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Monday, September 26, 2011

It's been a while


It's been a while since I visited this blog. For being inactive it certainly gets a lot of google juice.

Since you're here you must be checking out my background. Since April 2009 my efforts have been promoting Fossati, my handbag line.
You can read my posts at

FossatiUS.com
@FossatiUS
facebook.com/FossatiUS

I've learned a ton about marketing and sales. One thing I knew was it is easier to market and sell for an established brand than to start from nothing. Easier when you have a sizable budget too. After two years of pushing we stumbled upon a revenue source we didn't expect. The lesson of how hard what I've been doing struck home. A known product with a loyal following sells itself. No marketing required. Just put it in a strong distribution channel and it sells. Provide excellent customer service and keep adding stock and you've got a growing business.

Launch a luxury brand during a global economic recession( depression in the Detroit area) and the climb is more difficult. Who would have ever thought this 'downturn' would last so long.

I'm ready to continue my corporate career. It was a lot easier. I'm damn good at overseeing initiatives and leading teams.

C

Sunday, May 17, 2009

Detroit Automotive Ruins Tour

Arsenal of democracyThe Arsenal of Democracy


A good friend of mine, Pete Hollinshead, is an automotive history buff. More than a buff really, he knows stories behind what you find in history books. I met Pete while working at Chrysler when he was brand manager for jeep.com and I was operations manager for ChryslerFinancial.com. Pete left Chrysler in August 2008, we’ve met at our neighborhood library to visit. We both miss the social aspect of work. I always knew Pete was into automotive history, but I had no idea to what depth until recently.

Pete has been giving tours of the Detroit Automotive industry ruins to anyone interested. There are so many stories behind the stories of the automotive history. I asked Pete for a tour and to help in gathering and writing some of those stories.

On May 13, 2009 Pete took my husband Jim and I on a tour of what was the envy of the world, the heart of the early 1900’s automotive industry. Places now ghost towns that used to be vibrant and alive, full of business and prosperity. Where the middle class was born and the rich ordered cars made to order. Bespoke vehicles, can you imagine.

We visited Dodge Main, Ford Model T plant, American Axle, the Russel industrial center that used to be Murray Body. We passed Pole town, named for the community GM bought to build its plant; a huge sprawling facility. The Ford Piquette building built in 1904. It was the prototype for the assembly line. There men walked the line, the line did not move. The most fascinating ruin was the old Packard plant in the Milwaukee Junction. Milwaukee Junction was the heart of the automotive industry in the early 1900’s. Packard was a brand with the cache of Lexus or Mercedes. In the beginning of the automotive industry, the manufacturing model was outsourcing. Packard built Chassis. You could order the frame, the engine, transmission. Then you had a catalog to order the body from a number of body manufacturers. What you actually ordered were the body components. There was a good deal of customization. You literally designed your own car. Truly a bespoke business model. Packard was an elite brand priced for the wealthy. You’d order your car like a fine suit. They only built around 100 cars a year.

During WWII Packard built Rolls Royce Merlin engines for our fighter planes. Detroit and the automotive industry was called the ‘Arsenal of Democracy’. Without the industrial might of Detroit Germany would have won WWII. It was surreal to stand outside and to walk around the decrepit ruins that used to be the pinnacle of luxury and technology in another era. You could almost imagine what it must have been like so many years ago. The Packard plant ruins must be a mile long and they’re as high as eight stories. Vehicles moved from floor to floor in an assembly line using huge hoists. Giant sliding doors separated sections of the assembly. Imagine at lunch, thousands of people leaving the factory to eat at the restaurants, shop in the stores or enjoy the beautiful Michigan day. Today hardly a soul lives in the Milwaukee Junction.

Detroit is a melting pot of humanity. The waves of immigrants influenced the culture and fabric of life in the city. The first wave was from Europe. Germans, Finnish, Dutch, French, English, Irish. The next wave was from Eastern Europe, Poles, Ukraine, and Serbs. In the 1930’s and 40’s blacks immigrated to Detroit from the south to escape oppression. Each culture brought with it their customs and cuisines, their religions and values. There were micro cultures. Each wave of immigrants built their own churches and clustered together. You’ll find four catholic churches in one area. One for Germans, one for the Irish, one for the English and so on. Many of the churches and buildings still stand. Many are crumbling like the Packard plant.

