Rolex（音频）
Rolex 处在价格—销量曲线上一个近乎荒谬地诱人的位置：年销量约110万–124万枚，年收入约110亿美元，但平均售价在逐字稿中前后矛盾——开头约13.3万美元，后文约11.3万美元。 这意味着其收入约占瑞士制表业的30.3%，约为 Cartier 或 Omega 的4倍；漫长等待和即时转售溢价，则维持了稀缺感。业务的悖论在于：Rolex 以工业化规模销售，却让每位买家相信这件产品“非常特别——而它确实如此”。
Hans Wilsdorf 起步时并不是制表天才；主持人的判断是，他可复制的优势在于识别技术突破、锁定这些突破、组织合适的专家，并把成果转化为市场听得懂的产品。 他将 Jean Aegler 的微型天文台级机芯，与旋入式 Oyster 表壳和 Rolex 自有的静音360度 Perpetual 自动陀结合，创造出现代腕表组合：精准、防护周全且自动上链。据称，他最初向 Aegler 下的订单金额约为公司资本的5倍；逐字稿称订单本身只有几百瑞士法郎——这是这段历史中少数真正押上公司命运的时刻，其余则由耐心执行定义。
Rolex 建立品类所有权的方式，是把稳定的产品架构绑定到特定身份和成就上，而不是宣传规格。 Rolex 的广告把 Datejust 与“引领世界命运的人”联系起来，把 Explorer 与 Everest、Submariner 与海底作业及 Jacques Cousteau 和 Sean Connery 等佩戴者联系起来，把 GMT-Master 与 Pan Am 飞行员联系起来，把 Daytona 与赛车和 Paul Newman 联系起来。“如果明天你要驾驶 Concorde 飞行，你会戴 Rolex”这样的广告，把工具变成佩戴者身份的宣言；而 Arnold Palmer、Roger Federer 等终身“testimonee”则在数十年间不断强化这种关联。
石英危机并没有以机械表重新夺回计时市场告终；它创造了一个全新的市场，在这个市场里，报时几乎无关紧要。 石英表更便宜、更精准，也更容易规模化生产，将瑞士制表业的销量份额从高峰期约85%打至1980年的15%。Rolex 看到 Omega 追逐石英、稀释品牌，看到 Jean-Claude Biver 把机械表的过时转化为 Blancpain 的旧世界价值，也看到拍卖行让稀缺变得有价值；它最终销售的是工艺、连续性、身份和浪漫，而不是一件性能较差的计时仪器。
基金会所有制给予 Rolex 足够长的时间跨度，让它能在竞争对手被迫紧急应对时保持理性。 Hans Wilsdorf Foundation 的首要使命是保证公司持续运营，因此可以容忍业绩疲弱年份，而无需降价、授权品牌或优化单季业绩。2008年，竞争对手纷纷打折清库存、撤下广告，Rolex 仍维持价格；但逐字稿对 Rolex 自身广告投入的描述前后不一致，一处称其将广告开支归零，后文又称其加码美国市场营销。后来的繁荣期，Rolex 缓慢涨价、约束供给，并拒绝建立一个最终可能迫使公司尴尬收缩的成本基础。
Rolex 的奢侈品力量更多来自对质量和市场行为的控制，而不是占据最高价格带。 Patrick Heiniger 任内，Rolex 于2004年以传闻中的10亿瑞士法郎收购 Aegler，将生产从数十个地点整合到4座主要工厂，实现表链和冶金工艺内制，并追求极致的流程一致性。但它仍把零售大体交给约1,500家受到严格管理的经销商，在保留运营效率的同时，也制造出一个日益严重的负担：不透明的配货和对客户不友好的等待名单——如果 Rolex 愿意，它完全可以把这些环节集中管理。
主持人给出的合理估值区间约为400亿–500亿美元至2,000亿美元，但他们确信，在考虑可能规模巨大的现金、投资和房地产组合之前，这项业务的价值已远高于1,000亿美元。 他们估计税前利润可能为每年30亿–40亿美元，经营利润率可能接近40%，累计现金可能超过500亿美元，且都未获得披露。最接近的经营类比是 Porsche——6或7个经久不衰的车型家族、工业卓越和持续改进；但品牌管理和经济特征更像 Hermès，而大众采用、专有工程和品类定义能力的组合则让人想到 Apple。
1. Rolex 是伪装成稀缺品的规模化制造商
Ben 以核心悖论开场：Rolex 是全球最知名的品牌之一，却是“世界上最不为人所知的公司之一”。它由 Hans Wilsdorf Foundation 私人控制，几乎不披露任何信息；正如 David 所说，公司“像一家情报机构”一样运营——对于一家年收入可能超过100亿美元的企业而言，这种结构异常不透明。
每年显然有超过100万名买家收到 Rolex，但逐字稿给出的平均售价前后矛盾：开头约13.3万美元，后文约11.3万美元。与其强行统一一个数字，更稳妥的结论是：Rolex 每年销售超过100万枚腕表，预计收入约110亿美元，而许多热门型号一出店门便升值。这使 Rolex 区别于低销量奢侈品牌：Hermès 不会卖出100万个 Birkin，但 Rolex 在远高得多的销量上维持了相近的符号强度。
实物产品本身又制造了另一重矛盾。Rolex 的计时准确性不如 Apple Watch，甚至不如10美元的 Casio，但数百个齿轮、发条和精密工程组件，共同支撑起一种有利可图的“被数字世界淘汰的死工艺”。
因此，这期节目的核心问题是商业问题，而非钟表学问题：一家销售劣质计时技术的公司，如何把工艺、制造和连续性转化为品类所有权？正如主持人强调的那样，“这一期其实不是在讲腕表，而是在讲腕表生意”。
2. Wilsdorf 是一个没有天然归属国的孤儿 outsider
Hans Eberhard Wilhelm Wilsdorf 于1881年3月22日出生于巴伐利亚 Kulmbach，时间距离巴伐利亚加入新德意志帝国不久。作为一个身处天主教占绝对多数的巴伐利亚的 Protestant，他从未强烈认同正在形成的德国国家；David 认为，这种早期的模糊归属感构成了一个人与一家公司的底色——都自在于“欧洲的缝隙之间”。
Hans 12岁时，父母在数月内相继去世。他的叔叔们卖掉家族的五金生意，为 Hans 和兄弟姐妹支付寄宿学校费用，迫使他很早就与原本可能继承的职业和社会身份断开。
Wilsdorf 后来直接把这段成长经历归因于自己的性格：“他们让我很早就学会依靠自己，这使我养成了照看自己财物的习惯。”Ben 和 David 将他与 Louis Vuitton、Thierry Hermès 相提并论：3个失去双亲的局外人，没有贵族出身，却建立了延续至今的奢侈品机构。
3. 瑞士钟表贸易让 Wilsdorf 同时看懂产品和关键卡点
Wilsdorf 数学、英语和其他语言能力出色。寄宿学校毕业后，他前往 Geneva，先在一家珍珠商处工作，随后进入手表出口商 Cuno Korten。据称，Cuno Korten 在19世纪90年代末的年营业额约为100万瑞士法郎，说明当时钟表业对瑞士已经具有相当经济意义。
Cuno Korten 并不制造腕表，而是把分散的瑞士生产商与国际零售商连接起来。负责英国业务往来，使 Wilsdorf 位于一个信息极其密集的节点：他知道谁能制造最好的组件、价格如何变动、哪些零售商掌控分销，以及最大出口市场的买家需要什么。
当时的腕表意味着怀表。它们是日常生活的基础设施，主持人的类比是：怀表兼具今天智能手机的实用性和人们因紧张而反复查看手机的习惯；人们需要它来安排日常，也会在等待、思考或面对尴尬场面时一次次掏出来。
Wilsdorf 还会把成批腕表带回家，对时后比较它们一夜之间的走时精度。当3枚异常优秀的腕表通过天文台精密计时测试时，商业启示立刻出现：原本为天文导航开发的认证，也可以用来推动消费品销售。正如主持人概括行业当时的领悟：“把这个贴到表盘上。”
4. Wilsdorf & Davis 在 Rolex 自行制造之前先完成了价值组装
Wilsdorf 于1903年移居 London。他欣赏雇主的“商业能力”，却批评其“缺乏专业化”。1905年，24岁的他与 Alfred James Davis 创办 Wilsdorf & Davis；Davis 的资金让这家年轻公司能够向瑞士下订单。Davis 后来与 Wilsdorf 的妹妹结婚，但主持人认为 Hans 才是实际创始人。
当时，零售商仍然掌握与客户的可见关系。珠宝商的名字出现在表盘上，而制造商、机芯供应商和进口商都隐身于幕后。Wilsdorf 起初只把“W&D”放在机芯和表壳内盖上——这体现了他早期的不满：明明是自己组装的产品，却由别人获得品牌功劳。
他的价值来自架构设计，而非手工技艺：采购最好的瑞士机芯，配上最好的表壳，在 Britain 组装成表，再通过成熟珠宝商分销。在主持人的框架里，机芯是决定性能的关键组件，类似于一台成品设备内部的半导体。
不可或缺的供应商是位于 Bienne 的 Jean Aegler。它能够在不牺牲准确性的情况下制造异常小型的机芯。双方的关系主要靠信任维持了99年，直到 Rolex 于2004年收购 Aegler；“我们来为你制造机芯”这句话，令人难以置信地更像握手约定，而非传统的长期供应合同。
5. 押注腕表：早、重，而且一开始押错了
Boer War 给了 Wilsdorf 产品洞察。南非战场上的士兵需要在手持武器时协调行动，且往往无法方便地穿着装有怀表的夹克，因此尽管腕表准确性较差、也更脆弱，佩戴在手腕上仍然有价值。
Wilsdorf 将这一洞察从军队推广到普通人：人们也会更愿意瞥一眼手腕，而不是掏出怀表并打开表盖。他向 Aegler 下了有史以来最大的一笔订单，采购适合新形态的微型机芯；逐字稿一处称订单金额为几百瑞士法郎，后文又称约为 Wilsdorf & Davis 资本的5倍。
最初的判断来得太早。退伍士兵并没有立即让腕表成为主流，但 India、Australia 和 South Africa 的热门市场提供了足够早期需求，让这家小公司得以存活。约10年后的 World War I，才带来 Wilsdorf 预见的品类级拐点。
6. “Rolex” 把组件押注转化成消费品类
Wilsdorf 希望消费者能够主动点名购买一个品牌，而不是再次面对一个隐形进口商。他受到 Kodak 的启发，寻找一个简短、在各种语言中都易于发音、容易记忆且没有历史包袱的名字；在尝试了“几百个名字”后，他声称自己乘坐 London 马车时，“一个善良的精灵在耳边低语：Rolex”。
这个名字还带有有用的机械联想，却没有直接描述产品：其发音让人想到旋转表冠或重复的滴答声。Rolex 最初作为 Wilsdorf & Davis 旗下的产品品牌注册，而不是公司名称。
认证提供了合法性。一枚 Rolex 机芯于1910年获得瑞士钟表学校颁发的首个腕表天文台计时认证；在与 Aegler 进一步合作后，一枚机芯在 England 的 Kew Observatory 经历45天测试，并于1914年7月15日获得该机构向腕表颁发的首张 Class A 精密证书——而此时 Europe 正在滑向战争。
7. World War I 同时创造市场，也把 Rolex 赶出 Britain
World War I 让腕表成为大规模军事协调不可或缺的工具，但反德情绪也让“Wilsdorf”这个名字在 Britain 变得无法继续使用，尽管 Hans 已是归化英国公民。主持人将这一问题类比为源自德国的王室将家族改名为 Windsor；1915年，Wilsdorf & Davis 更名为 Rolex Watch Company。
Britain 随后对腕表进口征收33%的关税。1916年初，Britain 又禁止进口黄金和白银，重创了 Rolex 的模式：把瑞士机芯和贵金属表壳运入 Britain，在当地组装，再频繁转口出口。
Rolex 于1916年将组装业务迁到 Aegler 所在的 Bienne，并于1919年将 Hans 和总部转移到 Geneva。中立的 Switzerland 带来的不只是更低的贸易摩擦：“Rolex of Geneva”可以分享瑞士制表业的声望，同时服务曾经的敌对国家，而无需选择某个民族国家立场。
约在1919–20年，Hermann Aegler 买下 Rolex 约15%的股份，并加入由 Wilsdorf、Davis 和 Aegler 组成的董事会；Rolex 和另一家客户 Gruen 也持有 Aegler 的权益。关系进一步收紧，但生产当时仍未完全排他。
8. 瑞士分散式工艺体系既创造卓越，也埋下暴露点
Geneva 的制表地位可以追溯到宗教改革。John Calvin 禁止奢侈装饰，打击了珠宝商，却为功能型腕表留下了空间；漫长冬季也有利于在室内从事高价值工作，而这类工作所需的实体空间很小。
逃离 France 的 Protestant Huguenots 将珠宝、金属加工和制表技艺带到 Geneva。Ben 用一句话概括这种组合：“法国美感与瑞士精准”——审美文化与精密工程的高效混合。
établissage 体系把生产拆分到由1–10人组成的工坊，每家只专注于游丝、表壳、齿轮或其他狭窄组件。数百年积累的技能带来非凡质量，但当石英表引入自动化规模经济后，这种依赖分散且昂贵劳动力的模式也会成为结构性弱点。
9. 准确性还不够，因为腕表会暴露在外部世界中
World War I 造成腕表需求爆发，但即便优秀机芯仍然十分脆弱。怀表藏在衣物内，而腕表会面对灰尘、湿气、撞击和水，任何一种因素都可能堵塞微型机芯，迫使用户频繁维修。
早期的“Hermetic”腕表通过把腕表装进第二层密封表壳来解决问题——有效，却笨重难看。佩戴者还必须每天拧开外壳、取出腕表才能接触上链表冠，这会再次让系统暴露于污染之中。
1925年10月，两名瑞士表壳专家为防潮上链杆和表冠申请专利。据称，Wilsdorf 会虔诚地阅读瑞士专利文件，他识别出缺失的关键环节，买下专利，并在 Rolex 至少3次内部尝试失败后将其设为 Rolex 独家技术。
最终的螺纹结构将底盖、中层表壳和表冠拧合成防水外壳。Ben 对 Wilsdorf 天才之处的判断非常准确：他不需要发明每一项突破，只需要在竞争对手之前识别、锁定并商业化正确的突破。
10. Mercedes Gleitze 让 Oyster 成为一场 spectacle，但限制条件仍然存在
Rolex 于1926年注册“Oyster”商标；密封外壳让这个名字直观易懂。公司准备每年在 Britain 投入超过1万英镑广告费。Wilsdorf 希望用一场足够有力的发布事件，证明只有 Rolex 拥有这种防护外部环境的系统。
1927年，British endurance swimmer Mercedes Gleitze 提供了这个机会。另一名女性虚假声称自己更快横渡 English Channel 后，Gleitze 举行了一场受到大量报道的“洗清名誉游”，Wilsdorf 为她配备了一枚 Oyster。神话需要加上限定条件：腕表是挂在她脖子上的链子上，而不是手腕上；她游了约10小时后停止，原定时间则约为15小时。
但腕表确实在水下持续了10小时并正常工作。第二天，Wilsdorf 买下 Daily Mail 的头版，宣布这是“制表业最伟大的胜利”，并宣传这款“挑战自然环境的奇迹腕表”——防潮、防水、耐热、抗震、耐寒和防尘。
选择女性与 Rolex 的实际市场相符，而不仅仅是进步主义式的营销安排。据称直到 World War II 前，女性型号数量一直是男性型号的2倍；主持人认为，如今 Rolex 的购买者仍接近50/50，尽管当代腕表爱好者的讨论明显由男性主导。
11. Rolex 的“testimonee”模式起初用于证明性能，后来变成身份认同
