Episode 60: From VW Bus to 800,000 Square Feet: Sweetwater Sound Grows in Fort WayneJune 10, 2019
This week we bring you the story of Sweetwater Sound, a homegrown Fort Wayne, Indiana company that started as a one-man operation in a Volkswagen bus in 1979 and has since grown to become the No. 1 online retailer of music instruments and audio gear. The company announced plans in October 2018 to invest $76 million in two new facilities at its 163-acre campus in Fort Wayne, bringing its facilities to a total of 800,000 square feet. To get the full story behind this impressive growth, we spoke to Sweetwater’s visionary Founder and CEO Chuck Surack and John Urbahns, CEO of Greater Fort Wayne Inc.
Patience Fairbrother (DCI): The year is 1979 and Chuck Surack has a dream and a VW bus. He has just returned from a five-year stint playing music around the country, and he decides to start his own recording business right out of his vehicle.
Andy Levine (DCI): Fast forward to 2019, and Chuck’s company Sweetwater Sound is the leading music instrument and audio equipment retailer in the country. In fact, we’re recording on Sweetwater equipment right now.
Patience: The company has seen impressive growth of over 20% in recent years and today has over 800,000 square feet of facilities. And they are still based right where they started – in Fort Wayne, Indiana.
Patience: So welcome to episode 60 of “The Project: Inside Corporate Location Decisions.” I’m Patience Fairbrother of Development Counsellors International.
Andy: And I’m Andy Levine also with DCI and Patience’s co-host of “the Project.”
Patience: This week we bring you the amazing story of Sweetwater Sound, a homegrown Fort Wayne, Indiana company that has grown from a one-man operation to become the No. 1 online retailer of music instruments and audio gear.
Andy: The company announced plans in October 2018 to invest $76 million in two new facilities at its 163-acre campus in Fort Wayne. This is the company’s third major expansion since 2012.
Patience: First we’re going to hear from Chuck Surack, who started Sweetwater Sound when he was just 22 years old – that’s five years younger than me – and he did it out of a VW bus.
Chuck Surack (Sweetwater Sound): Well, I started the company 40 years ago in my Volkswagen bus. I was a musician on the road and came home, frankly, to create a job. I used my bus to pull alongside churches, and schools, and nightclubs, and I’d run 200 feet of microphone cables into the building, and then I would sit in the bus with headphones and a recorder and I would record those musicians, or artists, or whoever it was.
Patience: Chuck knew from his time as a musician that renting studio space could be cost prohibitive – so he brought the studio directly to his customers. For the first few years of the business, Chuck operated out of the Volkswagen bus and his 12 by 55 mobile home on the south side of Fort Wayne, Indiana.
Chuck: I’d actually do the recordings in the bus and then I would bring them to the living room of the mobile home. And then, eventually, a small house on the west side of Fort Wayne, and then a little bigger house, and then I built my first 5,000 square foot building. We were there for 17 years, and it expanded from 5,000 to nearly 50,000 square feet before we moved out back in 2006.
Andy: In 2006, Sweetwater moved to the northwest part of Fort Wayne into a 50,000 square foot building. Chuck and his team quickly added on, and today, they have 400,000 square feet of space.
Chuck: The company, over 40 years, has just grown, and grown, and grown, and today, we have about 1,700 people here at Sweetwater and about 300 in other businesses that we own. We specialize in selling music and recording equipment to musicians all over the country. They can be individuals just beginning to play guitar, or keyboards, or drums, or the biggest names you could imagine.
Patience: In October 2018, Sweetwater announced plans to invest $76.4 million into two new facilities at its 163-acre campus in Fort Wayne. The expansion will double the company’s presence to 800,000 square feet and add more than 1,000 new jobs over the next five years. So how did Sweetwater decide to stay and grow in Fort Wayne?
Chuck: We did look at locations outside of the Fort Wayne area, and maybe someday, that will happen. There are a lot of challenges and pressures to maybe have a distribution center on the West Coast.
Andy: According to Chuck, this pressure to have a West Coast distribution center comes from companies like Amazon and Walmart – both of which announced one-day shipping in the last few weeks.
Chuck: Having quick access for our customers is going to be important going forward, but we did some investigation on the West Coast, and they were pretty competitive. They really…the states wanted us to move out there.
Andy: So why didn’t Sweetwater make the move to the West Coast? It comes down to the fact that the company has had a great experience operating there thus far
Chuck: At the end of the day, the state of Indiana, and specifically this region, Fort Wayne, has been very good to us, and we’re also in a great proximity to a big part of the U.S. Yes, it’s a little longer to get to the West Coast, but we can reach something like 40% of the U.S. in just a 1 or 2-day service from right where we are, which is why FedEx has a hub in Indianapolis and UPS has one down at Louisville.
Patience: We asked Chuck to hone in on the top factors why For Wayne is attractive for growing a business. #1 is Indiana’s business environment.
Chuck: I think it’s a great place for businesses. The business environment in Indiana is really, really good. The business environment in this particular part of the state is particularly good, and that was very, very compelling to me. And if that’s not good enough, we’re only two hours from Indianapolis, and we’re three from Chicago, and three from Detroit, three from Columbus, Ohio, and I’d say, “Why not Indiana?” I think Indiana’s a big advantage, so that’s clearly the big thing.
Andy: Number two: the local talent pool and the Midwest Work Ethic.
Chuck: The second thing I would say is I have a company in Florida and a lot of friends with businesses all over the country, and the quality of the workers here is really, really good. There’s a work ethic, a Midwest, wholesome ethic, that comes through loud and clear. My employees work really hard here and they appreciate the quality of life that they have, and it’s just a little bit easier, as a business owner, to find the kind of people that I would love to have here.
Andy: We asked Chuck to expand upon the local workforce as a key factor in the decision.
