The company began as Fender's Radio Service in late 1938 in Fullerton, California, USA. As a qualified electronics technician, Leo Fender had been asked to repair not only radios, but phonograph players, home audio amplifiers, public address systems and musical instrument amplifiers. (At the time, most of these were just variations on a few simple vacuum-tube circuits.) All designs were based on research developed and released to the public domain by Western Electric in the '30s, and used vacuum tubes for amplification. The business also sidelined in carrying records for sale and the rental of self-designed-and-built PA systems. Leo became intrigued by design flaws in current musical instrument amplifiers, and he began custom-building a few amplifiers based on his own designs or modifications to designs.
By the early 1940s, he had partnered with another local electronics enthusiast named Clayton Orr "Doc" Kauffman, and together they formed a company named K & F Manufacturing Corp. to design, manufacture and sell electric instruments and amplifiers. Production began in 1945 with Hawaiian lap steel guitars (incorporating a patented pickup) and amplifiers, which were sold as sets. By the end of the year, Fender had become convinced that manufacturing was more profitable than repair, and he decided to concentrate on that business. Kauffman remained unconvinced, however, and they had amicably parted ways by early 1946. At that point Leo renamed the company the Fender Electric Instrument Company. The service shop remained open until 1951, although Leo Fender did not personally supervise it after 1947.
The first big series of amplifiers were built in 1948. These were known as tweed amps, because they were covered in the same kind of cloth used for luggage at the time. These amps varied in output from 3 watts to 75 watts. This period was one of innovation and changes; While Leo made a Tweed Princeton in 1948 for his Professional 8 string Lap Steel guitar [very short lived, as later he would focus on 6 string Student models] later the Princeton would become a push-pull class AB tube amp, in 1948 it was a single ended Class A amplifier similar to the Fender Champ, with the output transformer mounted to the speaker frame and bereft of any negative feedback. Also, in 1964, the Tweed Champ amp would be reissued in black tolex in small numbers along with the newer model with the slant front panel and controls; the stacked plywood boxes Leo used often went uninventoried. In late 1963, he found a couple hundred Tweed Champ chassis boxes in these bins. He had had them chromed and printed in 1958; being frugal, he built them in black tolex with a chrome and black Champ nameplate, as he had money tied up in them already.
Fender moved to Tolex coverings for the brownface amps in 1960, with the exception of the Champ which kept its tweed until 1964. Fender also began using Oxford, Utah and CTS speakers interchangeably with the Jensens; generally the speaker that could be supplied most economically would be used. Jensens and Oxfords remained the most common during this period. By 1963 Fender amplifiers had a black Tolex covering, silver grille cloth, and black forward-facing control panel. The tremolo was changed to a simpler circuit based on an optical coupler and requiring only one tube. The amps still spanned the spectrum from 4 watts to 85, but the difference in volume was larger, due to the improved, clean tone of the 85w Twin.
Fender owed its early success not only to its founder and talented associates such as musician/product engineer Freddie Tavares but also to the efforts of sales chief, senior partner and marketing genius Don Randall. According to The Stratocaster Chronicles (a book by Tom Wheeler; Hal Leonard Pub., Milwaukee, WI; 2004, p. 108), Mr. Randall assembled what Mr. Fender's original partner Doc Kauffman called “a sales distributorship like nobody had ever seen in the world.” Randall worked closely with the immensely talented photographer/designer Bob Perine. Their catalogs and ads — such as the inspired "You Won't Part With Yours Either" campaign, which portrayed people surfing, skiing, skydiving, and climbing into jet planes, all while holding Jazzmasters and Stratocasters — elevated once-staid guitar merchandising to an art form. In Fender guitar literature of the 1960s, attractive, guitar-toting teenagers were posed with surfboards and Perine's classic Thunderbird convertible at local beachside settings, firmly integrating Fender into the surfin’/hot rod/sports car culture of Southern California celebrated by the Beach Boys, beach movies, and surf music. (The Stratocaster Chronicles, by Tom Wheeler; Hal Leonard Pub., Milwaukee, WI; 2004, p. 108).