Leatherman Tool Group: Tim Leatherman

I was at the show. There was a man and his name was uh Skeets Houchins. Skeet Houchins. It's like a movie. 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 gonna wanna show them the prototype of my new type of pocket knife. Skeet says You can't do that. The people walking by

They're like zombies. They're in a daze. They don't see anything. You gotta get up. You gotta get out in the aisle. You gotta grab him! Gotta stop'em!

So I stood up. When people walk by I'd say You, sir. Have you seen my new pocket knife?

From NPR, it's how I built this. show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Roz, and on the show today, how Tim Leatherman tried to market his foldable knife for seven years before he finally made a sale. grew his company into a multi-million dollar brand? Leatherman Tool.

Back in the ear two thousands, 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 arrive to a new place, a city, a village, a Dusty outpost? I'd have to set up a mobile studio. I'd haul the sad phone up to the roof of the guest house or motel

and then start to strip wires and screw and unscrew connections. I'd cut rope to hold things in place, 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 a hundred million dollars of pocket knives and tools each year. 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. 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 nineteen sixties, 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. 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 have 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 uh went there and while we're 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. And her name was Cho.

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 and she'd never speak to me again. 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. Exactly.

This took incredible courage for you to approach her. Well, let's not go that far, but but uh I was uh in in college I had three distinct lives. I had my academic life I had my table tennis life. And I had my foreign friend's life. And uh so I was

starting to come out of a a little bit. Well seems somehow I was better able to interact with uh f my foreign friends than with With uh my American friends. Hm. So so Cho uh was from Vietnam. Right. And uh and I ga and I guess you s the two of you started dating and and you got into a pretty serious relationship because After you graduated from college, you actually went to Vietnam to live with

with her and her family there and to teach English. This was like nineteen seventy two, uh I mean th th the Vietnam War was was still going on. I I don't think the fall of Saigon would happen until like like s nineteen seventy five. Tell me about living in Saigon in nineteen seventy two like As an American who was not

What what was that like? It was the best experience of my life, the most formative experience of my life. Yeah, everything was new, everything was different. For me everything was exciting. In Saigon there was

Chaos everywhere. I mean organized chaos everywhere. There was there's plenty of evidence that there was military activity and there's soldiers and jeeps going through the streets and Lots and lots of American infrastructure there. But for me I I went there. I I Paid my own way to get there.

And I Once I got there I tried to live m m more of a Vietnamese life. And and I I I remember just from from being a reporter in places like Baghdad and Kabul there There's always this kind of slight sense of paranoia that, you know, the rumors and and there's gonna be an attack coming or an explosion or something can

I mean, did you do you remember th that feeling? Because v Saigon was not I mean, there were there were attacks on you know, on on on US backed forces, on South Vietnamese forces there and on on US soldiers. I mean there were This was a war. Yes, but I was not I wasn't

didn't have any war experiences. I can move around Saigon very well. My mode of transportation initially was a a bicycle. And I would even dri ride out into the countryside sometimes and I didn't feel unsafe. 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 you're not'cause people people had images of it from from television, right? That there was a war zone. I didn't consult with my friends. I I was determined to go.

Right. Alright, so you end up spending three years. in Vietnam, right? Yes, almost three years. Almost three years. Within uh a month after I arrived, uh Cho and I decided our our love was real and and we got married. Mm. Uh she and I uh rented a a room and a house. Uh 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 w uh repaired helicopters. And then I got a job with uh 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 w ready to be sent back to sent to America.

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 ten, eleven 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. 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 c 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.

And there were these kids on the sidewalk that set up sidewalk businesses who could repair motor scooters. And so and it was pretty much from that moment that I became very interested in the way things worked. I'd buy clocks and take'em apart and try to figure out how they worked and Just anything. Try to understand and try to repair. I guess one of your

very first ideas or in inventions really was something you made f uh for those motor scooters that you were Yes. And I noticed that all of the Japanese motorbikes had luggage racks on the back. Yeah.

Add luggage racks on the back. And I thought, aha. Market opportunity. I'll create a luggage rack.