Chuck: It’s only about 7 months later, we’ve already filled 250 of those jobs, but the State really stepped up and helped with training grants, they’ve helped with some recruiting, and they just set an environment that makes it a little bit easier. You know, it’s always difficult to find great people, but definitely made it a little bit easier to find good people, and I’m just really happy with what the State has done.
Patience: Finally, perhaps more important to Chuck – even than the business environment and local workforce – are those intangible factors that make him want to continue to grow his business where it started. Number three comes down to culture.
Chuck: At the end of the day, frankly, at this point, I’m just a little bit afraid to have another location. Could I really have the same culture that we have in Fort Wayne? I’m just not sure I could duplicate that as easily, and part of our strength or advantage is having this really, really deep integrated culture. I’ve relocated about 70% of our employees to Fort Wayne, and I just want to make sure that we stay as successful as we can here for this region.
Andy: Despite Chuck’s desire to stay, there was one stumbling block Sweetwater had to work through as part of this project. We’re going to hear now from John Urbahns of Greater Fort Wayne Inc.
Patience: You may recognize John from a previous episode of our show where we profiled party supply company Shindigz. John has spent the last 24 years working in community and economic development in Fort Wayne, Indiana – and has been CEO of Greater Fort Wayne Inc. for the last six months. Here’s John about the primary roadblock for this project.
John Urbahns (Greater Fort Wayne Inc.): Well, it’s a bit of a unique project because their campus is right on the edge of the Fort Wayne City limits. So part of their campus is within the city of Fort Wayne and part of it is in unincorporated Allen County. So from a project perspective, you all of a sudden now bring more players to the table. When you start to look at redevelopment areas and bring in the city onboard and the county onboard to help with different pieces of the infrastructure, it creates a more complicated situation.
Andy: So the campus being within both county and city limits made things a bit more complex. But Greater Fort Wayne Inc. was well suited to handle the situation.
John: One of the luxuries we have here as being the economic development agency for both the city and the county, we can pull both parties into the room, work together collaboratively to understand who’s working on the road, who’s working on the water lines, how do we support the project to make sure that they have everything that they need, that they’re in a competitive situation and can get the best deal for the company.
Patience: We asked Chuck how this affected the project from his perspective.
Chuck: There’ve been a couple little things, you know, slightly different rules about the land development, that sort of thing, but I have to say, our City and our County have worked really well together, and we have several examples where we’ve done joint agreements with both, and one entity or the other takes control so I don’t have to deal with both the City and the County. I deal with the City on this thing, I deal with the County on that thing, and it really has not been a problem and maybe a little bit of an advantage for us because I can sort of take the best of both. If the County offers something pretty special, I can go back to the City and remind the City of that, and vice versa. And I think it’s a great example of our City and County working together, and the leaders in our community and the staff in the various departments for approvals and all that have been just really, really good.
Patience: Ultimately, getting to take the “best of” the city and the county was sort of an advantage for Sweetwater. So Greater Fort Wayne won the day. But John and his team at Greater Fort Wayne Inc. know that, eventually, Sweetwater is likely to expand beyond Fort Wayne.
John: Sweetwater is a great company. It’s a locally homegrown company. And they’ve also got, you know, very much a national, if not worldwide, presence. So we know that, at some point, there’s probably reason that they should be looking elsewhere to expand. We did know that there were other locations that were very much courting them. When you look at how some communities go after a company, they’re looking for companies exactly like Sweetwater that are on a high-growth trajectory and they feel would be great in another environment. Thankfully, Chuck and the team at Sweetwater felt that they could continue to grow here. I think we know that, at some point, they’re going to have to expand elsewhere in the country. It just makes sense logistically, at some point. But for right now, we’re on a good run.
Patience: The company is well on their way to expanding their operations, with 250 new employees already hired in the first 7 months. In 2019, Sweetwater expects to do over $800 million in sales.
Andy: So Patience, I know we’re going to talk about the takeaways of this project. But first, you know, gosh, just what an amazing company, amazing growth.
Patience: Such an interesting story. I really enjoyed interviewing Chuck. He just had such a cool story of running his business.
Andy: Now, I’m sure if you had a VW bus when you were 22, you would also be running an $800 million company, right?
Patience: I’d like to think so, yes.
Andy: Okay, yes, yes. The VW bus is the important thing. All right, let’s talk about this project. Patience, you spoke with both Chuck and John. What were the big takeaways?
Patience: Two things really stood out to me. And I think the first is really the importance of this business retention. I think we’ve heard this on several episodes in the past, but often if the community has a great company that’s already growing there, the project is really theirs to lose in a lot of cases. Companies do want to continue to grow where they’ve put down their roots. So in this case, Sweetwater was committed to staying in Fort Wayne, and Greater Fort Wayne Inc. just needed to help them get there.
And the second thing I’d say is just the value of continuing to build a company culture. Chuck even mentioned that he said he’s kind of afraid to expand somewhere else because he’s worried that that culture that he’s built over the last 40 years is maybe going to change, or it won’t be able to be replicated in another location. So it’s sort of that intangible factor of having this culture that you’ve built from the ground up. And is this going to change my company fundamentally if I move it somewhere else?
Andy: So it sounds like culture wins the day.
Andy: So that is a wrap on episode 60 of The Project: Inside Corporate Location Decisions.
Patience: We want to thank Chuck Surack and John Urban for taking the time to share their stories with us. Thanks also to Kate Yurig of Northeast Indiana Regional Partnership for coordinating these interviews.
Andy: The Project is sponsored by DCI. We’re the leader in marketing places, and have served over 450 cities, states, regions, and countries. You can learn more about us at aboutdci.com.
Patience: We hope you’ll keep listening. There are many more projects to come.