Tumi & Roam Luggage: Charlie Clifford

Over nearly 50 years in the luggage business, Charlie Clifford has built two premium brands and weathered three existential crises: the recession of 1982, the travel slowdown post- 9/11, and the extreme aftershocks of Covid. His fist luggage company, Tumi, was inspired by his time as a Peace Corps volunteer in Peru. Charlie began by importing hand-crafted leather duffels from South America, but quickly pivoted into more durable and distinctive ballistic nylon bags. Business travelers loved them, and by the 1990’s, Tumi was spreading to Europe and Japan. Today, Tumi is owned by Samsonite and its stores are in airports and shopping malls around the world. Meanwhile, Charlie—unfazed by the challenges he’s faced over the years—has launched another premium luggage brand, Roam. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

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• 5:14Guy Raz?

  So 1982, this is the first year since you founded Tumi in '75 that you actually lost money. And the bank, I guess, that was lending you money started to get nervous.

• 5:24Speaker 01

  Yes, we had got a call from the bankers saying that they wanted us to come down and rent a very traditional bank building. And I can recall getting off the elevator, walking down the hall, and the sign on the frosted glass above the door said Asset Recovery Department.

• 5:40Guy Raz?

  Asset Recovery Department. That's not a good sign.

• 5:44Speaker 01

  One didn't have to be a banker to realize what that meant.

• 5:53Guy Raz?

  Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 6:05Guy Raz?

  I'm Guy Raz, and on the show today, how Charlie Clifford's time as a Peace Corps volunteer inspired an import business that eventually became the high-end luxury brand Tumi.

• 6:24Guy Raz?

  There's a moment you may remember from my interview a few years ago with John Foley, the founder of Peloton. He mentioned that when he first started selling his stationary bikes, he priced them at around $1,200. At the beginning, sales were sluggish. Apparently, customers thought a $1,200 bike was too cheap and was probably low quality. So John Foley raised the price to $2,000. And soon, sales started to pick up. Now, as some of you who went to business school know, this is called a premium pricing strategy. It's what you do to signal to consumers that what you're selling is exclusive, special,

• 7:07Guy Raz?

  available only to the most discerning customer. It helps explain why people will pay more for a bottle of Dom Perignon or a cotton t-shirt by Balenciaga. The price is part of the brand's very identity. I mean, is that Canada goose coat really keeping you warmer than the one at H&M? Well, for the consumer who pays $1,000 for that Canada goose coat, it doesn't really matter. Which brings me to today's guest, Charlie Clifford, the founder of Toomey Luggage. You may know Toomey from its ubiquitous presence at airports and high-end shopping malls. The brand makes very good luggage, high-quality, practical, and expensive,

• 7:50Guy Raz?

  anywhere from $600 to $3,000 a bag, which, as you will hear, was part of the strategy. When Charlie started selling ballistic nylon bags in the early 1980s, he wanted to attract a certain type of high-end traveler. So he designed his bags to be sleek and strong and easy to use, and he priced them at what you might call the lower range of luxury. Charlie understood that enough people care about luggage and use it often enough to be willing to spend that kind of money on it. And the interesting thing about Toomey is that unlike many products that start high-end

• 8:32Guy Raz?

  but eventually wind up on a bargain basement rack, Toomey stayed high-end and flourished there.

• 8:40Guy Raz?

  Charlie moved on from the company when it was sold to a private equity firm in 2004. But in 2016, when Samsonite acquired Toomey, it was valued at $1.8 billion. But Charlie wasn't done. After he sold Toomey, he launched yet another high-end luggage brand called Rome. But as you will hear, luggage is by no means a bulletproof industry. Over the past 40 years, Charlie's brands have had three life-threatening challenges. The first, with the big recession in 1982, just as he was getting Toomey off the ground. Then came the massive downturn in travel after 9/11 in 2001.

• 9:22Guy Raz?

  And most recently, with this new company, Rome, travel again ground to a halt when COVID hit. But let's start a few years before Toomey began. After growing up in New Jersey and attending college there and in Indiana, Charlie joined the Peace Corps in the late 1960s and spent two years working in Chiclayo, Peru.

• 9:43Speaker 01

  Chiclayo was lacking in support for small businesses and for entrepreneurs. And in some of the other areas of Peru, they had developed industrial parks. They would have all of the electricity, all of the infrastructure that businesses need to operate. So there was another Peace Corps volunteer for the MBA program by the name of Jerry Papantonio, who was assigned to Chiclayo along with us. And Jerry and I worked with a group of people under the sponsorship of the Chamber of Commerce and essentially set up a local group of businesspeople to encourage them to organize and promote the idea of Chiclayo getting an industrial park.

• 10:25Guy Raz?

  All right, so you, obviously you're in the Peace Corps for that two-year period. And then eventually you return to the US. And from what I understand, you get a job in management for like a large... Company that operates supermarkets. But I gather that around five years in, you start to get restless, right?

• 10:44Speaker 01

  Yes, I was definitely restless and I recognized that I would probably do better in an environment that was not a corporate environment. Almost all of my friends were in the corporate world. They were moving up, they were happy. But I was, I guess I had enough independence and was enough of a maverick that I, I felt that getting involved in, in something that was more entrepreneurial, that was my, my own thing would be, would be more interesting and ultimately more satisfying.

• 11:09Guy Raz?

  Did you start to, to have conversations with friends? Did you start to talk to people about ideas?

• 11:14Speaker 01

  Yes.

• 11:15Guy Raz?

  You did?

• 11:15Speaker 01

  Yes. During the period I was there, I carried on communications with my old friend from the Peace Corps and we talked about potentially starting a business together. And because we had a wonderful experience in Peru, first thing we thought about was potentially getting involved with importing Peruvian handcraft.

• 11:31Guy Raz?

  And what was the name of this friend?

• 11:33Speaker 01

  Jerry Papantonio. Jerry and I were, learned from another friend, another Peace Corps friend, that George Millard had set up a company that was importing handcrafts from Peru and actually several other South American countries. The name of the company, the trading name was La Maline and George had been an associate director of the, of the Peace Corps in Peru, went on to be head of the, the Peace Corps in Uruguay after leaving Peru. Lovely guy who I was happy to go into business with.

• 12:02Guy Raz?

  And what was he doing? Tell me, tell me a little bit about what he was bringing in.

• 12:06Speaker 01

  George and his, his business partner, Dana Danielson, another ex-Peace Corps guy, were bringing in handcrafted rugs, handloomed rugs, wall hangings, hand carved gourds, hand knit sweaters, costume jewelry that was made by hand. And I became their regional salesperson. I was calling on and visiting stores in the Northeast, going to trade shows and basically helping them sell their various products.

• 12:31Guy Raz?

  And, and this is in the mid 70s. Was there a market for it? Were people interested in, in, because mainly indigenous crafts from Andean region?

• 12:40Guy Raz?

  Was there enthusiasm for this stuff?

• 12:42Speaker 01

  There was a reasonable amount of enthusiasm, particularly in the gift store market. But in the Northeast, I was able to sell to Bamberger's in New Jersey and Bloomingdale's in New York to their gift departments, and we enjoyed a pretty good business there.