Gleitze 成为 Rolex 所称 testimonee 的原型，而不是传统意义上的 influencer 或短期品牌大使。这种关系的设计目标是终身绑定：成就者成为品牌历史的一部分，品牌也成为成就者公共身份的一部分。
这种证言最初用于证明工程技术能够承受压力，但后来承载了更多象征意义。Rolex 可以把腕表绑定到横渡、攀登、潜水、竞速或领导者身上，让客户购买一小部分属于那项成就的参与感。
Roger Federer 后来成为现代最纯粹的体现，但这种机制早在1927年就已存在：“人类成就”让技术可靠性在情感和社会层面变得可理解。
12. Oyster 必须自动上链，因为人类会破坏它的密封性
旋入式表冠只有在关闭时才能阻止水和灰尘进入。每天上链都要求佩戴者拧开表冠、暴露机芯，再一丝不苟地记得重新密封——这是对普通人行为习惯过于乐观的假设。
因此，自动上链机芯的重要性不只是便利，而是实现防水的最终条件。如果正常的手腕运动能够为主发条补充能量，用户就可以“设定后忘记”，让 Oyster 连续多年保持密封。
3个产品支柱相互强化：天文台级准确性让腕表值得信赖，Oyster 让它抵御外部环境，Perpetual 自动上链则保护 Oyster 免受自身用户的破坏。带来突破的不是某一项孤立功能，而是这套完整系统。
13. 机械表把物理材料转化成算法
主发条是一块机械电池：一条长金属带紧密盘绕在发条盒内，储存势能，现代版本可以储存约3天动力。若直接释放，能量会让齿轮系高速旋转并损坏，因此腕表需要精确控制的擒纵机构。
擒纵机构中的叉瓦在滴答之间摆动，让擒纵轮每次只前进一个齿。擒纵轮再驱动更宽的齿轮系；这套用机械编码的逻辑，可以在没有软件的情况下控制小时、分钟、秒、日期、星期，甚至更复杂的功能。
摆轮和游丝调节叉瓦。游丝反复储存和释放能量，摆轮每秒改变方向3、4、5或6次；精确的弹性、抗拉强度和惯性最终变成时间。经过 Rolex 认证的机芯每天的误差可以控制在约2秒以内。
简化解释或许只涵盖4个部件，但一枚成品腕表包含约200个部件。红宝石和蓝宝石充当坚硬、低摩擦的轴承；各组件要承受数百万次摆动，大多数 Rolex 可能可以运行约10年才需要保养。“这取决于金属的具体物理性质”——一门建立在普遍规律之上、已有500年历史的艺术。
14. Rolex 的静音陀轮取代了一个巧妙但有缺陷的前代方案
British 发明家 John Harwood 从儿童跷跷板得到灵感，设计了一个随手腕摆动、交替撞击表壳两侧的锤摆。取消表冠有助于防水，但这种机构会发出咔嗒声，无法手动上链，而且腕表停走后重新启动非常缓慢。
Harwood 选择授权知识产权，而不是建立一家规模化腕表公司；他的 British 专利显然广泛覆盖自动上链。Wilsdorf 想要自动上链，却拒绝采用他认为较差的实现方式；Harwood 于1929年破产，最终为 Rolex 清除了道路。
Rolex 的 Perpetual 陀轮可在任意方向静音旋转360度。一个带配重的半圆盘会随着手腕倾斜不断受重力下落，利用这种运动为阻力较大的主发条上链；早期的“Bubbleback”表壳略微凸出，以容纳新增机构。
与 Aegler 的机芯精度或授权而来的 Oyster 表冠不同，陀轮是真正由 Rolex 贡献的研发成果。其底层架构至今仍是制表业最主流的自动上链方式。
15. Oyster Perpetual 确立了 Rolex 持久的产品语法
1934年，Rolex 推出 Oyster Perpetual chronometer：精准、密封且自动上链。现代表盘上仍印着的这些词并非装饰性传说，而是总结了腕表要成为可靠日常工具之前必须解决的3个工程问题。
Rolex 加入 Rolesor，即钢和黄金的双色组合，并在约1931年开始使用五点皇冠标志。即便后来的审美标志也保留了功能出身：fluted bezel 最初用于增加摩擦力，以便旋紧表壳组件。
时机并不理想。大萧条和英镑贬值导致出口下降约三分之二，因此 Rolex 在 Paris、Buenos Aires 和 Milan 开设办公室，并探索 South America、West Indies、China 和 Japan。产品得到改善之时，较弱的竞争对手正在收缩。
Ben 强调，Omega 在1932年仍推出了被认为是首款专门设计的潜水表。Rolex 后来的品类主导地位不应掩盖竞争对手在技术上依旧强大；1936年，Rolex 终于获得 Aegler 的全部产能，终止对 Gruen 的供应，使两家公司在运营上不可分割。
16. World War II 让精准计时成为职业工具，也让 Rolex 保持政治灵活性
France 沦陷后，Rolex 与当时最大市场 Britain 隔绝。公司最终通过 Spain 和 Portugal、绕过 Gibraltar 运送腕表，部分恢复对 Allied 市场的供应，同时不放弃中立的 Switzerland。
与此同时，Italian 零售商 Panerai 赢得海军潜水合同，并要求 Rolex 代工腕表。当时的 Panerai 还是零售商，而不是后来那个著名制表品牌；Rolex 在推出 Submariner 多年前，就为 Axis 一方提供了其第一款真正的潜水表平台。
Royal Air Force 飞行员也佩戴 Rolex。航空飞行中的气压变化、黑暗、导航和同步任务，把腕表的重要性从 World War I 的战壕协调进一步推高：第二次战争让精确、耐用的腕表成为飞机、无线电、雷达和协同攻击技术系统的核心。
瑞士中立使工程师和技工能够继续生产，而交战国则把工业产能转向战争。Europe 满目疮痍地走出战争时，Rolex 面对一个显而易见的增长市场：繁荣的 America、返乡的军人，以及新的全球秩序。
17. Datejust 把 Rolex 戴到管理这套新秩序的人手腕上
为庆祝 Rolex 成立40周年，Wilsdorf 于1945年推出 Datejust 和 Jubilee 表链，这是第一款外观明显接近现代核心 Rolex 的产品。他据称考虑过用“Victory”命名表链，但瑞士同事拒绝了这个来自中立公司的暗示。
Rolex 通过3步布局策略纪念一系列天文台计时里程碑。第50,000枚送给瑞士战时领导人 General Henri Guisan；通过 Guisan，第100,000枚到达 Winston Churchill 手中；Churchill 接受腕表后，第150,000枚得以送给 Dwight Eisenhower。
Eisenhower 于1952年戴着黄金 Datejust 就任 US president。随后 Rolex 与 J. Walter Thompson 投放广告：“引领世界命运的人都戴 Rolex 腕表。”这是一个大胆的主张，但产品先被送到 Churchill 和 Eisenhower 手腕上，广告因此获得了可信度。
Cyclops 日期放大镜也形成了 Wilsdorf 自己的神话。据说他的第二任妻子 Betty 很难看清日期窗口；当一滴水让 Hans 手腕上的日期被放大时，他喊道：“我找到了。”主持人喜欢这个故事，同时也承认 Rolex 极其擅长把方便的轶事转化为企业传说。
18. André Heiniger 把护城河从性能转移到身份
André Heiniger 于1948年加入 Rolex，负责 South America，随后主导营销、引入 J. Walter Thompson，并在1950年代中期成为腕表业务负责人，最终接替 Wilsdorf。他面对的问题是：天文台级、防水、自动上链腕表已不再独特，数十家瑞士公司都能组装功能上相近的产品。
Heiniger 的答案是从腕表做什么，转向佩戴它意味着什么。公司还没有完全进入后来意义上的“奢侈品”运营阶段；它正在成为一套生活方式系统，围绕那些在人类能力边界上行动的专业人士展开。
1953年至1955年间，Rolex 推出 Explorer、Turn-O-Graph、Submariner、Milgauss 和 GMT-Master。把它们称作“professional watches”，而不是工具表或运动表，本身就是品牌策略：Rolex 始终拒绝归入他人的类别，更偏好难以定义的“Rolex way”。
19. 即使是 Rolex 的失误，也产出了可复用的产品架构
Turn-O-Graph 引入旋转表圈，但部分定位是帮助国际商务人士计算昂贵的通话时间。机构本身有意义；但“能在长途电话分钟数上省钱”的身份，不如潜水、探索或飞行那样浪漫。
Milgauss 与 CERN 工程师共同开发，可以保护机芯免受最高1,000高斯磁场影响，让科学家在强磁体附近保持准确。闪电形秒针和科学起源令人印象深刻，但可服务的专业市场很小；Rolex 后来停产该型号，直到2007年才重新复兴。
这些产品揭示出一种持久的开发模式：与可信的专业群体共同解决一个狭窄的技术问题，通过命名腕表让工程成果可见，再让更广泛的买家借用专业人士的身份，即便他们永远不会遇到那种真实风险。
20. Explorer 把一次并不完美的 Everest 关联转化成持久神话
Explorer 与 Sir Edmund Hillary 和 Tenzing Norgay 于1953年登顶 Everest 联系在一起，Oyster Perpetual 原型表参与了这次探险。Rolex 后来让两人都成为 testimonee，并把这次登顶嵌入型号起源。
主持人保留了不方便的事实：Hillary 更喜欢 Smiths 腕表，而 Smiths 似乎才是这次探险的官方供应商。Rolex 可能确实出现在登顶者的手腕上或背包里，但今天那套干净利落的故事，超出了现有证据能够确信重建的范围。
腕表本身符合使用场景：坚固、易读且没有不必要的复杂活动部件；在可靠时间可能关乎生死时，它被设计来承受压力、冲击和温度变化。Rolex 的营销把“差不多在场”转化成了定义登山腕表品类的关联。
21. Submariner 成为一个大过多数腕表品牌的 franchise
Rolex 在 Jacques Cousteau 受到全球关注之际推出 Submariner。Cousteau 是 scuba diving 的发明者，也是 The Silent World 的导演。Cousteau 和团队成员佩戴 Rolex，但双方没有正式合作；当时潜水表确实是追踪水下停留时间的必需品，而不是摆在潜水电脑旁的怀旧装备。
Sean Connery 在1962年的 Dr. No 中佩戴 Submariner，这与 Ian Fleming 的小说和 Fleming 本人的偏好一致。Connery 本来就是 Submariner 用户；直到 Pierce Brosnan 在1995年的 GoldenEye 中转戴 Omega，Bond 一直与 Rolex 联系在一起。最初，服装设计师称这一转变并非付费植入激励，但 Omega 后来支付了大笔费用。
这种匹配非常准确：Bond 可以潜水、拆除水下威胁，再戴着同一件物品参加优雅晚宴。Rolex 销售的不只是防水性，而是一个能在极致能力和高雅社交之间轻松切换的幻想。
Ben 认为，若与 Rolex 分离，Submariner 几乎足以成为一个独立的大品牌。它成为许多收藏者的第一块腕表，正是因为它定义了潜水表品类，同时几乎在任何场合都能佩戴。
22. 极限深度把浪漫放大到远超真实客户需求
Rolex 与法国水下公司 COMEX 于1967年共同开发 Sea-Dweller，服务饱和潜水员。氦气可能在高压环境下进入腕表，并在上升过程中造成损坏，因此 Rolex 增加排氦阀，并将额定深度提高到600米。
后来的产品继续推动叙事：Deepsea 达到3,900米，巨大的 Deepsea Challenge 达到11,000米。James Cameron 将后者固定在潜水器外部，带入 Mariana Trench；那里的人类手腕会被压碎，但腕表仍然保持走时。
Omega 在2019年技术上夺得深度纪录，其 Seamaster Planet Ocean Ultra Deep Professional 下潜约比 Rolex 多20米。主持人的笑点抓住了 Rolex 的品牌优势：Omega 也许拥有测量纪录，但如果问公众哪款腕表下潜最深，很多人仍会回答 Rolex。
23. GMT-Master 把 Jet Age 戴在手腕上
Boeing 707 和 Pan Am 的洲际航线创造了一个新问题：时差。Pan Am 希望飞行员能够持续关注出发地时间，因此 Rolex 改造 Turn-O-Graph 的双向表圈，将其标记为24小时，并增加一根每天转一圈的第4根指针。
GMT-Master 同时显示当地时间和出发地时间——这是实际的专业用途，对现代旅行者依然有帮助。双色表圈把白天和夜晚转化为色彩，爱好者则赋予它 Pepsi、Batman 和 Sprite 等昵称。
Space 提供了一个存在争议的续篇。NASA 为 Apollo 配发 Omega Speedmaster，但 Apollo 13 astronaut Jack Swigert 更喜欢 GMT-Master；Rolex 总部展示着他写给 communications executive René Jeanneret 的感谢，称对方让他“始终准时”。
Rolex 的传说称，NASA 最初接洽的是 Rolex，但 New York 的采购混乱让 Omega 获胜。主持人认为，这个故事需要听取 Omega 一方的说法，不能视为已确定事实——这也是 Rolex 缺乏公开解释、任由神话固化的多个场景之一。
24. Rolex 营销的是巅峰，而不是规格表
从1960年代中期开始，Rolex 与 Mark McCormack 的 IMG 合作，把终身运动员关系正式化。Arnold Palmer、Gary Player 和 Jack Nicklaus 成为高尔夫领域的奠基三人组；策略不是签下所有人，而是占据“最顶尖人群”中的大部分。
高尔夫和网球在多个层面都适合 Rolex：富裕的全球受众、可见的手腕、漫长的精英职业生涯，以及反复冲击带来的真实技术测试。Roger Federer 后来为 Rolex 提供了数十年的卓越、沉着和全球辨识度；在 David 看来，他比 Jordan 与 Nike 低一个层级，但仍属于体育领域最伟大的品牌关联之一。
1960年代末的“If you were”广告完成了从功能到愿望的转移：“如果明天你要驾驶 Concorde 飞行，你会戴 Rolex”，或者攀登、潜水、在联合国发言、扑灭油井大火。画面告诉客户，他们可以想象自己成为谁。
后来的文案更加直白：“当一个男人把世界握在手中，你会期待看到他的手腕上有一枚 Rolex”；“Rolex 永远不会改变世界。我们把这件事留给佩戴它的人。”腕表从佩戴者身上借来重要性，再把这种重要性转移给买家。
25. Daytona 需要20年和一只 Italian butterfly
Rolex 在 World War II 前就已经生产 chronograph，在 Rolex 的语言体系中称为“Cosmograph”。新增的秒表机制需要中央秒针以及独立的分针和时针计时盘，使本已复杂的机械表复杂度进一步倍增。
Rolex 于1962年成为 Florida Daytona International Speedway 的官方计时器，并在1963年将其 chronograph 更名为 Daytona。“Le Mans”也曾被考虑，但 Daytona 同时具备美国魅力、赛车、电影明星和国际易读性，不会遇到法语字母不发音的问题。
