Jeff Johnston kicks his foot up onto the bottom rung of his stool and begins to tear through the opening chords of Dire Straits’ “Sultans of Swing.”
A few minutes and the flick of a switch later, the silver guitar in his hands delivers the country twang of a Fender Telecaster. Then, it’s on to the snappy Stratocaster sound that defined 1960s’ rock and roll guitar gods like Eric Clapton and Jimi Hendrix.
“It was more something we stumbled across,” says Johnston, who has worked beside friend and custom guitar builder Jay Pawar for the last five years, designing and refining the guitar in his hand today. “I think the difference between an entrepreneur and someone who isn’t is not the quality of the idea, it’s that entrepreneurs follow up on it. You hear people all the time saying things like, ‘They should really build a convenience store there’.
“That’s who Jay and I are. We’re ‘they.’”
So when Johnston caught himself telling Pawar in 1995 that “someone” should design a guitar that could deliver all of the classic rock and roll guitar sounds in one package, the two men decided to build one themselves. Their creation was unveiled last summer at an industry trade show in Nashville, where the pair of entrepreneurs showed the world what had, up until that time, only been seen by a few dozen people.
Then, in February, Johnston and Pawar were two of 70,000 people who descended upon Los Angeles for the industry’s second largest trade show. Out of a field of 1,000 eligible guitars makers, including industry heavy hitters such as Gibson and Fender, the newly unveiled Pawar’s “Turn of the Century Player,” (which has a price tag around $1,900) was recognized as one of the top three values on the market today.
Industry consumer magazines quickly found their way to the doors of the Willoughby Hills-based guitar manufacturer, but six months, later Johnston and Pawar are hardly an overnight industry sensation. Instead, they are marching ahead with the business plan they drafted two years ago, and their work is paying off with industry visibility and a growing buzz about a guitar that is unlike any other that hangs in music store showrooms across the country.
“Here’s a crazy thought, and it probably makes me sound arrogant,” says Johnston, who is now sitting on an olive couch beneath a row of acoustic guitars in the showroom of the Cleveland Heights music store in which he still shares an ownership stake. “We sat down in 1995 and said, ‘Let’s design the best electric guitar ever made. That was our goal, and every decision we’ve made is guided by that principle.”
The catch was that neither Johnston or Pawar had any experience in manufacturing. Nevertheless, the entrepreneurs forged ahead, drafted a strategy and learned their new line of business. Along the way, they also figured out how to survive in a market driven by classic companies and pure rock and roll nostalgia.
Perfect your product
By July 1998, Johnston and Pawar had a working prototype in hand, which they showed to guitar players they admired, getting plenty of positive feedback. While other manufacturers might have started production on the long-toiled after design, Johnston and Pawar realized there were four or five elements of the guitar they believed needed improvement.
Given the fact that there are an average of 100 distinct parts of an electric guitar, a few sticking points is a minimal part of the pie, not to mention the fact that thousands of hours and dollars had already been invested in the product with no return. Despite that, the duo agreed not to move forward with the guitar until it was perfected.
Johnston and Pawar went back to work refining the product.
“We had an idea that we were going for, but we had to put that idea in actuality,” explains Johnston. “We thought the prototype would take three or four months. It took 10. With the second prototype, we had something really direct we were going after. That took three months.
“You don’t really necessarily know what you’re going into, because you’re going into this abyss. It’s an unknown.”
Find an adviser
Johnston’s background in the music industry was retail. Pawar’s was service. So when it came time to work out the logistics of their manufacturing operation, a field with which neither of them was familiar, Johnston went out in search of an adviser for help with the details.
After flipping open the Yellow Pages, Johnston called a Kirtland business named Applied Geometrics. He explained the situation to Tom Gabor, who was brought aboard as an adviser. Gabor helped the pair figure out how to translate their creative vision into machinery for their Willoughby Hills manufacturing operation and solved many of the profitability concerns that remained up in the air.
“Tom showed us how to take 80 percent of the needed cuts and automate them and save hours and hours of manufacturing,” explains Johnston. “That was one of the things that along the way turned us into a potentially profitable business model.”
Even after Johnston and Pawar worked out the details of their manufacturing operation, they were still faced with the unavoidable question of financing. They needed an angel investor, but they wanted someone who had entrepreneurial experience and could serve as a business adviser for the operation.
