Why an ESOP and Planning Succession

A bright blue guitar covered in orange koi fish vanished from a museum display … and Swifties immediately knew what it meant.

That distinctive guitar—the one Taylor Swift used to record Speak Now—had been a gift. Hand crafted, by the founders of Taylor Guitars. When she brought it back on stage during her Eras tour, the fans went wild.

In this episode, Bob Taylor and Kurt Listug tell the unlikely story behind one of the world’s most respected acoustic guitar brands—how it grew from a tiny San Diego repair shop doing $30,000/year into a global business with nine-figure revenue. And how it survived every challenge that should’ve ended it: a distributor deal that didn’t add up, a brutal market crash in the disco era, and such slow growth that—five years into the business—the founders could barely pay themselves a salary ($15/week).

It’s a story about serendipity, obsession, and the quiet power of a partnership where each person knows their lane—Bob with relentless craftsmanship, Kurt with the discipline to turn it into a massive business.

Plus: the purple 12-string featured in Prince’s “Raspberry Beret” … the MTV Unplugged boom that boosted the business … and why the founders eventually chose to convert the business to 100% employee ownership.

What you’ll learn:

• The operating principle that changed Taylor’s production: one finished guitar beats 10 half-finished ones
• How to make a slow-growth business survivable (and why Bob saw it as “education”)
• How to recognize a bad distribution deal
• The design innovations that drew musicians to Taylor guitars
• Why Bob got a call from Taylor Swift’s dad when she was 14—and the iconic guitar her fans grew to love
• How the business managed demand shocks during COVID
• Why an ESOP can be a founder’s best “succession plan” decision
• What a great partnership looks like in practice

Timestamps:

(Timecodes are approximate and may shift depending on platform.)

• 00:06:39 – The high school moment: “I didn’t have $175 … so I thought, I’ll just make a guitar.”
• 00:07:14 – The American Dream shop: the hippie setup that became a launchpad
• 00:10:20 – The “baseball bat neck” problem with guitars—and Bob’s happy-accident innovation
• 00:11:59 – Buying the shop for $3,700 … then realizing it didn’t include the name (or phone number)
• 00:22:31 – The sentence that changed everything: “Would you rather have 10 half-done guitars or one done guitar?”
• 00:26:28 – The distributor deal that ended in layoffs: good sell job, bad math, and what they learned
• 00:38:30 – Buying out the third partner: why the business doubled when “the brakes were off”
• 00:59:52 – Before Taylor Swift was Taylor Swift: a phone call from a proud dad, and a promotional concert that almost went unheard
• 01:09:36 – The inflation economics of guitar building

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This episode was produced by Alex Cheng with music composed by Ramtin Arablouei. It was edited by Neva Grant with research help from Rommel Wood. Our engineers were Patrick Murray and Maggie Luthar.

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