Ep. 76: Why Cuba Sued My Company (And Why It Wasn't My Biggest Mistake) | Kurt Van Keppel

Kurt Van Keppel: The Lifetime Guarantee That Built a Global Brand

Most entrepreneurs focus on profits.

Kurt Van Keppel believes that's backwards.

In this episode, Kurt shares the remarkable story of building XIKAR from a single cigar cutter prototype assembled in a garage into the world's leading cigar accessory brand. What began as a $5,000 investment and a better-designed product eventually grew into a global company known for one thing above all else: an uncompromising commitment to its customers.

Along the way, Kurt moved his family into his mother-in-law's basement, spent years traveling two weeks every month to build distribution, launched products that failed, learned painful lessons about focus, and even found himself defending a trademark lawsuit brought by the Cuban government.

But perhaps his most valuable insight is this: the purpose of a business isn't to make money—it's to create something people genuinely want and to serve them exceptionally well. The profits come later.

Whether you're an entrepreneur, business owner, marketer, or simply someone fascinated by how great brands are built, this conversation is packed with practical wisdom earned over more than two decades in business.

Key Takeaways

🔹 A Better Product Isn't Enough

Many companies create superior products and still fail. XIKAR succeeded because it paired innovation with exceptional customer service and a lifetime guarantee. 

🔹 Treat Customers Like Friends

Kurt's famous lifetime guarantee began when a customer pointed out a flaw in his first production run. Instead of making excuses, he fixed every product—and built a company philosophy around that experience. 

🔹 Know What Business You're Actually In

One of Kurt's biggest mistakes was launching a cigar brand because it seemed like a natural extension of his success. He eventually learned that being in the cigar accessory business was very different from being in the cigar business. 

🔹 Revenue Opportunities Can Become Distractions

Not every logical expansion is a good one. Focus often creates more growth than diversification. 

🔹 Brand Value Compounds

While competitors optimized for short-term profits, Kurt invested heavily in product quality, service, and reputation. Those investments ultimately increased the value of the company when it was sold. 

🔹 Don't Chase Profit—Create Value

Drawing from the teachings of marketing scholar Theodore Levitt, Kurt explains why profit is the result of serving customers well—not the purpose of the business itself. 

🔹 The People Around You Matter

Kurt's final lesson applies equally to business and life: surround yourself with people who share your values and elevate your standards. 

Transcript

SPEAKER_01 0:00

Hey everyone, Jeff Hopek here, host of Interesting Humans Podcast. Quick note before we get started today. This episode originally aired on my former podcast called 20-minute MBA, where I interviewed high-level operators using the same four question format. I'm now bringing the best of those conversations into the Interesting Humans podcast as bonus episodes. So everything lives in one place. Today's guest is Kurt Van Keppel, founder of Zytcar, one of the world's leading cigar accessory brands. Let's dive in. All right, guys, welcome back to another episode here. I have a treat for you today. Kurt Van Keppel, original founder of an awesome, awesome company, Zykecar. If you're in or around, in and around cigars, um, you you'll know this brand. Um, he's gonna get into some really cool stuff today. I've got Kurt sitting here with me today. Kurt, thanks for being here. Um it's gonna be a treat. So let's get right into it. Tell tell me the journey. How do you get into something like that?

SPEAKER_00 1:03

Yeah, so uh Zycar is a accessory brand in the cigar space. And in around '95, 1995, I was working a high-pressure corporate job and had at the same time uh been part of a startup of a cigar club in Kansas City, which is the time frame of when cigars began to boom. And I thought, I went to buy a cigar cutter and I thought, wait a minute, this is uh expensive and doesn't work very well. And literally, I built a better mousetrap for myself, which is not the way to start a business, you know, uh, because it the dangers of uh of a product for one are um are really high, and and you can spend a lot of money and time effort on something that nobody else wants. So um I took a design to my uh friend Scott, who became my partner, Scott Alensberger, and um he designed this really, really cool shape, and I think you're holding one next to you if you'll show it. I'd appreciate it.

SPEAKER_01 1:59

I've actually got one right here, folks. So with the White House logo on it.

SPEAKER_00 2:04

Yeah. So the the cool part about the cutter is uh pull down the button, palm grip, squeeze, close, and uh so it's a single-handed cigar cutter. And um, so he built a model in plastic, and that model cut a cigar because that pivot point is the lever, which makes the cutter really powerful. So it was a beautifully designed product, even in the prototype phase. I began taking it around to the local Kansas City cigar shops, and even the plastic one, and said, What do you think? And and one of the shops told me, he said, you know, that Davidoff cutter is was the number one selling item in my store last year. I don't know if you should be into this. And I was like, oh boy, I don't know either.

SPEAKER_01 2:50

Right.