• 12:55Guy Raz?

  I guess, not too long into your time there, because you were selling a bunch of different products from a bunch of different categories, and you felt that maybe it was the leather goods that you should focus on, that the company should focus on. What were the leather products they were selling?

• 13:12Speaker 01

  Well, I should have mentioned those at the outset. They were selling some leather handbags and some small leather duffel bags that were made in Columbia. Very rustic, very rugged, very natural leather for the most part, very well-priced. It was a good price-value relationship. So I felt that we should focus on that category, because unlike handcrafts, which patterns would vary, and sometimes what people ordered at a wall hanging or rug, it would come in slightly differently because they were made by artisans. The sizing might be different, the colors might be different. So I thought that leather bags would offer the opportunity to focus on a product that had a lot of handwork in it, but essentially be able to be reproduced consistently the same way every time.

• 13:57Guy Raz?

  So you thought the leather bags that they were selling, that was really where the business should focus on. But I guess your partners did not see it that way. And from what I understand, you decided to leave. It wasn't like it was amicable, it was perfectly amicable, but you just decided that, you know, maybe I'll go my own way?

• 14:14Speaker 01

  That's right. The two fellows who owned the majority of the company, they were reluctant and did not want to focus on leather. So with their blessing, I essentially had an introduction to their leather supplier in Columbia. I found, through my original business partner, another leather supplier, and we set off to focus on the leather business.

• 14:33Guy Raz?

  And this was a man named Seth McQuillan, I think, right?

• 14:37Speaker 01

  That's correct. Nice guy, smart guy. He was not involved in leather goods, but he did have experience importing products from Columbia.

• 14:46Guy Raz?

  So you and Seth decide to join forces and focus on importing leather bags from Columbia. I think this is 1975. And you decided to call the company Tumi. First of all, just tell me about that name, Tumi.

• 15:02Speaker 01

  It's basically a ceremonial knife that was used back in the Incan days. It's got a Peruvian god figure on it and the bottom of the knife is a curved blade. It was also used as a symbol used for wall posters by the Peruvian Tourism promotional agency. So the Tumi figure was a figure that was near and dear to my heart. And when we were trying to come up with a name, I thought Tumi was one that would travel well. For some people, it sounded Italian. For other people, Finnish. It sounded, it was very easy to pronounce for the Japanese. So I thought it was a name that would travel very well over time.

• 15:41Guy Raz?

  All right. So you, the two of you joined forces. You've got Tumi. And I think you both invested a few thousand dollars to get this started, right? Like 5,000 bucks, is that about right?

• 15:50Speaker 01

  I think we had $10,000 between us.

• 15:53Guy Raz?

  Right. And the plan was to basically import these leather, were they like duffel bags? Describe the kind of bags that you were importing.

• 16:03Speaker 01

  Our most important product originally was indeed leather duffel bags. They were, they were made from very rustic leather. They had kind of a handcrafted look to them, which they should have because they were made by leather artisans. And they became very popular because they were very well priced. I believe our most popular size at the time was selling for $49, then 55, then $59. So tremendous value, would be several hundred dollars today. We found a ready marketplace for them in stores where there were, people were crafting leather sandals and making leather belts. They were, they were happy to buy our leather bags because their customers might think that they were, that these bags were being made in the back of these stores where indeed

• 16:48Speaker 01

  they were, they were making some products for themselves.

• 16:50Guy Raz?

  Right. So online, I mean, it was just, it was just leather. I mean, you would open it up and inside was, it was like a rough texture of the inside of the leather hide?

• 16:59Speaker 01

  It was the napp side of the leather. That's correct, in the early days.

• 17:03Guy Raz?

  Not waterproof?

• 17:04Speaker 01

  Definitely not waterproof.

• 17:05Guy Raz?

  All right. I read that that first year of business, 1976, I guess. You did pretty well, six, over $600,000 in sales. I mean, that's 1976, that's a lot of money.

• 17:17Speaker 01

  Yes.

• 17:18Guy Raz?

  I mean, I would have thought, and I'm not spoiling the story here, but for anyone listening, this is going to get dark for some time. This story is going to get dark and challenging. But I'm thinking 1976, you guys must be like, high-fiving each other, thinking, we're crushing it, $600,000, our first year, it's only up from here.

• 17:36Speaker 01

  Yeah, I don't remember thinking we were crushing it. I think we were happy that we were making progress, and we made progress for another five or six years, steady progress. But I think any entrepreneur, part of what motivates you, you're always looking over your shoulder. And we certainly weren't fat and happy. We weren't making a killing in terms of being able to take a lot of money out of the business. We were still very much of a mom and pop business, so happy with the progress, but by no means thinking we had made it.

• 18:06Guy Raz?

  All right, so you had this line, it was leather, and that was your brand, that was what you were doing. But I guess at a certain point, '81, '82, you felt like there was an opportunity to branch out beyond leather. Tell me about sort of the evolution of your thinking around that. What made you think that the opportunities might actually be outside of leather products?

• 18:28Speaker 01

  Well, there were a couple of things. Perhaps four or five years into this process, I remember discovering the fact that luggage, as you might surmise, is an infrequently purchased product. People buy a piece of luggage and use it for a number of years, but many people do own a variety of travel bags, a variety of luggage. So we felt that if we moved into the luggage stores, we could do a lot more business. And as we made this transition, we discovered that most travelers didn't want to buy a large leather suitcase because they felt that it might get damaged during transit when it was checked by the airlines.

• 19:05Guy Raz?

  Yeah.

• 19:05Speaker 01

  So we felt that moving into a fabric, a synthetic material, would help us to penetrate this market.

• 19:13Guy Raz?

  Meantime, while you're kind of thinking about other fabrics, the business is, I think, steadily growing every year for the first five or six years. But the 1981-82 recession hits and all of a sudden, from what I understand, things just start to go downhill like very, very quickly. Because people forget, this was the biggest economic downturn in the US since the Great Depression. The 82 recession was really bad.

• 19:38Speaker 01

  Yeah, it was tough times. Inflation was spiraling out of control.

• 19:42Guy Raz?

  Yeah.

• 19:43Speaker 01

  At one point during this period, prime interest rates went, I believe the height was 21.5%, over 20%.

• 19:51Guy Raz?

  Wow.

• 19:52Speaker 01

  Which is just inconceivable today.

• 19:55Guy Raz?

  Today, yeah, yeah. And we're talking about 5% today and people are freaking out.

• 19:59Speaker 01

  I'm not sure how we survive with that type of interest rates because our bank was our best business partner, which is another segment of the story.

• 20:06Guy Raz?

  You did not have any outside investors. It was just you and Seth and then borrowing from the bank.

• 20:12Speaker 01

  Right.

• 20:13Guy Raz?

  So 1982, this is the first year since you founded Toomey in 75 that you actually lost money. And the bank, I guess, that was lending you money started to get nervous.

• 20:23Speaker 01

  Yes, we had gathered with them to talk about quarterly results over lunch. And I can vividly remember the atmosphere changing from one second to the next, one minute to the next, when we told them that we'd actually lost money the last quarter. The tone of the conversation sobered up very quickly. And before the end of the afternoon, got a call from the bankers saying that they want us to come down and talk about the business the next week. So we went down on a Monday and they were in a very traditional, classic bank building. And I recall getting off the elevator, walking down the hall to the office number they had given us, and the sign on the frosted glass above the door said Asset Recovery Department.

