Sweetwater Sells To Private Equity
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- Опубліковано 12 вер 2024
- Sweetwater has sold to a Private Equity group, What does that mean for the future of Sweetwater? Is it going to become just another big box retail like GC. Will they try to grow too fast ? Let us know in the comments on what you think will happen with GC?
I’ve never once saw a corporate buyout result in an improvement for consumers, tell me I’m wrong
No I won't. Because you're not wrong.
If there was ever anyone who could understand the complexities of a Corporate Buyout it would be a Doctor of Enigma.
I'd say your assessment is spot-on, the only improvement likely will be profit, however that will be short-lived as return business drops off.
You’re wrong!
I mean idk if you’re wrong but you told me to tell you that you were wrong.
Would CMI taking over Gibson count?
That was 1944 & led to a golden age for Gibson
When an investment firm gets involved, it becomes all about the profit, not the products. They bleed the company for as long as they can, sell it.
Investment firms have only one thing in mind, wringing out as much money from a profitable company. I don't have any good vibes about this sell.
Me either. I love Sweetwater too. I’m gonna text my sales mana get and see what he has to say.
@@smelltheglove2038 I'd do the same but I'd be afraid it might impact his job
@@Madchris8828 it’s all good. He thanked me for asking and said that the day to day is remaining the same, it was a move to expand. So basically what Baxter and John were saying. I’m pretty cool with my sales guy. He’s a phish fan as am I, and I even met him at a show once.
Thats capitalism
Reverb went down hill after they were acquired
Etsy screwed up Reverb, I have little faith in this move...
They may have raised the fees, but Reverb seems to be doing better than ever.
I feel like Reverbs fees went up prior to Etsy
We agree unfortunately. It was directly after the acquisition that the fees went up...from 5 to 8% without the bumps even...eeck:)
@@Viser11222 yep
It’s not 5% like they claim it’s 7.7% which is about 8% plus taxed twice if it’s used plus I personally pay shipping. I don’t trust them re protecting me so there’s eBay which is just as bad or I’m thinking Facebook marketplace may be my new thing. Yea the bumps too add up. And I mint gear. If I lower the prices anymore I’ll be giving it away for free. The people just keep watching and watching. I’m literally the lowest price and the mintiest gear. Sigh. Buy it new if they want to pay full price, tax and maybe shipping and restocking fees in some places that don’t mention it. I won’t name the store that took me for a ride with a defective item. Charged me a total of $30 bucks for nothing. Was going to be $60. Moved on from them real dam fast.
To the new owners: Please don't screw up the only music equipment retailer that many of us trust. I think I speak for the vast majority of Sweetwater customers. Don't let us down.
They don’t care. Period.
Noticed Sweetwater charging tax whereas previously they had not. Called my rep and he frankly admitted there's a new policy. Cancelled and bought from somewhere else.
We're all hoping the same with you Keith!
@@JamesKimSynergize It's not just Sweetwater. Amazon, Reverb, Ebay and others are all collecting sales tax -- no way out of it any more.
@@orlandoguitarist I must have gotten lucky then. My best guess is it depends on the 3rd party merchants on those sites?
I've worked for companies that were bought out by private equity firms. They have all gone downhill quickly because the "expert" MBAs and bean counters take over. They alienate customers and employees in a flurry of stupid "cost saving" measures and PowerPoint presentations.
They are scrap dealers. The employees and communities the stores are in will suffer. Not to mention anyone that buys something expecting customer support and/or product quality.
I have worked for three companies that this happened to. Guitar center, Whole Foods, and the Fresh Market. I had to part ways with each of them not long after. This great company will be shit very soon. The first thing they will do is get rid of any management that wants to keep the company the same. Then they will replace them with beam counters who will find ways to drive out any well paid employees to replace them with half as many 20 year olds. Any customer service measures that will take even a cent out of stakeholders pockets will be gone right away. I’m glad I’m a guitar builder because pretty soon we will be the only way to buy any gear that doesn’t make 200% profit
And that’s when the “Bobs” come in asking what it is exactly you do for sweeetwater. And you reply frantically, “I’m a people person! I’m good with customers” and then you end up “Jumping to Conclusions”
Went through 2 sales to PEG’s where I worked. Performance reviews halted (no raises,) increase in benefits costs etc with first one. When the second one was announced I found another employer as did many coworkers. It never ends well for the employees
We really hope not but the writing on the wall here is very real...bummer
It all starts when you lose the candy.
They're already cutting back, no Laffy Taffy in the bag any more; I'm very sad... :-(
@@SeaDrive300 This is a tragedy.
I came here to say the same thing.
That's a sure sign. The bean counters will say, "Oh, we can save a half cent per order by not including candy."
@Boyito
Ah, Haaaaa!!! THAT'S WHAT HAPPENED TO MY CANDY!!! I Ordered A Case For My Epiphone Dot & Thought The Delivery Dude Pilfered My Stuff: Candy, Stickers, Booklet....🤔 During The Drought Of Fall 2019 Into 2020, I Was A Thomann Maniac: 2 EXCELLENT Harley Benton Strats & A Cort B5 Artisan Plus Bass. Lately, Though, It's Been Sweetwater (Despite The NEW Drought With Notification Requests For A Dot/335 & Goldtop 1950 Epiphone Les Paul Standard) For All My Equipment Needs..... I Hope This Pans Out Well, Otherwise I'm Going Back To Thomann!!!
