Kathy Gornik: Why I Sold Thiel…

*Strata-gee.com EXCLUSIVE*

Photo of Kathy GornikMuch has been written on the changes at Lexington, KY-based Thiel Audio Products Company (Thiel) in the wake of its purchase by a group of Tennessee investors that we first reported last November. Shortly after their acquisition, strata-gee.com was invited to speak with Bill Thomas – one of those Tennessee investors and now the new CEO of Thiel Audio. And a couple of months after that, we had the opportunity to speak with new Thiel interim COO and Board member Bob Brown.

But many Thiel-related reps and dealers kept asking us about co-founder and former President Kathy Gornik. Some of this curiosity was related to rumors that Gornik had been forcibly removed from the respected high-end loudspeaker company that she helped found. And some of the interest centered around an unanswered question, not covered by any of the press (including Strata-gee.com) as to why Gornik decided to sell the company.

Now, Gornik has granted Strata-gee.com an exclusive interview…to tell her side of the story…


Thiel was founded in 1976 by three college friends including engineer Jim Thiel and Kathy Gornik. Thiel, an engineer, carried strong opinions about speaker design philosophy and had a strong and recognized commitment to constantly pursue purity and perfection by advancing the state-of-the-art of loudspeaker engineering design. Gornik handled sales and went on to deal with the business side of the business as the company’s President.

Unique to the universe of engineers – although not unlike some other well-known pioneering engineers in the electronics industry – Jim Thiel also had a passion for music. This led him to develop a line of loudspeakers that many hailed as some of the best in the industry.

A source of coherency…

Thiel was committed to the concepts of phase- and time-coherence in his pursuit of loudspeaker accuracy. Ultimately, he created what became known as the Coherent Source design concept which continues to drive their product design philosophy to this day. Thiel products have won many, many industry awards.

Jim Thiel died from cancer in 2009 – a seminal event that touched off a series of developments that ultimately led to Gornik’s decision to seek new investors in the company. When we first approached Gornik to talk to us about these events – they were still too fresh…too emotional…for her to address.

Photo of Jim Thiel and Kathy Gornik

Jim Thiel and Kathy Gornik in the early days

Added perspective through the passage of time…

Finally, as time passed…and perhaps, provided her with some perspective…Gornik agreed to answer our questions through an email exchange that opened a window onto the thought process that drove her decision to seek outside investors, and ultimately, sell and leave the company.

When the sale originally took place and was revealed last November, many in the industry were not surprised. It had become well known that the specialty side of the retail and electronics industry were declining, causing extreme stress on many of the players. So news of Thiel being sold was – for some – not a huge surprise.

The emergence of a mysterious entity…and a keeper of the keys…

But many long term supporters of Thiel became extremely concerned. The original story was that some mysterious, unidentified private equity company had purchased Thiel. Many in the industry hold to the thinking that private equity financial types often change companies in unexpected, and often negative, ways trying to extract a profit. Fueling this concern, word circulated that none of the new investors had any industry experience.

Photo of Jim Thiel training

Jim Thiel doing something he loved to do…teach.

Originally, the market was told that Gornik was staying on – welcome news to many Thiel supporters who viewed Gornik as a kind of “keeper of the keys” to Jim Thiel’s legacy. But very quickly the story changed to reports of disagreements between Gornik and the new owners…culminating in Gornik leaving the company within just a couple of weeks.

A sudden force of change…

Gornik commented to us on these events, explaining her mindset as matters approached – and unfolded.

“Jim’s illness and death changed things for all of us at Thiel, and we grieve the loss to this day,” Gornik told us. “It was a poignant time for me on many levels…”

Change – major change – was suddenly forced upon the company in the wake of Thiel’s passing…and Gornik says, with obvious emotion and appreciation, that employees rose to the occasion.

“It still astonishes me to think of their [the employees] willingness to face and accept the loss of Jim, their rising to the occasion with such passion and gusto, and doing so with so much care and commitment for the company and its values,” Gornik said. “You learn a lot about people under duress, and they [the Thiel employees] are remarkable beyond anyone’s right to expect.”

