Fender's CEO learned this key lesson in product development from Steve Jobs


Fender CEO Andy Mooney poses for a photo at the firm's Hollywood office ribbon-cutting ceremony on September 22, 2016 in Hollywood, California.
Matt Winkelmeyer | Getty Images
LISBON, Portugal — Before Andy Mooney took the reins at guitar maker Fender, he was an executive at two other companies — Nike and Disney. And it was during his time at Disney that he met iconic entrepreneur Steve Jobs.
Mooney says the Apple co-founder was "one of the first people" he met at Disney. Jobs joined the entertainment giant's board as a result of its acquisition of animation studio Pixar in 2006.
"He grilled me on our very first meeting about what my point of view on brands was," Mooney told CNBC in an interview at the Web Summit technology conference. According to Mooney, Jobs agreed with his perspective that "great brands are the accumulative effect of great products," but there was a "but."
Mooney recalls that Jobs told him: "Every single product that you make, that you put your brand on, is either a deposit or withdrawal from the bank of brand equity."
That is, the product has to speak to the success of a well-known brand by being an instantly recognizable part of the company's lineup.
Jobs, who died in 2011, was the face of Apple at a time when the company released some of its most iconic products, including the Macintosh family of computers and the iPhone.
"I'd say that every single guitar we've made over 70 years — and electric guitar amplifier — was pretty much a deposit in the bank of brand equity," Mooney said — although he admitted the firm could "do more" in other categories like acoustic guitars and effects pedals.

'I'm a heavy metal guy'

Fender has for decades been seen as one of the most iconic names in the guitar industry and — inevitably — rock music. Fender's guitars have been used by everyone from rock pioneer Jimi Hendrix to Pink Floyd's David Gilmour.
When asked about what his favorite guitar was — whether from Fender or one of its rivals such as Gibson — Mooney began by stating: "I'm a heavy metal guy."
He admitted his current go-to guitar is the signature Telecaster used by Jim Root of U.S. metal outfit Slipknot, which Mooney said has a more "simplistic" setup in terms of electric components because "in his outfit, he sweats so much during every show that the guitar would short out and literally go quiet on stage."
Jim Root of Slipknot performs on stage at Download Festival 2019 on June 15, 2019.
Katja Ogrin | Redferns | Getty Images
But all has not been rosy in the guitar sector of late, with headlines around Gibson's filing for bankruptcy protection last year adding to concerns the industry may be struggling due to changing musical tastes and technology. The firm has since appointed a new team of senior executives to help it return to financial health.
Mooney, however, said Gibson's bankruptcy was more of an isolated case. "Gibson's bankruptcy had nothing to do with the guitar business," he said. "The bankruptcy was brought about by ill-considered acquisitions in the consumer electronics space." One notable acquisition was the firm's $135 million deal to buy Philips' audio unit in 2014.
"The fretted instruments segment has been growing robustly for over a decade now," Mooney claimed, adding 2019 "will be a record year for guitar sales worldwide."

Online music 'nothing but a positive'

The strategy for Fender more recently has been updating its product line to reflect a digital-native demographic. The company has been launching a handful of new apps, including one that lets people learn how to play and another for tuning guitars.
Streaming services like Spotify and Apple Music have faced criticism from some musicians, who argue it's squeezing artists' income. But Mooney countered that school of thought, claiming the revenues from digital distribution have actually benefited music artists as well as record labels and publishers.
"Today the revenues from digital distribution for the labels and the publishers accounts for 60% of the total revenue," he said. "They're making more money now than they have ever made in their history. The same percentage of revenues that go back to the artists and creators is the same that it was."
The Fender boss said the rise of online distribution in the music business has been "nothing but a positive in the sense that consumers worldwide are listening to more music than they ever have in history." He cited the example of his 13-year-old daughter listening to The Beatles as a testament to the success of music's digitization.
Mooney said that when reading one of her essays from school, she wrote that a fact that would surprise her classmates was the fact that she liked the English rock group. Not only that, she also claimed that if the band were around today, "they wouldn't have a genre on Apple Music," according to the executive.

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