A cohort of investors including Silicon Valley venture capitalists, a French luxury group incubator, a Superbowl champion quarterback and a Grammy-winning singer, pumped $40 million into HODINKEE late last year, valuing the company at around $100 million, according to Forbes. What makes the ecommerce and media hybrid so valuable, and what will it do with the new cash injection? Rob Corder caught up with founder and executive chairman Ben Clymer to find out.
WatchPro: Congratulations on closing a funding round of $40 million.
Ben Clymer: Thank you. If feels good, I have to say. We worked so hard for so long, and there is more to come.
WatchPro: What was the purpose of raising the money, and what convinced investors to back the plan?
Ben Clymer: We are a long-lasting brand and we have been able to prove that, whether we are in the worst of times or the best of times, the HODINKEE community is always dedicated not only to us, but to the watch world. In many ways it has less to do with us, and more to do with what HODINKEE represents.
The support of our community allows us to take on some of the more ambitious projects that we have always wanted to do. That is what encouraged me to go out and look for more capital. The first project of this type is HODINKEE Insurance, which we launched earlier this year. That has proved to be a great success, but it took us years to develop. We want to try some more projects like that, which are equally ambitious.
HODINKEE will be hoping to get members of its community in the same room together in 2021.
WatchPro: Is there anything you can tell us about the projects you are thinking about at this stage? Are you any nearer opening physical retail space once we get covid behind us?
Ben Clymer: I think physical retail will always have a home in luxury and in watches. I hope one day to have a HODINKEE store, home or showroom. But something we have really reconsidered since covid is our investment in digital. There are so many wonderful stores around the world already. We think ours would be great and different, but digital is really our home and we definitely want to invest more heavily there than in physical, at least right now.
Once covid is over, we probably will look at physical retail again, but right now it is all about digital.
WatchPro: You launched in 2008 and, while I am not able to see your accounts, the company certainly looks financially successful. Did you need to raise money to accelerate your development, or could you not have just reinvested profits to get you to where you want to be?
Ben Clymer: We are certainly profitable, and have been from day one. Oftentimes raising money has very little to do with runway or the need for capital, it is more often about what we want to do and what opportunities the extra money creates.
There was certainly no need to raise money, we could have continued growing at a healthy pace. We were planning to do the retail store in New York without raising, but we realized quickly that there are so many other things that we want to do.
With Toby Bateman and a leadership team in place, we feel the time is right to put the pedal down and accelerate. The goal is to do more of what we are doing, and in a better way; to serve the HODINKEE community better.
WatchPro: Being a business owner myself, I certainly understand the desire for more working capital, but I have seen too many companies spend more time thinking about the next raise rather than running the business properly and reinvesting profits. This perhaps applies most to Silicon Valley startups and the venture capitalists feeing them, but do you feel you and HODINKEE have been distracted by this round of funding?
Ben Clymer: Certainly not. We have not raised money in quite a long time and, with the exception of Google Ventures, which is a different kind of Silicon Valley firm, we have really avoided that scene. If you look at who has invested, Tony Fadell now lives in Paris and is not part of that Silicon Valley set at all. We do not want to be one of those companies — the Ubers of the world — that are losing billions of dollars per quarter. Both of my parents were teachers, and I think that has given me a very middle class mind set about how to run and grow a sustainable business.
WatchPro: What are the investors in this $40 million funding round getting for their money? What are the terms? Is there an exit plan?
Ben Clymer: The terms are like any other equity deal. Standard equity financing. We have a valuation for the business and they have each acquired a minority share. Nobody has a majority of the company. Me and my board remain very much in control.
WatchPro: Sorry this is not my area of expertise so, to clarify, you calculated a value for the whole company and sold percentages to the investors?
Ben Clymer: It is not like money was exchanged for ownership. Money did not go into my pocket or any of our other shareholders, it went directly into the company. That is very important to point out. This was a simple equity finance deal.
WatchPro: Are you happy to share the valuation of HODINKEE that you pitched to those investors?
Ben Clymer: No we don’t but we have some of the best investors in the world and it is a reasonable number based on growth trajectory and current revenue. There are certain businesses that you could probably comp-out to give you a rough idea, but we don’t really talk about figures in that way. Most companies in our position would not have spoken at all about fundraising like this. We feel that our audience deserves more transparency than that, which is why we reached out to you.