And with the help of my brother in law I was able to uh design one and and b make uh one hundred of them. After I finish. Making my batch of a hundred, I w was able to talk a uh shop into taking uh two of them on consignment. And I hired a girl to distribute leaflets on uh parked Vespa's. When we left Vietnam

There were still uh ninety seven in the So you never sold them? No. And it turned out that all that the People who rode Vespas.

considered themselves a class above. Uh huh. 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 Or live chickens and

on the backs of their motor scooters. Wow. So the Vespa was like the sort of uh upper class considered to be the luxury vehicle and and you would never be caught dead hauling anything on the Vespa. in Vietnam so so nobody wanted to buy a rocket. Exactly. It was your mode of transport, but it was you were you were driving a luxury vehicle and and seen as such. Right. 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 your Living.

And the attitudes of the people About the Products that are for sale. So interesting. Wow.

Alright, so I I think I think you guys were planning to stay in Vietnam f for a while, but geopolitical forces actually got in the way. Um Because the war was ending, Saigon was about to fall. Uh the Americans were withdrawing.

And and I think you left Vietnam Like just a few days before the fall of Saigon, right? I mean the nineteen seventy five that the North Vietnamese come in, I'm assuming that that was what Prompted you to leave. Yes, the uh country fell in on uh april thirtieth, nineteen seventy five. We were able to get my wife and her family out.

On uh about ten days before We still had uh some children at the At the agency I worked for Who's the adoption agency. That still hadn't uh been we still hadn't been able to get out yet. And so about uh

Five days before I I left and w brought out and helped to bring out about uh our remaining uh twenty Children or so. Well. Yeah.

I wonder Tim whether it's a Those scenes from Afghanistan. Brought back. Memories for you.

of your time in Vietnam. Watching that. Yes, I was uh part of the airlift out of out of Vietnam. I left on an airplane. I it wasn't so late that I had to leave on a helicopter but uh I did.

Got it a little bit close. So that was it. That was that was the end of your time in Vietnam. And you returned to Yes. Uh we got Joe's family Yeah 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? So this is around August of nineteen seventy five. By August the two of you decide from from what I understand to

to travel to backpack. And hitchhike. uh in Europe and maybe even beyond. We wanted us to Experience other cultures and and in particular the culture in eastern Europe.

By now we decided that maybe the best way to for us to travel would be to have our own own car. easiest and best place to buy a car was in Amsterdam. Hm. So we added there.

Bought a three hundred dollar used car. It was a uh Fiat six hundred If you can imagine a Volkswagen bug Scale down to two thirds size.

This was our Or little fiat. Beautiful car, by the way. Just a beautiful Italian car, right? I mean it's a A tin box, but a beautiful car. Well our nickname for it was the little monster. All right, so you decide to take this trip and and how by the way, how long was the entire trip gonna take?

Well it ended up taking uh ten months. Ten month. I think you traveled through seventeen countries in Europe and the Middle East, right? Right. And on that trip I was carrying a pocket knife, a multi blade pocket knife, like a like a Boy Scout type knife? And I was using that for everything from um

Adjustment making uh well for Using the knife blade for slicing food for dinner to the Can opener for opening cans and the screwdriver for turning screws. But there are often times when I needed a pair of pliers, so An example would be when the car had issues, but even more so when we stayed in cheap hotels and pensions and the hotel plumbing had issues.

Yeah. My bet. Um When you um w on your trip, did the car I I have to assume the car broke down.

Now and again. Yes. Could you get the parts for it? Yes. If it stopped running. Like in the middle of I don't know, Bulgaria or something? In Bulgaria, no. Okay, all right. But uh yes, there were there were parts. You could get parts.

One kind of humor story is while we're 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 start and then I look down and I realized that the supports holding her seat had corroded. And her seat was falling through the car down towards the pavement.

So uh Joe moved to the back seat and She was sort back there, she was sort of like I'm James the chauffeur up front and chosen back telling me what where to go and when to turn. And then uh 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 and then show moved front again and we continued on. So I 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. That just sounds so on the nose that Like Mm. Is that true? Is that How it happened?

It was a what are we gonna do if the rest of our lives trip. And I and during the trip I was jotting down Notes of any ideas I had. Right. And one of the ideas in essence said

Add pliers to a pocket knife. Well. And the and the reason for that was for my own personal need. Both to fix the car, but even more so. To fix the bulky plumbing in the cheap hotels and with and pensions in which we stayed.

