In The Headlines
Daniel Wellington Makes the Cheap Watch Cool Again
Daniel Wellington, or DW as the company is often abbreviated, makes watches that are both instantly recognizable and so generic they verge on invisible. They come with polished-steel or rose-gold-colored cases, in five sizes from a diminutive 26-millimeter (mm) to a medium-large 40mm. The dials are all white, with slim lines marking each hour and hands just wide enough to be legible. The only thing that noticeably sets DWs apart from each other is the strap, which comes in a half-dozen colorful nylons and a few leather options, none flashy enough to mar the luxurious look. With a watch, you often pay extra for minimalism—think A. Lange & Söhne or Piaget—but DWs are cheap, running from $149 to $299.
“Our watches are inspired by the upper echelons of the watch world but at a very accessible price point,” says Frans Sjo, business manager for the U.S. “It’s fair to say that we want everyone to be able to own a Daniel Wellington.” Four years ago, Tysander invested $15,000 to start the company. In 2014 it sold more than a million timepieces and took in $70 million. This year, Tysander projects $220 million in revenue. By comparison, Rolex, which sells $5,000-plus watches, and Tag Heuer, which focuses on $1,000 timepieces, consider it a good year if they sell a million units. Which means that, right now at least, it is good business to sell very expensive watches—or very cheap ones. DW competes with countless other brands in the $100 to $500 sector, including the Bauhaus-style Mondaine and the more military-looking Tsovet. But, in the same way that brightly colored plastic Swatches dominated the 1980s and utilitarian Fossils took off in the ’90s, Daniel Wellingtons own the current decade. “Often a designer watch whose core reason to exist is that it is fashionable this season is probably no longer viable next season,” says Steve Bock, former president of Fossil and current president of Bedrock Manufacturing, the parent company of Shinola watches.
Beyond getting the styling right, Tysander picked a good moment to build a watch brand. After dipping during the financial crisis, the industry has grown every year since. About 40 million analog quartz watches were sold in 2014 in the U.S. alone, up from about 33 million in 2009, according to market researcher Euromonitor. Corresponding revenue rose by an even larger rate, jumping from $3.7 billion to $5 billion. And even though the Apple Watch—which sold 1.5 million timepieces in only a week—might have looked like a deadly threat to traditional watchmakers such as Daniel Wellington, sales have since dropped as much as 90%, says a recent report by Slice Intelligence, an analytics firm in Palo Alto. Two-thirds of the Apple Watches sold were the cheaper $349 Sport model.
When Tysander, 30, started his company in 2009, he also was running an online necktie store with his brother and producing a line of plastic Rolex look-alikes. The Chinese factory he worked with on the watches happened to also make nylon bands, so he began thinking about what kind of face might look handsome paired with them. “I designed a thinner case and added some color to go with the preppy trend going on at the time,” he says. The first Daniel Wellington was 40mm and rose-gold, and it came with one of four bright nylon straps. “One of the biggest challenges in the beginning was that it was just me, no co-founders,” he says. At first, he recruited classmates from Uppsala University to help. Now his team has more than 100 people throughout five offices, in Los Angeles, New York, Stockholm, Hong Kong, and Shenzhen, China. Only recently has he started adding senior staff, including a chief executive officer, Roger Kylberg, who used to run a popular Swedish children’s clothing brand.
Although DW bills itself as a Swedish company, the watches are manufactured in China, which is how the company keeps prices so low. The internal quartz movements—a battery and vibrating crystal to keep the time, essentially—come from Miyota, a Japanese supplier popular with lower-price brands, because their products are reliable and they always have a massive inventory. The rest of the components are made and assembled in Shenzhen, a manufacturing hub. The distribution is similarly international. At first, Tysander began selling the watch online in Sweden and through local storefronts. A year later he came to New York to find American partners, and now the watches are carried in major department stores such as Bloomingdale’s and Nordstrom, as well as at niche fashion boutiques including Haberdash in Chicago and Lizard Lounge in Portland, Ore. Soon after, the DW team began attending Baselworld, the industry’s largest trade show, held each spring in Switzerland. Unlike other brands that aim to stay exclusive by not selling to any old shop, DW will distribute to most retailers that want its product. There are now more than 5,800 partners worldwide, in places as far-flung as Kazakhstan, the Faroe Islands, and Andorra. Tysander says he wants to expand into places such as Africa that are underserved by the watch market.
