Thread: Michael Kobold's Letter To AskMen

Watch Snob was a good read this week, and this letter I think is worth posting and discussing - Kobold Watch Challenge - AskMen

In response to the original criticism - Kobold Watches - AskMen


Since the letter is very long, I will make a separate post with it in it's entirety.
Also, I know I shared this letter on another forum already but I figured it was worth sharing again.

WARNING IT IS A VERY LONG RESPONSE!!!

Michael Kobold's Letter To AskMen

Although in his column the Watch Snob has correctly identified an industry-wide problem (i.e., watch companies using smoke-and-mirrors techniques to dupe unsuspecting customers into buying their overpriced watches), he clearly has got some of his facts wrong.

It has sadly become a prevailing industry practice to use base ETA (or other) calibers and combine them with cases made in China that cost between $25 and $60 [U.S. dollars] per unit. Swiss and German laws regarding the use of the terms "Swiss Made" and "Made in Germany" are very lax, which allows watch companies to identify their watches as such, even though critical components (i.e., the case) are made in a low-cost country such as China.

Including assembly and all other components (dial, hands, band and box), a watch produced in this manner typically costs less than $200 to make. Depending on the relevant watch company's brand positioning, said watch will then retail for between $1,000 and $5,000. The profit margins of these watches are astronomical. Numerous very large and powerful watch companies have amassed a great deal of wealth precisely in this manner, all the while misleading the public by using the "Swiss Made" or "Made in Germany" trademarks.

Making a large profit is in itself not a bad thing. Time has proven that capitalism, as flawed as it may be at times, is still better than the alternative options. Typically, profits are reinvested into R&D in order to identify better technologies, increase product quality and to lead the way into a better future. At least that is the case in theory. What has happened in the watch industry (and in a number of other cottage industries that faced exploding costs in their traditional places of production in the 1990s), instead, is that manufacturing and artisanal jobs were cut at home in favor of low-cost jobs overseas. This has caused two problems.

First, the loss of jobs affects the individuals and their families, as well as the specific country's economy. Just last summer I toured a very prestigious watchcase manufacturer in the Swiss Jura who had to shut his company's doors and lay off some 60 employees. Until then, the company had been led by the fifth generation of expert watchcase makers. Instead of regrouping and working with fewer people, the owners decided to abandon the watch industry altogether. Today, they import solar panels from China.

The second problem is the permanent erosion of trade-specific know-how in these former centers of the watch industry. Europe is losing its cutting-edge technology much in the same way that the U.S. has lost a lot of its manufacturing expertise.

As a lifelong collector of watches, I find these practices abhorrent. I started with Swatch when I was 6 years old, and over the course of 25 years progressed to Chronoswiss, Patek Philippe and vintage Rolex. I have spent my entire adult life, from when I was 17 years old, in the watch industry. As a result, I came to benefit from the tutelage of men like Helmut Sinn (founder of Sinn watches) and Gerd-Rudiger Lang (founder of Chronoswiss). These men have taught me a thing or two about creating a unique product and selling it by way of an enticing story.

However, the practice of selling cheaply made watches that are essentially from China (for they may also be assembled there) is not unique, nor is stamping "Swiss Made" on the dial of such watches any part of telling an enticing story. It's selling watches by way of an elaborate ruse.

At Kobold we do things very differently, and it's my firm belief in the fairness of our products and our trade practices that has led me to write this response to the Watch Snob's column.

First, Kobold does not simply "bury" ETA movements into oversize watch cases. The term "bury" is misleading in the sense that it implies that we, as a company, are not proud of using these movements. We are!

Although any connoisseur of fine mechanical watches will agree that ETA movements are not the most exclusive in the world, as a watch manufacturer I know that my company's customers can rely on these movements no matter how much abuse they take. It's actually an ETA movement that can take a licking and keep on ticking! Why is this so important? Because Kobold watches are made for men who abuse their watches in all types of harsh conditions.

This brings me to my second objection: The implication that we use smoke-and-mirrors tactics to somehow dupe unsuspecting customers into buying our watches. The facts are simply this: We are a company that prides itself on producing "watches for adventurers, by adventurers." Unlike some of our biggest competitors, this is not just empty marketing speak. The Soarway line of watches, which comprises almost all of our products, is based on a case we have decided to call the Soarway case. This case isn't just something that was preexisting and that we simply picked off some watchcase manufacturer's shelf and called it our own. It was designed by me and with the close help of none other than Gerd-R. Lang of Chronoswiss and Sir Ranulph Fiennes.

Sir Ranulph, as you may not know, has been called "the world's greatest living explorer" by the Guinness Book of World Records. As a legendary polar explorer and former Rolex brand ambassador, Sir Ranulph is quite well-versed when it comes to the requirements of a professional-grade "tool watch." Since Kobold markets its watches as adventurer's watches, Sir Ranulph's input from the very start of the Soarway case's design phase was invaluable.

Although I take great pride in my company's watches, I cannot take all the credit for their success. Men like Philippe Cousteau, grandson of the legendary oceanographer, Sir Stirling Moss, the Formula 1 driver of yesteryear, and a number of U.S. Navy SEALs have all helped me to develop various Kobold watches over the years. While other companies purport to make watches for pilots, divers, etc., Kobold watches are actually designed with the direct input of these types of individuals.

The Soarway case is now in its 11th year of production, which perhaps is an indicator of how popular it has become. In fact, it has consistently been copied by other, smaller watch companies who clearly source their components from Asia, either directly or through middlemen.

