We are live at NetSuite SuiteWorld 2018, in Las Vegas.
I'm Michael Krigsman.
I'm an industry analyst and the host of CxOTalk.
I'm speaking with Tony Drockton, who is the founder of Hammitt.
Hey, Tony.
How are you?
How are you doing, Michael?
Good.
Tony, tell us about Hammitt.
[Laughter] [Laughter] We're a southern California based
designer handbag line, rapidly growing, and we just celebrated our ten-year anniversary.
Congratulations.
Handbags, and you've been growing rapidly.
How fast have you been growing?
The last four years, about 40% a year.
We just broke 800 points of distribution in the U.S. Primarily, we sell through our retail
partners in the wholesale channel.
Our online, direct to consumer, has grown about 300% year-over-year.
Wow.
[Laughter] [Laughter]
It's an extraordinary growth rate.
I think the obvious question is, how do you manage a business that's growing that rapidly?
Because it's been ten years, and the rapid growth has come on the tail end, I think the
key was a strong base.
Luckily, "The Great Recession" held me back for five years.
I was able to really block and tackle and get ready for this spurt over the last four
years.
I think it starts with great people.
Obviously, we've got some processes in place.
Then the product; it has to deliver.
A big part of your success is the relationship that you have with your customers and your
community.
Tell us about that.
In the fashion industry ten years ago, when I got into it, it took me a couple of years
to get my feet wet because I'm not a veteran.
I figured out that there's a lot of conflict.
Everybody thought they were fighting over the same one customer.
I took a different approach, and I embraced retail partners, both in wholesale, online,
offline, always with the vision that the customer is the most important person, and developed
a business philosophy, which was all about that customer.
We like to say at Hammitt we have what is called price integrity, brand integrity, and
product integrity.
What you see is what you get.
My goal is, if two Hammitt fans are on a plane sitting next to each other and they compare
notes, they share the same story.
If I get to that point one day, to me it's almost the holy grail.
We hear a lot of companies talk about placing the customer in the center, but it's really
hard to do that.
In a practical way, what are the steps or the issues that you address in order to make
that happen?
Well, I think the customer is a little bit of a wider term at Hammitt.
To me, it's the artisans that make the bags.
They're my customer.
First, I have to make sure they believe in the vision.
It's the team members in the company.
They're also my customer.
I get them behind that ultimate goal of who we are.
Then, with a great product and a great team, finding people out there that can sell, that
can carry our brand, and that can really deliver on that vision every day — that's the third
hardest step.
When you get all three of those, the rest takes care of itself.
The ideal goal for me is, wherever a new fan, an existing fan, or a fan that maybe purchased
their Hammitt three years ago encounters us again, they have a similar experience.
Advocacy, passion, almost, "Wow!
I just love that bag.
I love Hammitt."
It's a goal.
You talk about fans, not customers.
[Laughter] Yeah, I do.
I do, and way before social [media].
Fans, advocates, you can call them what you want, but clients, I guess, would be the term.
To me, it's a one-on-one relationship that you cannot create.
You have to embrace it.
You have to be authentic.
You have to be transparent.
Words are easy; actions are a lot more difficult.
Follow through, to me, is the real key ingredient, even in the worst of times, especially when
the customer or client has a problem or an issue.
That's when you have to deliver on everything.
When you say follow-up, elaborate on that.
Well, I think, between advertising and marketing, most companies, I see, do a really good job
of getting to the point of purchase.
Maybe when they throw the handbag into that digital shopping cart or they touch it at
the store for the first time and maybe even purchase it, to me, at that point, that's
when the advocacy has to start.
That's when the relationship begins.
The minute they put the bag on their arm and they walk out of the store or they open the
box at their house, that's where the work really begins because, then, what is it you're
all about?
Are you delivering on those promises?
If they compare notes with someone else about how much they paid, about the promises that
were made, if they wear it for a long time and then the quality is not there, then the
relationship ends.
But, if they wear it for a long time and it delivers on quality, if they walk up to someone
on the street and compare where they got it and how much they paid, and if they look at
the two products that have the same name on them and they have the identical quality,
you've created two customers for life.
