Adweek recently called Shinola “the coolest brand in America.” The Washington Post has called it an “innovative giant” in “understanding the consumer zeitgeist.” The New York Times says the brand that has “scored a hipster hat trick, unveiling a brand that married ‘Americana,’ ‘locavore’ and ‘small batch’ at the height of the artisanal era.”
All this about a company that makes watches — in Detroit?
Dressed in jeans, work boots and an untucked plaid shirt that looked more Walmart than Filson — a chic heritage brand he owns — the company’s founder looks as if he had spent the morning hanging Sheetrock, writes Alex Williams for the New York Times.
Unlike other CEOs, Shinola’s 56-year-old founder almost never speaks to the news media, and even though he stands out at 6-foot-7, with his surferish mop of gray hair, he has not posed for a press photo, he said, in 30 years. (Just try an Internet search.)
Stepping out before the cameras, the man famous for being publicity-shy (the profile picture he uses for his bio is an image of Fred Flintstone), Tom Kartsotis explains the Shinola mission:
“We’re not a watch company,” Mr. Kartsotis tells the Times. “I did not want to build another watch company. This company really started as a job-creation vehicle.”
Indeed, with revenues of $60 million in 2014, has not only contributed hundreds of jobs to an unlikely Detroit renaissance, but it has also become a handy symbol of it. After buying more than a dozen Shinola watches last year, Bill Clinton said in a speech, “We need more American success stories like Shinola in Detroit.”
Starting with the original nine employees, Shinola (its name was appropriated from a popular prewar shoe polish) now employs more than 500. The company’s signature Runwell watch ($550), which calls to mind a 1940s nautical gauge, can be found in Neiman Marcus, in Colette in Paris, even in the Abu Dhabi airport.
After recent openings in Miami; Dallas; and Palo Alto, Calif., Shinola has a dozen gleaming boutiques scattered around the country, along with one in London, selling American-made watches, bicycles and leather goods marketed as a blend of contemporary sleekness and a timeless Norman Rockwell sturdiness, with a heavy emphasis on its Motor City roots.
Shinola plans to open three more stores beginning this summer, in Dumbo, Brooklyn; the trendy Arts District in Los Angeles; and Chicago. At around 5,000 square feet apiece, the ones in Brooklyn and Los Angeles may be considered minimalls for cool kids.
The Los Angeles location, for instance, will feature a bakery outpost of the Smile, the celebrity-friendly NoHo restaurant owned by a group including Carlos Quirarte, one of downtown Manhattan’s most influential scenemakers, and a Saved Tattoo studio by Scott Campbell, a tattoo artist and fine artist who has inked the likes of Marc Jacobs and Penélope Cruz.
The pricing of some merchandise is a far cry from Detroit’s union-scale roots. The Shinola Runwell bicycle, a no-nonsense city bike, goes for $2,950, the same price as many good carbon-frame road bikes.
But Shinola is selling the idea of lineage: Its lugged-steel frame is manufactured by Waterford, a lauded Wisconsin-based maker of custom bikes (Richard Schwinn is a founder), and designed by Sky Yaeger, who helped turn bikes into fashion items during her years at Bianchi and Swobo.
The marketing is built on the back story, and the back story is that origin counts. “In today’s world, people want to know who’s making their food, where it’s coming from,” Mr. Kartsotis said.
Anyone who has read the fine print, however, knows that Shinola was not started in a garage by a couple of post-grads with Stonewall Jackson beards, but by the mogul who founded Fossil watches as a 24-year-old college dropout and ticket scalper in Dallas, and built it, with his brother, Kosta, into an empire worth more than $1 billion.
Mr. Kartsotis currently runs Bedrock Manufacturing Company, a Plano, Tex.-based brand development and investment firm that is quickly becoming Hipster Inc., given that it controls Shinola; Filson, which Mr. Kartsotis hopes to build into another Burberry; an animation film studio; and a stake in Steven Alan.
Despite Shinola’s successes, including investment from the likes of Dan Gilbert, the Quicken Loans founder who is spurring considerable development downtown, it is still running in the red, Mr. Kartsotis said. That is in part because the company pays hourly workers at least $3 more than the $8.50 minimum wage and absorbs the cost of worker training itself.
Even so, management is already preparing to unveil Shinola, Part II.
This fall, the company will introduce an audio line of turntables, speakers and, most important, audiophile-quality headphones, rendered in leather and brushed stainless steel, which it intends to sell for $450 to $650. Its founders think those will become one of its biggest revenue drivers.
