Shinola Takes Its ‘Detroit Cool’ Message on the Road
DETROIT — “When I first saw this neighborhood, I thought: ‘You want to put a store here? You kidding me?’” said Tom Kartsotis, the Shinola founder, recalling his initial tour of Detroit’s Cass Corridor, where he opened his company’s flagship two and a half years ago, with a couple of colleagues. While there were signs of resurgence, he said, “This was a rough part of town.”
As recently as a few years ago, when Mr. Kartsotis started his company known for its “Built in Detroit” watches, bicycles and leather goods, these blocks were on the fringe of an infamous skid row, the city was sliding toward bankruptcy, and the words “luxury” and “Detroit” were rarely paired outside the executive suites of Cadillac.
Shinola, with revenues of $60 million in 2014, has not only contributed hundreds of jobs to an unlikely Detroit renaissance, but it has also become a handy symbol of it. After buying more than a dozen Shinola watches last year, Bill Clinton said in a speech, “We need more American success stories like Shinola in Detroit.”
But even as Shinola has become a feel-good story for a city that needed one, questions linger. Mr. Kartsotis is a moneyman from Dallas. Not one of the company’s top executives is from the city. So how Detroit is Shinola? Is it “Detroit” enough?
Despite the city’s well-chronicled woes, Mr. Kartsotis came to town in what, in retrospect, seems like perfect timing. By 2012, when Shinola hired its first nine assembly workers, Detroit — select neighborhoods, at least — was already well into a striking resurgence. Downtown, elegant prewar skyscrapers that had sat hauntingly empty for years had begun to fill up with luxury apartments and hotels. Within a few years, a John Varvatos boutique would sprout on Woodward Avenue.
Even so, with tens of thousands of blighted buildings, and an unemployment figure hovering around 18 percent, no one seemed to be crying out for $19.95 linen-bound journals made from acid-free paper sourced from sustainably managed North American forests.
“It’s a little nutty,” Mr. Kartsotis said of the Shinola concept, hunched over an oversize burger at the Bronx Bar, an old-school tavern near the Shinola flagship. “I think that might be part of its charm.”
In Detroit, Mr. Kartsotis gets a lot of ink — he has been cast as a savior, a carpetbagger — but you rarely hear him weigh in on the debate. The 56-year-old entrepreneur almost never speaks to the news media, and even though he stands out at 6-foot-7, with his surferish mop of gray hair, he has not posed for a press photo, he said, in 30 years. (Just try an Internet search.)
Even that afternoon, dining in this blue-collar bar with the Shinola president, Jacques Panis, Mr. Kartsotis seemed to be wearing a form of camouflage: dressed in jeans, work boots and an untucked plaid shirt that looked more Walmart than Filson — a chic heritage brand he owns — he looked as if he had spent the morning hanging Sheetrock.
He was explaining the Shinola mission.
“We’re not a watch company,” Mr. Kartsotis said. “I did not want to build another watch company. This company really started as a job-creation vehicle.”
True, no one on his team had any ties to Detroit. They chose the city, they said, because, well, it needed jobs, and because of its legacy as an industrial powerhouse. “When you think manufacturing, you think Detroit,” Mr. Kartsotis said. The fact that later internal research indicated that Detroit — a city that many seemed to want to throw money at — might be a potential marketing windfall certainly did not hurt.
Starting with the original nine employees, Shinola (its name was appropriated from a popular prewar shoe polish) now employs more than 500. The company’s signature Runwell watch ($550), which calls to mind a 1940s nautical gauge, can be found in Neiman Marcus, in Colette in Paris, even in the Abu Dhabi airport.
After recent openings in Miami; Dallas; and Palo Alto, Calif., Shinola has a dozen gleaming boutiques scattered around the country, along with one in London, selling American-made watches, bicycles and leather goods marketed as a blend of contemporary sleekness and a timeless Norman Rockwell sturdiness, with a heavy emphasis on its Motor City roots. (The word “retro,” however, is verboten around Shinola headquarters.)
Shinola plans to open three more stores beginning this summer, in Dumbo, Brooklyn; the trendy Arts District in Los Angeles; and Chicago. At around 5,000 square feet apiece, the ones in Brooklyn and Los Angeles may be considered minimalls for cool kids.
The Los Angeles location, for instance, will feature a bakery outpost of the Smile, the celebrity-friendly NoHo restaurant owned by a group includingCarlos Quirarte, one of downtown Manhattan’s most influential scenemakers, and a Saved Tattoo studio by Scott Campbell, a tattoo artist and fine artist who has inked the likes of Marc Jacobs and Penélope Cruz.
The pricing of some merchandise is a far cry from Detroit’s union-scale roots. The Shinola Runwell bicycle, a no-nonsense city bike, goes for $2,950, the same price as many good carbon-frame road bikes.
But Shinola is selling the idea of lineage: Its lugged-steel frame is manufactured by Waterford, a lauded Wisconsin-based maker of custom bikes (Richard Schwinn is a founder), and designed by Sky Yaeger, who helped turn bikes into fashion items during her years at Bianchi and Swobo.
