Leatherman Tool Group: Tim Leatherman

Most entrepreneurs expect it will take at least a few years for their businesses to gain traction. But Tim Leatherman waited 7 years to make a single, $175 sale. In the late 1970s, he had set up shop in his brother-in-law's garage, scavenged some metal from old appliances, and built a tool that he'd dreamed up a few years before: a foldable pair of pliers with several other tools tucked into the handles. Tim worked for years trying to market his design to knife and tool companies, but none of them were interested. Was it a tool? A gadget? A knife? Eventually he was able to convince mail-order catalogs to sell the tool; and within the space of a decade, he went from selling a single knife to a million every year. Today Tim's company is worth over a $100 million and his last name has become a household brand: the Leatherman. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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• 0:00Guy Raz?

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• 0:46Guy Raz?

  build the prototype, analyze the market, maybe even come up with the idea, what separates the people who actually build something from everyone else? I don't have a clean answer yet, so I've been sitting with it with Claude. There's hope in hard questions. Ask yours at claude.ai/hibt. We get support from U.S. Bank. A question I love asking founders. What's the one decision you almost didn't make? The one that changed everything? Because it's never the obvious stuff. It's never, I decided to start a company. It's the small, boring, Tuesday afternoon decision you barely remember making until you realize it's the reason everything after it either worked or didn't.

• 1:32Guy Raz?

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• 2:14Guy Raz?

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• 2:58Guy Raz?

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• 3:40Guy Raz?

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• 4:23Guy Raz?

  And it reminds me a little bit of the founders I talked to on this show, because the best ones obsess over things their customers will never see. Tiny details, invisible improvements, relentless iteration. And not because anyone's watching, but because it makes the product better. That's what the mobile brand does. It engineers fuel the same way great founders engineer their products. Mobile Supreme Plus Premium Gas helps keep engines three times cleaner, which can mean better performance and improved gas mileage. It's for people who care about what's under the hood, even if they never see it. Three times cleaner compared to mobile, regular gas in port-fuel-injected engines. Actual results may vary.

• 5:07Guy Raz?

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• 5:13Speaker 01

  I was at this show. There was a man, and his name was Skeets Houchens.

• 5:18Guy Raz?

  Skeets Houchens?

• 5:19Speaker 01

  Yes.

• 5:20Guy Raz?

  It's like, have a movie.

• 5:23Speaker 01

  So Skeets comes up to my table and says, "What are you doing?" And I said, "I'm waiting for someone to stop, and I'm going to want to show them the prototype of my new type of pocket knife." And Skeets says, "You can't do that. The people walking by, they're like zombies. They're in a daze. They don't see anything. And you got to get up. You got to get out in the aisle. You got to grab them. You got to stop them." So I stood up. When people walked by, I'd say, "You, sir, have you seen my new pocket knife?"

• 6:00Guy Raz?

  From NPR, it's How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 6:11Guy Raz?

  I'm Guy Raz, and on the show today, how Tim Leatherman tried to market his foldable knife for seven years before he finally made a sale and grew his company into a multimillion-dollar brand, Leatherman Tool.

• 6:29Guy Raz?

  Back in the early 2000s, I was a foreign correspondent for NPR and CNN. I covered the Iraq War, Afghanistan, Kosovo, and a few others. And the only reliable way to file my stories was through a big, bulky satellite phone connected to a device called a Roadrunner. Together, they took up a suitcase. Every time I arrived to a new place, a city, a village, a dusty outpost, I'd have to set up a mobile studio. I'd haul the sat phone up to the roof of the guesthouse or motel, and then start to strip wires and screw and unscrew connections. I'd cut rope to hold things in place.

• 7:10Guy Raz?

  And invariably, I needed a pair of pliers, or a screwdriver, flat and Phillips, and a sharp knife. Which meant that the one thing I always brought with me on every trip was a Leatherman Wave. Now, it may surprise you, as it did me, that the Leatherman has nothing to do with leather making. I always figured it came out of a 19th century tannery in Montana or something. But in fact, it's a tool that first came onto the market in the 1980s, and it was invented by a man named Tim Leatherman. Today, Leatherman is a company that sells well over $100 million of pocket knives and tools each year.

• 7:52Guy Raz?

  But it took Tim more than seven years of tinkering on his idea before he managed to sell one. And then, on that day in that convention hall, he literally sold just one. Tim tried to sell his idea to knife companies who rejected it because they thought it was a tool. And then, he went to toolmakers who didn't want it because they thought it was a knife. And in the very early days, he didn't attract any investors either. But that means that today, Leatherman is still a family-owned business, based in the city where Tim was raised, Portland, Oregon. His mom was a homemaker, his dad was a union carpenter, and Tim grew up in the two-story house his father had built.

• 8:37Guy Raz?

  Tim was kind of a shy kid, a self-described nerd. And from an early age, he usually had a job, either mowing lawns or babysitting. Tim went on to study mechanical engineering at Oregon State in Corvallis. It was during the late 1960s, the height of the Vietnam War. But Tim wasn't drafted. He was actually too skinny to join the army. So he spent his time focusing on other things.

• 9:03Speaker 01

  In college, I decided I wanted to be really good at something. And I wanted to be able to leave some evidence that I'd been there. And I decided that the way I wanted to do it was to become really good in table tennis. And to win the, the school championship and have my name on the, on the list of, of school champions. So I put a lot of effort into trying to become good in table tennis. And during the summer, a friend of mine and I, well, we heard that there was a ping pong table in the basement of a dormitory for the students at Portland State. So he and I went there.

• 9:47Speaker 01

  And while we were playing, a group of students came down. And one of them was the most beautiful girl I'd ever seen. And so I tried to play even better to try to impress her. And somehow I got the courage to approach her and talk to her a little bit and even got her phone number.

• 10:05Guy Raz?

  And her name was Cho.

• 10:07Speaker 01

  Her name was Cho. And I was so worried that when I called her back and wanted to follow up with her, that I would mispronounce her name. And she'd never speak to me again.

• 10:18Guy Raz?

  And I'm imagining you were just terrified and nervous and you had butterflies in your stomach because you were a self-described socially awkward guy.

• 10:28Speaker 01

  Exactly.

• 10:29Guy Raz?

  This took incredible courage for you to approach her.

• 10:33Speaker 01

  Well, let's not go that far, but I was in college, I had three distinct lives. I had my academic life, I had my table tennis life, and I had my foreign friends' life. And so I was starting to come out of it a little bit. It seems somehow I was better able to interact with my foreign friends than with my American friends.

• 11:00Guy Raz?

  So Cho was from Vietnam?

• 11:04Speaker 01

  Right.

• 11:05Guy Raz?

  And I guess the two of you started dating and you got into a pretty serious relationship because after you graduated from college, you actually went to Vietnam to live with her and her family there and to teach English. This was like 1972. I mean, the Vietnam War was still going on. I don't think the fall of Saigon would happen until like 1975. Tell me about living in Saigon in 1972, like as an American who was not part of the military. What was that like?

• 11:37Speaker 01

  It was the best experience of my life, the most formative experience of my life. Everything was new, everything was different. For me, everything was exciting. In Saigon, there was chaos everywhere, I mean, organized chaos everywhere. There was plenty of evidence that there was military activity and there were soldiers and Jeeps going through the streets and lots and lots of American infrastructure there. But for me, I went there, I paid my own way to get there, and I, once I got there, I tried to live more of a Vietnamese life.