• 21:07Guy Raz?

  Asset Recovery Department. That's not a good sign.

• 21:12Speaker 01

  One didn't have to be a banker to realize what that meant.

• 21:16Guy Raz?

  That meant they were freaking out that you guys were going to default on your loans.

• 21:20Speaker 01

  Well, they were certainly concerned and they began to watch over the business very carefully. They looked at our budgets, our cash flow. They insisted during this period that we set up our receivables so they would go into a lockbox.

• 21:32Guy Raz?

  Wait, let me just understand this. The money that you were getting from customers was going directly to a bank lockbox?

• 21:39Speaker 01

  Once they put us into the asset recovery department, that was one of their requirements. That's correct.

• 21:44Guy Raz?

  So you didn't have control over your receivables?

• 21:47Speaker 01

  We had use of the money, but the deposits were going first to the bank and then we had use of it.

• 21:52Guy Raz?

  Wow.

• 21:53Speaker 01

  The money was not going to repay the loan. They were letting us run our business, but they just wanted to take greater control because they were concerned about the, whether or not they were going to get repaid. And there was certainly a big brother mentality to the relationship. No question about it.

• 22:10Guy Raz?

  Yeah, I mean, that must have been very, very, a very tense time because here you had this business that was on the up and up and you were starting to kind of think about new product lines and moving into nylon and other fabrics. And all of a sudden, this recession hits and sales drop. What about your partnership with Seth? Did that create any tension between the two of you, the financial situation?

• 22:31Speaker 01

  Well, certainly when a company is under duress like that, there's a tension that everybody in the company is aware of. Before this started, it was apparent that we had some different views as to the best way to run the business and we had different vision for the business.

• 22:48Guy Raz?

  What was the difference? Why did you see it differently? Like, what did he want? What did you want?

• 22:52Speaker 01

  I think one of the major differences was that I began to feel we had to build a brand. We were existing because we had a, we're offering a nice product, a differentiated product, but we had no brand loyalty among consumers.

• 23:06Guy Raz?

  Nobody was saying, oh, I gotta get a, I gotta get a Tumi leather duffel bag. They were just, they were just seeing these leather bags and saying, I got a leather bag.

• 23:13Speaker 01

  We weren't creating demand. We were getting sales because we were distributed by stores where people, people were going, frequenting, looking to buy bags. But we were not creating any pull through demand.

• 23:24Guy Raz?

  And he wanted to stick with the existing business model?

• 23:28Speaker 01

  Well, he, let me just say he was more comfortable with, with the type of operation that we were running. I started pushing to put more features into the bags and to, to essentially to upgrade the products that we were selling because it became, again, pretty clear to me that there was a terrific opportunity of selling more expensive products to frequent travelers. And we would have discussions about whether we wanted to do that. There was risk involved, it was quite expensive for the time. So, we were able to function and do things together, but it was clear that we were seeing things somewhat differently and the, and the financial crisis of the company certainly exacerbated the, whatever differences there were.

• 24:12Guy Raz?

  I mean, this is a, this is a problem, right? Because you've got a partner, you're equal partners, and your vision is diverging significantly, which we've told a version of this story on the show in the past. That's, that is a recipe for a lot of tension. So, what did you do? I mean, did you, how did you, how did you work through that? I mean, did you say, hey, let's try, try this out, let's compromise? What was your plan at that point?

• 24:40Speaker 01

  Well, unfortunately, the tension, the, the real tension began when I decided that the business would be better off if one of us were running it. And I approached him and offered to buy him out. It was unexpected, it was out of the blue, and he was quite disconcerted by, by my suggestion that I wanted to buy the business and that meant he would, would leave. If, if he agreed, he would leave and go on to do something else. The discussions were on again, off again, and lasted the, the better part of two years because we couldn't come to an agreement.

• 25:14Guy Raz?

  Wow.

• 25:15Speaker 01

  He didn't, he did not want to leave, and I was determined to see it through. And there were a couple of times that I attempted to backtrack and say, well, let's find a way to resolve, there are different points of view, and set up a working relationship and we'll see this through together. But unfortunately, I was not able to repair the. The damage that was done by the fact that I was the one who had approached him and suggested that I would buy him out. And during that period, while we were having these negotiations and discussions, unfortunately, other people in the business became aware of it. We lost Jeff Brodelson, our designer, who was hired by Samsonite, our most important

• 25:56Speaker 01

  salesperson, who was a terrific guy, a very charismatic figure, who everybody in the company loved, and his customers loved him. So that two-year period from 1983 to 85 was a struggle. There's no question about it. We were struggling.

• 26:12Guy Raz?

  When we come back in just a moment. How Charlie goes all in on turning Toomey into an upscale brand. And how a snub from Samsonite turns out to be a blessing. 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

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• 29:46Guy Raz?

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• 30:17Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's 1983 and Tumi is in trouble. It's recovering from a recession, its top designer has left, and Charlie and his co-founder are not getting along. Meanwhile, the brand is making its first major pivot, away from leather duffel bags and into serious luggage.

• 30:39Speaker 01

  In 1983, we did introduce our Ballistic Nylon line. Our garment bag, which was designed by Jeff Bertelson before he left, became our best-selling piece. It was widely sought after in the industry because from a functional standpoint, we ended up, thanks to Jeff's work, with the best-designed garment bag in the industry. So from 1983 to '85, we had begun to recover, thanks to the movement into nylon luggage, and the designs that Jeff Bertelson had come up with before he left us absolutely.

• 31:14Guy Raz?

  So let me ask you about Ballistic Nylon, because this is now kind of a signature of what we think of Tumi today and other luggage brands. This was a fabric, I think, that was developed, literally, for like, flak jackets for the military. And it's this very durable nylon that you can throw around. I mean, there was a reason why they called it Ballistic Nylon, because it covered bulletproof vests, and I think a version of it still does. And that started to kind of, you sort of gained traction. I mean, you mentioned the garment bags. Was that also the Ballistic Nylon, was that used on the garment bags?

• 31:49Speaker 01

  Yes, it was. It had four very capacious outside pockets. Our designer had come up with the concept of putting upside-down, U-shaped flap openings. So if you imagine the way a hatch opens on a ship.

• 32:04Guy Raz?

  Yeah.

• 32:05Speaker 01

  Well, this would open the other way. The U-shaped tongue would flap down, and you had a very wide, easily accessible opening. So the pocket, it was easy to see what was inside the pockets, and they were very easy to pack and unpack.

• 32:17Guy Raz?

  Which is, became a signature of Tumi luggage, and now is widely used on luggage everywhere, that sort of U-shaped flap at the top of the travel bag or the garment bag. 1985. That year, you finally convinced Seth to sell his shares to you. How did you do that? Did you come to an agreement on the value of the company? Is that what put it over the top?

• 32:40Speaker 01

  We did, and that was not an easy number to reach an agreement on. But we reached a number on the value, and it was for a fixed amount of money and a percentage of sales up to a cap for a number of years.