Not the only challenge…


But Thiel’s passing wasn’t the only challenge facing the company. Our industry was also changing in a major way. Many upscale brands were struggling with the dramatic drop-off in the number of specialty retail storefronts and their sales were dropping precipitously. Many revered high-end brands began experimenting with new types of distribution, products, and policies. Limited distribution was quickly becoming nothing more than a fond memory.

Still in the midst of an economic slowdown, and an industry consolidation, Thiel was tested as never before. Gornik saw the changes taking place in the marketplace, and knew that is was necessary to take action.

There was “…a confluence of events – including Jim’s death, the changes in consumers’ audio tastes that had been ongoing for years, and buying patterns of consumers that rendered the audio specialist a more minor role in the scheme of things,” Gornik told us. “If we were going to adapt, we needed fresh ideas across the gamut of the company and this meant having capital to invest. We had already begun this process but we needed to proceed with greater speed.”

A capital idea…

Once Gornik had reached these conclusions, she began seeking an investor to participate in this process. Of course, with the economic downturn – and the sluggishness of the more traditional consumer electronics markets – this was easier said than done.

Beginning in December 2011, Gornik retained a firm to help in the search for serious investors. The process took almost a year…and how the situation ended up was not necessarily consistent with how she had envisioned it would at the beginning.

“Ideally, it would have been great had we found a minority investor so we could still determine the course of the company,” Gornik mused. “This was not to be.”

Yet another path not taken…

Still, even though the situation had taken a different tack, Gornik was game. The new buyers were to take control of Thiel and, initially, Gornik was to stay on board for some period of time and shepherd the transition. However, this plan quickly fell apart.

Photo of Kathy Gornik, Dawn Cloyd, and Jim Thiel in Dubai

Kathy Gornik, Dawn Cloyd, and Jim Thiel in Dubai for a distributor meeting.

We reported that disagreements between Gornik and the new management quickly emerged. Confirmed through multiple sources, we were told of loud shouting matches and open disagreements. [Ed. note: Gornik strongly disputes the assertion that there were any “loud shouting matches and open disagreements.”] While Gornik did not want to comment on  any of the specific incidents surrounding her separation – she did agree to more generally describe the situation.

“I had thought I would stay with the company for at least a while to help in the transition,” Gornik admitted. “But it became clear quite early on this was not a role I would play. The new ownership, and rightfully so, wanted to make their own mark in their own way.”

Of friction and grace…


And so, though there was a quick build-up of friction forcing her decision – Gornik gracefully…and quietly…left the company. Accompanying her was Dawn Cloyd, Thiel’s International Sales Manager…and Kathy Gornik’s daughter.

For some Thiel supporters…this is the worst case scenario. Many were stunned at the rapid series of events and remain concerned about where Thiel is headed at this point. We asked Gornik, where does she see them going?

“Because they were not from our industry and, consequently, not aware of Thiel prior to their introduction to it, they came with neither prejudices nor awareness about who we were and how we got that way…except to note that, indeed, we had a great reputation and a great brand,” Gornik declared. “I don’t know their plan for Thiel, so I guess we will all find out together where things are heading.”

It’s done…

What’s done is done, and Gornik expressed to us that – while she experienced some “grief” upon her initial separation from the company that she was so wrapped up in for so many years – she is now in a very good – and peaceful – place.

Gornik told us “…it’s clearly the right move for me to have made. I’m more peaceful than I have been in a long while and am excited about my new-found freedom and working with Quadrant Solutions for growing their magnet business.”

As we recently reported, Gornik joined Quadrant Solutions – a supplier of magnets and magnetic products to industry. Although they have some business in the consumer electronics space, Gornik will seek to dramatically expand that business based on her many years…and many contacts.

There is only one regret…

But Gornik does have one regret – that it all happened so quickly. Because of that, she wasn’t able to say a proper good-bye to so many industry colleagues and friends.

“I know it [her sudden departure] was a great surprise to many folks, and for that I am sorry,” Gornik said sincerely, “particularly to those distributors, dealers and reps who were working so hard along side us to move Thiel forward. I can’t express how much I appreciated their support, and it was not my plan to depart so quickly and unexpectedly. I had sincerely hoped to continue our mission and to celebrate our mutual success in the future.”

