XIKAR Interview Vol V Issue I

January 23, 2012

Cigar Press – How did you guys come up with the name XIKAR?

Kurt Van Kepple – Paul Garmirian wrote a book on cigars. And in his book he wrote that the original Spanish spelling for the Mayan cigar was sikar. I thought that was such a cool name, and then we played on that. We changed the S to an X because it was like two blades of a cutter. Originally, we even pronounced it like sikar.

CP – Where did you two go to school?

Scott Almsberger –I went to the University of Kansas.

KVK – I went to three schools, the first a small college in Switzerland called Franklin College. It’s an American school in Lugano. It was awesome. I had actually been a foreign exchange student in high school, spending a year in Argentina.

CP – What were your focuses?

SA – I went for Industrial design and product design.

KVK – European Studies was my associates at Franklin College. It was a two-year school at that point. So after my Associates I had to come back. I eventually made it to University of Kansas where I graduated with a degree in History.

CP – Which is where the two of you originally met.

SA – Yes, through Kurt’s brother Dierk. Dierk is a glass blower and artist, so he and I would run into one another a lot around campus, and became friends.

KVK – They lived in a house with a bunch of buddies, and I lived in a different house with a bunch of buddies. I don’t mean house as in a fraternity, it was just a house. We’d get together from time to time, their place, our place, that sort of thing, and Scott was always around so we got to know each other a little bit that way.

CP – What did you guys do after school?

KVK – For a few years I worked at Faultless Starch Company. And then I actually went back to school, to Thunderbird, which is an international business school in Phoenix. It’s one of the largest business schools in the country, and the only one that concentrates solely on international business. So that’s where I got my business concentration.

SA – I moved to Japan. We were both out of the country for two or three years. Eventually we both came back to Kansas City and ran into each other a couple times.

CP – XIKAR made its start with the invention of the Xi1 cutter. Where did the idea to make a cutter stem from?

SA – Kurt was out and wanted to buy a cigar cutter for his father, Bill. He had been to all of the shops around here in Kansas City. I hadn’t talked to him for at least a year. He calls me and said he couldn’t find a cutter to buy for his dad. He asked me, “You have a degree in product design, right?” He wanted to meet and talk about how we could design a cigar cutter. He thought there was an opportunity to have a cool cutter. We decided to get together once a week before work. We’d meet for breakfast, and then during the week I’d come up with concepts. We did that for about six months. Exploring all sorts of options.

KVK – We started the company with a $5000 investment that got us the engineering and the parts. Then in the very beginning, Scott and I used to assemble the cutters out of our garages and then sold them out of our houses locally. Shortly there after I called a couple retail shops in the country and sold them by mail. My very first retail sale was to John B Hayes tobacconist in a mall outside of Washington D.C. He called us, so we sent him a cutter as well as all of the members of the TAA. I could barely afford the envelope much less to send them a cutter.

SA – We thought we would do the cutter and make it a weekend and evening project, to keep us busy. After a year, it became apparent that this cutter was well received.

CP – Revolutionized the cutter concept.

SA – Cigar’s aren’t easy to cut. Having a cutter that is interesting, ergonomic, something you can produce and sell at a reasonable price, is a hard accomplishment. It’s always hard to know what’s going to be popular on a broad basis. You never know what the masses will like. Who would have thought that the pet rock would have sold, or the fake bass nailed to a block of wood that sings?

CP – When did the design of the original Xi cutter come into the picture?

SA – I was driving through the mountains in New Mexico, just brainstorming. It actually came together during the long drive to the top of the mountain. I came back and drew out my ideas. We did a patent search and worked with an engineering group through the university. Kind of an incubation type of organization, in order to come up with some engineer drawings. We went to a machine shop to produce parts for two hundred cutters. Out of all of those parts, we were able to get about 150 good cigar cutters. It’s exactly the same shape, size, and the engineering is the same today as it was then.