• 32:55Guy Raz?

  So you had to basically come up with that cash?

• 32:58Speaker 01

  I had to come up with the cash for the down payment. That's correct. The business did buy the rest of his shares over time in terms of the fixed payments and the percentage payments.

• 33:08Guy Raz?

  All right. So 1985, you're doing $4 million, a little over $4 million in sales. You've bought out Seth, and now you are the sole CEO.

• 33:19Speaker 01

  Yeah.

• 33:20Guy Raz?

  And I guess you managed to rehire that designer who had left. He went to Samsonite, not just a competitor, but, well, I wouldn't even call them a competitor at the time because they were the 800-pound gorilla on the block. How did you convince him to come back?

• 33:37Speaker 01

  Well, my first phone call after we consummated the sale was to Jeff, who was living in Tucson, Arizona at the time. And I think he realized that by leaving Samsonite and coming to Toomey, instead of being a designer, one of many designers for Samsonite, he would be the designer for Toomey. My second phone call was to Scott Harris, who was our New York salesperson, who had become a manufacturer's rep. And fortunately, Scott also agreed to join the company and became an instrumental part of building our sales team.

• 34:09Guy Raz?

  All right. So now that you've sort of, your vision is going to be the vision of what this brand is going to become. 1985, you've got the ballistic nylon bags and the travel bags. And did you start to think, you know, really, we need to become a premium brand, like almost not necessarily a luxury brand, but... A brand that is not for the everyday traveler, but maybe for the premium traveler.

• 34:37Speaker 01

  That was an evolution, again, as with most things in business. Probably by the late 80s, we were moving into what I would call a serious premium brand mentality. By 1990, nylon was dominating. And it was dominating because it really is a more practical material for luggage. And we started making nylon bags in the US from day one. And that was probably, I would think, 1983. And we were lucky that we discovered an ad in the Industry Trade Journal, luggage traveler, I think it was called at the time. There was a company in Georgia run by a couple of brothers who basically had a very catchy

• 35:22Speaker 01

  ad that said they did great work for low prices. And that caught our attention. We contacted them, started talking with them, and ended up working with them for many, many years.

• 35:34Guy Raz?

  So, all right, you've got this bag. And who is buying them in the late 80s? I mean, where are you selling these bags? Because I think at the time, you were probably doing, by the late 80s, maybe, I don't know, $7, $8 million in sales. Where were they being sold? Because you still are, at this point, primarily, or I think entirely, an American-based. I mean, that was where you were selling them.

• 35:59Speaker 01

  That's correct. Actually, I think we hit 10 million, a little over 10 million in 1988. But we were selling them primarily through luggage specialty stores. They became our brand ambassadors because the store owners and their salespeople became convinced that Toomey was essentially the best upscale, serious luggage for traveling professionals, for frequent travelers. In the 80s, as we began the 80s, there was a brand called Hartman Luggage, which was a 100-year-old, respected American brand that had done a terrific job with nylon luggage. They were using a lighter weight packcloth nylon, khaki-colored. And Hartman

• 36:41Speaker 01

  Had be had become a market leader, but the ballistic nylon, I think people saw it as more contemporary. They responded to the black on black look. It was considered to be a more modern look. They liked the pocketing. And by the late eighties, Hartman, though still very respected, was becoming a little bit like like an Oldsmobile. High quality, good brand, but it did not represent contemporary design. And Toomey was able to fill that that role due to the black on black look.

• 37:11Guy Raz?

  Now, by the late eighties, was were you starting to gain traction as a brand? I mean, was it was it still relatively kind of niche at that point? Or did more and more people know what Toomey was?

• 37:23Speaker 01

  Guy, it was it was certainly niche. It was it was had good traction within the trade, within luggage specialty stores and the the department stores that we were beginning to partner with at the time. But we began doing some consumer advertising by putting black and white ads into airline magazines. And this was before everybody was traveling with their laptop. And people would actually pull out the airline magazines from the the seat jacket. We had we had a black and white ad, two thirds of a page. And the only color in the ad was we had a red Toomey logo on our luggage.

• 37:59Guy Raz?

  Oh, wow.

• 38:00Speaker 01

  And the the ads were strictly feature and benefit. We had a picture of the garment bag. The headline was 500,000 miles from now. This bag will look better than ever. We had bullet points and and arrows going to the particular features. And we had enough people who were interested enough to perhaps take that ad and go into a luggage store and and and look at the brand that we ended up developing a a bit of a cult following among the frequent travelers. And long about 1990, we had become a a market leader in the high end luggage business in the US.

• 38:36Guy Raz?

  All right. So now, I guess it's time to to expand. And I guess the expansion that you really wanted to focus on was Europe.

• 38:45Speaker 01

  Yes.

• 38:46Guy Raz?

  For people who who listen to the show, they know all about distribution, right? Like whether it's whether you're selling kombucha, or cookies, or whatever, like you you have to work with distributors in in many sectors and many industries, including luggage. And I guess you went to to Samsonite, and you sort of what you kind of pitched them. You said, hey, would you guys be open to being our distributor in Europe? Because they were a huge player, right?

• 39:12Speaker 01

  They were. They were a dominant player in Europe and they were considered to be a more upscale brand in Europe than in the US. Samsonite was really the luggage of choice for business travelers. So I was a little bit naive and I, both naive and audacious, and I had really had no business approaching them, but I was able to get introduced to the Vice President of Marketing for Europe, who was an American. He politely told me that they wanted to focus on their own brand, that they really would not be an appropriate business partner for us. I think what he was really thinking is there's no way in hell that Toomey's going to be successful in Europe and why should we get involved?

• 39:53Speaker 01

  And I end up speaking with another Samsonite person, a highly regarded marketing guy who had left the company, and he basically took me aside and he said, "Look, you're going in the wrong direction. If you want to have any chance of being successful in Europe, you'd better do it yourself. You're not going to find a distributor who's going to devote the time and the resources and will have the patience to do what it's going to take to be successful in Europe."

• 40:20Guy Raz?

  It's interesting because when you went to Samsonite asking for their help, they said no. And that must have been quite discouraging, but upon later reflection, you would realize that that was actually good fortune, that they did not become a distributor, because then they would have been involved in your business in a way that maybe you wouldn't want them to be.

• 40:40Speaker 01

  You're absolutely right. Best thing that ever happened to us was that they, that I got brushed off, had off, cut off at the pass.

• 40:46Guy Raz?

  Right, but I'm sure at the time you felt like, like, like deflated, right? Like, what, I can't, how am I going to do this?

• 40:52Speaker 01

  Only momentarily, only momentarily.

• 40:55Guy Raz?

  Yeah.

• 40:56Speaker 01

  Having somebody say no was not something that was new to me. You're used to it and you pick yourself up and you figure out a different approach and go off and knock on a different door.

• 41:04Guy Raz?

  All right, so you know that you have to do this on your own. And there are ways to start, right? There's going to be trade shows in European countries and, you know, sort of different paths that you can enter. But you, from what I read, you believe that the path into Europe was through Germany, that if you could make it in Germany, not France, not the UK. Not Italy. If you could make it in Germany, that was where you could really expand. Tell me why you were so fixated on Germany?