There’s a bridge over the road by the plant, it used to have the Packard emblem on it and the tag line ‘ Ask the man who owns one’ above the door to the plant. During the depression, Packard decided to ‘go down market’, to produce a cheaper car for a larger audience. They built the 120 model. The 120 had the Packard quality, and looked like a Packard but it was at a lower price point. This move marked the demise of Packard. They lost their cache and exclusivity among the wealthy.

Their timing was off. In 1941, they built and introduced the Clipper. Then came the war and they had to retool for the war effort. Four years later, after the war, they reintroduced the Clipper. They sold a lot, and even through the late 1950’s they sold more Packards that GM sold Cadillac’s but the management was too conservative. The new Clipper design for 1949-1950 was nick-named ‘the pregnant clipper’ . They had some supplier problems when Chrysler bought Briggs one of their body suppliers. What finally killed Packard were quality problems.

In 1952- 53, Packard brought in Jim Nance to run the company. He was talented and brilliant, but he saw the multi floored Packard plant as an albatross. He moved manufacturing to a new facility that was nicknamed ‘the cracker box’. It was just too small. It was so small men couldn’t move around, it was dangerously close. Quality suffered. The final Packards ever produced were beautifully designed with amazing engineering. Bu they fell apart and by 1956 the public had had enough.

Today the Packard plant ruins are stripped of almost all metal. A few frames remain with shards of broken glass. A musty smell exudes from the entry ways filled with garbage. Strange things like a boat, computer equipment, tires, shoes and plush toys. We didn’t see any vagrants, bodies or animals. Packard is the most decrepit.

We also went to the Rouge plant which is still operational. Raw materials go into the plant and cars come out. Raw materials like steel, rubber. Huge piles of coal sit ready to heat the furnaces to melt the steel , which is then rolled and formed and cut and assembled. Ford Rouge is the only plant where raw materials go in and a finished car comes out.

Outside the Rouge complex is a memorial. There’s a bigger than life bronze statue of Henry Ford. Along the courtyard are etched marble photos of historical events in Ford’s history. The images are not all favorable to Ford. They tell an amazing story. Then there’s the bridge where ‘the battle of the overpass’ took place. This is the very place where the UAW was born. Workers battled with Henry Ford’s goons and won the right to fair work conditions and pay. Since then the UAW has grown too strong and fallen out of favor, but there is still a need for unions. There’s a need for bargaining strength for the small and weak against the strong and rich who hold all the advantages. That’s another story.

Henry Ford while no philanthropist did see the benefit in paying his employees well. You could say he was the father of the middle class. He was the first to pay his workers enough so that they could afford to buy his products. He paid them enough so that they could afford to buy his cars and one of his homes. The basis of the Ford family’s wealth is the belief that the good of many is most profitable; much more profitable than today’s culture of ‘everyone for themselves’.

There are so many stories about what it was like to work in the automotive industry in its hey days. I’ll end with one of the more fun stories. Back in the day before automated assembly lines and business practice offices, anything was possible. One worker sitting in his office with the window open and the oscillating fan blowing turned his head just in time to see his fan fall out the window. It fell four stories right onto the hood of his boss’ brand new Cordoba. Bummer. So he called his pal at the factory. Hey Joe I need a favor. Yeah what? I need a dark blue Cordoba hood. My fan fell out the window on my boss’s new Cordoba. So he took the Cordoba to the plant and they installed a new hood on it that day. Those were the days.

If you have a story of life in the automotive industry during its heyday please write in the comments.

Packard ask the man who owns one
Packard - 'Ask the man who owns one'


PackardStreet view of the Packard Plant


Packard Plant RuinPackard Ruin


Packard boatThe strangest things were discarded in the Packard ruins. This boat has a 2008 license


Packard shoesShoes... and plush toys


Rouge PlantRaw materials go in and cars come out


Rouge battle of the overpassRouge - The Battle of the Overpass took place here. Ford workers took on Ford goons for safe working conditions and fair pay


Bill Ford VisionOur vision of sustainability is to build great products, a strong business and a better world

'Bringing Home the Birkin' Michael Tonello

'Bringing Home the Birkin' by Michael Tonello is a delightful story about his adventures traveling to the swankest places in the world in search of Hermes treasure. The story takes you from his life in Province Town to Barcelona where he finds his soul mate and then around the world to places like Paris, Luxemburg, and dozens of other luxurious places you’ve only dreamed of visiting. You’ll learn his ‘formula’ for buying Birkins in France versus Italy. You’ll laugh till you cry at the descriptions of the typical Hermes sales people. It isn’t all frolic and gallivanting though.

