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Guttenberg: What sort of stuff do you and Dan argue about?

D'Agostino: [chuckles] I'll play it safe here and go back to when we were in business for just for about a year. We had been approached by an investor—and we really needed the money. Dan was all for it, but I argued that we didn't know enough about business; we were mere babes in the woods. I was afraid that an experienced businessman might try to take our company places we weren't prepared to go. So we didn't accept the offer. In any case, let's just say it's very hard to succeed in business, and it's very easy to put yourself out of business. You have to be open to new ideas, flexible, and remain just a little bit humble. The minute you begin to believe your own press releases, you'll be in trouble.

Guttenberg: True, but Krell has been ahead of the curve on a number of fronts. You got into digital and home theater before the rest of the high-end industry was up to speed.

D'Agostino: Dan has always been an early adapter, and he thinks the stuff that appeals to him will sell. He's always looking ahead for the next trend. It made sense to break out of the preamp-power-amp mold and do other things, like home theater.

Guttenberg: Dan handles the visual aspects of his designs. Do you ever feel the look is too macho?

D'Agostino: No, not at all. You know, we patterned our original amp's fittings and gold screws after the Cartier Santos. I love that watch. I always felt our electronics should look like jewelry.

Guttenberg: That's funny—I assume that something like 99% of Krell owners are men. Is there a way to reach more women?

D'Agostino: That's been the big question since day one. I think it's possible, but it'll require simplification. Women's lives are complicated—between the kids, the house, the job, and looking good, they don't have time, let alone the desire, to get into the details of audiophilia. It's tough being female. Sure, women can hook up a DVD player to an amp, but the components would be easier to sell if they were all in one piece. And it's not just women—the whole discovery process of selecting a system can be a turnoff to non-technically oriented guys. Besides, nobody wants to look like a fool when they're spending a lot of money. I think we'll eventually have many more female customers, but the gear will have to be easier to set up and use. That's why single-brand systems, like Bang & Olufsen, are more attractive to women and non-audiophiles.

Guttenberg: Pardon a non-PC question, but I'd say men and women listen in different ways.

D'Agostino: We don't have the time to sit down and listen, but we love to listen to music while we're doing five million other things. And women buy more music than men.

Guttenberg: Does Dan ever sit you down to listen to something he's working on?

D'Agostino: Sure, we listen to our new products together, but Dan has stupendously good ears—and the ability to translate what he hears into fabulous-sounding circuits. Though there was that one time...Dan made a phono section he thought was the cat's pajamas, but I didn't really like its sound. At first he defended it, but later he agreed, allowing how it might have been his "designer's ears" that threw his judgment off.

Guttenberg: "Designer's ears"?

D'Agostino: Meaning that if you designed it, its got to sound good. Designer's ears are something you have to be aware of, kind of like believing your own press. We're currently building a new sound room at the factory that we'll use as an evaluation and teaching tool.

Guttenberg: Are you working on an SACD or DVD-Audio player?

D'Agostino: Yes, though from where I sit, the tough part is deciding on when to get into these new formats. Back in 1988, when we produced our first CD player, we had to pay Sony-Philips $25,000 for a license. And DVD-Video fees are way more expensive—the price of admission to that "club" is very, very steep. Each new format brings new technical issues and challenges. To answer your question, we may to have to wait until we can produce a machine that plays SACDs, DVD-As, and CDs. It will, of course, have to sound great on all three formats.

Guttenberg: Are you feeling any pressure to move production to China?

D'Agostino: No, we've never even contemplated that. As long as we build high-end electronics, we'll do it here, because that's the only way to exert full control over production—we have spent nearly 22 years honing those skills. Parts are another question; if we can source less expensive but high-quality bits and pieces, that's all the better for our customers and us.

Guttenberg: How's export holding up?

D'Agostino: Business goes on, but Europe is flat, and Japan isn't moving yet—about 30% of our sales are export. It used to hover around 50/50 domestic/export. But you have to remember that our overall sales have gone up considerably from the time we were in the 50/50 mode. We're going to redouble our efforts to increase our overseas business.

Guttenberg: And your home-theater sales are strong?

D'Agostino: Home theater is our business, because it has allowed the audiophile husband to spend a whole lot more money on his hi-fi than he used to. Nowadays, you can have really great two-channel built into your home-theater system.

Guttenberg: So you're a total convert to multichannel!

D'Agostino: Multichannel music recordings? No, I hate the thought of that. I don't want to sit in the middle of a rock band or an orchestra. Surround is great for movies, but it sounds like the music-recording folks still have a ways to go before they figure out how to do surround.

Guttenberg: We have to wrap this up, but before I go, I have to ask how you've managed to succeed in this male-dominated business.

D'Agostino: Ending up in audio was just an accident, but I'm a competitive person. Business is fascinating, and I'm up for the problem-solving, tracking the minute details, and growing the business. I don't do any of this by myself—Krell has a fabulous staff, and top-tier managers in all of the different departments. They're a dedicated group and work their butts off to make it happen month after month and year after year.

Guttenberg: You and Dan are divorced now, but you're still a great team.

D'Agostino: And we'll stay that way until Krell do us part. I love the business, and every day there are new challenges. I don't know if we're ever going to take a stab at stuff like car stereo, but it would be fun to branch out to somewhat lower-priced systems. May music rule!