• 41:32Speaker 01

  Well, there's several reasons. First of all, Germany was the largest market in Europe. Even at that time, there was an East Germany and a West Germany. Germans are inveterate travelers.

• 41:42Guy Raz?

  Yes.

• 41:43Speaker 01

  Most Europeans, even at that time, were getting five or six weeks of vacation a year. They also travel a lot on business. Germany was, is a tremendous export country.

• 41:53Guy Raz?

  Yes.

• 41:54Speaker 01

  I think they've got the fifth highest export level in the world even today. So there's a traveling mentality in Germany, both for leisure and for business. And secondly, there was a large network of specialty stores in Germany. They typically would sell fashion handbags in addition to luggage. So these were thriving family businesses. Like in America, many of them were second and third generation. So it was a very challenging market. It was a little bit like if you could make it in New York, you could make it anywhere. Germany essentially was the mother lode, if you will, of the leather goods industry in Italy, in Europe, excuse me.

• 42:31Guy Raz?

  But how do you do it? I mean, how do you, because Germans have a very high standard when it comes to quality, right? And so you better be offering like the best quality product. So how did you even break in? What was the, what was the first breakthrough you had there and how'd it happen?

• 42:48Speaker 01

  Well, again, what you do in a situation like that is you go to people who, who know more than you do about potential solutions. In this case, I went to a, one of the top leather goods retailers in Germany, set up an appointment with him and told him I wanted to come down and talk with him about a new brand that was entering the marketplace. During the appointment, I pulled out a leather bag and he took one look at it, put his hand on it, and he said, is this leather or plastic? And I, I knew we were in trouble because I had not, I had been in a rush and I didn't take, I really didn't take enough time to pick out my samples carefully. And we were manufacturing our leather goods in Colombia at the time.

• 43:30Speaker 01

  And when the leather was good, it was, was quite good. Often it was mediocre. And in this case, it was one of the poorer quality

• 43:37Guy Raz?

  Wow.

• 43:37Speaker 01

  pieces that had just slipped through.

• 43:39Guy Raz?

  He asked you if your leather bag was plastic. That is, that is quite an indictment.

• 43:44Speaker 01

  He did it with a straight face, even worse.

• 43:46Guy Raz?

  It says plastic. That is not a good sign.

• 43:48Speaker 01

  Well, the good sign is he didn't ask me to leave.

• 43:53Speaker 01

  He was a gentleman and fortunately, he did not order any leather during that trip. But he did like the ballistic to the point that he said, would you mind taking order? And I said, gee, you know, I really came to see you to get some feedback on the marketplace. And we really haven't priced our products yet. And my day was made when he smiled at me. He said, well, why don't you take the order anyway? And you'll know what I want. And when you finalize your prices, you could just send me a copy of the order with the prices. So at that point, I knew that I knew we had some possibilities.

• 44:27Guy Raz?

  Wow. And that was strictly on the strength of just showing him a sample of that ballistic nylon bag?

• 44:33Speaker 01

  Yes. He recognized the quality of the material, that it was a performance material that could create superior performance for the product. And he liked the design of the pieces.

• 44:43Guy Raz?

  Hmm. And throughout the 1990s, Toomey really began to expand. I mean, you eventually got into dozens of stores in Germany. You got into Harrods in London. You were growing in Europe. You were also in Japan. And from what I understand, you were on the road all the time.

• 45:04Speaker 01

  Yeah.

• 45:04Guy Raz?

  What about on the home front? I mean, you, did it, was that challenging for you to be on the road all the time? You have a family and, you know, how did you cope with that?

• 45:15Speaker 01

  Well, I don't, certainly I could not have done what I was able to do if I didn't have, had made a great choice in terms of the woman I married. Cricket held the home front together. She was, she was working full time herself. She was an adult educator. But she was able to keep the kids pointed in the right direction. And essentially, my children were very understanding and supportive as well. But I was probably on the road, depending on the time of the year, 30 to 40% of the time.

• 45:47Guy Raz?

  Wow.

• 45:47Speaker 01

  During the 90s. Certainly in the 30, 30% plus range.

• 45:52Guy Raz?

  I mean, by the end, and I should mention, throughout this time in the 1990s, you were still self-financing. You were not, you had no, you had some friends and family who'd put a little bit of money here and there, but you had no, you had no private equity money or any outside, major outside investors, right?

• 46:06Speaker 01

  We did not.

• 46:07Guy Raz?

  But presumably, to go even further, you needed more money, right? Because just dealing with lines of credit and loans sometimes isn't enough. So I guess at a certain point in the late 90s or early 2000s, you made the decision that we should bring in some outside money. We should bring in some private equity capital.

• 46:26Speaker 01

  Yes.

• 46:27Guy Raz?

  And I think you signed a memorandum of understanding with a private equity company in the year 2000, and they were going to make a significant investment into me, which was going to help you really scale even further. That money did not come in. What happened?

• 46:44Speaker 01

  Well, it didn't come in for a couple of reasons. Well, one major reason. We signed the MOU in December of 2000. Unfortunately, December of 2000 was not a good year for this retailer. Christmas did not meet expectations. The dot com bubble was about to burst. I think consumers were aware of shifting winds. The early months of 2001 were not good. The economy started to slip. Therefore, we started to miss our projections. And as we began missing our projections, the private equity firm, they came back once, they came back a second time, and finally, they came back a third time in the summertime

• 47:28Speaker 01

  to renegotiate the deal because we weren't making projections. In August, I went back to H&Q, our investment banker, and said, "Look, this deal isn't going to happen. Let's go back to the marketplace and we'll have to end this, I should say, end the MOU term and go back to the marketplace." And that was probably a month before 9/11, which turned the world upside down.

• 47:52Guy Raz?

  And of course, the travel industry upside down. Because I think up until that point, you were averaging 20% growth year over year. You had to slow down, but as you say, you started to see some upswing a little bit. 9/11 happens. I read your sales declined by 40%.

• 48:12Speaker 01

  Yeah, it was close to 40% right after. There was immediate halt in the travel industry. Stores stopped buying. People weren't traveling. They weren't looking for luggage. It was a very, very grim period.

• 48:26Guy Raz?

  Were you... Did you have anxiety?

• 48:29Speaker 01

  Did I have anxiety?

• 48:32Speaker 01

  You asked that in jest, I'm sure.

• 48:36Guy Raz?

  When we come back in just a moment, how Charlie salvages the business, eventually sells it, and then goes back to the drawing board to create a whole new luggage brand. Stay with us. I'm Guy Raz and you're listening to How I Built This.

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• 50:41Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2001, just after 9/11, and world travel has ground to a halt, literally overnight. And once again, Toomey is in trouble.

• 50:56Speaker 01

  The first thing we had to do was create a plan to survive. We were in a survival mode. And we knew the first order of business would be to cut costs. And that meant letting some good people go, which was very, very difficult, because you develop personal relationships with the people at a small business.

• 51:15Guy Raz?

  I think you had to lay off 150 of your 500 employees.

• 51:19Speaker 01

  It was definitely in that neighborhood. So for the survival of the business, we had no choice but to make those decisions. And yes, it was extremely difficult.

