There are a lot of watch entrepreneurs and startups out there; this post is the story of one of those companies. This post will cover how these entrepreneurs design and produce watches, looking at their design processes, making prototypes, and finding producers. I will do my best to tell their story so that those interested in going into the watch business know the process, the difficulties, and the rewards of the industry. This is the story of TiMe22.
A quick review of the watches posted on Instagram is anecdotal evidence that watch companies are starting up everywhere. The Swiss watch industry has owned the luxury market (really) for most of recent history, and the Japanese industry has owned the mid-range market (Casio, Seiko, Citizen). Recently, entrepreneurs have been attempting to attack these entrenched producers and provide competitive, well-crafted watches at more affordable prices. It is still to be seen whether or not they will make it? Some will and some won’t — in fact, estimates for startup failure range from 50-80% within the the first few years.
Disclosures: I have not received any money or compensation to write about this company. This is not an endorsement of TiMe22, rather they serve as a case study. This company has produced their product yet so I cannot vouch for final quality.
Why Micro Brand Watch Companies Matter
As watch collectors, it’s fun to think about entrepreneurs making new watches more accessible to more people. Even if you’d never buy anything but a Rolex, it’s fun to watch these new companies come onto the scene and expand the interest in watches to a new, previously untapped market, creating future watch enthusiasts. I have no idea where these this featured startup will be two years from now, but read on to see what they have going for them and the challenges ahead as this company is in the launch phase. We’ll continue to follow them to see if they can break into this entrenched industry!
Even if you’d never buy anything but a Rolex, it’s fun to watch these new companies come onto the scene and expand the interest in watches to a new, previously untapped market, creating future watch enthusiasts. I have no idea where these this featured startup will be two years from now, but read on to see what they have going for them and the challenges ahead as this company is in the launch phase. We’ll continue to follow them to see if they can break into this entrenched industry!
This post is not about reviewing watches or even giving my take on whether you should buy a watch or not from this watch startup — I don’t care if you do. There are a lot of micro brand watches out there; this post is the story of one company. This post will cover how this company designs and produces watches, looking at their design processes, making prototypes, and finding producers. I will do my best to tell their story so that those interested in going into the watch business know the process, the difficulties, and the rewards of the industry. Integrating some basic entrepreneur fundamentals into this analysis, I hope you will find it enlightening and informative, if not inspiring as we look at the story of these entrepreneurs pursuing a dream.
What Is An Entrepreneur?
What is an entrepreneur? There is a more formal definition, but from my perspective, it is the person who identifies an opportunity while everyone else sees a problem or lack of a solution. The entrepreneur is someone who is willing to find a solution to a problem. In caveman times, the entrepreneur was the guy who left the cave, went out and captured and domesticated animals and made it possible for everyone to eat while he made “money” in the meantime. TiMe22 is a company that has potentially identified an area of the watch market that they think they can do better. They left their “cave” and went out to “find animals” while 99.99% of the population complained about there “being no food”. Regardless of whether you like this company’s product, you must respect their willingness to get out and try. They have put their careers and other dreams on hold to pursue their one dream of starting a watch company. That, in itself, is the first step an entrepreneur must make; one that most people will never have the courage to take.
Defining the Problem:
We all complain about different aspects of our life every day. As watch collectors, most of us are never satisfied with our collection. There is a watch that we “need” to meet a specific taste or aspect of our life (I say “need” because most of us could survive without a watch; we just like watches). Stefan Wessels and Marc Schot had been friends for many years. Both had worked in various engineering and consulting jobs and always dreamed of starting a business together. Avid cigar aficionados, they were meeting in a ‘smoke-filled room’ (not really a room, but cigars were definitely present). They were bantering back forth about how they liked the construction and reliability of Omega’s titanium watches, but could never afford them at their $3,000+ price. They asked each other “what if we could design a high-grade titanium watch that had the same level of fine craftsmanship and durability as an Omega, but at a price below $1,000?”
