In 2003, Jimmy Olmes was fired as president of the company that he spent 20 years building. He had sold his Freestyle watch company two years earlier so that his two partners could retire, and stayed on as president and CEO. But Camarillo-based Olmes and the new owners in New York just couldn’t get along. So at the age of 50, Olmes said, “I was forced into retirement.” The sale of the business left him financially comfortable, plus, he added, “My wife earns more money than I do.” But entrepreneurs don’t really do retirement and after about eight weeks, his “beautiful bride,” as he consistently refers to his wife, Dana, told him it was time to go back to work. So he decided to build another business. In the spring of 2003, he went to an international watch convention in Basil, Switzerland, with the intent of learning about Swiss watchmaking practices. His new company, Reactor, was born. Major clients Halfway through 2008, Reactor is on track to sell 50,000 watches that retail from $500 to $5,000. These days most sales are done through independent watch and jewelry retailers. That is changing, though, with the 330-store Dillard’s department store chain carrying Reactor watches at most locations. Reactor and Dillard’s have also teamed up with country music duo Montgomery Gentry for a promotional campaign. Reactor watches are also found in about 20 Nordstrom stores across the country, but they’re not at the jewelry counter with the rest of the high-end watches. The store is testing a new concept with sports watches being part of “men’s furnishings,” which is their terminology for accessories. So Reactor watches are sold with the sunglasses and cufflinks. “It’s the best-selling watch in men’s furnishings,” Olmes stated, in the stores that have made the switch. “We’re hoping for another 30 to 40 stores.” One reason the watches aren’t found in other department stores is that Olmes will not allow the product to be discounted. “We turned down a nice P.O. from Macy’s,” for just that reason, said Olmes. Talks are underway with the Jared Galleria of Jewelry chain as well. <!– Reactor founder Jimmy Olmes shows off a sample case of the company’s sport watch line. –> Reactor founder Jimmy Olmes shows off a sample case of the company’s sport watch line. Changing focus So are these sport watches or jewelry-quality timepieces? Both. He started with the idea of creating a Swiss-quality, high-performance sport watch that would be more affordable for the surfers that Olmes originally thought would be his demographic. That makes sense since his first company was responsible for the Shark watch, a highly successful action-sports timepiece. So Olmes set out “to build the best performance sport watch on the planet.” A discussion of all the features of Reactor products would take more column inches than are available, but suffice to say, Olmes appears to have succeeded in that goal. Retailers liked the product, but the sell-through wasn’t great. That led Olmes to change his focus from action sports, where the participants are younger and, for the most part, less affluent; to sports like fishing and scuba diving where the participants might be more inclined not only to recognize the quality of the watch, but be willing to pay for it as well. But retailers said the watches, priced between $500 and $1,000, were too inexpensive to be perceived as competitive with other high-end timepieces. They wanted him to charge more. So Olmes created a second category of watches, the Elite line, with a little more bling. The most expensive watch, retailing for $5,000, has seven carats worth of diamonds on the case. In-house The Reactor team works primarily out of 5,200-square-feet in an unremarkable industrial park in Agoura Hills. Parts for the watches are shipped from all over the world mechanisms from Switzerland, high-quality stainless steel from Japan, exotic-wood boxes from Africa to be quality-checked before the components are sent off to an assembly plant in South China. The finished products are then sent back to Agoura Hills to be quality-tested again and then packaged for shipment to retailers. Also located in the local facility are a fully-stocked watch repair center and a fully-equipped photography studio. Olmes’ younger son, Michael, is almost full-time on the repair bench, said Brand Manager Scott Lipsett, while older son Branden manages inventory and warehouse operations. The three Olmes’ make up almost half of the local staff. Sales associates are located in St. Louis, Florida and South Bend, Ind., the latter being handled by Olmes’ nephew. Doing repairs in-house allows Reactor to provide a higher level of customer service than any other premium watchmaker, Olmes said. With a warranty that has no fine print “if it breaks, we fix it, including the battery,” Olmes said they didn’t want to rely on an outsourced repair center. Not to mention that when a watch is expected to survive repeated exposure to salt water, one of the most corrosive elements on earth, the need to keep it leak-free is paramount. Industry standard is anywhere from six weeks to six months to get a repair completed: Reactor turns theirs around within a week. Reactor also creates all of its marketing materials in-house from photography for advertising layouts, to large-format banners used at trade shows and promotional events. Brand manager Lipsett previously worked for Olmes at Freestyle, leaving when the company was sold. He started an advertising agency that had Freestyle as one of its principal clients along with others in the action sports industry. When Olmes started Reactor, he turned again to Lipsett. “As Reactor started to grow, it became about 50 percent of my agency’s business,” said Lipsett, “and I kind of saw where this company was headed and decided to sell the agency and buy into the business.” He’s one of two outside equity partners in the business, the third being a Hong Kong company that is one of Reactors’ primary suppliers. Having that in-house advertising talent may be one of the reasons Reactor has gotten its fair share of ink in trade and sport publications. Olmes is particularly proud of the prominent exposure he’s gotten from Europa Star, a trade publication that has a natural bias to European-made products. “I’m pleased at the success we’ve had at getting editorial coverage,” said Olmes, “because we’re really an anomaly in our market.” SPOTLIGHT: Reactor President: Jimmy Olmes Location: Agoura Hills Revenue in 2003: $800,000 Revenue in 2007: $4.9 million Employees in 2003: 1 Employees in 2007: 10 Personal: Married 30 years to Dana Hobbies: Water/snow skiing, snowboarding, wakeboarding, running, golf and surfing.