When I read this news a few days ago, the first words out of my mouth were, “Oh no.”
Non-musicians running a musician’s company can only spell trouble. Move over,
Guitar Center. You got company now.
That was an odd spam that replied to you earlier...but yes, we are for sure worried here and hope the cards don't read what we see here...:(
@@CasinoGuitars About that spam…I’ve seen there is a nonsensical, bogus casino guitars response to quite a few conmenters on this video.
I didn’t even know til
Just now.
This is literally and categorically never, ever a good thing. When has being bought out EVER improved a company from the customers' perspective? j
Can't think of any.....🥺
Never !!
I know it sucks from a employee perspective. Working in the IT field is like that having the company I work for now being sod three times each time it got sold the employees lost something. Normally the customer service never fails because that is where the money comes from.
Every company in the motocross world that was bought by Private Equity was gone in 5 years time.
@@BobbyGeneric145 I worry that that's going to happen to Williams in F1.
I am a data systems engineer. Unfortunately I see these type of takeovers more than other people. It is never a good thing. The purpose of the experts and bean counters is to generate cash at the bottom line. Service and quality are the first things hit and things go downhill.
Shucks...we keep hoping this one may be different:) Hoping...
Agreed. First target is replace quality products with cheap crap, raise prices, fire the service department and eliminate anyone making a living wage. Other than that corporations are great.
@@tikigodsrule2317 how is that possible? Sweet water dies not make products
....really
How do you think this will happen? They don't make their own products.....
@@atta1798 Any store decides what they sell. Corporations only care about profit. They chose products to sell you based only on what their profit is. A high quality product that gives them less profit gets dropped.
Anybody in business knows to be purchased by a “private equity” is the kiss of death for a company. Why? They’re not interested in quality; they’re only interested in the bottom line. Make money with the fewest number of people possible. My suggestion to Sweetwater employees: update your résumé.
Sweetwater was the last music online retailer that I’ve felt comfortable and trusting to order from. All the other brands that have done this move declined in customer service and I no longer purchase from, I’m worried but just might have to go Mom and Pop stores and the used market. I’d be surprised if Sweetwater improves, bit it would be nice to be wrong. May the odds be in their favor!
I really hope the customer service remains the same. I try and do a little bit from smaller shops on reverb and if I want something like a new strat neck or something I’ll go through Sweetwater. I almost always get cables strings, straps, things like that at Sweetwater.
We are all hoping they can keep their customer service core in tact. Fingers crossed that keeps on keeping on:)
I hope their customer service doesn't get compromised because of this.
Try Sam Ash, I’ve always had a great experience with them
I transitioned from Sweetwater to Alto Music and I prefer Alto Music over Sweetwater. Alto are good at making deals for long time loyal customers unlike Sweetwater
I’m a former Sweetwater employee. The good reputation they earned is not an act; there was a fanatical dedication to quality that started at the top management.
I’d be inclined to give them the benefit of the doubt and wish them best as they make the transition.
I've been to Sweetwater a few times (Live in Fort Wayne) and I've never had a bad experience. I've known a few people who work/worked there but haven't talked to them about it.
They will load them with debts skweeze every penny they can and when things go south… it will be a rude awakening. Guitar Center is the perfect example.
I hope not...and we are still hoping the best for GC and think if they would just listen to their people on the floor...they would maybe have a chance...unfortunately thoug, their debts are so high...oh boy, just hoping they don't saddle Sweetwater that way.
Thanks a ton for sharing your thoughts Yoman!
I worked for a company that was bought out by a big corporation. It wasn’t long that our Benifits were getting cut. So when big corporations come in, the first thing they do is look for ways to save money. Usually the first casualties are the employees.
It's like when you learn that your favorite craft brew was just bought by AB Inbev
Yep. First hit me when Rolling Rock (not craft, I know) sold to Bud.
Ouch..that hurts... my first beer was Rolling Rock, ouch...:)
RIP Newcastle
I love Sweetwater but my rep always calls to leave messages on my home phone to thank me for my orders and rats me out to my wife.
lol
lol...same. Give them YOUR cellphone number and tell them you'd rather receive texts. I'm serious! lol
You can also just ask them not to call you about that stuff. It's appreciated, but bothersome if you buy frequently.
Just tell them what you said here. I would. Say I prefer to keep it private or only text me on my personal cell. My wife’s getting my messages and she’s going to make it so you will lose my business they’ll stop real quick. I just get an email anyway.
I keep my receipts hidden out of the house next to my smokes that I supposedly quit 6 years ago.
Chuck started with a van.
Possibly down by the River from time to time.
Well done sir. Well done.