Finally, Gornik summed up her feelings saying, “It has been such an honor and great pleasure to work with all of them and I can only wish them the very best as they navigate the challenging waters they find themselves in.”

Gornik can be reached at Quadrant Solutions (part of Quadrant Magnetics), which can be found at: www.quadrantmagnetics.com. Or you can email her at kathygornik2@gmail.com.

For more information on Thiel Audio, see: www.thielaudio.com.


Comments

Kathy Gornik: Why I Sold Thiel… — 15 Comments

  1. Ted,
    Very interesting story & much appreciated follow-up. Thiel is a venerated iconic high-end audio brand. Its great that you cared enough to provide Kathy this opportunity to share the story with us.
    BTW, One of the things I’ve always thought was interesting about Kathy Gornik was her leadership & volunteer activities in CEA. She brought unique valuable perspectives & vision to CEA.
    Well done. Thank you.
    DK

    • David,

      Thanks for your thoughts. Yes, I felt strongly – and many strata-gee.com readers felt – that the whole story wasn’t out there. With this interview generously granted to me by Kathy – I feel as though the loop is now complete.

      Gornik remains in the industry and I’m sure we’ll hear more from her in the future.

      Thanks for reading!

      Ted

  2. Thiel is doomed as a company because Jim Thiel died, just as Apple computer is doomed because Steve Jobs died. You cannot replicate genius.

    • Hi Scott,

      Thanks for your comment. I’m not sure that it is quite as simple as you suggest. However, there are many people who have expressed to me the exact same sentiment…so you may be on to something.

      Ted

  3. I am a physicist and from my perspective very few people actually understood Jim Thiel’s vision and expertise in electronics and physics in general. Jim was also a physicist. Just listen to his Scs4 speaker and you’ll be astounded.

  4. Excellent article,and i am catching up on the news of Jim and Thiel Audio.
    I live in Lexington and followed his company closely, toured it back in the very old days (veneer was awesome!), and owned his products.

    I just glanced at the “new” Thiel Audio, and am surprised that Jim’s name is not even mentioned for given any credit. That makes me sad.

    He and Kathy i am certain gave their many hours to the company, and stood eye to eye with marketing tigers, bringing their vision to us.

    I probably can say for sure that all the former Thiel lovers are dismayed, and perhaps that is how the world is now, with loyalty a thing of past.

    Still shocked they did not want to run with Jim’s ideas and acoustical prowess, as it was really out of the box stuff.

    Remember “New Coke”? yep….

    Best,
    jay

  5. Ted,

    I am late to this party, but wanted to add my thoughts after reading your article about Kathy Gornik and her separation from Thiel Audio.

    I was a customer of Thiel early on, having purchased a pair of Jim Thiel’s premiere speakers, Model 01, in my 20s. I recall the conversations I had with Jim Thiel over the years whenever I called the company, instead of a dealer, with questions about products. He was always so generous. Jim found a way to be helpful and offer guidance without being technically elite, given his breadth of knowledge and my lack of same.

    When the company moved to Nashville after Jim’s death, the Thiel website still included a historical section about the company with pictures of founders Jim and Kathy at various times, as well as a gallery section showing pics of Thiel products released over the previous decades. But when I accessed Thiel’s website months ago, all information about the founders and its products had been wiped from the content. How sad the current owners will not pay homage to Jim Thiel and Kathy Gornik for their contributions to the industry and to the company that the investors now own.

    Thiel may never be the company it once was due to the death of its founder, but I can recall my conversations with Jim and the painstaking care long-term employee Rob Gillum took with restoring my Model 01 rosewood cabinets to their glory after being damaged. While I could have purchased another set of speakers for hundreds less than it cost to refinish them … or had someone local do the work, I didn’t want anyone but Thiel employees hired by Jim to do the restoration. Knowing that I owned a piece of corporate history that were Jim’s first … and mine … was enough to justify the expense.

    • Mira

      Thanks for your stories. I’ve heard many stories like yours about Jim. Many told me how he loved to share his knowledge and how he believed there’s no such thing as a stupid question.

