Marketing Budgets

Sorry I have not been writing much.  My head is a bit out of it all with the new baby.  If there are any topics you would be interested to hear my take on, feel free to suggest in the comments – a jumping off point might help me.

That is exactly what I got when Fred Wilson blogged yesterday about marketing budgets for venture stage tech companies.  If you have a moment, you should read his post and some of the comments.  I found it particularly relevant to the watch industry, where marketing budgets are sky high.  Here is the comment that I left, reproduced below:

I could’t agree more, Fred.

My current business, high-end mechanical watches, is dominated by marketing budgets. The big brands fill the ad space of every magazine you can pick up on the rack, and little guys pop up every day with millions of dollars who want to start their own brand – their first step is always a huge marketing budget.

Coming from a background in tech, I had never seen anything like this. My company is structured a lot like a tech startup. We have (comparatively) no money, but we have ideas. We believe that if we make the best products, tell an interesting story, and work hard to tell it to the right people, good things will happen.

The results have been tremendous. I, the President here, and our CEO in Switzerland do all of the PR ourselves. We create personal relationships with the journalists and clients and therefore have full control. We administer our social media accounts and connect for free wherever possible (have ~9000 fans on facebook and make 150 watches/year!) We can launch a new product on an hour’s notice and are widely admired in the industry for having some of the most covered, most talked about product releases.

Precisely the fact that we do not spend money and instead fully exploit free resources and our skills is perhaps the single biggest factor that has let us reach the top of our field. The drawbacks are that it is incredibly time consuming, and you need to find people with unique and broad skill sets (being capable of successfully communicating is, unfortunately, not as common a skill as it should be, and often comes without other necessary skills for running a business).

Thanks for the thought-bait. I could go on this one for a long time.

Best,
Steve

 

The comment itself even turned in to a bit of marketing, although it was completely unintentional.

A Personal Update

As I wrote earlier, I took a leave from the blog for a few weeks while I finished up the year and got ready for the birth of my first child.  I am happy to announce that he was born on 1/12, a big, healthy baby boy named Everest.

Of course, the timing was a bit difficult as I had to leave three days later for Geneva.  So here I sit, taking meetings all week.  I hope to have lots of time to blog when I get back.  TickTocking has been a very rewarding project for me and I cannot wait to get back to it.

In the coming day or two I hope to write a post or two on what this week in Geneva during SIHH is like.

So consider this my comeback post.  I’ll be back soon with some good stuff.

Partnerships

Max and I are featured in the latest issue of Worth Magazine.  The article is on the importance and difficulty of successful partnerships, a PDF can be found here:

Worth Magazine

This topic seems particularly relevant to MB&F and to my view of business.  Of course, the &F are the Friends.  The entire company was structured around the importance of working closely with people.  Personally, I have always believed that people are the most important part of any enterprise.  You can have a great idea, tons of funding, and every other advantage, but if you don’t have the right team it is not going to be successful.

As cool as it is to be involved with the fantastic, cool watches that we have made over the last few years, by far the most pleasurable part of working with MB&F is the team.  They are very small (only 7 people incl 2 watchmakers) and everyone is supremely competent.  We develop plans and execute them at the every step along the chain.  While the amazing designs and creative ideas get most of the press, I have no doubt that this is truly the biggest advantage MB&F has.  It makes my job a pleasure.

My guess is that those of you reading this who enjoy your job probably work with similar teams.  Great people make great companies.

Paxman meets Hitchens

Nothing watch related here, just a fantastic interview that I watched last night.  While I don’t always agree with Christopher Hitchens, he is undoubtedly one of the most interesting and brilliant thinkers/writers/speakers of our time.  To be able to hear from someone like that as they stare death in the face is particularly powerful and, I think, important.

Enjoy!

Never Forget Where You Come From

This is a copy of a post that I made yesterday on PuristSPro.

On Monday, we had the pleasure of announcing The Chocolate Frog, a special edition of 10 watches we are making to celebrate the 10th Anniversary of ThePuristS and PuristSPro. This collaboration is of particular significance for me and is something I have been working towards since the day I started with MB&F.