After cleaning out all the Hermes stores in Europe and Asia Michael finds that even traveling to the luxury capitals of the world to shop dine and visit the finest hotels can get old. His final trip to the beautiful Island of Capri (pronounced CAP ree) Italy is to recover after the loss of a very close loved one.

The story has adventure, humor, love and sorrow; all the ingredients for a great story.

Wednesday, May 6, 2009

All that Sparkles is Not Gold

“Fashion is made to become unfashionable.” - Coco Chanel

That’s the unspoken mantra of most ‘It’ brands today. Instead of timeless style, they give us new trends each season. Instead of exclusivity based on scarcity, we have exclusivity based on price. Instead of high quality handmade craftsmanship we have mass production from China with finishing touches in Italy or France to justify the Made in Italy or Made in France label. Luxury is available to the masses but luxury isn’t what it used to be.

At one time, our ‘It’ bag luxury brands were small family owned businesses catering exclusively to royalty and the very wealthy. Today most are brands owned by one of three conglomerates. Conglomerates focused on profits that have made their owners the richest men in France.

Bernard Arnault bought 43% of LVMH during the 1987 stock market crash. He wanted to add Dior perfume to his Dior clothing brand. Once at the helm, he led LVMH through an ambitious development plan acquiring luxury goods brands including, Louis Vuitton , Fendi , Celine , Donna Karan New York (DKNY) , Emilio Pucci , Givenchy , Loewe , Marc Jacobs LVMH is the largest luxury group and Bernard Arnault is the second richest man in France.

Bernard Arnault tried to buy Gucci but lost in a battle with PPR the second or fourth largest luxury conglomerate. Gucci, Yves Saint Laurent, Alexander McQueen, Stella McCartney, Sergio Rossi, Bottega Veneta, operate as brands within the Gucci Group owned by PPR.

The third largest luxury goods conglomerate is Swiss-based Richemont, which owns Cartier, Van Cleef & Arpels, Piaget, Baume et Mercier, IWC, Jaeger-LeCoultre, A. Lange & Söhne, Officine Panerai, Vacheron Constantin, Dunhill, Lancel, Montblanc, Montegrappa, Old England, Purdey, Chloé, and Shanghai Tang. Richemont focuses more on Watches, jewelry and writing implements.

Ten ‘It’ handbag brands owned by three very profitable conglomerates. Ten brands with the same tactics to maximize profits. Introduce a new trend each season, mass produce using the cheapest labor, market, market, market to create a need to achieve status. Tightly control distribution.

For fifteen years the results were phenomenal with double digit growth mostly from handbags and shoes. Luxury goods are usually insulated from economic downturns, but 2008 was a difficult year even for luxury goods. The economic slump is expected to continue through most of 2009. Consumers, still in a good position financially are careful with their purchases and are buying more traditionally designed bags that can be considered an ‘investment piece’. ‘In essence, frivolity is out of fashion – short-lived Champagne high - bad - long-lasting leather - good.’ Luxury brands that have stayed to the tenants of luxury have done well. Hermes, the only handbag brand that still makes their bags by hand, has done well in today’s difficult economic climate and announced better than expected profits in March 2009.

That may make them a target for acquisition. According to the Financial Times smaller weaker brands will be bought up the big conglomerates. LVHM is interested in Hermes and Prada. There may even be a merger of conglomerates as PPR and Richemont consider how to seize top position from LVMH.

As more and more ‘luxury’ brands are bought by conglomerates bent on profits one has to ask whether they really are luxury brands or well marketed mass produced fashion brands. The most sophisticated luxury consumers will seek out truly unique quality handbags from small designers. Like Fossati.

