Jim Hinshaw
Contributing Writer
Improvement Professional, President & Sales
Growing up, a shoe polish that was in every household was Shinola. They owned the market back in the day. Then people stopped shining their shoes, suede came into vogue, whatever, we just did not see much from Shinola. Tom Kartsotis did see something in that brand, however. He had a career growing Fossil watches into a $2 billion/year company, which he still owns 12.5{938cd9e8dae860e800efc538277d4f7684e6f6981618ba70d1c34357a53c2e1f} of. Started with a stake of $200,000 importing watches from Asia, but I digress. Here is the important story.
2010, he has just stepped down from chairman of Fossil, not sure what next step would be. He is on a vacation trip to Williams, AZ, stopped by the Flintstones theme park called Bedrock City. Tom, since he was a kid, was fascinated with the Flintstones, wanted to visit the park. It was rundown, he actually considered buying the park, converting it into a sustainable living model, helping to support Native American communities all around it. As he was leaving, a friend mentioned that if he wanted to make a difference today, he should go to Detroit.
So a few weeks later he is in Detroit, where he connected with Don Nelson, former NBA coach, and Dan Gilbert, owner of the Cleveland Cavaliers, and co-founder of Quicken Loans. He had pumped more than $2 billion dollars into dozens of properties in downtown Detroit. Gilbert became an investor in Bedrock, Tom’s group that he uses to invest in business he feels have long-term potential. Here is a couple of guys who are wealthy, buying businesses and building manufacturing plants, and don’t need government subsidies to get it done.
Tom’s first idea was what he did with Fossil, produce high end watches for a couple of luxury brands, maybe employ 100 people in a factory in Detroit. It dawned on him that Detroit was a brand, one that had lost some traction since the automobile production days. One early study that was done showed a key element, would people pay $10 for a US made pen and $15 for one made in Detroit? The study showed that folks would pay a Detroit premium. Tom went on to buy the Shinola shoe polish name for $1 million in 2010, started selling Shinola watches in 2013.
He is creative in how he put this all together, the Argonaut movement name came from the Argonaut research lab where the automatic transmission and heart lung machine were created. He uses his employees in ads, customers can watch dial makers working through plated glass in the retail stores, they feature products from other Detroit craftsman, all bringing a small boutique feel to the items for sale.
Kartsotis talks about a quality supervisor named Bibb, 32 years old who thought she would never do more than basic janitorial work. Tom claims that she and others like her are the main reason he is doing what he is doing, growing the Detroit brand. His idea to sell high end products, with high quality and often a creative story behind them is also a strategy for creating jobs and careers in Detroit. Take the extension cord for example. His extension cord is beautiful, available in green, beige, or black. 5 receptacles, 2 USB ports, it looks significantly more robust than the ones you find at your local big box store. It also starts at $85, but this one you will put in FRONT of your Christmas tree.
And what else are the Shinola guys up to? Lots, they have jewelry, knives, fine leather belts and purses, and of course, a slew of nifty watches. In fact, they just rolled out a diver’s watch in a limited edition. It is an automatic, only 500 pieces available, called the Lake Erie Monster. Comes in a box with a high intensity flashlight, map of Lake Erie, extra strap, it rocks. Limited to 500 pieces on first run, $2200, sold out first week.
Back to products. They have a separate factory just for high end bikes. Prices range from $1000 to $3000, and they will sell you a pedal wrench for $20. Audio, they make turntables, speakers, headphones, all excellent quality and built to highest quality standards. Leather journals, address books, key fobs, baseball gloves, footballs, baseballs, gloves, even a stunning set of allen wrenches, all color coded! Jackets, scarves, ball point pens, candles, it goes on and on. They are rolling out a hotel in Detroit, complete with a vinyl listening deck.
My point is this. The guy took a concept and ran with it. People will pay more for a story, for an improvement to society. Each watch purchased helps Detroit’s fight for survival. How can we apply this marketing and sales lesson to our business? You don’t have to go far to see a bunch of new watch companies, most are using Kickstarter to fund initial runs of products. They are almost always less than half the price of the Shinola watches. I found it interesting how Tom turned what most people think is a commodity into a unique product with a message. He also has a life-time warranty on the product. Life-time.
We need to work on our offerings in the marketplace. Bundle more features, warranties, guarantees to set ourselves and our products apart from the group of people selling boxes. Put together a story, give back to the community, do something different this year. It will pay dividends.
Full disclosure: For Christmas I gave myself a Shinola Runwell Sport Chrono. Actually used some left over airline miles to get it. I am delighted with how it feels, works and the life-time warranty. Will let you know how it goes in a few years.