The company also has a habit of giving its product away for free, specifically to social-media stars and prominent personalities. Tysander refuses to pay for traditional advertising, instead working with thousands of bloggers, celebrities, and other “influencers” worldwide. One of them, Blake Scott, 27, has been collaborating with Daniel Wellington for a little more than a year, sharing the watches with his 318,000 Instagram followers. “I first found out about Daniel Wellington via Instagram: Everyone outside the States was wearing one, and it seemed so cool,” he says. Soon after, someone from the brand reached out and said he wanted to give Scott a couple of watches to post on his feed. Eventually he negotiated a deal with the company, which paid a few hundred dollars for a multiweek campaign. By being so blatant on social media, Daniel Wellington’s Instagram account has gained more than a million followers, almost quadruple that of competitors MVMT (238,000) and Fossil (236,000). Traditionally, watch brands have avoided using social media, so Daniel Wellington has filled the void for online watch content.
But a plain watch gets boring after a while. So, in April, Tysander announced Daniel Wellington’s latest style, the Dapper, its most complicated watch yet. And, at $299, its most expensive. It has black Roman numerals, instead of the typical stick markers, and a date window, a first for the brand. Instead of gold, the hands gleam metallic blue. And, in the most dramatic departure yet, the company suggests wearing it not with a NATO strap but a more sophisticated leather band.
Citations
1. http://bloom.bg/1OaRd66 – BusinessWeek
Hyundai and Accenture Team Up to Move Ships to the Cloud
Hyundai Heavy Industries and Accenture are designing connected ships that would measure information about a vessel’s progress through the sea as well as optimize efficiency when it comes to handling cargo. The goal is to take the same sort of real-time data analytics and predictive insights from the manufacturing floor and apply them to shipping.
Hyundai will handle the physical manufacturing of the connected vessels adding sensors and connectivity to ships while Accenture tackles the tougher challenge of building business models and the cloud infrastructure that will help Hyundai transition from selling a product to selling and designing services. John Deere and other heavy industrial companies are in a similar situation as product companies move from letting customers buy a piece of industrial equipment to instead offering them the ability to pay for completing a task.
In the case of shipping, Hyundai might sell a customer the ability to get 40 tons of goods from Japan to the United States at a certain cost, or it might guarantee a certain time frame or logistics contract on a particular item. Beginning in the second quarter of 2016 Hyundai will start retrofitting existing ships with new sensors and connectivity. Hyundai Heavy Industries plans to initially offer customers the ability to monitor and maintain their ships.
It is akin to guaranteeing uptime on a piece of industrial equipment, only this equipment is traveling across the ocean, which means that there are a lot more variables to track when it comes to factoring wear and tear on the overall equipment. Services are expected to include real-time alerts and warnings, predictive maintenance and more efficient scheduling. It is a big job, but smarter ships could one day not only help ship owners ensure goods make it places on time, but do so in a way that reduces fuel.
There are still a lot of questions about this partnership, such as how many sensors a ship would require and how much data each ship would generate. Because a ship spends a lot of time out of range of broadband networks, a constant network connection is not feasible, so some on-board processing will be necessary. Figuring out how to divide up tasks that need to call out to the cloud, versus those that can take place on deck will be part of Accenture’s role in this project, and might be of interest to anyone else trying to build sensor networks in remote locations such as mines or oil fields.
With real-time data collection and exchange across vessels, ports, cargo and land logistics, Hyundai would be able to create additional services and revenue streams to customers across the lifecycle of ships and journeys, removing barriers between different elements of a ship’s operation. The collaboration is part of Hyundai’s plans to expand its business, moving from manufacturing to services.
“Through this collaboration with Accenture, our ambition is to lead innovation in ship operations, shipping and the port logistics sector,” said Moon-kyoon Yoon, Chief Operating Officer of the Shipbuilding Division of Hyundai Heavy Industries.
Citations
1. http://for.tn/1Sucvwc – Fortune
2. http://bit.ly/1MABAnm – World Maritime News
The Good News Is . . .
• U.S. housing starts rebounded strongly in June and building permits surged to a near eight-year high, pointing to a rapidly strengthening housing market. Groundbreaking on new homes increased 9.8% to a seasonally adjusted annual pace of 1.17 million units, the Commerce Department said. May’s starts were revised up to a 1.07 million-unit rate from the previously reported 1.04 million-unit pace. Rising household formation as a result of a tightening labor market is encouraging young adults to leave parental homes and boosting demand for housing, especially apartments.
• Intel Corp., a leading chip manufacturer, reported earnings of $0.55 per share. The firm’s earnings topped the consensus estimate of analysts by $0.05. The company reported revenues of $13.2 billion, a 3.0% increase. Management attributed the company’s results to growth in its data centers and “Internet of Things” businesses, which helped offset weak demand for PCs that use its chips.