SPEAKER_00 2:51

So we moved forward and and invested five thousand dollars, which today seems like nothing, but back when I was uh two kids, uh both of them under the age of three, and uh and uh so it was a lot of money to us at the time. And with that five thousand dollars, we got 200 sets of parts made for us, which we then assembled in our garages. And and the first 30, well, I I gave one to each of the stores and they were showing it around and I was getting calls from them. They're like, hey, we want to buy these. And I was like, Whoa, wait a minute, hold on. We we have to get some manufacturing that isn't me and Scott. And the other thing is that I um amongst the first uh 150 that we made from the 200 and sets of parts, we sold uh 30 to my cigar club members. There were 30 members at the time. Wow. I handed them out at this big dinner, and this guy at a table uh he he owns a meat cutting manufacturing plant, so meat slicers. And so they all get their cigars, they're cutting their cigars with their brand new cutter that the club bought for them. And this guy speaks up and he says, Hey, it's dull. And I was like, It's it's what? What? He said, Yeah, it's dull. And I'm like, uh, what do you mean? He said it needs to be honed. And I said, What do you mean? What's honing? So we'd had them sharpened, but I had no idea that you finished sharpening with buffing on the buffing wheel to hone it to make it razor sharp. So I said, Okay, everybody, give them all back and I'll take them, I'll take them apart, get them honed, and send them back out to you. And that was the beginning of our lifetime guarantee. Because once we started manufacturing and selling, I thought, wait a minute, if I'm willing to treat my friends who are buying this product from me, why am I not willing to treat my buyers, my consumers, as my friends? So at that moment, I decided, okay, we're gonna do a lifetime guarantee, no questions asked. And that's the reason that Zycar became the number one brand in the world. Uh, it wasn't because we had a better mousetrap, which we did, but you know, the world is full of better mousetraps that didn't succeed. And it wasn't because our design was cool. My competitors' designs I appreciated as well. It was because we said, first in cutters, then in lighters, when um all my customers told me, hey, if you do a lifetime guarantee on lighters, you're gonna go broke. Well, we didn't, and I won't I I I'm not able to tell you the the percent of sales that our returns were, but they were let me just say they were de minimis as compared and are just I mean, our first year's growth 25%, then 25%, then 20% year after year for 10 years, we just grew like crazy. Um but but but I will tell you, and and you remember this period when we started uh again, two years, no revenue, or no net income, lots of revenue, no net income. Every penny was going into buying more cutters at that growth rate. And so um moved into my mother-in-law's basement in order to uh finance the company and uh and was there for a year while we tried to um get it off the ground, thank God for Sally. And um and then uh was able my very first year to move out of the basement and pay myself $30,000 that year. So um it was a real labor of love, a real labor, but just a joy because of the responses I was getting from the marketplace, uh, starting with our retailers and then to um the consumers. In fact, we we got tens of thousands of testimonials of that they started out talking to me for the first couple years how cool the cutter was, and they were so pleased and impressed. And then it shifted, and I knew we had something big when I started getting testimonials about our lifetime guarantee. And so we just kept that and made sure that quality was our first priority, and we could back that lifetime guarantee up with uh something more than just a marketing statement.

SPEAKER_01 6:59

And uh what a story.

SPEAKER_00 7:01

So we just kept going and and um my primary job the first 10 years was traveling on the road. I was gone two weeks of every month um visiting cigar stores with our sales reps, uh, establishing distributors worldwide, and and just worked our tails off. Um never regretted quit quitting my corporate job. Oh, but and and I never regretted selling a house and moving in to my mother-in-law's basement because uh because she was wonderful, but um that's if that's what it takes, that's what it takes.

SPEAKER_01 7:34

That's part of it, yeah. Yeah, that's part of the the journey. Now I met all sorts of people from all around the world, cool, cool, cool stories, startups, but I never ever met somebody who was sued by a a country.

SPEAKER_00 7:51

You've done your homework. I mean, right? Yeah.

SPEAKER_01 7:55

You're like we're literally sued by a country.

SPEAKER_00 7:58

Yeah, we well, and wild. And I can get into the story. Uh, in fact, it's uh uh amongst my biggest mistakes ever made. Um hold it then.

SPEAKER_01 8:06

Yeah, don't don't give it away. We'll get into it. But tell me the quick uh story on how a country sued how and why they sued you.

SPEAKER_00 8:14

Well, uh Cuba sued Zycar because Zycar um created a sub brand called Havana Collection. And they said that we were um um uh misrepresenting the um country of production, country of origin of the product. And uh and uh we we I'll tell you the full story when we get that.

SPEAKER_01 8:36

It was good press though, regardless, I'm sure. So, all right. Best advice, best advice you ever got.