Friday, May 1, 2009

Threadless...No More

The original pitch for Fossati handbags at start up weekend was to apply Threadless.com’s business model to high end handbags. Threadless is a T-shirt company that skyrocketed to popularity in 2007. Threadless business model is based on crowd sourcing and mass customization.

According to Wikepedia, Crowdsourcing is a distributed problem-solving and production model.

In its simplest form, crowdsourcing follows 8 steps:
1. Company has a problem
2. Company broadcasts problem online
3. Online crowd is asked to give solutions
4. Crowd submits solutions
5. Crowd vets solutions
6. Company rewards winning solvers
7. Company owns winning solutions
8. Company profits

Threadless follows this process to solve the problem, How to get an endless supply of hot designs almost guaranteed to sell on threadless.com. They ask consumers to contribute designs and to vet out the best designs. Threadless rewards winners for the best designs, taking ownership and profits.

It works because t-shirt design and mass customization are fairly simple. The compensation to winners is good and it’s become a platform for artists to promote their work. Even if you don’t win, you get a one of a kind t-shirt with your design printed on it for $12.00. This level of customization on a mass produced item at mass produced prices is called ‘Mass Customization’.

It worked really well for t-shirts and in 2008, threadless expanded to mass customization of bags. They partnered with Timbuktu, a bag manufacturer specializing in sturdy laptop bags.

Crowdsourcing and mass customization work well when you are printing onto a mass produced product like a t-shirt or canvas bag. It doesn’t work as well for more complicated product design like high end handbags. The model finally adopted for Fossati is call Social commerce. I’ll leave social commerce and how I settled there for another post.

Tuesday, April 14, 2009

Top Secret

Your mother’s maiden name is still considered the height of security. It’s used by banks and credit card companies as the most obscure question you could ask someone. A secret no one would every guess. I doubt that’s been true for the last 20 years and it certainly is not true for my two sons.

Their ‘Mother’s maiden name’ is plastered all over the internet. It is signed to thousands of public documents. It’s now the name of a luxury handbag brand.

On the final day of start-up weekend, my three remaining teammates and I discussed the merits of a name. We wanted something either French or Italian. Knowing that the challenge is picking something not already being used, I offered up my maiden name. It met the ‘Italian’ criteria. Although I never thought of it as glamorous, having had to spell it all my childhood as ‘F” as in Frank ‘oss’ as in Sam ‘ati’, they thought it had cache.

And so my handbag brand name became ‘Fossati’.

Monday, April 13, 2009

Startup Weekend Ann Arbor June 2008

‘Startup Weekend is a community building startup event.’ It’s like a mini Ycombinator, but 2.5 days instead of 3 months. And you get to go home at night. Local Ann Arbor businesses donated food and space. We were well fed and had 5000 sq feet to play around in.

Friday night, business ideas were pitched and then everyone gravitated into groups of their choice to work on an idea. 38 ideas were pitched that June evening from tracking and reclaiming stolen metals like copper to providing travel advice on an iphone as you visit a new destination. By Sunday 4 or 5 viable businesses launched. That’s amazing. Pitch an idea, form a team of talented motivated strangers and launch a business in 2.5 days.

It’s polite to bring something to a party. I brought homemade cookies and an idea to create a high end handbag business based on the threadless.com business model. I felt kind of like Reese Witherspoon in Legally Blonde. It was at Startup weekend in June of 2008 in Ann Arbor that Threadless for high end handbags was pitched to an audience. Not only did 6 people join my group but one guy stood up and said ‘I want to use the threadless model to make low end bags and if Cathy doesn’t want to then I’m going to.’ Hmmmm.

That made things interesting because I wasn’t sure whether people were joining me or him. As it turned out, most people had something in between a $30,000 and $10 handbag in mind. Something maybe around the $700 mark. Fortunately for me, this guy turned out to be a little Hitler, and the group shrank from 8 to 4. We became a much more productive team.

By July, a lot of those businesses had fizzled out. You have to wonder how viable a business is when it can be built in a 2.5 day weekend by a bunch of strangers thrown into a room together under time constrained pressure. It was a really great exercise in social and group dynamics. You got to see how people act under pressure really quickly. My team drifted away by late July too.

Startup weekend is where Fossati handbags began to take shape.