A Chat with June’s Profile, Justus Bauschinger, president/owner of Lilliput Motor Co. & Deutsche Optik

Catalog Success: Where are your companies headquartered?
Justus Bauschinger: We’re out here in the boondocks of Nevada. Northern Nevada — about 90 miles southeast of Reno. Yerington, Nevada. On Main Street.

CS: What are the customer demographics for both catalogs?
JB: They’re actually remarkably similar. I’d say 45-plus [years of age], well-to-do. On the Lilliput side, committed to really fine kinds of models and antique toys, or reproductions thereof. And on the Deutsche Optik side, in fact, I never knew until I took over the company from Mike Rifkin that there were so many optical freaks out there. Or enthusiasts, I’m sorry. I mean people that just, you know, love to get big, weird hunks of glass and and go out in the field and use them.

CS: Is it primarily male buyers?
JB: Yes.

CS: When were both catalog’s established?
JB: Lilliput almost 20 years old. We started in a little office on Sutter Street in San Francisco. We started the company with a two-column, six-inch ad in the then relatively new New York Times, Western edition. And our first catalog was a bifold piece of paper with a couple of drawings on it.

CS: And for Deutsche Optik?
JB: Well, Mike Rifkin started that in San Diego and I guess that company’s close to the same age. I don’t remember exactly how old it is — maybe 16-years-old, 17-years-old. Out of San Diego. He started it buying a container of surplus binoculars. They came from East Germany when that whole thing ended. That was in ’89; I guess when the reunification happened. Or the wall came down. Or whatever. And they were Zeiss glasses that the Nazi army used, and they were like a seven by 40 glass, which is still today considered one of the best binoculars ever made. So he started with a little drawing also. It’s very funny actually to look at his earliest catalogs and look at mine.

CS: Were you an original founder of Lilliput Motor?
JB: Well, I had a toy store in San Francisco that went broke. And at that time I was probably the biggest Schuco dealer in the world, which didn’t mean much. Schuco was at one time the largest toy maker in the world. They made little windup toys. In fact, a lot of the stuff that comes out of China now, like a little pecking chicken and so on, was stuff that they did right after World War I. The company dates back to 1912. Anyway, in my store in San Francisco I had as much Schuco stuff as I could scrounge together. That was the “aha!” thing that all these males my age would be in the store at lunchtime playing with, because they all had them as a kid. Typically their fathers were GI’s who came back from the German occupation and had these with them and gave them to their kids. Especially a series called the “microracers,” which were little dye-cast cars that had windup motors in them. You could steer them and they were pretty fast and terrific … and I think at that time cost like a $1.75 here. They made more of those than any other single category of cars.
It turns out that there was a guy that worked for Schuco before the company went broke. He was a machinist. When the company went broke he basically asked for that tooling. And then he continued making them [microracers] on his own. His name was Nutz. In July, somewhere in the late ’80s or early ’90s, I guess it was late ’80s, he got up from the dinner table, had a heart attack and croaked. So that ended that. I found the widow and bought the tooling from her. And that was really the mainstay of Lilliput from its inception. That’s where the name came from: Lilliput for small, because these were tiny, little cars. And that’s really what started us on the path.

CS: What’s the primary merchandise offered in both of the catalogs?
JB: God, we’ve had such a huge range. Mechanical toys I guess is the best way to describe it for Lilliput. We don’t do plastic, we don’t do remote control or battery or that kind of stuff. We like tin or dye-cast or wood. Real stuff. And it didn’t matter. At some some point we extended into mechanical clocks, mechanical watches, music boxes. Then for a while we had a good run with artist dolls, lead soldiers … that you can still get in France and Germany.