KVK – And still, the Xi1 original cutter is a vastly different cutter from what they are now. Even though they are the same size, shape, and have the same engineering, they evolved. There are different screws, different blade material, different springs, the angle of the blade grind is different, and it’s all to perfect the issues we would see as each new model came out. We’re doing the same thing for our lighters. We have full-time people at the factory inspecting quality. We are also now specifying all of the components in a lighter. Before we were specifying the design, which is what we do here, and Scott will tell you more about that. We would say what the shape would be, here’s how many flames, etc. But now we specify everything. From what factory the piezzo comes from, to the filter the fuel goes through. We identify the reasons for our returns, and we fix that problem.

SA – We’ve just made minor improvements as we move ahead. We’ve probably made 20-30 improvements. It’s been at least a year since we’ve done the last improvement. And now the rate of return for any returns is negligible. About 98% percent of everything that comes back has clearly been put through the ringer. We had a guy who had one in his pocket when he crashed his motorcycle. He basically slid across the pavement grinding the button of the cutter off. He actually sent in a funny letter, saying how it saved his ass. So we replaced it. There was the fireman who had an Xi3 with redwood handles. He was in fighting a fire and it fell out of his pocket. He found it when they went back to clean up, and of course it was completely burned up. So we replaced it. People have been through some sort of experience with their cutter, and our philosophy is that it’s always easier just to replace it. We always assume that is just good business to make the consumer happy. We’ve tried hard on that aspect. Thankfully no one has sent back cigars. But we get all sorts of things. These guys were working on oil rigs in the middle east and this guy left his cutter outside in a sandstorm. So the whole cutter was basically sand blasted, so we replaced it.

CP – I noticed recently the warranty changed from lifetime warranty, to unconditional lifetime warranty.

KVK – The unconditional part has been an evolution. I thought I’d give people a break and instead of having to call for every little thing. It’s all good, It’s all guaranteed. We even include abuse. Fortunately most cigar consumers are honest, hardworking and not abusive of a relationship. The consumers don’t abuse the warranty. Our return rates are extremely low.

CP – How long have cigars been part of your lives?

KVK – My father has always smoked cigars. He smokes two or three a day. When I was growing up he smoked two a week. One on Saturday and one on Sunday. He would smoke them outside at the end of the day, working on the yard. That’s exactly when I smoke too. I don’t smoke as much during the day. Scott and Jerry smoke several every day. My passion for cigars is a weekend passion. Mostly because I enjoy a cigar so far less if I’m not paying attention to it. I can’t work and smoke. Otherwise I’ll feel a regret. I wasn’t paying attention or relaxed. When I smoke a cigar, after working outside all day and my body is worn down. I’ll sit down with a beer and a cigar, and then I enjoy that cigar so much, that everything else pails in comparison.

SA – I definitely smoke a lot more now than I did. I started in the boom days of the 90s, it seemed that everybody smoked cigars. We didn’t really have any aspiration in developing a company for a whole line of accessories at the time.

CP – How old were guys when you got into the hobby?

KVK – I was in my early 30s, which seemed to be the average age. But not today.

CP – There are a lot of younger people getting into the cigar culture these days.

KVK – There are a ton of younger people enjoying it. I started looking at who was smoking cigars, when we got into the business. We wanted to know their affinities. The biggest affinity there was is Cuban cigars. We created the Havana Collection based on that. Last year I started to feel like the Cuban cigar affinity is losing its luster, especially with the rise of Dominican, Honduran, and Nicaraguan cigars in quality, in perceived value and in brand share. What these guys are doing today is incredible.

CP – Todays market is filled with people who know what they like, and a lot of the Cuban brands have failed to match up in consistency.

KVK – The other thing I noticed was the rise of younger consumers who wanted to know everything they can know, from seed to smoke. Cigar Press is this generation and feeding these guys. Before people didn’t get information on the countries, on the makers, harvest, fermentation, you name it. Now they are veracious. Now a lot of consumers are more knowledgeable than ever. Tattoos are all happening at the same time as this. There’s something related to this desire to get to the very core or essence of something. The Indigenous tattoos, and the indigenousness of the cigar. Now that’s what the Mayan Collection is all about. It’s the indigenous art of the cigar. My expectation is that the guys who aspire to really know everything essential or indigenous, are going to aspire to one of those products.