SPEAKER_00 8:42

Well, somebody somebody introduced me to Ted Levitt, marketing professor from Harvard, who uh wrote a book whose name right now I can't recall, but he postulated that what is the purpose of a business? And um, this is actually the best advice I've ever heard in business. And and that is that the uh you know, in fact, when I when I when I do presentations at University of Missouri, I ask students to raise their hand and say, okay, what is the purpose of a business? And 99% of people say to make a profit. And I always say, no, that's not right. Making a profit is a mathematical formula that is at the bottom of the of the ledger, and your profit is what's left over after you've done your job right. So, what is your real job? And that is to make something that the marketplace wants and preferably wants and needs. In the case of the Zykar cutters, they were just cool cigar cutters. People don't have to survive on a Zykar cutter, but people really wanted it, and they really wanted our lifetime guarantee. They wanted to have the comfort of knowing that if they invested at the time $60 in a cigar cutter, that they would be protected in that investment. And and who, I mean, think about buying a car. Who doesn't want the warranty? Well, in our case, the warranty was free. So the best advice is that is to understand what the purpose of a business is, and that is to provide to the consumer, ultimate end user, and that's important too, because we didn't sell it to consumers, we sold to retailers. By the way, we guaranteed the sale to the retailers. If they didn't sell the product, we would take it back. And so um, you know, gladly. And so that guarantee and giving them that comfort to go along with the product performance is really what made our business, and we made we made plenty of good profit, but it wasn't our primary focus, taking care of the customers was yeah, yeah.

SPEAKER_01 10:36

So special. So then turning that on its head, what what's the biggest, biggest mistake?

SPEAKER_00 10:41

Yeah, well, okay, the biggest mistake was not understanding what business we were in. So 10 years after we started, uh, somewhere in the upper mid-2000s, 2006, I think it was, we introduced a cigar brand. That cigar brand was called Havana Collection. And our biggest problem with that cigar brand was not the Cuban government who sued us for uh um infringement, you know, uh uh country of origin infringement. And by the way, they won that suit in the trademark trials and appeals board. And um, I was astonished that they did because I I said, okay, uh I my my attorney, our defense was where is Tommy Bahama made? Is Tommy Bahama made in the Bahamas? I mean, come on.

SPEAKER_01 11:26

Wow.

SPEAKER_00 11:27

But uh, and yeah, you know, our products had country of origin, etc., etc. So Havana Collection I thought was just easy and simple. We just changed the name to HC Series. So everybody had already seen the original name, so it wasn't any problem.

SPEAKER_01 11:40

Sure.

SPEAKER_00 11:41

We I I had about 2,000 retail customers in the United States at the time. We distributed to 500 stores the initial cigar launch. Three different types of cigars, uh, four different sizes of each. So we got really good distributions. Uh 12 facings is a lot to get into the. And guess what? Guess what followed? No orders. They were good cigars made by one of the biggest and best makers in the world, uh, Dominican Republic, where uh about half of the cigars are made. And um I just kept scratching my head. And and I and when I was selling them originally, I did hear a few comments. You guys are in the accessory business. What do you know about cigars? And I would respond with the names of plenty of cigar brands whose founders were jewelers or attorneys or yeah, etc. etc. And when I had this experience of not getting any reorders, it occurred to me, wait a minute, the people asking me, what do you know about cigars? We didn't have a history in cigars. We didn't have a or a mystery, some sort of history or mystery to back up why we were doing cigars. It was, frankly, a revenue profit play. And uh, that's the wrong reason to get into a business. So even though we were in the cigar business because we were selling to cigar retailers, we weren't in the cigar business, you know, the the stick business. And um it was a fairly expensive lesson uh when when I told my two partners who love smoking the cigars, when I told them that it was 40% of our salespeople's time, it was uh five percent of our revenue. I said, it's time to to let this go. Because and and I predicted that as soon as we let the cigar goes, uh the cigars go, and we sold the brand, thank goodness we were able to sell it for inventory plus a little bit, uh, our sales of uh accessories went up immediately, 15% the next year because our salespeople were able to refocus uh on what our business was, which is our accessories. And by the way, we Zykar brand had cutters, lighters, humidification, and cigar containers. So we've basically uh ran the gamut. We did the same thing in pocket knives too, by the way. But before cigars, we tried pocket knives, made beautiful pocket knives. You may have one. Um and um we weren't in the pocket knife business either. And just because uh yeah, oh you have a steak knives, they're wonderful.

SPEAKER_01 14:22

Didn't you do a set of them? You started in that too, yeah. Yeah, but not folk, not in the focus. Not in the pocket.

SPEAKER_00 14:28

I mean, we weren't selling to cigar retailers, cigar retailers couldn't sell knives very well, so I just so we we learned that we had to stick with the business that we were in, and it was a very focused, uh narrow path, it turns out. And and frankly, the reason I sold Zycar in 2018 is because we had run the gamut of not just the cigars access, the cigar accessories sub-subcategories. I mentioned them to you in a a moment ago.

