Last night we sat down with Mr. Nicolas Lehotzky, co-founder of of Manufaktur Waldhoff in Germany, to learn how he got into the microbrand business and operates a successful company that is specialized in designing and producing high end Tourbillon watches at affordable prices.
Manufaktur Waldhoff watches are beautifully designed and reasonably priced, we have noticed that they are retailed in several high-end watch stores in Asia where foreign brand watches are quite popular among consumers.
So let us start with the conversations with your background and operation,
How did Manufaktur Waldhoff get started in 2015, what inspired you and your partners to create a brand-new watch company? What s meaning of the name of the brand? What are your past background and current role in the watch company?
Manufaktur Waldhoff was started in 2015, I was a Swiss watch designer, and Manfred Starck Uhren Gmbh is a watch manufacturer based in Pforzheim, to create a line of high-end Automatic watches. Manfred and I were introduced at the Baselworld by a mutual friend, at a time when we both were looking to create a new watch brand. Our idea is to combine the skills of a Swiss watch designer with the engineering and experience of a German watch manufacturer. It took around one and a half years to launch the first collections. Now I am responsible for all product designs, customer service, sales and e-commerce. My partner Manfred handles manufacturing, repairs and logistics.
Since 2017, you have had a few crowdfunding campaigns on Kickstarter and Indiegogo. Can you share the experiences and lessons on using such platforms?
I decided to try a Kickstarter campaign after seeing a number of highly successful campaigns by other watch brands. We went in blind and with no experience, and a near zero ad budget. Nonetheless, the campaign did well and has been generating traffic to our website long after the end of the campaign. Overall the experience has been positive, and it is a great way to evaluate the potential of new collections before starting mass production. If one collection does poorly on either of these platforms, we would produce only a small quantity of it, and we may produce a larger quantity of items that sold well. That said, the number of watch brands that are launching on both platforms has skyrocketed, among them a number of projects which ended up never delivering on their promises, which have the risk of turning away some customers in the future. Kickstarter has a wider audience than Indiegogo, so I would recommend starting there, but I would not recommend focusing exclusively on these platforms as a result, but to expand to other sales channels.
Watchmaking from concept, design to final production and delivery is a long process; for many newcomers in the microbrand watch world, the challenge is to successfully navigating the entire process and get the products delivered into the hands of early backers and customers. What is the biggest challenge you ever encountered in the past eight years? Is it manufacturing, quality control or customer services?
Our products feature rather unusual movements, such as Tourbillons, which are far more complex than standard 3-hand Japanese movements used in most microbrand watches. For this reason, they require a tremendous level of attention, cleaning, testing and even parts replacement, for the sake of accuracy and durability. As such, production is slower, more tedious and costly. While this has been the biggest challenge, it is also why we are one of only few brands using this kind of movement, meaning we remain quite unique in the market.
How do you manage consumer expectations after the sale? How do you provide warranty related services to customers from all over the world? Can you share some insights?
I remain in close contact with customers via e-mail or our social media accounts, because direct communication makes customers happy and reinforces a sense of safety when they buy from us. Any product with a manufacturing defect is shipped to us or our overseas repair center for exchange or repair, and we also pay for the return shipment. As a result, a sizeable proportion of our buyers is coming back for more, so in the end it is all worth it.
We saw your beautiful Tourbillon watches; it is exceedingly rare to see microbrand watch companies producing expensive watches due to cost factor and technology know-how. Are high end watches from microbrands well accepted by consumer market?
So far the response has surprised us, and our high-end models have done better than expected. As you said, it is difficult to use these complex movements, due to the high amount of work and skill required for their use, which may be a deterrent to other brands. We will remain in the mid-premium segment for this reason, but it is also becoming more competitive. For this reason, we need to permanently raise the bar with new innovative products.
What do you think about the future of microbrand watch industry? Where are the markets for microbrands since there are many competitors from the big names?
Hundreds of new brands have popped up and more will come, but only few survive beyond one launch. Ultimately a few winners will emerge which will morph into long lasting, more famous brands. Microbrands differ from the famous brands in that they primarily launch by selling to customers directly, with much lower markups than traditional retail brands, and consequently, lower margins. This poses the question to brand owners: Shall I sell directly to buyers from my website, or shall I also offer our products to third party retailers? The winning formula is still unclear.
Finally, because of the pandemic in 2020, many consumers may not spend the money on expensive items such as watches during this holiday season, how to you handle this kind of situation in terms of brand marketing and increasing sales?
Watch sales indeed fluctuate wildly and unpredictably, it is not a business for the faint of heart. We did well thus far in 2020 with sales up over 40%, but the future is always uncertain, and the past month has seen a slowdown. Contrary to common wisdom, we do not invest a lot into advertising, and instead reinvest most profits on developing new and unusual products. Due to the complexity of our products, we prefer a slow and steady growth over mass production, so a few slow months do not bother us.
Mr. Lehotzky, thank you again for talking with Microbrand Watch Business, the sharing of your experiences is really appreciated, we wish you a very pleasant holiday season and happy new year!