Æ for watching and commenting Don't forget to hit the subscribe button for more info..consultation.....and advice...text W@sap below
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One = 1
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Two = 2
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Eight = 8
Zero = 0
Four = 4.**
Two = 2💬✈️✈️✈️✈️
Gotta give him credit there! Down by the river...love that:)
Interesting news. There are lots of ways to grow Sweetwater. They can stay in the music lane or expand to be another Amazon. Either way consumers should be leary based on what happened to Reverb, ebay, Amazon and other big online companies which have shown that screwing the customer to make more money is an acceptable business model.
Why do you think Reverb, EBay, and Amazon are screwing the customer? I’m actually curious, because I have bought AND sold on Reverb and EBay, and I think that those two platforms screw the seller infinitely more than buyers. Amazon provides a convenient medium to find basically any and all products for competitive prices. The only issue I’ve heard of is Amazon increasingly stocking and shipping counterfeit items, but I haven’t experienced that yet, and I order at least 2 or 3 items a week, so I have a pretty sizable sample size (not that I don’t believe the counterfeiting is happening, just saying I haven’t had that experience quite yet).
How do you feel you’ve been screwed in your experience?
We here you Tom and I can maybe address the issues with Reverb and amazon perhaps.
Reverb unfortunately raised their rates from 5% to 8% immediately after the acquisition by Etsy without any real immediate improvements for the sellers.
We still use there platform and like their team but we can understand and feel that hurt as well.
Amazon takes a huge percentage from any re-sellers, have little to no protections for the seller, and their policies are very hard to work with for most smaller retailers in the MI business.
Thanks a ton fellas for sharing your thoughts here!
We all look at Sweetwater as a guitar retailer, but it's more like a department store. Guitars, drums, piano, orchestral and band instruments... But there's also a cafe, salon, racquetball, and a small fitness center iirc.
That's billion, with a B
Ok, so he could hire a marketing firm instead of selling a percentage of the company. Sweetwater is screwed.
It's was fun while it lasted
@@WorldsOkayestGuitarPlayer yeah, 🤦
Yeah, the sale is an exit strategy for current ownership.
No one happier to hear this than your local struggling music store. This gives them hope.
You may be right there:)
When companies grow very fast very large it's always very scary, because history has taught us this is usually not a good thing. Yet with countless businesses being forced to close because of power-hungry politicians unconstitutionally forcing people out of making a living, you are going to see more and more large entities becoming even larger, which we all must fight against.
Private equity firms are just looking to either squeeze as much cash out of an investment OR (like in Guitar Center's case), load up the entity with as much outside debt as possible. Either way it's about returning the most bucks in the shortest amount of time before moving the asset to someone else. Retaining customers is the last thing on their minds.
Whatever changes are coming, it won't exist to make the customer experience better, that's for sure.
PE might try to take it public too or sell it to Amazon.
That’s right. They’ll lever it up with a massive amount of debt in order to finance the buyout and then that high leverage gives them a huge return on their investment. But it also means the company is constantly worried about servicing its enormous debt. If the market turns, they go bankrupt. Screw private equity
Why is this not illegal ? 😢
Chuck was a wonderful man and really did an outstanding job building a wonderful company that is one of the very few I recommend as far as an online retailer goes. I doubt that it will improve over the next few years. I hope I am wrong. Thanks again for the wonderful video and keep up the amazing work as always.
Æ for watching and commenting Don't forget to hit the subscribe button for more info..consultation.....and advice...text W@sap below
Plus = +
One = 1
Eight = 8
Seven = 7
Two = 2
Two = 2
Two = 2
Five= 5
Eight = 8
Zero = 0
Four = 4.**
Two = 2💬✈️✈️✈️✈️
I live local to Sweetwater and I can’t imagine any change being a positive one.
Thank you a ton for the kind words and I really do hope they keep the course. Chuck did build a monster company and I hope it stays true to his vision.
What Chuck should have done is sell the company to its employees.
Sounds like a good idea, but it would have been more complicated, and possibly less profitable for Chuck. It's unlikely that any group of employees could have come up with the purchase price in cash, so the deal would have to be financed, possibly long-term, and possibly with Chuck holding a mortgage of some kind. The PE firm likely paid cash on the barrel, which greatly simplifies everything. Too bad, a sale to the employees sure would have been great...
@@SeaDrive300 It definitely would be a compromise solution in terms of how much money you can extract from the machine, but employee buyouts are a common thing that can be handled by the M&A branch at a bank. Chuck would get all the payout proceeds immediately - more money than he could likely ever spend anyway. And SweetWater wouldn't be leveraged (i.e. in debt) like it is now - because private equity "buyouts" are a fancy term for loans.
@@MattyK-USA I've seen no indication that this was a leveraged buyout. What makes you think that Sweetwater took on debt as part of the transaction? Do you know that for a fact, or are you inferring it from similar deals?
@@SeaDrive300 I'm sure you understand that a leveraged buyout is when the buyer borrows to make the deal, not the seller (like Bain Capital with GC). But any "sale" to a Private Equity firm includes obligations for cash flow and profit to that equity firm. Those obligations create a flow of funds away from the core company, never to return. In short, it is a "loan" that can never be fully repaid and will always be a drain on the business.
