In December, Farmingdale, N.Y.-based D’Addario & Co. Inc. announced that, effective Jan. 1, John D’Addario III, son of John D’Addario, Jr., and nephew of the current CEO, Jim D’Addario, would take on the title of CEO in addition to his current role as president. John D’Addario III has held many positions within the organization over his 23-year tenure there, which we will find out more about. Jim D’Addario, one of the company’s founders and leaders since its inception in 1973, will be stepping down as CEO and assuming a new dual role as chairman of the board and chief innovation officer. The Music & Sound Retailer sat down with both John D’Addario III and Jim D’Addario at the company’s offices to find out why the move was made, how the company could be different in the future and much more.
The Music & Sound Retailer: Jim, can you first discuss the timing regarding why you made the move now to name John D’Addario III the CEO?
Jim D’Addario: In December, I turned 70, and it was my personal goal, if we were prepared, to step down at this milestone, and John and our management team are ready. We are definitely prepared. There are also some personal family issues that need a great deal of my attention, so the timing is perfect.
Succession planning is something our family and board of directors have been working intensely on. We have devoted pretty much half of every quarterly board meeting to this topic for the last three years. As a result, we have built out a great management team to support John. We added a strong chief of finance and administration officer, chief revenue officer and have recently promoted Chris Griffiths to assume the position of chief sales officer. Many other organizational changes have been made to support this transition.
After much deliberation, the board, family and I felt John III was ready to take over as CEO. We have worked hand in hand, and he knows our business cold. Nobody works harder than John. He is well respected by all of our colleagues, and I am here to help him when he needs it. I am sure I will be a pain at times [laughs].
The Retailer: John III, can you tell us about your background, how long you have been at the company and your role models, which perhaps include Jim? And can you tell us about your business philosophies?
John D’Addario III: I graduated from the University of Richmond (Va.) in 1993. I entertained a couple of job offers in the Richmond area, but I ultimately decided to come back home. When I did come home, I started out at D’Addario as a marketing coordinator. I did that for only a few months before Jim and my dad really needed me to help out with a diversification strategy. At the time, we acquired a small cosmetics manufacturer; that was a turnaround situation. I worked in that role for three years, two years with Jim and my dad, and we successfully sold the business in 1995, the year the Evans acquisition opportunity came our way.
Jim D’Addario: We helped a friend out with that business. We actually sold it for a profit, but it was a big distraction, and we were all excited about the Evans opportunity and focusing solely on the music business again.
D’Addario III: When we sold the business, I agreed to stay on with the new owner for roughly a year. I learned a tremendous amount with that opportunity. I equate it to a mini MBA. When the new ownership took over, I was essentially the operations manager for the company, which was in Hauppauge, N.Y. I was only in my mid-20s, and there were 80 or 90 employees there. It was kind of crazy having so much responsibility at such a young age.
Ultimately, I came back to D’Addario in 1996. I was initially involved in production planning. In fact, the first project I worked on was the due diligence for an acquisition. We had acquired the Kaman Musical String Division (originally the Black Diamond String Co.) in the summer of ’96. My first job was to drive to Bloomfield, Conn., and count all the inventory and validate all the other assets. There was a lot of work involved from there, but we were able to transfer most of the volume to our facility here. From there, I continued with production planning, and eventually, I got into brand management. I was involved with D’Addario’s fretted brand management for a brief period of time. Ultimately, I got more involved in the commercial side of the business. I was a national sales manager for a number of years. It was an exciting time to be a national sales manager, because Mars Music was still in the throes of expanding rapidly, as were Guitar Center and Sam Ash. They were all opening up stores, and the online business had yet to kick in.
One of my role models at the time was Kathy Slezak, who was one of the first employees of the company. She was general manager for a number of years, and at one point was vice president of sales. When she was in this role, I was learning the ropes from her. Ultimately, she ended up marrying Mike Dawes, who owned our distributor in Australia. She moved to Australia and became our APAC sales manager, working from the Melbourne area. So, I took over her role as VP of sales. I continued in that role for many years, getting involved in the international side of the business. Eventually, I became an executive vice president, and I was working closely with the company president at the time, Rick Drumm. I learned a lot from Rick and eventually succeeded him in the president’s role, which was 2014. And now, I’m also assuming the CEO role.
