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Europa Star

Kickstarter, for better and for worse

CROWDFUNDING

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May 2019


Kickstarter, for better and for worse

The crowdfunding platform is not just about success stories: less than half of the watch projects submitted reach their objective. But those startups who succeed can teach some lessons, at a time when the whole industry seems to be looking for its “community”. In Switzerland, we have heard a lot about Code41. In the United States, LIV Watches has established itself as a master of the genre.

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n his latest report, watch consultant Thierry Huron, founder of the Mercury Project, focused on one of the most significant disruptions in the watch industry in the last decade: the emergence of dozens of new watch brands each year on crowdfunding platforms such as Kickstarter (see a summary of the watchmaking projects initiated on this site by clicking here).

“Since 2009, Kickstarter has established itself as the most popular and respected crowdfunding platform for the watch industry,” says Thierry Huron. “Today, young creators, designers, but also established brands use it.” For example, Alpina, launched its AlpinerX model on Kickstarter last year, raising over 1.5 million francs. This project was nevertheless destined to remain a one-off, as the brand’s manager explained to us in an interview (read it here).

The AlpinerX, a connected watch launched last year on Kickstarter by Alpina
The AlpinerX, a connected watch launched last year on Kickstarter by Alpina

We might also mention French brand ZRC, founded in 1904, which raised more than 500,000 francs from 300 contributors two years ago for its “North Adventure” project. The brand has thus achieved more than twice its initial goal.

The ZRC North Adventure timepiece, worn by polar explorer Alban Michon
The ZRC North Adventure timepiece, worn by polar explorer Alban Michon

More failures than successes

These cases are pretty rare, however. According to Thierry Huron, failures are more frequent than successes on Kickstarter. By listing all the watch projects submitted in 2018, the consultant noted that 51% of them had not achieved their initial objective. The proportion of failed projects reached 57% in the first quarter of this year. The Kickvalue Tracks & Facts report of March 2019 is available here.

By listing all the watch projects submitted on Kickstarter in 2018, consultant Thierry Huron noted that 51% of them had not achieved their initial objective.

Consultant Mercury Project monitors the results of watch projects on Kickstarter every month
Consultant Mercury Project monitors the results of watch projects on Kickstarter every month

The success of a fundraising campaign is not necessarily a sign of great solidity in itself. Remember Pebble? The smartwatch brand raised over 30 million dollars in two campaigns on Kickstarter, before going bankrupt and being sold to Fitbit. The challenge for yesterday’s fashion watch brands, as well as for tomorrow’s Kickstarter brands, remains that of longevity.

The smartwatch brand Pebble raised more than  million on Kickstarter, a record, before going bankrupt in 2016
The smartwatch brand Pebble raised more than $30 million on Kickstarter, a record, before going bankrupt in 2016

The challenge for yesterday’s fashion watch brands, as well as for tomorrow’s Kickstarter brands, remains that of longevity.

Direct contact with customers

Despite these warnings, the platform is a valuable tool for new watch projects. Those that take the plunge are forced to deal from the outset with a rather fickle community of buyers. While the industry as a whole likes to talk up the idea of direct contact with end customers, lessons can be learned here. Klokers, for instance, which has managed to find its niche with watches inspired by calculation rules, is a good example of brand building using the platform at its best.

The new Klok-08 by Klokers
The new Klok-08 by Klokers

We recently met the creators of two watch brands that have managed to make the most of crowdfunding: Code41 in Switzerland (3 million francs raised in two campaigns) and LIV Watches in the United States (3.8 million francs raised in four campaigns). North America remains the dominant market for crowdfunding. According to Thierry Huron, for the first quarter of 2019, more than a third of the watch projects on Kickstarter were generated from the United States or Canada.

The rise of LIV Watches

Headquartered in Miami, Esti and Sholom Chazanow positioned their brand in the men’s sports watch segment from the very beginning. Their idea was to offer Swiss made quality at a more affordable price than what was available on the market at the time. That was in 2014. Sholom Chazanow already had a solid watchmaking background dating back to 1992. He began with fashion brand Daniel Mink, before leaving the warmth of Florida for Bienne, working at Roventa Henex, then Candino and Edox. It was after having contributed to the launch of another online brand that he decided to create his own watch company with his wife.

