Guitaronomics: The Challenges of Expanding a Boutique Guitar Business with Doug Kauer and Paul Rhoney

On a recent episode of “The Luthierist” podcast, Doug Kauer was asked about the challenges of getting started as a guitar builder. He responded emphatically: ”If you're going to get into this, you have to be original and you have to be expensive.”

This is poignant advice considering Kauer Guitars has established itself as a prominent name in the burgeoning market of boutique builders over the past eight years. Kauer designs, like the Arcturus and Banshee models, are lauded for their impeccable sound, playability and detailed craftsmanship. His shopmate and longtime collaborator, Paul Rhoney of Rhoney Guitars, has similarly cultivated a unique following with his own take on “modern vintage” models like the Oceana and Starblaster. The two builders recently sat down in their Elk Grove, California shop to discuss the issues facing boutique builders as well as the steps they're taking to grow their respective businesses.

For both builders, the next phase of development centers around the release of a more affordable model. In April of this year, Rhoney guitars released his Lil' Stinker production model and early next year, likely at NAMM 2017, Kauer plans to unveil his new Titan series. These are less expensive guitars built with the same level of detail and quality as the high-end models but refined and simplified to make them far less expensive to produce.

Comparisons can be made between what these two are doing and boutique forerunners like PRS, Collings, and Tom Anderson Guitarworks.

“When Paul Reed Smith first started in the factory, they still built, like, 1500 guitars that year,” Kauer explains. “We've never done more than 80 a year. They took a huge gamble. You have to be willing to roll that dice, but you can't start off that way.”

Rhoney similarly explains that “You start slow and you build your brand. Every year we see these start-up companies throw up a kickstarter campaign and say they are going to make affordable guitars in the USA, and it doesn't work because they are not considering infrastructure. It takes many years to build the infrastructure to be able to do that.”

Maintaining a Unique Aesthetic at Scale

One of the key components to attracting and maintaining attention in a saturated market is developing a unique aesthetic, and much of the appeal of Kauer and Rhoney's guitars is their striking finishes. For boutique builders, though, the labour required to hand finish each guitar presents a real hurdle in developing more affordable guitars with quicker turnaround times.

Rhoney Lil' Stinker

“We get graded on finish first, it doesn't matter how it sounds,” Kauer points out. “There are a lot of companies that can sell guitars with satin, open grain finish. We can't. It has been the biggest struggle for us the last eight years.”

Inspired by a recent trip to the Taylor Guitar factory, where he witnessed the innovative curing techniques the acoustic giant uses during the finish process, Kauer decided it was time invest in a UV system for his shop. This has been an absolute game changer for both companies, and the new models would not have been possible without it.

“This year with the UV finishing, we are hanging right there with the best of them,” says Rhoney.

It's a much thinner finish, similar to nitrocellulose, but less toxic, releasing less solvents and catalysts into the environment. Most importantly, the reduction in sanding and buffing labor has decreased the hands on time for each guitar significantly. Coupled with a huge cut in wait time, from six weeks to three days, this change has made it possible for both companies to take the next crucial step forward.

A three-to-six-month wait for a guitar with a high price tag is often the deal breaker that sends buyers away from small American companies towards cheaper models. They needed to build faster and cheaper in order to satiate the consumer need for instant gratification. The Rhoney Lil' Stinker and Kauer Titan are aimed at bridging that gap between a factory-made guitar and boutique, custom quality.

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The New Model

While many larger companies offer “affordable” guitars that are outsourced to Korean or Chinese factories, it was important to Kauer and Rhoney to keep everything as close to home as possible. Kauer explains, “We brought a guitar out at an import price… and we did it without taking it overseas. There will be no compromise in quality of parts or construction.”

The guitar bodies will be constructed and finished in-house at the shop in Elk Grove, California, while the necks will be machined and built by California legend Grover Jackson.

Kauer Titan

The Titan is a completely original Kauer design that clocks in at a base price of $1299. A basswood body fitted with locking Gotoh tuners and Seymour Duncan pickups will come standard (and ship within 36 hours). If you’re looking for more, no worries: it’s still a very modification-friendly instrument. Buyers will be able to grab fully-loaded pickguards or pickup upgrades from TV Jones, Lollar, Wolfetone or Roadhouse—all at the upgrade cost, of course. Getting a Mastery vibrato or a Bigsby fitted is always an option as well.

Rhoney’s Lil Stinker, inspired by classics like the Danelectro U2, Supro Dual Tone, and the Gibson L6s, is a guitar refined down to the bare necessities. Priced at $2500, it is a high-quality, USA-made, boutique guitar with a 30 day order-to-ship time. There are a wide range of modification possibilities coming in at significantly less than his other models.

The Stinker features a beveled neck pocket with two-bolt neck joint, custom design floating tailpiece, two tone finishes, polycarbonate back-painted pickguard that matches the side of the body, and a whopping 500-plus color options. There’s also a “modular” pickguard that allows for instant pickup swap out without any need for soldering.

Much of the process is automated, but the model still has all the hallmarks of a custom instrument. CNC machines are used to cut the bodies and shape the necks, but that doesn't eliminate the hours of hands-on attention that each guitar needs.

“There is a certain level of satisfaction when you have something programmed [in the CNC] just right and you sand it out just perfect… you know you can nail it every time. That's a really great feeling,” Rhoney explains.

Every guitar needs special attention to get it just right, since each instrument has it’s own specific feel, especially when it comes to neck shape and taper. Rhoney adds, “It's a feel thing… maybe the way I do my neck carve is something different that you aren't going to find in a store. It might be your new favorite thing, you just don't know it yet.”

When asked how their new guitars might compare to stylistically similar import companies, like Reverend or Duesenberg, the guys were quick to point out that both of those imports are actually made in the same factory in Korea.

“I think we are there as far as quality is concerned but they are doing more guitars than we are,” Rhoney replies. “The Titan is in the price point of a Reverend.”

“Features-wise, you are probably getting more for your money out of a Reverend… there's only one Titan. But you are getting a guitar completely made in California. You will be able to upgrade to TV Jones or Lollar. There are four color and plastic choices. I don't know that the other companies offer that,” Doug continues. “Kauer will always have a little niche that won't displace anyone from the market.”

True craftsmanship in the current boutique guitar climate has come to a wholly different meaning than where it was ten years ago. The dual necessity of quality construction and components with efficient, cost-effective production is at the fore of everyone’s mind; if Kauer and Rhoney’s new models have anything to say about it, a new paradigm in salon shop guitars may be coming.

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