• 12:15Guy Raz?

  And I remember just from being a reporter in places like Baghdad and Kabul, there's always this kind of slight sense of paranoia that, you know, the rumors and it's going to be an attack coming or an explosion or something can... I mean, do you remember that feeling? Because Saigon was not... I mean, there were attacks on, you know, on US-backed forces, on South Vietnamese forces there and on US soldiers. I mean, there were... This was a war.

• 12:47Speaker 01

  Yes, but I was not... I wasn't... Didn't have any war experiences. I could move around Saigon very well. My mode of transportation initially was a bicycle. And I would even drive, ride out into the countryside sometimes and I didn't feel unsafe.

• 13:04Guy Raz?

  And did any of your friends say, "Wait a minute, you're going to Vietnam right now? What are you doing?" Did anybody say you're not, because people, people had images of it from, from television, right? That there was a war zone.

• 13:16Speaker 01

  I didn't consult with my friends. I was determined to go.

• 13:18Guy Raz?

  Right. All right. So you ended up spending three years in Vietnam, right?

• 13:23Speaker 01

  Yes, almost three years.

• 13:24Guy Raz?

  Almost three years.

• 13:25Speaker 01

  Within a month after I arrived, Cho and I decided our, our love was real and we got married. She and I rented a, a room in a house. Her family was in Saigon, so we had lots of contact with them. And I was initially an, an English teacher and then I had some other jobs. I repaired helicopters and then I got a job with an adoption agency to be their logistics person to arrange for the supplies that we needed for the kids and arranging for the transport of the kids when they're ready to be sent back to, sent to America.

• 14:05Guy Raz?

  One of the things I read was that while you were there, you noticed how, how just any, like kids, teenagers, kids as young as 10, 11 were, were really handy. They could, they could fix motorcycles and scooters and, and you were sort of embarrassed because you didn't know how to do that.

• 14:23Speaker 01

  Yes, that was a real awakening for me in Vietnam. I had a degree in mechanical engineering, but I really knew nothing practical. And a colleague of mine, when I was teaching at the hospital, one day we were sitting at lunch and somehow the subject of motor scooters came up and he said, "The engine of a motor scooter, it's really pretty simple, you know?" And I thought, "If he thinks it's simple, there's something wrong with me."

• 14:54Speaker 01

  And there were these kids on the sidewalk that had sidewalk businesses who could repair motor scooters. And it was pretty much from that moment that I became very interested in the way things worked. And I'd buy clocks and take them apart and try to figure out how they worked. And just anything, lots of things that I'd pick up and try to analyze, try to understand, and try to repair.

• 15:17Guy Raz?

  And I guess one of your very first ideas or inventions, really, was something you made for those motor scooters that you were seeing everywhere.

• 15:26Speaker 01

  Yes. And I noticed that all of the Japanese motorbikes had luggage racks on the back.

• 15:32Guy Raz?

  Yeah.

• 15:33Speaker 01

  But none of the Vespas had luggage racks on the back. And I thought, aha, a market opportunity. I'll create a luggage rack for a Vespa. And with the help of my brother-in-law, I was able to design one and make 100 of them. After I finished making my batch of 100, I was able to talk a shop into taking two of them on consignment. And I hired a girl to distribute leaflets on parked Vespas. When we left Vietnam, there were still 97 in the bedroom of our house.

• 16:13Guy Raz?

  So you never sold them?

• 16:15Speaker 01

  No. And it turned out that all, that the people who rode Vespas considered themselves a class above.

• 16:24Guy Raz?

  Aha.

• 16:25Speaker 01

  And they all had homes, and they had maids. And their maids would go out and do the shopping and bring back the groceries and the live chickens on the backs of their motor scooters.

• 16:39Guy Raz?

  Wow. So the Vespa was like the sort of upper-class

• 16:44Speaker 01

  Luxury vehicle.

• 16:45Guy Raz?

  Vehicle, considered to be the luxury vehicle. And you would never be caught dead hauling anything on the Vespa in Vietnam. So nobody wanted to buy a rack.

• 16:54Speaker 01

  Exactly. It was your mode of transport, but it was you were driving a luxury vehicle and seen as such.

• 17:00Guy Raz?

  Right.

• 17:01Speaker 01

  And I learned a lesson from that. I learned that when you're looking for customers, you need to also know the culture within which you're living and the attitudes of the people about the products that are for sale.

• 17:19Guy Raz?

  So interesting. Wow. All right, so I think you guys were planning to stay in Vietnam for a while, but geopolitical forces actually got in the way because the war was ending, Saigon was about to fall. The Americans were withdrawing. And I think you left Vietnam like just a few days before the fall of Saigon, right?

• 17:42Speaker 01

  Right.

• 17:43Guy Raz?

  1975, the North Vietnamese come in. I'm assuming that that was what prompted you to leave.

• 17:50Speaker 01

  Yes, the country fell on April 30th, 1975. We were able to get my wife and her family out about 10 days before. We still had some children at the agency I worked for.

• 18:08Guy Raz?

  The Adoption Agency.

• 18:09Speaker 01

  Adoption Agency. That still hadn't been, we still hadn't been able to get out yet. And so about five days before, I left and brought out and helped to bring out about our remaining 20 children or so.

• 18:26Guy Raz?

  Wow. I wonder, Tim, whether those scenes from Afghanistan brought back memories for you of your time in Vietnam, watching that.

• 18:40Speaker 01

  Yes, I was a part of the airlift out of Vietnam. I left on an airplane. It wasn't so late that I had to leave on a helicopter. But I did cut it a little bit close.

• 18:52Guy Raz?

  So that was it? That was the end of your time in Vietnam? And you returned to Portland? Everybody went to Portland?

• 19:01Speaker 01

  Yes, we got Cho's family to Portland. So now the project was to get them settled. And then Cho and I said, now what? What do we do with the rest of our lives?

• 19:15Guy Raz?

  So this is around August of 1975. By August, the two of you decide, from what I understand, to travel, to backpack and hitchhike in Europe and maybe even beyond.

• 19:28Speaker 01

  We wanted to experience other cultures, and in particular, the culture in Eastern Europe. By now, we decided that maybe the best way for us to travel would be to have our own car. And we heard that the easiest and best place to buy a car was in Amsterdam. So we headed there, bought a $300 used car. It was a Fiat 600D, a 1969. If you can imagine a Volkswagen Bug scaled down to two-thirds size, this was our little Fiat.

• 20:05Guy Raz?

  Beautiful car, by the way. Just a beautiful Italian car, right? I mean, it's a tin box, but a beautiful car.

• 20:12Speaker 01

  Well, our nickname for it was the Little Monster.

• 20:16Guy Raz?

  All right, so you decide to take this trip. And how, by the way, how long was the entire trip going to take?

• 20:22Speaker 01

  Well, it ended up taking 10 months.

• 20:24Guy Raz?

  10 months. I think you traveled through 17 countries in Europe and the Middle East, right?