I am a Purist. In 2004, when I moved to Los Angeles, I was a budding watch collector – just starting to travel down the rabbit hole of information available on the internet. A young Contemporary Art fan in casual LA, once I became aware of the world of Independent, “Contemporary Horology,” I was hooked. There simply was (and there still is) no better source for information on the planet than ThePuristS.

I started going to the Los Angeles get-togethers and quickly made friends with the tight group of LA PuristS. The founder, Thomas Mao, welcomed me with open arms even though my horological knowledge was mediocre, my watch was not overly impressive, and I was probably 10 years younger than anyone else there. It was the combination of the community and the information that got me really hooked on watches. From there, I learned as much as I possibly could about every watch, every brand and everyone involved – never missing a PuristS event or a chance to learn more. I even met Max Busser, the founder of MB&F, at a PuristS dinner before the launch of HM1 and again to launch the brand and HM1.

First Time I Saw a Horological Machine - PuristS dinner 2006

Of course, at the time I had no intention of ever working in the watch industry. I just loved watches, loved the work these creative Independents were doing, and loved ThePuristS for providing me with an incredible resource to sink into. After I moved on from my last business I decided to take some time off and focus on my passions. This allowed me to get even more involved with watches. I started the TimeOut forum and was both a general moderator and TO moderator. I also joined ThePuristS Executive Staff to help with the transition to PuristSPro. It was in that capacity that I got closer with Max Busser, who I had met earlier and stayed in touch with. The rest is history. Two and a half years later, MB&F has clearly cemented its spot as one of the leaders in the genre, tremendously raised visibility even outside of the niche watch collecting world, and even recently won the Grand Prix d’Horlogerie!

So, amazingly, the PuristS literally changed my life. I have learned an incredible amount (not only about watches!), met wonderful people, and had great adventures. The first thing I did when I joined MB&F was to get the ball rolling on a special piece for ThePuristS. Two years later, we have found a perfect opportunity. This is not just a limited edition for me, but a very personal statement of gratitude. Thank you Thomas and the rest of the team. Without you, brands like MB&F would most likely not be able to exist, and I certainly would not be here writing this.

I hope you guys like the piece. I have to say, I really want one for myself, so I won’t be too disappointed if they only sell 9 ;)

I can’t wait to meet all the new owners and those of you who I have not yet met next year in Las Vegas at IGOTT2!

Sincerely,

Steve Hallock

President
MB&F North America

Grand Prix d’Horlogerie: Results and Analysis

I am happy to report that both of my picks ended up being correct.  Congratulations to Van Cleef for Best Ladies’ Watch and of course, we took home the Design and Concept Watch prize for our HM4 Thunderbolt.  I know Max and the whole team are very excited, and they truly earned it.  All of the other winners were very well-chosen.  It’s great to see the judges actually choose the most deserving watches.

And that is why, if I were any of titans of the Swiss watch industry, I would be scared.  Look at the winner list:

  • Golden Hand: Greubel Forsey (independent)
  • Ladies Watch: Van Cleef and Arpels
  • Men’s Watch: Laurent Ferrier (independent)
  • Design and Concept Watch: MB&F (independent)
  • Jewelry Watch: Chopard
  • Complicated Watch: FP Journe (independent)
  • Sports Watch: Seiko (Japanese)
  • The Small Hand (cheaper watch): Tag Heuer
  • Special Jury Prize: AHCI (Academy of Independents)
  • Public Prize: Vacheron

Anything stick out there?  It has been clear to many people following the industry that the independents have really been the ones making interesting products for quite some time.  To see it play out so dramatically in such high profile awards *should* be the wakeup call that some of these companies need.

More likely, they will shrug it off and continue business as usual.  Can you imagine another industry where the main companies would get completely swept at the most major awards ceremony and no one would take notice?

Don’t get me wrong, I am incredibly excited that independents are finally beginning to get recognized.  At the same time, it is a bit frustrating that these big brands, with all of their history and resources aren’t bringing their A-games.  I would love to see the watches that could be created if everyone were focused on making incredible products.

Congrats to all the winners and the nominees.  Here’s my parting shot with the prize winner..

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Bloggers vs. “Journalists”

Over the weekend, a very interesting discussion broke out on The Watch Lounge.  I encourage everyone to read the post and the comments there, they are from some of the biggest players in the watch media.  I wrote a comment, but wanted to expand a bit here.