For some areas in life, the problem is not always clear. For example, if somebody said ‘the whole concept of a watch doesn’t work; we need a new solution to tell the time’, the problem wouldn’t be clear, rather we’d only know what doesn’t work (ie the watch), not what the actual problem is. However, for this company, there is not an actual real life problem (such as watches not existing), rather they are attempting to fill voids in the current market landscape. To do this, a startup must find out if other people have the same ‘problem’, or maybe the would-be founders are the only ones that think this is an issue.
As author Peter Drucker noted in his book “Managing for Results”, people don’t pay for a product, they pay for a solution. Or as noted by Harvard Business School Professor Theodore Levitt, “people don’t buy 2-inch drill bits, they buy 2-inch holes” (1). In other words, people care about the solution, and your product only is relevant if it helps solve a problem that real people have. More often than not, there is already an existing solution to the problem. There very well may be watch companies out there already meeting these needs that Stefan and Marc are trying to address? If there are, why haven’t these founders heard of them? If they have heard of them, why are these existing companies not meeting the demand? A few possible reasons every potential founder must consider:
- The problem you identified isn’t really a problem except for you. This is why you must test your concept with passionate people (both those who love and hate your idea).
- Your idea could solve the problem, but it’s not a big enough problem to make people actually buy your product (this happens all the time. In pre-production surveys, people will say ‘that is such a great idea, I would so buy that.’ Yet when it’s available for sale, only a small portion are willing to pay money. As a general rule, only 5% of those “interested buyers” will actually pay money. Saying you’d buy something and actually giving your money are two different tipping points).
- The other company currently solving this problem doesn’t do it very well or poor management means they can’t keep up with demand. This also happens all the time.
- It costs too much to solve the problem. In other words, the juice isn’t worth the squeeze. This is especially true of the watch industry. It would be cool to have a watch made out of solid iron from a meteor, but if the watch costs over $1M, there will be very few buyers, meaning it might not be worth the entrepreneur’s time to find those buyers and produce the watch.
The Founding Team
Friends and business don’t mix, or can they? Generally speaking, it is better to keep your friendships and business partnerships to a minimum to keep awkward but necessary business conversations out of your social sphere (such as “We’ve already spent $5,000 of my money, you need to chip in $1,000 more”). However, friends can also make great business partners because you have a very good understanding of each other, and if both are on the same page, it can be enjoyable. Just as great friends don’t always make great significant others, they also don’t always make great business partners! When you start a company, you should always make a very deliberate and well-considered decision whether or not to join with a business partner. Never pick a partner out of convenience or just because you don’t want to try the venture by yourself. Picking the founding team is like entering a marriage. If everyone isn’t willing to bear an equal part of risks and rewards, it can quickly put founders at odds and destroy an otherwise great friendship, idea, or company. Pick a business partner deliberately after much thought and consideration.
Empathize with the customer & get their feedback:
To ‘build a better mousetrap’ (or watch), a startup must figure out what customers are actually looking for in a watch. An entrepreneur must take their design to potential customers and see if it solves the customer’s problem. For a watch, we can’t think of it as a problem as much as it is a customer preference (I will refer to it as preference from now on). Does the customer find elements of your design or your value proposition compelling enough to say ‘I prefer your designs over existing designs?’
Behavioral Economist Daniel Khaneman won a Nobel Prize for discovering how potential customers assess choices (my paraphrase): they establish a benchmark based on a known product they already have, then determine if a new product has new benefits and new shortcomings. The customer penalizes the shortcomings much more than rewarding the new product’s benefits (2). In other words, your proposed watch must meet new needs without having shortcomings compared to existing watches out there. This is the challenge of breaking into an established industry.
At TiMe22, Stefan and Marc started out by putting a design to paper (actually Solidworks, a digital design software). As an engineer, Stefan was able to make this design himself (if you don’t know how to do design work, find a CAD engineer on who can help you — the design process should not be a roadblock for you). TiMe22 took their design to a local 3D printer and had a few prototypes printed. This is an important thing for a startup to do, especially when developing a physical product such as a watch. It can be tempting to avoid this step, but it saves a lot of heartache in the end (if you can’t find a 3D printer, check out shapeways.com who does 3D printing through the mail and can 3D print in any material from plastic to platinum). With prototypes in hand, Marc tested the designs with potential customers, who provided some encouraging feedback but also some critical recommendations.