WatchPro: I am struggling to get a clear picture on what your priorities are now that you are in a position, as you put it, to accelerate growth.
Ben Clymer: We are really talking about more of the same. I fundamentally believe that content is everything, so we will go out and hire new editors, new photographers, new videographers. We want to produce the very best content. We have a track record of that. Content is my background and Jack Forster’s background. We feel really good about the future of our content development. It might surprise some folks, but we believe the future is all about content.
WatchPro: I am certainly not among those that would be surprised or disagree with you on that. But let’s talk about some key people that have joined HODINKEE, either as non-execs or, in the form of Toby Bateman, as your new full time CEO.
Ben Clymer: I have known Toby for the longest time and I always feel that anybody is fighting for increased use of digital storytelling, commerce, anything — we are all on the same team. That could be HODINKEE, Revolution, WatchPro or Mr Porter. We are all pushing for the adaptation of digital.
Back in 2013 or even earlier, it was myself and Toby as HODINKEE and Mr Porter going around and talking to Tudor, TAG Heuer and all the brands; trying to persuade them to come on board to do ecommerce. We were both being shot down left and right at that time, and we bonded over the mission and have remained friendly ever since.
He left Mr Porter over a year ago and, at that point, we wondered whether we could make something work together. We had nothing to do with his departure from Mr Porter, but as time went on we got closer and closer and thought him coming on board made a lot of sense.
For me, one important thing to know is that being executive chairman means I am working full time for HODINKEE. I will be there five days per week. It is still very much my love and passion project. But I have come to realise, as this thing continues to scale, my greatest contribution was not as CEO, it was as somebody who can talk to the younger content producer, talk about limited editions and be more of an active member of the community.
When Toby expressed interest in the role, it made sense and happened to line up with the fund raising.
WatchPro: Have you felt over recent years that you have not loved being CEO as much as you once did?
Ben Clymer: To be honest, yes. I could not be more thankful for that time as CEO and the growth we are going through, but there are certain aspects of the business that I love and they are not necessarily creating budgets, business plans and all that jazz. I enjoyed it, but I am ready to get back to loving watches again and this transition will allow me to do that.
WatchPro: Is Toby Bateman in New York already?
Ben Clymer: No, Toby will continue to live and work in London.
WatchPro: Interesting. Does that signal any intention to expand internationally into Europe in the near future?
Ben Clymer: Not at all. We do look at the European market, but I can tell you that it is not in our short term plans. A year ago, I am not sure we would have even considered a CEO telecommuting from London to New York, but covid has changed everything. We have employees in Virginia, California and all over the place.
Now, more than ever, we think people can run businesses from wherever they happen to be and Toby is the right person. He has worked at a company that is similar, although different, to ours and we were not willing to give up on the opportunity to bring him in simply because he is based abroad.
WatchPro: Did he make it a condition of taking the job that he could stay in London?
Ben Clymer: Not a condition, but it is a situation where he has young children and we are completely fine with it. Once covid is over, we expect and he expects to be in New York regularly and as required.
WatchPro: I have spoken to other members of your team and I know that your office in Manhattan has been all-but deserted this year.
Ben Clymer: The office still is deserted. I am speaking to you from my living room right now and I think that will remain the case for some time. It is becoming unpleasant again in New York [with rising infection rates]. It is not yet as bad as March and April, but it is getting cold out and we do not want to take any risks.
WatchPro: What can you tell us about Tony Fadell, who is one of your investors and will join the HODINKEE board?
Ben Clymer: Tony is credited with creating the Apple iPod. He was also founder of Nest Labs [developer of wifi-enabled thermostats for the home] and now he is a principal at Future Shape, a firm coaching and investing in disruptive technology firms. He is widely considered a really thoughtful entrepreneur in Silicon Valley circles. He is a very serious watch collector. We did a Talking Watches video together back in 2013 when he was at Google, and we have remained close.
He is somebody that I have gone to for counsel all the time because he has built and scaled business. He loves watches and has great taste, and he has done before what we are trying to do. He has attended SIHH several times with us and I have often joked that he is one of our interns when we get there because people in the watch world do not know who he is.
I am humbled and excited that he is joining our board. He is an investor in some of the most prominent and successful companies in the world. He lives in Paris now, so for him to take the time to work with HODINKEE is fantastic.
WatchPro: Your Talking Watches videos have snagged more than one investor. Haven’t Tom Brady and John Mayer, both now investors in HODINKEE, featured as well?