By the way, what were some of the other ideas that you jotted down? Actually some of'em turned out to be things that other people did, but I did not. One of'em 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 Dical.

that had the zip code on it and th 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 or one mall. And and in particular Like.

repair shops. So you if you and particularly small repair shop. So if you w have a T V repair. Appliance repair, watch repair, locksmith. Congregate all those into one place. You said you've done some travelling around the world and I'm sure you've been in places where they have these

Bizarre. And within the bazaars there's sections where Every w where the whole section of the bazaar is everyone selling cloth. And why and you think to yourself, why would they all be in the same place? Why wouldn't why wouldn't they G each be uh go in various places where only where there's less competition. Right. But but the 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.

Love it. I the the problem today, yeah, and I'm gonna 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. You'd be surprised, uh you'd be surprised how many people with a Leatherman tool are still fixing things. That's a shameless plug for the leatherman.

Um uh back in in Oregon, nineteen seventy six, 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. Exactly.

It had the most re realistic chance of uh actually being able to do something with it. And I Ask my wife. Uh could I build one? Just one? Just for me.

She said How long will it take? And I said. Maybe one month. She said, Okay.

And so she went to work to support us. Mm-hmm. And I went to at the time we were s at my parents' house, I went into the basement and Picked up the file and the hexon. Started trying to build what was in my mind.

I don't just But Like s Like scrap metal? Like sc scrap metal I s was able to scrounge up.

And where were you doing this? In whose garage? I was working in my brother in law's garage. And and what did that mean? Were you like Or you Pound I mean you weren't a you're not like a nineteenth century blacksmith where you're pounding metal, right? Or were you? Is that w were you doing some of that? My initial prototypes I was cannibalizing parts out of other tools. Okay.

But then I was and then but to c connect'em and get it to design the way I want it to. I was Cutting the Uh

Ten snips. And uh Folding them together by putting the metal in the vice and then putting the Spending it over. the corner of the vice and pounding by pounding it with a hammer. It was really pretty crude. So you were like a nineteenth century blacksmith.

Well other than I didn't have fire and flames, I was doing everything cold. Right. Okay. So you're really like you're trying to make a prototype and you come up with a prototype and it 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 what were the tools? Like a knives and a file and Bottle opener, that kinda thing.

Yes, and screwdrivers. Right. What did you do with it? Did you present it to to to f 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 gonna make me millions of dollars. No, I quickly it. Because even for me it had uh shortcomings.

Which were what? Wha well the first shortcoming was that I had a c I had a strict criteria in the length that it could be Closed when you put it in your pocket. It had it to be pocket knife length. Okay. Not beyond no m 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. Oh yeah. And I and I couldn't get good leverage. So You realize that to make this work it has to fold over. Yes.

So how long did it take you to To make that prototype. About Yeah. Two more years.

So all told, you start this in nineteen seventy six after and you were only supposed to do this for a month, by the way. Right. This is uh it reminds me of James Dyson. For five years.

I think he or six years he worked on the the vacuum. I think it had f I don't four thousand or five thousand prototypes. Um I mean you were still a young man, but you're now in your

Guy, you're you're in early thirties. You are not earning any money. You were working on this prototype. But you believed that this was gonna be a business. You clearly believed it. Did anybody else do you remember anyone at the time saying, Mm, yeah, maybe you should just I don't know, get a job?

Well, I'm pretty sure people were looking askance at me. But This was my day job. Every every day I would uh go to my brother in law's Garage. And so

Uh there were s I spent a lot of time in the library too. All right. When I was researching various aspects of materials. Or specifications on how good the tool should be. Yeah. 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

Swiss army knives. They just have'em. Even if they're not. But Did you think it would be that kind of person who would who would want this?

Well f I thought that It would be anybody and everybody. 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. So

This is what you were working on. And In the meantime, um, you know It's a lonely pursuit, right? I mean you're you're doing this.

And uh I don't know. I mean you I mean You didn't have like an office of people to get feedback from. Did you do you remember feeling?

Lonely Yeah, no. You were all alone in the world. Working on this thing. I do.

Yeah, and one one time in particular it was the Eve of my thirtieth birthday. And I've 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. Mm. Uh 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. 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 or catalogs. Stay with us, I'm Guy Raz, and you're listening. how I built this. 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 multi-purpose tool.

And his plan is to patent it. sell it to a big knife, and make lots of money. And It would pay me about One million dollars.

And I would sit back and live happily ever after. You would just count your gold coins in your vault of gold. For the rest of your life. So the idea was hey I'll I'll make a prototype, but 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 approach them.

in nineteen seventy eight or nine, and And said hey. Check out what I've built. Uh What do you remember about that meeting?

