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.

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

Maximizing for Enjoyment Not Profits

Last week the New York Times featured an article on how we have used our retail strategy to keep us in demand.

Traditionally, business models are optimized for profits.  But that does not have to be the case.  But MB&F is different.  Max has chosen to optimize for creativity and quality of life.  When we make decisions, instead of focusing on how it impacts our financials today, we think how to make the brand strongest in the long run and ENJOY ourselves along the way.  Obviously the watches are incredible, but I think this single fact is what makes MB&F the most special and what Max deserves the most credit for.  It certainly makes it a pleasure to be involved in this adventure.

The goal is to have a company that can remain very small, continue constantly making one amazing product after another, and achieve an awareness and trust level with consumers that the watches more or less sell themselves on their own merits.  This is not to say that we don’t all want to make money, just that it is not the primary driver of our actions.  Not only does that maximize our enjoyment, but it provides the greatest level of value for all of our partners and customers.

As an aside, optimizing anything other than profits is a concept that simply does not register for some people.  Occasionally when explaining this, we just get a blank stare and some sort of cynical statement like, “Cut the b.s.  When are you really going to grow and start pumping out watches?”  I can’t help but think that they are missing the point.

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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Grand Prix d’Horlogerie: Design and Concept Watch

As I mentioned yesterday, the Grand Prix d’Horlogerie will take place tonight in Geneva.  Today I’ll tackle what is almost always the most interesting category, Best Design and Concept Watch.  Again, go here for all of the nominees.

Ok, obviously I am biased.  First of all, MB&F has two watches nominated in the category: HM3 Frog, and HM4 Thunderbolt.  For that reason, I expect that most people will discount my opinion.  However, I have a countering bias.  I have been primarily interested in these Concept type watches for six years and have spent my own money on many of the other brands (I even own an URWERK 202 which is very similar to the 203 nominated).  For those who know me personally, I think it is clear that I work with MB&F because I love what they do rather than loving what they do simply because I work with them.

With that out of the way, I will say that there are two watches that are far ahead of the pack, and no, it is not the two MB&F’s.  I absolutely love the HM3 Frog.  In fact it would probably be my choice out of our entire collection if I wanted to daily wear a watch.  However, at the end of the day it is a variation on a platform we have already shown and therefore I do not believe it deserves the Concept Watch prize.  Same goes for the URWERK 203, Freak Diavolo, and B&R.

No, the clear winner to me should be the MB&F HM4.  In the history of haute horlogerie, no one has ever created a movement or a case like it.  It represents the absolute best in available manufacturing and finishing capabilities and is emblematic of the shift in watches from tools to sculptures.  I happen to know how difficult this project was to execute, both in physically producing all of the parts, and the risk-taking self confidence necessary to put three years and a company representing multiple peoples’ entire professional lives and savings into such a risky product.  It is a result of Max’s complete history in the industry, one that has helped this Concept Watch category matter in the first place.

So who would I choose if I weren’t allowed to pick an MB&F?  Well, I think second place is clear too: Devon Tread 1.  I have seen this watch in person, and it is COOL!  It fits the category perfectly as it is a watch that breaks paradigms.  It is the first watch made in the USA that has ever been nominated for the GPdH.  It uses a combination of electrical motors and mechanical belts and recharges through induction.  The Devon guys should be very proud of what they have created.

Good luck to everyone nominated.  I hope the judges make good decisions.  I’ll report the winners tomorrow.

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.

Selling Online

Well, it’s Tech Tuesday during Retailer Week, so what else could we talk about but selling online?

Clearly MB&F is focused on leveraging the internet as much as possible.  Without the internet, we would never have gotten to where we are.  It is the single biggest factor that allows little guys like us with no money to compete with big brands.  So, it may seem obvious that we should be selling the watches online.  Well, here are some of the reasons we don’t.

The biggest is that people need to see the watches.  There is nothing like an MB&F.  Show me a round watch and give me its dimensions and I will have a pretty good idea of how it looks in person and how it will look on my wrist.  But, if I give you the dimensions of HM4, you still will have absolutely no clue what the piece really looks like.  For a $1580 watch, you might take the risk.  At $158,000, the number of people willing to take that risk is certainly not enough to build a business on.

Also our retailers provide marketing and education.  We are pretty good at getting the word out about our watches given our limited budget, but we are far from well-known.  Most customers who walk into the retail store have never heard of MB&F.  It is, in fact, targeted marketing that is very similar to the internet.  A point-of-sale provides a great opportunity to educate customers who have already signaled an interest in watches and their behavior can be tracked through the store (and sometimes after if they stay in touch with the sales people).

Another great function of retailers is to cut down delivery times.  Here is how our deliveries work:  we take an order from a retailer, provide an estimated delivery date usually between 4-12 weeks depending on the piece, and then get paid by the retailer either shortly before or shortly after we deliver.  This helps us with our cash-flow as we get paid close to production.  For a customer, they can walk into the store, buy the watch from the store’s stock, and go home with it that day.  If we were to sell online, we would either have to produce in advance in anticipation of sales and risk major cash flow issues, or have delivery times of between 4-12 weeks per sale.  I don’t know about you, but when I want a watch, I want it NOW!

Of course there are a lot of other reasons why selling online is difficult with such a product, but those are a few of the big ones.

Tomorrow I’ll be back to profile our Mexican retailer, Berger Joyeros, and give a fun story of my first days with MB&F.