There are a few issues at play.  In my comment, I address the Bloggers vs. Journalists question.  This reminds me a bit of our parents saying Rap music isn’t music, or their parents saying Rock music wasn’t music.  Of course bloggers are journalists.  If you are such a contrarian that this does not seem obvious to you, just look at all the “journalists” starting blogs and all the bloggers writing for mainstream outlets.  Or if you really need more proof, go over to Columbia University and find Ben Clymer of Hodinkee in his Graduate Journalism program.  He will not magically become a journalist when he is finished; he is a journalist now.  He will simply be a better journalist.  A journalist is not a doctor.  They are not defined by a degree or by years of experience.  They are defined by their commitment to the subject matter, their readers, and quality of their work.

Now that we can remove the distinction between bloggers and journalists, we can start making generalized statements.  For example: most journalists suck.  If this were only confined to the watch industry, we would be living in a much better society.  Unfortunately, it holds true all the way to the top of the profession.  Don’t get me wrong, there are some absolutely fantastic journalists.  We all have our favorites, whether it be watches, gadgets, sports, or politics.  Making a distinction between bloggers and journalists that is to imply poor quality to high quality is a dirty trick of false association.

On the point that brands should somehow subsidize and encourage the development of bloggers as writers, I think to even imply such a thing is doing bloggers a disservice.  It is no one’s responsibility but a journalist’s own to make sure he has the tools and abilities necessary to create good content.  There is, however, a very fair criticism that brands should provide better information to all media.  I have written many times before on the misinformation often presented by the brands.  One cannot expect a well-informed media if they are only being fed propaganda.

Lastly, on “journalistic integrity”, I have written about that some as well.  All journalists have a major risk of bias, especially in this environment and especially in this industry.  The watch industry are huge ad buyers across all verticals.  Watch media are almost entirely supported by watch brands.  Whether a blog or a magazine, the fact is that the brands are paying for the content and thus, conflicts are inevitable.

Thanks Tom, for bringing up a great discussion.  Thanks to everyone else for commenting.  I could go on seemingly forever, but I’ll leave it here to be picked up another day.

Retailer Week: Manfredi

When I came on board with Max, clearly we needed to open a few more retailers.  The challenge was that we had no connections at most of the stores.  Luckily, I have no shame whatsoever in cold calling or showing up somewhere unannounced.  I would never pressure anyone to become a dealer, either they get it or they don’t, but it was important for me, in the beginning, to at least be acquainted with all of the right players so that they could make their own decisions.

Manfredi is located in Greenwich, CT on the main street of stores.  Greenwich is like a small town, and Manfredi feels like a neighborhood jewelry shop.  It just so happens that the neighborhood is one of the wealthiest in the world, and the store has some of the most spectacular brands and inventory in the country.  The owner, Roberto, has as good a reputation as you will find in this business.  He does what he says when he says 100% of the time – never overextending himself so that he can always follow through on his commitments.  That is a philosophy both Max and I share, so this seemed like a perfect fit.

Before the Geneva show one year, I cold called the store.  I spoke to Roberto who was familiar with MB&F and told me he would let me know if he had time to stop by our suite.  Sure enough, a few days later he called back and made an appointment.  Then he showed up on time for his appointment.  Eventually, after meeting us a few times and feeling comfortable with the brand, he placed an order.  This may all sound simple, but I cannot tell you how often this is not the case.  So many people never call back, miss appointments, keep things hanging.  Or on the other end, we have dealers that we know have no business carrying MB&F who rush in and want to place an order without thinking it through.  Luckily we are not looking to make a quick buck, so we turn them down, otherwise that is how you get too much product out and pieces all over the secondary market.

In any case, here was a guy who was reliable, fully thought through his involvement, committed only after he was sure that we would have a mutually beneficial relationship.  How could we not love it?!  We shipped our initial order there earlier this year – our first representation on the East Coast.  Well worth a short trip from anywhere in the area.

