We caught up with the brilliant and insightful Michael Varela a few weeks ago and have shared our conversation below.

Hi Michael, thanks for joining us today. Folks often look at a successful business and imagine it was an overnight success, but from what we’ve seen this is often far from the truth. We’d love to hear your scaling up story – walk us through how you grew over time – what were some of the big things you had to do to grow and what was that scaling up journey like?

I always think that social media is a trap. New businesses start, see themselves with 100,000 followers in a year, making all kinds of money, and before you know it, they are all gone. Social Media is a great tool, but sitting back and waiting for social media to carry you is not a realistic strategy. It is important to remember that if you want this to be a “real job” you need to treat it like a “real job”.

My name is Michael Varela and I am the owner of Tonetuga FX, an effects pedal manufacturer based in Charlotte NC. Just like artists have different brushes to make different strokes, musicians have effects pedals to make different sounds and textures. It is a very busy marketplace, new operations try to pop up every day and the majority of them never make it past the beginning stages. I think a lot of people see the time involved to make one pedal and think “If I could make 100 of these, I would be making XYZ money, easy”. Sadly, that way of thinking breaks down when you attempt to scale in a business like this.

In general, making one pedal is easy, making 100 pedals and having them all look and sound exactly the same, that is hard. Going from 10 sales a year to 700+ sales a year is no easy job. A lot of what I have done isn’t in “tricks and techniques”, most of it is being disciplined, practical, and always make moves with the intention of making future obstacles easier. I can summarize it in three simple rules. These are the rules I live by to give Tonetuga the best chance of success long term.

Rule 1. Show up – Keep to a schedule. No one is going to push you, except you. It truly is all on you to make it happen

Day #1, I told myself that the hours between X and Y are business, every day. Whether it is Circuit Design, Fabrication, R&D or Content Creation. I might not always be able to check everything off the list, but I at least commit that time to the task at hand, every day. The longer you commit to that mindset, the easier it is to maintain a schedule. As much as I think the “Rise and Grind” mentality is cringy, it does get some things right. Never give the discipline a chance to slip, and when growth happens you will already have the discipline to tackle it.

Put yourself out there. Regardless of how you feel. Regardless of if you want to or not. That show where you’re going to be out till 4am, that shop that is a 3-hour drive away, that phone call that you don’t want to make. In the music business all of the opportunities take place after the sun goes down. The opportunities don’t come to you willingly. You need to show up to even have a chance at getting one.

Follow local talent, make friends with venue staff and media, anything that makes it easier to get in the room where opportunity might present itself.

Rule 2. Go through the doors that open

I look at opportunities like planting trees. If you only plant one seed it might grow into a beautiful tree and it might bear fruit, but it will only be the one tree. If you plant hundreds of seeds, some will get never grow, some will grow halfway and then die, but the majority will eventually bear fruit.

Remember that the music business is incredibly saturated. It was important that I get Tonetuga out in the public eye. People needed to see my gear at live shows, streaming, social media, YouTube, to get comfortable with the brand. It doesn’t matter where I go, I always bring product with me and give it away before I came home. Artists, Roadies, Event Staff, it doesn’t matter, I put product in the hands of anyone who I think might use it. Maybe the seed grows and maybe it doesn’t, but seeds don’t grow unless you plant them.

The majority of players in the game are not willing to take that risk. To take the short-term loss in exchange for potential future gain. Don’t get me wrong, the financial hit is not fun at all, and I don’t recommend everyone take this approach. But the Music Business is saturated, but in a relatively short about of time Tonetuga has grown significantly faster than it otherwise would have without taking the up-front risks. After all, who knows where that pedal will end up? Maybe the artist you give it to ends up making a name for themselves, maybe it gets you into the right room, and maybe it disappears never to be seen again, but I kept planting seeds.

Rule 3. Resources/Risks Ratio: Be conservative with resources and liberal with risks

This might seem counterintuitive to Rule #2, but hang in there with me. Being conservative with resources speaks to the broke college kid that still lives inside of me. When you’re broke and someone hands you $500, the immediate urge is to spend it. You get a little taste of success and it turns you crazy. This rule means you buy the essentials and anything that is leftover goes back into the business. More materials, more tools, more automation and streamlining. Every time you do this you are building all of the tools needed to scale up. When that big order comes in, or you need to turnaround a project quickly, you’ll be grateful that you invested in better tools and more inventory.

Being liberal with risks is an entirely different story, because the budget is not bottomless. Earlier, I said I hand out free product anywhere I think there might be an opportunity. But you still need to identify a good opportunity. Is getting backstage going to get you anything other than an Ego boost? Is that music shop a strategic partner, and are they worth giving an extra 5-10% off to get your foot in the door? I am all for risks, but they need to be calculated, because at the end of the day they are risks.

