Katie Porterfield [1]

Shortly after three Harvard MBA graduates with no music instrument industry experience purchased the well-known, yet ailing, Gibson Guitar Corp. for a reported $5 million, they received an unusual request. A dealer wanted to buy about 60 guitars from the Nashville-based company, which, back then, struggled to sell guitars even one at a time.

The order generated quite a bit of excitement, but also made Chairman and CEO Henry Juszkiewicz curious. "I called [the dealer] and asked, 'Why are you doing that?'" says Juszkiewicz, who took control of the company with partners Dave Berryman (Gibson's president) and Gary Zebrowski in 1986. "He said, 'Well, I figure these are the last guitars Gibson is ever going to manufacture, and they're going to be worth a lot of money.'"

In fact, that dealer's bet paid off—though not for the reasons he expected. Sure, the "Harvard college kids" had previously saved a struggling technology firm, but most observers expected they would fail to revive the company. Instead, Juszkiewicz and Berryman transformed a company that was bringing in less than $10 million in total worldwide sales to one with revenues Juszkiewicz says are approaching $500 million. (Zebrowski left the company a few years after its purchase.)

But while the partners succeeded in breathing new life into the iconic guitar brand, today's Gibson Guitar Corp. has not been built by the axe alone. Led by Juszkiewicz (Berryman, president, oversees the Epiphone division), Gibson has become a company of instruments stringed and keyed, of videogames, clothing lines and jukeboxes. And it's all part of the plan for the 54-year-old Juszkiewicz, an innovative risk taker and self-described "contrarian" who is determined to take the Gibson brand far beyond the Les Paul Standard.

"If you're growing [in this industry], you're doing something different because the industry isn't growing," he says. "It's not like computers, where people are buying a ton more this year than last. The only way to grow a mature business is through constant innovation and risk-taking."

Still, a phrase like "grow a mature business" doesn't really do justice to Juszkiewicz's ambitions. He's structuring the company to go public—though he says Gibson doesn't need to do that for several years—with the ultimate goal of becoming a Fortune 500 company. He estimates that hallowed designation will require about $6 billion in annual revenue. And with or without a public offering, he concedes that reaching such a goal isn't a "given," but he's confident that Gibson can get there within his lifetime.

"I've really got to hustle, but we can make it," he says.

Even his secondary goal—to become the world's largest musical instrument enterprise—is ambitious. Yamaha, the current holder of that title, sells about $3 billion in various musical products each year. Though it might be feasible for Gibson to match Yamaha's success through the sale of musical equipment, instruments alone are not going to cut it when it comes to increasing revenue twelve-fold.

To that end, Juszkiewicz has led Gibson in a number of directions, not all of which have been controversial stretches of analyst imagination. There has been the purchasing of prestigious guitar brands like Kramer, Valley Arts and, most recently, Garrison—moves with the well-established "assume market dominance" motivation.

And there has been the lateral industry integration. Through the years, Gibson has acquired numerous companies that don't make musical instruments of the six-string variety. The Gibson family of brands includes Baldwin Piano, Slingerland drums, Tobias basses and Wurlitzer keyboards.

Along with the widening of company product lines has come a similar expansion of Gibson's global footprint. Today, 50% of the company's revenue is generated outside the United States. Just last year, it expanded its global presence through two major acquisitions. In July, the company acquired Deutsche Wurlitzer, headquartered in Germany. The acquisition brought the Wurlitzer jukebox and vending electronics brand completely under Gibson's umbrella.

In December, the company, which had already established a manufacturing base in China about five years ago, purchased Dongbei Piano Co., the third largest Chinese piano producer.

"No one in our industry has ever done anything like this," says Paul Majeski, publisher of Music Trades magazine. "It's the biggest thing the company has ever done. Gibson's strategy for developing the Chinese market is brilliant, and they are getting a ton of traction with it."

Not all of Juszkiewicz's moves have met with such praise. After all, this is a man who devoted years of research to building the world's first digital guitar—an invention that could undermine the sales of his core product, the electric guitar. Considering that the underlying design of the electric guitar has gone pretty much unchanged since its introduction in the 1930s, going digital is a sensitive topic for many music industry professionals who have an "if it ain't broke, don't fix it" mentality. Gibson released the digital guitar, which uses an Ethernet cable instead of a regular guitar cord to transfer music to an amp or computer, in 2004. But revolutionizing an entire industry takes time, and Juszkiewicz, who says such technology typically takes about 10 years to become commercially viable, is willing to wait.