• 20:29Speaker 01

  Right. And on that trip, I was carrying a pocket knife, a multi-blade pocket knife, like a Boy Scout-type knife. And I was using that for everything from adjustment-making, well, from using the knife blade for slicing food for dinner, to the can opener for opening cans, and the screwdriver for turning screws. But there were often times when I needed a pair of pliers. An example would be when the car had issues, but even more so when we stayed in cheap hotels and pensiones and the hotel plumbing had issues.

• 21:06Guy Raz?

  Yeah, I bet.

• 21:09Guy Raz?

  When you, on your trip, did the car, I have to assume the car broke down now and again?

• 21:15Speaker 01

  Yes.

• 21:17Guy Raz?

  Could you get the parts for it?

• 21:18Speaker 01

  Yes.

• 21:19Guy Raz?

  If it stopped running, like in the middle of, I don't know, Bulgaria or something?

• 21:23Speaker 01

  In Bulgaria, no.

• 21:25Guy Raz?

  Okay, all right.

• 21:26Speaker 01

  But, yes, there were, there were parts. You could get parts. One kind of humorous story is, while we were in Bulgaria and driving down the highway, I noticed my wife was getting shorter. I looked across and, yeah, she was getting shorter. And I started, then I looked down and I realized that the supports holding her seat had corroded and her seat was falling through the car down towards the pavement.

• 21:53Speaker 01

  So, Joe moved to the backseat and she was back there. She was sort of like, I'm James, the chauffeur up front, and Joe's in back telling me what, where to go and when to turn. And then when we got to, out of Bulgaria and into Turkey, there was a kid on every corner that had an oxyacetylene tank and we stopped at one of those and he was able to weld the front seat back in and then Joe moved front again and we continued on.

• 22:19Guy Raz?

  So, I don't know if this is apocryphal or not, but there were things that, that when you would do repairs to the car, you would take notes about the drawbacks or the deficiencies of the knife you had, almost as if you were thinking, there needs to be a new knife. Is that, that just sounds so on the nose, like prescient. Is that true? Is that how it happened?

• 22:47Speaker 01

  It was a, what are we gonna do with the rest of our lives trip? And I, and during the trip, I was jotting down notes of any ideas I had.

• 22:59Guy Raz?

  Right.

• 22:59Speaker 01

  And one of the ideas, in essence, said, add pliers to a pocket knife.

• 23:05Guy Raz?

  Wow.

• 23:05Speaker 01

  And the, and the reason for that was for my own personal need, just both to fix the car, but even more so to fix the bulky plumbing in the cheap hotels and pensions in which we stayed.

• 23:19Guy Raz?

  By the way, what were some of the other ideas that you jotted down?

• 23:22Speaker 01

  Actually, some of them turned out to be things that other people did, but I did not. One of them was that postage should have some kind of a barcode or something on it. Some kind of a method by which if you want to send it somewhere, you would buy a decal that had the zip code on it that was readable somehow, so that the post office could process the mail more easily. Another idea was to congregate service shops within one shopping center, one mall. And in particular, like repair shops, so if you, and particularly, small repair shops.

• 24:02Speaker 01

  So if you have a TV repair, appliance repair, watch repair, locksmith, congregate all those into one place. You said you've done some traveling around the world, and I'm sure you've been in places where they have these bazaars, and within the bazaars, there's sections where everyone, where the whole section of the bazaars, everyone's selling cloth.

• 24:25Guy Raz?

  Yeah.

• 24:25Speaker 01

  And you think to yourself, why would they all be in the same place? Why wouldn't, why wouldn't they each be, go in various places where only, where there's less competition?

• 24:35Guy Raz?

  Right.

• 24:36Speaker 01

  But, but when you think about it, it works really well, because if you're in the market for cloth, you go to the place where there's the most selection.

• 24:44Guy Raz?

  Love it. The problem today, and I'm going to sound like a grumpy, crotchety old man, is nobody repairs anything anymore, because the prices of products are so cheap, people just throw them away and buy a new one.

• 24:58Speaker 01

  You'd be surprised, you'd be surprised how many people with a Leatherman tool are still fixing things.

• 25:04Guy Raz?

  That's a shameless plug for the Leatherman.

• 25:08Guy Raz?

  All right, so you end up, back in Oregon, 1976, and you're flipping through your book of ideas, and you decide the most viable idea, the one you want to pursue is this, this knife tool.

• 25:22Speaker 01

  Exactly. It was, had the most realistic chance of actually being able to do something with it. And I asked my wife, could I build one, just one, just for me?

• 25:35Speaker 01

  She said, "How long will it take?" And I said, "Maybe one month." So she said, "Okay." And so she went to work to support us. And I went to, at the time, we were at my parents' house. I went into the basement and picked up a file and a hacksaw and started trying to build what was in my mind.

• 25:56Guy Raz?

  Out of just, what, like scrap metal?

• 26:00Speaker 01

  Like scrap metal, I was able to scrounge up.

• 26:04Guy Raz?

  And where were you doing this? In whose garage?

• 26:06Speaker 01

  I was working in my brother-in-law's garage.

• 26:09Guy Raz?

  And what did that mean? Were you like, were you pounding? I mean, you weren't, you're not like a 19th century blacksmith where you're pounding metal, right? Or were you, was that, were you doing so many of that?

• 26:22Speaker 01

  My initial prototypes, I was cannibalizing parts out of other tools.

• 26:26Guy Raz?

  Okay.

• 26:27Speaker 01

  But then I was, and then, but to connect them and get it to design the way I wanted to, I was cutting the piece of sheet metal with a hacksaw or cutting them with tin snips and folding them together by putting the metal in a vice and then putting the, bending it over the corner of the vice and pounding it by pounding it with a hammer. It was really pretty crude.

• 26:51Guy Raz?

  So you were like a 19th century blacksmith?

• 26:53Speaker 01

  Well, other than I didn't have fire and flames, I was doing everything cold.

• 26:59Guy Raz?

  Right, okay. So you're really like, you're trying to make a prototype and you come up with a prototype. And I'm trying to imagine, it looks like a pair of pliers, but in the pliers, you had like some tools that would come out of the handles. What were the tools, like knives and a file and a bottle opener, that kind of thing?

• 27:15Speaker 01

  Yes, and screwdrivers.

• 27:17Guy Raz?

  Right. And what did you do with it? Did you present it to friends, to your wife? Did you say, "This is it, I got it. I think this is it. This is the thing that's going to make me millions of dollars."

• 27:29Speaker 01

  No, I quickly discarded it because even for me, it had shortcomings.

• 27:35Guy Raz?

  Which were what?

• 27:36Speaker 01

  Well, the first shortcoming was that I had a strict criteria in the length that it could be closed when you put it in your pocket. It had to be pocket knife length.

• 27:48Guy Raz?

  Okay.

• 27:49Speaker 01

  Not beyond, no longer than four inches. So by the time I had the pliers taking up about two inches, I only had about two inches of handle.

• 27:58Guy Raz?

  Oh, yeah.

• 27:58Speaker 01

  And I couldn't get good leverage.

• 28:03Guy Raz?

  You realize that to make this work, it has to fold over.

• 28:07Speaker 01

  Yes.

• 28:07Guy Raz?

  So how long did it take you to make that prototype?

• 28:11Speaker 01

  About two more years.

• 28:14Guy Raz?

  So all told, you start this in 1976 after-- and you were only supposed to do this for a month, by the way.