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

So I called them. And they said, uh sorry. Uh we decided to not Take this on. It's not a knife, it's a tool. Okay, what's wrong with being a tool?

They said, We're in the knife business and This is a tool. It's not something that uh we're interested in getting into. Did part of you say, Okay, well maybe I'll approach tool companies and see if they want it. I'm a little more stubborn than that. I s said, well there's other knife, so I'll approach them. So I did. I ultimately I think I contacted every knife company there was in the US. In the US, even even Victornox in Switzerland.

Wow. And you you ha and that that this is pre email. You're you're writing letters and mailing them. Yes, I would send him a letter and all of the answers were the same. Uh sorry, we're we're not interested. And then I finally got the message and said, Okay, if the night companies are inter aren't interested I'll go to the tool companies. Yeah. And when I

wrote to them the the answer's back was uh sorry. This is not a tool. It's a gadget. And gadgets don't sell. What tool company do you remember going to?

Well the big ones like Stanley, Black and Decker. Well. I mean I mean you You're you're now talking about mm You know.

Three, four years in the This is not a vote of confidence. This is not uh this would not instill confidence in most people. And and and I would say most people at this point would say I gotta move on. And I wasn't too much different. My wife and I had a conversation.

And we decided it was time that I get a A real job. Hm. I've looked through the want ads and I've saw found one that said wanted. Salesman.

Welding products. And uh was m offered a job and and I accepted it. W this company you worked for was called uh U TechTic, I think, right? The welding supply company. Yes, their their headquarters was in Switzerland. It was actually a perfect job for me in in a lot of ways. It was It was I was calling on businesses where they could uh They had equipment and they had processes that could be used in the manufacturer of my tool.

So I would show'em my prototype and And it was that was also a way of getting rapport with my Wow, so you so while you were representing U Techtic selling supplies, you could also talk to these customers about but by your passion, which was this this pocket knife that you were inventing. Yes. Mm-hmm.

If you try to sell stuff to people that get their antenna up. If you ask them for advice, they're Plenty willing to talk to you. Alright, by this point in the early eighties, I believe I read

You'd already received More than a hundred, maybe more than two hundred. Either rejections or no replies. From Uh knife companies and tool companies.

But you still thought. you were still holding on to this dream, even though you'd already had about two hundred Or more rejections. Or or no replies. Yes, I still had the goal, still had the dream, still persevering. Why did you think that it was gonna work?

If no one was confirming that idea. There's a fine line. between persistence And failure to accept reality.

And I was determined to Try it. Before giving up too soon.

And I have to assume he probably didn't. have to invest too much money because it was like scrap metal and pr there's cost for the patent, I'm imagining. You probably had put a couple of several thousand dollars into developing th this thing. Or maybe more, I I actually I don't know. I believe the patent cost about uh fourteen hundred dollars.

And I probably put in Maybe Five thousand dollars and And to Purchases of equipment.

And and the time. I will I was real I had uh f 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.

But what changed that? Why why w what happened that made you not give up on it? A friend of mine from university days named uh Steve Berliner. I've been following my Let's not say progress, but Lack of progress all this time. And he stepped in.

And said uh there let's Be partners. There's still a few things you haven't tried. And he stepped in and offered to uh offered to become partners to try to see if we could get it on the market. And Steve was a friend from college. Yes. We were fellow uh table tennis players. And uh Steve's father had a manufacturing business.

And Steve so Steve grew up with that environment. Uh Steve's education in university was on the business side. So he was he was kinda 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 nineteen seventy six. Steve approaches you in nineteen eighty two, you had not yet incorporated a business. You did not have a business. No? Steve and I did agree to become partners. It was uh seventy five percent me and twenty-five percent Steve. Uh and uh so then they

We were smart enough to r recognize that before starting to manufacture the tool, we should get an order for enough tools to justify going into business. I read that that In nineteen eighty three.

So there'll be what, seven years after you started on work on this product, you finally sold At all. Yes, uh my very first sale Well Bye.

Going to a knife show. I had a table. And I had an exhibit on my table called The Evolution of an Invention. Right compiled the prototypes that I'd uh

Created it 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. Did you get a l I don't know, did you get a bunch of people coming up to the to the table and Inquiring and asking you questions and No. Uh I was at the show

And no one was stopping. Sorry, I would have stopped. I would have stopped for you, Tim. I promise.