The marketing is built on the back story, and the back story is that origin counts. “In today’s world, people want to know who’s making their food, where it’s coming from,” Mr. Kartsotis said. Is it the same with $230 goose-feather dog beds designed with the fashion photographer Bruce Weber?
Many national media outlets have seemingly bought in. Adweek recently called Shinola “the coolest brand in America.” In 2014, The Washington Post called it an “innovative giant” in “understanding the consumer zeitgeist.”
Indeed, Shinola scored a hipster hat trick, unveiling a brand that married “Americana,” “locavore” and “small batch” at the height of the artisanal era. It didn’t hurt that it was Detroit, a city that has defined “authentic” for indie types from the days of the Stooges, who came from nearby Ann Arbor, right through to the White Stripes.
Anyone who has read the fine print, however, knows that Shinola was not started in a garage by a couple of post-grads with Stonewall Jackson beards, but by the mogul who founded Fossil watches as a 24-year-old college dropout and ticket scalper in Dallas, and built it, with his brother, Kosta, into an empire worth more than $1 billion.
Mr. Kartsotis currently runs Bedrock Manufacturing Company, a Plano, Tex.-based brand development and investment firm that is quickly becoming Hipster Inc., given that it controls Shinola; Filson, which Mr. Kartsotis hopes to build into another Burberry; an animation film studio; and a stake in Steven Alan.
Not everyone gets sucked in by Shinola’s golden-age-of-industry aura. In a 2014 takedown, the men’s style site Four Pins asserted that “Shinola isn’t really a Detroit company,” comparing it instead to “a trust fund kid that decided one day he wanted to start a company and had his dad buy him all the cool stuff.”
In a 2013 review of Shinola’s TriBeCa store in The New York Times’s Critical Shopper column, Jon Caramanica described Mr. Kartsotis as “a midprice watch mogul looking to go luxury under the cover of charitable business practices.”
As a symbol of Detroit gentrification — always a tangled issue in a town where issues of race and social class burn deep — Shinola has also taken shots.
Last February, to cite just one example, Rebekah Modrak, an associate professor at the University of Michigan’s school of art and design, made Shinola Exhibit A in an online essay that took aim at “bougie” garbage (she used a stronger term) that “uses the design aesthetic of ‘calculated authenticity’” and serves as a harbinger of an invasion by moneyed outsiders.
Mr. Kartsotis rolled his eyes at the suggestion that he is an economic imperialist looking to profit off Detroit chic.
“Profit?” he asked ironically. “What’s that?”
Despite Shinola’s successes, including investment from the likes of Dan Gilbert, the Quicken Loans founder who is spurring considerable development downtown, it is still running in the red, Mr. Kartsotis said. That is in part because the company pays hourly workers at least $3 more than the $8.50 minimum wage and absorbs the cost of worker training itself.
Even so, management is already preparing to unveil Shinola, Part II.
This fall, the company will introduce an audio line of turntables, speakers and, most important, audiophile-quality headphones, rendered in leather and brushed stainless steel, which it intends to sell for $450 to $650. Its founders think those will become one of its biggest revenue drivers.
“We read about Beats by Dre selling to Apple for $3 billion and we thought, ‘Huh,’” Mr. Kartsotis said with a smile.
Initially, the audio equipment will be manufactured in the company’s midtown headquarters, although Shinola recently purchased an abandoned creamery in the same area where it plans to create a free-standing audio factory.
A market that potentially is even bigger than headphones, Mr. Kartsotis said, is eyewear, which the company hopes to move into seriously by 2017. The plan is to open a Shinola eyewear plant on the South Side of Chicago, in Hyde Park. “It’s every bit as hard hit as here,” he said.
In a few years, watches and bikes may be only a slice of the pie.
“Who knows what else we’ll get into,” he said. “We’re always looking for nooks and crannies.”
“The beautiful thing is, when you come into this organization, you’re part of the family,” said Mr. Panis, who, despite his musically Gallic name, is a bearded dynamo with an athletic build and a south Virginia twang who seems more Navy SEAL than watch executive.
The image of happy workers is a big part of the Shinola pitch. Mr. Panis was touring the watch-assembly floor at the Shinola headquarters, within a design college in the former General Motors Argonaut research building in midtown Detroit, wearing a shower cap and blue smock, like the assembly workers on duty.
That day, Mr. Panis was slapping backs and chatting with workers, many of them from nearby neighborhoods, as they took a break from work that can require surgical precision.
There can be 105 parts in the movement alone, and there are dozens of steps — many painstakingly detailed — as workers churn out up to 1,000 watches a day.
Key to the marketing, certainly, are the watch case backs that read “Built in Detroit: USA Movement with Swiss Parts.” It is a matter of some debate, however, what constitutes “built,” “USA” or “Swiss.”
Shinola has never made any secret of the fact that Ronda, the Swiss maker of quartz watch movements, designed the factory, built the equipment and supplies many parts (it also owns a stake in Shinola).