Finally, as concerns Kobold's pricing, which has been heavily criticized by the Watch Snob, we are in line with our "Swiss" competitors who also use ETA movements but who apparently source their cases in Asia -- this, despite us having far higher per-unit costs. Take, for example, the Soarway case. Made in the USA, its basic components cost far more (about 10 to 15 times) to manufacture here than for how much one can purchase an entire watchcase of decent quality from China. Add to that the significantly higher costs of labor in the U.S. and you can imagine why I find our pricing to be relatively low in light of the fact that all our watches are assembled in the U.S. If we were to apply the same margin calculations to our watches that our so-called Swiss Made competitors apply to their products, we would charge an average of $15,000 per watch.

Instead, we have learned to become efficient enough to live with lower margins and still find ways to innovate. For example, we invested hundreds of thousands of dollars into research and development in order to come out with the first serially produced U.S.-made case in almost 40 years. That was in 2008. Today, almost all Kobold cases are made in the States and we have plans to do more. We have capitalized on highly precise equipment to make our case components and hope that before 2013 ends, all Kobold watches will be semi-made in the USA. Of course, unlike our Swiss competitors who freely and legally bastardize the Swiss Made trademark, the U.S. Federal Trade Commission bars us from putting "Made in USA" on our watches, even though they are far more U.S.-made than the "Swiss Made" watches of our competitors.

(Continued in the next post)

Lastly, our little horological endeavor here in Pittsburgh has created local manufacturing jobs; helped to revive an otherwise dead industry; and created a stir this side of the Atlantic, for today we find ourselves in good company, as many smaller watch brands based in America have decided to follow our lead and jump on the bandwagon of American watchmaking. Over a hundred years ago, America was the world's leading producer of good mechanical watches and in fact taught the Swiss a few tricks along the way. If Kobold has its way, we will one day see our own cottage industry spring up here again, and once that is reality, we can focus on more than just making watchcases. So far, we have used the lull of the recession to spend the significant time and effort required to tool up for more locally made products.

It is my wish and goal that in the future we produce certain movement components here in Pittsburgh, and I think this, too, will become a reality. When I started this business, all I had was $5,000 and the trust of one of the leading watchmakers of our time. Look what has come of that in just a matter of some 13 years.

Will we ever make a complete movement here? Only if we can do so at least as well as ETA does, because our customers are less interested in the mechanical exclusivity of the movement inside Kobold watches than they are in knowing that they can tempt fate for fun or profit and rely on their Kobold in all situations. There is a reason why we sell so many watches to members of the military, in particular to SEALs, Force Recon Marines and Army Special Forces. These watches hold what they promise.

This has become a rather lengthy email, but it is my hope that the Watch Snob is now more well-informed and can make a more reasonable assessment of the situation as a whole and as it concerns Kobold in particular.

I would like to reiterate my invitation to the Watch Snob to visit us in Pittsburgh and tour our operations. Please contact me directly if you have any questions or comments.

Very sincerely yours,
Michael Kobold
Founder, CEO,
Kobold Watches

Awesome response. Very well written and he certainly brings up some interesting points.

Read the original a few weeks ago when it all began. Love the response they gave!

I actually was really interested in Kobolds when I started to look at sport watches.
thanks for posting this and I love to see how it plays out...

So I just read all of this including some of the words used by the Watch Snob in his first comments that illicited Michael's response.

Watch Snob commenting on Kobold:

"The whole oversized “tool”-watch craze has never made sense to me, but Kobold watches take it to an entirely new level. Its website is littered with melodramatic rubbish about “special forces” and “tactical operations,” yet the only people I see wearing the watches are television actors. I am waiting to hear how a stock ETA movement buried deep inside a 15mm steel case is worth $5,000. Every new Kobold watch gives legions of sofa-dwelling oafs an erection, as they escape the honey-do lists and live out their fantasies driving their minivans to shoot paintball guns at each other. I’m starting to think “tool watch” is in reference to the owner and not the watch."

I felt this statement was too strong and intentionally exagerated for dramatic effect. If he would have said that about JLC's navy seal watches I would have agreed 100%. But as Michael has pointed out, and as I have witnessed myself, their are a significant amount of military and law-enforcement personnel that actually use and wear Kobold's. Where in as I have yet to see narry one Navy Seal member wear a $10,000 a piece Master Compressor.

Now, I will give you the Kobold problem in a nutshell as I identified it years ago. I was holding a Omega Planet Ocean purchased for $2500 in one hand and a new Kobold Arctic Diver I had just paid about $2200 for in the other hand. The delima is a simple one, the fit, finish and overall quality of the Omega trounced that of the Kobold. You can see and feel the decades upon decades of Omega refinements and advancements culminate in the Planet Ocean. The Kobold felt crude, basic and not very far down the evolutionary watch scale in my side by side assessment.

In short, you get significantly more watch from other manufacturers for the same or less money than you do with a Kobold. And unfortunately, most regular watch consumers rarely consider the other qualities mentioned in his response when choosing a watch.

That being said I have owned several Kobolds and would not hesitate to buy another if I was able to secure it based on pre-order pricing or on the second hand market. Michael Kobold, you can send us a watch and we would be happy to photograph and review it for you.

Sal when you review the watch, were you intending on flying me out to Socal to take the pictures for the review, or would you like the watch sent here to be photographed and then I fly you out to write the review? haha

Here's to hoping Michael Kobold has a google alert setup for his name.