Uh 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 Kind you'd use it at by a barker at a country fair. And

He would go through his uh dog and pony show with sparks flying and him starting fires and drawing a big crowd and every once in a while they would take a break. And to this day I don't know why. But he came up to my table. And his name was uh Skeets Houchins. Skeet Houchins.

Yes. Only a guy named Skeets Houchens is selling magnesium fire starters. Okay, keep going. So 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 gonna wanna show them the prototype of my new type of pocket knife. Skeet says. You can't do that.

The people walking by the aisle. They're like zombies. They're in a daze. They don't see anything. You gotta get up. You gotta get out in the aisle. You gotta grab them.

Gotta talk to him! You gotta stop'em. And so I I Went back and I sat down.

And I started looking at the people walking down the aisle. Yeah. And Skees was right. They weren't they weren't absorbing what they were seeing.

Yeah. It's true. They were like zombies. Yeah. So I thought to myself, I'm at a nice show. Why are people here?

They want to see new knives. What do you have, Tim? So I stood up. When people walk by I'd say You, sir. Have you seen my new pocket knife?

And they'd shake their head and turn around and look who what who was that? What was that? And they would I'd actually be able to talk to them a little bit. Hm. And I read that um I guess I guess some guy walked by and and and offered to buy a knife from you. Who who who was he? He was a German emigrant. He had uh moved to San Francisco. And he had started a auto repair business. repairing uh high end German automobiles.

His name was uh Wolf Schultz. Tot and put? And he agreed to pay uh one hundred and seventy five dollars. To buy your knife.

A knife I would And he mailed me a check. And that was my very first sale. Wow.

Wolf got the first He could take a picture of that and sell that as an NFT. Ha ha ha.

All right, so he's finally Sell a knife to Wolf. By now uh Steve and I were already partners. Well we thought that if we can make and sell four thousand tools in our first year

We could pay back our cash investment. But wouldn't pay ourselves anything for our time. Hm. So Steve and I were looking for someone to order uh two thousand of the four thousand. And we thought, Who could that be?

And our first thought was The U S Army? They said, we approached them. They said no. Our next thought was A T and T.

The telephone company before it broke up, it had Tens of thousands of people. Repairing telephones? They said, No.

Mail order catalogs. Hm. So we Found a list on of two hundred and eighty different mail order catalogs. We got uh

Zero responses from two hundred and seventy nine. Catalogs. Yeah. Uh, but the two hundred and eightieth catalog was in Seattle and it was close enough to call and ask for appointment to come up and show show them our tool in person.

This is a catalog company I think called Early Winters. That's correct. Okay. So we drove to Seattle. Show them the prototype. I said, Hm.

Looks good. Yeah. How much? And I have to admit I hadn't really thought yet, so I thought quickly and I said, Uh your price, uh forty dollars. And they said. That means we have to sell it for

Eighty. Sorry. Don't think anyone would pay eighty dollars for this. But uh 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, uh how could you make the tool. Less complex, less expensive. Huh. 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 him. Yeah. They said they said we like this.

How much? I said your price. Twenty four dollars. I said that's fine. My hopes are rising. So I said so you're ready to order two thousand.

And they said No. We don't think we could s possibly sell that many. Wow. So

I mean Now you're talking about what, this is nineteen nineteen eighty three. Yes.'Cause of you are still doing your day jobs. Yes. So no orders. No order from early winters. None of these catalog and and what catalogs was I mean, Sears was probably still

You know, Neiman Marcus and Eddy Bauer, LL Bean, Sharper Image. Sharper Image, Sharper Image. They weren't interested. Well So once early winter said Sorry we don't think we can sell two thousand. Stephen I

Then took a picture of this latest prototype. Wrote a cover letter. Mailed it to the remaining two hundred and seventy nine catalogues. You want to see this prototype. Wait, but oh, because you had this this new prototype. You just reached out to the exact same catalogs as before?

Yes. And this time we got one response. It was from a company called Cabellus. Cabella's, which I think is owned by uh Bass Pro Shops today. Yes. It's owned by Bass Pro Shops. Okay. And one day.

In late May of nineteen eighty three. Eight years after I 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. Or twelve thousand dollars. Wow. For five hundred tools. Wow.