Paul Newman 于1969年在 Winning 中饰演赛车手，随后成为真正的赛车车手。他的妻子 Joanne Woodward 送给他一枚独特的 exotic-dial Daytona，刻有“Drive Carefully — Me”——这是名人、真实使用场景和私人故事近乎完美的汇合。
但一切并没有立刻发生。Newman 公开佩戴这枚表约10–15年，但 Daytona 仍相对便宜且无人问津；Rolex 已经把符号排列到位，但市场没有按计划作出反应。
26. Paul Newman 丢弃的腕表帮助创造了收藏市场
1984年，Newman 向女儿的男友询问时间。听说对方没有腕表后，Newman 把 Daytona 递给他：“拿着这块，它走时很准。”这枚表当时的价值或许只有约200美元，后来却在拍卖中以约1,750万美元成交。
约在1986年，Italian dealers 开始购买 Newman 所戴的那类 exotic-dial Daytona，可能是因为一张至今未找到的杂志封面。这些型号的价格飙升至约33万美元甚至更高；腕表也成为 Italian style uniform 的一部分：飞行夹克、不锈钢 chronograph 和经过培养的酷感。
Daytona 的 tachymeter 增加了功能戏剧性。用 chronograph 计时1英里后，停止的秒针会在表圈上指向平均英里时速，从60一直到接近400的赛车速度。
对 Paul Newman 配置的需求扩散到每一款 Daytona。几十年来，它一直是无法随手买到的型号；用现代经销商的说法，其他腕表可能还有 waitlist，但钢款 Daytona 只有“愿望名单”。主持人认为，这是把腕表视为可交易投资，而不仅仅是购买品的重要火种。
27. 石英把半导体经济学引入手工艺市场
在石英之前，Bulova 的 Accutron 用音叉提升准确性。它属于延续式创新：仍然需要数百个零件和熟练组装，因此成熟制表商有理由相信可以把它纳入现有生产模式，而无需放弃原有体系。
石英则不同。Bell Labs 于1927年制造出一座房间大小的石英钟；受电激励的晶体以精确的32,768赫兹振荡，集成电路将这些振动计数并降频到1赫兹，用于秒针跳动或数字显示递增。
Switzerland 看到了这项技术的到来。其电子腕表实验室据称在1962年就制造出石英天文台表，比 Japanese 的 Seiko Astron 早7年，准确性是机械表的2倍。正如 Kodak 面对数码摄影，既有企业缺乏商业化这项会威胁自身生产体系的技术的激励。
Seiko 于1969年推出 Astron。它最初的价格约等于一辆汽车，每天最多可能偏差5秒，并不像显而易见的行业杀手；但其半导体基础让它进入陡峭的性价比学习曲线：零件更少、劳动力需求更低、经营杠杆更高。
28. 石英危机在10年内抹掉了瑞士制表业的功能性市场
瑞士腕表产量从1945年的约1,900万枚扩大到1973年的近9,000万枚。但当时约有2,500家分散式企业生产这批腕表，其中约90%的企业雇员少于50人——这是一个技能高超但结构上缺乏弹性的网络，而且身处全球劳动力成本最高的环境之一。
到1979年，石英表更便宜、更准确。对几乎所有客户而言，机械表在功能上已经过时；剩下的实际理由，只属于偏好发条而非电池的特殊用户。
American semiconductor companies 尝试 LED 腕表，包括 Hamilton、National Semiconductor、Fairchild、Texas Instruments、Commodore、Intel、HP 和 Hughes Aircraft，但需要按键才能点亮的显示屏不够方便，商品化又抹掉了利润。常亮 LCD 和指针式石英表证明更优，Seiko、Citizen 和 Casio 则围绕它们建立品牌。
Hong Kong 于1980年出口1.26亿枚腕表，已经超过 Switzerland 此前的峰值。Japan 于1981年超过瑞士出口量，到1985年达到约3倍；瑞士在全球销量中的份额从历史高点约85%降至1980年的15%，企业数量也从1960年的2,000家降至20年后的不足500家。
29. 机械表通过放弃报时功能才得以存活
主持人拒绝使用“机械表复兴”这个说法。石英表永久夺取了腕表的功能性计时市场；随后出现的是一个围绕稀缺、工艺、美学复杂度、历史连续性、身份和地位建立的不同市场。
这一区分是本期节目的核心战略启示：应当根据客户要完成的任务定义市场，而不是根据外观相似的产品定义市场。Rolex、Casio 和 Apple Watch 都占据手腕空间、显示时间，但购买理由完全不同。
Mobile phones 后来连佩戴任何腕表的最低功能借口也消除了。机械表所有权变成一种纯粹声明：“戴上它时，我感觉自己是更好的自己。”人们仍然会着迷于工程，但对时间显示本身已经没有真实需求。
30. Omega、Blancpain 和拍卖行教会 Rolex 新市场需要什么
Omega 以声望领袖身份进入危机：moon watch、Olympic 计时器；直到1977年，它仍是全球第3大腕表品牌，仅次于 Seiko 和 Timex。它的应对方式是推出过多型号、大举投资石英、授权品牌，并采用因地而异的表壳——这是一种稀释全球产品一致性的恐慌反应，还要求公司掌握与自身文化不相容的能力。
感到挫败的 Omega 高管 Jean-Claude Biver 于1983年买下沉寂的 Blancpain，按通胀调整后价格约为16,000美元。他的名言——“自1735年以来，Blancpain 从未生产过石英表，未来也永远不会有”——把陈旧、不准确、劳动密集型这些弱点转化成稀缺且代代相传的工艺证明。10年后，他以约6,000万瑞士法郎卖掉公司。
Patek Philippe 和拍卖行提供了另一重信号。为纪念 Patek 1989年周年而设计的 Calibre 89 重达数磅、拥有约30项复杂功能，成交价超过300万美元，甚至登上 Saturday Night Live；稀缺和机械过度复杂，能够获得与计时效用无关的价格。
Rolex 可以从这3个案例中看到完整答案：不要跟随 Omega 进入成本结构错误的技术业务；用 Biver 所谓的“柔术式壮举”把过时转化为 desirable；再让拍卖行和 Italian Daytona 文化把稀缺型号变成金融和文化资产。
31. Rolex 保留石英作为选项，但把品牌故事押在机械上
Rolex 在石英研发上投入巨大，也销售过少量棱角分明、工程高度复杂的 Oysterquartz。它没有否定这项技术，而是在机械表需求彻底消失时，保留了追逐石英的能力。
据报道，André Heiniger 的判断极其商业化：石英最终会像晶体管、电视和计算器一样变得平庸，而机械表生产会因为合格劳动力而持续昂贵。“富人不需要一个报时仪器。他们想要的是一件戴在手腕上的美丽、独特物品。”
主持人讨论这一决定究竟有多冒险。当时的记者认为机械表注定灭亡，因此 Rolex 的坚持显得“胆大到近乎鲁莽”；但它的现金、品牌和独立性使公司可以等待2或3年，观察其他策略失败，并比负债累累的竞争对手更久地保留两条路径。
到1989年，Rolex 和 Patek 都报告创纪录销售。这个决定奏效了：Rolex 用“Superlative Chronometer Officially Certified”掩盖机械装置并不完美的计时能力，把劳动、历史和复杂性变成值得支付溢价的理由。
32. 基金会所有制把耐心转化为结构性优势
Wilsdorf 的第一任妻子于1944年去世，而他没有继承人，于是将所有权放入 Hans Wilsdorf Foundation。基金会的首要目的，是保证 Rolex 持续运营；在 Geneva 周边进行大量慈善分配的同时，它还拥有一个异常明确的使命：保护公司。
这种结构消除了股东按季度索取回报的压力。Rolex 可以承受连续3个疲弱年份，维持营销、避免打折并继续投资，而不必担心董事会因为下一年的利润率下滑就判定战略失败。
管理层连续性体现了这一点：约90年来，Rolex 只有3位 chief executives——Wilsdorf、André Heiniger 和 Patrick Heiniger。后来的短任期也交给了长期内部人士 Bruno Meier 和 Gian Riccardo Marini，维持了跨越数十年的渐进式决策文化。
早期唯一明显的生存风险，是 Wilsdorf 对 Aegler 下的超大腕表订单。此后，模式变得不那么英雄主义，却更强大：理性选择、卓越执行，以及让每项优势都能比竞争对手更久复利的组织结构。
33. Patrick Heiniger 把统一质量变成奢侈品价值主张的一部分
Patrick Heiniger 于1992年成为 CEO；他于1986年加入 Rolex，担任 commercial director。他的标志性动作是垂直整合，最终于2004年以传闻中的10亿瑞士法郎收购 Aegler，终结了 Rolex 与机芯制造商彼此独立的假象。
生产和供应地点从约30个减少到4座主要瑞士工厂。Rolex 收购表链制造商，将钢材和贵金属锻造纳入内部，并打造 Oystersteel 和 Everose 等专有材料。Rolesor 是钢和黄金的双色设计，而不是专有材料。
战略目的不只是提高利润率。每一枚 Submariner 都必须符合全球统一标准；Tokyo 的客户不能发现，名义上相同的型号在 New York 使用了不同表壳或较差的本地组装，而这种情况曾在其他分散式瑞士体系中出现。
参观过 Rolex 的记者描述了定制机器、几分钟内开合1,000次的表扣，以及按现有最大设备两倍宽度设计的走廊，以便未来机器能够通行。Ben 的结论随着证据改变：Rolex 可能确实是“质量最高的东西”，在不需要新的型号名称或营销活动的情况下，悄悄改进零件。
34. Rolex 利用金融危机扩大品牌差距
2007年的繁荣让昂贵腕表成为金融文化的一部分；2008年几乎一夜之间终结了这种需求。竞争对手削减广告、打折清库存以保护收入，伤害了刚刚按全价购买的客户，也向市场证明官方价格可以讨价还价。
Rolex 维持价格，并继续支持 US Open 等赞助项目。但逐字稿对 Rolex 自身广告的描述前后不一致：Ben 称它“将广告开支归零”，后文却说 Rolex 在危机期间“在美国市场大幅加码”营销。后一个动作与美国腕表热度在专业媒体和在线社区推动下的长期上升联系在一起。
2011–13年需求反弹时，同行再次反转方向，通过涨价把繁荣货币化。Rolex 则保持相对稳定：每年小幅涨价、控制产量，不试图攫取每一美元短期收入。
这种连续性保护了既有客户。15年或30年前购买的 Daytona 或 Datejust 仍然像今天的产品，因此拥有者会觉得自己做出了明智选择，而不是已经过时。Rolex 避免了消费电子行业那种“昨天的购买是个错误”的信息。
35. 第三方零售保留了效率，却腐蚀了稀缺性
Rolex 历来通过约1,500家授权零售商分销，近期称其为 Rolex retailers。经销商通常保留 Rolex 约33%–34%的 gross margin，略低于行业平均水平，同时接受对店面陈设、展示、营销和门店投资的严格要求。
这种安排让 Rolex 看起来拥有受控的全球零售网络，却无需承担员工、租约和运营负担。约16,000名员工可以支持约110亿美元收入，部分原因就在于珠宝商管理最后一公里；代价是 Rolex 往往没有客户姓名、邮箱和购买历史。
Ben 反驳 David 关于单一品类公司无法支撑自营门店的观点：1,500家 Rolex boutiques 很可能能够支付租金。David 的反驳是体验层面的：一个无法购买的6或7款产品组合会让商店变得单调，而多品牌珠宝商仍可以向失望的访客出售 TAG Heuer、Omega 或 Patek。
最具破坏性的地方在于，每个经销商都自行管理不透明的配货。买家可能把“waitlist”理解成有序排队，但它也可能意味着购买历史、名气、Instagram 粉丝数量或经销商裁量。Rolex 无需买下零售商，只要通过合同就能集中配货，因此这种对客户不友好的体验是可纠正的选择，而非不可避免的特征。
36. Rolex 收购 Bucherer，可能主要是为了不让别人拥有它
Rolex 于2023年以传闻中的50亿–55亿美元收购了合作一个世纪的 Bucherer，并将主要零售商 Tourneau 一并纳入。更好的客户数据、经济效益和配货控制都是真实收益，但主持人怀疑单独任何一项都不足以证明这个价格合理。
Rolex 本来就拥有压倒性议价能力：它可以把装修、数据共享或集中式等待名单作为年度授权条件。它也不需要为了阻止经销商销售其他品牌而拥有经销商；Rolex 带来的客流，正是许多珠宝商得以“飞黄腾达”的原因。
Ben 最有力的解释是防御性收购。Bucherer 家族没有继承人，Rolex 不敢冒险让 LVMH 或另一家上市公司收购这家零售商——后者掌握着可能占 Rolex 销售额约8%的可见数据，进而刺穿 Rolex 精心维持的秘密。
37. 稀缺性保护稳定，但 Rolex 可能放任经销商将其武器化
大约2015年以前，大多数 Rolex 型号都可以从展示柜购买；钢款 Daytona 是著名例外。因此，最近为了花7,000–20,000美元而请求购买许可，并不是永恒传统，而是爆炸式需求与刻意不动的生产系统发生的新碰撞。
主持人不认为 Rolex 主要通过扣留普通 Submariner 来制造炒作。管理层担心的是破坏下一个世纪的稳定：如果产量增加20%，周期反转后就可能被迫打折、销毁库存或缩减管理费用。Cartier 据称在2016年过度生产，并销毁了价值数亿美元的腕表——这正是 Rolex 设计制度时要避免的结果。
预计约在2027年新增的产能可能只增加10%–15%；一份未经证实的报道称，员工在2020–22年间每周工作6天。这些信号表明 Rolex 确实希望增加供给，只是拒绝追逐整个泡沫。
争议仍然存在：极端稀缺性能够筛掉短期倒卖者、保护残值，但普通钢款 Submariner “应该摆在货架上”，或者至少应该能在透明的2周排队后买到。长期保守主义不必等同于当地珠宝商的任意对待。
38. Tudor 让这面盾牌先替皇冠吸收实验风险
Wilsdorf 于1926年创立 Tudor，作为更便宜的兄弟品牌：采用 Rolex 风格的表壳和表链，但使用第三方机芯，历史上主要来自 ETA。如今 Tudor Black Bay 的外观可能接近 Submariner，价格约4,000美元；相近的入门 Rolex 可能从约8,000美元起。
David 最初把 Tudor 解读为释放销量的阀门，但 Ben 指出，其产量据称还不到 Rolex 的1%，“如果真有这么多的话”，因此这一解释不足以成立。大多数买不到 Rolex 的客户并不会简单地带走一枚 Tudor。
Ben 更有力的判断是：Tudor 是创新实验室。它可以测试陶瓷表圈、钛材质、非传统颜色和短期潮流；失败几乎不会伤害 Rolex，而经得住时间的想法可以在5或10年后进一步改进，再迁移到 Rolex。
“盾牌保护皇冠”：Tudor 可以向 Omega 和 TAG Heuer 发起挑战，让 Rolex 无需降低身段、追逐竞争对手，也无需拿6或7个经久不衰的 franchise 冒险。主持人把它类比为 Acquired 较小的访谈节目：提供一个有用的实验表面，却不危及旗舰业务。
39. Rolex 的经济特征体现了一个由单一超大赢家主导的品类