CS: And for Deutsche Optik?
JB: Obviously sporting optics, with an emphasis on refurbished and interesting surplus goods from Germany, Switzerland, the Czech Republic, Russia. Whatever sources, because there’s no more American surplus left. And again there, it’s all precomputer chip stuff. In other words, even night vision stuff that I saw is analog instead of digital. For example, we saw tons and tons of rangefinders and they’re all optical (analog). And with good reason. The laser rangefinders, if you have dust in the air, particulate, or rain or snow, then they don’t like to work so well.

CS: What’s the average SKU count for a catalog mailing for each book?
JB: Lots. Between 300 and 450. We do small books. We do a digest-size in Lilliput, because we like the small format. And that’s usually 64 pages.
And Deutsche Optik, until this book, was always 48 pages and a slim jim.

CS: Do you have Web sites for both catalogs? Are more SKUs offered on these sites?
JB: Web sites for both, absolutely. Sure, because when it gets down to a mere handful of something that we can’t get any more of, then we don’t put it into the catalog. Because it isn’t worth the space.

CS: Would you have an idea of the total number of SKUs offered altogether?
JB: A thousand, I don’t know.

CS: Are both books mailed the same number of times per year?
JB: Yes. I mail four catalogs at a minimum for each book, and each book is dropped in three increments. And what we do is we’ve eliminated Christmas and that kind of a thing. We just do a winter book, a spring book, a fall book and a summer book. Because in many cases most of our stuff is imported — I would say 95 percent. And a lot of it comes from very small makers or sources that aren’t huge. So we’d paint ourselves in the corner by doing a Christmas book because often times, even though we had a certain stock to start with, we’d run out of it and couldn’t deliver in time for Christmas. And that would just piss people off. And I must say, our customers are probably the most patient in the world.

CS: Have you noticed that one season produces better results than the rest?
JB: It’s actually very even throughout the year. A little more so with Deutsche Optik than with Lilliput. I mean obviously because there are toys, a lot of grandparents come in heavier when it’s stocking- stuffing time.

CS: What are the annual circulation’s of both catalogs?
JB: I do about 600,000 each per year.

CS: What are the annual sales (combined)?
JB: Total I do about $5 million.

CS: Is it split evenly among the two books?
JB: It fluctuates. It depends on the supply. But they’re pretty even.

CS: Do you have a breakdown of sales by channel?
JB: No I don’t. I don’t really concern myself with it for the simple reason that our catalog drives people to the Web site. You know, there’s more Web sites than there’s human beings on the planet.

CS: Do you implement any matchback programs to determine which channel is driving sales?
JB: No, I don’t really spend my time on that. I’m sure that there’s referrals and that kind of thing, but I know for a fact that if I look at the trend, which you know is steadily climbing upward because people can go on the Web whenever they want, and both of our Web sites are pretty extensive, as attractive and extensive as any body’s out there. The problem is that our mail order software doesn’t mesh with that. Sometimes you can be out of something that you sold that day and the guy goes on that evening and tries to get it off the Web site and it’s sold out. Which is a little bit of a pain, but it doesn’t happen that much to make a big bother. I do know that when we’ve tried doing mass mailings and that kind of a thing that they haven’t worked.

CS: How many employees are there between the two books?
JB: We’ve got 14 people, full time.

CS: How did you get your start in the catalog business?
JB: I started out as a manufacturer — I was in the sewing trades for many years. My hobby, personally besides mountaineering and sailing so on, was toys. My sister at the time lived in Germany and had a toy store in Munich with a partner that was very, very special. And I used to go over there and always go-gah through it and I always wanted to have my own. I just never got there because the demands of the other business were such that by the end of the day I was exhausted.
So one day I decided that I didn’t like that other business any more because the sewing trades had all gone offshore. I decided I didn’t want to do that. I didn’t want to sit in some office in San Francisco and have my stuff made in China, because I liked the involvement of designing it and making the patterns and then producing it. So I got out of that business and got serious about the toy business. Spent a few years researching it and put together some money and opened a store that failed in San Francisco, which was supposed to be the flagship of a multistore rollout and mail order venture. That lasted three years and went tips up for a lot of money.
There I was bankrupt and the only idea I had at the time was, well, there are these little Schuco cars and a lot of residents. So as I said, a two-column, six-inch coupon ad in the New York Times, Western edition put it on the map.