Do you remember I mean I would've cried. You can't believe how happy I was. I was climbing the walls. Mm-hmm. I called Steve. He was so happy.

Then we both settle down. Uh. And realized Well this is only five hundred tools. We wanted two thousand.

Yeah. But still. Finally, after eight years, an order, a sale. And presumably this is May of of nineteen eighty three. Presumably They

How how much time did you have? To make five hundred tools. Yeah. came in late May of nineteen eighty three and they wanted a delivery date in late December of nineteen eighty three. Okay.

That seems reasonable, but who is gonna make five hundred tools? Just just you and Steve? Well, we were very lucky in that Steve's father had a metal working 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 subcontrace. Right. One knife. One pocket knife.

Like Well if you think of the labor hours, Those days. Labor like Pretty good wages in manufacturing.

Jobs were like five dollars an hour, so Yeah, we had two two or three hours of labor in every tool. Yeah. You were a I mean we've been calling it a pocket knife up until this point, but I think in nineteen eighty three, once you got that order

Uh or maybe around the time we got the order, you of you you gave it an official name. You called it the pocket survival tool. Which which from what I read Was a very well considered decision, like you thought about a bunch of different possible names for it. Yes.

And we We were I've surpr We're surprisingly astute at Considering markets and marketing and who our customer It could be

And we finally settled on Knife Enthusiasts. As one category. And back in those days.

There are people So we quite consciously added the term survival in our tool to With the thought that maybe that would trigger a response from them.

Well as it turned out. During that seven month period when we were building the the tools for Cabellas and and anyone else we could Convinced by them. Uh early winter's calls. And said anything happening.

We said yes, we're in production. They said, uh put us down for two hundred and fifty tools. Oh also also for delivery in late December of nineteen eighty three. Alright, so that's great. So now you're

Closing in on on a thousand. Tools. Right. 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 During that period I was basically Totally neglecting my sales job.

I was pretty much spending all the time in in Steve's dad's shop. Just Trying to turn out you were one of the I mean it was an assembly line. You were on the assembly line. I was personally checking every tool.

My name was on every tool and I wanted each one to be perfect. Alright, so nineteen eighty three, you're getting these orders in and It's ki December approaches and And and what's going on? Have enough.

product to send send to Cabellas into early winters? Late December arrived much more quickly than we thought. About uh two days after Christmas we got a call from early winters. I asked our tools, our two hundred and fifty tools, where are they? We need'em really badly.

Because they've all been sold. Oh, they actually had it in their catalogue at that point. Their catalog has been printed and released. And they already had uh two hundred and fifty orders. You are so lucky that you did not do business in the Amazon Prime two day delivery era. For sure.

You would have been wiped out. Everyone's like, What? I just ordered this two hours ago. Where is it? Yes. We were lucky that uh in those days people had a little bit more tolerance for how long it took to ship an order. But but the catalogs didn't 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 two hundred and fifty have been sold.

Here's an order for five hundred more. Wow. And a week after that they called and said the five hundred are gone. Here's an order for seven fifty. And just to m I just want 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 s that that whether they could even sell two hundred and fifty of these things. Right. Two weeks later they called back and said the order is now a th one thousand tools. And then it turned out that the catalogs qu were all monitoring each other. And if they got a sense there was a hot product. And they all want it on board.

Of course. Then we started getting calls from all these catalogs that had turned us down before or or hadn't even responded. They were saying, Oh this we want this. And Steve and I rather than saying You idiots. We 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. When we come back in just a moment. How a few samples morph into many, many sales for Leatherman. But how September eleventh sends business back. into an unexpected slump.

Stay with us, I'm Guy Raz, and you're listening to how I built this. Hey, welcome back to How I Built This, I'm Guy Raz. So it's nineteen eighty three, and after years in the wilderness. Tim Leatherman's multi-purpose tool is finally finding a market with mail order catalogs. And sales?

They start to grow. Like mad. Yes, it was it was b by then it was quite evident that uh there was a market for this tool. When we're able to go from Two hundred tools to And nineteen eighty three to one million tools in nineteen ninety three.

Those were really exciting years with Growth rates of fifty percent per year are compounded. How how were your profit margins? I mean, it cost you twenty four dollars. Are you You were selling them for twenty four dollars, I guess. Um, but I imagine they were not cheap to make. I imagine your margins were kind of

Pretty thin, or am I wrong? In that first partial year, we did manage to sell two hundred tools. And we had revenues of uh six thousand dollars. And with that money we were able to uh start launching launch the business and eventually be able to make and sell some tools.

