Equity crowdfunding is a relatively new financing method, and DuBois et fils is the oldest watch factory in Switzerland. This is the story of how a luxury watch brand successfully reinvented itself – redefining its relationship with shareholders, by giving its customers an opportunity to become part of the brand’s story.
When Thomas Steinemann became CEO of Phillipe DuBois & Fils SA back in 2010, he took on the challenge of financing an over 200 year old company with a very niche product. The advantage of selling DuBois et fils, a brand of luxury watches, was a loyal and discerning customer base with an appreciation for true craftsmanship. The disadvantage? A luxury swiss watch industry hit with multiple challenges from a strong Swiss Franc and weakening demand from Chinese markets to the emergence of smartwatches. Luxury mechanical watches had taken a hit before, largely weathering through the quartz crisis of the 70s by taking up position at the higher end of the market.
Now, with luxury watch buying behaviour migrating online, new challenges arise. Brands having to rely less on the magic of the in-store shopping experience are investing more time into digital platforms and figuring out how not to be undercut by the thriving ‘grey’ market of secondary watches online. You’d be forgiven for thinking the only way to ride out this storm would be through big budget advertising – not an option for boutique watchmakers. However, Steinemann had other ideas. In fact, he believed that market trends were in favour of the boutique brand. Steinemann took over the brand with an eye on reviving it in today’s evolving luxury watch market. The challenge was finding capital to come up with a new line of unique Swiss watches. Equity crowdfunding, he soon realised, allowed him to directly reach out to the true believers in high quality, traditionally crafted watches. At the time, few equity crowdfunding platforms were operational. The market was still getting used to rewards-based crowdfunding with platforms such as KickStarter. So for a company to open itself up to retail investors – this was unchartered waters. Steinemann however decided in was the right move. Around the world, disruptions in fintech were re-writing the playbook. He decided the time was ripe for DuBois et fils to become a pioneer in this space.
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A display case at the DuBois et fils event in Kuala Lumpur, August 2016 |
He’d read about crowdfunding in the New York Times and as he looked deeper into the subject he saw the potential of equity crowdfunding as not just a gateway to business financing but to building a new type of customer-shareholder relationship. For someone with almost three decades of experience in the watch industry, Steinemann believed in the value of traditional craftsmanship and also in the growing demand for these products. Now, he could give other watch enthusiasts the chance to be part of the brand story of Switzerland’s oldest watch company by offering them a stake in the company. Steinemann thinks there is already evidence that future generations of consumers appreciate and value craftsmanship, originality, and design. Millennials, he reasons, care less about materialism – they’d rather spend their money on experiences than goods, invest in something no one else has rather than buy products churned out for the mass consumer. And so his plan was to embrace digital technology to reach out and build a relationship with both true believers and millennials, turning potential customers into potential investors and brand ambassadors.
Diving into the Unknown
The goal was to go paperless, open themselves up to global enthusiaasts and fans of Swiss watchmaking by taking things online. And they did. DuBois et fils launched the world’s first online shareholder platform. The first challenge was ironing out the legal challenges of executing a public offering. They settled on Swiss Law and sought a minimum investment of 500 Confoederatio Helvetica Franc (CHF), the legal tender for Switzerland with further investment packags of 1000, 3000, 5000, and 10,000 CHF. They aimed to raise 1.5 million CHF and despite scepticism, it worked. Swiss television coverage, newspaper, and internet reports of the project got them noticed and today Duboi et fils has over 850 shareholders from 31 countries worldwide who own 32% of the company. In essence, Steinemann made history and became an international sensation by relaunching one of the oldest Swiss watch brands with capital raised through retail investors via equity crowdfunding from all over the world.
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General meeting with DuBois et fils shareholders at Basel, 2016 |
If there is a lesson to the story, it’s that there are different advantages to equity crowdfunding. Throughout the process, Steinemann says the company was very clear that investors shouldn’t expect a return on investment for at least seven years or more but that didn’t seem to matter too much. What people did care about, Steinemann realised, was the brand and its success. Many invest because they want to support Switzerland’s oldest factory. They see the value of the craft and also the challenges of growing a traditional business and finding financing in this rapidly evolving economic environment. Since the launching the shareholder platform, which comes with certain privileges and discounts exclusive to its investors, many of DuBois et fils’ shareholders have become brand ambassadors.
The level of interest and engagement was surprising even for Steinemann. And the lesson? We shouldn’t underestimate the motivations behind why people invest. In fact, a research paper by Jonas Josef and Oscar Merri from the University of Applied Sciences and Arts Northwestern Switzerland, who looked into DuBois et fils as a case study on Crowdfunding: Success Factors in the Financing Phase found many of Duboi et fils’ new shareholders invested simply because they wanted to support a business in which they believed. Watches are more than a time piece. They are a personal statement, a culmination of skill and vision, poured into one-of-a-kind limited edition designs that last not for a day but for a life time. If there was ever an example of an equity crowdfunding success story, look no further than DuBois et fils. Those who want to see the art of Swiss watchmaking have become more than customers, more than investors, they are part of the DuBois et fils growth story.
