If you can make it there, you can make it anywhere, as the song says, and so Kryptonite Corp. found during 17 years of selling its bicycle locks in New York City. But "making it there" was not cheap for the $5-million, Boston-based company, thanks to New York's bicycle thieves.
Kryptonite, you see, has long guaranteed, not only its locks, but the bicycles they are designed to protect. If a bike is stolen while properly locked, the company will reimburse the owner up to $1,000, provided the warranty is in effect and proper evidence (including the broken lock) is supplied. Because the locks are strong, the warranty has proved to be an effective, and relatively inexpensive, marketing device -- in every place but New York City, that is. CEO Michael Zane says that, nationwide, the number of claims has never exceeded 0.5% of the units sold. But New York, with less than 2% of sales, has historically accounted for 15% to 35% of the company's total warranty costs.
In 1984, however, claims from New Yorkers began to soar as high as 50% of the total. Noting that claims elsewhere were flat or down, Zane blames the bike-stealing epidemic on drugs. The company tried mightily to outwit the thieves. "We redesigned and redesigned," says Zane. To little avail: none of the adaptations stemmed the rise in New York claims for more than a few months. "We must have seen about 30 different methods [for breaking locks]. People would shoot the locks with bullets, use battery-operated power tools, even apply chemicals to freeze the metal until it became brittle."
Finally, in March, Zane and his brother Peter, company president, decided to cut their losses and withdraw the warranty from all locks sold in New York except a newly introduced model called The Rock (which sells for $45). So why didn't they just bail out of the city altogether? "We wouldn't do that," says Zane. "For us, New York is R&D. There's no lab where we could simulate the possibilities as well. We figure New York is 10 years ahead of the rest of the world."
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