March 1 – 2012 late night
from Douglas in Minneapolis MN
email replies are welcome
macintoshsavant@gmail.com
I stumbled upon this site more or accidentally. I started out 5 hours ago looking for graphic images of Moog’s on the web, and as usual when I’m bouncing around the web I ended up following various threads here, there, and beyond, and finally ended up reading about Bain taking over Guitar Center with a Leveraged Buyout (which I did not know about until tonight). Now that I’ve read for two hours about it, I’m depressed enough I’m going to take some Ambien, put on my iPod, and go to bed. I know a little bit about finance, just enough to “be dangerous” as they say. I’ve read all the above comments. Fascinating. It has motivated me enough that I am going to visit one of the the GC’s in my area in the next few days and walk around for a while and see what happens. If anything interesting, maybe I’ll post back here. I wouldn’t know a humbucker from a drumstick if you shoved them in my nose, but I’m real good at spotting salesman B.S. I do need some CAIG DeOxit and I’ve heard they carry it, so I’ll go “shop” for that. By the way, anybody ever used it, and their “tuner lube”? I do vintage audio gear repairs/resto’s (the GOOD stuff, from the 70’s) and I’ve heard these are THE two products to use for all those scratchy pots. Any input is appreciated.
As I mention at the bottom of my comments, I’d be very happy to hear comments from others in more detail about the Bain thing and how it affected the stores/business, expecially from those who know more from the “inside”. Leveraged Takeovers are one of the worst aspects of American Business (if you ask me, which you didn’t).
I am hoping to learn how to play synths (hardware) in the near future. I’ve goofed around with software synths on my Mac, and have found it to be lot’s of fun. But after reading everything here, and a few other sites tonight, when I’m ready to buy hardware, I’ll buy it from companies that have better reputations than GC. I’ve heard that Sweetwater is great, but that’s only anecdotal. If anybody has recommendations about them or anybody else, I’m all ears. And by the way, Musicians Friend is part of the Guitar Center empire. Besides all of that, I’ll never ever, ever buy so much as a guitar pick from GC now that they are owned by Mitt Romney and his boyz. Bunch of barnacle humps is all they are.
Doesn’t matter to me where I buy a hardware synth from, because they’re all the same no matter who sells it to me. Not like buying a guitar at all. Same with a software synth package. It’s a box with a DVD and a manual. Who could screw that up? So what I will care about is price and customer service. As is mentioned above, Customer Service is what it’s all about in business. I spend a lot of money, on all kinds of stuff. I gladly pay 10% more if I am dealing with a person or business who takes the time to find out what it important to me, and then tries to meet that need, rather than selling me what will make him the most profit AT THE MOMENT. Smart sales people know that people go back to the store and person that gives them the “warmest feeling”.
My appeal to all of you who have had negative experiences with GC; please tell your friends who might lean toward voting for a republican (not that very many musicians would be around many repub’s) everything you’ve told us here and everything you have read here and everything you know. This is real life, and people should know this story for real. I’m not meaning to be overly political, since that’s not what this site is about, but really, Romney is worth $250 MILLION DOLLARS. And this story with Guitar Center shows exactly how he got that way. And what has he done, excuse me, what has he done that is CONSTRUCTIVE, except wreck companies. Over the past four weeks he has just made one “blunder” after another after another showing how disconnected he is from the life of the “average person”. He keeps sticking his foot in his mouth. Kinda reminds me of ole’ George Dubya.
Anyway, here is my set of comments, which I actually wrote tonight for a different website, but they seem appropriate for this forum. Just a warning, it is a very long article.
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commentary: I’m not really a musician (but I would love to learn to play synth’s-hardware version). I’ve been in the Edina MN GC a few times. There is also a new one in Maple Grove Minnesota, but I have not visited it yet, probably will soon. I’m not particularly interested in working in a sales job, of any kind -I think I’d be a HORRIBLE sales guy. I’m too honest. One question from above-what is the “GAIN” program that was mentioned? Some kind of super salesperson competition program? Or some kind of “rewards” program? Or discount buying for employees? My main comment though; I was surprised to learn that Bain Capital bought GC. Bain Capital is the place where Mitt Romney was a partner. Mitt Romney has a personal fortune of $250 million. Bain Capital is what is currently called a “private equity” operation, but that is just a different name for what used to be called (back in the 1980′s) a “Leveraged Buyout” operation. LBO got such a bad rep that they had to start calling it something different. What an LBO place does is to buy a company or corporation, and they use the “assets”, or “worth” of a company to “leverage” (hence the name) the entire company. In simpler terms, what they do, is they “buy” a company, but to finance the “purchase” they BORROW as much money as they possibly can against the value of the company. Why would they do this? Simple. There is a POTENTIAL to make a MASSIVE AMOUNT OF MONEY on the deal. There are a lot of very complex economic and finance aspects I could describe, which would just bore everybody. But the essence of the whole dynamic is, that they rarely put very much of their OWN money in to the deal. It is mostly a paper exercise of determining what a company is “worth”, say 100 million dollars. That’s just an example number, I have no idea how much the whole Guitar Center company was worth before they were sold. Then, the LBO company goes to a huge bank or other finance company-J.P. Morgan, Goldman Sachs, etc, and they BORROW $95 million, and they put up $5 million of their own money. That’s another part of where the word “leverage” comes from. They are “controlling” a $100 million company but they are only putting up 5 mil of their own money to do so. So that is “Leverage”. Then, and THIS IS WHERE IT GETS REALLY INTERESTING, is that once an LBO has control (ownership) of a company, they start dissecting every single number within the company and they try to figure out every single thing they can do to cut costs and expenses, to improve the monthly cash flow. They also examine a company to see if they can “break it into pieces” and sell off some of the parts, for a profit. You can see descriptions of this in the first Wall Street movie (Gordon Gecko), and also in the movie