• 51:28Guy Raz?

  Charlie, when you are facing a situation where you've got to engage in mass layoffs and to save the business, at the same time, I think you're facing just an incredibly challenging retail environment. Describe what was happening in the luggage business. I mean, were the sort of mom and pop stores that you were depending on, were they going out of business?

• 51:51Speaker 01

  There were a number of closures, absolutely. The specialty store segment of the market became challenged during the late 90s. And when the dot com bubble burst, they were challenged even more. And 9/11 was kind of the hammer that caused a number of them to either go out of business or to close their poorer performing stores in order to focus on the better stores and survive. So yes, we went from probably having 600 or 700 viable points of sale to, I would suspect, we lost maybe a third of those after 9/11.

• 52:27Guy Raz?

  Wow. And I guess you felt like you needed to do something to shore up the cash situation.

• 52:33Speaker 01

  Yes.

• 52:34Guy Raz?

  So I gather you eventually found a private equity firm. They're called Oaktree Capital. They were interested in making an investment in Toomey. And they became a majority shareholder. And I'm assuming in 2002, they got a pretty good deal.

• 52:51Speaker 01

  They got a great deal. They got a great deal. We needed the capital at the time. They did come in with a taking a majority share of the company. The fact that I was the largest individual shareholder, you know, meant that I had a seat at the table with them. I was part of the board of directors, but I could no longer call the shots when it came to major decisions.

• 53:15Guy Raz?

  Was it the kind of investment firm that looked for distressed companies?

• 53:18Speaker 01

  They did. They looked for companies where they felt that they felt had a sound concept, a business concept, but for one reason or another, we're going through tough times. After 9/11, we certainly fit into that category.

• 53:32Guy Raz?

  Yeah. I'm trying to get in your head at this time, because I would have thought, if I'm you, you kind of have no choice. You've got to take this in, because you want to save the business, you want to save the jobs, and you want to see if you could turn it around. So whether it was a good deal or not, and it sounds like it wasn't an ideal deal, you kind of had to take it, right?

• 53:52Speaker 01

  Well, we had other PE companies that were interested, but most of them backed off because they were concerned about the potential for another terrorist attack. So Oaktree essentially presented the best offer that we had at the time.

• 54:06Guy Raz?

  Right.

• 54:06Speaker 01

  And they took a very strategic view of the business. Their sole job was to create value for their shareholders, for their investment.

• 54:14Guy Raz?

  To make money?

• 54:14Speaker 01

  Yes.

• 54:15Guy Raz?

  Sure. That's your job. They're not a charity.

• 54:17Speaker 01

  Right. And they were good strategists. They're a couple of young guys who engineered the deal, were very smart, very capable. The difference between financial investors and other types of investors is that people are fungible, and they were less interested in the value that different people brought to the parts of the business than they were in getting down to what was a reasonable headcount and a reasonable fixed cost for the business.

• 54:44Guy Raz?

  Right.

• 54:44Speaker 01

  And I understand that. The business isn't worth anything if it doesn't survive. So they brought, I think, sound business principles to the table when we had those types of discussions.

• 54:55Guy Raz?

  You also had to tell your manufacturing partner in Georgia.

• 55:00Guy Raz?

  That you were moving your operations to Asia, that you could no longer afford to manufacture in the US.

• 55:05Speaker 01

  That was certainly extremely difficult. David and Alan Rice had been terrific partners and become friends. And we had to move to Asia for a number of reasons, one of which we had to improve our margins to give the company sufficient cash flow. It was something we had to do for the sake of the business.

• 55:25Guy Raz?

  But I'm wondering, I mean, you're talking about this in a very level-headed way, and I think you are a very level-headed, kind of, you know, rational thinker. I'm just surprised that there's no emotion here. I mean, this is your business. I mean, you created this. You started this from a Peace Corps experience, and I'm just surprised that you're not feeling any emotions about this, because I would. I would be, I don't know, kind of tied up in knots.

• 55:51Speaker 01

  Well, this is 20 years after the event, guys. I'm sure there were various emotions at the time, but the first emotion, frankly, was appreciation of the fact that we were bringing in some money and that the company would live to fight another day, and jobs were going to survive, and the brand would survive. And I was optimistic about the future. I thought that we would live and prosper and leave the agony of 9/11 behind us. And that's what, in fact, happened.

• 56:21Guy Raz?

  I mean, the travel business, it took some time for it to return, but it did return. Did you start to see a steady uptick in sales pretty soon after that investment from Oaktree?

• 56:34Speaker 01

  We did. The brand was still very healthy. We did not succumb to the temptations of creating sales by any means. During periods like that, when companies are under duress, often they will broaden their distribution or they'll run constant price promotions to the point that consumers might lose faith in what's this product really worth. Consistent pricing is very important if you're developing a premium brand. So we hadn't done anything to damage the brand. We had held true to our values, and therefore, as travel began to recover, people began having more confidence that security was satisfactory. Sales certainly recovered and began recovering in 2002, recovered more strongly in 2003

• 57:19Speaker 01

  and 2004.

• 57:20Guy Raz?

  All right. So, within two years of Oaktree becoming a majority shareholder,

• 57:26Guy Raz?

  They get an offer from a British private equity firm to buy out Tumi reportedly for $276 million. So I think they probably did pretty well in their initial investment. How did you feel about selling at that time in 2004?

• 57:41Speaker 01

  When they approached me in 2004 and said that they had people who were interested in the business, my first reaction was it's too early that we shouldn't be doing this. But they estimated that they would be able to get a large enough multiple, that they were very comfortable turning the business over quickly, selling out their stake and moving on to something else. That's the way P firms operate.

• 58:05Guy Raz?

  And was it clear to you that it was time for you to leave at that point?

• 58:08Speaker 01

  Yes. Essentially, the team that was involved with marketing the company would really have to be united in feeling that this was the best thing to do. And they surmised correctly that I wasn't ready to do that.

• 58:21Guy Raz?

  But that was it going to be it? I mean, it's almost 30 years to the year, right? 29 years, June 2004. How was it? You were out.

• 58:30Speaker 01

  Your math is right.

• 58:31Guy Raz?

  But you had, at one point, you had 500 people working for you. You had people you knew in Europe. You had people you knew in Japan. You had all these specialty stores. You developed all these relationships. You invested all this time getting to know people who believed in your product. And now, like, one day, you go from just, you know, constant calls and emails and faxes to silence.

• 58:54Speaker 01

  Well, you hit the nail on the head. There was more emotion involved with leaving in 2004 than there was bringing in Oak Tree in 2002. Because in 2004, it was essentially closing the door. So quite a difference. And there was stomach churning and some soul-searching. You know, I wasn't ready to stop working. I still feel very positive about the company today, but it was time to move on, do something else.

• 59:21Guy Raz?

  So meantime, you're no longer involved in Toomey. And that brand, really, it goes from, you know, obviously being privately owned and private equity and different strategic iterations. It goes public in, I think, in 2012. And it was valued at like over a billion dollars. I mean, I know you had no involvement at the time anymore, but what did you think? I mean, as you're sort of completely out of that business, but all of a sudden, there's just this march throughout, you know, across cities around the world. You see Toomey stores opening left and right, at airports, and, you know, Champs-Elysees, or wherever, wherever. You know, I remember one in Georgetown in Washington DC.

