Creator of the Leatherman pocket tool Tim Leatherman is living proof that success doesn’t happen overnight — but that with dogged determination and self-belief, anything is possible.
2018 marked 35 years of business for Leatherman — a US-made rival to the Swiss Army Knife with a few distinctive features — and Mr Leatherman embarked on something of a world tour to meet fans of the product in various countries, including Australia.
Coinciding with the anniversary, the company released a documentary outlining how the tool came to be and how it has saved a number of lives by simply being there when it was needed most.
My Business asked him to share some insights into how the business bearing his name has continued to grow over the years, and the extraordinary lengths it took to get his invention to market despite plenty of knockbacks and naysayers.
Given your eight-year journey trying to develop and perfect the product and secure the first meaningful sale, what drove you to keep going rather than simply give up?
A willingness to persevere. I had set a goal at the very beginning to not only create a prototype I liked, but to somehow commercialise it.
I didn’t want to give up until I had achieved my goal. Also, as time went on, I was willing to consider new options, either by seeking them out myself or being receptive when they were offered.
It’s quite clear that Leatherman has developed a real cult following. Is that something you have actively fostered?
No, but I think it’s been an outgrowth of our dedication to making our tools with the most functionality, the highest quality, in the smallest space, with the least weight. Tools that really work. Tools that are compact enough to carry with you all the time and useful enough that you want to.
I think we have also created fans with our exceptional customer service, especially with our 25-year warranty and the generous terms with which we honour it.
How has Leatherman as a business harnessed this dedicated following to drive growth?
Word of mouth is the best form of advertising, so we try to treat all our customers well, especially those that are most passionate about our products.
We also sometimes create special versions of our tools, with premium features, that many of our most dedicated customers buy.
“Most businesses consider warranty to be a cost, a cost to be avoided by making the terms difficult to fulfil. I consider warranty to be not a cost centre, but a profit centre.”
Given your products have a 25-year quality guarantee, how do you drive sales growth and repeat business?
Most businesses consider warranty to be a cost, a cost to be avoided by making the terms difficult to fulfil. I consider warranty to be not a cost centre, but a profit centre.
I budget for its cost, so its cost is built into the price of the product. And when we give outstanding service, we have happy customers.
You have probably heard of the truism that goes something like this: “If you have a customer who is unhappy with your product or service, they will tell 25 other people how unhappy they are. If they are happy, they will tell seven.” I would much rather have my customers tell seven others how happy they are than to tell 25 that they are unhappy.
Also, we drive growth from new customers and repeat business from current customers by developing new tools that are so compelling that current customers buy the new tool and prospects who previously had not yet been convinced are now willing to buy.
Over the last 35 years in business, there must have been opportunities arise to sell the business. Why have you stayed with the business rather than take the option of cashing out?
We get inquiries almost weekly. But while there are many things in life that are important to me, Leatherman Tool Group, Inc. ranks right up there.
My plan (and my son’s) is for Leatherman to remain a privately held family business during both our lifetimes and hopefully for many more generations to come.
What is your approach to dealing with competition from the likes of the Swiss Army Knife?
Competition is good. It spurs us to keep developing new products that keep us ahead of the competition.
“Of course, our labour costs are higher, but quality is remembered long after price is forgotten.”
You have mentioned previously that you remain committed to supporting local jobs by retaining US-based manufacturing rather than offshoring. Why have you taken this approach and what has it ultimately meant for the business?
One of the things of which I am most proud during this whole Leatherman journey is the jobs created. And since the Leatherman Tool fell into a previously unknown market category, not pocket knives and not hand tools, but pocket tools, the jobs created were an addition to the world’s supply, not a cannibalisation.
Those jobs were created in my home city of Portland, Oregon (in the US), so I am fiercely loyal to keeping them here.
Also, there are practical business reasons for doing so. We can much better improve and monitor quality in our own factory. Product development is much easier when the factory is a few steps away instead of a continent away. And front office employees have a much better understanding of who we are and what we are and how their jobs help the company reach its goals when the factory is in the same building.
Of course, our labour costs are higher, but quality is remembered long after price is forgotten.
What would you say are the biggest factors behind your business longevity?
Good products that provide more value than the price paid; a focus on the customer; doing it right the first time; and continuously improving.
What is the best advice you have ever been given in business?
I have heard so much, but a short answer does not come to mind quickly. Here is my advice to prospective entrepreneurs. Some of it must have seeped in from others:
- Set goals.
- Persevere. But understand, there is a fine line between perseverance and refusal to accept reality. However, if you are going to error, error on the side of being too perseverant.
- Especially at start up, expect time needed to be twice what you plan. Expect dollars needed to be four times what you budget.
- Learn what you need to know as you go along.
- Sweat the details.
- Hire good people.
- Don’t let your employees make the same mistake three times.
- Delight your customers.
- Have fun.
- Make money.
Where to next for Leatherman?
Times are going to change. The way we live our lives and the technology used in living our lives is going to change.
We always want Leatherman Tools to be relevant for the way life is lived in the future. That means we will have to change the features in our tools so that our tools remain relevant and continue to save steps, save trips, and sometimes save lives.
More short term, we are excited about a new series of products we will be introducing in 2019.
And we will continue to develop products such as the Raptor (for first responders) and the Signal (for off-the-road adventurers) that more perfectly meet the needs of people engaged in specific activities.
The business benefit: Going all-in on sustainability
By Adam Zuchetti
Analysis: How likely is an interest rate cut in June?
By Adam Zuchetti
Workplace wellness is the real trickle-down economics
By Adam Zuchetti