• 28:20Speaker 01

  Right.

• 28:22Guy Raz?

  This is-- it reminds me of James Dyson, who invented the Dyson vacuum. He was on our show five years ago. For five years, I think, or six years, he worked on the vacuum. I think he had 4,000 or 5,000 prototypes of his vacuum cleaner. People thought he was nuts. I mean, you were still a young man, but you're now in your-- kind of your early 30s. You were not earning any money. You were working on this prototype, but you believed that this was going to be a business. You clearly believed it. Did anybody else-- do you remember anyone at the time saying, you know, maybe you should just, I don't know, get a job?

• 28:59Speaker 01

  Well, I'm pretty sure people were looking askance at me. But this was my day job. Every day I would go to my brother-in-law's garage and spend the whole day in the garage. And so I spent a lot of time in the library, too.

• 29:15Guy Raz?

  All right.

• 29:16Speaker 01

  When I was researching various aspects of materials or specifications on how good the tool should be.

• 29:25Guy Raz?

  When you were, when you were kind of like working on the prototype, what were you imagining this would be used for? I mean, you knew that you needed something like this on your trip to Europe. Did you think this would be like a utility knife? Like, you know, like lots of people have Swiss Army knives. They just have them, even if they're not handy. They just have them. But did you think it would be that kind of person who would, who would want this?

• 29:47Speaker 01

  Well, I thought that it would be anybody and everybody. Anybody that carried a pocket knife would rather carry this tool that I was creating because you not only got all the features of a pocket knife, you also got a pair of full-size, full-strength pliers.

• 30:02Guy Raz?

  So this is what you were working on, and--

• 30:07Guy Raz?

  In the meantime, you know, it's a lonely pursuit, right? I mean, you're doing this by yourself. And I don't know. I mean, you didn't have like an office of people to get feedback from. Did you remember feeling lonely? Like, I don't know. You were all alone in the world working on this thing?

• 30:35Speaker 01

  I do. And one time in particular, it was the eve of my 30th birthday. And I'd been working on this for two years already. And I went to bed that night thinking, I have nothing to show for this. Two years of my life are wasted. But the next morning, I woke up and remembered, I have a goal. I want to build a tool that works for me. And if it works for me, I think other people are going to like it, too. And so I went back to work and on I went.

• 31:16Guy Raz?

  When we come back in just a moment, how Tim finally makes a sale, a single sale of a single knife, but still gets turned down by dozens and dozens of mail order catalogs. Stay with us. I'm Guy Raz, and you're listening to How I Built This. Does your team want a website that looks and feels handcrafted but is still fast to ship? Well, Framer is built exactly for that. With Framer, you design on a visual canvas with responsive layouts, hosting, and a CMS built in, so the work is production-ready from day one. And you can get it done with help from Framer's AI agents.

• 31:59Guy Raz?

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• 32:43Guy Raz?

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• 33:27Guy Raz?

  expert-created business guide in your hands today. It's called Aligning for the Agentic Era: How AI is Changing Everyday Work. And right now, it's yours, absolutely free. Inside, you'll discover how AI could reshape work across your entire organization, and how to position your business to prosper from it. If your revenues are at least in the seven figures, get NetSuite's free business guide, Aligning for the Agentic Era: How AI is Changing Everyday Work, at netsuite.com/built. The guide is free to you at netsuite.com/built. netsuite.com/built. Stripe is built for whatever comes next, because the pace of change has

• 34:11Guy Raz?

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• 34:51Guy Raz?

  with Stripe's users processing a combined $1.9 trillion last year. So if you're already thinking about what's next for your business, see what's possible at stripe.com.

• 35:11Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's 1978, and Tim Leatherman has been grinding away on a prototype for a folding, multipurpose tool. And his plan is to patent it, sell it to a big knife company, and make lots of money.

• 35:28Speaker 01

  And they would pay me about $1 million, and I would sit back and live happily ever after.

• 35:36Guy Raz?

  You would just count your gold coins in your vault of gold for the rest of your life?

• 35:41Speaker 01

  Yes.

• 35:42Guy Raz?

  So the idea was, hey, I'll make a prototype, and I'll have a patent. And then I'll sell the technology to another knife company. And I believe the knife company was Gerber, which is also based in Portland. They make great knives. And you actually approached them in 1978 or '9 and said, hey, check out what I've built. What do you remember about that meeting?

• 36:04Speaker 01

  Yes, I approached Gerber. I called them and said, I have a new kind of pocket knife I'd like to show you. They said, sure, come on in. They agreed to borrow my prototype and do an evaluation of it and get back to me. After a couple of weeks, I hadn't heard from them, and I was getting really anxious. So I called them, and they said, sorry, we decided to not take this on. It's not a knife, it's a tool.

• 36:35Guy Raz?

  OK, what's wrong with being a tool?

• 36:36Speaker 01

  They said, we're in the knife business, and this is a tool. It's not something that we're interested in getting into.

• 36:44Guy Raz?

  Did part of you say, OK, well, maybe I'll approach tool companies and see if they want it?

• 36:48Speaker 01

  I'm a little more stubborn than that. I said, well, there's other knife companies, so I'll approach them. So I did. Ultimately, I think I contacted every knife company there was.

• 36:58Guy Raz?

  In the US?

• 36:59Speaker 01

  In the US, even Victorinox in Switzerland.

• 37:01Guy Raz?

  Wow. And this is pre-email. You're writing letters and mailing them.

• 37:07Speaker 01

  Yes, I would send them a letter, and all of the answers were the same. Sorry, we're not interested. And then I finally got the message and said, okay, if the knife companies aren't interested, I'll go to the tool companies.

• 37:22Guy Raz?

  Yeah.

• 37:23Speaker 01

  And when I wrote to them, the answer back was, sorry, this is not a tool, it's a gadget, and gadgets don't sell.

• 37:32Guy Raz?

  What tool companies do you remember going to?

• 37:34Speaker 01

  Well, the big ones like Stanley, Black & Decker.

• 37:37Guy Raz?

  Wow. I mean, you're now talking about, you know, three, four years in, this is not a vote of competence. This is not, this would not instill competence in most people. And I would say, most people at this point would say, I gotta move on.

• 37:55Speaker 01

  And I wasn't too much different. My wife and I had a conversation, and we decided it was time that I get a real job. I looked through the want ads, and I found one that said, wanted salesman welding products, and was offered a job, and I accepted it.

• 38:18Guy Raz?

  This company you worked for was called Utectic, I think, right? The welding supply company?

• 38:23Speaker 01

  Yes. Their headquarters was in Switzerland. It was actually a perfect job for me in a lot of ways. It was, I was calling on businesses where they could, they had equipment and they had processes that could be used in the manufacture of my tool. So I would show my prototype, and that was also a way of getting rapport with my prospective customers.

• 38:46Guy Raz?

  Wow. So while you were representing Utectic selling supplies, you could also talk to these customers about, by your passion, which was this pocket knife that you were inventing?

• 38:58Speaker 01

  Yes. If you try to sell stuff to people, they get their antenna up. If you ask them for advice, they're plenty willing to talk to you.

• 39:07Guy Raz?