• The Canadian auto parts maker Magna International said that it had agreed to acquire one of the world’s largest suppliers of automotive transmissions, the Getrag Group, for $1.9 billion. Getrag is a joint venture partner with Ford and its customers include BMW, Daimler, Renault and Volvo. It also has joint venture relationships with Chinese automakers Jiangling and Dongfeng. The deal will bolster Magna’s powertrain and transmission business and increase its growth potential in the Chinese market. Magna employs about 133,000 people at 316 manufacturing plants and 87 product development, engineering and sales centers in 29 countries. The company reported sales of $36.6 billion in 2014.
Citations
1. http://onforb.es/1KdyKVf – Forbes
2. http://cnb.cx/1DigK6X – CNBC
3. http://www.intc.com/financials.cfm – Intel Corp.
4. http://nyti.ms/1COYIyu – NY Times Dealbook
Planning Tips
Tips for Caregiver Tax Deductions
These days, many families include children, stepchildren, former spouses and in-laws. According to the Pew Research Center, the number of remarriages has been steadily rising over the past few decades. In 2013, 40% of marriages included at least one spouse who had previously been married. In 20% of remarriages, both spouses had had a previous marriage. Such situations require careful estate planning with clear goals. The biggest issue in blended families is, ‘where does my money go when I die?’ Below are some things for those in a blended family to consider when setting up their estate plan. Be sure to consult with your financial advisor before making any changes to your estate plan.
Be careful about beneficiary designations – One of the biggest mistakes people make when determining who will inherit their assets is in the beneficiary designations on retirement accounts and insurance policies. The best-laid estate plan can be destroyed by an incorrect beneficiary designation. Regardless of what a will or trust says, the asset goes directly to the primary beneficiary or beneficiaries. For example, if your will states that a particular asset, such as an IRA, is to go to your current spouse, but you have named your child as primary beneficiary, the IRA will go to your child. Another error occurs when a spouse names the current spouse as primary beneficiary and the children as equal contingent beneficiaries, believing that everyone will get something. In truth, the primary beneficiary receives all the assets in this situation and will be free to act as he or she wishes. One way to avoid a potential problem is to name each beneficiary as primary and designate the percentage of the asset each will receive.
Plan trusts carefully – Remarried couples often use a trust to spell out the distribution of assets. The trust—either revocable or irrevocable, depending on their situation and amount of assets—does not preclude the will, however. A will is still needed to ensure that assets not titled in the name of the trust are transferred according to the decedent’s wishes. Another challenge with trusts occurs if a spouse sets up income for the surviving spouse with the remainder going to the children and then dies prematurely. In this scenario, the children could have a long wait before receiving their inheritance, particularly if the surviving spouse is not much older than the children. One way to avoid this situation is to implement a strategy that leaves an immediate inheritance to the children, perhaps naming them as primary beneficiaries on an insurance policy so they receive some money upon the first spouse’s passing.
Use a prenuptial agreement – The mechanics of designing an estate plan are bound to run more smoothly if a couple makes decisions about their assets and puts them on paper before tying the knot. A prenuptial agreement will start a couple on the right road to an understanding, though it does not replace a written estate plan. Because the prenuptial agreement is a contract, be sure the terms of the will and/or living will are in line with the intentions spelled out in the prenuptial agreement. Otherwise, you could set up a potential court battle for your heirs. If the intent going into the marriage is to keep assets separate so that each spouse can pass an inheritance to their own children, then be sure to maintain that separation. Once you start blending assets in accounts, then the other spouse has a claim. If one spouse decides to claim “elective share” (a percentage of the estate), the claim is only against marital assets. Non-marital assets and separate property are considered separate and not subject to the elective share. The amount of elective share is determined by state law, but typically is between one-third and half of the estate.
Communicate the plan – Drafting an estate plan by no means ensures a smoothly blended family. That is why it is critical to maintain meaningful and ongoing communication among all concerned parties. Many families set up family meetings to inform everyone what is expected of them. Regardless of the chosen method of communication, a well-thought-out estate plan will have a better chance of a seamless transition. If there are no surprises, things have a much better chance of going smoothly.
Citations
1. http://bit.ly/1VfdNPI – Nolo.com
2. http://bit.ly/1e7zpfi – Bankrate.com
3. http://onforb.es/1CILGmj – Forbes
4. http://bit.ly/1TJm4d3 – Investor Solutions
5. http://bit.ly/1J7O07q – EstateAssist.com
6. http://bit.ly/1MABRqk – WikiHow.com