"There's no doubt in my mind it's going to be huge," Juszkiewicz says. "There's also no doubt in my mind it's going to take a while to hit its potential. Hopefully, it won't take 10 years, but you can't push technology into popular acceptance. There's a sort of natural birthing process."

But ultimately, moves meant to establish niche supremacy, and even research initiatives meant to redefine the niche itself, can only take Gibson so far. In order to reach Fortune 500 heights, Gibson has to play in a bigger sandbox—it has to find ways to cater to a larger consumer market. For Juszkiewicz, that means Gibson must become a lifestyle company, analogous, he says, to Nike or Harley Davidson.

"Both brands originated from a core activity that was a small part of the consumer population, but over time, the feeling about that particular activity was more important than the activity itself," he says. "Buying that brand became a way of showing people that you were into that particular lifestyle, whether it be motorcycle riding or sports."

For Gibson, the road to brand ubiquity means consumer electronics, video games, toys, clothing—even ice cream. The digital guitar R&D effort yielded vast technological opportunities, including a line of consumer electronics products that support home theatre audio and video capabilities.

"The Gibson name means something to people," Juszkiewicz says. "So, we have to be consistent with our heritage and what the brand meaning is. We are in the general music-making lifestyle business, and things like consumer electronics and audio products are consistent with that. Our brand would have meaning in that marketplace, which would bring Gibson to that consumer."

To further infiltrate that marketplace, in 2005, Gibson bought the naming rights to Los Angeles' Universal Amphitheater in a ten-year, $14 million deal. Adjacent to the Universal Studios Hollywood theme park, the Amphitheater puts the Gibson name &mdash in lights, no less &mdash squarely before the eyes of 10 million annual visitors.

Other initiatives have been less flashy—just this year, the company introduced a variety of accessories, such as a thumb drive shaped like a Les Paul guitar. Additionally, Gibson guitars are featured in the immensely popular Guitar Hero video game series, giving countless non-musically inclined youths a taste of the musician's high. In a similar vein, Gibson has partnered with Hasbro to create the Power Tour Electric Guitar, which allows kids to play songs by touching sensors that light the way to the correct notes.

On the opposite end of the spectrum, Gibson also launched a fashion division, and Juszkiewicz says he hopes to have a designer clothing line consisting of casual men's wear in department stores next season. The company is opening several retail stores worldwide that will sell every product &mdash instruments, clothing, jukeboxes, electronics, etc. &mdash that Gibson offers.

And finally, there's the ice cream parlor set to open in downtown Nashville this month. Consumer electronics, clothing, guitar-related toys &mdash they may not be a Flying V, but it's not all that difficult to see how they fit into Juszkiewicz's plan. But ice cream?

To Juszkiewicz, it makes perfect sense. He just acquired the first jukebox sporting the Wurlitzer name (made in 1934), and he needed a place to put it. After some research, he discovered that back then, these machines were in ice cream parlors, so he found a 1926 sweet shop in Port Huron, Mich., and moved it to lower Broadway. (The parlor most likely will be called Wurlitzer's Place.)

"We have several people wanting to do it in other places already, and we're not even open yet," he says.

Tactics such as ice cream parlors and clothing lines might raise a few eyebrows, but Juszkiewicz isn't deterred, even when those eyebrows belong to his own board members and advisors. "I'm usually going against street wisdom," he says, "and even though [that wisdom] is usually wrong, you get a lot of arrows doing that from people who are going with you."

If anything, the resistance he encounters seems to drive him. Joe Galante, Sony BMG's Nashville chairman who served on Gibson's board for almost two years, says Juszkiewicz is a focused individual with strongly held opinions. "If he believes it, he develops the reason why it will work," Galante says. "Sometimes advisors have said they don't think it will work, but he still pursues the course."

Though Juszkiewicz acknowledges that he's made some "bonehead" moves in the past, he says he'll never stop taking risks.

"You don't have to win them all, you just have to win more than you lose and never bet more than would take you out of the game," he says. So, what does he say to those who question his "lifestyle" idea and whether he will ultimately succeed in his mission to take the company into the ranks of the Fortune 500? Nothing. "The best comeback is to actually do it," he says.

Hm. "Just do it." That's kinda catchy.