Ben Clymer: It is funny the reaction those videos get. I keep hearing that people get stopped on the streets more times to talk about the HODINKEE videos they appear in than they do if they go on David Letterman. John Mayer has told me that. These videos resonate with people as much and sometimes more than being on television or in movies. That series has an amazing ability to make people micro-celebrities in the watch world.
WatchPro: There is something unique about the watch collecting community and HODINKEE seems to have really tapped into that.
Ben Clymer: I think so. All we have done is give that community a place to come together and talk about themselves and their passion. That community certainly existed before us, but things like Talking Watches give people a voice and a platform. That is probably one of our greatest contributions to the watch world that these people now have a home.
WatchPro: Do you think video will become increasingly important as a medium for sharing information about watches?
Ben Clymer: I can only speak for myself, and I still love the written word. YouTube content is great but, a little like social media, Instagram is passé and on its last breath right now. YouTube will probably feel that way in a few years as well. Twitter was almost irrelevant before Donald Trump became President and started going crazy on it. These platforms have a life cycle. Instagram is breathing its last breath now, and there will be new platforms in the future that emerge, but what is important for us right now is to ensure that we are in control of our medium.
YouTube is not our business, Instagram is not our business. Our business is HODINKEE, and we always want to be in control of that. We are investing heavily in video, but that is not the be all and end all for us.
WatchPro: The reality today is that Google and Facebook are taking something like two thirds of digital advertising today. That puts you and I in a difficult position.
Ben Clymer: That’s right. We do still sell ads, but that is not the real business for us. The real business is the commercial side. I am sure, like us, you get calls every day from people in the traditional ad-driven publishing business because they are looking for a way out. We believe content and commerce is the future of everything, whether that is the New York Times, Hearst or whatever.
WatchPro: There was so much heat when HODINKEE first launched ecommerce, but it feels like the argument has lost its bite now.
Ben Clymer: From our side it is a non-issue. There will always be a vocal minority that will object to what we do, but the response from the people that use our site is that they love it. Beyond that, they actually want more. The number one request we get from HODINKEE surveys is that our community wants us to sell more watches because our experience is so much better.
If you are a traditional retailer I can see why you might be frustrated, but there is nothing stopping these retailers from creating their own content for YouTube, websites or a magazine. Many of the good ones do. If you look at what the Hour Glass or Watches of Switzerland have done, they produce great content, and we are delighted with that.
WatchPro: One of the challenges with ecommerce is that the customer is always a click away from leaving your store and going to another one that could be discounting the same product. HODINKEE appears to have trodden a line of careful curation of what you are selling. Is that so you do not get into an algorithm- or AI-driven price war with competitors?
Ben Clymer: That is part of it, but the key is that we are, for many people, their only entry point into the world of watches. A lot of guys do not even know that Watches of Switzerland exists. They do not know what an authorized dealer is. They only know HODINKEE.
We have an amazing ability to convert people that did not know anything at all about watches into watch lovers. That is our real difference. There are places where people can buy watches cheaper, but we do not believe there is anywhere that gives them a better experience. Whether people buy from us or not, we will keep giving them the same fantastic content, which is a great service to our community.
WatchPro: It is interesting you use the same language that I hear all the time from traditional authorized dealers for the likes of Rolex or Patek Philippe. They will say it is all about the experience, which is why they spend so much money ensuring their stores provide the highest possible quality experience. Rolex is the same. They want every AD to be up to the same standard and deliver a consistent experience in terms of well-trained staff, service and support, furniture, everything, in every store around the world. That Rolex model has proven to be obscenely and enduringly successful. It accounts for over half of The Watches of Switzerland Group’s turnover without Rolex allowing a single watch to be sold online. Every Rolex sold keeps the case alive that watch lovers want that full in-store experience.
Ben Clymer: I agree, and I would argue that is not our community. Somebody walking into a store just because Rolex is sold there is not the same as somebody in our community. I love Watches of Switzerland and think they do a great job, but anybody can sell a Rolex. It is not the same thing as fostering a real appreciation for watches. I do not consider people walking in off the street to buy a Rolex, just because it is a Rolex, part of our community.
Our community is made of people that really love watches and make them part of their lives and social set.
HODINKEE opened a pop up store with Omega in 2019 to give a physical embodiment of its concept.
