Lucky Timing and My Best Business Decision
As mentioned in Getting Started, Tech Hifi began in my dormitory room at MIT. The local audio dealers pressured the school to have me move off campus or stop selling. I moved across the street to a commercial, tax-paying, 20’ x 20’ store and started recruiting other students to keep the shop open.
Sandy Ruby was one of these students. He was a doctoral graduate student specializing in Turing machines and a tutor in my dormitory. He had become a local audio maven while I was still operating from my dorm room since he had purchased a good system when graduated from Harvard.
I was still buying from local dealers and one of them wanted to close and offered to sell me his business. With a store front and regular store hours, I purchased his operation and became a factory authorized dealer for HH Scott of Maynard MA, Acoustic Research of Cambridge MA, Dynaco, Shure and Koss. These became our bread and butter suppliers. Our product lineup was to grow pretty rapidly.
Friends were returning from the Vietnam War with audio products we had never seen or even heard of –Pioneer, Sansui and Teac. We contacted these companies, and many more, directly in Japan. When they decided to enter the US market, we were one of their first dealers.
Sandy, being paid year-round by the school, allowed me to retain his commissions and buy inventory. The next summer, I went back to Iowa to work on the Iowa Highway Commission, helping oversee the construction of the Interstate Highways. I asked Sandy to run the store in my absence. In the fall, he said he had enjoyed running the store so much that he wanted to take his back pay in inventory and start his own store. I suggested he come in with me as an equal partner. Then we made the best business decision of our lives: instead of each having a store to run, we decided to hire two store managers and devote our time to building the company.
MIT recruits and trains competitive individuals. Now, two of those competitors were unleashed on the staid audio retail community just as the Japanese were invading the U.S. with better products at lower prices. Our timing could not have been better for explosive growth.
We developed a hierarchical structure with Sales Staff reporting to Assistant Store Managers reporting to Store Managers reporting to Regional Managers reporting to Area Managers and all reporting to a Sales Manager. Parallel to the staff was a support staff of an MIT-trained architect. He designed the new stores and supervised the reconfiguring of space. We also created an advertising agency, run by a talented Harvard graduate and a distribution operation run by a professional we recruited. Sandy and I did the product selection and general management. Tech Hifi became the dominant audio retailer in New England, Michigan and Philadelphia. I dropped out of MIT after five and a half years and Sandy never completed his PHD disortation. We were doing well in audio and running out of things to improve.
We considered getting into the Personal Computer business before they were called Personal Computers; but our Sales Manager felt they were too technical, so Sandy and a friend of his started their own group of stores. They became a Samsung distributor when few people had heard of this Korean company. I had always been fascinated with what it took to make a good sounding speaker. An article by Henry Kloss intrigued me. It was about a Speaker Quality Control Knob: an external filter that could be adjust the frequency balance to the listener’s taste. I built one and used it to improve the products in our private label brand TDC (Transducer Development Company) of inexpensive speakers. I found that adding $4 to a $15 (cost) speaker system could make it sound much, much better. Tech Hifi needed good sounding, low-cost speakers for students’ systems and I really enjoyed designing them.
That’s how I got into audio manufacturing – and I am still trying to get the sounds of the coffee house in my home. I think we are getting closer.
Thanks again for letting an old man reminisce.