When setting out on this journey, Stefan and Marc had one overarching rule: whatever they designed had to be a watch that they would want to wear. Surprisingly, this is an error many entrepreneurs slip into — they don’t even want their own product, but they assume somebody else will. It is possible to sell units to people without liking your own product, but eventually the lack of passion for the product makes it difficult for an entrepreneur to keep going. A few factors were brought up by their potential customers as well as some additional rules Stefan and Marc established to guide their design process: it couldn’t be another copy of a Hublot or Rolex, it had to meet the price point of less than 1000 euros, it had to use high-tech materials that are stronger and lighter than steel, the quality had to match Omega, it couldn’t have any sharp angles or edges, and the service and warranty for the watches had to be second to none (in fact, they offer a lifetime warranty).
After hitting the digital drawing board for some adjustments, they were ready to try a prototype in Grade 5 Titanium, their hi-tech metal of choice. They chose this metal and ONLY this metal because it was harder and stronger than virtually any metal out there. Grade 5 Titanium is virtually scratch resistant and is only used in some of the finest luxury watches such as the: Tudor Pelagos, Omega Planet Ocean Ti, Richard Mille RM055, new Tag Heuer Monza Chronograph, Audemars Piguet Royal Oak Offshore Rubens Barrichello II Chronograph — the common theme being watches that are well above the $1,000 price point. Many titanium watches only use Grade 2 titanium, which has a lighter color but is much more prone to scratches. (Read here for a detailed analysis of metals used in watch cases and the benefits of each).
When developing a customized physical product for commercial sale, finding a producer can be extremely difficult. Watches require some kind of metal case which can be prohibitively expensive to produce in small quantities. The cheapest way to produce something like a watch case is to create a mold and cast the cases; however, the minimum order size is usually 500+ pieces if you plan to keep your watch in the <$1,000 range. For most entrepreneurs, making 500 pieces of their first watch is not realistic. The practical option for production then becomes a CNC drill, where a robot literally carves your watch case from a chunk of metal. The other option is 3D printed metal (shapeways.com is a good option for this).
Stefan and Marc found numerous companies that could do the CNC drilling, but nobody wanted to do it in Grade 5 Titanium (will abbreviate it as G5Ti for the remainder of this post) that their specifications called for. This metal was so important because it helped give their watch a competitive edge: it would be made from a material so tough that almost no other existing watch could match it in the same price range. It would make the watch virtually scratch-proof and 45% lighter than steel — so light that it’s used in aerospace components. Because it was so tough, no factory wanted to work with it. After almost giving into changing to a new material, they found a factory willing to try. They produced a handful of prototypes which they fitted with the ETA Automatic (ETA 2824-2) and ETA Quartz (ETA 955-112) movements and some generic bands to test their final prototypes. The prototypes worked well, but the band of the watch didn’t meet their requirement of no sharp edges — back to the drawing board. What emerged is the linked band going to production (see picture inset).
Sourcing the supply chain for the final working prototype and production can be one of the most difficult parts of producing a physical product such as a watch. Not doing this right can become expensive and sink a watch startup, while also causing a poor final product. You have to do a final working prototype; can you imagine Stefan and Marc ordering 500 final watch cases only to find out they are 1mm too small for the movements and crystal they are supposed to house? Despite your best attempts at measurement, there are usually tiny sources of error whether it be you while taking measurements, or the machine making your parts (some forms of plastic 3D printing can have up to 2% size variation due to heat shrinkage). Both Stefan and Mark at TiMe22 went through the tedious process of prototyping all the way to a final production-grade model, but it saved them these common pitfalls of entrepreneurs.