In that first year uh Of thirty thousand y tools of sales we had about six hundred and eighty thousand dollars of revenue. And uh actually made a few dollars. You made a profit. Yeah.

W uh he here's w here's my wonder. I mean now all of a sudden you are scaling fast. You go from Two hundred and year. Full year one, you go to thirty thousand.

Then you're doubling hundred and sixty thousand by nineteen eighty six. Yes. Uh Uh you were

F funding the growth and the scaling of this purely through the cash flow? Almost entirely. After about Three years. We finally found a a young banker who shouldn't have been willing to talk to us, but

I did. And was willing. It's our that our balance sheet was strong. And and agreed to give us a uh a line of credit. All right, here's a question.

one of the things that that you did I think it was nineteen nineteen ninety six, so this is like Uh you know. Well, but but Thirteen 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? Every Pretty much every leatherman. Product.

We do all the assembly ourselves and the vast majority of the manufacturing ourselves. In our own factory in in Portland, Oregon. How I mean I know that um'cause 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 I think I know why. Uh, but it meant that they were gonna always be more expensive. I mean your wife was from Vietnam. You you you had some Probably some contact there. And it and it would have been about much cheaper to make them in Asia. Why did you decide to continue to make them in Portland?

I was I was born in Portland. I was raised in Portland. The jobs. Created. We're 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 supply. They were in addition to the world supply. Because this was a whole new product category that added jobs that didn't take away from

companies that were selling other things. So one is one of my Everlasting goals is to keep do everything I possibly can to keep these jobs here in Portland, Oregon. Mm.

I I know Tim that at at one point there was a a lawsuit, a a class action lawsuit. Against Leatherman. Um because your tools were stamped made in the USA, even though

Some of the component parts were actually made in Europe or or elsewhere. But most of it was assembled and made in the US, including Um Anyway, I know there was a it was based on on an obscure law, this lawsuit. It was it was a complicated legal back and forth, but the but the upshot was or the the the outcome was that you

Ended up taking made in the USA off of your products. Yes. As as a result we We're 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. Mm. 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 it spurred us into being more resolute and seeking more domestic uh supp suppliers and adding even more f uh US content into our tools so that we can't. And most of our tools now we can uh label them as made in USA. A leatherman. is not chip. Right. You can get a knockoff.

You can get another knife. But Is it a knockoff? Yeah. Uh

That's made in the In China or in a in a cheaper Country. Um how do you How do you make sure that that people

Our um You know? Yes, it's true that you can buy a uh Uh

Knock off of our tool or Uh Made in China for Ten dollars, whereas a A leatherman tool, mate.

Yeah. We used to fight the knock offs, we used to file lawsuits against the Uh importers and uh 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 we do have some advantages. We we we sweat the details. I think it was Mr Sears of Sears and Roebuck long ago said

Uh Quality is remembered long after price is forgotten. I mean I I I know that that that lots of people have have stories of of

Of the Leatherman. Right,'cause it's one of those things that You bring with you for For the you know, for f for the eventuality when something will go wrong.

And you need to fix it. Right. We get testimonials of The Leatherman tool. Saving lives.

We got Testimonials of uh from leatherman tools from a couple of soldiers who said the leatherman tools stopped a bullet. We've received uh testimonials of uh Being used as a surgical instrument saving a life in in an emergency. We've uh ha have l many testimonials of a leatherman tool being used to

Rescue someone out of a burning vehicle. Uh Fallen helicopter. There's uh many, many, many uh different markets that where everyone finds the leather material to be of great value. You were

really just every year growing, growing, growing, growing and I think You know, around nineteen ninety nine your sales reached over a hundred and hundred million dollars. You you're a private company, so you don't reveal your numbers, but but That was reported at the time and then Next three, four years sales dropped. twenty, thirty percent. What what was going on? What happened?

What happened around nineteen ninety nine? Nine eleven. Oh two thousand one, nine eleven. And nine eleven had a huge impact on sales. Yes. Because people couldn't travel with them in their panbags.

And they as to use the euphemism that the TSA Yeah. Which meant that people had to leave them at the airport, these hop fift seventy dollar knives.

