Even though the specific effect of this rent in the ratural order of things is difficult to quantify, there have been times when the consequences could be seen more or less clearly. In 1972, for example, the reigning Steinway brothers, John and Henry, reacting to their own advancing age and to the lack of interest from other members of the family, sold the legendary company to CBS Inc. for about $20 million in stock. CBS, in turn, attempted to expand production, but the results were far from impressive. Musicians and dealers alike agree that during the next decade, the quality of the prestigious Steinway piano declined. "The piano business does not take well to big-business ownership," says Houlihan. "It was an industry started by a few entrepreneurs, and when that spirit gets subjected to the demands of a big corporation and excessive financial analysis, it loses its spontaneity." CBS may have reached a similar conclusion. In 1985, it sold the piano manufacturer to a group of Boston-based investors, which again caused Steinway & Sons dealerships to fret over the future of the instrument.
Like Steinway, the Baldwin Piano & Organ Co. also suffered from conglomerate tinkering. During the late 1970s, the assets of the piano maker were transformed into a diversified company calling itself Baldwin-United Corp., which ran up a sizable debt acquiring banks, savings and loans, insurance companies, and most notably, the giant $1.2-billion mortgage guarantor, MGIC Corp. Late in 1983, Baldwin-United filed for protection from its creditors under the federal bankruptcy code. Through it all, the original piano company continued to operate profitably, and by 1984, its employees had managed to extricate themselves from the debacle by purchasing the subsidiary in a leveraged buyout.
Against this backdrop, Santi Falcone stands out as something of a welcome anachronism, an artist-entrepreneur worthy of membership in the proud guild established by Cristofori. In his own mind -- and indeed, in the minds of many of his customers and admirers -- he had come to rescue beauty and truth from the maw of mass production. But his immediate challenge was more prosaic: finding a way to break the closed circle of logic that kept him small because he was small.
Even if it was obvious to Falcone that he had to expand his volume, the question of how was still an open one. His pianos were already priced well below comparable Steinways (although not the Baldwins) and certain foreign brands because they were sold direct from the manufacturer. But in order to preserve this important competitive advantage, Falcone could not use the existing network of independent piano dealers -- with their hefty middlemen markups -- to bring his product quickly to a wider market.
And there was yet another constraint that Falcone imposed on the method of his ascent. True, he had to grow, but he had promised himself he would never grow beyond the point of producing more than 1,000 pianos a year. Beyond that number, he feared, he might compromise the instrument's quality, which was, after all, his primary interest as well as the instrument's ultimate selling point. "I will not have a huge production line pushing people into making errors," Falcone says. "You can't have just the profit motive and be great."
Falcone's was a noble sentiment, but not one calculated to win the support of the capital markets, to which he had turned in 1985 with a $1.7-million private stock offering. Various venture capital groups and financial institutions were intrigued with this craftsman, his piano, and his prospectus, but they balked at the idea that a company should anticipate, let alone plan, to cut off its unit volume at 1,000 pianos annually. After all, if you could take in $20 million at that level, why not produce a few more pianos and make it $40 million? "We didn't get much institutional interest at all," says Thomas J. Walsh Jr., Falcone's director of marketing, an investment manager whom Santi lured from early retirement. "I guess it looked un-American."
In the end, the shares in Falcone Piano Co. were purchased by wealthy individuals whose interests in music were at least equal to their interests in rates of return. To their $1.7-million investment, Falcone is scheduled to add another $975,000, the proceeds of an industrial revenue bond secured through the Massachusetts Industrial Finance Agency.
Production soon moved into higher gear at the new Haverhill location, and so did Falcone's marketing, with particular emphasis on wooing well-known, if not always big-name, performers. Clearly, he could not duplicate Steinway's system, which includes 126 dealers in more than 195 markets, and an inventory of concert pianos in the field valued at $15 million. But he could mount a modest campaign in his own backyard.
He began in the Boston area by loaning pianos of various conservatories and orchestras. And if a visiting artist, intrigued by the piano's growing reputation, asked to play one in concert locally, Falcone was as likely as not to pay the $500 to ship it to the concert hall. Thus, in the part three years, more than 40 prominent pianists and some 15 orchestras have used Falcone pianos, and Falcone now turns away two loan requests for every one he accepts. "He's a good promoter," says Jack Romann, Baldwin's director of concert-and-artist activities. "He's done well in New England. And everybody has to start somewhere."
To date, Baldwin has been more tolerant than Steinway of the occasional use of the new piano by name artists. But Falcone still has yet to receive the unequivocal support of even a single major concert pianist from either camp. Although his company has grown, it is still not big enough -- and certainly not yet able to satisfy the legitimate self-interests of international artists on tour. Pianist Leonard Shure, for example, who ranks the Falcone piano "among the best available anywhere," said he would not become a Falcone artist "because I've been with Baldwin so long and because Santi can't service me all across the country." Falcone intends to begin meeting Shure's challenge head-on over the next three years by opening seven company-owned dealerships in major U.S. cities.
In the meantime, as the piano maker chips away at his catch-22, Leif Bakland is practicing like crazy. And when his new Falcone is finally completed and delivered, he promises to practice even more. "Why? Because you want to get your money's worth?" he is asked. "No," he says, pausing to laugh at the thought, "because if Santi calls and asks me to be a Falcone artist, I want to be ready."