On the tour that day, Mr. Panis discussed the sourcing of the parts. The primary components of the watch (the crystal, the case, the dials, the hands) come from Asia, which he said is common among many Swiss watchmakers. About 70 percent of the movement parts come from Switzerland; the rest from Asia.
Sourcing is an issue in Switzerland as well as in Detroit. Swiss regulations require that 50 percent of the value of the watch movement be of domestic origin to be considered Swiss, among other stipulations. (Under revised “Swissness” rules, at least 60 percent of the manufacturing costs of the whole watch will have to occur in Switzerland.)
It is also an issue in that other Detroit industry, automobiles, which has changed as supply chains become globalized. Even in an iconic “American” car like the Chevrolet Silverado pickup, only 45 percent of the parts are from North America, according to a domestic-content index compiled by the Kogod School of Business.
To Joe Thompson, the editor of WatchTime magazine, the question of sourcing obscures the larger point: that Shinola “is a very serious effort by very accomplished watch-industry veterans to manufacture quality analog watches in large quantities in the United States.”
“Asking a start-up to begin making its own movement components from scratch is not realistic,” Mr. Thompson said. “By importing parts and assembling them here, Shinola has created jobs and is developing in-house expertise in watch-movement making that will pay off down the line.”
It is not always possible to reconcile domestic production with the bottom line, Mr. Kartsotis said. For example, while its watch straps, leather goods and even the boxes for the watches are made in the United States (the boxes, from Minnesota, cost the company $18.50 apiece), buying American-made shopping bags for its flagship store would have cost $6 apiece; instead, the company opted for a $1 Chinese variant.
The company reinvested the savings in part, in a facility to produce rubber watch straps in Minnesota. “You can’t stay in business and buy the $6 shopping bag,” Mr. Kartsotis said.
One thing that is very clearly not “Built in Detroit” is Shinola’s management team, a motley assemblage that Mr. Kartsotis said reminds him of “the bar scene in ‘Star Wars.’”
That was evident one evening as the Texas-bred founder sipped a cocktail wearing the same flannel shirt and jeans at the London Chop House, an old-school jacket-and-tie-style steakhouse downtown.
Across the table sat Bridget Russo, wearing chunky glasses and an art-curator haircut. Ms. Russo was talking about how she used to live in TriBeCa and was an executive at Edun, the fair-trade fashion brand founded by Bono and his wife, Ali Hewson, before she chucked it all for Detroit, where she just bought a house on the East Side and works as Shinola’s chief marketing officer.
Ms. Russo, apparently, is a true believer. Hardly the first New Yorker to see Detroit as a bohemian mecca, she called the city “a place where there’s still room for artists and free spirits, creativity and new ideas.”
“I know it all sounds very ‘Unbreakable Kimmy Schmidt,’” she said, referring to the Tina Fey comedy about a cult survivor, “but it’s true.”
Absent that night was another of Shinola’s idea generators, Don Nelson — yes, that Don Nelson, the coach with the most wins in N.B.A. history. He has traveled with management from the early days as an unpaid adviser.
Mr. Nelson, 75, is a close friend of Mr. Kartsotis’s from Maui, where both have houses and play in a regular poker game that includes Owen Wilson, Woody Harrelson and Willie Nelson. (Before Don Nelson’s final year as the Golden State Warriors coach, the 2009-10 season, he tried to hire Mr. Kartsotis as an assistant coach. “I told him, ‘You can sit behind the bench, keep stats, and I’ll do all the coaching,’ because you know, he didn’t know anything about basketball,” Mr. Nelson recalled. “But he’s great with people. I said, ‘You can keep everybody happy.’”)
Very visibly, Shinola’s management has zero tangible connection to the old Detroit of smokestacks, 5 p.m. whistles and Stroh’s beers at Tiger Stadium. They are outsiders. Then again, they are, in a sense, quite representative of the new Detroit, a city where a fresh generation of professionals is tiptoeing onto unfamiliar turf, trying to will a resurgence in a city that many outside its borders had written off.
Wearing a black-on-black Detroit Tigers cap pulled low over his eyes, Mr. Quirarte, 40, sat next to Mr. Kartsotis.
The voluble New York restaurateur, nightclub owner and brand consultant has extensive connections in art, fashion and Hollywood, so he serves as Shinola’s director of culture. “He’s our cultural thermometer,” Ms. Russo said.
He is a true believer, too. That night, Mr. Quirarte lifted his right hand to show a small tattoo on the inside of his wrist — a lightning bolt from the Shinola logo, courtesy of Mr. Campbell, who has the same tattoo, as does their friend Justin Theroux. So does Mr. Kartsotis. So does Mr. Panis. So does Mr. Nelson (it’s his only tattoo).
“How would you want to hate on a company that is doing so awesome, creating jobs in America, where we really need it?” Mr. Quirarte said.
“People need to get behind the fact that it’s about the home team,” he added. “And we are the home team.”
CreditFabrizio Costantini for The New York Times
Note: Shinola opened in the North Loop in 2014.