Right. Well we thought that the people that lost our tool would Buy another one. So b it wouldn't hurt business at all. But it turned out that m well, maybe they some of them did buy an another one, but then they stopped wearing it. Because they

We're afraid that if they went to the airport again that they would forgotten to still have it and they'd lose it again. It comes with a leather a leather holster that you put you could put your belt in. So then they stop carrying him. 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. So alright, so So really People were not buying them. And you s and you had to you had to do lay offs in two thousand two, I think, right? I mean your sales were dropped off considerably to the point where you actually have to let people go.

That's Down points of My leatherman journey. That was really, really hard. Mm.

But she had no choice. Really we had no choice. It was You have to It's better to have most employees employed rather than have No employees employed.

Yeah. How did the company Turn around. From that. Low point.

What was it just? Just the economy bounce back. Um Or was there m was it a more methodical, like new product line? new strategic approach. Revenue of

number for 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 uh a few months later, uh a couple of months later, we started getting orders again.

And by the end of twenty twenty We had had our uh third best year in our history. Wow. Wow. And this year we project we'll have our our best revenue year ever in our history.

Wow. You stayed on. S CEO. Until two thousand five. Um when you

decide to step down, I guess and Um kind of change your role at the company. um and and become the chairman of the board. Um or you just at that point burnt out were you kind of done

I was a bit tired. I Earlier on I'd The criteria for

My 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 two th nineteen from the garage even from nineteen but from nineteen eighty three to two thousand and five.

They 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? So often my answer was I processed paper.

Mm. And then there was one other factor but at that point I was uh fifty seven Years old and calendar years. But in terms of all the hours I'd put in all th all those previous years I was sixty seven years old in work years.

Okay. And I thought I had earned the right to be able to cut back a little bit. Wow, I I read that in in two thousand nineteen, actually heard you in an interview, you said you were g you're making about eight thousand tools a day. Yes. Uh Are making more now? So that

Or you're selling about eight thousand tools. Three million tools a year. Wow. I know you don't reveal your your revenue, but y it's not hard to do the math. I mean it's Yeah I t I've I've admitted I've I'm quite ready willingly to admit because it's pretty well

Very low uh nine figures of revenue. I'm quite proud that uh about thirty percent of those sales are export sales. And for an American company, uh thirty percent of Sales being inter international is is

Pretty good. So Tim, when you think about the the journey you've gone on, right? You know, this This is just kinda crazy. Story man. Toiling away on this thing that nobody wanted and

And you were kinda like, you know. He 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 It was not rational. This was not selling you were not.

Making a product people seem to want. because you weren't getting confirmation from the market and yet you persisted. And it's a No. hundred plus million dollar company today.

How much of of of of this story do you think has to do with Just your hard work and persistence and smart. Has to do with luck. I think that

Yeah, it's a route. Ten percent luck. And about Ninety percent. Pluck.

I've persevered, I've worked hard. I've I've had Great people working with me. Obviously I'm privileged to born into a life of privilege in the in it in the United States and growing up in a middle class household.

I've been s so many places in the world where life is not nearly as good as I've had it. There have been uh Things were In life where I've Beaten the odds?

The fact that uh Leatherman Tool became successful. of of uh products that are patented. I've read that only About five percent of 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 I've already beaten the odds. And it's not gonna happen again. 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 two thousand nineteen Tim won the National Silver Medal in doubles in his age group. But that silver medal was in an

Ancient age category. at a middling skill level. Oh, you're just being modest. It was the seventy plus division. Yes. That's still gr National Pickleball Championships. It's actually led to a new entrepreneurial spark in me. Oh really?

I've come up with a product that I think um Many pickleball players will love. A pickleball multi-purpose tool? No, it's I'm not at liberty to to disclose it entirely. I'm thinking you could combine like a portman too 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. Good job of trying to scuff out what it is. 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 hibt at npr.org.

If you want to follow us on Twitter, our account is at HowIBiltThis and mine is at GuyRaz. Our Instagram account is at how I built this NPR and mine is at guy.ros. This episode was produced by Carrie Thomson with music composed by Ramtin Arablui. It was edit by Neva Grant with research help from Catherine Cypher. Our production staff also includes Casey Herman, Liz Metzger, Faris Safari, JC Howard, Elaine Coates, and Julia Carney.

Our intern is Margaret Sarino. Jeff Rogers is our executive producer. I'm Guy Raz, and you've been listening. to how I built this. This is NPR.

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