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What makes a brand “Micro”? If you read online discussion of watches, you almost certainly have come across some debate about what the term means. The topic seems to come up weekly in the Microbrands group on Facebook, and with similar frequency on forums like Watchuseek.
A Google search for “what is a microbrand” turns up a wiki page, a Quora discussion, articles from Hodinkee and at least a half dozen other blogs, plus articles posted by brand owners themselves, and even news outlets like Forbes (albeit, that article was about small brands generally, not watches specifically).
I don’t have any official authority to tell anyone else what it means. But as the owner of a brand which has been described as such, and as many of my friends likewise run similar businesses, we as a group might be considered the authorities on the matter. And so we took it upon ourselves to discuss what we have in common, with the sole intent of trying to figure out what we as a group believe the term ought to mean.
Part of the confusion seems to be that many people will use the term to describe any new brand, any obscure or merely not-very-well-known brand, any brand which seems to have low production numbers, and independent watchmakers who make and sell watches under their own names. An argument can certainly be made for why any of these ought to be called “micro”.
But the truth is that some new brands have operations, production volumes and sales figures which aren’t that small. Some brands with low production numbers aren’t very small businesses. And the inclusion of some independent watchmakers is somewhat like equating an elite personal chef to the owner of a popular restaurant - while both make and serve food, the differences in what they actually do make them quite different businesses.
It was this wide-spread ambiguity which led about two dozen of us who thought of ourselves as “microbrand” owners to discuss what we thought the term meant.
WHAT THE MICROS SAY MICROS ARE...
We found that even among a group of people engaged in running similar businesses, there was some disagreement over some aspects, especially pricing. But we did eventually form a consensus around some things we thought we all had in common (more or less), and we came up with this loose definition…
Microbrands are brands that meet *MOST* of these criteria:
Although it didn’t make it into the definition above, one aspect which I thought was worth including is this – if someone is talking about starting a microbrand, but hasn’t delivered anything yet, they’re not a microbrand owner yet. This ought to be obvious. To be a business owner, you have to have delivered a product, and until you do, you’re just talking about doing it.
Also, and I know some won’t like this, but in my mind, you’re not “officially” a microbrand until you’ve delivered your second model. Even if you’ve delivered your first model successfully, if you never deliver another, then you just did a one-off watch project, never to be heard from again. In my mind, microbrands are businesses, and businesses have ongoing operations. If your operation isn’t ongoing, it isn’t a business, and so there’s no “brand”, just a one-and-done watch project.
Even after putting that fairly loose and seemingly agreeable definition out into the world, we’ve still seen debate about it. As such, I thought it might help to do a little explanation of why this is our definition, and why a lot of businesses frequently described as "micros" don’t fit the description.
WHAT'S SMALLER THAN SMALL?
Likely the easiest way to start is to focus on the “micro” part. Micro essentially means smaller than just “small”.
Whereas "small businesses" can actually be fairly large in the USA, the EU defines businesses as "small" when they have fewer than 50 employees, and in Australia, it's just fifteen.
Most microbrands are one-person operations, or at most, they have a very small number of employees. But since most microbrands are privately held, their sales figures aren’t known, and most of us aren’t likely to tell you.
NO, I'M NOT TELLING YOU WHAT MY ANNUAL SALES ARE.
As such, the best proxy for sales is to look at their annual production of new models, but we might also look at their retail distribution, their promotional efforts (in the form of advertising, which gives an indication of their advertising budgets), and the quality and quantity of their photography and other media content (like polished videos), which demonstrates the level of their own investment in their sales success.
Most microbrands are outsourcing production (which is the norm in the industry, by the way, even for large brands). Factories typically require a 500-piece MOQ (“minimum order quantity") per production, but some will accept 300, and I’ve heard of a handful which will accept even lower numbers. But using 300-500 pieces as the norm, we can infer that a company which releases a new model or announces a new production of an existing model twice a year is likely making (and hopefully selling) 600-1000 pieces per year.
That’s a fairly small annual production number when compared to the likes of the big-name luxury brands, the big Japanese brands, and just about any fashion brand available in the mass market. If we say that the average price of a microbrand watch is $300-$400, give or take, you can quickly arrive at a gross annual revenue number of $180,000 to $400,000 (this is not to be confused with “profits”, or “cash flow”, as there could easily be none of either, as is often the case for many micros, especially in the early years).
NEW ISN'T THE SAME AS SMALL...
