Guitar heroes identify a niche and strike the right chord

11 Sep 2008

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Forget air guitar, one tech start-up is aiming straight for the classic vintage guitar market online.

All around the world this weekend, grown men with beer guts will be leaping across their living rooms, bashing out neat riffs as they relive rock and roll dreams from teenage heydays. It doesn’t matter that many of them can’t play guitar … in the 21st century playing air guitar has evolved to playing Guitar Hero on video games consoles.

But for a more discerning and moneyed class of rock and roll aficionado, plastic guitars and plasma screens aren’t enough. They want the real thing, be it a classic Gibson Les Paul or a Fender Stratocaster.

Realising this trend, a group of savvy Irish executives have got together to create a social networking site called Dbtwang.com that will facilitate investors’ appetites for classic vintage guitars.

Operating out of Kilkenny, this niche new social networking start-up is headed by internet veteran, Keith Bohanna, and the team includes guitar collector, Fintan Blake Kelly, O2 Ireland former commercial director, Gerry McQuaid, and the ex-business development manager of Fender Europe, Jamie Crompton.

While Bohanna admits he can barely play a guitar chord, the other members of the team are united by their love and respect for vintage guitars, which has driven them to identify an emerging business niche that could propel the start-up into global play.

The market for vintage guitars is a thriving one, says Bohanna. According to guide prices, a ’54 Fender Stratocaster would set you back between $55,000 and $100,000, while a ’58 single-cutaway Gibson Les Paul Junior would have a range of between $7,000 and $13,000.

“Out of the team of four, I’m the only one who doesn’t know one end of a guitar from another, but the other three are passionate guitar collectors, they understand their niche. My job will be to keep it focused and commercialised,” says Bohanna.

The company has already raised €140,000 from angel investors and is looking to raise additional funding from venture capitalists. According to Bohanna, venture capitalists such as Anchorage Capital in London have established a €100m fund to invest in the classic guitar market.

“We are setting up a trusted marketplace for people who buy and sell guitars. At the moment the only place you can do that is eBay, which unfortunately is full of forgeries. Discerning investors would be very reluctant to buy a guitar on eBay. Our business model is to establish a marketplace where paying subscribers will know they are part of a community of serious collectors.

“We won’t have straightforward advertising on the site, but will have sponsorship and premium subscriptions for access to the trusted marketplace with a lot deeper content aimed at collectors.”

And it is a serious business. According to the respected ‘42 Guitar Index’ prized by collectors, the market for classic vintage guitars has been growing at a rate of 30pc a year. A Fender guitar sold in 1991 for $150,000 could sell for $1m today.

“This is a global play,” says Bohanna. “We’ll be looking initially at the US marketplace where they sell three million guitars a year. This is followed by Japan. Gibson and Fender sell 75pc of their guitars to the US and 25pc to Japan. European dealers tend to have to go in through the back door.

“I love niche markets and have never been in a niche market this valuable. Fender can’t manufacture enough guitars so supply is limited.”

Bohanna says there are particular nuances to collecting and valuing guitars. “Guitars improve with use, so the more you play it, the better the guitar sounds. If you put a good guitar in the hands of someone famous, the value goes up.

“The market we are looking at is growing steadily because a lot of new people are starting to collect guitars. Interestingly, a lot of people are coming into the guitar collection business because they’ve played games like Guitar Hero.”

Bohanna says he’s taking a long-term view on the development of Dbtwang.com. “It’s going to take us at least four to five years to see the value of the start-up. We’ve raised €140,000 so far and we have outsourced our web development to a company in Poland called Luner Logic, which has done great work for other Irish technology companies like Nooked.”

Essential to the success of Dbtwang will be winning the trust and respect of bona fide collectors, as well as novices who are finding their feet. “One of the things we have been very clear about from day one is that when you come to Dbtwang, collectors aren’t trying to do what rock musicians do, they’re not trying to emulate their lifestyle, but they want to go to a place where they can share their love for the instrument.

“The core team bonded on that very basic and fundamental level. Our very first business meeting involved Fintan, Gerry and Jamie spending an hour and a half bonding over guitars before we started discussing the commercial opportunity.

“A serious website aimed at serious collectors. That’s the level we are aiming at,” Bohanna says.

By John Kennedy

Editor John Kennedy is an award-winning technology journalist.

editorial@siliconrepublic.com