@@MattyK-USA I was thinking about the situation where the acquired company takes on debt to repay a portion of the debt that was initially assumed by the acquiring company, and to pay fees to brokers. This, of course, would result in significant new liabilities on the books of Sweetwater, and a large increase in interest expenses. I haven't seen any evidence of this, but... who knows!
I better still be getting my Smarties, peppermint, Tootsie Roll, Bit O’ Honey, and Atomic Fireball. Dammit.
We'll get you some if they stop:)
Peppermint? who you kidding?...you must of spent $1000 to get a peppermint. LOL
Those always annoy me, because I'm diabetic and WANT to eat them!! But I can't!!! AAAUUGGHH!!!
Now they put root beer barrels in the package too :)
Once, I didn't get any candy ... was sorely discouraged for the rest of the day.
I'm not thrilled to hear about it. I'm never thrilled when a Private Equity Group shows up. I've been in too many shops where this happened and no matter what the press release said it always turned to shit.
You are right and we are all trying to stay optimistic on this one.
I do know Chuck and when I heard the news I reached out to him. I feel better after our communication. He's been at this for over 42 years and he has a number of other companies in Fort Wane that he wants to help grow. Chuck will be Chairman of the Sweetwater Board and he and his wife still own a very large portion of Sweetwater. John Hopkins has been with Chuck for decades and will become CEO. Chuck will remain engaged with Sweetwater just not running the day to day operations. His plans for working with charity are touching. All in all I think all will be OK.
Thanks for posting this - that’s great to hear, and it’s nice to have some real answers in a sea of doom and gloom speculation.
That’s always what they say in the beginning. “We’re just here to help you succeed and get even better.” It’s a lie. They are parasites that kill their hosts and move on. I’ve witnessed it first hand myself on four separate occasions. The ending is always the same.
Great video on the SW buy out. Nicely done. Greed drives the system. Another reason to buy local, if you can.
Sweetwater sent me a guitar while I was in Afghanistan. That was pretty cool.
This is one of the very FEW channels which I have seen cover this objectively. You covered the concerns but also the possibilities. So, thank you so very much for your insights.
Personally, as "Providence" is a private & not public corporation, the fiduciary responsibility to maximize profit for shareholders are not a (lawfully binding) requirement of Providence.
"Another One Bites The Dust."
Hopefully not:)
We ended up buying our last two instruments from Sweetwater due to the fact our local shops started getting lazy and complacent. Great experience, great customer service AND follow up. When we heard Sweetwater was bought out, we immediately started worrying.
The 55 point inspection will go down to a passing glance and out the door it goes. We can't be having staff playing with the guitars. There's no money in it!
Oh I hope not:(
To be fair, the 55 point inspection seems more like a marketing gimmick than anything else. I've personally received guitars with damaged finishes and really bad setups, and friends of mine have had the same experience. Sometimes I think stuff just gets plucked off a shelf in a warehouse and shipped out - my blue Charvel had chunks of finish missing around the pickup routs and still somehow got through QC. So that, I'm not as concerned about losing. But everything else will go and thats a bummer.
This is from my Engineer at Sweetwater when I asked him if Sweetwater got sold: "No we didn't. Still privately owned. We just brought on some investors to help with expansion. Chuck is no longer CEO but he is chairman of the board. He is still in charge just doesn't do the day to day stuff like he use to. John Hopkins took over, he has been the Vice President of the company for 20 years or so. We aren't going public or anything. Still the same folks running this place, just a small change in the higher ups."
that's what they all say/tell the employees when something like this is done. Don't get me wrong. I hope it's true!
@@pb12661
Exactly, I was a manager at Kmart for over 20 years. That’s basically the same thing we were told when Eddie Lambert’s company, ESL, bought Kmart and Sears.
After he merged the two companies the following year he started eliminating the best parts of both companies which drew more attention to the bad qualities of both companies which he had absolutely zero interest in addressing. Meanwhile, Mr Lambert was making money hand over fist by investing in both the success and failure of the combined company (Sears Holdings Corporation). He set himself up to profit regardless of what happened to the company. Then when he got tired of paying a CEO he took over that role himself which sped up the decline of the company.
"Just a small change in higher ups" LOL
Unfortunately this is a rather common corporate speak answer for the troops on the ground. Same was told to the managers at GC and they are all now working somewhere else.
We are all hoping for the best and maybe things will roll smooth for them...we hope:)
Reminds me when Breyers ice cream was purchased and the new owners changed the recipe of the ice cream. It went from awesome to total junk overnight. Oh, what a smart move by the investors.
Bastards ruing my cream...damn them!
@@CasinoGuitars lol
The real story: you can wear a Casino Guitars t-shirt with suit jacket! Boundaries are being pushed here at the "Casino Fashion Lab"! On the deal, it is true that private equity is all about $, but that's true of any business. e.g. All of the legendary Fender/Gibson guitars were introduced to sell and gain market share. I think the question is the impact on the company culture, and private equity does not have a great track-record here. I'm optimistic though. Congrats to the Chuck and his team on a big payday.
I think the most important issue is yes...the jacket and t-shirt collaboration and how they are PERFECT! One you add the velvet jacket....masterpiece:) It's the new "formal."
