encouraged a lot of it. And again, that's the positive and the negative of it from that point of view. So it makes sense to me that this next chapter which is I imagine you get through that year 2020. It's an amazing. You broke a billion dollars over a billion dollars in business that year. And since then it's been over a billion every year which is a billion dollars. Right. It's unbelievable. Unbelievable. But you get through this year 2020 clearly very stressful for you. But going to that year because I was wondering I was like, you know, in 2021 he decided to sell a majority stake of sweet water to a private equity firm. I mean, you're doing over a billion dollars in sales amazing opportunity to sell. But I have to imagine now knowing what I know from the previous year. Maybe you were like, this was a lot. I just I think I need to step away. You know, it wasn't so much that I had previously tried to figure out what's life after Chuck and what's what's the long term plan. And we have this problem in our country with a state taxes and you have to pay about 50% of whatever your net worth is just when you both die for a state taxes and over a certain amount. Yeah. Yeah. So I realized it's a big problem. And so for two years my financial advisor, my attorneys, all that brought in all kinds of experts and had us look at various strategies. I learned terms like irrevocable trusts and all these sort of things that we could move our company to and I just felt weird. And so December of that year, I said, well, why don't we consider selling it and decided to go through the process. So they went away and we worked on what we call a book. They are time with the bankers. Yeah, JP Morgan. Right. So they sent out a copy of this book to 32 companies. And I was really clear when I started working with JP Morgan, there were some principles that I would not give up on. I had no debt. Didn't need to sell it. I was in a great position. But going forward, they had to continue to support our community, whoever bought the company. They had to support our sales management process. The team, you know, couldn't dismantle it. They had to really keep the company kind of the way I'd been running it. And that was just a prerequisite or we weren't going forward. So 16 sent back incredible offers. I mean, blew my mind, life changing incredible offers. And we narrowed it down to two. And I just really liked the one that ultimately won and we five years in August. And they've done absolutely everything they said they would do. And it's just been a great relationship. My wife and I still own a big piece of it. We just don't own the majority anymore. And that course is free. Does up to do lots of other things. Yeah, I mean this Providence equity. Providence. Yep. A majority stake in and you retain a minority stake. Right. And how did you guarantee that they are going to do the things that you really need them to do or that you you have a certain view about your employees, the business, the community. How do you bake that into a guarantee for ever? Well, I don't know if I can do it forever. But but when I did interview them and I interviewed them as hard as they interviewed us. And we talked to references of other companies they had done. The best thing I can tell you is they've done exactly what they said they would do. And what they really did is they sped up some of the stuff that I was going to do anyway. You know, I'd have done things in sequential order, very monitored and measured taking on selling band instruments as an example or opening the warehouse on the west coast or they did it all at once. It was a little bit stressful for the team, but it allowed us to go even faster. And that's that's what they really brought to the table. So 2021 this happens you come to terms with and the company again has done you are done over a billion sales. So you know that acquisition was was certainly considerable. Part of this is you decide that you're going to move on you're going to step down a CEO. What did that mean for your day to day life? I mean here you go 2021 to running this thing. And then what is this like one day to the next? It's like you're not. There's not like a million questions coming at you. You're not going to bunch of meetings like just I will tell you I didn't believe it ever happened. But the money was so amazing not only the money for me but the money for all my team you know all my top people had a really nice pay day. Yeah, but I stayed in my office until the day I saw the money in my checking account or in my saving the count actually. I wasn't going to leave my office and it was hard. It was really hard. My staff helped move me out of my office. I couldn't have done it by myself. But I stepped up to chairman of the board. I'm still involved. I've got so many friends that are their lifetime friends that are there and it's my baby. But I've now sent my baby off to college and doing really well. So I mean again like just emotionally was part of you. You know there's still the emotional thing of like I'm not coming in every day anymore. I'm not. Sometimes people get sort of say to me I didn't feel as needed right away. I miss it. That's what I would say. I miss my friends. I miss going there every day. But I am fulfilled with other things that we're doing and I'm glad I have that. You know I talked a lot of my friends of course retiring right now and I go that scares the crap out of me. I'm 69. I feel like I'm 39. I guess I don't quite look at but I really have lots of energy. I'm up early and I'm going late and I sleep you know very few hours per night and so I love what I do. And today I think sweet water's got like 2600 employees roughly some like that. Yeah. Yeah. You've got a warehouse in Glendale, Arizona and but most of the employees are in Fort Wayne. Yeah it's pretty amazing. I left we were doing a billion five in business this year. They're new two billion dollars in business. Wow. It's crazy. Amazing. I guess in the lobby or somewhere in the sweet water headquarters you can still find well maybe set the original but there's a replica of that VW bus that this all started out of right. Yeah. My rusty old VW bus went to a junkyard over in Van Ward, Ohio but many many years ago. I got a version of it. It's kind of a facsimile of the original VW bus. And it's in there in the headquarters and you can go see it. And I guess your Boy Scout uniforms also in there. My Boy Scout uniforms hanging on the door and my first saxophones on the floor right in front of it and just a little bit of the story of sweet water in the surroundings. Yeah. It's pretty amazing. I'm Chuck. When you when you think about this your trajectory of your life, right? Everything happened just for even for like the four years of going gigging around the country and I'm starting this little recording studio to a multi-billion dollar business man in Fort Wayne, Indiana. Again, it's amazing. How much of this do you attribute to the work you put in and the hard work and the skills you brought to it? And how much do you think you have to do with luck and fortune? Yeah, I'm not a big believer in luck, but it was hard work. I think it was the grace of God and the more you're given, the more you're expected. You know, it's just been amazing, but it's been a lot of work and a lot of support from others around me, whether that's customers or friends. I don't take credit for it. All there's no way that one human being can do everything that I've been able to accomplish. I get credit, but I don't believe in that. Yeah. I reflect all the time. I started with nothing, no business theory, no background, a rusty VW bus. It's just been an amazing, amazing ride. That's Chuck Sirack, founder of Sweetwater. And by the way, even with everything he's got going on these days, Chuck still makes time to gig as a musician. On the instrument that kind of launched his career, the saxophone. Yeah, I played Saturday night and I'm playing three times a week, three different bands. What are you playing? I play in a nine piece R&B soul band and I play in a little three piece jazz trio. And I play in an 18 piece big band and there's this various clubs and places we play around here. We'll plug you. What's it? What's the VW venue? Yeah, the next venue I play at the club room at the Clyde Theater. The Clyde Theater? What is happening? We're there a couple times a month, so I think we'll look at the calendar and find it. Hey, thanks so much for listening to The Show this week. Please make sure to click the follow button on your podcast apps so you never miss a new episode of The Show. And if you're interested in insights, ideas and lessons from some of the world's greatest entrepreneurs, please sign up for my newsletter at gyros.com or on Substack. This episode was researched by Carla Estevez and produced by Casey Herman with music composed by Routiner of Bluey. It was edited by Andrea Bruce. Our engineer was Anli Huang. Our production staff also includes Alex Chung, J.C. Howard, Chris Messini, Sam Paulson, John Isabella, Carrie Thompson, Niva Grant and Elaine Coates. I'm Guy Ross and you've been listening to How I Built This. [BLANK_AUDIO]