WatchPro: If I look at the top five to ten Swiss watch brands: Rolex, Omega, Cartier, Patek Philippe, Tissot, Audemars Piguet, TAG Heuer. I know you have done some work with Omega and TAG Heuer, but the majority of the biggest brands in the world are not allowing you to sell their watches online. They are still interested in protecting territorial monopolies on behalf of their dealers. Do you think that resistance will break down eventually?
Ben Clymer: I believe there is real value in authorized dealers and I buy watches from Wempe, Tourneau and Watches of Switzerland. They provide real value. But I do think, with time, the old boys network of the watch industry has to change if it wants to survive.
At HODINKEE, I have never asked for any favors from brands or retailers. We believe in meritocracy so if you are an authorized dealer or brand and a website or blogger can add value to your brand and help sell more watches, you should work with them. We would never say: if you work with them then you cannot work with us — like some people do to us — we would never do that.
Authorized dealers will always have a very important role to play in this industry. A lot of them will go online, and that will be great for them and for us. But the old boys network of trading favors needs to change. Decisions should be made based on merit and not relationships.
WatchPro: Are you talking about the way authorized dealers manage their waiting lists?
Ben Clymer: Not really. I am referring to authorized dealers in this country that sell Rolex and Patek Philippe but do not understand the product that they sell and do not give watches to people that truly appreciate them. That should change.
I am not saying that we deserve better treatment, but I am saying there are amazing dealers like Watches of Switzerland, Bucherer and Wempe that really do things the right way.
Many of the dealers I am talking about are not in the main markets. They are legacy players that have been selling watches for so long that they are allowed to get away with it. What I want is for everybody to be held to the same standards, and that has been a frustration for us when we have put so much time and effort into presenting watches in the best possible way and, because we are only selling online, it is not considered good enough. Other brick and mortar stores can be operating out of a dingy old corner but can still be a dealer for a golden brand.
WatchPro: There are so many brands that will not work with pure ecommerce players; not just Rolex, Patek and AP, but also Omega and Oris. Part of the reason that this is still a successful strategy is that so many customers of the venerable Swiss watch houses are old themselves. I would assume HODINKEE has a much younger demographic.
Ben Clymer: You really nailed it right there. Things have gotten so much better compared to the days five or six years’ ago when me and Toby would walk around Baselworld and would not have been able to talk to half the brands we now work with as ecommerce players. With time, we will be able to expand that.
WatchPro: Do you tell your time courting and schmoozing the top brands that I just mentioned?
Ben Clymer: Never. I am not that person. I don’t drink much, which seems crazy to some Swiss. We do go out and present the facts and tell our story to brands, but I do not want favors. I don’t want them to come to HODINKEE because they like individuals in our team, I want them to come because we can add value. It is my hope that everybody is judged by the same metrics, and HODINKEE will come out very well.
WatchPro: Maybe I should not have talked about schmoozing. What I should have asked is whether you are constantly thinking of new ways to pitch to the tier one brands?
Ben Clymer: We really do not. We are more concerned with ensuring that our community continues to love what we do and to make sure that the partners we have on board continue to succeed and grow.
WatchPro: The world has changed so dramatically this year, and everybody is talking about how ecommerce has leapt forward by five years. I wonder whether we might discover that it has leapt forward five years and then falls back four when the pandemic is over. Ecommerce has only ever been a tiny proportion of turnover for the likes of Watches of Switzerland. It might have doubled this year, but from such a small base that the gains could easily be reversed.
Ben Clymer: I believe people’s eyes have been opened this year. It is a bit like a year ago we might not have been happy with our CEO living in London, but things have changed for the better when people take a digital-first approach. I do not think there will be a retraction of ecommerce because a lot of folks are learning a lot.
WatchPro: I have been fairly vocal about my frustration this year with webinars, online press conferences and zoom calls instead of meeting people. Do you think the watch industry sees things the same way and will soon go back to investing in massive events like the old Baselworld or Watches and Wonders in Geneva, or might they look to stick with this year’s inexpensive communications strategy?
Ben Clymer: We may be a digital company, but I certainly understand the desire for people to meet in person. I would much rather be able to speak with Toby across a desk every day. I would rather be having this conversation with you over a coffee. But we have learned a lot and we know that business can be done this way.
The trade shows, in particular, will really feel good to some of us when we are dashing around an event and running into Wei Koh from Revolution or Jean-Frederique Dufour and having those impromptu conversations. I love that and it reminds us of how small and special the watch industry is.