So that’s it for Retailer Week.  I hope it was interesting to hear about how these retail partnerships are formed and what the selection process is like.  In the end, it is all about the people.  Some brands will open any store that will place an order and pay for it.  For us, we want to be in the right places, with the right people who we know will represent the brand properly and can sell a reasonable amount of Machines consistently.  If you start selling to stores that can sell their first few pieces easily but have to majorly struggle and discount to sell any more, it is not beneficial to anyone and kills the brand in the long run.  Again, thanks to Max, I am able to always stay patient, focus on the longterm health of MB&F, and not chase money.  I believe that is one of the most important reasons you will see MB&F as a major player long into the future.

Retailer Week: Lussori

Last year I received an invitation from Lussori to join them in their store during the Pebble Beach car shows.  Generally I turn down offers to appear at stores other than our Authorized Dealers, but this was too good an opportunity to miss.  Their store was on the main street in Carmel – an obvious destination for the biggest gathering of high end car collectors in the country.  That being said, I went in not knowing what to expect.

At the time, I had only two other dealers, Westime in Los Angeles and Berger in Mexico City.  I had no intention of opening another dealer in California, but I went into it with an open mind.  At the very least, it was a great opportunity to show some of our pieces to potential collectors.

I made my first sale within ten minutes of walking in the door – before the store opened.  How?  The owner, Lawrence Kosick saw the Rose Gold and Ceramic HM2-CR that I had with me and it was love at first sight.  From then on, the next couple days were a pleasure.  I got to meet great collectors and the staff at the store could not have been nicer and more accommodating.  Before I left, they asked to place an order and become a dealer.

Lawrence with his HM2-CR on his wrist along with Max and Me

Now I had a dilemma.  Do I open my second dealer in the country, both in California?  It makes no sense.  On the other hand, I like the people involved and I like what they are doing.

Lawrence was an early employee at one of the big Silicon Valley companies.  A watch lover, he decided to open a watch store after he left.  They also have developed CRM software for luxury companies and are at the forefront of online retailing.  While the store was initially in Carmel, the plans were always to move to Silicon Valley – they moved to Los Altos earlier this year.

One of the most fundamental characteristics of MB&F is its focus on people.  Luckily, I have the ability to follow that even in my choice of retailers.  And so, I decided to go with my gut and take the order.  Since then, we have enjoyed a nice relationship, even doing a great dinner event with Max over the summer.  While the choice to have two California dealers looked strange for a few months, now that we have someone on the east coast and with all of the interest we have in the tech world, I think the choice to have a store in Silicon Valley makes perfect sense.  For all of you tech guys, go over and check out some of the Machines!!

Retailer Week: Berger

Rewind back to September 2008.  Max and I had just decided to start MB&F North America.  I knew business and I knew watches, but I had zero experience with the watch business.

The organizer of SIAR, the great watch show in Mexico City, had invited Max to visit the Salon.  It was an invitation that Max was going to decline as he did not have the time in his schedule.  But now that I was on board we could do it.  So, within a few days of starting with the company, I found myself in Mexico City, at a major event representing MB&F.  I gave probably thirty interviews to various press in those few days and met everyone there.  It was truly being thrown directly into the fire and I loved it!

Of course the “Godfathers” of the Salon are the Bergers.  Berger Joyeros is the main jewelry and watch store in Mexico City.  Located on the “Rodeo Drive of Mexico”, it is a family business that is nearly 100 years old.  They carry pretty much every brand you can think of including the big guns, Rolex and Patek.  If we were to ever sell in Mexico, Berger was clearly the store for us.

I was introduced to Mauricio Berger first.  While Ari, his son, now runs the store for the most part, Mauricio is always present and really sets the tone for the entire business.  I was a bit nervous.  The only watch I had with me was my Rose Gold HM2.  What was this older gentleman going to think of such a crazy watch?  I showed it to him half expecting him to wince.  Boy was I wrong.  Mauricio took the watch and started running it around and showing everyone there like a little kid with a new toy.  I knew then that I would get along very well with the Berger family.  Within a few months we took an opening order from them and have been working together very well ever since.

Now Ari, and his nephew Eric, are the ones I deal with the most, but Mauricio still gives us huge smiles every time he sees our new watches.  If you ever find yourself in Mexico City and want to see an amazing inventory of watches from every brand, Berger is worth the trip.  They are working on a major addition that will hopefully be ready to open sometime next year.