How Hartley Peavey took his electronics company from a one-man shop to a $270 million global brand
Growing up in Mississippi in the 1950s, Hartley Peavey dreamed of becoming a rock star. Though he lacked the chops to become the next Chuck Berry, his name has been etched into the pantheon of rock 'n' roll history. That's because Peavey amplifiers, sound equipment, and guitars boast a devoted following among rock stars and wannabes alike. More recently, airports, government buildings, and other facilities are turning to Peavey gear as well. Peavey started 46 years ago as a one-man shop. Now it is a global brand with about 1,000 employees and a reported $270 million in annual revenue.
When rock 'n' roll came along in the mid-'50s, like any other teenager, I was just delighted. In 1957, I went to a Bo Diddley concert in Laurel, Mississippi, and that's when I decided that I wanted to be a guitar player. My father, who owned a music store, told me, "You don't want to play guitar. Rock 'n' roll is crappy music; it will never last."
Eventually, he gave me an old electric guitar, but I needed an amp. My dad said, "When you learn to play, then I'll think about it." Just like any other kid, I wanted it now. So I built this big old amplifier from surplus parts. It wasn't very good, but it worked. That's how I got started. I've always enjoyed building things. I used to win science fairs and model-airplane contests. I wasn't a genius, but I was good with my hands.
I was a lousy musician, but I managed to get into some bands. The first group I got into would play fraternity parties for $50 and all the beer we could drink. When my band mates needed an amp or a PA system, I would build it. After I built all their gear, they sat me down and told me I was out of the band.
That was the turning point. I had to look in the mirror and be totally honest with myself. I said, "OK, you're not going to be a rock star. So what are you going to do with the rest of your life?" I realized I love music. I'm not so great at guitar, but I am pretty good at building things. So I decided that that's what I would do.
I started the company in 1965, when I graduated from Mississippi State. My idea was to build the best product I knew how to build but do it at a fair and reasonable price. Not cheap—reasonable.
I started out in a small room above my father's store. My first products were these small, single-unit bass and guitar amps. I'd build one a week, and then I'd go out and sell it to a local music store, come back, and build another one. I went all over the place trying to sell my products. I learned that that wasn't going to get me very far.
"I'm not so great at guitar, but I am pretty good at building things. So I decided that that's what I would do."
One day, after I demo'ed my amp downstairs in the music store, I got a knock on my door from a guy who said, "Man, that's a kick-ass amplifier. I could sell some of those." I was just treading water; I didn't have any money to pay him. He said, "If you give me that amplifier, I'll go out and sell it." And he did. He sold so many that I couldn't keep up. His name was Don Belfield. Through his efforts, I was able to hire a part-time employee to help me, and we just built and built.
When my father realized I was serious, he signed the first loan I got—$17,000, to build our first factory. Ever since then, I've tried to do it all by myself. One thing about Peavey is that we owe the bank nothing. Over the years, I have borrowed tens of millions of dollars, but I've paid it all back. I go out on the factory floor and I see a resistor on the ground, I pick it up. That's a penny to me. You see a penny on the ground, you pick it up.
In the music business in the '60s and '70s, conglomerates came in and bought up everything. CBS bought Fender. Beatrice Foods bought JBL. Quality went to hell, and prices doubled. Musicians didn't know what hit them. While the conglomerates were going nuts raising prices, I kept my prices within reason. That has both helped me and hurt me. A lot of people assume that you can judge performance, quality, and reliability on price alone. That's an unwarranted assumption.
In the mid-'70s, we were having a lot of success. So much so that our competitors started using their guitars as leverage—basically telling dealerships that if they didn't sell their amplifiers and sound systems in the same number as Peavey, they wouldn't sell them their instruments.
I said, "Screw it; I'll just start building guitars." I'd been through guitar factories, and I knew there was a better way. As a gun collector, I was amazed at how precisely gun manufacturers can mass-produce the wooden stocks that fit on the barrel of a gun. I said, if a machine can make stocks like that, it could make guitars. We pioneered mechanization in the guitar business.
We also started making loudspeakers. That was a tough time for us, because I bit off more than I could chew. We came very close to crashing and burning.
We introduced our first digitally controlled sound system, called MediaMatrix, in 1993. We had to go all over the country convincing people that computers were reliable enough to control their sound systems. Today, it's in use just about everywhere—the U.S. Capitol building, the parliament house in China, and in airports and stadiums all over the world.
The sound business has gone through an incredible revolution. People have surround sound in their cars, in their homes. Their level of expectation is rising. I keep pushing the state of the art. Four years ago, we bought a software company. Musicians are always looking for their signature tone. With this software, anyone can tweak a digital amplifier to match the sound they are looking for.
I've had the good fortune to be able to watch my competitors make mistakes, and I've tried as much as possible to avoid those mistakes. That's not to say I haven't made plenty of my own.
Here in this small town, there aren't a whole lot of opportunities to be had. Over the past 46 years, we've had roughly 14,000 people float through Peavey. We've got a manufacturing facility that spans a quarter of a mile and a dozen more support facilities in Mississippi and Europe that handle distribution to 136 countries.
There are some things that I would change, but not many. Would I have given it all up to become a rock star? Absolutely.
For a full archive of How I Did It features, visit www.inc.com/hidi.
More from Inc.com: