Why Did Klokers Fail? A Personal Conversation With The Former CEO
In the small world of watchmaking crowdfunding, Klokers was a reference point in terms of concept, community, and success. To everyone's surprise, the Annecy-based brand filed for bankruptcy early July 2019. We recently met with former CEO Richard Piras, to try to understand what went wrong.
Klokers' two crowdfunding campaigns raised nearly € 650,000 in 2015 and more than € 500,000 in 2017. The brand was riding high with its innovative design of time inspired by a calculus ruler from the '70s. Its community - developed directly through the digital tool - was strong, growing, engaged, and active. Growth forecasts were exponential. But on July 4, we arrived to the office and found a short email titled, "Klokers, it's over!"
Former CEO Richard Piras explained the circumstances in all transparency: "The brand is entangled in a legal-financial knot. With two entities - a French parent company and a Swiss production subsidiary - the risk increased, and we ended up with bank debt that asphyxiated the business. The situation is due to a major event dating from June 2017. A real industrial accident." What happened? He shared: "Our case supplier for the Klok-01 and Klok-02 delivered whole batches on which serious sealing problems appeared: 100% on the KLOK-02 and 50% on the KLOK-01! After investigation, we realized that they had completely changed tools and did not warn us. The net loss for the company amounted to more than 1.5 million euros. All cash was spent there. From that moment, in December 2017 the dominos started falling and we arrived at the current situation of receivership."
Of the 30,000 watches produced, some were destroyed, but more than 20,000 watches were delivered in the end. According to the Piras, only a hundred "backers" have not yet received their timepieces. Most of these watches are the Klok-08 with sapphire crystal. Unfortunately, the crystal glass delivery took too much time.
This was the greatest lesson for the entrepreneur: the industrial character of this growing business creates extreme financial risks for which one has to be prepared. Klokers and its investors were not enough to keep the business afloat. They went too fast, and the growth was not mastered.
Despite this sad end, we must recognize some of the achievements of the Klokers adventure. First and foremost is the community that the brand created through the power of the digital approach. Nearly 40% of the revenue was achieved live!
Klokers was a commercial success with a distribution in more than 19 countries including Japan. The country is one of the most demanding markets in the world, and top quality and concepts are essential for these discerning clients. Klokers additionally opened 300 points of sale around the world as well as an accessible service program. During the brand's fundraising in 2017, investors presented their ambitious development plan to sell 120,000 watches in 2020 for a projected turnover of € 20 million. The healthy foundations of the beginning of the adventure were unfortunately not enough to ensure its durability and achieve these objectives.
The brand still exists
However, some critical brand assets remain. Klokers has not disappeared; it belongs to Affordances, based in Annecy. The ecosystem that accompanied it began to develop. According to Richard Piras, "40% of live customers came back within the year to buy a second accessory, such as a bracelet or a table stand."
The assets are mostly patents on this staging so different from the time because Klokers was not just a new dial design, but rather a watchmaking innovation. This will remain, and perhaps adventure is not yet over. Disappointed, Richard Piras admits, "My dream today is that Klokers continues - with or without me - because the concept has proven itself. The community is big and strong. The craze no longer belongs to its creators."
If the legal-financial constraints happen to be resolved, the Klokers story may not be entirely over. Stay tuned.
(Images provided by Klokers)