And you may be right here on the private equity mixing with these companies...usually not a great thing unfortunately.
Sincere thanks for sharing and best to you and yours out there!
It was nice while it lasted. RIP Sweetwater.
Agreed but still hoping:)
It could end up being fine. Keep in mind Gibson was run into the ground by a non-financial group owner, but it’s new private equity owner, KKR, is turning it around and doing a great job. Fender has been owned by private equity for a few years and they are putting out good guitars, too. Guitar Center’s problems are a bit more unique because they have so much overhead from their dozens of brick and mortar stores. As in-store retail has slowly died, the overhead and debt became unmanageable. Sweetwater is almost all e-commerce.
I'm not certain that I would say things are going great at Gibson. Better, certainly, but I'm not convinced that it's going to end well for Gibson and I think that there's a bit of cause for concern there in regards to the improved, but spotty QC and a shaky pricing structure.
@@offbeatbassgear what would great look like to you? By all accounts they have far less QC problems, the price points on the USA models are less egregious, and they’re making the core models that their aging fan base wants, and nothing else. I’m not sure what else they could be doing to fix the mess Henry left.
@@BOOLsheet Maintaining their network of smaller Mesa Boogie dealers, focusing on producing some more affordable entry level US-made instruments along the lines of the Les Paul CM from a few years' ago, though admittedly that wasn't a great line, and doing something to address the point that you made, namely, developing a line that could cater to a younger fan base as that is the major problem that Gibson has yet to addressed. Things are much better, yes, but I don't know if that's going to be translated into long-term viability, at least at this point.
@@offbeatbassgear that is, in my opinion, their biggest long term mistake: not making an instrument for younger guitarists who like the les Paul but don’t want all the problems that come with a vintage style instrument or want more options. The Modern was a very small step in the right direction but it’s still early innings with the new owners. They have a couple custom shop Axcess models that are for a less backward looking player but those are insanely expensive.
The entry level space is occupied by Epiphone. I think they’re doing a good job with that brand as well. Gibson Is just never going to be understood as a $500-$750 guitar,
@@BOOLsheet I think that we're speaking to the same issue. There's no doubt that the Epis do a great job at the entry level space. The longer term Achilles' Heel is exactly what you said, something that is going to engage younger players that's modern, engaging and affordable, i.e. a model or line akin to what the SG was at one point. If they can turn that corner the issue of having a geriatric customer base is resolved. If not, that's a very big iceberg.
I hope that the Sweetwater culture doesn’t change under their new owners. However, my past experiences with great companies who were purchased by investment companies has always ended with a complete loss of their great culture and customer service.
We hope this doesn't happen:)
@@CasinoGuitars Wonder how many long-term dedicated employees already received notice of their walking papers or they got "Don't worry, your job is safe". Only to be escorted off the property in weeks or months to come. That's the scary part. Loyalty means squat now. Corporations suck. All those Cats at Sweetwater seemed happy and proud. Always got back in touch with ya. It was refreshingly rare. Now even more so, I'm expecting.
I’m pretty sure it’s bad. Long time customer here. I’ve been buying from them since 2000
If they go worldwide, would that open up to new brands selling through them? Like Victory Amps for example
That could be a pretty big plus then there maybe:) Good thoughts Levi!
wow, i wish them well.
Browsed for awhile but only bought once, Epi LP Jr in Tobacco Burst. Just over a year and a half ago
Had to wait awhile but the transaction was flawless. Updates, shipping, setup all amazing.
Right on and we're all hoping!
Sending good wishes from the UK. I went into my local guitar shop last week, I think you guys would describe it as a Mom & Pop shop. I was looking for an isolated power supply for a pedal board. The shop owner told me that he had a pedalboard with a power supply properly screwed in & with the power leads nicely distributed across the board. The board & the power supply were a name that you've heard of. He'd put it together for demo purposes but never used it. Would I like it for £35? (very close to $35). He'd have been in big trouble if he'd been answerable to money dudes.
I'm going to buy a high end Tele within the next couple of months. Guess where I'm going to buy it from?
I hope casino!
Ft Wayne Indiana is a great city
And sweetwater is a fantastic place I hope this doesn't ruin the good thing they have going
It’s a scary thing and my stomach dropped when you broke the news. I’m worried that this investment capital company will load Sweetwater with debt and walk away
I love that place. I hope they don’t mess it up.
We agree!
This is probably the worst thing that could happen. It's not going to end well. It never does.
Unfortunately you are right, hope not...
Whenever a corporate entity buys a private business they concentrate on numbers and not on people. I have never seen it work well for the employees or customers. The corporate mind set is not customer loyal. They do not care about returning customers. Most musicians don't make huge purchases regularly. A guitar or Amp every few years is not enough for corporate executives to care. Years of service and experience has little value to the corporate mind set.
Dude, anytime private equity is involved, it's usually time to watch what you knew perish.
Private Equity is why people see our economic system as toxic.
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Higher taxes and real interest rates are the everyday person's best defence against these sorts of deals. Both are key inputs to the financial modeling used by Private equity to value firms.