主持人估计 Rolex 年产量约110万–124万枚，收入接近110亿美元。Morgan Stanley 和 LuxeConsult 估计，Rolex 占瑞士腕表收入的30.3%；Cartier 和 Omega 各约7.5%，Patek Philippe 为5.6%，Audemars Piguet 为5%。
销量对比更加极端：Rolex 的腕表数量可能是 Patek 的约15倍、Audemars Piguet 的22倍。逐字稿给出的 Rolex 平均售价前后矛盾：开头约13.3万美元，后文约11.3万美元，因此这里不将 Rolex 平均值统一为单一数字。后文给出的其他品牌对比数字约为：Audemars Piguet 4.8万美元、Vacheron Constantin 3.8万美元、Patek Philippe 4万美元。
逐字稿后文称，Switzerland 每年只生产全球估计7亿–9亿枚腕表中的约1,700万枚——按销量计算约2%；但更早一处称为1.77亿枚。主持人在后续比较中使用的是后文的1,700万枚，但逐字稿没有解决这一矛盾。逐字稿还称，瑞士腕表占全球收入约45%，机械表占瑞士腕表出口约86%，并可能占全球腕表收入约40%。
Rolex 全球约有16,000名员工，其中约9,000人在 Switzerland。行业经营利润率估计接近29%；主持人怀疑 Rolex 可能接近40%，并以30%的收入份额拿走瑞士腕表业约40%的全部利润。
40. 未公开的资产负债表可能让 Rolex 成为全球最有价值的私人公司之一
如果 Rolex 每年产生30亿–40亿美元税前利润，并且数十年来持续积累数十亿美元现金流，那么在投资收益之前，公司可能持有500亿美元或更多现金；主持人反复强调，外部没有人知道真实数字。
基金会据称每年向环保、科学、艺术和 Geneva 直接援助项目分配约3亿瑞士法郎。这是一笔巨额慈善支出，但可能还不到公司年度现金创造能力的十分之一，因此慈善与资产积累可以并存。
Rolex 在 Geneva、London、Milan、Melbourne、Tokyo、Dallas 和 Manhattan 拥有重要房地产；位于 Rockefeller Center 附近的一栋新楼原定于次年完工。它甚至拥有 Omega 旗舰店所在的 Geneva 大楼，形成 Omega 向 Rolex 支付租金的滑稽画面。
行业估值倍数对应400亿–500亿美元至2,000亿美元的宽广企业价值区间。Porsche 的市盈率约15倍，Hermès 约60倍；考虑 Rolex 的增长、利润率和品牌管理，主持人认为在现金和房地产之外，超过1,000亿美元的估值完全合理；如果未来上市，公司甚至可能进入全球市值前50大企业。
41. Rolex 是带有 Hermès 式市场控制力的工业卓越企业
Ben 拒绝把 Rolex 称为工艺奢侈品的巅峰：Patek Philippe、Audemars Piguet 和其他高端制表商生产的物品更少、更复杂、价格也更高。Rolex 是“一件制造极佳、工程精妙、品牌惊人的工业产品”，而不是以可佩戴艺术品为主要定位。
David 对奢侈品的定义不同：奢侈品是对整个市场的管理，而不是价格最大化。Rolex 限制供给、拒绝机会主义折扣、保护二级市场价值、标准化每一件产品，并牺牲短期利润来控制客户体验；按照这个定义，它应当与 Hermès 并列。
两人的分歧最终在 Porsche 上得到调和。Rolex 以真正的规模销售高质量、高利润的工程产品；它保护6或7个核心家族，不断改进而非替换它们，让买家可以拥有一件现代版本——外祖父母可能曾经佩戴过的东西。
平均买家未必是在拿 Rolex 与 Patek 比较。James Dowling 的表述更尖锐：选择可能是购买 Rolex，还是升级 Porsche 911。Rolex “恰好处在不合理的边缘”，许多成功专业人士可以通过牺牲实现购买，但它仍然保有真正的愿望属性。
42. 品牌是可见力量，但规模和连续性让它具备防御性
在 Hamilton Helmer 的框架中，品牌是最明显的力量：Rolex 基本占据了消费者心智中的腕表品类。更困难的问题是，当 Omega 曾拥有相当甚至更悠久的历史、规模和技术可信度时，究竟是什么让 Rolex 建立起这一位置。
主持人没有找到经典意义上的反向定位。Rolex 的竞争对手本可以签约成就者、统一产品或宣传生活方式；但 Rolex 只是更早形成了连贯的产品与品牌系统，执行得更好，并且拒绝放弃。
一旦 Rolex 达到逃逸速度，规模经济就会进一步强化领先。只有一家约百万枚产量、拥有高利润率的制造商，才有能力支撑专有冶金、定制机器、极端测试、全球赞助和经销商议价能力，同时悄悄改进客户可能根本注意不到的零件。
公司最可能采用的解释，或许是“连续性”。除最初押注 Aegler 外，Rolex 很少依赖某个单一英雄式风险；结构和资源反复让它能够做出低风险、长周期的决定，而竞争对手被迫采取紧急行动。
43. Apple 扩大了手腕市场，却摧毁了机械表最后的功能借口
Apple Watch 于2014年推出，重创了低端瑞士机械表、时尚表和石英表。Fossil 的股价随后下跌约99%；一枚售价500–1,000美元的机械表，可能看起来像一台价格相同、但功能更差的智能手表。
但在高端市场，Apple 反而提供了帮助。数百万人习惯于在手腕上佩戴并花费数百美元购买一件物品；其中一小部分人随后进入机械表收藏。两个市场在动机上互补，即使它们争夺的是有限的手腕空间。
Ben 和 David 用 Apple Watch 接收通知、健身和监测睡眠，但用 Rolex 追求工艺和表达。比较两者价格几乎没有意义，因为人们购买它们都不是真为了报时：前者是传感器和通知终端，后者是承载身份的机械物品。
Rolex 的视觉语言甚至类似 Apple：命名的专有组件、精致的产品影片、产品从水中穿过的镜头，以及把规模化生产、高利润率、工程质量和巨额品牌溢价结合起来的工业体系。“亿万富翁有 iPhone；第一次买智能手机的人也有 iPhone。”在腕表领域，Rolex 独有地接近这种定义品类的广度。
44. Rolex 最后的技巧，是同时成为初学者的选择和鉴赏家的回归之处
刚进入腕表世界的新手，通常想要一枚人人都认识的 Rolex。爱好者随后可能探索复杂功能、艺术型独立制表商和更昂贵的品牌，最终却又回到 Rolex，因为它异常完整地结合了精准、防水、自动上链、可维修性和工业一致性。
Ben 的总结是定位：Rolex 同时放大销量和单枚售价这两个大数字，而不是让一个大数字乘以一个小数字。这正是一家公司能够销售超过100万枚腕表、维持多年需求并拿下瑞士腕表收入30%的原因。
David 的总结是市场重新定义：机械表如今承担的是“与过去完全不同的待完成任务”。Rolex 没有在计时能力上击败石英表；它成为成功、连续性和机械意义这一新生意中最优秀的运营者。
主持人的收尾判断异常赞赏 Rolex：“你研究得越多，就越喜欢这家公司。”Wilsdorf 似乎把极端的创始人投入，与对 Geneva、两任妻子以及一个旨在超越自身寿命的基金会的投入结合起来——这说明，要建立一个持久机构，需要一个人“极其……”，但不一定要无情或残酷。
核验说明
- 逐字稿给出了相互矛盾的 Rolex 平均售价（开头13.3万美元，后文11.3万美元）、相互矛盾的瑞士腕表销量（某处1.77亿枚，后文1,700万枚），以及相互矛盾的 Rolex 2008年广告投入描述（归零与在美国加码）；本摘要将这些矛盾保留为未解决状态，而未擅自选择单一数字。
All right, David, what’s on your wrist?
Currently on the wrist is my stainless steel, white-face Daytona that my dad gave me. I think it was still quite popular when he gave it to me, probably close to 15 years ago, but not like it is today.
A strong choice. I’m actually also wearing a Daytona that I’m borrowing from a good friend of the show, M [?].
I love it.
Fun fact for listeners: The watch that David is wearing is the one that I was wearing during the Morris Chang interview, when we wanted to foreshadow that this was our next episode.
And in front of me here, in my hand but not on my wrist, is my other Rolex that my dad gave me a long time ago: my Rolesor Datejust.
Dude, you’ve got to go one on each wrist.
Welcome to the spring 2025 season of Acquired, the podcast about great companies and the stories and playbooks behind them. I’m Ben Gilbert.
And I’m David Rosenthal, and we are your hosts.
All you need for timekeeping is something that happens at a constant rate and some way to count it. It could be sand in an hourglass. It could be a weight being pulled down by gravity on a grandfather clock, slowly turning the hands, moderated by the tick-tock of a pendulum. Or it could be a mechanical watch on your wrist, driven by a complex and beautiful array of hundreds of gears and springs.
Today, listeners, we tell you the story that we can’t believe we haven’t already told on Acquired: Rolex.
Rolex is a cascade of paradoxes. It’s one of the best-known brands in the world, but despite that, it’s one of the least-known companies in the world. They’re privately held by a charitable foundation, the Hans Wilsdorf Foundation, so they don’t have to disclose anything—and really, they never do. They’re one of the most secretive companies that we have ever studied.
David, check me on this: I think they’re even more secretive than IKEA or Mars.
Oh, yeah. It’s funny that the closer to the present day we get, the less we know.
Totally. They operate like an intelligence agency over there.
Like James Bond, one might say.
Or one might not say, listeners.
They make the watch that everyone wants to buy but nobody seems to be able to get, with famously long and opaque lists at retailers. Except, of course, over 1 million people a year actually do buy one, for an average price of about $133,000 each. That is, until you walk out of the store, and then they instantly become worth more—at least for a lot of the models these days.
To your point about the paradoxes of Rolex, this is one of the greatest ones. It is absolutely one of the very, very top-tier luxury brands in the world, and yet they also sell a lot of units. Hermès doesn’t sell 1 million Birkins every year. There are probably 10 times more Rolexes sold than Birkins sold, or at least on that order.
It’s a success built on the back of craftsmanship, engineering, and manufacturing honed and perfected over 120 years. It is one of the greatest brands in the world, built meticulously and so intentionally.
David, my favorite part of the paradox: This is the story of the most successful Swiss watch company, but it wasn’t founded in Switzerland or even by a Swiss person.
No, it was not. It’s a $10-plus-billion-revenue business performing a dead craft obsoleted by the digital world. They make a watch that can’t tell the time as well as my Apple Watch, or even a $10 Casio, for that matter. So what is going on here? How did Rolex become Rolex?
