For audiophiles, the path to paradise leads to an unmarked, graffiti-stained door in Sunset Park, Brooklyn. Walking through it feels like stepping back in time to some sepia-toned factory floor: the smell of soldering irons, the dut-dut-dut of an antique injection molding machine, the polyglot team of artisans tinkering away.

This is Grado Labs, a third-generation family business that has quietly built a global reputation for handcrafting headphones out of everything from powder-coated aluminum to mahogany. Despite not advertising, Grado has had famous fans across the musical spectrum, like Neil Young and Thelonious Monk. One professional reviewer described the experience of using Grado headphones as “sonic bliss.” Another claimed that, when listening to an orchestral recording of Mahler, he could actually hear the string players “breathing in time” with the conductor. “What we push is sound,” says John Grado, the owner and chief executive.

The Grados trace their business’s roots to 1918, when the family bought a ramshackle four-story townhouse after emigrating from Sicily. First they ran a fruit shop out of the ground floor. Then one of the sons, Joseph Grado, a watchmaker by training, began building phonograph cartridges on his kitchen table in his free time. The side business grew fast, in step with the market for LP records, and in 1953, the fruit store became an audio factory specializing in not just cartridges but eventually tonearms to hold them and even full turntables.

You might say that John, Joseph’s nephew, learned the business from the ground up: He got his start sweeping the factory floors. He fell in love with the work, and, when LPs collapsed in the ’90s, made a big bet on headphones. “Back then, headphones were considered second-class citizens. Everyone listened to speakers,” John says. “We saw students with laptops, how they would need headphones, but we never envisioned iPods or smartphones.”

As the market has ballooned, so has the competition. For John, the only way to stay ahead is to be unrelenting about quality. “People try to copy our look, but they can’t figure out the sound. They think headphones are simple—a housing, a speaker, and a wire. But we think of ourselves as chefs. We add that bit of salt, that twist, to make it more than the sum of its parts.”

Rather than being built with the snapped-together, machine assembly process used to make other high-end headphones, Grados are built primarily by hand and fused tight with special glues and bonding agents that John painstakingly tests to make sure they don’t hurt the sound quality. He is fanatical about prototyping, always rechecking new models against the same three tracks. One of them, from Eric Clapton’s Unplugged album, begins with a round of applause. “With some headphones, that moment sounds like one giant clap,” he says. “I’m not happy until I’m able to hear each person clapping.”

The SR325e, the latest in Grado’s mid-priced “Prestige Series,” exhibits all the company’s design gifts. The look is straight out of a 1960s recording studio: powder-coated-aluminum housing, a thick black leather head strap, and soft open-air foam earpads. The headphones are weighty by design, to smooth out the transitions between sound frequencies.

John is now preparing his sons, Jonathan and Matthew, to take the business into a new generation. The younger Grados, both in their 20s, have already made their mark by introducing a slick new brand identity and inking collaborations with such companies as Dolce & Gabbana. Soon, Grado will introduce its first Bluetooth-equipped speakers.

As his business has grown—Grado now ships more than 150,000 units a year—John has received the occasional acquisition offer. But he says he’d rather close his business than see it fall into the wrong hands: “I often said if the boys weren’t interested, we’d ride off into the sunset. That’s better than having someone else make a shoddy product under our name.”

Grado Labs outlines the steps behind the SR325e headphone.

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