Timing Is Everything
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Why would anyone abandon an incredible job at great financial risk to start a business? That's what critics and naysayers asked Carlo Crocco when he left his family's watchmaking dynasty to start Geneva, Switzerland-based MDM Geneve, manufacturer of the exclusive Hublot watch.
Crocco turned a deaf ear to the critics, convinced he could do what they thought impossible. The result is a company that produces one of the world's most distinctive watches. This year, Crocco's company will rack up sales of $22 million. But getting to that point was a study in perseverance, conviction and enormous risk-taking.
When Crocco decided to leave the family fold in 1976 at age 32, almost everyone who knew him was convinced he had a few screws loose. As scion of Italy's premier watchmaking family, the Milan-based Binda company, Crocco had it made. In fact, until he defied tradition, no family member had ever left the firm.
It's easy to understand why. Founded by Crocco's grandfather in 1906, the time-weathered company was as solid as the Rock of Gibraltar. Today, Binda controls the largest watch distribution network in Italy. Like his parents, uncles and cousins, Crocco grew up in the business. He had become its top marketing and creative person, and was destined to take the helm of the sprawling multimillion-dollar empire. But Crocco had other plans.
The need to go off on his own became an all-consuming drive he couldn't deny. "Growing up in a watchmaking family, there was no question about what I was going to do for the rest of my life," he recalls. "When I told my uncles I was leaving, they thought I was crazy."
It was no snap decision, either. "I agonized over it," Crocco says reflectively. "But when I compared the pros and cons, I felt I had no choice. I had been working for my family's business since graduating from college. I loved the business, but I had my own ideas I wanted to test. I wanted to make my own statement."
Not only was Crocco bent on starting his own company; he decided to relocate to Switzerland to do it. "If you're going to be in the watch business, Switzerland is the place to be," he says.
Crocco's most important reason for setting up shop in Switzerland was to create a unique watch that would enjoy world recognition. "My vision was to produce something different," he says. "I envisioned a timepiece that flawlessly merged Italian styling with Swiss craftsmanship." Watch connoisseurs know that's as close to perfection as anyone can get. If Crocco's plan worked, he'd capture the hearts-and pocketbooks-of fickle, fashion-forward Europeans.
Taking His Time
Making his vision happen took four years and $4 million, some of which was Crocco's, the rest borrowed from banks. Crocco spared no expense creating the right product. He built a small factory and hired a battalion of top Swiss designers to execute his ideas.
In 1980, Crocco's creation was born, and MDM Geneve was formed. He dubbed his watch the Hublot (it means "porthole" in French) and introduced it at Switzerland's prestigious Basel watch fair. "The watch's nautical theme implies adaptability," says Crocco.
"Most handcrafted luxury watches are heavy and meant to be worn only on special occasions," explains Michael Goldstein, vice president of MDM America Inc. "But the Hublot's most distinctive feature is that it can be worn at state dinners or the opera, yet is also suitable for playing golf and deep-sea diving. This made it unique."
Guaranteed to be water-resistant to a depth of 165 feet (and up to 1,000 feet for professional divers' watches), the Hublot was made to take a beating. But the watch's most distinctive feature, according to Crocco, is its band. It's not made of gold, silver, leather or exotic skins like lizard or ostrich. It's made of rubber.
The idea struck Crocco on a flight from Paris to Geneva. "Absentmindedly, I began to color in my watchband with a black [felt-tip pen]," he says. "When I realized what I was doing, I loved the effect. I knew a black strap would smartly complement the black dial of several of my models and also contrast strikingly with the dials of other models without competing with the timepiece's lines."
Yet Crocco quickly discovered great ideas are easy to come by but difficult to execute. He estimates it took almost $1 million in research and development costs to come up with the perfect rubber watchband. In the end, though, it was money well spent. The results were startling and revolutionary.
Crocco developed a tempered rubber that is virtually indestructible. "Unlike conventional metal and leather bands, [the Hublot band] is resistant to chemical deterioration," he says. "It absorbs body oils and conforms to the shape of the wearer's wrist. And it has zero weight, making it ideal for sports and virtually any activity."
The biggest challenge: inserting steel plates into the ultrathin strap to hold the watch securely. When all was completed, the lightweight timepiece and sleek black rubber watchband added up to an exquisite watch that retails for $2,500 to $60,000. Precious stones knock the price up considerably.
Clearly, Crocco was breaking the rules-and at first, many snobbish watch dealers thought the rubber watchband was heresy. Eventually, however, the watchband came to be viewed as a key to Crocco's personality, a symbol of the reason he went off on his own. Wrote one journalist, "The rubber strap captures Crocco's penchant for originality and endurance, his contrary nature and his zest for bucking tradition."
Unique as the finished product is, Crocco was ready to pull his hair out when no one showed up the day he debuted his watch at the 1980 Basel watch fair. "I was nervous, to say the least," he chuckles. Like any anxious entrepreneur who has just invested years of his life and a pile of money, he began entertaining second thoughts. Was his watch too far-out for the world's top watch dealers? Or maybe the Hublot was too far ahead of its time.
