Owning a luxury watch is a sign of achievement but how does one decide which timepiece will be the signature piece for today and more importantly, tomorrow. In this era of massive consumer choice, it’s extremely easy to develop fatigue and grow tired of the same phone, watch, or car in minutes. Luckily we have Eleven James, a membership platform that allows its users to “rent” a luxury watch from a collection of fine timepieces and then swap it out as taste changes dictate. Offering several packages at different price points ranging from $149-$799 per month, the NYC-based startup has made wearing a luxury watch a luxury that you can afford and it is available for both men and women.
Today AlleyWatch sits down with Founder and CEO Randy Brandoff to discuss the luxury market, his startup, and its most recent round of funding.
Who were your investors and how much did you raise?
We raised $30 million of additional capital. $20 million is in the form of a credit facility from Great American Capital Partners, LLC (GACP), a wholly owned subsidiary of B. Riley Financial, Inc. (NASDAQ: RILY). The remaining $10 million is in the form of a Series A-1 equity financing led by existing investors and management, for which the company has completed the initial closing of approximately $9 million.
Tell us about your product or service.
Eleven James is a “Discover, Experience and Share” platform that provides members with a luxury watch collection when, where, and how they want it. For curious newcomers and passionate collectors alike, Eleven James is transforming the way you experience luxury by prioritizing access, service, variety, and value. Members get unmatched access to an incredibly diverse collection of watch brands and styles at a fraction of the cost to purchase a single one, as well as complimentary or prioritized access to luxury goods, services, and experiences from Eleven James’ exclusive partners.
What inspired you to start the company?
Eleven James has been in the works for nearly ten years. As the former chief marketing officer of NetJets®, a Berkshire Hathaway company (BRKa), I had first-hand experience with, and played a catalytic role in, the proliferation of luxury collaborative consumption. The luxury market has evolved to a world prioritizing access and experiences. Private jets, vacation homes, classic cars, and many other historically prized possessions have all become accessible via various club and shared ownership models that continue to expand and thrive. Heretofore, this same model did not exist with luxury watches. As an avid watch collector myself, I found an opportunity in the market, and thus founded Eleven James.
How is it different?
Though the concept of the sharing economy is an increasingly common and sought after model by both brands and consumers, there are not many businesses applying the paradigm to a wide range of luxury goods and services. Eleven James is changing the way luxury is consumed; we provide experiences and products on an ever-rotating basis.
What market you are targeting and how big is it?
The annual market for new and pre-owned luxury watch sales is ~$40 billion. This is a subset of the market for personal luxury goods which is $270 billion globally, and US consumers represent about 33% of that spend. In addition, there is a $75+ billion corporate gifting and incentive market opportunity in the United States alone.
About 30% of our Members are new market entrants that are experiencing luxury timepieces for the first time. They are being introduced to the segment, and see this as an opportunity to explore with only a modest commitment, which is consistent with the Millennial psychology of prioritizing access and experiences over traditional ownership.
The other 70% are generally well educated in the world of luxury watches. Many within this segment utilize Eleven James as a “try before you buy” opportunity, to enjoy watches they want to wear but not necessarily want to own, and also to enjoy greater variety at a fraction of the price of traditional collecting.
What’s your business model?
Our business model capitalizes on the “sharing economy,” and brings a new luxury asset to the world of collaborative consumption. Though the concept of the sharing economy is now an increasingly common and sought after model by both brands and consumers, there are not many businesses applying the paradigm to a wide range of luxury goods and services.
Can you explain the different collections?
The Enthusiast Collection (starting at $149/month) is your entrée into the world of luxury mechanical watches, and includes our broadest selection of vintage time-pieces. Brands include Bell & Ross, Cartier, Tudor, and more.
The Aficionado Collection (starting at $299/month) is an array of luxury brands and styles with primarily steel construction, plus some ceramic and precious metals. Brands include Breitling, Cartier, IWC, Panerai, Rolex, and more.
The Connoisseur Collection (starting at $499/month) includes complex watches with a higher caliber of detail, complications, and refinement. Brands include Audemars Piguet, Breguet, Hublot, Jaeger-LeCoultre, Vacheron Constantin, and more.
The Virtuoso Collection (starting at $799/month) contains the world’s finest timepieces, boasting masterful complications, detailing, and finish work. Brands include A. Lange & Söhne, F.P. Journe, Parmigiani Fleurier, Patek Philippe, and more.
What was the funding process like?
We raised additional equity and debt simultaneously. Those are similar discussions but they differ in important ways and thus we learned a lot from going through the process. Our entire fundraise process benefitted from the interest and enthusiasm of our existing lead investors to continue to participate in a leading capacity.
What are the biggest challenges that you faced while raising capital?
Fundraising is time consuming and often intense and draining. We had proven the concept and the market opportunity for the business in 2015, so last year was a time of reinforcing and strengthening our foundation [systems, processes, controls] to set Eleven James up for growth post-fundraising.
Keeping a team motivated and focused during that phase in our company’s growth and evolution while fundraising was a constant, iterative challenge. It’s difficult but imperative to balance between fundraising activities and your existing responsibilities to continue leading your organization towards success.
What factors about your business led your investors to write the check?
The luxury consumer evolution has arrived, transforming the traditional “buy and hold” model to a new paradigm of multiple “experiences and memories.” This is proven out across various products and industries in addition to ours, with Cadillac being the latest brand to embrace a subscription option for their luxury vehicles. We have our sights set on building the ultimate destination for a new, modern era in luxury goods and experiences, and our investors have fully grasped and bought-in to our vision.
What are the milestones you plan to achieve in the next six months?
Eleven James is poised to provide our members with access to one of the largest watch collections in the world. In parallel, in the months ahead, we are launching further enhancements to the overall member experience and new technology solutions that allow for even more personalization and flexibility. In the next six months and across 2017, we have numerous announcements planned related to these goals.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
It’s increasingly difficult to find investors funding growth companies for extended periods without any visibility towards when you will achieve profitability. Thus, I believe early-stage survival and success are predicated upon extending your runway as long as feasible, and at least having a plan for, if not achieving, profitability.
Where do you see the company going now over the near term?
Our focus is first and foremost on our members. We are working towards providing them with the best possible experience at every turn. Towards that end, this capital will most immediately go towards expanding our luxury timepiece collection with sought after styles and models, enhancing our personalized member experience across all touchpoints and platforms, as well as scaling technology and infrastructure to support continued growth.
What’s your favorite restaurant in the city?
I love eating out in NYC and this is a difficult decision. If I had to pick a current favorite, it’s The Nomad.