As for my other role models, they are, of course, Jim and my dad. I didn’t get a chance to work with my dad that long because he retired in the late ‘90s. But he was certainly very generous to me, lending an ear any time I needed his support. Of course, Jim has always been with me. I have learned a lot from Jim over the years. But as much as I have learned from Jim over the years, we are also very different in terms of management style and skill sets. I will never be a Jim D’Addario when it comes to innovative, creative thinking. But I bring other skill sets that are a nice complement. That’s how Jim and my dad were so successful. They were always different in terms of skill sets they had. They were great complements to each other.
I have a little bit of a different approach. I am very analytical, organized and do everything I can to understand the person’s role I am interfacing with. Having worked in all these positions — even in high school as a teenager — I learned almost every facet of the business. That was invaluable to me because I have a good feel for what everyone is up against. That lets me collaborate with people in a productive, respectful way.
The Retailer: John III, tell us about your family and what you do when you’re not working.
D’Addario III: I have three children. My oldest, Lily, is 20. She is in her first year of college. I have a senior in high school, Lucy, and the youngest, John IV, is a sophomore in high school. Lily is a violinist and an athlete. Lucy is a talented and passionate singer and dancer who has Broadway aspirations. John is an upright and electric bass player, and athlete. He loves both. So, they keep my wife Michelle and I very busy. I try to stay as active as I can outside of work. I love a wide range of sports, including tennis. It clears my mind and keeps me energetic.
The Retailer: Do any of your children have an interest in becoming the next generation at D’Addario?
D’Addario III: My daughter, Lily, has been the most curious about the business. In fact, she worked here for several months before going to college. She helped with our lean initiatives. She asked a lot of questions and has been involved in the family assemblies we have on an annual basis. You are eligible to be part of our family business meetings at age 16. She is also part of our family council, which is in charge of organizing our family assemblies and identifying other educational opportunities for family members. So yes, Lily seems interested. I am not sure about my other two children yet, but it is early, of course.
Jim D’Addario: Janet and I have three children: two girls and a boy. Our oldest, Julie, worked as a graphic designer at D’Addario before she started her family and has been focused on that. Her husband, Pat, has been with our company in several roles and recently has been leading a diversification effort expanding our hand exerciser product range into the physical therapy and sports markets. Amy stepped down as director of brand in 2018 but was responsible for our rebranding and the build-out of our new creative departments in Farmingdale and Brooklyn. She is still an active board member and sounding board for me and the entire management team. Our son Robert is running Cleerline Technology, which was a spinoff of our Planet Waves solderless connector and cable business. They are focused on wire, fiberoptic cable and all the components that are utilized in home and commercial control system installations. These two businesses are part of our family’s desire to diversify, using technologies and expertise we have developed for our music business in other industries.
Between our two family branches, there are 19 grandchildren. In fact, in December, our daughter Amy recently had our eighth grandchild. The 19 generation-five members run from being only weeks old to 20. Fortunately, they are all healthy and have diverse interests. There are some very smart and talented kids with a wide range of talents and passions. There certainly might be another family member or two that want to join the business. That would be a dream for my brother and me. I would love to see it, but who knows?
The Retailer: Jim, with that said, how hard is it to keep a family business going? You would think some family members would want to do other things.
Jim D’Addario: Well, there are a lot of people in John III’s generation that are not involved in the business. For example, my daughter Amy worked here for about five years because our marketing was suffering. She felt strongly at our family meetings that we needed to do better. She worked part-time as a consultant for seven years and helped with our rebranding. But she really wasn’t interested in doing that long term. It wasn’t where her passion was. She went back to screenwriting and just finished a screenplay she is pitching. Her husband is a successful screenwriter, too.