While not featured in this post, I have another friend who started his own watch company and sourced everything from Switzerland with the goal of making a luxury Swiss piece (and he has been fairly successful). His efforts to make that happen are more than most would be willing to do, so don’t assume this process is easy. Sourcing movements for watches used to be easier, but now ETA (the company who supplies, or used to supply most of the watch movements) no longer offer near as many movements as they used to, making it much more difficult for a watch entrepreneur to get their start. Making the other parts of the watch from the case, bezel, face, and hands can be difficult, especially to find the craftsmen willing to make the parts in small enough quantities for an entrepreneur to get their start. Sourcing the supply chain can be one of the most difficult steps in the process. However, for those willing to attempt the 100% Swiss sourcing and are successful, there is a small but very devoted market willing to pay a premium for luxury Swiss-made bespoke pieces.
Going to Market
Once you have the watch, now you must sell the watch. The next post will focus specifically on marketing for a watch startup, but I will close out this post with the last step in this design and production process: developing a go-to-market strategy. Many entrepreneurs fall into the pitfall of “if I build it, they will come”. This is not just a pitfall, it is a giant crater waiting to swallow the unwise. While I am writing this last, the go-to-market strategy should be developed and refined starting day 1 of your idea. Once you have your watch ready to produce, you should have a pretty good idea of who is going to buy your watch. Don’t think it will be “watch people” — watch people are an undefined group.
As proof, write down the age, income, job, marital status, car, and hobbies of a watch person — you can’t; “watch people” is way too broad of an assessment. You should be able to identify all of these traits down to an exact estimate. You will likely refine this as you continue your market research and as your sales begin. For example, maybe TiMe22 finds construction workers are gobbling up their G5Ti watches due to their strength and durability. They would have never guessed this would be their target market, but through demonstration of demand, they have found their customer base is different than expected — that happens. An entrepreneur should be able to identify these traits about their customer; without going into this amount of detail, it means your go-to-market strategy and advertising will end up being the equivalent of putting up a highway billboard: people will see it, but you’re not focusing on those you could be. For the target customer, the entrepreneur should outline who is most likely to buy the majority of their watches. Sure, there will be other people that buy it, but who is the CORE customer:
- Gender (could be 1 or both — most watches will only target one or the other)
- Age (pick a 10-20 year age span. Anything larger than this is too broad and preferences vary too much)
- Income Level (describe their average income range. The average person making $300K is not going to be the core customer for a $200 watch. Oppositely, can your target customer afford your product?)
- Hobbies (are they into extreme sports? Or diving? Or racing? This will dictate their brand or watch attribute preferences as they look to identify with their hobby group’s identity)
- Social Media Involvement (Do they use facebook or youtube? If you’re targeting people in rural areas, they likely spend much less time on facebook and youtube due to slower internet connections. Do they use Pinterest? The vast majority of Pinterest users are women so targeting men for a men’s watch on Pinterest is not the most effective use of resources)
- Marital (partner) status (this matters because single people tend to make solo decisions while married couples tend to talk about financial expenditures; your marketing efforts might need to be adjusted to account for this)
- Do they shop in stores or online? (if you’re going to only sell online, make sure your demographic regularly uses online shopping. Not all demographic groups do)
This concludes part 2 of our posts on watch startups. We’ll hear again from TiMe22 in 2 weeks as we take a look at their marketing efforts. In the meantime, visit their Kickstarter.
Disclosures: I have not received any money or compensation to write about this company. This is not an endorsement of TiMe22, rather they serve as a case study. This company has not produced their final product yet so I cannot vouch for final quality.
(1) “Customer Discovery & Validation for Entrepreneurs” document #812-097 by Cespedes, Frank, Thomas Eisenmann, and Steven G. Blank, (Harvard Business School Press, page 2, 2012) who also cite Peter Drucker’s book “Managing for Results” (Pan Books, 1964).
(2) ibid, page 3, who cites Khaneman and A. Tversky’s original research entitled “Choices, Values, and Frames” (Cambridge University Press, 2000).
Notice: This article was edited on 11/10/2016 to remove references to a startup company that was referenced in the original version of this article.