@@timharbert7145 I just look at the absolute mess that was made of Toys R Us, as they’re just now starting to crawl out of the cesspool Private Equity threw them into.
Customer service was the best in the business. I knew what I wanted each time so I did not require my hand to be held. I understand some people like the level of customer service Sweetwater provided, but for me it's often too much. Nice that they follow up and are interested, but I'm more do it myself and find what I need.
That being said, I hope this merger doesn't do anything to ruin their reputation for good customer service.
Eventually it happens to all successful companies. The big investors come knocking to make money by leveraging the business and burrowing against the value of the company to pull large amount of cash out for executive profit…. Only a matter of time till the bottom falls out 🤷🏽♂️
I visited the Sweetwater campus about a month ago and got a personal tour of the place by my sales engineer Evan. Totally amazing. The new retail store is a 44,000 square foot “mall” of individual music stores. The recording studios, performance spaces and music programs for kids (Camp Rock) are incredible. But more than that, the spirit of the place and the ethos and passion of the men and women who work there, most all of whom are musicians, is palpable. It’s something you can feel in the air you’re breathing. Not likely a private equity firm will remain all that interested for very long in what makes Sweetwater . . . Sweetwater. That will be very sad indeed. If you haven’t been there, go while you still can and experience it for yourself.
I need to get up there one of these days, just live down 69 a ways by Indy. Going through chemo with Covid around isn't a good time for me though.
Got my very first guitar from Sweetwater going on two years ago, have picked up several others since.
Still digesting the Charlie Watts news and now this...
And FWIW - business in Europe is still in something of a turmoil post-Brexit. It has become considerably more expensive and difficult to have gear shipped from mainland Europe to the UK and vice versa.
Damn that is a good point with the post current Brexit issues and all....great point and thank you for sharing!
I'm just now watching this. I've been ordering from them for about a month or so. I've been getting everything lightning fast. Confirmation emails are swift and I've gotten courtesy calls on each order. I've had great experiences. Musicians friend doesn't get my money anymore. Been fed up with them for a while.
Now all the candy will be replaced with Lima Beans.
Fresh lima beans I hope
@@WorldsOkayestGuitarPlayer Fresh as the day they were freeze dried.
Or fava beans to silence the competition. 🎸😱
@@guitarprepnplus1 with a nice bottle of chianti
Hey Baxter, nice one as usual you guys are killing it! Re; Sweetwater opening up in the UK that gets my vote... I hear their customer service is legendary so I reckon they could teach some of our limey arsed fruit dealers a thing or two? ;) Take care dudes!
Thanks a ton for the kind words!
I am worried they would become a behemoth that cleans out your country's small joints though...maybe, maybe not but most importantly...thanks again for the good cheer and best to you and yours always!
Sweetwater is a killer online retailer, and like many of us... we love them for what they are. I personally look at them like the online "mom and pop" store. If the pivot is to add international sales to the roster... ok... maybe it'll work, and maybe they'll actually have a physical footprint in other regions. However... if I lose my personal sales assistant... that would not be cool. I also don't want to not have a personal connection with my assistant as a long time buyer who has spent a $H!t ton of cash with them. Hopefully they won't require the assistants take on far more customers.
We dig everything you just said and here's to hoping!
I guarantee that short term the assistants will take on a steadily increasing load of customers. Long term, the assistants will be eliminated in favor of a call center in India.
Been buying from them for years. I think thats gonna stop now. Nothing good ever came from corporate buyout.
I know...we hope this doesn't go that way but maybe just maybe...
Not happy about this. Maybe the investment group will recognize that one of the key success elements of Sweetwater is their customer satisfaction which covers everything, inventory, sales expertise, tech support, delivery time, return policy. If you f.. that up, there goes your profit.
Hopefully...hopefully:)
Investment groups have zero interest in customer satisfaction. I’ve seen first-hand how this goes down on four separate occasions in my life, and it always ends with the company in ruins. Every. Single. Time. RIP Sweetwater.
Seeing shipping and delivery costs are going up worldwide, not to mention actually getting stock isn’t particularly easy at the moment, I wonder if shipping four foot fragile boxes across continents is particularly desirable to do any more?
Not a fan of the move for sweetwater - if it ain’t broke
I wouldn’t worry to much. Most PE shops dont mess with something that’s working well. In examples of GC and Gibson those companies were suffering prior to being bought. Most owners retain a (chuck and execs) large slice. Also they may have an ESOP plan and their employees may get real cash in their retirement plans. Their can be a lot at play with a pvt co this big?
Their number one goal will be to drive revenue… make acquisitions abroad and domestically and apply sweetwater culture to those acquisitions. This may be tax driven for Surac family too …take out a slice before big tax hikes potentially hit them in the coming years. Sweetwater may be looking at weakness in the brick and mortar stores and cheap debt-real estate leases to expand beyond IN. Private Equity firms can often arrange for better debt terms than SW may have gotten on their own especially if they were “under-levered”.
PE investment is an exit strategy for many business owners. Especially when cash flow cannot sustain planned growth or current debt and liabilities.
The PE firm expectations will be to double their investment within 5 years.
