A Titan Of The Tech Industry Who Called Milwaukee Home

It is not too often that the death of a Milwaukee citizen makes national news, but John C. Koss deserves every ounce of ink spilled about him. Koss and a friend invented stereo headphones, revolutionizing the way we listen to music. Milwaukeeans know him for his charitable work, and the humorous billboards the Koss company put up around town. What many people may not know is how he stepped up and led his company through the Chapter 11 bankruptcy process

According to his obituary in the New York Times, “Koss and his friend Martin Lange Jr., an engineer, developed a portable stereo phonograph in 1958 that they called a ‘private listening station.’ It had a turntable, speakers, and a privacy switch that let users plug headphones into a jack. But most of the headphones available, like those used by telephone operators, shortwave radio users, and pilots, were incompatible and not stereophonic. So they rigged up cardboard cups that contained three-inch speakers and chamois pads from a flight helmet, and they attached them to a headband made of a bent clothes hanger covered with a rubber shower hose.” 

The private listening station didn’t take off, but Koss headphones became the industry standard. They were even used by the members of the House Judiciary Committee for listening to the White House tapes during President Richard M. Nixon’s impeachment inquiry. 

In the 1980s, Koss brought in a professional manager to help grow the company. The manager diversified the product line and moved production offshore, but instead of growing, things fell apart. The professional manager left after his five-year contract was up, and Koss retook the reins. Eventually, the company had to file for Chapter 11 bankruptcy. 

In a 1988 interview with Inc. magazine, Koss said about his company’s bankruptcy, “I felt awful … My board had agreed, my family had agreed, but I was the guy who had to sign the papers. I just walked around in a daze, angry at myself.”

Two years later, in a follow-up interview, he elaborated a bit more on how bankruptcy impacted him.

INC.: Does it cost you anything in your head, your heart, or your gut to file bankruptcy?

KOSS: It costs a lot. The guy who starts the business never thinks it’s going to fail. That is why most bankruptcies are too little, too late. People wait too long, thinking something will happen at the last minute. Somebody has to be objective for you in your organization. If you are an entrepreneur, that person has to tell you, We’ve got to stop here, or there will be nothing left. I don’t think the fellows in Chicago who became our lead bank realized that they weren’t dealing with a man and a business; they were dealing with a man and his life’s work — not only my life’s work but my wife’s and the five kids’. What were we going to do, take something we had spent all our lives developing and just throw it away? Or were we going to fix it? It was never a question of whether we were going to turn it around, just when.

INC.: So it was more than a business issue for you?

KOSS: Yes, it was the family, the lifestyle, the whole thing. It wasn’t just deciding with your wife that, gee, the business has come to the end, so we’ll let it go and do something else. This was an exciting life’s work…. Signing those Chapter 11 papers was hard — especially because of my age. I’m from a generation where you never did that.

INC.: How did you reconcile this bias you had against bankruptcy in light of having to file for one yourself?

KOSS: I talked to a lot of people, including some friends who had gone through it. One friend gave me very good advice. He said: “When you do this, you’ll want to hole up at home. You won’t want to talk to anybody or see people. You’re going to feel like a beaten animal. Don’t do any of that,” he warned me. He said it would eat me up from the inside, and I’d die from it.

…The first night I stayed in and sat with my wife. It was on the television, and of course, I had called a few friends to let them know it was coming. The next day, though, I went charging into the office with a very positive attitude because we were going to get through this thing. We were sharing information about what was going on with our employees and everybody else.

Another friend told me that there’s another reason that you don’t go into hiding. The reason is that a lot of people out there want to help you.

INC.: Is failure — to the extent that bankruptcy is seen as failure — a culturally acceptable event?

KOSS: Failure is when you join the turf club. Anything else is an experience that didn’t work out too well. Bankruptcy is a tool. If you try your best and you’re an ethical and honest businessman and circumstances work against you, the tool is there to give you a chance to start over. We started over, and my God, look at all the jobs and the families we saved.

This is a refreshingly honest look at how difficult it is to file for business bankruptcy when your business is very much an extension of yourself. But as Koss said, sometimes circumstances work against you, and you need to use the tools available to turn things around. Bankruptcy is that tool, and using it is nothing to be ashamed of. 

Rest in peace, Mr. Koss. Thank you for everything you did for Milwaukee, and the music you brought to the world. Contact our team today.