CP – You guys do a lot of traveling.

KVK – Absolutely. In fact I travel, and have always traveled, since Scott and I started XIKAR, every other week maximum, and minimum every third week. I think I have been inside almost every cigar store in the country. Scott and I continue to do that today.

CP – I think people really appreciate that.

KVK – I hear from customers it’s one of the reasons for our success. Above all, walking into the retail store has been key to the sincerity of the look, handshake, and word, is fundamental to the belief and power of our warranty. When you offer a lifetime warranty through a letter it’s one thing. But when you look someone in the eye and you say to him, We don’t warrant our products for life, we guarantee every thing we say, sell and do. We shake hands, and then when you go ahead and back it up, it builds instant and permanent credibility. Someone said to me one time, “Do you know why you’re successful? Because you’re standing in my store.” People know me, and I have a personal relationship with all of our customers.

CP – That’s key, especially with cigar brands. It builds a foundation. You guys really get to see a lot of places.

KVK – We do, and I love it. I really got bit by the travel bug at an early age. My dad’s passions are art, travel, and cars. So growing up my siblings and I each got to travel with him since my mother wouldn’t.

CP – How many of you were there?

KVK – There were four. He would take one of us four on a big trip. Usually those trips were with the Nelson Art Gallery here in Kansas City, which is particularly famous for its Asian art collections. When the original Chinese friendship tour came through in ’78 it made three stops. New York, Kansas City and San Francisco. Based on that diplomatic art tour, the Nelson Art Gallery got invited to bring a tour group to China. So my father took me on that. I was in China in 1979. It was unbelievable. I have two hundred and forty six photos from the trip, and this is when photos were film. I have all black and white, gorgeous shots. So that was it, the travel bug was in me. I didn’t just want to go on tours in order to see architectural sites and museums. I wanted to get to know the people and speak their language.

CP – When did XIAKR decide to branch off into other areas besides cutters?

SA – It was about 2002 and we had all sorts of Xi cutter variations. We had a request for a punch cutter, which is when the 007 punch came to be. Then the MTK, which are folding scissors.

CP – Still one of my favorites.

SA – That was an interesting product. It was developed when we were on a trip in Italy. We were producing pocket knives, and our idea is that we are well versed in cutters and the basic principle behind that is a sharp cutting instrument, same as a knife. That would be an addition to sell to the same cigar shops we already do. Guys like pocket knives, so it was a perfect fit. We learned a lot about knives in general. It increased our expertise on blade materials, edge geometry, tempering, and how to create something really sharp and durable. The knife industry is known for using all sorts of new materials for their blades and handles. There are a ton of custom knife makers. We were able to take some of that knowledge and incorporate that into some of our cigar cutters. We discovered that certain exotic woods that worked as a knife handle, also worked well as our cutter handles. It was nice to be able to take from the knife industry and incorporate it into our cutters.

CP – Where were you guys in Italy?

SA – We produced our knives in Maniago Italy, the knife capital of Italy. Traditionally throughout history, there are a few knife capitals of the world, Maniago was one of them. There was a small manufacturer who was creating the scissor component for the Swiss Army knives. We were working with him and came up with this folding scissor, developing it specifically for cigars. The tools were for a cigar smoker. There is poker that also acts as a bleeder for your lighter, screwdriver to adjust lighter flames, box opener, and a bottle opener. In the beginning we weren’t really sure how popular it would be, given that cigar scissors aren’t that popular in the US, like they are in Europe. This product was different, and has exceeded our humble expectations. You can put in on your keychain, it folds up, weighs one ounce, it’s really slim and handy. I’m surprised how popular that item has been. But it’s different form anything else that we have, or anything that is available.