  All right. By this point, in the early 80s, I believe I read, you'd already received more than 100, maybe more than 200, either rejections or no replies from knife companies and tool companies. But you still thought, you were still holding on to this dream, even though you'd already had about 200 or more rejections or no replies?

• 39:32Speaker 01

  Yes, I still had the goal, still had the dream, still persevering.

• 39:36Guy Raz?

  Why did you think that it was gonna work if no one was confirming that idea?

• 39:45Speaker 01

  There's a fine line between persistence and failure to accept reality. And I was determined to try to go on too long before giving up too soon.

• 40:01Guy Raz?

  And I have to assume you probably didn't have to invest too much money because it was like scrap metal and pretty, there was cost for the patent imagining. You probably had put a couple of, several thousand dollars into developing this thing, or maybe more, actually, I don't know.

• 40:18Speaker 01

  I believe the patent cost about fourteen hundred dollars. And I probably put in maybe five thousand dollars into purchasing various types of equipment.

• 40:30Guy Raz?

  And, and the time.

• 40:31Speaker 01

  And put in a lot of time. I was, I had, felt I had more time than money. And about seven years after starting the project, first going into the garage, I was about to give up.

• 40:43Guy Raz?

  But what changed that? What happened that made you not give up on it?

• 40:48Speaker 01

  A friend of mine from university days named Steve Berliner had been following my, let's not say progress, but lack of progress, all this time. And he stepped in and said, let's be partners. There's still a few things you haven't tried. And he stepped in and offered to, offered to become partners to try to see if we could get it on the market.

• 41:13Guy Raz?

  And Steve was a friend from college?

• 41:14Speaker 01

  Yes, we were fellow table tennis players. And Steve's father had a manufacturing business. And Steve, so Steve grew up with that environment. Steve's education in university was on the business side.

• 41:30Guy Raz?

  So he was, he was kind of like a, a perfect match. And when he approached you and said, hey, let's start a business. This is actually amazing. You had started this prototype in 1976. Steve approaches you in 1982. You had not yet incorporated a business. You did not have a business.

• 41:46Speaker 01

  No. Steve and I did agree to become partners. It was seventy-five percent me and twenty-five percent Steve.

• 41:55Speaker 01

  And so then we were smart enough to recognize that before starting to manufacture the tool, we should get an order for enough tools to justify going into business.

• 42:08Guy Raz?

  I read that in 1983, so that'll be, what, seven years after you started on work on this product, you finally sold a tool.

• 42:21Speaker 01

  Yes, my very first sale was by going to a knife show. I had a table and I had an exhibit on my table called "The Evolution of an Invention," where I had compiled the prototypes that I'd created over the, by then, seven-year period that illustrated my progress or lack of progress in trying to reach the tool that would be marketable.

• 42:51Guy Raz?

  Did you get a, I don't know, did you get a bunch of people coming up to the table and inquiring and asking you questions and?

• 42:57Speaker 01

  No, I was at the show, people were walking by, and no one was stopping.

• 43:04Guy Raz?

  I'm sorry, I would have stopped. I would have stopped for you, Tim. I promise.

• 43:09Speaker 01

  Well, by the, after I tell you my story, you might, you might agree that you might not have stopped. And the reason is, is that down at the end of the aisle, there was a man selling magnesium fire starters. And being at the end of the aisle, he would get up on a podium, so he was up a little higher than everyone else, and he created this well-honed sales pitch that he would, that kind you'd use at by a Barker at a country fair. And he would go through his dog and pony show with sparks flying and him starting fires and drawing a big crowd, and every once in a while, he would take a break. And to this day, I don't know why, but he came up to my table, and his name was Skeets Houchens.

• 43:53Guy Raz?

  Skeets Houchens?

• 43:55Speaker 01

  Yes.

• 43:56Guy Raz?

  Only a guy named Skeets Houchens is selling magnesium fire starters. It's like, a movie. Okay, keep going.

• 44:03Speaker 01

  So Skeets comes up to my table and says, "What are you doing?" And I said, "I'm, I'm sitting here, waiting for someone to stop, and I'm going to want to show them the prototype of my new type of pocket knife." And Skeets says, "You can't do that."

• 44:19Speaker 01

  The people walking by the aisle, they're like zombies. They're in a daze. They don't see anything. And you gotta get up. You gotta get out in the aisle. You gotta grab them. You gotta talk to them. You gotta stop them. And so I went back and I sat down and I started looking at the people walking down the aisle. And Skeets was right. They weren't absorbing what they were seeing.

• 44:47Guy Raz?

  Yeah.

• 44:48Speaker 01

  It's true. They were like zombies.

• 44:50Guy Raz?

  Yeah.

• 44:51Speaker 01

  So I thought to myself, well, I'm at a knife show. Why are people here? They want to see new knives. What do you have, Tim? So I stood up. When people walked by, I'd say, "You, sir? Have you seen my new pocket knife?" And they'd shake their head and turn around, look, who was that? What was that? And I would actually be able to talk to them a little bit.

• 45:13Guy Raz?

  And I read that. I guess some guy walked by and offered to buy a knife from you. Who was he?

• 45:20Speaker 01

  He was a German immigrant. He had moved to San Francisco and he had started an auto repair business, repairing high-end German automobiles. His name was Wolf Scholz Tottenpott. And he agreed to pay $175.

• 45:39Guy Raz?

  To buy your knife?

• 45:40Speaker 01

  To buy a knife that I would go back and make in my garage for him. And he mailed me a check and that was my very first sale.

• 45:50Guy Raz?

  Wow. Wolf got the first Leatherman ever. He could take a picture of that and sell that as an NFT. All right. So you finally sell a knife to Wolf.

• 46:04Speaker 01

  Well, by now, Steve and I were already partners. We thought that if we could make and sell 4,000 tools in our first year, we could pay back our cash investment, but wouldn't pay ourselves anything for our time. So Steve and I were looking for someone to order 2,000 of the 4,000. And we thought, who could that be? And our first thought was the US Army. I said, we approached them. They said, no. Our next thought was AT&T, the telephone company. Before it broke up, it had tens of thousands of people repairing telephones. They said, no.

• 46:47Speaker 01

  And then we thought mail order catalogs.

• 46:49Guy Raz?

  Hmm.

• 46:50Speaker 01

  So we found a list of 280 different mail order catalogs. We got zero responses from 279.

• 47:02Guy Raz?

  Catalogues?

• 47:03Speaker 01

  Yeah.

• 47:04Guy Raz?

  Ah.

• 47:05Speaker 01

  But the 280th catalog was in Seattle and it was close enough to call and ask for appointment to come up and show them our tool in person.

• 47:15Guy Raz?

  This is a catalog company, I think, called Early Winters?

• 47:18Speaker 01

  That's correct.

• 47:19Guy Raz?

  Okay.

• 47:20Speaker 01

  So we drove to Seattle, showed them the prototype. They said, hmm, looks good.

• 47:26Guy Raz?

  Yeah.

• 47:27Speaker 01

  How much? And I have to admit, I hadn't really thought yet, so I thought quickly. And I said, your price, $40. And they said, that means we have to sell it for 80. Sorry, don't think anyone would pay $80 for this. But Early Winters did us a big, big favor. Instead of saying, go away, don't let the door hit you on your way out, they said, how could you make the tool less complex, less expensive?

• 47:57Guy Raz?

  Hmm.