• 1:00:06Guy Raz?

  Were you paying any attention to that?

• 1:00:09Speaker 01

  Well, I was certainly well aware of it. I was still traveling to Europe. There was honestly a feeling of pride at seeing the stores.

• 1:00:16Guy Raz?

  Yeah, I bet.

• 1:00:17Speaker 01

  They were taking the brand, and they were taking it to the next level and beyond. And I was very, very proud of having been part of the foundation in the early years, and very happy to see that it was flourishing.

• 1:00:30Guy Raz?

  Yeah, I mean, did you, that's my, I mean, they, I mean, the new owners essentially took this brand that you created, and they really did kind of take it to the next level, right, as a luxury brand. And they didn't, you know, they could have sort of cheapened it, let's say, and you would see Toomey luggage at Target and at, you know, at Filene's Basement or wherever, you know, right, like, cut-rate prices. But they didn't do that. They actually turned it into a super-premium brand.

• 1:00:59Speaker 01

  Well, private equity people are smart business people, generally speaking, very smart business people. And I think they realized that Toomey's future was as a premium brand. The middle of the market's a tough playing field. There are a lot of people fighting for a share of the middle of the market. And, you know, we looked upon it as no man's land. It's, there are some good brands there, there's some good companies there. But I think playing at the premium end of the market, and I think Toomey is not really luxury, it's still premium.

• 1:01:29Guy Raz?

  Yeah.

• 1:01:31Speaker 01

  Perhaps for the luggage category, but as brands go, it's a high end brand and well made and so on and so forth, but beautiful stores, but they've maintained the integrity of the product for the most part. And I think the brand is still going very strong today.

• 1:01:48Guy Raz?

  It's owned by Samsonite today. They acquired it in 2016. This is just, it's a bit of an irony. I mean, the same company that was not interested in distributing it in the 90, early 90s is now the owner.

• 1:02:00Speaker 01

  How the worm turns, though.

• 1:02:02Guy Raz?

  Yeah.

• 1:02:03Speaker 01

  So I wasn't shocked when Samsonite bought it, but it's not where I expected it would end up. I thought it would probably end up as part of one of the luxury houses as opposed to with Samsonite, which is basically a very broadly distributed brand.

• 1:02:20Guy Raz?

  Meanwhile, you had been doing consulting in the luggage business during this time. And you were working with a guy who worked with you at Toomey. He was an executive at Toomey.

• 1:02:32Speaker 01

  Yes, Larry Lean. Larry was a, came to me and said, look, I'm leaving Toomey. Perhaps we could do something together. And he worked with me for a number of years where we were consulting and distributing in the luggage and leather goods area.

• 1:02:46Guy Raz?

  And I guess like around 2015, what, like somebody came to you guys with a new idea? Is that right?

• 1:02:53Speaker 01

  Yes, probably around 2015 or 16, we were approached by a couple of people, retailers that we knew who essentially had turned to manufacturing, hard side luggage in America. And they approached me and they said, look, we, we think we've got a good product concept. It's high quality. We're making in America, but we're having difficulty finding customers. And I understood completely what they were talking about. It was very difficult for a new brand to break in. Their product was high priced. We thought the designs needed work. We thought it needed a new name. We, we basically told them that we thought that the, the traditional

• 1:03:36Speaker 01

  approach of selling through brick and mortar stores for a brand like theirs that wasn't Already there was a very, very difficult road to follow. And we basically said, if we're going to do this, we've got to focus on direct to consumer.

• 1:03:49Guy Raz?

  Let me just, let me just understand this for a moment. I mean, this, so sometime in the mid 2000s, like mid 2010s, like 2012, 13, 14, 15, you started to see a very, very significant shift in luggage. Direct to consumer, sort of the, not the upper range, but sort of below the Tumi range, right? Away Suitcases, the classic example, we told that story on this show many years ago. They were, their, their content marketing was really smart. They were, you know, their, their social media presence was great. They were, they were selling travel, they were selling the travel lifestyle. They weren't selling suitcases. Did you, did you notice that? Did you see that?

• 1:04:32Speaker 01

  I began to notice them probably a six months to a year after they, after they had launched. They came out of nowhere. There were a couple of young women who did a terrific marketing job. And they, as you said, they sold the lifestyle. They sold the travel adventure. They created an aspirational brand.

• 1:04:54Guy Raz?

  Yeah.

• 1:04:55Speaker 01

  And they were targeting initially young millennials. You're right.

• 1:04:57Guy Raz?

  So meantime, around that time, you were approached by two people who want to make luggage. And I should mention, at this point, Charlie, you're in your 70s. And from what I understand, from clearly what's, what happens is you decide, yeah, I'm going to jump into another entrepreneurial venture at this point in my life, which is awesome. But, but tell me how you were convinced that you wanted to do this?

• 1:05:24Speaker 01

  Well, really, we're stepping back and looking at the marketplace. During the, the 90s, Tumi black on black luggage, mostly ballistic nylon, had become really the travel uniform of professionals. Very broad market following, and it became very normal to see lots of Tumi when you were traveling. I thought that there was room for a brand that essentially could produce a high-end premium product that would be quite different from what Toomey was doing. Rather than gearing our product for road warriors who wanted to have a status piece of luggage that in this particular case their boss might be carrying, we were essentially

• 1:06:08Speaker 01

  harkening back to the early days of Toomey. We were looking for early adapters who were not afraid to adapt new products and essentially try something new if it was good-looking and well-made and would essentially differentiate them, allow them to stand out from the crowd.

• 1:06:26Guy Raz?

  So basically, you landed on this concept of, instead of just a, you know, we design what the suitcase looks like and sell it, you basically have a number of shapes of different pieces of luggage, but you allow, would allow the consumer, the customer, to design, to basically choose the colors, to the color of the suitcase, but not the entire suitcase. They could choose different colors for different sides of the suitcase, the color of the fabrics, the zippers, the wheels.

• 1:06:56Speaker 01

  Yeah.

• 1:06:57Guy Raz?

  It's sort of like Build-A-Bear, you know, like Build-A-Bear, but for suitcases. You know what Build-A-Bear is?

• 1:07:01Speaker 01

  I do. That's a good analogy.

• 1:07:02Guy Raz?

  Yeah. Yeah. You can totally customize your stuffed animal, right? So this is a concept that really, I don't, did it exist in luggage at all?

• 1:07:13Speaker 01

  It did not, not the way we're doing it. We allow our customers to personalize seven or eight elements and we don't charge the extra for it.

• 1:07:23Guy Raz?

  I should preface this by saying customers really look at price, right? But you're going for a sort of a more premium segment of the market. You offer total customization of a suitcase, and it's made in the US, in the very same place where you'd made the Toomey bags at the factory in Georgia, right?

• 1:07:45Speaker 01

  Yes, we've got an ideal situation where we've got the Rice brothers, who are two of his original manufacturing partners. So that's a terrific outcome from my point of view. And we're able to do it in a way that allows us to have a reasonable price for the product. We're reducing the carbon footprint because we're not shipping container loads of empty suitcases across the Pacific. Now, we do source some components in Asia that are not available in the US. But whatever component we can source in the US, we do. And the assembly takes place in Vidalia, Georgia.