      Our industry was once rich with companies founded by gifted people like this. And while innovation still thrives – nowadays it’s more in the form of software coding, than a tangible product.

      Ted

  6. I just came back to this and wanted to add my .02 in 2017. As an owner of Thiel speakers, CS1.6, SCS3, and Powerplane 1.2, I am still amazed that the new owners did not continue or at least modify and improve on the original Thiel concept that adopted a large and loyal following. The current speakers are well built but there is nothing to differentiate them from other speakers. No sloped baffles. No time alignment. Nothing Thiel. They are very expensive for what they are.

    I still think that the company should go back to the original designs and if need be re-design the crossovers and drivers to get away from the 1st order design which was great but finicky. That way you would have the Thiel identity back and stir up the passion that many owners of these speakers had.

    This would be a great marketing decision in my view that would generate sales and excitement.

    Come on Thiel!

  7. I bought my CS 2.2s in 1992. They are still in showroom condition. Moreover, playback quality still pleases to impresses to astounds me. It does not matter they are now in their fifth dedicated music room. Each room provided unique conditions but always many hours of music listening enjoyment.

    One tweeter blew when the speakers were four years beyond the company’s generous 10-year warranty. I called Lexington to ask about repairing or replacing it, fully aware of the age of the speaker and willing to buy a new tweeter. Much to my amazement, the company repaired the tweeter, as new ones were no longer available, at no charge to me! My only expense was shipping and insurance to Kentucky. Thiel returned it to me via UPS, also at no charge to me. The mirror-matched teak veneered pair still provides hours of dynamic and detailed response.

    It is now to wonder if the new owners can maintain such superior customer service. While the product is well reviewed, as with so many technical products, it is service that builds customer loyalty. I wish them well.

  8. its 2017,still nothing in the market come close to jim thiel’s design .i owned whole set of thiel .cs6 ,mcs1 ,ss2 . hope someone will continue his work ,i feel sad when i saw the new speaker which use no either one jim thiel ‘s design but called thiel .this is really sad .

  9. I`m not planning to replace my cs 1.5s in the near future. They are absolutely amazing and keep my emotions becoming overwhelming every time I listen to them!

  10. greetings: i too just found this thread and wanted to comment. I am on my fourth and obviously last set of the 2 series. started with 2’s, then 2.2, 2.4, and now he wonderful 2.7’s. i have had to replace the mid/tweeter driver twice and that is unusual as it never happened but once before and that was with the 2.2 series when they were about 12 years old. Rob Gillium was great both times and i am in good shape. but i bite the bullet and spent $500 on a spare mid/tweeter. you never know what could happen to the company and to Rob. I sure wonder why a company why buy a Legacy brand like Thiel and then completely destroy the history and the products. go figure. All of my electronics are PS Audio and their products and customer service are excellent and they are not going anywhere thank goodness.

    • Hi Kent,

      Thanks for your comment. If you want to get a sense of why the private equity company that bought Thiel chose to do so, I interviewed their first post-Kathy CEO who was associated with that company. He told me the story of how they came to purchase Thiel and I wrote it up in this interview. Of course, it turned out that most of what he told me was not true, but you can get a sense of their initial thinking. You can follow the whole saga as I have reported extensively on the company over the last couple of years. To see all of my coverage, simply click on “Thiel” in the Tag Cloud in the sidebar on the right hand side of the page. You can also type “Thiel” in the search bar on the right hand side of the menu bar at the top of the page.

      Ted

Comment on this Post

Your email address will not be published. Required fields are marked *

PLEASE READ OUR **COMMENT POLICY** BEFORE POSTING A COMMENT

We welcome your comments and encourage you to participate by offering your insights and thoughts on our posted stories. However, in some instances, your comment may be subject to editing or deletion if they violate one or more of the following points.

    --First, while we support vigorous debate and are generally quite tolerant of even controversial thoughts and ideas - we do not tolerate rudeness, profanity, or personal attacks.
    --Second, please stay on topic with your thoughts.
    --Third, while links to relevant content are OK, we do not allow self-promotion or SPAM.

The owner of this site reserves the right to edit or delete any comments submitted to this site without notice. This comment policy is subject to change at any time.