This is a story we’ve been giddy to share.
So excited.
One big disclaimer up front: Much like how our NFL episode wasn’t about football and our NBA episode wasn’t about basketball, this episode isn’t really about watches. It’s about the business of watches.
Yes. And if you want to know every time an episode drops, check out our email list. It’s the only place where we’ll share a hint of what our next episode will be, along with corrections, updates, and little tidbits that we learn from previous episodes. That’s acquired.fm/email.
Join the Slack and come talk to us about this episode with the whole Acquired community afterward at acquired.fm/slack. And if you want more Acquired between monthly episodes, check out ACQ2, our interview show, where we talk to founders, CEOs, and investors who are building businesses in areas that we’ve covered on the show.
The most recent one was a very fun interview we did with a friend of the show, Guillermo Rauch, the founder and CEO of Vercel, about the whole history of web-development frameworks and their latest and greatest product, v0—a startup within a startup that lets you code web apps from scratch in just English instead of a programming language.
Yes. Search ACQ2 in any podcast player.
And before we dive in, we want to briefly thank our presenting partner, J.P. Morgan Payments.
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All right, David. Where do we start our story?
1. Hans Wilsdorf Starts Over
We start, as is so often the case with these big old European companies, back not in the last century but even the century before that. On March 22, 1881, in Kulmbach, Bavaria, about 30 miles north of Nuremberg in present-day Germany, Hans Eberhard Wilhelm Wilsdorf is born to young Anna and Johann Wilsdorf.
You might say, “This sounds like a German name. Bavaria wasn’t a part of Germany, right?”
I was just going to get to that. Technically, it’s not Bavaria anymore. Technically, it is part of the German Empire, but this is a very, very recent development, as Count Otto von Bismarck had only just, 10 years earlier, convinced Bavaria to join forces and unite with Prussia to form the greater German state—the German Empire—in the aftermath of the Franco-Prussian War, where they battled Napoleon III over in France.
But as far as young Hans and his family are concerned, they’re Bavarian. They don’t identify with this Germany thing. This is foreign to them. They are also Protestant, not Catholic, which puts them in the great minority in Bavaria at the time.
I say all of this deep European history for 2 reasons. One, because it’s sort of a fun story and calls back to our Hermès and LVMH episodes, and it’s going to call back very directly to those episodes in a minute here. But also, I think it’s important to paint the picture of Hans.
Even from birth, he’s this consummate outsider. He doesn’t really fit in with any sort of national or religious identity in either the established or changing European order at the time. He doesn’t really have a country. He doesn’t really have a religion or a people. He sort of floats between the seams of Europe, which Rolex itself is going to do, as we shall see, in a very big way.
Now, back to young Hans and his family. His father, Johann, came from a line of successful ironmongers, and very likely Hans was destined to go into this business as well. However, when Hans is 12 years old, tragedy strikes, and both his father and his mother die within a couple of months of each other. So he’s orphaned.
Ben, this should sound familiar.
Oh, yeah. Louis Vuitton and Hermès. This is absolutely freaking nuts. The founders of arguably maybe the 3 biggest and most significant luxury brands in the world today were all orphans from the 1800s.
This is wild. I wonder how much of a statistical bias there is here. If we were studying anyone from this era, how many of them would be orphans because of disease and war and all sorts of stuff? Just lots of people died for lots of reasons.
Yes, totally true. But it’s just so interesting, right? These brands—much less so Rolex, but Hermès and Louis Vuitton—are so steeped in European history and the tradition of the nobility, but it’s actually these orphaned outsiders that founded them.
I think it’s a great point. Rolex doesn’t share that heritage at all. This is not steeped in nobility. This is not an artifact, like a leather bag or a saddle, that any kings ever had.
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.
In the wake of this tragedy, Hans and his brother and sister are placed in the care of his uncles, and the uncles decide that they are going to sell the family ironmongering business to fund sending Hans and his siblings off to boarding school.
I see.
Hans would later write in this amazing document that is essentially his autobiography. It’s the first volume of a 4-book set that the company published in 1945 for the company’s 40th anniversary, the Ruby Jubilee. Hans writes:
“Our uncles were not indifferent to our fate. Nevertheless, the way in which they made me become self-reliant very early in life made me acquire the habit of looking after my possessions, and, looking back, I believe that it is to this that much of my success is due.”
So Hans goes off to boarding school and becomes an excellent student there. He excels in math, and he also excels in foreign languages, particularly English.
While he’s there in boarding school in Bavaria, he meets a friend who is from Switzerland and develops an interest in that country. He no longer really has any family ties or anything to Bavaria anymore and doesn’t really care about Germany. He’s like, “Oh, great. Switzerland seems like a good place. I’m going to go live there when I graduate,” which he does.
He moves to Geneva and finds work there, first for a large pearl merchant. This business was buying raw pearls from fishermen and then selling them to the famous Swiss jewelers there in Geneva. Then he joins another local trading company in an adjacent industry to the jewelry business, a firm called Kuno Korten.
Kuno Korten turns out not to be in just any industry as far as Switzerland goes. Besides banking, they’re in the watch trade.
You need something to bank.
Exactly. A country can’t just have banking as an industry. It needs a real economy to build banking on top of.
Exactly. You start with jewelry and watches, then you get into banking.
Kuno Korten is actually a major player in the watch trade. They are not watchmakers; they are watch exporters. They are facilitating the trade of all these best-in-the-world Swiss watches out of Switzerland and into other countries around the world.
At this time—this is the late 1890s—Kuno Korten is doing about 1 million Swiss francs’ worth of business a year. I don’t know exactly what the Swiss franc-to-U.S.-dollar exchange rate was in 1900, but today the Swiss franc is stronger than the dollar. It’s about 1-to-1; they’re pretty close. So call it $1 million of business a year in the 1890s. They’re big. They’re a big player.
It’s important to remember, too, that it wasn’t like watches were this little corner of the Swiss economy. Exporting watches was a huge part of the Swiss economy and a huge employer in the nation.
Yes. Now, when we’re saying “watches” here, it’s important to note what watches were at the time. They weren’t something you wore on your wrist. It was not wristwatches, because basically Hans and Rolex hadn’t invented that yet.
They didn’t exactly invent it, but they hadn’t popularized it yet.
We’re talking about pocket watches.
Yes, that’s what the industry was at this time. Part of the reason is functional. Pocket watches were bigger, so the movement needed to accomplish a certain amount of precision didn’t require as tiny tools. You had more margin of safety in bigger watches.
Whenever anyone tried to make a watch and put it on the wrist at this point in history, it was usually fragile, really inaccurate, or actually worn more as jewelry. They didn’t call them wristwatches; they called them wristlets, and they were mostly worn by women.
Wristlets. We’ll get more into that later.
I know you’re chomping at the bit to give the technical explanation of the crazy human craft and engineering that goes into watches. It’s amazing. It’s so unbelievably cool.
But back to the Hans story for the moment. The job that young Hans gets at Kuno turns out to be pretty pivotal for him and the future of Rolex. He is a secretary, which means that he’s answering letters from clients all around the world and then responding and coordinating with them. Remember, he’s really good at languages, and his best language is English.
He’s coordinating with most of their clients in the British market, in the United Kingdom, and he sits at this really interesting choke point of the whole industry. He understands how all the producers are laid out and how the whole value chain works on the Swiss side of things. He’s seeing the market prices and price action happen for all different types of watches from different makers, different parts, and so on.
But he’s also getting to know the buyers in Britain. These are not individual people. These are retailers. These are the jewelers in Britain. These are the distribution points for watches.
He’s getting the perfect business, market, and strategic background, along with distribution relationships, for going on to ultimately found Rolex.
But it’s not just that he falls in love with the business of watches there. He also falls in love with the objects and watches themselves, and with their performance.
He starts this habit of taking home batches of pocket watches at night and running his own tests for accuracy on the products that Kuno Korten was trading in. He would set them all at the same time and let them go overnight, then check them in the morning—how much they had diverged from one another and how accurate they were.
The legend goes that one day he gets the idea that he’s going to take 3 watches that he’s found to be quite accurate in whatever recent batch he’s testing and get them tested at the local astronomical observatory. He wants to have them measure these watches according to the strict observatory timekeeping tests, which are also called chronometer tests.
If you’ve ever heard the term “chronometer,” a chronometer is a timekeeping piece—it could be a watch, a larger clock, or all sorts of devices—that has passed these astronomical-observatory tests for being accurate enough for celestial navigation.
Yes, David, I’m looking down at this Daytona right now, and it says, “Rolex Oyster Perpetual Superlative Chronometer Officially Certified Cosmograph.” A lot of words in there that we haven’t gotten to yet.
At the moment where we are, we’re at “chronometer officially certified.”
Yes.
Today, this is like, “Oh, cool. That’s cute. Your mechanical watch is officially certified that it keeps good time.” Back then, this is critically important. Celestial navigation, if you’re involved in anything in shipping—the maritime trade—is critical. If you have a bad timepiece, you’re going to go to the wrong place because you’re using it for navigation.
To your point, observatory chronometer certification—no one’s doing it for my pocket watch that I can set to the local church bell whenever I need to reset it. But young Hans has this idea. He goes and does it, and these 3 pieces that he takes, these pocket watches, pass the test and get certified as chronometers.
He takes them back to his bosses at Kuno, and they’re like, “Whoa, let’s slap that on the tin.” It’s this aha moment for Kuno, and then soon the rest of the industry realizes that chronometer certification on pocket watches helps them move product.
The other thing to realize here is that we’re in an era where having a watch is super important. It’s not a fashion accessory; it’s not a nice-to-have. Without a pocket watch, if you’re leaving your house and moving about in the world, you’re lost. It’s almost like not having your phone today. You feel like you’re floating. It’s very uncomfortable.
Totally. It’s even more than you’re saying. Pocket watches are also like smartphones today in that they’re fidget devices. If you’re out in the world and waiting in line, or you don’t know what to do with your hands, or you’re in a socially awkward situation, you take your pocket watch out. You open the clasp. This is what people did. It was just so ingrained in everyone’s day-to-day existence, just like a smartphone is today.
It’s an essential tool for moving about the world, which explains how it was such a huge industry that moved the needle for the nation of Switzerland, how there were businesses that could be exporting $1 million worth of watches over 100 years ago, and why there was so much attention being paid to it. It’s not a random accessory. It is an essential piece of life—a tool.
Totally.
After working at Kuno for a couple of years and liaising with the British market, in 1903 Hans decides, “I’m good at English. I like London. I might actually want to move there.” So he moves to London at age 22 and goes to work for another watch company there in London.
Locally, we actually don’t know the name. I don’t think anybody has ever found it.
You and I read probably 5 books between us, and it wasn’t in any of them.
He works there for 2 years and writes:
“Two things struck me most forcibly about my new employers, this British watch company: on the one hand, their commercial competence, and on the other hand, their lack of specialization. I soon gained confidence in myself and, in 1905, at the age of 24, decided to set up in business alone, feeling that my training and education had prepared me.”
So he strikes out on his own and starts his own watch-importing company there in London. But remember the specialization piece. That’ll come back in a second.
Hans is out on his own. There’s one problem, though: In order to do what he wants to do—which is import Swiss watches and sell them directly under his own banner, where he makes and keeps the profits there in London—he needs some capital in order to finance the buy.
You’ve got to place the order.
Exactly. Through his lawyer, he gets connected with a local man in London named Alfred James Davis, who has some money to invest. They meet through the lawyer, hit it off immediately, and decide to go into business together.
2. Wilsdorf And Davis Is Born
Thus, in 1905, Wilsdorf & Davis Limited, the world-famous merchant watch-trading firm, is born.
And none of you know Wilsdorf & Davis. However, Wilsdorf & Davis Limited is Rolex.
As we shall see.
It’s often said that if you read anything about the history, people will tell you, “Oh, well, Davis was Hans’s brother-in-law. He married Hans’s younger sister, Anna.” That is true, but I believe that didn’t actually happen until after Hans and Alfred went into business together. I think Anna met Davis through Hans.
Really, it is Wilsdorf’s company. It’s kind of funny that Davis’s name is on it.
I get the sense that Davis is mostly capital.
He’s there a little bit, but it’s almost as if Atari, instead of being Atari, were Bushnell & Dabney. That’s the equivalent here.
I think that’s right. Obviously, they get closer over time as they become family when Davis marries Hans’s sister, but I think this is Hans’s business. He’s running it. Davis trusts him.
What is the business doing? The business plan, when they get going, is to do what Hans has been doing his whole career at this point: importing the highest-quality Swiss-made watches in the world into the London market, where there is high demand for them.
They’re not selling directly to consumers, right?
No. Just like back at Cuno Korten, the buyers are the retailers. They’re the jewelers. No end consumer had any idea who made their watch at this point in time.
They would walk into the retailer and say, “Give me a fine Swiss watch, sir,” and the retailer would sell it to them. The retailer would take one out from the case. You’d look down at the face of the watch, and the face of the watch would have the retailer’s name on it. You were just trusting that the retailer bought a good watch from some importer, who bought a good watch from someone on the Swiss side, who managed to create a good watch by putting a movement in a case and putting all that together.
There’s a little bit of detail in there. Sometimes the importer would import a fully built watch. Sometimes the importer would just import a movement, and then import a case separately, and then put them together themselves.
This was the craziest thing that struck me: The retailer is the brand on the watch at this point in time.
Yes. There is no brand for the product.
Wilsdorf & Davis is occupying the spot in the value chain where they’re importing the watches and then selling them to retailers to brand.
Yes. You said something there that’s really important. There were kind of 2 ways that this would happen. You would either import fully finished watches from Switzerland—a whole product, so to speak—and either a trading firm like Wilsdorf & Davis would do this, or Cuno Korten would export it. Maybe the retailers would buy directly from Cuno Korten if they were big enough.
If they were big enough.
What Wilsdorf & Davis are doing is saying, “Hans knows, through his time at Cuno Korten, all the best movement makers and all the best case makers.” He operated one click up the value chain, aggregating on the Swiss side.
Now that he’s operating down on the importer level, one click down the value chain, he’s like, “I can still aggregate all these producers and start building a watch myself.”