• 1:08:18Guy Raz?

  I'm just curious, to start a luggage company like this, how much did you have to raise? Are we talking tens of millions of dollars?

• 1:08:25Speaker 01

  I wish that we had tens of millions of dollars to put into the business. But you know, again, I think too much money too fast isn't necessarily good for a business. No, we did not raise tens of million of dollars. We bootstrapped the business. We made a decision early on that as much as we admired and appreciated what Away had done with their business, is that we were going to grow at a reasonable pace. We did not want to be rushing from one round of capital raise to the next with venture capitalists. Away had really, you know, grew like a comet.

• 1:09:05Guy Raz?

  Meteoric rise, yeah.

• 1:09:06Speaker 01

  But they brought in a lot of capital. They raised a couple million dollars, and then they raised 10 million, then they raised 50 million, then they raised 100 million. And they created tremendous valuation, and the early shareholders have done very well, I'm sure. But growing a company too fast is a very risky proposition from a number of standpoints. So we were not going down that route, and therefore, bootstrapping made the most sense to us.

• 1:09:33Guy Raz?

  So you launched this company, and I think in 2019, you start to hit some, you get some traction. But, you know, and you're not going to be a market leader soon, but from what I gather, in 2019, you're getting a little bit of traction, and things start to look pretty cool and interesting. And then, like a great entrepreneur, Charlie, you've got one more crisis in you, at least one more crisis in you, because that is what you need in life, and the crisis is COVID. And once again, the massive disruption to the travel industry, the biggest disruption since the previous one that you'd already experienced after 9/11.

• 1:10:13Guy Raz?

  I mean, I mean, I'm got, I gotta be thinking, if I'm you at this point, I gotta be looking up at the heavens and say, God, what are you, are you, I mean, are you just trying to torture me again? It's like you're Job and you're looking up and you're saying, what did I do to deserve this?

• 1:10:30Speaker 01

  Well, talk about being blindsided. Certainly, nobody saw that coming. The impact of the pandemic was more, and I don't say this lightly, it was more than the impact of 9/11 and the financial crisis of 2007 and 2008 put together. It was more than that put together. The travel industry came to a screeching halt and sales dropped by 60, 70, 80, 90%. I think the month of April, DTC Brands publicly announced that their sales were down by 90% from one month to the next. So you go into a survival mode again.

• 1:11:13Speaker 01

  Fortunately, we did not have a lot of fixed expenses. We were able to make adjustments in our variable spend. We curtailed our advertising big time, as you would imagine. We focused on the product. We focused on making the product better and we made a number of improvements during the product during this period. Small things, many of which the consumer would notice, but essentially make the product increasingly better.

• 1:11:38Guy Raz?

  So, but what did you do differently? I mean, of course, in 9/11, you had a team of 500 people. You are much leaner now and presumably, you know, because you'd been through this, what did you know about how to weather this pandemic situation? You must have learned things from previous crises. So what gave you confidence and what did you do, rather, that helped you kind of weather the storm?

• 1:12:07Speaker 01

  Well, the confidence comes from the fact that, that, that, you're right, I've been through at least four crises, four major crises. The confidence that the market will come back. And we also were confident that we would continue to fund the business and we would be standing when, when people began to travel again. So that enables you to look at the numbers, which were depressing because we are, while we continued to book product and make and ship product, the numbers were much lower than we expected during 2020 and 2021. The second part of 2021, the market has become healthier month by month, but we're still not where we would have been if the pandemic had not come along.

• 1:12:47Guy Raz?

  You know, I love that you really have been thinking in an innovative way over the course of your career, you know, from the leather duffels to the U opening, to the ballistic material, now a completely customizable suitcase. What is going to be, what's success to you? Like, what has to happen for you to say, yep, we did it with Rome. It's successful. Is it when it becomes a hundred million dollar business? Is it when it's, I don't know, ubiquitous like Toomey? How would you define that?

• 1:13:21Speaker 01

  When Toomey was established back in 1975, to think that it would become, in my lifetime, I think our peak year was 140-plus million, and now it's over 500 million. That would not have been part of my game plan. I would have not have dared to dream that we could create a brand that was that large and that important. So where can Rome go? Like a 50 million, 100 million dollar brand? Absolutely, no question about it. But I think we'll start to feel that we have created a sustainable brand when the buzz begins. People are coming to us saying that they discovered us, not through the press, but

• 1:14:04Speaker 01

  a friend of theirs recommended Rome. Peer reviews and referrals by friends, I think that's the real mark of a brand coming of age. That's what's going to just put the brand on the map.

• 1:14:17Guy Raz?

  Charlie, when you think about your entire journey, your whole career, I mean, you built an iconic brand. I mean, you created an iconic brand. Toomey is in every airport, and anyone who knows suitcase has seen it, it's a great brand name. And now, you know, you've got Rome and all the things that you've done in that time.

• 1:14:39Guy Raz?

  How much of the success that you've had do you attribute to the hard work, the skills that you brought? And how much do you think has to do or had to do with just luck? Getting lucky, finding the right partners, meeting the right people, getting a lucky break here and there?

• 1:14:55Speaker 01

  Well, I think we've had plenty of luck along the way, Guy. I think that, you know, meeting the right people, marrying the right woman, hiring the right people, or being lucky enough to be exposed to talent. There is an art and a science to hiring people, I think would be the best way to express it. And part of that art involves luck. We were lucky to meet the Rice brothers in Savannah. Larry Lean was a stroke of luck. If I hadn't attended that industry event, I never would have met Larry. So I think that if an entrepreneur or a business person always wants to be the smartest person in the room, I think their opportunities are limited.

• 1:15:38Speaker 01

  I always took great pleasure in being able to find people who had different skill sets and were smarter in the areas that they were stronger than I was. I think that that's how you get one in one and come up with three.

• 1:15:49Guy Raz?

  That's Charlie Clifford, the co-founder of Toomey and Rome. Charlie, I'm telling you, your next marketing push, it's like Build-A-Bear, just for luggage. What do you think?

• 1:16:04Speaker 01

  Are you suggesting that as a headline guy?

• 1:16:06Guy Raz?

  Yeah, yeah, just try it out. Beta test it.

• 1:16:08Speaker 01

  I'll present it to the marketing committee. If I presented it, it would immediately get declined, but I'll present it as Guy's idea.

• 1:16:15Guy 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 the team, our email address is [email protected]. If you want to follow us on Twitter, our account is at How I Built This, and mine is at Guy Raz. On Instagram, we're at How I Built This, and I'm at Guy dot Raz. This episode was produced by Liz Metzger with music composed by Ramtin Arablouei. It was edited by Neva Grant with research help from Sam Paulson. Our production staff also includes J.C. Howard, Casey Herman, Josh Lash, Alex Chung,

• 1:16:57Guy Raz?

  Kerry Thompson, Catherine Seifer, Elaine Coats, John Isabella, Chris Messini, and Carla Estevez. I'm Guy Raz, and you've been listening to How I Built This.