Bill Crutchfield, Founder of Crutchfield

In September 2014, the Tom Tom Founders Festival launched the Founding Cville project which highlights local artists, civic leaders and entrepreneurs “whose groundbreaking and original work has impacted Charlottesville and the world.” Charlottesville Tomorrow is republishing the eighteen profiles of each of the inaugural Founders.

In 2007, Bill Crutchfield was inducted into the Consumer Electronics Association Hall of Fame alongside Paul Allen and Amar Bose. The Charlottesville founded and Charlottesville based firm has been a pioneer in online and mail order electronics, and now employs nearly 500 people in Virginia with annual revenues of $230,000,000. Yet it started in the mid-1970s from a basement office and a $1,000 savings as a humble side project: restoring vintage cars with state-of-the-art stereo systems. Bill Crutchfield grew his passion into a business that has remained profitable for forty years because of his visionary approach to educating consumers.

The inspiration.

In 1974, I was the General Manager of a local company. To satisfy my entrepreneurial passion, I had a sideline business of restoring old 356-series Porsches. While restoring one of these cars, I decided to make it more marketable by installing an aftermarket car stereo system. These products were so new that no retailer in the Charlottesville area knew anything about them. So, I went to the newsstand at a local drug store to find the mail order car stereo specialist that was surely advertising in car and audio magazines. To my surprise, there were none. Recognizing a void in the marketplace, I did what most founders/entrepreneurs do. I decided to start a business that would satisfy what I thought was an unsatisfied void. With $1,000 in savings, I started a car stereo mail order business in my mother’s basement.

What was the biggest setback?

I had two very memorable setbacks. The first occurred almost immediately. I modeled the first Crutchfield catalog after every other catalog of that era. It was jam-packed with product. And, it was a miserable failure. Being almost broke, I could not afford a consultant to advise me. So, I turned to the best source of advice—my shoppers. In a simple questionnaire, they told me that the problem with my business was not the typical—price, service or merchandise selection. The problem was my shoppers’ lack of understanding of aftermarket car stereo and its installation. My nontraditional solution would have been dismissed by every direct marketing consultant of that day. I invented a new catalog format that was part magazine with rich content and part mail order catalog with product. In the articles, I explained how to buy and install a car stereo. With my last few dollars of savings, I published this radically different catalog. Fortunately, it worked. Because of its success, other famous catalogers have now adopted this format. In the industry, it is called a “magalog”.

The second big setback was in 1983. Crutchfield had grown at an astronomical rate during most of the years since its founding in 1974. However, sales fell in 1983 and earnings turned negative. The company was in crisis. To make a very long story short, I recognized that the culture of the company had changed as my staff grew. The company no longer operated based on my innate set of values—mainly treating each customer as I would want to be treated. The company was operating based on a variety of values held by my various managers. To address this crisis, I instituted a set of common values which we call our Basic Beliefs. From that moment on, we have managed our company in accordance with these core beliefs. Very quickly, Crutchfield’s fortunes changed and strong growth resumed.

When did you begin to suspect this could be a success?

By every metric, Crutchfield is a huge success. In 40 years, we have had only one operating loss. That was in 1983 before I established our Basic Beliefs. We have no debt. We have over 20 million customers. We have never had a layoff. And, Crutchfield enjoys the highest rating of the 5,100 online retailers that Bizrate surveys. However, I am still working hard to make the company a success. Hopefully, I will never fully believe that the company is a success.

What has been the biggest positive impact you have observed?

Our business innovations have had a significant impact on the direct marketing industry (catalog and online retailing). Our leadership in the consumer electronics industry is well recognized. The mentoring of our employees has led to their success within and outside of our business. Alan Rimm-Kaufman benefited greatly by working at Crutchfield. In 2013, we supported 288 not-for-profit organizations through the leadership of our people and our financial support.

How do you define Founding?

To me, founding is being the driving force behind starting a viable initiative that no one has considered doing. Starting a business or service organization that is similar to an existing one is not founding. It is replicating. Unfortunately, too many “entrepreneurs” are replicators. From my observations over the years, true founders have a much greater chance of achieving success than replicators.

What brought you to Charlottesville, and what keeps you here?

I was born here. My business keeps me here. Additionally, I have not found another place where I would rather live.

What’s next? For you and for your initiative?

My next initiative is to perfect a true 21st century retail model. Our new Charlottesville store is the first step in that long and complicated process. Stay tuned.

Founding Cville culminated in an award ceremony at Tom Tom’s Fall Block Party
with over 6,000 in attendance | Credit: Tom Daly Photography