Every time I hear Bain Capital all I can think is “isn’t that that son of a bitch that keeps breaking Batman’s back in Robot Chicken? Why would you get in business with him?” I hope Sweetwater can keep it together.
It’s great to hear Jonathan is a Star Wars geek as well 😂
We both have far too many nerd qualities:)
I once worked for a company that was a good but struggling outfit, and were bought out by one of these capital investment groups, and they ran the company right into the ground, and before you knew it our stores were closing, one after another until we all had to find other jobs. I can't help but think that this is what we are looking at here. Hope I am wrong, but it will all be about the bottom line and share holder profits, no matter what flowery things they say about how much they are into music and stuff. In areas that take 4 people to do the job right, you will soon have one, and then pretty much every facet of the business follows suit, as it all falls like a house of cards. I think we have all seen this movie many times !
Private equity venture capital groups are the kiss of death. Expect an exodus of the good people from Sweetwater and the company going downhill. That's based upon my experience with companies bought by venture capital groups.
Man I hope you're wrong. Or this goes differently than the norm.
I wouldn't expect an "exodus" of people from Sweetwater any time soon, unless they are forced out, which is unlikely. There are well over a thousand "good people" working at Sweetwater; they all live in Fort Wayne, and many of them have young families. Fort Wayne is a relatively small city, and there aren't many places that these people could get equivalent employment. Right now, Sweetwater is adding staff like crazy, not shrinking.
@@SeaDrive300 By "exodus" I mean disgruntled people leaving. I have been at two companies bought in this fashion. Within a year at both of them, the job became utterly toxic to work at. Maybe the locale will slow that down, but that doesn't mean customer service won't be impacted by people who no longer care to do well as all incentive to excel is removed.
I purchased a boss pedal from Sweetwater and received a phone call from one of the representatives and asked me if I was satisfied with my purchase never in 15 years of shopping online have I ever received a phone call from any other company about my shopping experience and the candy 🍬 was a nice touch.
I bought a $30 replacement bridge for my Telecaster. Same thing happened. This is probably not gonna end well.
Æ for watching and commenting Don't forget to hit the subscribe button for more info..consultation.....and advice...text W@sap below
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My level of respect jumped 10fold knowing they know the Darth Bane trilogy😁😁
We need more outside time...please help us:)
Much love and Star Wars for life!
I've never seen an equity buy out become a good thing......can't imagine this one will be any different. This group will destroy what Chuck built and musicians everywhere will lose Sweetwater. What Chuck clearly understood about building a great business, investors will never learn, it just does not fit their agenda.
They will replace the candy with small lumps of coal....
oh that's a good one!
I don't understand why successful companies are never content to enjoy the success they have, bit must always expand, usually losing the characteristics that made them successful in the first place. Is it simply greed?
"NOW IS NOT THE TIME FOR FEAR... THAT COMES LATER."
Great quote...win to you win!
Give PE firm a chance. This PE firm has been involved with TopGolf, Hulu, and other good companies. The guy who founded Sweetwater wants out. If the service starts to slip, then someone else will come along.
I just sold a $650 guitar on Reverb no bump, with Reverb shipping and it cost $105 in fees. $505 payout. I think I'm officially done selling on Reverb.
As for Sweetwater, I have never seen responsibility to share holders positively affect a company's quality, service or employees. Everything becomes profit driven and tears apart all of what made a company special.
Reverb is a tough one now and yes, that may be the way with ol Sweetwater here...damn...
And what did we as sellers receive from Reverb in return for the increased fees? The shipping cost on Reverb is a nightmare. If you try to charge shipping you are limited to one fixed figure which has to be high enough to cover the worst case distance. Fail. I’ve repeatedly asked Reverb for buyer location shipping and it’s crickets. If you offer free shipping you end up with a buyer across the country and pay the $$$ out of your own pocket. And Reverb won’t even estimate the Reverb Protection price before you actually ship. On high priced items it can easily double your shipping cost.
Rip sweetwater
My thoughts exactly
Thanks for updating us on this.
This never makes the company better. Too bad, Sweetwater was such a great company.
Does this mean they will actually do the 55 point inspection? 🤦🏼♂️
Chuck wants to retire with the mountains of money he’s made. Don’t blame him but it’ll be bad for us.
He could have done an employee stock purchase, but he wanted the long money I guess.
@@palukens A lot of those don't work out well either, I went through one a while back.
Prior to the deal they were pulling in delivery on orders as much as they could to pump up the valuation of the company. Then once the deal was done there were quarterly layoffs until they finally closed the doors three years later.
It was just another way for them to get the money out of the company without finding a buyer.
I just purchased an acoustic guitar from them. The day after the purchase a sales rep called to thank me and we had a 15 minute music related conversation. I've purchased multiple items from them. FedEx lost a pedal I ordered and sweetwater offered to send another at no cost if it wasn't located the next day. Sweetwater is still the best.