CS: Was the response what you’d expected?
JB: No. In fact, we were just flooded. We were blown away. That led to raising a little bit of money, which allowed me to go buy the tooling, which allowed me to then be the first American manufacturer in the de-communized Czech Republic … well, it was still Czechoslovakia then. In fact, I started making these cars in an ex-weapons factory. Time went on and we kept adding more product and so on.

CS: What was your biggest challenge upon entering the catalog business?
JB: There was none. I didn’t spend much time thinking about it. I was broke … I had to do something. And I remembered all of these guys that were my age that used to come in at lunchtime from the financial district and lust after these toys and buy them. So I figured I’d just go with that. That was what interested me the most in the whole toy thing anyway. So I just went for it.

CS: What are the factors that have made your companies successful?
JB: Well, it was great good luck. It was the right thing at the right time … coupled with good luck.

CS: Was it your unique product line, your customer service, etc.?
JB: The thing is in both cases the product is unique. Now a lot of people have said that they liked our catalogs a lot. They liked the copywriting — we were very detailed with a sense of humor and it always was in a conversational tone as if I was talking to a customer on the phone or in person. But I think it’s all product. We always say here, “Where else are you going to get it?” Which on the one hand is good, but on the other hand doesn’t lend itself to mass merchandising. We’ve never had any bank debt; never used a bank for anything other than to deposit money and to write checks. Never had a loan. And there were lean years starting out, obviously.

CS: What about the catalog industry is most appealing to you?
JB: I don’t have to stand behind a counter and wait for somebody to come in and buy something.

CS: Then the direct aspect of the business — getting your product out in front of people?
JB: Yeah. In any given area you only have a limited demographic that might be interested in what you do. So bricks-and-mortars seem like the wrong thing for a niche business. And here I have my choice. I can live anywhere I want. For example, here in Yerington we’re the largest FedEx, we’re the largest UPS, we’re the largest postal customer, which has its advantages. I live where I want: It’s cheap, there’s no taxes. I own everything lock-stock-and-barrel — the building and the expansion we did, home, ranch, everything. It’s great.

CS: What are the issues that affect your companies, as well other catalogers, today?
JB: I’m doing fine with what I’m doing, so I don’t see any great challenges other than the time it takes me to do it. Certainly to get people who know what they’re doing or how to do trench warfare, how to do a lot with little. You don’t find people like that, hardly. Certainly not here. I don’t concern myself much with the industry as a whole. But when I look at it I just see … I go to the post office to pick up my stuff out of the box and half of it, or more than half of it, is catalogs. And I don’t even look at them. I throw them away because it’s always the same stuff. So I think terminal sameness is the biggest problem mail order has.

CS: What are the specific tactics you implement to make sure your catalogs evolve and aren’t the same old catalog time after time?
JB: Every catalog has new product in it. I spend a good third of the year looking for product. I travel all over the God-damn world. And that’s getting a little tedious because the airline service is getting so bad. And I’m getting older.

CS: Has there been a concerted effort on your part to reduce costs in light of the rising costs (postage and paper) to mail a catalog?
JB: We worked with two presses and now we work only with one. We run our stuff only on a Heidelberg Sunday [web press], we use a gloss No. 3 [paper]. Short of printing it on junk paper, I don’t know how I could get it any lower. We make sure that it’s always under the 3.2 [weight for automation rates on flats size], and up until now we didn’t even tab because we formatted in such a way. We don’t do enough catalogs, first of all, to have it make sense to go to the different centers for consolidation. I’ve done that in the past and I’d look at the results, and hell, they cost as much in the end as anything else I did.
I come from the trenches and we’ve always worked it absolutely as inexpensively as we could possibly do it and still put out a catalog that looks like something. I think I was one of the first people to use the covers for product, only because I never thought doing an atmosphere cover made any sense in light of the product we were selling. That a good image of what we sold was its own atmosphere. And the covers are typically my best page.