But in John III’s family, several of their family members are intimately involved. John’s brother, Michael, is the VP of operations here. He is really involved and doing a great job. He is in charge of all the factories here in Farmingdale and the Promark factory in Houston. And John III’s brother-in-law, Esteban, is one of our most productive mechanical engineers. He is a fantastic designer who has built some great machine solutions. He is married to John’s older sister Laura, who worked here for a while, as well, before having children. And of course, Suzanne D’Addario runs our D’Addario Foundation in support of music education and is doing a fabulous job.
We have quite a few family members working here, but nobody is forced to work here. We want our family members to truly want to be part of the business and to be passionate about it.
The Retailer: Jim, are you amazed at what you built at D’Addario? Did you ever think in your wildest dreams you would build what you have now?
Jim D’Addario: No. I didn’t know what I was getting into, but being a driven person, I always knew I would be successful at some level. Things fell into place for me and the company, and I believe we were clever enough to capitalize on the opportunities that came our way, with creativity, hard work and strong values. But no, I never dreamed we would be able to assume such a strong market position in the accessories market.
When we started this company, we agreed to stick to small goods — just strings, at the time. Most guitar companies either didn’t have a string business, or if they had one, it wasn’t succeeding, because they would always put their best people on instrument projects. I figured we could be “Switzerland.” We could be the “Gillette” of the music business, selling to every store. That philosophy paid in spades for us because we became known as strings first. In fact, our slogan at the time was “Making Fine Strings is Our Only Business.” We couldn’t use that one now!
In 1986, as we grew our direct-to-dealer sales, we wanted to add more product lines to get the dealers’ attention. For 23 years, we were the North American distributor for Vandoren, and later we acquired Evans, Planet Waves, RealFeel, Puresound, Rico and Promark — all accessory brands. It just built from there. We developed a reputation as the small-goods experts. There is no conflict. We didn’t have to worry about managing exclusivity on the dealer level.
It was tempting to go beyond small goods. We almost bought Guild Guitars in 1991. It would have been great timing had we bought it because, the next year, MTV came out with “Unplugged,” and the acoustic guitar went through a several-decade renaissance. But, in the end, we realized getting into instruments would have been a terrible distraction and complication for us. It might have ruined the good thing we had going.
The Retailer: John III, whether subtle or significant, will we see any changes at D’Addario under your leadership?
D’Addario III: I don’t think you will see any dramatic changes. One thing we will do is always seek competitive advantages in everything we do. We are in control of most everything we go to market with. We produce the majority of the materials for strings now. We have our printing facility. We have our own engineering and machine shops where we literally design, program and build our own manufacturing equipment. These things create opportunities to create competitive advantages. These things will never change. It has made our company very successful. But, at the same time, as much as it’s a competitive advantage, it also creates a level of complexity as an organization. I joke that we are roughly a $200 million company, but billions in complexity when you consider all the manufacturing facilities we have and all of our distribution companies around the world. It’s a lot to manage. But to Jim’s point about the team we now have, we are more prepared now than ever to be able to manage that level of complexity and excel despite the challenges.
We will continue to improve as a company. We seek talent that has one major characteristic: curiosity. That is the one quality we look for in everyone here. Being innately curious about how things can be better. We are going to continue to drive that in a big way going into the future. I will say that with Jim being able to focus on the innovation side of the business, we are going to look at how we can be more of a market disruptor and how we can diversify the portfolio of accessories we have.
One major change we will have is, we are in the process of transitioning to more of a business-unit structure. That means we literally have business-unit leaders of each area of the business. We have three defined business units: guitar plus (strings and other guitar-related accessories), where Brian Vance is the VP; a percussion division where Randy Beck is our leader; and band and orchestral woodwinds division led by Bill Wrightson. We are empowering them to be virtual owners of those businesses. But each of them is competing for shared resources. We created a matrix-type organization to support our business units. They do have a lot of their own dedicated resources they are responsible for managing. We are leveraging the great shared services we have as a corporation, meaning finance, IT, HR, sales organization and our internal marketing agency. But at the same time, they are managing a highly focused team. One of the things that drove this structure is that most of our competition are single-brand-focused companies. They tend to be very nimble in terms of competing. We are trying to create that same environment, and yet take advantage of strong shared services and a global distribution network. The future of how we run the organization will be through these business units.
