Taylor Guitars was founded on October 15, 1974 by Bob Taylor, Kurt Listug, and Steve Schemmer in Lemon Grove, California. They were in their 20s at the time.
At first, they called the company the Westland Music Company; however, they later settled on Taylor Guitars since Taylor fit better on the headstock of a guitar, and Bob Taylor had the "American-sounding" name and was considered the "real luthier" of the group.
After selling a few prototypes at the workshop, the partners decided to take their wares directly to dealers. In 1976, Listug loaded some guitars into Bob Taylor's van and headed for the music stores in Los Angeles. Surpisingly enough, they actually sold.
Random acceptance, however, did not translate to across-the-board success. Wholesale receipts just barely enabled the luthiers to continue making guitars. Taylor was competing in a market that was oversaturated. Competing brands in their price range included Mossman, Gurian, and LoPrinzi guitars, all of which were at their peaks then (although those competitors have long since faded away into the mists of time).
In 1977, Taylor Guitars linked up with a distributor in the hope of boosting sales. It would prove to be an unproductive move; Taylor's profit per guitar was cut enough that two years later, Taylor left to distribute on their own. They couldn't break in to any new markets, however, so guitars remained unsold and the company began to sink into debt.
At that point, to save the company they realized drastic measures had to be taken; they fired everyone and slowly began to make a profit. They sent Lustig around the country to get distribution deals with shops all over; he returned successful and Taylor slowly but surely developed into the guitar company it is today.
Today, the company employs 335 staffers, and occupies a 143,000-square-foot complex that includes two factory/office buildings, a case factory, a Baby Taylor factory, and additional leased space.
Taylor makes only acoustic and acoustic-electric guitars (and a few acoustic basses). Most of their guitars are not radically different in the ways that, say, Ovation guitars are; they're just beautiful sounding guitars.
A model of note is the Baby Taylor, a travel-sized guitar that is the best travel guitar I've played; common consensus among those who play it is that it's even better-sounding than most full-sized guitars in its price range.
Signature Taylor artists include Leo Kottke; a complete list of players who use Taylors would be a tad too long even for e2; artists of note include Aerosmith, Trey Anastasio, Beck, Blues Traveler, Billy Corgan, The Edge, Madonna, Liz Phair, Prince, R.E.M., Tenacious D, and Steve Vai; 'Civilians' who own Taylors range from Bobby Bonilla to Bill Clinton to Carson Daly.
For more guitar manufacturers and such, see the Everything Guitar Project.
Most of this information is based on Taylor Guitar's history essay and timeline from www.taylorguitars.com.