Rolex

“I think it's kind of an innovation lab. It's a way to protect Rolex's brand, because if there's something new and interesting that might be a fad that customers seem to be caring about in the watch world, Tutor can go and implement it, and they can figure out …”

“And even to this day, I believe the market of buyers for Rolex watches is basically fifty-fifty, men and women.”

“It was designed in association with the engineers at CERN in Switzerland, the particle accelerator, for scientists who are working While exposed to strong magnetic fields.”

“And when they did that, that huge order, I don't think we talked about this, it was the order that they placed was for five times the capital that they had in the business.”

“And in the early days, the Swiss industry and a lot of makers, including Rolex, released their own quartz models, too.”

“So interestingly, Rolex actually massively doubled down on their marketing spend in the US during the 2008 financial crisis”

“From 1953 to 19 55, Rolex, and again, Hans is still running the company, he dies in 1960, but Rolex, Hans, Andre, launch a whole suite of wild new models, very different than the Datejust and the Oyster Perpetuals that we were talking about before. This is the…”

“Well, they raise prices slowly every year. It's a modest price increase every year that kind of sets the floor. And frankly, if they do it over enough decades, Everybody just believes forever that these things are gonna appreciate, because it's almost like the…”

“And even to this day, this is crazy. Design, sales, marketing, and I think final assembly all happened in Geneva while production of the movement still happens up in the mountains in Vienna.”

“I think if that were the only factor, Rolex probably would have stayed in England.”

“What Rolex doesn't talk about to these days is a footnote to history of, it wasn't actually on her wrist.”

“Morgan Stanley and Lux Consult estimate it at 30.3% of the whole Swiss watch industry. No one else even comes close. Cartier and Omega have 7.5% each.”

“In this forties, fifties, sixties, Omega was the big brand. Like Rolex had a target in mind to beat, and that target was Omega, who was bigger.”

“The reason why they truly are among the very highest quality watches in the world is because they throw their scale economies around. They do absolutely unreasonable things to engineer and build and test these watches that other people in the industry just can…”

“Rolex had a built-in hedge because of their independence and because of their cash position. Everybody else is just gonna do all the scrambly stuff fast. They're all super reliant on each other, and they're all overextended. And Rolex is this incredibly conser…”

“It was the best thing to ever happen to Rolex, Audemars Piguet, Patek, etc.”

“Rolex is positioned at the perfect point on the curve of price and quantity. They are the most optimally positioned supply-demand curve company I think we've ever covered.”

“Hilariously, they just bought the building where Omega has their flagship store in Geneva. So Omega makes a rent check out to Rolex every month.”

“They had at least three failed attempts to create a waterproof seal in-house.”

“Industry-wide, third-party retailers make a 37% gross margin after they mark up from the wholesale price. That's their margin. For Rolex in particular, it's lower than average, because Rolex, you only get to keep 33 to 34%.”

“In 1936, I feel like this is a big moment, and kind of exactly what you were saying. As your competitors fall off a cliff due to economic hardship, there's an opportunity, if you have the right product that's working well in the market, to kind of consolidate …”

“Yes, it will help them improve their economics for watches that they sell through Boucherer, but not why they did it. Yes, it will help them improve leverage over other retailers, but they didn't need that. They already do things like, gee, it would be nice if…”

“They're going to absurd lengths to make these things the highest quality engineered and produced products in the entire industry or in any other industry too.”

“The Italian affair, the Paul Newman affair, is the luckiest thing that ever happened to Rolex, because this gave them the golden opportunity to do that.”

“Well, less than a year later, Rolex makes their 150,000 officially certified chronometer once again in the now, you know, new top of the line Datejust model. And who does Hans go to for this one? Through, not directly, but with some influence of the fact that …”

“Rolex did not focus on the American market until after World War II.”

“When you buy a Submariner or a Daytona or even a Datejust, you are not buying Swiss history here. You are buying 20th century modernity, as we will get into.”

“And so I think if they had gone quartz, Rolex would be fine today. That would be a way to build a good business. But the way to potentially build a great business was to try this crazy Blancpain-esque strategy, but at scale with one of the biggest and most suc…”

“Weightless were only really a thing for, until, honestly, like, twenty-fifteen for, like, steel Daytonas. The rest of it, you could just buy.”