Thankfully, Crocco's anxiety was short-lived. The second day of the fair, a few people trickled in. By the third day, Crocco's little booth was buzzing with activity. It took a while for dealers and buyers to discover the Hublot, but once they did, the elegant timepiece became an immediate topic of conversation.
"That was the beginning of the story," Crocco says. Orders followed as the Hublot turned in a stunning debut performance. But the real work lay ahead. The next and most critical step was marketing the product. Although first-year sales hit a respectable $2 million, Crocco wanted more. "It's a good feeling knowing you have a unique watch," he says, "but if you can't break into the luxury watch market, you're doomed."
Just as Crocco knew what he wanted his watch to look like, he also had definite ideas about how it should be positioned. To capture the attention of well-heeled buyers, he pinpointed exclusive jewelry stores. "Image is critical," he stresses.
The distribution of the watches was also important. Rather than turn the distribution process over to a wholesaler, Crocco set up offices in key European cities and set his sights on breaking into the U.S. market.
Once the distribution machinery is in place, it takes time, patience and lots of high-class selling to launch a luxury product, according to Goldstein. "This is not a fast-buck business," he says. It requires a subtle blend of sophisticated marketing and advertising, superior service and low-pressure selling. And even if all those factors are working together, it still takes about five years to build relationships with exclusive jewelry stores.
"The watch market is crowded," Goldstein adds. "There is plenty of competition in all price ranges." In Crocco's market, the very high end, that means facing off against formidable superstars like Rolex, Patek Philippe, Vacheron Constantin and Cartier.
Getting retailers to commit to any watch line takes arm-twisting. And persuading an exclusive watch dealer to plunk down hefty sums for a pricey watch that may be difficult to sell requires the patience of Job. "You can't blame retailers for being skeptical," says Goldstein. "We were asking them to invest thousands of dollars in a watch they'd never tested."
Most exclusive jewelry stores didn't know what to make of the offbeat timepiece. Some felt the rubber watchband was absurd, a radical break from tradition. In short, "many dealers were afraid of being pioneers," says Edward Suhyda, the company's western regional sales manager for the United States. "They were afraid of going out on a limb."
Nobody understands the dealer mentality better than Suhyda. Prior to joining the company, he owned a jewelry store in the Ft. Lauderdale, Florida, area and was the largest Hublot dealer in the United States. He loved the watch so much that in 1994, he asked to join the company.
The key to the Hublot's success was committed salespeople like Suhyda who believed in the product and could walk into exclusive jewelry stores and make a compelling presentation. "Selling the Hublot was a two-step process," Goldstein recalls. "First, we had to convince retailers to try it. Once they were convinced, we had to teach them how to sell it to their customers."
Americans were a particularly hard sell. Crocco introduced the Hublot to the United States in 1984 but didn't make real inroads until 1990.
"Breaking into the States was an uphill journey all the way," Crocco says. "In the mid-1980s, the American market wasn't ready to understand the concept. Even after potential buyers got past the quirkiness of the rubber strap, they didn't understand the watch was a long-term investment. They couldn't see spending a lot of money on this watch when they could buy a sturdy Japanese watch for much less."
"Most Americans were unwilling to buy the Hublot because it had no track record," Suhyda concurs. "They'd heard of Rolex, but they had never heard of Hublot and were skeptical. They mistakenly thought they were spending a great deal of money for a rubber watchband. We had to explain to them that they were spending a lot for the watch, not the band."
Crocco wouldn't give up. Building his family's watch line had taught him that a sophisticated publicity campaign using slick print ads in top consumer and trade magazines would eventually work. In 1993, he launched a marketing campaign to let potential buyers know that an impressive lineup of the rich and famous proudly wear Hublots. The list includes King Carl Gustav of Sweden, Prince Albert of Monaco, Giorgio Armani, Sylvester Stallone, Candice Bergen, Elton John, and former New York Knicks coach Pat Riley.
By 1985, the Hublot was enjoying well-deserved recognition throughout Europe. But just as sales hit a steady upswing, Crocco discovered an unforeseen problem: Counterfeit knockoffs of the Hublot were popping up all over the place.
Imitation is said to be the highest form of flattery, but Crocco wasn't amused. The Hublot knockoffs put a serious crimp in sales. Although Goldstein says most were "cheap imitations," some of the copies were so good, it was hard to tell them from the real thing. Stopping the counterfeiters was a long and expensive process. It took a few years and eye-popping legal fees, but Crocco prosecuted and put the counterfeiters out of business.
Dreams Come True
Today, the Hublot is a hit worldwide. It's been quite a ride, but Crocco's dreams have come true. Looking back, he says it's an incredible feeling to find out your instincts were right. It took longer and required more money than anticipated to launch his company, but the end dramatically justified the means.
"Early in the process, I learned that you can't give up, no matter how tough it seems," Crocco says. "If you love and believe in what you're doing, stick with it. Things will turn around." This elegant entrepreneur, heralded as the "watchmaker's watchmaker," is living proof of that.
Bob Weinstein is the author of eight books and a regular contributor to Entrepreneur.