Fashion mogul Tom Kartsotis is known for wristwatches, but on Wednesday he made it clear he has far wider ambitions.
Kartsotis, the branding mastermind behind Shinola watches, announced that he and Detroit real estate developer Dan Gilbert will be entering Shinola into an entirely new category: hotels. The 130-person boutique Shinola Hotel in downtown Motor City is slated to open in the fall of 2018. Dan Millen, executive vice president of Gilbert's Bedrock Real Estate, says the new hotel, which will be located in the up-and-coming Woodward Avenue shopping district, "will be like nothing else in Detroit."
Like everything Kartsotis touches, the Shinola Hotel will likely be a performance in manufactured authenticity. As Inc. chronicled in its recent profile, the Plano, Texas-based Kartsotis first hatched the "built in Detroit" company in 2011 after a focus group confirmed that consumers were willing pay $10 for a pen made in the U.S.--but $15 for a pen made in Detroit. It turned out anchoring a brand to the city emblematic of American hardship, resilience, and craftsmanship was a brilliant marketing pitch. Instead of just selling pricey watches, it was selling a comeback.
From Shinola's inception, every detail has been meticulously engineered to give a heavy whiff of scrappy Detroit "heritage." In 2010, Kartsotis's outfit reportedly spent some $1 million to buy the name of the long-defunct American shoe polish--best remembered for being part of the World War II-era insult "You don't know shit from Shinola"--and reanimated it with a new narrative. The factory where it produces its watches is General Motors' old research lab. The hardscrabble personal stories of its employees, many of them former auto workers, are telegraphed on the company's website. Its multimillion-dollar ad campaign by fashion photographer Bruce Webber spotlights Detroit locals (along with a supermodel). By last year, Adweek had dubbed Shinola "the coolest brand in America."
For Kartsotis's new venture, he's continuing to import the big branding guns to Detroit. Chef Andrew Carmellini's NoHo Hospitality, the restaurateurs behind trendy New York City spots including Locanda Verde and the Dutch, will be operating the hotel's food and beverage service. Meanwhile, what Shinola calls the hotel's "Detroit-inspired design" will be developed in part by Gachot Studios, the New York firm that designed fashion titan Marc Jacobs's home.
Kartsotis and Gilbert, who owns the NBA's Cleveland Cavaliers, were introduced several years ago by a mutual friend, former NBA coach Don Nelson. It turned out they had had an encounter prior to that because Kartsotis's Bedrock Manufacturing--which would eventually become the parent company of Shinola--had a name similar to Gilbert's real estate firm. "We were trying to buy [the Bedrock URL], and he told us to take a hike," Gilbert recently explained.
Then last year, Gilbert, along with venture capitalist Ted Leonsis and other investors, threw $125 million Kartsotis's way to help shape Shinola into a global lifestyle brand. Along with the new hotel, Shinola tells Inc., it is planning to get into products as varied as designer power strips (a partnership with GE), headphones (manufactured in a 1915 Detroit creamery), and eyewear (possibly manufactured on Chicago's South Side).
Kartsotis, who told Inc. earlier this year he's invested some $100 million of his own cash into the company, has received plenty of criticism for co-opting Detroit for what many consider a crude marketing exercise. In November, the Federal Trade Commission went after the company's "Built in Detroit" tagline, accusing Shinola of embellishing its made-in-America claims.
But Kartsotis isn't one to get slowed down by criticism. Well aware that the halo of American-made has even more potency overseas than it does in the U.S., he's busy plotting his next move. "I've never seen a brand that has this potential in multiple product categories, in multiple geographic regions," Kartsotis told Inc. It doesn't take a great leap to imagine a not-too-distant future where a Detroit-themed Shinola Hotel boutique chain is competing with an Ace Hotel at every hipster enclave from Paris to Shanghai.