Yes. He’s not making anything, but he is assembling the finished products. That was part of the value that he was adding to the industry.
This is probably an important time to say that there is so much lingo in the watch industry, and we’re going to do our very best on this episode to demystify it.
“Movement,” in lay terms, is the whole inside that makes the watch tick and drives the hands.
Not the dial, right?
Correct. No dial, no hands, no case, no glass front. The movement is the critical piece.
That’s the hard thing. The case is important, the dial is important, and the hands are important, but that’s all aesthetics. As far as performance goes, it’s 100% movement.
It’s like semiconductor production. If you’re a movement maker, you’re TSMC here.
Exactly.
So, David, who is he importing movements from, and how does he meet said movement maker?
That brings us to the other half of the Rolex equation.
Jean Aegler, based in Bienne, Switzerland—which is in the mountains of the north of the country, importantly, not Geneva—runs this movement workshop up in what is then a tiny little town in the Swiss mountains.
It turns out that he’s actually a generational talent at watch-movement making. In particular, what he’s really, really good at is making movements that are accurate and on par with the highest-quality, most precise, most accurate movements on the market, but are also much smaller in size. He’s making miniature movements.
Hans had gotten to know Jean when he was working at Cuno Korten and thought, “This guy’s a diamond in the rough up there in the mountains. He’s as good as or better than any movement maker, and he’s making these miniature movements before there’s a real market.”
It’s almost like he’s just doing it because it’s the hardest thing he can think of.
Totally. It’s like his hobbyhorse: “I’m going to push the limits of human achievement. How small can I make this thing?”
Yes. I think it was probably known and respected in the industry, but he wasn’t a large player. Hans is like, “This guy is my ticket to differentiation here.”
“I’m keeping his address so I can write him a letter when I start my own company.”
So here we are at the beginning of Wilsdorf & Davis. Hans is importing these movements from Aegler, putting them into cases, and selling his watches there in the United Kingdom. This is 1905.
This relationship carries through for the next 99 years, until Rolex finally buys Aegler in 2004. Aegler 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.
That’s correct: “We will make your movements.” A handshake deal for 99 years.
For everything Rolex becomes.
This is the basis of it. They aren’t exclusive yet, so in 1905 they’re placing their first order, and there’s already a little bit of a dance that’s starting to happen.
Of course, the front of the watch, on the dial, is unsigned, so the retailer can put their name there. This is already starting to rub Hans the wrong way. He feels like these are his watches. Why does the retailer get to put their name on them?
He goes to Aegler and says, “The ones we’re going to sell, these are Wilsdorf & Davis watches. I understand you made the movement, but we’ve got to brand it somewhere.”
He gets Aegler to buy into the idea that on the movement they’re going to put a W&D, and then, inside the case back, for whoever they’re buying the case from, they also inscribe W&D.
That’s the state of things in 1905 and the first few years after: There’s a W&D on the inside case back and on the movement, but not on the face of the watch.
That gets into the type of watches they’re making here. We’re still in pocket-watch land. The wristwatch vision hasn’t really entered Hans’s brain yet, even though Aegler’s specialty is these small, miniature movements.
Remember what Hans said about his earlier British employers and their lack of specialization. He continues in his autobiography, talking about how he decided to do things differently here at Wilsdorf & Davis:
“I undertook the financial side and management of our concern from the very outset. Our success was assured by our fundamental policy: to trade only in specialty horological products, and especially in new lines. The first specialty we adopted was the traveling watch, called a portfolio watch, cased in the finest-quality leathers. This line I immediately placed in large quantities on the market, the range covering every possible style and design.”
Again, we’re not at the wristwatch yet, but he’s saying, “The way that I’m going to succeed and break through here is through differentiation.”
To do something different. As we always talk about, the most important thing to build a huge, successful business is to do something different and unique that people have to come to you for and can’t get from the commodity markets.
That doesn’t necessarily mean you’re right.
He wasn’t right with traveling watches. We don’t tell the stories here on Acquired of all the people who wanted to do something extremely unique and different, and it wasn’t what the market wanted.
It’s the classic: You have to be contrarian and right.
I don’t know. Reading what Hans wrote there, maybe he was right. It sounds like the traveling watch was successful enough.
He probably thought it was a success at the time.
So, as legend has it, one day shortly after starting the company and focusing on these travel watches, Hans is reading an account of the Second Boer War in South Africa.
Ben, I never knew that all my European history lessons would be useful.
I tweeted this yesterday. Who knew that our livelihoods would depend on AP European History someday?
That’s right. Anyway, Hans is reading an account of the Second Boer War in South Africa, and he reads that the soldiers who had fought had worn wristwatches so that they could coordinate their movements and their firing times, along with all the troop movements, even while holding guns.
Do you know why, in particular, this war had them wearing wristwatches?
I don’t. I just assume that the technology had progressed enough, because wristwatches existed at this point in time. They just weren’t thought of as serious watches.
That was part of it. Climate.
Oh, yes. Of course. They can’t wear their jackets, so they can’t reach into their pockets and grab a pocket watch.
Exactly. They can’t wear a jacket, and it’s hot there.
Climate is going to become important again in the development of the wristwatch industry. The soldiers and officers would use these wristwatches because, even though they weren’t as accurate as pocket watches, you probably weren’t wearing a jacket.
Even if you were wearing a jacket, if you’re engaged in battle, you’re not going to stop, put your gun down, take your pocket watch out of your vest, open the case—
The axis upon which you evaluate value is different from when you’re hanging out on the streets of London.
Exactly.
Supposedly, as Hans is reading this, like a bolt of lightning, he has the key insight: “It’s not just soldiers. There are actually a lot of people in the world who could benefit from having an accurate timepiece on their wrist that they could just turn their wrist and look at instead of taking out a pocket watch.”
The funny thing is, he calls Aegler—or maybe he writes to Aegler. I don’t exactly know. He places the largest order in Aegler’s company history: several hundred Swiss francs for a bunch of these tiny movements.
The great irony of this whole thing is that he’s kind of wrong. The time was not right for wristwatches yet. The Boer War was not the shove that the world needed to say, “Whoa, wristwatches.” The soldiers come back from the Boer War, and it’s still kind of the wristlet era. There isn’t really enough inertia to make it take off everywhere.
It’s okay because Wilsdorf & Davis is still this small company, so they don’t need that big of a market to address to feed the needs of the business. But it would be another 10 years before World War I happened and created this incredible, unfortunate tailwind: “Oh my God, we need tons of wristwatches now.”
There does start to be a market for serious timekeeping wristwatches, particularly in the far reaches of the empire—Australia, South Africa, of course after the Boer War, and especially India.
These are places where you’re probably not wearing a jacket or a vest very much, so this is the initial seed of the wristwatch market for Wilsdorf & Davis.
Hans is a true believer at this point. This is going to be the future, way beyond just the empire. People in Britain are going to want this too. It’s obvious to him why you wouldn’t want to have to reach into your vest to bring out your pocket watch.
He’s a zealot.
He’s a total zealot.
So he’s like, “All right, we’ve got this killer product. We’re first to market. We’re basically going to invent this whole market. We need a name for the product. We need something that’s going to make consumers know to ask for this product. We need to coin the term for the industry.”
He’s inspired here by the Kodak camera, which by then had been around for a while and was made not by the Kodak Company but by the Eastman Company.
Kodak, I believe, was the first invented product brand name. It was a name that meant nothing.
Yes, I think that’s right. It intentionally meant nothing. It was easy to pronounce, easy to say, easy to remember, worked in any language, and was 5 letters long with a great sound to it.
Supposedly, Eastman came up with the name Kodak with his mother using an anagram set. He said there were 3 principal concepts he was looking for in the name: It should be short and easy to pronounce, it should work in any language, and it should not resemble any other name or be associated with anything else.
Hans takes inspiration from this and decides that he needs a Kodak for his new wristwatch. He writes:
“I tried combining the letters of the alphabet in every possible way. This gave some hundred names, but none of them felt quite right. It was one morning, when I was sitting on the upper level of a double-decker bus, powered at that time by horses, driving alongside Cheapside in London, that a good genie whispered in my ear: Rolex.”
He’s good at mythmaking. Many startups are named this way today.
Totally.
A few days after this fruitful journey, the Rolex brand was filed and then officially registered in Switzerland by Wilsdorf & Davis.
This is a brand name, not yet the company name. It’s Rolex by Wilsdorf & Davis. They trademark it in Switzerland, and a couple of years later they trademark it in London.
It’s short, easily pronounceable, memorable, and the same in every language. But there’s one other characteristic that makes it perfect: When you hear “Rolex,” you can kind of think about rolling the crown of a watch—the little knob sticking out from it that you use to wind the clock.
It channels that, and the X kind of has a timekeeping feel to it. It almost sounds like the tick-tick-tick-tick-tick of the Rolex. Maybe you’re turning the crown until it hits the end or something like that. You can intuit the type of product that would be called Rolex.
Yes, totally.
Hans is like, “Great. I’ve got my Kodak name. I’ve invented this new category. How am I going to legitimize this with customers?”
“I have one cool trick.”
Exactly. “I’m going to do the one cool trick, just with wristwatches instead of pocket watches.”
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, which is a big deal because people simply did not think these things were accurate before. Without Aegler, they kind of weren’t.
Exactly.
Getting certified at the School of Horology in Switzerland is nice and all, but this isn’t an astronomical observatory. It doesn’t carry the same weight as something like the Royal Observatory there in England.
So Hans and Aegler keep working on these products, refining the movements. Aegler is getting better and better at making wristwatch movements that are truly great.
1910 goes by. 1911 goes by. We’re here in 1912. Wilsdorf asks Aegler specifically, “Can you produce a wristwatch capable of achieving an observatory timekeeping certificate?”
And, as you mentioned, the Royal Observatory.
Aegler says, “Let me try,” and gets to work.
It still takes a couple more years. He works for 2 years, and then finally, in early summer 1914, Hans takes one of Aegler’s movements to the Kew Royal Observatory in England for testing.
Kew is not only a well-respected observatory for astronomical and specifically timepiece testing there in England; it’s where all the marine chronometers for the British Royal Navy are tested. The British Royal Navy at this point in time—we’re talking about the British Empire—is the greatest navy in the world.
It takes 45 days. They put it through the ringer to make sure that this marine chronometer is going to get the sailors where they need to go.
Even more than that, it is, of course, affiliated with the other great observatory in England, the Greenwich Royal Observatory.
Which was where Greenwich Mean Time was invented. We’re talking about probably the most important timekeeping institution in the world.
Have you been there, David?
No. I want to go. Have you?
I spent some time in London one summer, about 15 years ago, and went and spent a day there. It was amazing.
We’ve got to go.
We’ll stop by on our way to Geneva.
Perfect.
Again, here we are. It’s early summer 1914. Hans has submitted this wristwatch movement to Kew, and after the 45-day, rigorous battery of tests, on July 15, 1914, it comes back. It has passed and receives the first Class A Precision Certificate, known as the Kew A certificate, ever awarded to a wristwatch.
It causes great celebration and fanfare all around the world, except that it is 3 weeks after World War I starts.
Between the time that Hans brought the watch in for testing and when it finally gets the certification, Archduke Franz Ferdinand is assassinated in Bosnia by a Serbian nationalist. The whole rats’ nest of European alliances gets triggered, and the next thing you know, the whole world is at war.
On the one hand, nobody cares about watches. There’s a war breaking out. On the other hand, everybody cares about watches.
Exactly. 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. The whole world cares about wristwatches.
It is also very directly the worst thing, because all of a sudden anti-German sentiment in Britain goes through the roof.
Totally insane. I didn’t realize this until now. Do you know why British people call German shepherds Alsatians?
Because they don’t want to call them German. It’s because of this.
There’s all sorts of horrible propaganda. It’s utterly ridiculous because the British royal family was German.
Queen Victoria married Prince Albert, and Prince Albert was a German prince. The whole British royal family was German. This is when they changed their name to Windsor, because before Windsor their family name was Saxe-Coburg and Gotha, which wasn’t going to play well when you were at war against the Germans.
No, no, no, no. Speaking of things that aren’t going to play well when you’re at war against the Germans, you’re not building a strong consumer brand in Britain in 1914 called Wilsdorf.
If the British royal family is rebranding and changing its name, Wilsdorf & Davis also needs to rebrand, despite the fact that at this point Wilsdorf is a naturalized British citizen.
And feels no affiliation with Germany. He really doesn’t ever in his life consider himself German.
Totally.
This is the birth of the company Rolex. In 1915, they rename the whole company after the brand name, and the Rolex Watch Company Limited is founded.
I was about to ask you how this becomes a Swiss watch company. The answer is definitely right around this time in World War I, but before we tell that story, now is a great time to thank our presenting partner, J.P. Morgan Payments.
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All right, David. How are we getting to Switzerland? How does Rolex become a Swiss watchmaking company?
3. Rolex Becomes Swiss
Obviously, the anti-German sentiment was part of it. If that were the only factor, Rolex probably would have stayed in England.
At this point, Wilsdorf is a naturalized citizen, his wife is British, and the company is called Rolex—or they’re working on it. It would have been fine.
However, the other reason that World War II in Britain is bad for business for the new Rolex company is that Britain imposes a 33% import tax on watches early on in the war.
That’s going to kill your importing business.
It’s interesting. I read that and thought, “Yes, it’s going to make it tougher. It’s crippling.” But you could still run a business. You could figure out how to pass those prices along to customers. That’s often what happens in the case of a tariff.
One year later, at the beginning of 1916, the British government puts the nail in the coffin. They completely ban the import of all gold and silver.
They make it impossible for Wilsdorf to build this business based out of Britain, because a lot of times he’s actually exporting the watches for sale in the colonies. He’s importing a movement, importing a case, or maybe taking a local British case, putting it together, making a Rolex watch, and then shipping it out somewhere else.
He’s sitting there thinking, “I can’t get these precious metals, and I’m paying out the nose for these movements. This is stupid to run my business here.”
I assume that, then as now, Rolex’s margins in precious-metal watches are way, way higher than in non-precious-metal watches.
It’s insane. A $10,000 watch becomes a $30,000 watch when you add gold or platinum or whatever.