The pair drafted a list of close friends, acquaintances and strangers who were known for their success with start-ups. It turns out they didn’t have to go far. Johnston’s brother, Kevin, who had been involved with several start ups, agreed to come on board. The deal providing crucial funding was signed early last year.
“With Kevin, I handed it to him and said, ‘You should do this,” recalls Johnston. “He read it that night and called me the next day. I think everyone has an inner circle to go to, they just need to think about it.”
Know where you’re going
Even with the recent industry notoriety, Johnston and Pawar aren’t getting dollar signs in their eyes just yet. In fact, the pair intends to keep their operation a lucrative, yet relatively small, business. Currently, the Pawar Guitar Willoughby manufacturing operation can turn out about five guitars a week, because they are largely hand-made.
Johnston concedes he and Pawar will eventually have to find a new home, but do not plan to ever produce more than 1,000 guitars during the course of a year.
“We have a five-year plan,” says Johnston. “To give you an idea of our long-term goals, I don’t think we’d ever want to make ourselves any more than a 1,000-guitar-a-year type company, which seems to be the model that companies we greatly admire follow where they can actually maintain their quality. You get much bigger than that, and you have to start making choices we’re not comfortable with.”
After perfecting their prototype two years ago, Johnston and Pawar knew they would have to sit down and draft a detailed business plan if they hoped to survive, laying out exactly how they planned to gain market share and grow their fledgling company. It was this stage that convinced the pair they had a viable product, which could find its niche in an incredibly loyal consumer market.
“We have a competitive advantage on our competition,” explains Johnston. “We have an electronic system that, with a flip of a switch, moves you in and out of 20 classic guitar tones. What makes us a viable business model is, at the end of the day, it’s a value-added strategy.”
Be flexible
At the first national show they attended on the manufacturer’s side of the table, Johnston noticed guitar designers from well-known companies stopping by to give them encouragement. Their message for making the jump to manufacturing was largely the same: be patient and be flexible.
“They said, ‘No matter how much time you think it’s going to take, double, triple it, quadruple it, and you’ll be in the ballpark,” recalls Johnston. “So far, quite frankly, they’ve been right.”
This past winter, Pawar Guitars learned another lesson in flexibility. When it received the award of one of the best values on the market today at the February trade show in Los Angeles, the duo never expected the flood of exposure they would get within the industry. The contest was sponsored by www.harmonycentral.com — a music consumer Web site that boasts 1.3 million unique hits a month. Once their guitar was featured on the site as a winner, the e-mail messages started rolling in.
The exposure has made Johnston and his partners rethink their international strategy, which they had simply put on the back burner until they established a foothold in the domestic market. Meanwhile, a dozen dealers stateside have requested demo models to show their customers — requests Johnston hopes are the seeds of Pawar Guitars’ dealership base.
Flexibility is at the core of Pawar Guitar’s business philosophy and, although he may never be able to replace the traditional Fender Stratocaster, Johnston wants Pawar Guitars to be a respected name when it comes to the next generation of industry players.
“You can’t beat the classics, but what we can do is say that, of the guitars being made right, now let’s strive to be the best,” he says “And if somebody beats us in some area, let’s find out why and beat them.
“That’s been the guiding principle throughout. That keeps us going.”
How to reach: Pawar Guitars, www.pawarguitars.com
Jim Vickers ([email protected]) is an associate editor at SBN.
This note’s for you
You might expect Jeff Johnston and Jay Pawar to be quickly trying to land a high-profile endorsement contract with a major rock and roll act to boost their brand recognition.
They aren’t.
Although Johnston isn’t naming names, he says he and Pawar have had a few brushes with nationally recognized guitarists, but they’re keeping their options open.
“We had a couple of people offer to play our guitar for us on tour, which basically means you’re giving them a guitar,” says Johnston. “We know of many manufacturers who have retained this idea of never giving anyone a guitar, so we’re kind of sticking to our guns on that one. If they want to buy one because they like it that much, I will happily support their efforts with advertising.”
Doubt that’s a winning philosophy for a start-up business?
Tell that to the Paul Reed Smith Guitars. The business wasn’t so much different from Pawar Guitars when it was a start-up in the late 1970s. Then, one day, Grammy Award winning guitarist Carlos Santana picked one up and never put it down, boosting not only the company’s national visibility, but also its crucial street credibility.
