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Guitarist–meets-businessman-meets-pedal-wizard Mike Matthews’ company Electro-Harmonix is, undisputedly, one of the earliest pioneers of guitar pedals – converting the likes of Jimi Hendrix, Carlos Santana, and Jimmy Page – into loyal fans. However, the company has faced its fair share of hardships and pivots to survive – and thrive – in 2026.
The ’70s were a particularly fruitful period for the company. After starting with just $1,000, a scrappy attitude, and a knack for innovation in 1968, EHX was grossing $5 million annually by 1978 and had offices in New York, Toronto, London, and Tokyo.
However, great success and great hardship can go hand in hand.
After a series of business decisions – coupled with an aggressive campaign by a trade union in New York that targeted EHX’s 200-something employees – caused one of the company’s potential lenders to pull its funds, Matthews was forced to file for bankruptcy. Even more heartbreaking, he had to sell the Electro-Harmonix trademark.
“I went bankrupt in ’82. I still tried to hang in there,” he recounts in an interview on The Zak Kuhn Show.
“Finally, the doors were shut. We brought in the generator to just keep the power on. I had loyal people that worked with me. But finally, in ’84, I was completely bankrupt, and it was very devastating, depressing.”
Matthews was forced to do a complete 180. His new plan and target market? The Soviet Union.
“I got involved with vacuum tubes because I was going to the Ministry of Electronics. Everything in Russia was centrally controlled,” he explains.
“In the ’70s, [I] was doing some business with communist countries, like with Hungary, which was communist-controlled. They came to my booth in Frankfurt and wanted to order about $1,000 worth of pedals. They picked out some stuff. I went back to them. I said, ‘Look, instead of ordering this and this and this, order this, because they'll sell better.’ And they said, ‘Okay, we'll take your advice.’”
“So the next year they came back and gave me a $2,000 order, and they said, ‘Mike, you pick out what we should buy.’”
Eventually, Matthews built enough rapport with the Eastern Bloc to secure an invitation to exhibit at the first consumer trade show open to Western countries.
“I jumped on it, and I got carried away. I took a whole band, and I took a guy to set things up… we would go on three times a day.”
This first introduction to the Soviet Union led Matthews down a path that would not only save the company but also secure its future – all under his new brand name, Sovtek.
“I got involved with the vacuum tubes. When we were in Russia, everybody wanted to buy our stuff, but they had no money. So I started thinking, well, ‘What can I buy from Russia, so they'll have money?’”
He continues, “At first, I was thinking of integrated circuits… so I went over to the Ministry of Electronics there… I saw, hanging on the wall, vacuum tubes. That's how I got into vacuum tubes.”
As the Cold War came to an end and the Soviet Union collapsed, another phenomenon was brewing in the guitar world.
“In the ’70s, we built tens of thousands of different pedals… the thing that puzzled me was that pedals that were built in the ’70s were selling for more than what they used to sell for when we had built thousands,” Matthews adds.
“This new vintage market developed, and so initially I started making them [the pedals] in Russia, because Russia collapsed, and they were desperately looking for work to survive.
“I hooked up with a very small military factory in St. Petersburg. They started making these pedals. That's how they came out with the first Electro-Harmonix pedals made in Russia.”
This Russian side quest eventually led to a full EHX comeback – and Matthews even managed to get the trademark back and restart Stateside operations.
The EHX founder's business learnings continue to guide him to this day – right down to his favorite pedal. “[It's] whatever sells, because I mean, it's a business. If I'm not focusing on business, I can't make more money, and if I can't make more money, I can't get more designers to design more products, especially in digital.”
In an exclusive Guitar World interview, Matthews looked back on the brand’s groundbreaking Hall of Science – a veritable candy store for audio pioneers that predated the likes of the Gibson Garage and Fender flagship stores by decades.