CP – At first XIKAR was only known for its cutters, which revolutionized the cutter scene. As XIKAR has been evolving, when did you notice it was becoming more of a lifestyle brand for cigar enthusiasts?

KVK – Well you’re very kind to say that. It is my aspiration to be that. It’s an incredible experience and I think it’s an incredible result. To have revolutionized a sub category, and then to have expanded that success to all off the categories in a cigar shop. I humbly believe that we’re the number one brand in lighters, cutters, butane, humidification, and travel cases. Therefore it’s an astonishing success on the cutters, and all of the rest.

CP – Making cigars was a big jump. How long have you seen that as part of the evolution of the XIKAR brand?

KVK – It was a process that we didn’t take lightly. We don’t to this day. We are very serious about getting in it, and staying in it. What really got us into it was XIKAR events. If the retailer was benevolent he or she would hand out a cigar of theirs when somebody bought a cutter or lighter, but that doesn’t support our brand. And depending on the cigar it could even detract from our brand. A consumer who bought a Havana Collection cutter, I handed him a cigar and he said, “No thanks.” He told me that we should put out a cigar, and then he would try that. So I thought, we really ought to have a cigar. This was years and years ago. It took several years to find the right guy to blend them, find the right quality, etc…

SA – We were always around people who produce cigars, and in retail shops. It came slowly, but we had toyed with the idea as early as 2001 or 2002, and decided at that time we would stick to accessories. As we created more and more accessories, and filled in all of the holes. It became more and more apparent that a cigar made sense. Originally it started out at events. For us, when we do an event, we lay out the accessories. The consumers at the event would say that they need to go get a cigar in order to try out the cutter, or the lighter. We saw that the consumers needed a cigar to use our accessories, obviously. It became hard for us to have an event without some sort of relationship with a cigar company. It was usually up to the retailer to tie us in with someone else. We thought that we ought to have our own cigars so that at an event they could smoke our cigar, and try out our accessories. We knew it was going to be risky for us to get into the cigar business, being that we weren’t seen as a cigar company. We knew that we were going to be judged very harshly. We couldn’t come out with an average cigar. It had to be good. So it took years before we decided on the blend.

CP – What led to Jesus Fuego?

SA – We ran into him all over the place, and he had just come out with his own brands then. Basically he produced some samples that were really good. Better than anything else we tasted. It was an easy decision, based all on the product, and Jesus produced the best cigar we put in our mouth. Now we have the three blends, and would like to come out with some more. But we’re having some problems finding a blend that we really like from anywhere.

CP – He makes some really enjoyable cigars.

SA – He’s easy to work with and produces a lot of blends. He knows what to get, and knows how to do it so we can keep a consistent product. Just at this point, we haven’t tasted anything that’s better than our three blends already, so we have to be patient.

CP – If you want to have a serious talk about cigar and tobacco, Jesus is definitely the right guy.

KVK – He’s serious. He really knows what he’s doing from seed to smoke. He is a true cigar guy.

CP – You always hear the story of a guy in the industry who grew up on a tobacco field, and he did.

KVK – if you ask him how much tobacco you can get out of a hector of land, wait for the answer. He’ll say, it depends. Then he starts going in to it. It’s a beautiful thing to listen to. It depends on the size of cigar, species of tobacco plant, if you’re producing wrapper binder or filler, he really is talking stream of consciousness. If you find the specifics, he’ll give you an answer. I was blown away by the information he has.

CP – How long does it take from concept to product?

SA – Usually about a year. This year we are actually already shipping some of the new items now. Hopefully by next year we’ll be shipping all of the new products by the time the show starts.

CP – It looks like there are a lot of sketches lying around.

SA – We crank out concepts, stacks and stacks of ideas. You can never have too many good ideas. I have placemats here from China, or other restaurants with sketches on them. You never know when an idea will hit you.

CP – What happens after you have a sketch?