• 47:58Speaker 01

  I said, okay. So Steve and I got back in the car, drove back to Portland, went back into my garage. And about six months later, I came out with a new prototype. We showed it to them. They said, we like this. How much? I said, your price, $24. They said, that's fine.

• 48:18Guy Raz?

  Yeah.

• 48:19Speaker 01

  My hopes were rising. So I said, so you're ready to order 2,000? And they said, no. We don't think we could possibly sell that many.

• 48:30Guy Raz?

  Wow. So, I mean, now you're talking about, what, this is 1983?

• 48:38Speaker 01

  Yes.

• 48:39Guy Raz?

  Because both of you are still doing your day jobs.

• 48:41Speaker 01

  Yes.

• 48:42Guy Raz?

  So, no orders?

• 48:43Speaker 01

  No order from Early Winters.

• 48:46Guy Raz?

  None of these catalogs. And what catalogs was this? I mean, Sears was probably still, you know, Neiman Marcus and...

• 48:53Speaker 01

  Eddie Bauer, L.L. Bean, Sharper Image.

• 48:57Guy Raz?

  Sharper Image. Sharper Image. They weren't interested?

• 49:00Speaker 01

  Well, so, once Ernie Winters said, "Sorry, we don't think we can sell 2,000," Steve and I then took a picture of this latest prototype, wrote a cover letter, mailed it to the remaining 279 catalogs. "You want to see this prototype?"

• 49:17Guy Raz?

  Wait. Oh, because you had this new prototype. You just reached out to the exact same catalogs as before?

• 49:24Speaker 01

  Yes. And this time, we got one response. It was from a company called Cabela's.

• 49:31Guy Raz?

  Cabela's, which I think is owned by Bass Pro Shops today.

• 49:35Speaker 01

  Today, yes. It's owned by Bass Pro Shops.

• 49:37Guy Raz?

  Okay.

• 49:38Speaker 01

  And one day, in late May of 1983, eight years after I had first thought of the concept, I got a letter at my business address, which was really my home address. I opened it up, and inside was a purchase order for $12,000.

• 49:57Guy Raz?

  Wow.

• 49:58Speaker 01

  For 500 tools.

• 49:59Guy Raz?

  Wow. Do you remember? I mean, I would have cried.

• 50:04Speaker 01

  You can't believe how happy I was. I was climbing the walls. I called Steve. He was so happy. And then we both settled down.

• 50:14Guy Raz?

  Oh.

• 50:15Speaker 01

  And realized, "Well, this is only 500 tools. We wanted 2,000."

• 50:21Guy Raz?

  Yeah. But still, pretty great.

• 50:25Speaker 01

  Still. Finally, after eight years, an order, a sale.

• 50:28Guy Raz?

  And presumably, this is May of 1983, presumably, they... How much time did you have to make 500 tools?

• 50:36Speaker 01

  Their order came in late May of 1983, and they wanted a delivery date in late December of 1983.

• 50:44Guy Raz?

  Okay. That seems reasonable. But who was going to make 500 tools? Just you and Steve?

• 50:50Speaker 01

  Well, we were very lucky in that Steve's father had a metalworking business, and Steve's father agreed to let us move the equipment I'd accumulated in my garage into his shop. And he let us use his machines and his employees on a subcontract basis.

• 51:09Guy Raz?

  Right. How long did it take to make one knife, one pocket knife? Like several hours?

• 51:15Speaker 01

  Well, if you think of the labor hours, in those days, labor, like, pretty good wages in manufacturing jobs were like $5 an hour. So, you know, we had two or three hours of labor in every tool.

• 51:27Guy Raz?

  Wow. You were, I mean, we've been calling it a pocket knife up until this point, but I think in 1983, once you got that order, or maybe around the time you got the order, you gave it an official name. You called it the Pocket Survival Tool, which, from what I read, was a very well-considered decision. Like, you thought about a bunch of different possible names for it.

• 51:51Speaker 01

  Yes. And we were surprisingly astute at considering markets and marketing and who our customers could be. And we finally settled on knife enthusiasts as one category. And back in those days, there were people who were building bomb shelters because they thought the Soviet Union was going to drop the big one on us.

• 52:20Guy Raz?

  I remember those days. Oh, yeah.

• 52:22Speaker 01

  So we quite consciously added the term "survival" in our tool with the thought that maybe that would trigger a response from them. Well, as it churned out, during that seven-month period when we were building the tools for Cabela's and anyone else we could convince to buy them, early winters called and said, "Anything happening?"

• 52:45Guy Raz?

  Oh.

• 52:46Speaker 01

  We said, "Yes, we're in production." They said, "Put us down for 250 tools."

• 52:52Guy Raz?

  Oh, all right.

• 52:53Speaker 01

  Also for delivery in late December 1983.

• 52:55Guy Raz?

  All right. So that's great. So now you're closing in on 1,000 tools.

• 53:01Speaker 01

  Right.

• 53:02Guy Raz?

  And by the way, you were, in the daytime, you were a salesperson selling welding equipment? And then, any free time you had, you were rushing to the metal shop and making these tools, these personal survival tools?

• 53:15Speaker 01

  During that period, I was basically totally neglecting my sales job. I was pretty much spending all the time in Steve's dad's shop.

• 53:23Guy Raz?

  Just trying to churn out. You were one of the, I mean, it was an assembly line. You were on the assembly line?

• 53:29Speaker 01

  I was personally checking every tool.

• 53:33Speaker 01

  My name was on every tool and I wanted each one to be perfect.

• 53:37Guy Raz?

  All right, so 1983, you're getting these orders in and it's December approaches and what's going on? Are you going to have enough product to send to Cabela's and to Early Winters?

• 53:51Speaker 01

  Late December arrived much more quickly than we thought. About two days after Christmas, we got a call from Early Winters. They asked, "Our tools, our 250 tools, where are they? We need them really badly because they've all been sold."

• 54:08Guy Raz?

  Oh, they actually had it in their catalog at that point?

• 54:11Speaker 01

  Yes.

• 54:12Guy Raz?

  And it had all been sold?

• 54:13Speaker 01

  Their catalog had been printed and released and they already had 250 orders.

• 54:17Guy Raz?

  Woo! You are so lucky that you did not do business in the Amazon Prime two-day-delivery era.

• 54:23Speaker 01

  That's for sure.

• 54:24Guy Raz?

  You could have been wiped out. Everyone's like, "What? I just ordered this two hours ago. Where is it?"

• 54:30Speaker 01

  Yes. We were lucky that in those days, people had a little bit more tolerance for how long it took to ship an order. But the catalogs had very little tolerance. They wanted their product in stock and when they got an order, they wanted to be able to ship immediately. So they weren't too happy, but they said, "The 250 have been sold. Here's an order for 500 more."

• 54:51Guy Raz?

  Wow.

• 54:52Speaker 01

  And a week after that, they called and said, "The 500 are gone. Here's an order for 750."

• 54:58Guy Raz?

  Just to point something out, this is the same company, Early Winters, who were supportive, who said, "Hey, try to make it cheaper." But at the same time, they were also skeptical that they could, whether they could even sell 250 of these things.

• 55:13Speaker 01

  Right. Two weeks later, they called back and said, "The order is now with 1,000 tools." And then it turned out that the catalogs were all monitoring each other. And if they got a sense there was a hot product, then they all wanted on board.