Scaling up is the fun part, but as long as you keep consistent on a few main principles, it will all happen in time.

Michael, How did you came up with the idea to start your business?

I come from a family of entrepreneurs. Even though it was never strictly spoken, it was always assumed that you’d at least try to strike it out on your own. So when I started college in 2008 and I was short on cash for textbooks I had to get creative.

I previously had a summer job doing grunt work in a local panel shop, just to scratch enough pocket money together to survive the school year. Following wiring diagrams and the basics of electronics was a skill I never really knew I had until one of my personal guitar pedals broke and I brought it into the shop to ask my coworkers how I would go about fixing it. They cracked it open, replaced a busted switch and just like that I was hooked and I saw the opportunity.

I would go on Craigslist and look for local guitar gear that was listed as Broken or Non-Functioning, haggle the owner down as low as I could, fix it up at home, and flip it online for a profit. I wasn’t making a ton of cash but It was enough to pay for my text books. But instead of going to the engineering college I decided to go into Business.

5 years later I was making some of my own mods and designs and had gained a little local following. In December of 2017 I decided to start branding all of my product with the name Tonetuga FX. A play on the word Tortuga (tortoise), I decided I didn’t need to go into business strictly for profit, I could use the skill to generate some good as well. Since day one, a percentage of all my annual profits have gone towards various Sea Turtle conservation efforts.

To my surprise, I wasn’t the only one who admired doing good just for the sake of doing good. The message resonated with my customers and over time I elaborated the idea, adopting 100% naturally biodegradable packaging, merchandise made from 80+% recycled plastics, and even “adopting” a handful of my very own sea turtles.

To be 100% honest, the most rewarding part is knowing the effort is pressuring other companies to adopt their own “green” initiatives. I like to think that eventually we will all demand more positive action from the brands we support to create a greener tomorrow for everyone.

Can you open up about how you funded your business?

Everyone in the finance world preaches “diversification”. Diversify your portfolio, diversify your friend circle, diversify as much as possible in an effort to limit your exposure to any one negative event. But with that in mind, only 5% of Americans have more than one source of income.

The initial intention of Tonetuga was to not only chase my dream, but to diversify my income as well. In the event of job loss, relocation, or even some global catastrophe like COVID, I wanted to insulate myself against being caught with no source of regular income. So I run the two in parallel, I have my primary gig and I have my failsafe gig. You can guess which one gets the bulk of my attention.

It is a tremendous amount of work, but, a secondary source of income has drastically changed my financial position. And during COVID lockdowns I had a failsafe that had already proven profitable years before I really needed it to be. I am thankful that I started as early as I did because the momentum kept the engine moving the entirety of 2020 and 2021.

In terms of funding, By 2015-2016 I was already burying every spare penny I had into better tools, research, and raw materials to feed my guitar pedal obsession. It took a few years, but Tonetuga is now fully self funded.

We’d love to hear a story of resilience from your journey.

In the industry there is really one primary way of branding your products. That is with UV printing, previously I would have to outsource all of my printing and unless you operate at a very large volume the process in expensive. So I decided fairly early on that I would save up to buy my own UV printer, a very expensive piece of equipment that had more secondary upsides to me. For one, I would be able to do my own in house printing. For two, I would be able to offer my services to other companies to help pay down the machine.

The day came, I got my printer, went to turn it on, and nothing happened. Its worth noting that this thing came from overseas, very little manufacturer support, and all of the programming and instructions needed were all in languages that I did not know. On top of needing to plot the artwork correctly, all of these other elements needed to work out as well. Well, I was totally stuck. I had sunk a significant portion of my operating capital into what was now essentially a door stop. That is the only time I ever seriously considered quitting.

I decided that I had nothing to lose and no warranty to void, so I disassembled the entire thing. 20 hours and several impolite sentences later I discovered a switch that was locked in the closed position because of a fault near the ink pump. I reassembled the entire machine, took a deep breath, and turned it on for the first time. In my life, I do not think I ever let out a more relieved sigh. I was back in business and had just learned how to service this machine all by myself. I did end up with a few washers and screws that never found their way back inside the machine, but that’s a problem for another day.

When all else fails, get out your screwdriver and figure it out yourself.

Contact Info:

• Website: www.tonetugafx.com
• Instagram: https://www.instagram.com/tonetugafx/
• Twitter: https://twitter.com/tonetugafx

Image Credits
Casino Guitars No Villains Left The Jonathan Robinson Trio Sean Alan and The Violet Exploit Skylar Simmons Photography