The delta is like Apple selling memory.
Exactly.
Interestingly, in the hype from 2020 to 2022, the precious metals were actually easier to come by as a customer because there was so much less demand to buy a $30,000, $50,000, or $100,000 watch. Those would kind of be lying around while the steel ones were flying off the shelves and there were huge lines for them.
Totally.
On the back of this, in 1916 Rolex first moves the assembly of the watches to Bienne in the Swiss mountainside near Aegler. It makes sense: They set up an office and basically say, “You’re making the movements next door. We’re going to put a case on them right here.”
And then they can export from Switzerland to countries all over the world and not go through Britain first.
Ultimately, after the war, in 1919, Hans moves both himself and the official company headquarters to Geneva, where, of course, it still is to this day.
Even to this day, design, sales, marketing, and I think final assembly all happen in Geneva, while production of the movement still happens up in the mountains in Bienne.
It’s super interesting. It would make sense if you’re Britain to throw on some tariffs to finance your war. You’ve got to finance it somehow.
At the same time, it also makes sense if you’re a business operating in Britain in this period to say, “I’m moving to Switzerland.”
Yes. But there’s this alternative reason to move the business to Switzerland, and Hans knows it. If he’s going to build a globally renowned watch company, he wants to do it in Switzerland.
This company becomes Rolex of Geneva—not just Rolex.
I’m going to look at this watch. All the way down at the bottom: “Swiss made.” Don’t forget it.
Or look at a Patek Philippe. “Genève,” right there on the face of every Patek Philippe watch. They are extremely proud of this Geneva heritage.
I love it.
Geneva.
Geneva.
I’m going to hear about that one, aren’t I?
It’s okay. We’re ugly Americans here.
So the question is, why does Geneva have this prestige? Why is Switzerland an amazing place for watchmaking?
Ben, will you indulge me and let me wind the clock back?
I actually thought you were going to start the timeline for this episode back in the 1500s. I was shocked that you only started it in the 1800s.
Perhaps this is a good time to tell the history of watchmaking in Switzerland.
By all means.
A lot of this comes from Mark Bridge, who is the founder and CEO of At Present, a marketplace for unique jewelry from independent artists. Mark is one of David’s and my very best friends, and, insanely coincidentally and luckily for us—and for you, listeners—he wrote his master’s thesis 20 years ago on the Renaissance of the Swiss watch industry.
Amazing. He sent me a copy of it. We’re going to link to it in the show notes. It’s awesome to have this resource available so conveniently from one of our best friends.
All the way back in the 1500s, Geneva was a center of activity for the Protestant Christian world, led by John Calvin. If you know anything about Calvinism, it’s very focused on moral uprightness: the Protestant work ethic.
One of these tenets was banning frivolous things like ornamental jewelry. Local goldsmiths and jewelers instead focused on watchmaking, since watches serve a real function in the world and were not frivolous. It was sort of an exception to the rule.
There’s also the human element. Human beings are human beings, no matter what rules you impose on them.
Life finds a way. Status always finds a way.
That’s 100% right.
You’ve got the rise of Calvinism, along with the religious reason that was causing this local pivot of industries. You also have a climatic reason. There are long, harsh winters, and an industry that could be done indoors, in a small physical footprint, was perfect.
If you’re going to pick a profession out of a hat to have in a mountainous country with long, cold winters, this is a great one. Especially because it’s so valuable at this point in time, you can become an important player in the European economy by making something that you can make in your climate.
Third, there’s a cultural reason. Ben, are you familiar with the term établissage?
No. Are you sure it’s supposed to be Swiss and not French?
I was going to say, I’ve been to Geneva and other places in Switzerland, but I know very little about its culture and history. Talk to me about établissage.
I know exactly what you’re talking about, but I didn’t know the word.
It’s Swiss for “establishment,” basically. What établissage means in this context is that it’s a system—an economic system—that they established in the area of the Jura Mountains, where very small independent companies, often 1 to 10 people, could focus on something small, like a single component. Then you’d have dozens of these small companies work together to create the finished product.
It’s almost like a distributed manufacturing system.
This is where Aegler comes from. This is why he has the workshop in the mountains.
Exactly.
With this specialization of labor in small companies, you could get really, really good at your tiny part—making, say, hairsprings, which we’ll talk about later, or other essential elements of watch movements.
These tiny companies, by artisanal craftsmen, were very labor-intensive, but they got really, really good and pretty efficient at making their one thing.
That’s the backdrop of how the Swiss are producing things.
Lastly, in the late 1500s, the French had been rising as a watchmaking powerhouse. When the balance of power changed in France and the Catholics came to power, French Huguenot refugees who had talents in jewelry, metalwork, and watchmaking fled to Geneva.
These are the Protestants who got kicked out of France.
Exactly. The Protestant safe haven of Geneva—if they brought their watchmaking expertise, great. If they didn’t have watchmaking expertise and were jewelers or metalworkers, that was all they could really do, since you can’t make anything too shiny and too off-putting.
Yes.
This is how Switzerland gets the reputation as the watchmaking capital of the world.
Exactly. It creates centuries of momentum, especially in this distributed établissage system of how Swiss watches were made.
I think about it as this beautiful blend of French beauty and appreciation for aesthetics and Swiss precision.
It sounds like Switzerland itself is a blend of French beauty and German precision.
I love it.
That’s definitely one big reason why Hans says, “We’ve got to move Rolex to Geneva to participate in this tradition, as we’re now going to be selling to the world.”
But the other reason is that, after World War I, they’re like, “We’re going to be selling to the world now. Britain is still going to be our largest market, likely, but every country in the world is fighting—or at least every European country has troops fighting—in World War I. They’re all seeing the benefits of the wristwatch. This is going to be way, way bigger after World War I. I need to be able to serve the whole world.”
So they want to be in a neutral country.
Yes. He’s just experienced Britain putting on these tariffs and thinks, “I didn’t really have a market for Rolexes in Germany before, but if I did, I wouldn’t have been able to sell in Germany. I don’t want that to happen in the future. Who’s not going to put on a big tariff to finance a war?”
Switzerland.
Switzerland.
Super interesting.
You know what else happens in 1919?
Now that we’ve set up shop next to Aegler for putting their movements in our cases, it’s time for us to get a little bit closer.
Rolex and Aegler arrange a deal where, in 1919 or 1920, Hermann Aegler, who is the son of the founder, Jean, buys shares in Rolex. The purchase price is unclear; it seems to have been lost to history. He owns about 15% and joins the board.
The board is Wilsdorf, Davis, and Aegler.
There’s a second part of the deal, which is that Rolex actually buys shares in Aegler too. This one is less talked about, but there are 2 companies that are big purchasers of the movements: Rolex and Gruen. Both of them are watchmakers. Gruen, I think, was American, and was Aegler’s second-biggest client. Both of them bought Aegler shares as well.
Rolex didn’t focus on the American market until after World War I.
Correct. So the companies are a little bit more joined at the hip, but it’s still not an exclusive partnership.
Like we said before, I believe that even though there’s this equity relationship, there’s no formal contract governing the provision of movements here.
It’s crazy.
But it’s in both their best interests to keep it going.
Of course.
So here we are. World War I is over. We’ve had the ChatGPT moment, shall we say, for wristwatches. All these soldiers from countries all over Europe and the world have experienced the power of having an accurate watch on their wrist. They go home to their civilian lives and want to bring it into their lives.
Who makes the best and most accurate wristwatch chronometer timepieces in the world?
Rolex.
And so, of course, they’re going to buy Rolex.
No, that’s not true.
No, that is not what they’re going to do.
It’s Omega, right?
I think it’s lots of companies. Basically, the market went from the very early adopters in the British dominions and far-flung reaches of the British Empire to this giant, Europe-wide market.
Most of those people had no idea about Rolex. “Rolex? I don’t know what Rolex is. I’ve never heard of such a thing before.”
I think everybody was rushing in. Even though Rolex had this history and probably had the best product, it just didn’t matter. There was massive demand for this new product category, of which there were many good options.
There was massive demand, but it was kind of like search engines before Google. The product still kind of sucked. Even really— in many ways, Rolex probably kept better time than competitors. They were Kew-certified.
Kew-certified.
Right. But if you’re wearing a wristwatch, it’s a lot more exposed to the world than your pocket watch. You talked a little bit about how complex and delicate these movements are, especially in a miniature movement that goes into a wristwatch.
Any dust, water, or humidity that gets into the case is going to jam up your movement, and your watch is going to fail.
I finally had this aha moment when I was doing the research for this episode. I had always thought it was ridiculous. You go look at the watch market now—Rolex and all the other brands—and they’re like, “Waterproof to 50, 100 meters.” I was like, “What? There’s no depth that exists.”
Watch aficionado, ladies and gentlemen.
Exactly. But why? Who cares?
I realized, “Oh, this is why waterproof watches are a big thing.” It’s not about water, necessarily. It’s actually dust more than water. It’s dust, humidity. If you’re waterproof, that’s shorthand for saying you’re element-proof. You’re durable. Nothing is going to get inside this watch and mess up your movement.
If water can’t get in, you could submerge it in 100 meters of still water and no impurities would get in. You could throw it to the bottom of the ocean and it’ll keep time forever, and so on. I thought, “Oh, this is why this is important.”
Servicing was also a big deal. You had to get your watch serviced often, and the more dust and humidity and stuff got in there, the more likely it was that it might break entirely.
Exactly.
4. The Oyster Makes Rolex Waterproof
I like where you’re going, Ben, because there are basically 3 big pillars of what makes a Rolex a Rolex—or, frankly, what makes a good mechanical watch a good mechanical watch.
There’s precision. There’s “officially certified chronometer,” and there are the other 2.
What’s the second one? Oyster?
As I said, there’s demand for these products, but they all suck because they’re not element-proof.
“Oyster” is Rolex marketing speak for waterproof. There’s this great race among high-end Swiss watchmakers to produce a waterproof wristwatch.
A Swiss case-making company called Francis Baumgartner, which supplied cases to Patek and many other great watch brands in the early 1920s, invents a new case style called the Hermetic.
Your Rolex doesn’t say Hermetic.
The way they do it is by putting the watch case inside another watch case.
That’s right. This is the weird hinge thing.
It’s like a scuba helmet. They take a watch and put it inside a scuba helmet that is waterproof.
It works. It makes watches water- and element-proof. But it’s big and ugly, and most importantly, you have to unscrew the outside case, break the seal, and take out the inside case every day in order to wind the watch.
Because famously, the crown is the most dangerous entry point for water or dust. You can’t leave the crown sticking out of the Hermetic case, or it would defeat the purpose.
Exactly.
That’s the state of play through the early 1920s. Rolex gets into this too. They buy cases from Baumgartner and make these Hermetic watches. You can find them in collector’s books. There’s a hinge on the left side and a little clasp on the right side that goes around the crown.
Then, this is so awesome: It’s like a Forrest Mars moment from Hans.
In October 1925, 2 Swiss case makers file a patent for a moisture-proof winding stem and button.
Just like you’re saying, it’s the crown of the watch—the winding stem and the button—where water and dust are most susceptible to getting in.
Rolex has been dying to solve this problem. They had at least 3 failed attempts to create a waterproof seal in-house. The whole industry had.
Hans, like Forrest Mars, reads the Swiss patent-filing register religiously every day. He’s reading all of the patents being filed in Switzerland.
He sees this patent get filed and says, “This is it. I’ve got to get this right now.” He goes to the 2 people who invented it, buys the patent, and makes it exclusive to Rolex.
This turns out to be the key component in making a waterproof mechanical wristwatch that doesn’t need to be put in a jar.
When I was reading this, I thought, “Rolex didn’t actually invent the Oyster case. They just watched someone else do it.”
That doesn’t really matter. They saw that it was absolutely essential, and Wilsdorf jumped right on the opportunity. He said, “Who cares who came up with the idea? We’re in the position to commercialize it and roll it out across all of our watches. I need to strike first.”
This is his genius. He’s not a watchmaker, and Rolex was not a watchmaker until it finally bought Aegler in 2004.
Hans’s genius is that he sees the vision for where the market is going, recognizes talent and innovation, and pulls it together and makes it commercially viable and marketable.
In a way, that patent got filed in the Swiss patent register. Any of the other watch companies that desperately wanted to solve this problem could have seen it too, but Hans jumped on it.
He’s really like the Mark Zuckerberg of his time.
That’s a good analogy.
“Hey, Instagram. I’m going to copy Stories from Snapchat.” Hans doesn’t care. He’s like, “I’m going to market this and make it the most successful thing possible. I don’t care that we didn’t invent it. It needs to be in our product.”
That’s interesting.
For anyone who’s a watch person wondering what was actually in the patent, it’s essentially for the screw-down crown—the Hermetic seal on all Oyster watches going forward.
Of course, it’s named the Oyster because oysters seal when they’re closed. It’s a perfect thing to name it after.
Everything works on a threaded system. The back of the watch screws into the middle part of the case, and the crown can be screwed out as well. You have these airtight, watertight threads that keep any impurities out.
In July 1926, Hans and Rolex register the product name Oyster. This is really, really big.
He’s like, “I am going to go big. Everybody in the whole world needs to know the Rolex name. They need to know that we are the exclusive owners of the Oyster system.”
He prepares to spend more than £10,000 annually in Britain alone just on advertising for the Oyster models.
The dude knows how to build a brand. He’s already naming components. He’s not just marketing Rolex; this is Rolex with Oyster technology.
Yes. Really, the parallels to Apple are incredible.
Four hours from now, I was going to make that point.
He’s prepared to spend all this money. He’s got the product, but he’s like, “We need a big launch. I don’t want to just buy regular ads in the newspaper.”
So, in 1927, toward the end of the year, the timing is right. That brings us to a young British woman named Mercedes Gleitze.
Gleitze was a secretary and bilingual stenographer in London who happened to have a unique hobby: endurance swimming in the River Thames in her spare time.
Which is insanely cold.
Very cold. I assume that even back then it was quite polluted, but so be it.
She was so good at endurance swimming that apparently she would swim for 10 hours at a time in the River Thames. In October 1927, she decided she was going to attempt to swim across the English Channel.
Maybe even more cold.