• 55:28Guy Raz?

  Of course. Of course.

• 55:30Speaker 01

  Then we started getting calls from all these catalogs that had turned us down before or hadn't even responded.

• 55:37Guy Raz?

  They were saying, "Well, this, we want this. Hey, hey."

• 55:40Speaker 01

  They'd call up and say, "Hey, we understand you have a new product. Would you mind sending us a sample?"

• 55:44Guy Raz?

  I love it.

• 55:45Speaker 01

  And Steve and I, rather than saying, "You idiots, we've sent you a letter. You said no. You could have had an exclusive. You didn't even reply." No, no, no, we didn't say that. We said, "Yes, sure. We'll be happy to send you a sample."

• 56:02Guy Raz?

  When we come back in just a moment, how a few samples morph into many, many sales for Leatherman, but how September 11th sends business back into an unexpected slump. Stay with us. I'm Guy Raz and you're listening to How I Built This.

• 56:25Speaker 02

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• 57:02Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's 1983 and after years in the wilderness, Tim Leatherman's multipurpose tool is finally finding a market with mail order catalogs. And sales, they start to grow, like mad.

• 57:20Speaker 01

  Yes, it was, it was, by then it was quite evident that there was a market for this tool. We were able to go from 200 tools to, in 1983, to 1 million tools in 1993.

• 57:32Guy Raz?

  Wow.

• 57:33Speaker 01

  Those were really exciting years with growth rates of 50% per year compounded.

• 57:40Guy Raz?

  How, how were your profit margins? I mean, it cost you $24 or you were, you were selling them for $24, I guess. But I imagine they were not cheap to make. I imagine your margins were kind of pretty thin, or am I wrong?

• 57:53Speaker 01

  In that first partial year, we did manage to sell 200 tools and we had revenues of $6,000. And with that money, we were able to start launching, launch the business and eventually be able to make and sell some tools. In that first year of 30,000 tools of sales, we had about $680,000 of revenue and actually made a few dollars.

• 58:21Guy Raz?

  You made a profit?

• 58:22Speaker 01

  Yeah.

• 58:23Guy Raz?

  Here's a wonder. I mean, now, all of a sudden, you are scaling fast. You go from 200 in year one, full year one, you go to 30,000, then 70,000, then you're doubling, 160,000 by 1986.

• 58:39Speaker 01

  Yes.

• 58:40Guy Raz?

  You were funding the growth and the scaling of this purely through the cash flow?

• 58:46Speaker 01

  Almost entirely. After about three years, we finally found a young banker who shouldn't have been willing to talk to us, but did, and was willing, saw that our balance sheet was strong, and agreed to give us a line of credit.

• 59:05Guy Raz?

  All right. Here's a question. One of the things that you did, I think it was 1996, so this is like, you know, about 13 years in, you build a very big facility in Portland to manufacture the product. And I think, to this day, they are assembled in Portland, right? Pretty much every Leatherman product?

• 59:30Speaker 01

  Yes. We do all the assembly ourselves, and the vast majority of the manufacturing ourselves, in our own factory in Portland, Oregon.

• 59:39Guy Raz?

  How, I mean, I know that, because some of the components you import, right? Some of the components that you use in the knife are made in Europe and maybe even in Asia. But how, why was it so important to make them in the US? I mean, I think I know why, but it meant that they were going to always be more expensive. I mean, your wife was from Vietnam. You had some, probably some contacts there, and it would have been much cheaper to make them in Asia. Why did you decide to continue to make them in Portland?

• 1:00:09Speaker 01

  I was born in Portland. I was raised in Portland. The jobs created, were created in Portland. And among the things I'm most proud of in the whole Leatherman journey is that I've created all these jobs, and that they were not a cannibalization of the world's supply. They were in addition to the world's supply, because this was a whole new product category that added jobs. It didn't take away from companies that were selling other things. So it's one of my everlasting goals, is to keep, do everything I possibly can to keep these jobs here in Portland, Oregon.

• 1:00:51Guy Raz?

  I know, Tim, that at one point, there was a lawsuit, a class action lawsuit, against Leatherman, because your tools were stamped "Made in the USA," even though some of the component parts were actually made in Europe or elsewhere, but most of it was assembled and made in the US, including most of the components. Anyway, I know it was based on an obscure law, this lawsuit, it was a complicated legal back and forth, but the upshot was, or the outcome was, that you ended up taking "Made in the USA" off of your products.

• 1:01:29Speaker 01

  Yes. As a result, we were required to label our tools, a proper label on our tools could be "Made in the USA," of US and foreign components, and assembled in the USA. Actually, that lawsuit, it could have spurred us to say, "The heck of it, we'll just go all the way and make our tool abroad." But the opposite happened. It spurred us into being more resolute and seeking more domestic suppliers and adding even more US content into our tools so that we can, in most of our tools now, we can label them as "Made in USA."

• 1:02:09Guy Raz?

  A Leatherman is not cheap, right? You can get a knockoff, you can get another knife that is a knockoff, that's made in China or in a cheaper country. How do you make sure that people aren't going to those alternatives?

• 1:02:34Speaker 01

  Yes, it's true that you can buy a knockoff of our tool, or a "Made in China," for $10, whereas a Leatherman tool might be $100. We used to fight the knockoffs, we used to file lawsuits against the importers and the retailers that were selling the knockoffs. It really wasn't possible to go after the manufacturers in China. And we were quite successful in those lawsuits for quite a few years. And of course, our labor costs are higher here in Portland, but we do have some advantages. We sweat the details. I think it was Mr. Sears, Sears and Roebuck, long ago, said-

• 1:03:17Speaker 01

  Quality is remembered long after price is forgotten.

• 1:03:21Guy Raz?

  I mean, I know that lots of people have stories of the Leatherman, right? Because it's one of those things that you bring with you for the eventuality when something will go wrong and you need to fix it.

• 1:03:38Speaker 01

  Right. We get testimonials of the Leatherman Tool saving lives. We get testimonials from Leatherman Tools from a couple of soldiers who've said the Leatherman Tool stopped a bullet. We've received testimonials of the Leatherman Tool being used as a surgical instrument and saving a life in an emergency. We have many testimonials of a Leatherman Tool being used to rescue someone out of a burning vehicle or another one out of a fallen helicopter. There's many, many, many different markets where everyone finds the Leatherman Tool to be of great value.

• 1:04:23Guy Raz?

  You were really just every year growing, growing, growing, growing. And I think, you know, around 1999, your sales reached over $100 million. You're a private company, so you don't reveal your numbers. But that was reported at the time. And then, next three, four years, sales dropped 20%, 30%. What was going on? What happened? What happened around 1999?

• 1:04:49Speaker 01

  9/11.

• 1:04:51Guy Raz?

  Oh, 2001, 9/11?

• 1:04:52Speaker 01

  Yes.

• 1:04:53Guy Raz?

  And 9/11 had a huge impact on sales?

• 1:04:55Speaker 01

  Yes.

• 1:04:57Guy Raz?

  Because people couldn't travel with them in their handbags?

• 1:04:59Speaker 01

  Yes, they were still carrying them when they got to the airport. And they, as to use the euphemism that the TSA was using is that they were voluntarily abandoned.