Just because a brand is new doesn’t make it “small” (or for that matter, “micro”). Brands like AVI-8 and Spinnaker, which bypass crowd-funding and pre-orders, with huge ad budgets, and with dozens of models available on Amazon and many other sites immediately after launch, are obviously not “micro”.
In fact, those brands and others similar to them are owned by large conglomerates. Although not as well known as the Swatch Group, companies like Solar Time in Hong Kong, owners of AVI-8 and Spinnaker, among several other brands, including all those above, and some others not shown in that graphic, can nonetheless own a dozen or more brands. They have well-developed retail sales networks in place and ready when they launch new brands.
SOMETIMES NEW BRANDS START OUT BIG. SOMETIMES SMALL VOLUME CAN STILL GENERATE BIG NUMBERS. SOMETIMES SMALL JUST MEANS SOMETHING ELSE ENTIRELY...
Even if a new brand doesn’t have the expansive infrastructure of a Solar Time working behind the scenes, brands like Farer and Autodromo seem better capitalized than most typically bootstrapped micro, and with what seem to be well-established connections for immediate and wide-spread retail distribution, along with the commensurate investments in promotion and marketing.
One of the founders of Farer told me when we met at a watch fair that he and his co-founder were former employees of a global retail chain, which helps explain Farer's near-instant prominence within bricks-and-mortar retail.
Brands like MB&F and Devon, who make a smaller volume of watches which sell for tens of thousands of dollars clearly have more resources than most micros.
This is also true for brands like RGM, Sinn, Damasko, and Habring2, even if they’re all making watches in smaller volumes.
And what about independent watchmakers like Richard Paige or Keaton Myrick, turning out what we might call horological art, but often doing so one piece at a time, where many of the watches they make are truly one-of-a-kind?
While I and most other microbrand owners have nothing but respect and admiration for what those independent watchmakers do, calling them "microbrands" is very much like comparing an elite personal chef working alone to someone who owns and runs a popular restaurant.
WE NEED MORE AND BETTER TERMS, WITH MORE PRECISE DEFINITIONS...
While we deliberately did NOT put any sort of price limit on “microbrand” watches, clearly some of these people and brands deserve a better description than for all of us to be called “micro” and judged on the same scorecard, no?
As such, it may benefit the community to begin using alternative terms, such as “boutique” brands, or "independent watchmakers", to describe those professionals and businesses which are clearly different, in terms of the market awareness for what they do, their retail distribution, time in business, available resources, and any other aspects which set them apart from what we typically think of as a “microbrand”.
WHO'S REALLY CUTTING OUT THE MIDDLE MAN? THE FACTORIES NOW ARE, AND YES, IT'S DISRUPTIVE...
In recent years, we’ve seen an increase in the number of what might best be described as “factory-direct” brands. These are brands owned by the factories (or their key employees), which often produce watches for microbrands (and big brands), but which now also make watches under their own brand marks, to sell directly to consumers, often at prices which seem too good to be true.
While some of these brands are run (and priced) much like microbrands, many of the newer ones aren’t. We’ve seen that some aren’t above using tooling that their microbrand clients have paid for to produce their own factory-branded models. Many are making lower-quality goods, and/or offer little to no post-sale support, which seems to go hand-in-hand with the too-good-to-be-true pricing.
As such, we as microbrands would rather not be lumped in and associated with those factory-direct brands, just as we don't want to be associated with fraudulent crowd-funding projects, as both are likely to give microbrands a bad name.
I KNOW ONE WHEN I SEE ONE...
Speaking as a microbrand owner, we don't exactly have a "secret handshake", but there is an informal fraternity whose members seem to recognize each other fairly easily by our behaviors in business.
Our intention in coming up with a definition for "micro" was to try to encapsulate what we saw in each other, for the benefit of those enthusiasts who seem so intent on seeing not just WHO we are, but also WHAT we are.
Whether you agree with me on all of the above or not, it seems likely that “microbrand” will continue to be a debatable term unless and until the market (likely led by enthusiasts) reaches some sort of consensus.
Until that day, I’d suggest that the criteria we microbands came up with be used as a general guideline, and in any case of a person or business which doesn't seem to precisely fit, we all adopt a stance somewhat like the one Supreme Court Justice Potter Stewart used to describe “pornography” – “I know it when I see it.”
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We are excited to have CEO, Bartek Mazurek, as our newest online seller, helping NTH expand its footprint in Poland and beyond.