“James Cameron On a manned submersible takes the Sea-Dweller Deep Sea Challenge, and it actually is, I think, all of those brands. They, like, include the sub-brand with the parent brand in this thing, down to the Marianas Trench, to the deepest part of the oce…”

“In 1932, Omega released a waterproof watch, which is, I don't know, half a decade after Rolex. This is considered to be the world's first dive watch. No one talks about this today. You hear dive watch, you think Rolex, but Omega had the first dive watch.”

“And so if this thing were to publicly trade, listing with its assets, It's probably top 50 companies in the world.”

“One of his maniacal control things was, I believe up until he died or pretty close to it, he did all the creative for all the advertising.”

“In 1910, he sends the first Wristwatch movement to the School of Horology in Switzerland to be awarded the world's first wristwatch chronometer rating.”

“They, like, don't have their customer's email address or names or addresses because that data belongs to the authorized dealer. Rolex doesn't actually know who's buying their product or who likes their product, which is kind of crazy for a modern company of th…”

“This carries through this relationship for the next 99 years until Rolex finally buys Egler in 2004, where Egler is making the movements for Rolex watches, and I don't think there's ever any real formal arrangement here. It's basically a handshake deal.”

“And Rolex followed this exact playbook over the last 10 years of not price-guiding themselves out of the market, but intentionally limiting supply, letting the secondary market go nuts, and then by keeping an even keel for themselves, and then now that there's…”

“They have 16,000 employees doing ten billion a year in sales.”

“Because Rolex does not engage in, ugh, paid product placement.”

“Rolex has 1500 authorized dealer locations, and if all 1500 of those were Rolex stores, they would absolutely do a great job paying rent.”

“And incredibly, Joe Thompson tipped me off to this, in a study conducted by Gallup in 1978, they asked the question, have you heard of Rolex? Eight out of 10 Americans in 1978 answered no.”

“This is part of my argument that Rolex really isn't luxury at all. They have hit the sweet spot in the market. If you think about a curve, like an X, Y axis, they have found the sweet spot where you can maximize revenue, where you just sell an absolute ton of …”

“Rolex didn't cut prices, didn't stop sponsoring the U.S. Open.”

“So, as you know, the Rolex Deep Sea Challenge happened in twenty-twelve, and in twenty-nineteen, the Omega Seamaster Planet Ocean Ultra Deep Professional went 20 meters deeper.”

“In terms of price, Rolex's average selling price, not Rolex's price, but what the retailers sell it for, is around 13,000 dollars. Audemars Piguet is 48,000 dollars. Vacheron Constantin is 38,000 dollars. Patek Philippe 40,000 dollars.”

“This is Panerai. This is the Panerai watch. Rolex makes the Panerai watch. So, you know, anybody who knows Panerai, famous, you know, very Art Deco style dive watch. They have two main models now, the Luminor and the Radiomir. Yeah, Panerai was a retailer befo…”

“My best comparison that I think I came up with is Rolex is Porsche. And I know there are different categories of price, but, like, cars are expensive things, and you do need one anyway. It's real scale manufacturing with a high-quality engineered product with …”

“They poured a huge amount of R&D into quartz watches, but they didn't productize most of it. They did these small runs of this oyster quartz”

“I don't think the Federer Rolex relationship is quite like a Michael Jordan Nike relationship, but it's in that next tier of great athlete partnerships”

“Rolex finally cracks it and patents their own Rotor, quote unquote, self-winding system, which still to this day is the primary method of self-winding across the entire industry.”

“Even in, I don't know, twenty-ten or something, you could walk into a jeweler who's an authorized Rolex dealer, and you could just buy something out of the case, which you cannot do today.”

“He presided over, most importantly, the Agler acquisition in 2004. For rumored roughly a billion Swiss francs, Rolex buys Agler and makes it officially in-house.”

