The Success Gene

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"Our business in America started in Manhattan. The family moved to Nazareth in 1839. They had come from a small town in southern Germany, and they didn't feel comfortable in a big metropolitan area. My great-great-great-grandfather was able to more consistently make perfect guitars than anyone from that era. People still say C.F. Martin set the standard for quality for American guitars.

"I was going to become a marine biologist and worked here summers. People were saying, 'Aren't you going to join the family business?' I remember I went to a trade show with my father when I was 14 or 15. My dad said that someone from CBS wanted to talk to us about selling the business and asked me what I thought. I said, 'I would like to think about joining the business -- I can't guarantee that I will.' And we went over and met this gentleman at the show, sitting at a big desk, and my dad said, 'This is my son, and he may want to join the business someday, so we're not for sale.' I have a 3-year-old daughter named Claire Frances, so if she ever wants to be C.F. Martin, she can. She comes to work with me every once in a while, and we go out to the plant -- right now we're watching a ukulele being made.

"When I took over, in 1986, the business was barely breaking even. We'd ridden the folk boom and then the folk-rock boom through the '60s and early '70s, and then business started to trail off with disco. Production peaked in the late '70s at around 20,000 units; by 1983, we were down to making and selling 3,000 guitars a year.

"The guitar started regaining popularity thanks to things like MTV Unplugged. We've got about 600 employees here in Nazareth and about 250 in Mexico, where we make our strings, our backpacker guitar, and our Little Martin travel guitar. Last year, we made 85,000 guitars.

"My father made a bunch of acquisitions. Aside from buying a string company, which was an astute move, none of these panned out. And when they didn't work out, he would take the people who were really smart here and send them to try to fix the acquisitions. As a result, the core business suffered. The people making the guitars were like, 'Hey, what about us?' And they'd hear, 'Oh, we've got to go fix the drum company! We've got to fix the banjo company!' It was really a distraction.

"I also found a very hierarchical situation: top-down, traditional, the boss tells the worker and the worker does it and goes home. As much as I knew there was a better way, forever and ever the old way was what everyone knew. I went on an Outward Bound course for a week, and I really learned the value of teamwork. I came back, and I was all fired up: If the Martin Company was going to move ahead, we needed to involve the workers more. We went through a lot of formal training, all the way down to the hourly level, about employee involvement. And since I came in, we've given out about $15 million to the employees in profit sharing.

"We hired a gentleman from Bethlehem Steel to formalize our quality assurance program a couple of years ago. One day he came in and said, 'Chris, people work really hard here, and I keep telling them, "Hey, we're not trying to make the perfect guitar!" ' And I said, ' Vince, we are trying to make the perfect guitar. '"

Iwan Reis & Company
TOBACCONIST
Founded: 1857
Chicago

Kevin Levi, 37, general manager, fifth generation

"Our store opened four years before the Civil War. It was started by my great-grandfather's uncle. We are the oldest business in Chicago that's still owned and operated by the same family, and we're the oldest family-owned cigar shop in the country. We've been doing mail order since the 1950s, and today mail order is probably half of our business.

"I started working here 14 years ago. I had quit a job in advertising after getting a promotion, because it wasn't a direction I wanted to go in. My dad, Chuck, and I split responsibilities. He handles all the financial aspects, and we share most everything else -- advertising, marketing, the website, buying, customers. We have eight employees, and my mom also helps out. In the store, we get 100 to 120 customers per day -- a lot of regulars. We also get a lot of new customers through the Internet.

"I smoke pipes, cigars, and cigarettes -- from 9 to 6:30 or 7, till I get back to the house. My dad is a cigarette smoker. My grandfather smoked cigars till the day he died at 92.

"The 1980s were a horrible time. If you looked at daytime TV, what was on? You had Jane Fonda workout videos, Jazzercise, nobody was eating meat -- it was kind of a health-conscious age. Our business really suffered then. We moved from the ground floor of our building to the second floor and rented out the first floor just to keep us around. In the late '80s, my dad didn't take paychecks for a number of months -- he had to pay the employees. Then, in the '90s, steakhouses started popping up everywhere, and the cigar boom happened. It was a total backlash to the late '80s, and it was amazing for business.