SA – Once we get two-dimensionally to the point of comfort, we’ll have a model made. Then we’ll put everything through rigorous testing, like how many times will a lid work before the spring will fail. We usually shoot for 50,000-100,000 lights in every lighter without any repair. We want to feel it in our hands, get a feel of the size. Once you get something in your hand, it’s more than likely going to be changed because of the feel of it. Recently we had a lighter that we drew out, and studied the weight, size, etc, and then made a prototype. We were certain we nailed the design right away. Once we had that prototype in our hand, we immediately started changing it. We reduced it by 3mm here, 2mm there, a lot of tweaks. After the second prototype it felt right, and then it goes into production. I like bigger lighters because they hold more fuel. But prototypes are one of the single most important parts of creating new products.

CP – Do you guys have a favorite cigar tool?

SA – We really don’t. They’re like children, all unique and different. I like to use them all. The V cutter was a recent item, and I never really used a V cutter. Years ago I was having dinner with Joel Sherman and he said, “you really ought to do a V cutter.” I told him that not many people use a V cutter. He said, “That’s because there aren’t any good ones.” He convinced us that if we had a good one, it would be a winner. It took years. We looked at concepts, looked at prototypes, and weren’t sold one-hundred percent on it. Last year we finally introduced it, and it’s selling like crazy. I didn’t expect much from it, but it has done really well. All of the new product intros basically comes from a consumer or retailer, saying “wouldn’t it be cool if you did this, or if you did that.” So we are always looking at requests and new ideas. We actually made a high altitude lighter, purely because of the requests we get from people who live in high altitude locations. Every year we’ll add to our list of products that we would like to introduce. We create concepts, go to the prototype stage, and then make the decision to introduce it or not.

CP – What do you give credit to for your success?

KVK – It’s not just because of our product philosophy, but the combo of the product and the service. Consumers tell me we are successful. There are so many stories of failure, and we set aside the reasons for business failure aside, the vast majority of others are because they didn’t service the market place. We are concerned with our customers well being, we are communicative, and consistent. If you think about the relationship of those three things if we are consistent people know what to expect. If we fail in our delivery of something, if we are concerned and are communicative, and then are quick about it makes up for the failure in consistency. Then it tumbles like a snow ball and gets better and better. Honestly I think brand equals trust and trust equals brand. I think the brand has exceeded the products themselves which is why we can introduce a new category, that if we are serious about, we can reach the top of the category in a shorter amount of time, based on trust. Now that’s if we’re serious about it. One area where we weren’t serious enough about, was humidors. We do travel cases, but not wood boxes any more. I discovered that we weren’t committed deep enough to try to make a return on investment that that business requires. Our approach is dual and parallel. One cannot survive without the other, and one can not advance beyond the other. They have to maintain the same value and importance. We have the four Fs of product. All of our products must have great function, feel in the hand, form to the air, and a fair price. That’s our product formula. There is this method that was popularized in the United States during the 80s by Demming. He was a business theorist and taught at a business school in California. He became wildly popular because of all his theories has been correct. He really got to use his experience by living in Japan and using them as the laboratory for his theories, one of which was continuous improvement. Continuous improvement of your products. This notion came out during in the middle of planned obsolescence. That was the auto companies way of saying we are going to get more sales by having some break down or parts break. But look where these guys ended up. Continuous improvement was really an American idea, perfected by the Japanese and brought back by that very same American. We practice that every day. We get stuff back. We see stuff coming in, and then you have to see free stuff going out as a result. I don’t want to see that. Instead of changing the warranty, we will change the product.

CP – What’s the number one reason for a lighter return?

KVK – Bad fuel. But over time a lighter will wear down. It’s like an automobile. You’ve got an engine with fuel that burns and moving parts. In needs to be maintained. Our lifetime guarantee is a lifetime replacement guarantee, it’s a repair or replace guarantee. Sometimes we’ll get lighters back that simply have bad fuel. The world of butane has diesel, regular, and premium. We make premium grade fuel.

CP – So the fuel was another step for continuous improvement.

KVK – You got it. We had to. We searched all over the place to find the best fuel that we could. But it doesn’t stop there, we try to find the best of everything to bring the best products to the market.

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