“So, at this time, Rolex finally brings on a third-party advertising agency, the J. Walter Thompson Advertising Agency in New York. Rolex and J. Walter Thompson, in collaboration after Eisenhower becomes president wearing his Datejust, launched a campaign in th…”

“His first wife, Anna, died tragically in 1944, right before the end of World War II. And that is actually when Hans sets up the Hans Wilsdorf Foundation and puts all of his ownership of the company into it.”

“It helps Rolex's long-term value to help their customers feel like they made a good decision when they bought the product.”

“I would bet it's way closer to 40% for Rolex's operating margin. My best guess is that while they account for 30% of the industry's revenue, it's in the neighborhood of 40% of the total Swiss profit.”

“I don't think Rolex wanted to be in the luxury business. I think they wanted to be a lifestyle brand. I think they wanted to have fantastic engineering. I think they wanted to continue making things a little bit better every year. They wanted to have the very …”

“Rolex has gotten so sophisticated in its manufacturing that they actually use ultraviolet lithography in making their watches. It's not an etching silicon, because God forbid they should ever get anywhere near a semiconductor. It is etching a very specialized …”

“World War I is truly the first crucible moment for... Rolex, because it's the best thing that ever happened to the company and the industry. It made the whole world care about wristwatches.”

“They could sell their products for much, much more than they do, and they do not, because it is the right long-term decision to do so.”

“If you separated Submariner from Rolex, Submariner may actually be a bigger deal. Submariner is its own whole franchise.”

“Twenty-twenty-three, they spend a rumored five billion dollars. Five? Five, yeah, that's what I read. I mean, nobody knows the details of the transaction, but to buy one of, if not their largest single retail partner, the jeweler Boucher, eh?”

“However, Sir Edmund Hillary did not prefer his Rolex. He had a Smith's watch that he preferred to wear.”

“But if you look at their product catalogs, really up until World War II, ladies models outnumbered men's models two to one.”

“Once you create the Porsche nine 11, you should just tweak the Porsche nine 11 once every seven, eight years, and that way you can buy a nine 11 just like your grandfather bought a nine 11.”

“He places the largest order in Egler's company history, several 100,000 Swiss francs, for a bunch of these tiny movements.”

“There was an article published at this time that said you could get a Rolex for as little as 25 dollars. Even if you inflation adjust that, it's like 450 bucks today. Or for as high as a thousand dollars, which is 18,000.”

“There's no way that this business is worth 40. I don't know if it's worth 200, but it's worth a hundred plus. Zero doubt in my mind.”

“Over a million people a year actually do buy one, and for an average price of 13,000 dollars each.”

“The founders of arguably maybe the three biggest and most significant luxury brands in the world today were all orphans from the 1800.”

“That is the absolute opposite of what you need to do as a luxury company. It can't be like, this one's better than that one, or different levels of quality, or these imperfections here, and it's cute. It's like, absolutely not. That is critically important bec…”

“In the hype of 20 20 to 20 22, the precious metals were actually easier to come by as a customer because there was so much less demand to go buy a 30, 5000 thousand dollar watch that those would kind of be lying around while the steel ones were flying off the …”

“And the way that they're going to do that is they're going to work with Rolex and develop a new professional watch for their pilots that can, for the first time, tell time simultaneously in two different time zones.”

“Not that there haven't been major changes and different eras of the company, but they have stuck with a strategy and a positioning and a product lineup and a culture longer than just about anybody else.”

“It is a shockingly low percent of Rolex's production. Less than one percent.”

“Still to this day, the Lady Datejust, I believe, is the single best-selling model in the Rolex catalog.”

“And I do think this was the very first sort of chip of what made Rolex a real challenger to Omega, who had been kind of the standard big Swiss watch brand. Rolex was really the one to bring lifestyle advertising to bear.”

“Much like the IKEA foundations that we talked about on that episode, the primary purpose of the Wilsdorf Foundation is to ensure the continued operations of Rolex.”

“You'll continue to see this in everything that is in the Rolex universe, is we don't want to be lumped into any sort of a category, so we have to refer to something entirely different, such that we can't be put into a box. Like, they don't make spore watches. …”

“Back on our Rolex episode, we threw out the idea of a functional alibi, a reason you could claim that you need such a watch. For Ferrari, they have lots of incredible alibis. Most people do not experience the thing that you just described, feeling maximally al…”