Selling Your Future or Receive Capital?

In advance let’s just get something straight. I started to write this post because of a recent transaction between a reputable small workshop and a huge investor… but.. It doesn’t reflect my opinion about that business (as I don’t know any detail it really can’t), it is only about this phenomenon. And this is only my opinion about THE phenomenon.

So, what s it about? Usually there is a small workshop, a family owned company, with a good reputation and brand name, luxury, not needed to mention: very high priced products. The investor usually buy a share of this business, or maybe just the right using the name. What could be wrong with it?

Luxury lost its luster – this is not a question, this is a fact. I mean luxury, which is manufactured in far east factories in millions. Those products – even they try to make us believe the opposite – are not handmade, though the quality can be still very high, but the ads are just lying. So, the next step to maintain the high end image – buy really high end brands. These brands – thanks to the small scale production and the very high price, were only available to a small, exclusive circle, but like these products usually – very well promoted and demanded by a wide range of customers. This acquisitions has a good effect to this segment – more people can buy the products, probably at a more friendly price range.

The owner of the small brand receive a bunch of money, the customer can get their long wanted product a bit cheaper, so what is wrong? win-win, right? It sounds good, and it really has a good effect – depends on the details – but let’s just talk about the down side of this business!

1. Craft. If the small workshop can’t maintain the production at the same professional level, that is a huge loss for the craft. I am not saying, that this is necessarily happens, but don’t forget – investors do it for money, and definitely not for helping those tiny little workshops. Income, nothing else. As a craftsman you don’t need to be a dedicated missioner – at the end of the day, you are looking for money to feed your family, right? So, what is wrong to get a bunch of money for something, what you already created? I think only one thing – it represents your future. You wouldn’t cut down a fruit tree in the middle of the winter just to heat up the house, right? (and trust me – even if you don’t cut this “tree” – you not gonna enjoy the fruits anymore. There is no such a thing as “free dinner”).

2. Heritage. Do you really think, that a family business with a long history, will be kept the same way by a huge a corporate? Bunch of policies, board of directors, marketing campaigns, strategies, administration – where the heritage will be placed? I guess somewhere behind shiny panes.

3. Luxury. Well, here is my opinion – you don’t need to believe me – real luxury is not made in factories. Real luxury is not made under investor names. Real luxury is created in a small workshop, by a highly skilled craftsmen. You don’t need “investor” for this. I hope. If you starve – then you do. (In this case don’t expect too much money from them)

4. Pressure. Pressure in decisions, pressure to make more money, pressure to act to satisfy shareholders. Pressure, pressure, pressure.

5. Flexibility. As a craftsman – 100% owner of a brand – I can decide to stop a design after 4-5 years, just because I don’t like it anymore. I can introduce a very work intensive antique technique, because that makes my product better. Not efficient – better. I can do it as a small, independent master. I am not sure, if I would own only a part of the business.

I heard plenty opinion about this phenomenon, since I started to write this post. Pro and con. It is not a question, that this kind of businesses bring a bunch of benefits as well, starting with the money, but… that money is for the future. It covers risks, but still. If – as an owner – you don’t evaluate your brand more that the price – it is a smart choice to sell, if yes – well… obviously not.

It is hard to decide what one should think. I just know what I shall say, if I would get this kind of offer (not if I am even close to get one):

‘thanks, no’.

11 thoughts on “Selling Your Future or Receive Capital?”

  1. Someone once said that there is nothing that cannot be made a little cheaper and worse. Usually, not always, cheaper means worse. I want quality in what I buy. I have had to buy 3 microwaves in the last 2 years because of quality of finish or assembly. I am not going to buy another until I can get one of quality. The first microwave I purchased, a Litton, was still working perfectly when I gave it away 20 years later to get one that was shorter to fit under my cabinets in the old house I moved to. What a mistake.

    The women I talk to all complain about the shoes available that never fit right and fall apart after 2-3 months of wear. The world is suffering from the little worse, disposable products being churned out by corporations.

    We as consumers can choose to buy well made, lasting products that are made to be repairable. That includes shoes that can be repaired rather than sent to a landfill. It would also be great if they could be composted when truly worn beyond redemption. Any other course is unsustainable.

    1. Please! Can you tell me where I can find or have someone make a pair of women’s LEATHER soled, (older style-oxford), low heeled shoes for my Mother? She’s worn this type for over 40 years, but the last pair were made in China ($280.00 us) and they do not fit correctly. She will be 80 yrs young next year, thankfully healthy and extremely active. But if unable to soon find her shoes, am worried. Any help or information will be greatly appreciated! Thank you very much

  2. A couple of thoughts:

    You reference the title of Dana Thomas’ book. I’d recommend this to anyone who’s not read it, it’s an excellent summary of luxury vs. brand marketing.

    I agree that luxury generally means a direct relationship with a craftsman. The only ‘brand’ that seems to have managed this transition is Hermes, where I honestly think the products are top quality and the retail experience unsurpassed, but it’s a very different relationship from the artist vs. patron relationship.

    At the end of the day I think we have only ourselves to blame. Despite the ease of information and learning on the internet, too many people allow themselves to be duped into buying something of poor quality for its signalling content rather than becoming an informed consumer.

  3. Although the level of craftsmanship is most probably greatly affected by such a strategic move, I would be more intrigued to find out how the negotiations goes down in such cases. I wonder what goes through the small brand owner’s mind. Is he happy to sell his company name, or does he feel sorry for not carrying on. For the conglomerate it’s just another name under its banner, but once it meant the world to the person who started it. Especially if it’s a family-owned workshop with a long history, does the tradition really matters when it comes to making a rational financial decision that concerns the present generation?

    However, I do think this trend does create its counter-current, namely that there will be more small workshops holding out and distinguish themselves from the giant companies. Thus revive the original meaning of the the word ‘luxury’.

  4. Mmm I agree with you Marcell and with what Yaya says. I’m also saddened by the thought that a lot of younger people don’t know a time when things were made to last. They expect stuff to crap out and then you just go buy another.

  5. Yep money and greed the enemy of the craft person and art itself!!! Sadly once the artist sells or licenses the art or product being art its OVER! I too remember The Pierre Cardin days… I was only about 10 but my father being in the retail business I was familiar with all of the designers. Sadly its very difficult to make any money in the fashion industry because your profits are being eaten up by the retailers and their “mafia” style way of running their business which demands that small designers extend terms to the retailers also manufacturers need to be paid before the product sells so the little guy- the artist with all the talent and all the ideas and all of the style gets squished and squashed until the only light at the end of the tunnel to recoup any of his / her losses is too sell out or license the product then its OVER! Sadly as a designer of luxury handbags I went through all of these girations, not selling out after 7 years just stopping…selling out meant degrading the product.. cheaper leather overseas manufacturing cheaper hardware… the brand would have become a parody of itself! No Thanks! LONG LIVE ART! LONG LIVE DESIGNERS! and the patrons that love them and appreciate them!!!

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