“Nothing we do is traditional,” he explains. “We started by launching an online competition to find the best design for our watches. More than 200 designers from around the world participated.”

Esti and Sholom Chazanow, co-founders of LIV Watches in Miami
Esti and Sholom Chazanow, co-founders of LIV Watches in Miami

Since 2014, LIV Watches has launched four Kickstarter campaigns amounting to nearly $4 million. The first project, LIV Genesis X1 Swiss Chrono, raised 191,000 dollars in 11 hours, while the second, an automatic model from the same line, reached 1.1 million dollars, over 30 days.

GX1 Swiss Chrono by LIV Watches
GX1 Swiss Chrono by LIV Watches
GX Swiss Automatic Chronograph by LIV Watches
GX Swiss Automatic Chronograph by LIV Watches

“Kickstarter is a tough exercise, which really forces you to sell your concept, your idea,” continues Sholom Chazanow. “There are so many microbrands and so many ideas: the environment is ultra-competitive. Our first experience proved that the project was viable. It allowed us to prepare the second campaign as well as possible.”

In February 2017, the brand introduced its new collection, Rebel, with an unconventional rectangular shape. The project raised 1.7 million dollars from 3,000 contributors.

“Kickstarter is a tough exercise, which really forces you to sell your concept, your idea.”

Rebel GMT by LIV Watches
Rebel GMT by LIV Watches

“We produce 60% automatic models and 40% quartz,” says Sholom Chazanow. LIV Watches uses movements from Ronda, Sellita and ETA, with prices starting at $290. Since its inception, the brand has sold more than 10,000 watches, sticking to its niche of men’s sports watches. Some 40% of customers are Americans. LIV Watches also has a strong following in the United Kingdom, Australia, Canada, Singapore, France and Germany.

The brand decided to move up the range with its latest Kickstarter campaign, which has just ended. A series of automatic models in titanium and ceramic has generated a result of 800,000 dollars.

P-51 Titanium Pilot by LIV Watches
P-51 Titanium Pilot by LIV Watches

A defining element in the success of the LIV Watches project is the collection of customer data. Forced to fight fiercely to survive, new brands often embrace practices that are destined to become widespread in the industry. This is the case here, at a time when major brands are looking for a more direct relationship with their customers and a better understanding of their profile.

“The data collected through Kickstarter, our newsletters and our website allow us to segment customers and make targeted offers,” says Sholom Chazanow. “For example, we notice that our customers are also very interested in brands like Breitling and Panerai.”

A defining element in the success of the LIV Watches project is the collection of customer data.

Code41 tackles luxury watches

Claudio D’Amore is better known in the Swiss watch world, since his project to impose transparency in pricing has caused many teeth to gnash (read more here). A first campaign on Kickstarter enabled Code41 to raise more than 500,000 francs at its launch in 2016.

The latest crowdfunding campaign, conducted on the brand’s own website, with the aim of “democratising Haute Horlogerie”, is the X41 project, a mechanical watch with a peripheral rotor. The 500 X41 Creator models launched have sold at a price of 4,000 euros, as have the 100 standard models, for a total of more than 2.5 million francs.

The new Code41 X41 timepiece with peripheral rotor
The new Code41 X41 timepiece with peripheral rotor

To achieve this result, Code41 relies on the power of its community. The brand claims more than 200,000 “members” and has already sold 10,000 of its Anomaly timepieces. A key to success is building and nurturing a community, and keeping them engaged with regular teasers.

We often hear that our planet is now functioning in “tribes”. For better or for worse, one of the tribes of today’s watch planet is Kickstarter. Like other social networks, this platform is complementary to online stores and to traditional retailers in the new omnichannel model being developed. If it’s going to stand the test of time, it must continue to inspire conviction in the strength of each project with sincerity and passion.