• 1:05:12Guy Raz?

  Which meant that people had to leave them at the airport, these seventy dollar knives.

• 1:05:16Speaker 01

  Right. Well, we thought that the people that lost their tool would would go out and buy another one.

• 1:05:22Guy Raz?

  Buy another one.

• 1:05:22Speaker 01

  So it wouldn't hurt business at all. But it turned out that maybe they, some of them did buy another one, but then they stopped wearing it because they were afraid that if they went to the airport again, that they would have forgotten they still have it and they'd lose it again.

• 1:05:37Guy Raz?

  Right, because it comes with a leather holster that you could put your belt in through.

• 1:05:42Speaker 01

  So then they stopped carrying them. They stopped using them. Other people didn't see them using it. And we lost that word of mouth advertising that was so valuable to us.

• 1:05:53Guy Raz?

  So, all right, so, so really, people were not buying them. And, and you had to do layoffs in 2002, I think, right? I mean, your sales dropped off considerably to the point where you actually had to let people go.

• 1:06:09Speaker 01

  That's one of the down points of my Leatherman journey. That was really, really hard.

• 1:06:16Guy Raz?

  But you had no choice.

• 1:06:17Speaker 01

  Really, we had no choice. It was, you have to, it's better to have most employees employed rather than have no employees employed.

• 1:06:26Guy Raz?

  Yeah. How did the company turn around from that low point? Was it just, just the economy bounce back? Or was it a more methodical, like new product line, new strategic approach?

• 1:06:41Speaker 01

  Well, we bounced around in that low nine-figure revenue number for quite a few years. In the last few years, we've, we've been able to introduce some new products. We've been able to take a little bit better control of the market. And after the pandemic hit, we thought there, we'll never sell another tool. We did make a few adjustments. Then a few months later, a couple of months later, we started getting orders again. And by the end of 2020, we had had our third best year in our history.

• 1:07:17Guy Raz?

  Wow, wow.

• 1:07:19Speaker 01

  And this year, we project will have our, our best revenue year ever in our history.

• 1:07:25Guy Raz?

  Wow. You stayed on as CEO until 2005.

• 1:07:31Guy Raz?

  When you decide to step down, I guess, and kind of change your role at the company and become the chairman of the board, were you just, at that point, burned out? Were you kind of done with the day to day?

• 1:07:47Speaker 01

  By that point, I was a bit tired. Earlier on, I had set the criteria for my leadership of the company. Two criteria. One, that the job remained fun, and the other, that I be an asset, not a hindrance. And all those many years from 19, from the garage even, but from 1983 to 2005, the job was fun. But near the end, it was fun most days, but not every day. And also, when I would go home at night, and Joe would ask me, "What did you do today?"

• 1:08:30Speaker 01

  So often, my answer was, "I processed paper." And there was one other factor. At that point, I was 57 years old in calendar years. But in terms of all the hours I'd put in all those previous years, I was 67 years old in work years. And I thought I had earned the right to be able to cut back a little bit.

• 1:08:55Guy Raz?

  Wow. I read that in 2019, actually, heard you in an interview, you said you were making about 8,000 tools a day.

• 1:09:02Speaker 01

  Yes.

• 1:09:03Guy Raz?

  Are you making more now?

• 1:09:05Speaker 01

  Yes.

• 1:09:06Guy Raz?

  Or you're selling about 8,000?

• 1:09:09Speaker 01

  Yeah, so that 2 million tools a year is now closer to 3 million tools a year.

• 1:09:13Guy Raz?

  Wow. I know you don't reveal your revenue, but it's not hard to do the math. I mean, it's...

• 1:09:19Speaker 01

  Yeah, I've admitted, I'm quite willing to admit, because it is pretty well-publicized, that we're in the very low nine figures of revenue. I'm quite proud that about 30% of those sales are export sales. And for an American company, 30% of sales being international is pretty good.

• 1:09:40Guy Raz?

  So, Tim, when you think about the journey you've gone on, right? You know, this is this kind of crazy story. I mean, we're toiling away on this thing that nobody wanted, and Joe kind of like, you know...

• 1:09:54Guy Raz?

  You had every reason to question why you were doing this. And everybody had a reason to question why you're doing this because it was not rational. This was not selling. You were not making a product people seemed to want because you weren't getting confirmation from the market, and yet you persisted. And it's a 100-plus million-dollar company today. How much of this story do you think has to do with just your hard work and persistence and smarts? And how much do you think has to do with luck?

• 1:10:26Speaker 01

  I think that it's about 10% luck and about 90% pluck. I've persevered. I've worked hard. I've had great people working with me. Obviously, I'm privileged to, born into a life of privilege in the United States and growing up in a middle-class household. I've been so many places in the world where life is not nearly as good as I've had it. There have been things in life where I've beaten the odds. The fact that Leatherman Tool became successful of products that are patented.

• 1:11:10Speaker 01

  I've read that only about 5% or less of products that are patented get on the market. So I feel like I've been a lucky person. I've never bought a lottery ticket because I feel like I've already beaten the odds and it's not going to happen again.

• 1:11:29Guy Raz?

  That's Tim Leatherman, founder, owner, and chairman of the board at Leatherman Tool Group. These days, Tim describes himself as a very engaged, part-time employee, but he's also spent the past few years becoming quite an accomplished pickleball player. In fact, in 2019, Tim won the national silver medal in doubles in his age group.

• 1:11:50Speaker 01

  But that silver medal was in an ancient age category at a middling skill level.

• 1:11:57Guy Raz?

  Oh, you're just being modest. It was the 70-plus division.

• 1:12:00Speaker 01

  Yes.

• 1:12:00Guy Raz?

  That's still national pickleball championships.

• 1:12:03Speaker 01

  It's actually led to a new entrepreneurial spark in me.

• 1:12:09Guy Raz?

  Oh, really?

• 1:12:09Speaker 01

  I've come up with a product that I think many pickleball players will love.

• 1:12:14Guy Raz?

  A pickleball multipurpose tool?

• 1:12:16Speaker 01

  No, I'm not at liberty to disclose it entirely.

• 1:12:20Guy Raz?

  I'm thinking you could combine like a portmanteau of the Leatherman and a pickleball paddle, like a Chinese fan that folds. And then you unfold it and then, like the Leatherman, but then you've got the pickleball paddle.

• 1:12:34Speaker 01

  Good job of trying to scuff out what it is.

• 1:12:40Guy Raz?

  Hey, thanks so much for listening to the show this week. Please do follow us on your podcast app so you always have the latest episode downloaded. If you want to contact us, our email address is [email protected]. If you want to follow us on Twitter, our account is @howibuiltthis and mine is @guyraz. Our Instagram account is @howibuiltthisnpr and mine is @guy.raz. This episode was produced by Kerry Thompson with music composed by Ramtin Arablouei. It was edited by Neva Grant with research help from Catherine Seifer. Our production staff also includes Casey Herman, Liz Metzger, Farah Safari, J.C. Howard, Elaine Coats, and Julia Carney. Our intern is Margaret Serino. Jeff Rogers is our executive

• 1:13:22Guy Raz?

  producer. I'm Guy Raz, and you've been listening to How I Built This.

• 1:13:29Guy Raz?

  This is NPR.