CS: What was the biggest mistake you made during your career? How did you correct this error?
JB: I had a partner. And I would never do it again with a partner. Just because of the example I gave you — it took me five years of arguing that we should put a product on the cover and sell off of it. And I was always fought on that.

CS: So you decided to buy the company outright, then?
JB: That happened a long time ago now, yeah. It got to be where we couldn’t work together anymore and I said, “Alright, that’s it. Either I go or you go.” And he said, “Well, if you go there’s no more company.” And I said, “Fine, then you go.”

CS: What does Lilliput Motor Co. and Deutsche Optik do to set them apart from their competitors?
JB: Well, I don’t think we have a competitor on either book. You have people like Franklin Mint or whatever they’re called, Danbury Mint, that does a dye-cast car catalog. Fine. But that’s all they have in there. I don’t. Like I say, I’ll have everything from a dye-cast model to a music box or a wrist watch. And I vary it often enough that it stays fresh. Harrington’s will take in a model car. Well, that I would’ve already had before. So we’re lightning fast. For example, I’m working on or finishing up the copy for a Lilliput catalog right now that a week-and-a-half ago I didn’t even know if I’d have enough product to fill a book with. And that will go to print before I leave for China next week.

CS: Do you yourself do a lot of the copywriting?
JB: I write all of the copy. I do the product select, I design the catalog, I write all of the copy and then I have a very good graphic artist that puts the book together. We’ve been together for years now.

CS: Have you given any thought as to where your career would have headed if you hadn’t gotten involved in the catalog/multichannel business?
JB: Oh God, it could’ve gone anywhere. I’m a pretty smart guy. All in all, I like what I’m doing just fine. I get out of here often enough: I have a house in Hungary, I have an apartment in Germany that I own. I travel worldwide. I’ve got friends everywhere. Things are hunky-dory. I’m perfectly contented — enough is enough.

CS: What’s done at your companies to keep a fun and light environment for your employees?
JB: Well, the last time I tried to organize a softball team that failed miserably. We’ve all been together for so long … basically most of the people here were children when I got them. They’ve been with me a long time. I think I’m a good boss and they appreciate that. I don’t interfere in their personal lives and don’t let them interfere in mine. It’s not a threatening environment.

CS: During the course of your career, have you had any mentors for guidance or been a mentor for anyone?
JB: Well, I’ve helped a lot of people with ideas and stuff, including my ex-partner, who’s also still in the catalog business. I just find that most people rely too much on “experts” that have never gotten their fingernails dirty. And I think it’s like anything: If you take a watch apart there’s so many little screws and cogs and springs. And when they’re in a pile they don’t mean anything. You have to know how to assemble them to make it work. It’s like any business. Obviously you need somebody that wants what you have, but given that, the rest of it’s really mechanical. That’s how I see it — pure logic. I don’t go to any of the DMA things; I went once a long time ago to New York and I listened to all of these people … and like half of them are broke. The latest of which was Sharper Image. And I kept saying, “Who the hell is going to buy that stuff?” I mean, I wouldn’t buy it.
I don’t have a personal jet. What the hell do I need it for? I mean, I’ve had an airplane in my past, I know how to fly. And what a pain. Besides that, it’s too expensive. I don’t ego trip in that way. All it really amounts to is a lot of hard work. And if you’re willing to do it, rewards come your way. I’m not evangelical about it. I don’t know when I had my last vacation. But then again, I guess my job’s my hobby.

CS: What hobbies do you enjoy outside of work?
JB: Well, I have a draft horse. I just bought a big spread out in nowhere that I’m going to work on putting a house built out of containers with an astronomical observatory. So star gazing, traveling, sailing, getting dragged behind a draft horse in a cart. Those are kind of hobbies.