“We read about Beats by Dre selling to Apple for $3 billion and we thought, ‘Huh,’” Mr. Kartsotis said with a smile.
Initially, the audio equipment will be manufactured in the company’s midtown headquarters, although Shinola recently purchased an abandoned creamery in the same area where it plans to create a free-standing audio factory.
A market that potentially is even bigger than headphones, Mr. Kartsotis said, is eyewear, which the company hopes to move into seriously by 2017. The plan is to open a Shinola eyewear plant on the South Side of Chicago, in Hyde Park. “It’s every bit as hard hit as here,” he said.
In a few years, watches and bikes may be only a slice of the pie. “Who knows what else we’ll get into,” he tells the Times. “We’re always looking for nooks and crannies.”
Helping him find those nooks and crannies is a management team that Mr. Kartsotis says reminds him of “the bar scene in ‘Star Wars.’”
There’s Bridget Russo, who used to live in TriBeCa and was an executive at Edun — the fair-trade fashion brand founded by Bono and his wife, Ali Hewson — before she chucked it all for Detroit, where she just bought a house on the East Side and works as Shinola’s chief marketing officer.
And Don Nelson — yes, that Don Nelson, the coach with the most wins in N.B.A. history. He has traveled with management from the early days as an unpaid adviser.
Mr. Nelson, 75, is a close friend of Mr. Kartsotis’s from Maui, where both have houses and play in a regular poker game that includes Owen Wilson, Woody Harrelson and Willie Nelson. (Before Don Nelson’s final year as the Golden State Warriors coach, the 2009-10 season, he tried to hire Mr. Kartsotis as an assistant coach. “I told him, ‘You can sit behind the bench, keep stats, and I’ll do all the coaching,’ because you know, he didn’t know anything about basketball,” Mr. Nelson recalled. “But he’s great with people. I said, ‘You can keep everybody happy.’”)
And Carlos Quirarte, a voluble New York restaurateur, nightclub owner and brand consultant with extensive connections in art, fashion and Hollywood, serves as Shinola’s director of culture. “He’s our cultural thermometer,” Ms. Russo said.
Mr. Quirarte is a true believer, too, writes Williams for the Times. As proof, he lifts his right hand to show a small tattoo on the inside of his wrist — a lightning bolt from the Shinola logo, courtesy of Mr. Campbell, who has the same tattoo, as does their friend Justin Theroux. So does Mr. Kartsotis. So does Mr. Panis. So does Mr. Nelson (it’s his only tattoo).
When it comes to why they chose Detroit, the answer is straightforward.
They chose the city, they said, because, well, it needed jobs, and because of its legacy as an industrial powerhouse. “When you think manufacturing, you think Detroit,” Mr. Kartsotis says. The fact that later internal research indicated that Detroit — a city that many seemed to want to throw money at — might be a potential marketing windfall certainly did not hurt.
Key to the marketing, writes Williams, are the watch case backs that read “Built in Detroit: USA Movement with Swiss Parts.” Detroit, says Williams, is a city that has defined “authentic” for indie types from the days of the Stooges, who came from nearby Ann Arbor, right through to the White Stripes.
Shinola has never made any secret of the fact that Ronda, the Swiss maker of quartz watch movements, designed the factory, built the equipment and supplies many parts (it also owns a stake in Shinola).
To Joe Thompson, the editor of WatchTime magazine, the question of sourcing obscures the larger point: that Shinola “is a very serious effort by very accomplished watch-industry veterans to manufacture quality analog watches in large quantities in the United States.”
“Asking a start-up to begin making its own movement components from scratch is not realistic,” Mr. Thompson tells the Times. “By importing parts and assembling them here, Shinola has created jobs and is developing in-house expertise in watch-movement making that will pay off down the line.”
It is not always possible to reconcile domestic production with the bottom line, Mr. Kartsotis says. For example, while its watch straps, leather goods and even the boxes for the watches are made in the United States (the boxes, from Minnesota, cost the company $18.50 apiece), buying American-made shopping bags for its flagship store would have cost $6 apiece; instead, the company opted for a $1 Chinese variant.
The company reinvested the savings in part, in a facility to produce rubber watch straps in Minnesota. “You can’t stay in business and buy the $6 shopping bag,” Mr. Kartsotis says.
“We’re not a watch company,” Mr. Kartsotis says. “I did not want to build another watch company. This company really started as a job-creation vehicle.” Read more at: nytimes.com