SPEAKER_01 14:53

Yeah, yeah.

SPEAKER_00 14:55

We were at a point where we were just producing new iterations of cutters, new iterations of lighters. You know, there's a when when I would go into cigar stores, half the guys in the lounge would show me their Zycar cutter, how many more do they need? And right, and and by the last few years before we we had the business 23 years before we sold it, and in the last three years, my my revenue was incre increasing under five percent per year, which is not sustainable because costs, uh, cost of goods, operating income, they are going up more than 5% per year. So um it was time to sell. We we we sold it a good time, right before COVID.

SPEAKER_01 15:31

What a less what a lesson. That's awesome. All right. So now let's go the other direction. What's what's the worst piece of advice you ever got?

SPEAKER_00 15:39

Well, uh, this is all related. You you you can tell I'm sort of a one-track story here. The worst piece of advice was to focus on gross margin and net income. And it's not bad advice in that I'm suggesting anybody should ignore gross margin or net income. Uh the suggestion, naturally, when when you get your finance people involved, the the company's big enough, they're willing to sacrifice service levels, sacrifice design, sacrifice product output in order to narrow for a um gross margin or a net income goal. So gross margin ought to be honed in like a sharp knife. Right. Net income needs to be honed in like a sharp knife. And all of the things that we um created for our operations, by the way, our operations were as big as a cigar company, and uh, and yet we're a quarter the size of a cigar company. So our expenses were much higher than any other accessory company as they should have been. So what was what was the goal, Jeff? Was the goal to make a lot of net income or was the goal to become the world's leading brand of cigar accessories? And that for me was the goal. I'm not saying that a business, and in fact, one of the companies that was um was gathered up uh in the sale, we sold to a PE company that uh merged a couple companies, is a really smart guy, about the same revenue as me, uh much better net income, because he sells fast and inexpensive. And you know, with a real thin organization. But he wasn't he wasn't even a branded guy. Uh so and he certainly wasn't the biggest brand in the world. Uh so at the end of the day, some listening to this might say, Well, you you know, you're an idiot, you left all that net income on the table. Uh, I would I would say, not when we went to sell it, because the value of the brand is what we sold.

SPEAKER_01 17:35

Wow.

SPEAKER_00 17:36

Oh, yeah. Yeah, we we we got a very, very nice multiple of our um revenue and income, uh, net income. Um because they were they were buying the brand.

SPEAKER_01 17:46

They were buying the brand, and you were brand you were brand and product obsessed.

SPEAKER_00 17:51

Yeah, absolutely. Brand, product, service, it's all together.

SPEAKER_01 17:54

Um give me the one minute so we don't go over 20. Give me the one minute on that name, it's so cool. How did that even come up?

SPEAKER_00 18:01

Yeah, um, I read a book on cigars when I first got started, and the book spelled the the word cigar S-I-K-A-R. They say that's what the that that's how the Spaniards spelled the word they heard from the Taino Indians who invented cigars, cicar or something like that. That's probably how they pronounce it. I just changed the S to an X because it's like two blades cutting something.

SPEAKER_01 18:23

Oh, that's so cool.

SPEAKER_00 18:25

Yeah.

SPEAKER_01 18:26

X-I-K, yeah. Okay. I'll make sure we put the logo up there too. Yeah. Oh my goodness.

SPEAKER_00 18:31

X-I-K-A R to X-I-K-A-R. Yeah.

SPEAKER_01 18:33

So that's the story of it.

SPEAKER_00 18:35

And then a brilliant graphic designer in our logo, you'll see he made part of the X cut the eye of I, cut, you know, cut the dot above the eye as if uh as if a blade was cutting a cigar. That that guy was brilliant. So I I which I can say I I invented that, but I didn't.

SPEAKER_01 18:53

So wow. Fascinating. Number one life, number one life lesson.

SPEAKER_00 18:59

Um, well, let's see. Um I I I think that's it. You it's it's beware of the company you keep, right? And and that's what we tell our children, right? Beware of the company you keep, who you're hanging around with. Make sure in your business that you're hanging around with people you want to hang around with, with people who you'd be happy to see on the weekend, even though you probably don't because you've seen them all week long, right? But people who live your own core values, I I think is my number one life lesson, and also num the number one business life lesson.

SPEAKER_01 19:34

That's awesome. Kurt, thank you. I mean, thank you so much. That was awesome.

SPEAKER_00 19:38

Yeah, man.

SPEAKER_01 19:40

So helpful, and I can't wait to hear what's coming next. So we'll probably do another episode because I can't wait to hear the the tech that you're developing on the new the new product.

SPEAKER_00 19:49

So all right, give me a few months and I'll be happy to come back.

SPEAKER_01 19:53

Absolutely. I appreciate your time, man.

SPEAKER_00 19:55

Thank you. Great to see you. Have a good weekend.