Small Business

A Family Affair at Martin Guitar


The current CEO wants to keep the successful company in the family. But the heir apparent is still in diapers

The sixth-generation, family-owned Martin Guitar Company will turn 175 next year, making it the oldest surviving guitar maker in the world (see BusinessWeek.com, 2/13/06, "America's Oldest Business Heirlooms"). The company has been passed down five times since it was started by German immigrant Christian Frederick Martin Sr. in 1833; each time, it has been handed to the first-born son of the owner.

The current chief executive officer, 51-year-old Chris Martin IV, wants to keep the company in the family. The business has 650 employees at its Nazareth (Pa.)-based facilities and revenues of around $100 million a year. Chris has just one problem: the heir apparent is still a baby. Chris and his wife, Diane, who works as a judge, had their first and only child, Claire Frances Martin, two and a half years ago.

Finding a Leader

Chris has no idea if Claire, who would be the first female to head Martin Guitar, will have an interest in music, let alone an interest in running the thriving company. So, he's bringing her along slowly but surely. He already takes her into the office and factory to learn about the guitar-making process. "It shows the employees that there is potential for continuity," says Chris.

Passing on leadership of any family business is notoriously difficult, but Chris hopes that by immersing Claire within it early on, he might be able to persuade her to take over one day. "It sounds like the first steps he's taking, which are to ensure that he communicates that this family business is a fun, exciting, neat opportunity and to welcome the kids in, are right on the money," says Mike McGrann, assistant director of the Babson Institute for Family Enterprising in Babson Park, Mass.

The quality and consistency of Martin Guitars is well known within the music industry and around the world. And by trying to keep the business in the family, Chris hopes to preserve what's best about the company, and continue a long family tradition. "You can actually pick up a guitar that was made 150 years ago—my great-great-grandfather, who founded the company, made extraordinarily well-made guitars," says Chris.

Selling to Superstars

Another part of the Martin legacy is the endorsement of the product by some of the giants in American music. By the late 1960s, a cachet had started to form around acoustic music, with the release of records from Crosby, Stills & Nash, Bob Dylan, and others. Many of these musicians played a Martin. Even today, the company builds professional models for artists such as Eric Clapton, Sting, Willie Nelson, and Paul Simon, among others.

But it's not just the sound of the strings that makes Martin appealing. It's the culture of the company. There are Martin fan clubs. Martin employees provide tours of the factory. Many of the company's longtime workers are family members or longtime friends.

"Keeping it a family business is the main reason why the quality has never, ever suffered on a Martin guitar. Unfortunately, I think some of those other manufacturers have lost their way, because they've turned into a mainly commercial venture, whereas with Martin, it's always going to be family-run," says Grammy Award-winning musician Peter Frampton. The famous singer and guitar player had his Martin guitar stolen after recording his famous album, The Camel, with it. "The character of the [Martin] sound is like no other guitar," says Frampton. Years later, the company offered to build him a new one—named Frampton's Camel. Today, it's also sold as one of Martin's professional models.

Past Challenges

But there have been times when it looked like the business wasn't securely in the family's possession. By the late '70s, the pervasiveness of disco and electric-guitar music in the U.S. caused sales to suffer, and Martin was losing money. Around that time, several ill-fated acquisitions—most notably a drum company, a banjo manufacturing firm, and a guitar factory in Sweden—had the Martins entertaining deals from venture capitalists. "All it really did was make us realize that we had to keep control of our own destiny," says Chris.

So in the late '70s, Chris moved to Nazareth and joined the company, first as assistant to the president, then as vice-president of marketing, to learn more about running the business. He also got to know the ins and outs of the guitar-making process, with the aim of one day helming the company.

Then, in 1986, when Chris was 30 years old, his grandfather died. Chris had already earned his bachelor's degree in business from the Boston University School of Management and went on a course with Outward Bound to improve his leadership skills, which he says helped his transition into leading the company.

Making Fair Decisions

To start, Chris blended some of the lessons learned in his business courses with common sense. "When I took over, I got rid of the acquisitions and focused on acoustic, flat-top guitars, and guitar strings," says Chris, who admits that leading a company full of friends and family was a challenge. Martin still almost exclusively builds acoustic models.

"I have to think—is each decision I make fair and equitable? Is this going to be perceived as a fair decision, or some kind of favoritism. You have to go out of your way not to play favorites," Chris says.

He insists that he won't pressure his daughter to join the business. "I'm going to go very gently with her. Someday, she's going to say she doesn't want to come to work. I'm going to respect that. I've done a good job of hiring people [in management positions]. If she decides to be chairman of the board and not CEO, that will be fine with me," he says.

Jeffrey Gangemi is member of the MBA Class of 2009 at the Johnson Graduate School of Management at Cornell University. He was previously a staff writer for BusinessWeek.com.

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