Jim D’Addario: There are no surprises here. We have been discussing the changes we would make on the board level and management level for years and years. So, I don’t think anyone is going to notice any major changes, except that perhaps we are getting more efficient and better at what we do. I’m sure at some point we will have to make some other decisions that could be disruptive. For example, should we stay on Long Island forever with taxes the way they are and the inability to deduct real estate taxes, as well as state income taxes we have? That is changing the picture for us. I am a devoted, loyal New Yorker who has supported this state with my personal time, serving on Gov. [Andrew] Cuomo’s economic councils, and have really been a tremendous backer of business on Long Island. But business is business. We are still committed to New York, but as each day goes by, it is becoming more difficult to keep committing to it. In the end, there are no real surprises coming down the road.
The Retailer: John, the D’Addario Foundation has now won our “Outstanding Community Service” award for seven years and counting. I am assuming this will also remain a priority moving forward?
John D’Addario III: Absolutely. One thing I tell my sister [Suzanne], though, is that it can be more global in its reach. That is something we are going to look at more seriously. That is consistent with our goal to continue to improve. I would like to enhance the foundation’s work and reach more people around the world. There’s no question we will continue to drive the foundation forward in a big way. One of the biggest things I learned from my father and Jim is it is always very important to give back to the industry. Do your part to grow the industry. We are planning on doing that.
Jim D’Addario: In terms of sales and revenue dollars, I think we probably do more philanthropic work than any other company in the industry. We would like to keep it that way. Perhaps, someday, we will be able to create a coalition out of it and get more companies involved. That would be great. On a personal basis, I listed 13 instruments on Reverb.com on D’Addario’s vintage store [in February], with all of the proceeds going to the Foundation for Music Education. There are some very valuable guitars that were auctioned, including a D’Angelico and Gibson. The guitars are worth a couple of hundred thousand dollars.
The Retailer: Jim, speaking of your collection, what is your favorite guitar?
Jim D’Addario: I would have to say it is the [C.F. Martin] D-35 that I bought in high school. I was 14, and I saved my newspaper route money. It is Brazilian rosewood, just before they couldn’t get any more of that [wood]. I just found the tags for it. It was a $440 list price with the case. I paid $220.
My dad took me on one of his trips to deliver strings to [Martin headquarters in] Nazareth, [Pa.]. There was a shortage of guitars then. Martin would only make 3,500 guitars a year then by hand. Now they must make about 90,000 a year. The folk boom was so big then. I kept telling Martin they didn’t even need any salespeople.
The Retailer: Let’s conclude by talking about your current products. Can you discuss the great success you have had with D’Addario XT strings and a little about what you featured at The NAMM Show?
D’Addario III: The new XT series of strings is far exceeding our expectations in terms of sell-through, especially our XT electric offering. Up to this point, we hadn’t been a strong contender in the electric coated string market segment. But XT is changing that. We are seeing incredible success there. The XT launch was unique because we offered it in just about everything right from the get-go, whether it be bass, acoustic, electric, classical or mandolin. I am really proud of our team here. It was a lot of work to pull off. It was no easy task. XT was a big focus at the NAMM show, and in the string realm, we have more things to come. There are new areas we will get into also.
Jim D’Addario: We also introduced an incredible synthetic reed at the show called Venn, and the Evans UV2 coated head launch has exceeded all projections so far. Venn and UV2 are going to be game-changers.
D’Addario III: Venn is a formidable threat to natural cane.
Jim D’Addario: There is some pretty good synthetic reed product out there, but Venn is on another level. It is one of our main focuses for this year.
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