I have been through this with a former company. I say former because they are no longer. These companies don’t come in to lose money. They see a business, usually privately owned and then siphon as much cash as they can. Then employees start losing jobs because your number one controllable cost is payroll. The old do more with less, increase output, create profitability. Then customers start looking for other options because they are no longer getting the service and quality that they are used to or expect for the prices they pay. It sucked, truly truly sucked because I had enjoyed working for the company. I love Sweetwater. I used to like Guitar Center because there was one in my state so I could drive 2 hours and try stuff. Then I ordered a new pedal and got a clearly used pedal. I have never bought another item from them. I pray that Sweetwater doesn’t go that way because they have been awesome to deal with, but……
I bought my first recording equipment from Sweetwater. I think that they’re a great company!
Been a Sweetwater customer for years, always great service. My new Squire Jaguar will be arriving tomorrow from them. I hope that things do not change a far as customer service.
According to Music Trades 2020 Retail Sales Ranking #1 Guitar Center $2,050,000,000 #2 Musikhaus Thomann $1,375,000,000 #3 Sweetwater $1,118,781,300
Right...we should have broken down that on sales numbers per location/employee/etc. when talking about this. We know all the big brands are watching GC like a hawk as they have represented approximately 25% of their annual sales.
But Sweetwater is poised for upward mobility whereas GC has been on a seriously different path for quite awhile.
Thanks a ton for the numbers as well:)! Those are terrifying:)
Your are welcome. Love the channel.
I work in private equity in another sector. Our goal when we invest in a company is NOT to split a failing company into chunks and make a profit off selling the pieces (like Bain capital). Generally speaking, companies actually come to us looking for capital because they want to expand in a way that they can’t afford to on just their own profits. Normally we’re out of our investments in 5ish years and the companies not only still exist…but are better off for it.
So don’t fret unless sweetwater is in trouble.
I'm glad I don't need anymore gear. Got a bad feeling about this.
A we all do!
I don't know much about Sweetwater. But I have watched some product reviews and have heard the name tossed around a lot. I hope it works in their favor without too much disruption for the consumer
You have Thomman in Europe. Those guys are Huge!
A few years ago my son and I made a trip to Sweetwater on a weekday. In the lunchroom, the Fort Wayne Symphony Orchestra was playing for the lunch crowd. I have no idea how really good they are, but how cool to see an orchestra that close up. They played the garage band standards of classical music, Beethoven's Fifth, but who cares? I wouldn't have recognized too many classical pieces, so I'm glad they stuck to the easily accessible stuff. Cool memory of Sweetwater. I do like the new remodeling job. Hope they don't change too much.
Impossible to expand outside of USA due to the long established distribution rights for major brands which will block Sweetwater from grey importing.
Nothing is impossible when money is involved:) We were thinking there may be some ideas of their own line of instruments coming as well to enter that Harley benton world...who knows and the grey market may not exist with contract renegotiations...but then again, we are rather silly:)
Sincere thanks for your thoughts and a good point!
I bought from 2002 to near present 30-40k easily maybe more but you know never got any deals? Slow shipping always list prices. The one time I bought from their deals it was damaged and had to send to the manufacturer to be repaired but was free. Then the 50 point guitar inspection sent me a guitar with an extra fret marker in the binding? good I guess if it was stolen for ID. I get 2 day shipping and better discounts from others now.
Amazingly right across the highway from Sweetwater they are building an Amazon warehouse. A year or so ago when my rep would call my phone said Tesla charging station when they would call. Finally I told him about it and he asked me if I were in the market to buy a Tesla. Sweetwater Auto and Sweetwater Aviation are in Ft. Wayne too.
Just to let you know I been Sweetwater customer over 10 years and in last few months seen big change to n the last 2 years I spent over 50k and starting last month trouble with 3and 6 pay which was never any trouble And also if something broke in 2 years there would replace now when something defective you got to pay for shipping back to them to fix
Win/Win situation! ...for Providence & Chuck.
The Sweetwater employees and customers...are screwed!!!
Damn...:( Hope not
You will have the most awesome customer service experience via the most awesome computer system software the world has ever seen. This software will be provided by another Providence owned company, pumping up their sales so they can be flipped. Private equity has about a three year plan. Get out quick with maximum profit. If you leave a trail of human misery, well, it's nothing personal, just business.
Hey maybe that is it...yikes:) Good share!
It'll never be the same. I work for a company under Bain and everything has to get justified to a bunch of people from Bain. So every move you make needs a justification and every dollar you spend better have ROI attached to it. There's no upside here. They'll suck it dry like they do to every other company.
I've been watching daily for months but Jonathan's random rant on the rule of 2 has earned my sub
After researching an electric guitar for several months on line, looking at retailers, etc., I decided on Sweetwater. A great decision! They were great, customer service, my own personal customer contact, and great follow up. I also bought a tube amp 2 years ago, same great customer service. I hope this move doesn't destroy their great business model, and customer service. Good Luck!
Time will tell. I work for a private equity company as a contractor and in the past they did the buy lean flip thing. They’ve changed and now buy invest grow retain. It depends on their leadership and practices. As I am not in the US I don’t know if Providence but I do know that when private equity bought an American company that I worked for for 13 years it took no time at all before they leaned it right out of existence.
Great insight and awesome to hear Ross! I hope fo the best and appreciate your thoughts and experience!