Pretty Woman (Richard Gere). So, the underlying dynamic is that an LBO company ALWAYS enters a transaction with the ultimate goal of SELLING IT later, for more than they paid. Very often, the “changes” they start making are changes that CAN NOT LAST for more than a few years, because the changes usually result in the business “going down hill”, because money is not being INVESTED in the company any more. You can make any company look better if you stop doing things like Marketing, taking care of the physical store building, firing a bunch of employees, etc. There is no shortage of things you can do on a temporary basis to make the books look better, but most of those can not go on forever. So the strategy for an LBO company is to make things look good enough that they can find some sucker to buy the company a few years after they buy it. But AFTER they sell it, sometimes one or two or three years later, only THEN does the buyer realize they have bought something that only LOOKED good, because there was no re-investment. Then THEY have to start doing the things that weren’t done, like fixing up the buildings, or adding inventory, or doing real Marketing, or improving pay to get higher quality more professional salespeople, etc. Think of it this way: You can buy a good condition used car, like a car that has been leased for three years. You can drive the car without ever changing the oil or the spark plugs or the tires. Never get it aligned, don’t wax it, etc. So you can save all those costs for a couple years, and you can have a worksheet that shows how you’ve been able to drive the car for two years without spending anything and it looks like a very economical car, right? But you can only do that for so long, because eventually the implication of not changing the oil becomes clear (the engine wears out), etc etc. THAT is what LBO companies do. Then they sell the car and let the sucker who buys it worry about the fact the oil hasn’t been changed for three years. So quite often, in fact almost always, one of the things they do very early is they start eliminating employees (firings, sometimes mass firings). Another thing they do is to look at every single penny that is spent, to see what they can “eliminate”. And sometimes this comes down to absurd things. At one of the companies I worked at that was taken over, they removed the change machine from the lunchroom. What can they save by that, maybe $10 a month? The other thing, and one of the things they do that is really destructive, which is why they are really a barnacle on society, is that they don’t really care about GROWING the company, and they rarely intend to invest very much into it. This is really despicable. LBO company’s often, ALMOST ALWAYS look for companies that are going through “weak” periods, in terms of financial results. That is why they can buy them for very low prices. You’ll almost never see an LBO operator trying to buy a real healthy company. They look for the very weakest. Then they put in their own management, who they think are smarter (or at least more ruthless and less moral) than the current management. So, as I said, I don’t really know anything about the history of the Guitar Center company, who started them, how long they have been in business, what their financial results were like before Bain swallowed them, or anything else about them. All I really know is that when I went to visit our local store a few years ago is that they had a LOT of guitars (and drums and lots of other stuff). I was not the least bit impressed by any of the employees. So, there are a lot of posters above who who have commented on what it is like to work there. But it would not surprise me at all to find that working there after Bain got them is probably a lot worse than working there before that happened. For any of you who are old enough to have been adults during the 1980′s (probably very few of you, Guitar Center people and musician types in general probably tend to be younger, in their 20′s and 30′s), but if you were adults in the 80′s you might remember hearing about the scandals on Wall Street about people like Ivan Boesky, Michael Milken, Kohlberg Kravis and Roberts, Dennis Levine, and many many others. These guys were all Leveraged Buyout guys. They pretty much invented this whole genre of financial shenanigans. MANY of those guys ended up in prison. The morality (or more accurately the LACK of morality) that leads people into that kind of life also tends to mean they don’t mind doing very illegal things, like Insider Trading, which is GROSSLY illegal and which is what most of them actually went to prison for. Another thing about the Leveraging” of the business they buy, is that the company is then LOADED TO THE GILLS WITH DEBT, which has to be paid every month, from the operations of the company. The LBO people might be willing to pay the debt every month for a short time, but they almost always PLAN that they will cut expenses so deep that they will have enough money from operations (sales) to be able to pay the debt. BUT, a lot of times they don’t which is why you hear of a lot of these companies going bankrupt. But it is THE COMPANY that goes bankrupt, NOT the LBO people who took them over. THEY loose very little, it anything, when their victim company goes bankrupt. They just do the same thing with another company. And THAT, ladies and Gentlemen, is how Mitt Romney ended up with 250 million dollars. What a swell guy. So, overall, I’m sorry to hear that working at GC is such a drag, but it doesn’t surprise me. Here in the Minneapolis MN area we are fortunate enough to have a LOT of great musical instrument shops, many of which are independent and owned by people who actually care about music and instruments. We also have a very lively music scene in every way, more bands per square foot than probably anyplace but New York and Nashville. We have recording studios, labels, recording engineering schools, lots of independent record/cd stores,and lots of other places where people who love music can work. We even have a few people who build guitars. If anybody reading this is in the Twin Cities MN area (Minneapolis-St. Paul), or you anticipate moving here, I would strongly encourage doing a LOT of homework, exploring everything this town has to offer to those who are really into music. There are a huge number of opportunities (although I suppose there are a lot of difficulties breaking into some of them), but there is no shortage of jobs that can be found working in and around music. Even being a waiter/waitress in a cool night club can lead to meeting other good music people, and getting leads, ideas, etc. This is a good place to live (if you don’t mind cold winters). Best of Luck to everybody. If you wish to comment, or if you are on the “inside” and would like to provide me with any more details, feel free to email me at “macintoshsavant@gmail.com”. Douglas in Minneapolis March 1 – 2012
Douglas in Minneapolis
March 1 – 2012
