Fender Names Andy Mooney CEO
...in a rock band in his home town of Whitburn, Scotland. Although he eventually gave up on the dream of playing professionally full time, his enthusiasm for the guitar never dimmed: He has an extensive collection, continues to play regularly, and is a self-described “product geek.” Summing up his priorities at the helm of Fender, he cites maintaining exceptional product quality and building “the best relationships you can possibly have” with specialty retailers, whom he describes as “the lifeblood of the business.”
Mooney was actively gigging in Scotland after leaving high school, but he also managed to secure an accounting certification. In 1980, at the age of 25, he joined Nike’s newly opened U.K. office as its CFO. Nike’s global revenues had just passed the $100 million mark and, he says, “They were small enough and crazy enough to hire a 25-year-old as CFO.” Two years later he “escaped finance for marketing” and in 1984 was transferred to the company’s corporate headquarters in Beaverton, Oregon. A succession of promotions culminated in Mooney being named chief marketing officer in 1994.
In 2000, Mooney was recruited to turn around Disney’s troubled Consumer Products Division, which markets products based on Disney characters, operates a chain of retail stores, and produces books and magazines for kids. During his 11-year tenure, he tripled retail sales of Disney-based products to $36 billion, pioneered the $4 billion Disney Princesses franchise, and established retail lines based on the Pixar Animation films Toy Story and Cars. In 2013 he was named CEO of QuikSilver, a maker of surfer and skater apparel. He departed in 2015 over strategy disagreements with the board.
During Mooney’s tenure at Nike, the company received countless accolades for marketing prowess, while revenues doubled from $6 to $12 billion. However, Mooney attributes the dramatic sales growth to exceptional product more than clever marketing. He explains, “I used to say to our product guys, ‘When the product is great and the advertising is poor, business goes up. When the product is poor and the advertising is great, business goes down.’ It’s all about the product.” Whether it’s athletic footwear and apparel or guitars, he says, delving into the smallest details of the product is crucial for success.
To communicate the importance of product to his Nike co-workers, Mooney naturally gravitated to stories about Fender because of his abiding interest in the guitar. He would cite Fender as a case study to explain how an exceptional product and potent artist relationships can create a powerful brand. “I talked a lot about the history of the company,” he recalls. “I would bring a beautiful 1955 Strat and a 1980s-era Fender Elite that had 15 coats of lacquer into a conference room, hand them to people blindfolded, and then ask, ‘Which guitar would you rather play all night?’ Everyone, even the non-players, could appreciate the exceptional quality of the early Strat.”
Mooney’s fascination with Fender began in his teens with the purchase of a Fender Musicmaster, “my first good guitar.” He owns and admires other guitars, but describes himself as “a hard-core Fender guy.” Later, through a friendship with Alan Rogan, Pete Townshend’s longstanding guitar tech, he immersed himself in the fine points of guitar design and construction. The purchase of Tony Bacon’s The Fender Electric Guitar Book also provided inspiration. After reading it, he says, “I decided to collect every guitar photographed in the book.” Although he has a long way to go before achieving that goal, he has more than 30 Fenders in pristine playing condition. Based on this historical perspective, he gives high marks to Fender management over the past 20 years, declaring, “They have really returned the company to the ethos of world-class products.”
Fender and Nike are markedly different businesses, but Mooney says they both depend on strong, mutually profitable relationships with specialty retailers. He recalls a “light bulb moment” in the early 1990s when he realized retailers were losing enthusiasm for Nike products as margins contracted. “At the time, Nike employed what I called the ‘Post-World-War II Coca-Cola’ distribution model: give everyone the same product and let them clobber each other. The end result was that no one made any money and retailers were getting increasingly negative on giving extra open-to-buy orders for the Nike brand.” His solution was to create unique entry-level products for individual retailers. “The theory was that every retailer should have unique products so they could control their price destiny,” he says.
Instituting this program involved overcoming the objections of manufacturing and marketing departments that wanted to deal with a standardized product selection. Ultimately, however, Mooney says specialized products enabled Nike to double its market share. “That type of approach is not revolutionary,” he says, “but it was an avenue that we would continue to develop with Fender.”
The guitar market is mature, limiting opportunities for sales growth, and Mooney expects Fender’s core guitar and amplifier business to expand in the low single digits. He says the company has several key franchise products—the Stratocaster, the Telecaster, the Jazzmaster, the Jaguar, and the Jazz and PrecisionBass—that provide a strong foundation. The challenge for management is to create additional “franchises.”
Mooney envisions larger, untapped growth opportunities with new digital services. “Fender has the ability to be involved in any number of musical endeavors, not just playing a musical instrument, but any consumer interaction with music,” he says. The company is exploring a variety of novel online opportunities. One involves helping beginners master the guitar. “The attrition rate among first-time players amazes me,” he says. “90% abandon the instrument after 12 months. With digital technology, we can complement our core guitar business by reducing the attrition rate.” Play-along tracks, new types of lessons, and even amp modeling and effects are potential online services that he says could help beginners stick with the instrument longer. “How it will manifest itself in terms of products and services has yet to be determined,” he adds. “Expanding the guitar playing universe is the right place to start.”
Mooney has the enthusiastic support of the Fender board of directors. Mark Fukunaga, chairman and CEO of Servco Pacific Inc. and co-chair of the Fender board, says, “His personal passion for Fender guitars makes him a great fit for our culture.” Bill McGlashan, founder and managing partner of TPG Growth and the other Fender board co-chair, adds, “Andy understands how to drive innovation and introduce differentiated product offerings. He’s the perfect executive to lead Fender’s next chapter of growth.”
Subscribe to Music Trades!