The brand equity, how does that connect to this fan relationship that you've just been
describing?
Well, I mean I think I'd like to say we have a lot of brand equity.
We're a fast-growing brand, but we're up against some much better-known brands.
I think brand equity can only be earned.
It can't be purchased.
I've always believed that.
You earn that with the efforts that you do every day with, again, those customers, the
team members, the artisans, everyone.
As it builds, and builds, and builds, it just kind of takes care of itself until you reach
that Malcolm Gladwell tipping point, and then, all of a sudden, you're an overnight success
that took 10, 20, 30 years.
How do you compete against these larger companies?
When I think of the word "competition," again it goes to that limited pie.
Instead, I really think about it more of embracing or trying to become part of that conversation.
If you're really looking at somebody as a competitor, [it's] turning that relationship
around and seeing what they are doing right.
We've embraced the European model of the designer world, the luxury world, which, again, it's
price integrity, brand integrity, product integrity.
It's designing craftsmanship first, brand second, taking care of that customer, as I
said, well after the first time they encounter your brand.
We've embraced that model, and that takes years, centuries, probably beyond my lifetime
to really become even a deep part of the conversation.
Right now, we sit next to some of those brands in a lot of our retail partners in the U.S.
To me, that's the start.
We're part of that conversation.
You're focused on really substantive values as opposed to flash in the pants social media.
[Laughter] We really are.
We really are.
It took ten years to get where we're at
when I launched ten years ago as an entrepreneur. I'm a quick start guy.
I'm literally the quarterback with the two-minute warning.
We're behind.
Hurry up, offense.
Three-plays.
I'm go, go, go, go as an entrepreneur.
Then, I had to slow down about five years in and realized this is going to take a lot
longer than I thought.
We've been talking about brand building, but that's different from managing a fast-growing
company.
Yes.
Tell us.
How do you manage the systems, the processes, the tools?
We launched with NetSuite, which to me was a strong back-end.
It's sort of like launching with a great, small management team that can do almost anything.
Right?
We launched with that from the technology perspective.
Then, in the beginning, we had a few key players that wore many hats, including myself.
Every time we grew a little bit, we added a specialist or somebody that was either better
than me or could take over their duties.
We layered in some additional software either within the NetSuite category or things that
could API or talk to it.
In managing now the rapid growth that's happened, those strong building blocks of people and
technology, layered in with, I think, some great processes, for example, budgeting--knowing
when to follow the budget, knowing when to break the budget because the opportunity is
too big. That's the key to growth.
You don't want to be so structured, have systems in place so strong that you miss opportunities
to really explode.
At the same time, you have to say no to a lot of opportunities either because your capital
constrained, you're people constrained, or you're product constrained.
Managing both sides of that is the key to consistent, fast growth.
How do you maintain the quality as you grow?
We don't.
[Laughter] No, I'm joking.
[Laughter] [Laughter] I'm sure you just sort of let it
go to seed and whatever.
Quality?
What's quality?
[Laughter] Whatever happens, happens, right?
Hey, you know.
[Laughter] We actually have a lifetime, no question warrantee - a shameless plug.
We don't just say it.
We mean it.
We replace bags.
We repair bags for any reason at any time.
It's an old-school model, isn't it?
Some great brands of the past did it.
To ensure quality, we pick great partners to make our bags.
If you have to have an inspector on premise for your artisans that are making the products
every step of the way, you need a new partner.
We sifted through a few in the beginning.
We found one great partner that really creates every bag by hand one at a time, not just
for us, but for other global brands.
To be honest with you, it's just turn on and go.
We're very lucky.
We like to say when we design a Hammitt, we start with our own signature silhouettes.
Then we wrap it in the softest Italian leather, layer on some functionality and versatility,
and then we put our signature rivet detail on it, so they're distinct and all of the
quality of manufacturing that lies on our partner, and I trust them, and I trust the
company that they're with.
Okay.
Tony Drockton, thank you so much and congratulations on your success.
Michael, thanks for having me here.