Definitely cold. Definitely pretty choppy.
She did it. She became the first British woman to successfully do so that year in October 1927.
However, a couple of days after she completed her swim, another woman emerged and claimed to have also swum the channel, but to have done it faster. It turned out that this was actually a hoax, and Mercedes knew it was a hoax.
In order to prove herself, she decided to stage a vindication swim that was hotly covered by the press.
She’s doing this vindication swim after she’s already spent 15 hours swimming across the channel. She’s still alive at this point.
Hans says, “This is our moment. This is exactly the spectacle we need.”
He comes up with the brilliant marketing stunt of getting Mercedes to do this vindication swim while wearing a new Rolex Oyster model.
What Rolex doesn’t talk about these days is the footnote to history that it wasn’t actually on her wrist. It was on a lanyard around her neck.
Yes, it was on a small chain that she wore around her neck. Nonetheless, it’s an incredible stunt.
Nothing ruins a good story like data. Let’s just smooth it over like the truth.
This is still featured prominently on the Rolex website today. Mercedes’s photo is everywhere. It doesn’t matter. At the end of the day, who cares if it was on her wrist or not?
She also doesn’t actually make it across the channel, but that doesn’t matter either.
That’s the other crazy thing. I think it was an especially cold or especially choppy day. She makes it 10 of the 15 hours.
The design of the test is a little arbitrary.
It’s a watch that wasn’t on her wrist and didn’t make it all the way from England to France, but it was still in the water for a long time—for 10 hours. Pretty good product testimonial, shall we say?
A testimony.
So after this event happens, the next day Hans buys the front page of the Daily Mail newspaper, a nationally syndicated newspaper in Britain at the time.
I didn’t realize you could do this back in the day. You could actually buy the front page as an advertisement.
I think it was common. It was a while before the front page was actually dedicated to editorial, and early on it was very common for it to be a full-page ad.
Hans does this and proclaims the success and announcement of the world’s first waterproof wristwatch, fully enclosed in its own case without a second hermetic seal around it, and the triumphant launch of the Rolex Oyster.
This is how Rolex tells the story. After I’d heard it told a few different times, I expected to see this full-page ad written in a certain way.
It is kind of buried. Maybe this is what the advertising style was back in the day, but the big words are not “Watch survives English Channel swim.” The big words are “Rolex Oyster.”
It says, “Rolex introduces for the first time the greatest triumph in watchmaking.” I still don’t know what it is. Then I see a picture of a woman’s face. Then it says, “Send for this colored brochure. It’s free,” telling you to send in for more information.
There are 4 sketches of the different watch faces you can get for the Rolex Oyster. Then it says, “The wonder watch that defies the elements.”
There are words all over the place. You finally get to the tiniest text in the entire thing—maybe the second-tiniest font, in this little corner—and it says, “Moisture-proof, waterproof, heat-proof, vibration-proof, cold-proof, dust-proof.”
Either Rolex hadn’t found its groove in advertising yet, or maybe people just read a lot more words back then. If you put this up today, our TikTok-ified brains would be like, “Don’t care. Next.” There are way too many words, and they completely bury the lead that she did a channel swim with this thing and it survived.
It’s hard to know how much of this is just the state of the art in advertising at the time versus Hans designing and writing all of that himself.
One of his maniacal-control things was that, I believe up until he died—or pretty close to it—he did all the creative for all the advertising.
I didn’t realize that.
We’ll get to it later, but they do bring on the J. Walter Thompson agency before he dies. Probably the rest of the company is like, “All right, all right, Hans, we need to professionalize a little bit here.”
That’s when they get extremely good, in the 1960s.
Extremely good, yes.
I think it’s fair to say there are 2 interesting takeaways here. One, they hadn’t found their groove in advertising yet. Two, advertising hadn’t really been professionalized in a way that we would see in the Mad Men era.
We’re still before World War II. We’re not yet in the modern world.
The other thing that’s really interesting is that something about this was sitting with me too while doing this research. The Mercedes Gleitze moment is a major moment: the first brand ambassador of Rolex.
It’s interesting that the moment and the person Hans chose for this launch was a woman.
Super interesting. The wristwatch was a ladies’ item before World War I, but after World War I, I would think the big market is men’s.
In this era, Rolex was still primarily a ladies’ product. The men’s market was growing, but if you look at their product catalogs, really up until World War II, ladies’ models outnumbered men’s models 2-to-1.
These are the little Prince watches.
Yes. Hans’s vision was that wristwatches were for everybody—men and women. But it’s interesting that they were really women-focused.
We did a little more digging and asked some friends, and even to this day I believe the market of buyers for Rolex watches is basically 50/50 men and women.
That’s insane. I would have guessed otherwise, especially because much of my research was lurking on the Rolex and Watches subreddits, which are a very particular type of dude. It comes across as a very male thing.
At least the way that I’m exposed to watches, it’s very male-focused. You read the amazing journalism about watches on Hodinkee and the whole world around appreciating watches. It’s kind of male-focused.
It’s like a Porsche 911.
It’s amazing that Rolex’s history indexes so heavily to women, and that even today they move a lot of units to women, even though that’s not where I come across Rolex in my day-to-day.
It’s certainly not where the enthusiast market is focused.
Yes. But it’s one of the really unique things about Rolex. So many of the other really high-end watch brands—with Cartier as an exception, I think—are really men’s brands.
Whereas Rolex really is 50/50.
Amazing.
So that’s Mercedes Gleitze. That’s the Oyster story, and it really is a huge watershed moment for Rolex and for the wristwatch industry.
She’s effectively the first Testimonee. I’m not sure they had come up with that terminology yet, but this is something they would lean heavily into as their means of marketing in the future.
They would hate you calling it a brand ambassador.
Yes. “Partner” is what Rolex calls them.
No, I think it’s “Testimonee.” I’m pretty sure it’s this very particular word that they wanted to invent and have to themselves.
It’s different from influencer marketing. It’s different from the way someone appears in an advertisement for a perfume for a 5-year deal.
I think it’s this very long-term-oriented thing: You are a part of the brand, and you are a part of the brand for your lifetime.
Roger Federer is the purest embodiment of this today.
That is to come in the future.
Back to the product: Oyster was huge, but it had a problem. The key to making it work was that you didn’t have to have the whole scuba jar that enclosed the whole watch, but the crown had to screw down.
The crown had to screw down like a jar.
That meant that when you went to wind the watch, you had to unscrew the crown, pull it out, wind the watch, expose it to the elements, and then screw it back in.
If you know anything about humans, probably at least half the humans on the planet are not going to be fastidious about screwing their crown back in.
There are 3 pillars to what makes this a breakout product and enables the wristwatch to have its iPhone moment. That third pillar—being perpetual, being self-winding—is the magic.
Yes. These things are so intrinsically linked. I didn’t realize until getting so deep into the research that self-winding watches are kind of cool on their own.
Before, I was like, “Waterproof, whatever. Why is that important?” Self-winding seemed cool, but how hard is it to manually wind your watch? That’s what people had been doing with pocket watches for centuries.
It’s actually because it’s tied to the Oyster and the screw-down mechanism. If you forget to screw your crown back down, you lose the element-proofness of the Oyster.
Oh, okay.
I can’t wait. The way that the Perpetual movement works is totally genius.
Before we do that, we want to thank good friend of the show Fundrise.
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5. Perpetual Completes The Product
Back to Oyster, and leading into the need for self-winding and the Perpetual element of Rolex: If you can create a self-winding wristwatch, all of a sudden the element-proofness of the Oyster works fine for everybody, because nobody actually has to unscrew the crown.
You never have to pop out the battery and put in another one. You never have to charge your Apple Watch. You name the analogy.
You just set it and forget it. You walk around all day, your watch keeps perfect time, it’s waterproof, and you never need to wind it.
It sounds like an amazing product. Who doesn’t want that? That’s a Steve Jobs-like product right there.
Before going into the nuance of how Rolex’s particular self-winding mechanism works, I think this is a good time to explain how mechanical watches work at all—what the key components are.
Frankly, it’s like alchemy. One of the coolest things I’ve ever done to prepare for an Acquired episode was go learn how a mechanical watch works at a high level.
You need 2 major components to make a timepiece. First, a way to store energy. Second, a way to release that energy at predictable and precise intervals.
You could do that these days with a battery and electronics, but imagine doing it without a battery and without electronics.
Exactly.
On that first one—storing energy—there is something called a mainspring. Imagine a foot-long, skinny piece of metal that you wind real tight and stuff into something called a barrel.
This looks like a film strip that’s stuffed inside a film canister. You’d see a stack of canisters in a projector room at a movie theater. That’s sort of what you should imagine: a really tightly wound mainspring inside that barrel.
Interestingly, to your point, David, this kind of begs the question: What is a battery?
Yes. Technically, that is a battery. It’s a mechanical battery, since it’s a way to store potential energy to be used later.
Amazingly, the way a mechanical watch works these days is so energy-efficient that the mainspring can store on the order of 3 days of potential energy to tick the watch forward.
Amazing.
Moving on, this obviously isn’t sufficient on its own. If you just released the mainspring in the barrel, it would spin around really fast, make all the gears spin, and let all the energy out at once.
It would break the watch.
You need something to control the energy release from the mainspring and do it in slow, fixed time intervals—all mechanically. You need something to make the watch tick.
Hey-o.
Watchmakers call this an escapement.
An escapement in a mechanical watch has 2 key components to harness that potential energy from the mainspring. One is a pallet fork—we’ll come back to that—and the other is something called the balance.
How does a pallet fork work? A pallet fork looks like a little T, with teeth on the edges of the top of the T, and it moves back and forth—a tick and a tock—like the pendulum of a grandfather clock.
As it flicks back and forth, it moves all the gears on the watch forward one tick, or one beat.
There’s this element several steps down the chain where it’s actually usually the hour wheel that then drives all the other movements off of that.
It depends on the watch and what complications are in it. The important thing to know is that when one beat happens, when the pallet fork enables everything to move forward one beat, what it’s really doing is allowing what’s called the escape wheel to turn one click. That drives whatever else is in the gear train for that particular watch.
Gotcha. Some watches have just hours and minutes. Some watches have hours, minutes, and seconds. Some watches have the date, day, moon phase, what you had for breakfast, and so on.
With these complications, which are the features, it’s really amazing because you can think through what the algorithm would be to make such a complication. When you think through it, you’re thinking like a programmer: “If this, then that. If the date is 31 days—”
These are not computers.
All of the logic is encoded mechanically in a gear train.
It’s beautiful.
So where we left off is our escapement, where we’ve got the pallet fork. It’s this little T, and it’s a tick and a tock. It flicks back and forth and moves the gears all forward one tick.
How do you get it to tick back and forth? What is the mechanism by which this pallet fork goes tick-tock, tick-tock, tick-tock?
This is where we introduce a big hero of the whole mechanical-watch story: the balance.
The balance also has 2 parts. There’s a balance wheel and a hairspring, and these 2 things are stuck together around the same center point.
Picture the wheel of a bike. That would be the balance wheel, kind of like a hula hoop. The gears go around the same axle on a bike. You can imagine that you’ve seen the rear wheel of a bike in this analogy. Those gears are the hairspring, and the outer wheel is the balance wheel.
That’s what this component looks like.
The hairspring looks really cool. It is another coiled-up piece of metal, although it’s much looser and more fluid than the tightly wound mainspring we talked about earlier. Unlike everything else, which is incredibly tight inside a watch, this component—the balance—almost floats and moves with very low friction.
It’s weird, because it’s the opposite of everything else in the whole watch.
The way it works is that the hairspring spins really fast in one direction. For anyone who has ever taken a spring and tried to uncoil it, you know it only goes so far, and then it wants to go back to its resting position. You try to go the other direction and tighten it a little bit, but that doesn’t work either, and it wants to go back to its natural resting position.
That’s what’s happening here. You’ve got the hairspring spinning really fast in one direction, and then the energy it has stored is overcome by the mechanical resistance of unwinding the spring. So it stops, and then it spins really fast in the other direction.
This cycle goes back and forth, spinning back and forth, ticking and tocking, and flicking the pallet fork back and forth to continually release one little interval of energy and one little advance of the whole gear train.
It is beautiful.
Amazing. You can totally see why, for the right kind of person, this is like a Porsche 911. It’s catnip. You can’t get enough of it.
Exactly. You end up with fancy names and proprietary things that Rolex makes in the far future, called a Parachrom hairspring, which has these amazing renders, animations, and videos of how it works. It’s gorgeous.
This happens really fast. It isn’t like I just described, where you go really far in one direction, run out of energy, and then come back. This happens 3, 4, 5, or 6 times per second, depending on the watch.
If you hold a watch up to your ear and hear these beats, that’s what you’re hearing. The pallet fork drives that whole gear train, releasing energy that powers the hands and all the other complications—the day, the date, and so on—at exactly the right pace.
When you take a step back and look at it all, the craziest thing is that it depends on the exact physical properties of the metals used. Time is literally kept by the physical laws of the universe: elasticity, tensile strength, inertia, potential energy stored by specific materials.
They have this down to such a precise science today that watches keep time—certified chronometers keep time—within 2 seconds per day.
Bonkers. It’s awesome.
I just named 4 parts of a watch. There are 200 parts. This is an oversimplification, but it’s the general concept of how a watch works.
The other parts are also amazing. There are jewels in the watch because all of these gears need to turn on things that create friction, so you need extremely low-friction surfaces.
It turns out that rubies and sapphires milled into little nuts are the best way to do that. There are actual gemstones inside your watch being used for a mechanical purpose.
Jewels can be very hard minerals, and you don’t want these things to wear out. When you’re slapping something back and forth 6 times per second, you want to make sure that it lasts.
Most Rolex watches don’t need to go in for service until every decade or so. It’s crazy that these things just don’t wear out.
The Daytona I’m wearing right now, I don’t think, has ever been serviced, and it’s at least 15 years old, if not more than that. It keeps time perfectly.
It’s so cool. This is a 500-year-old art. The idea of a mainspring that applies energy to an escapement with a balance wheel and a hairspring to oscillate back and forth isn’t new.
Every piece of digital technology—and most analog technologies—was invented after this.
To bring us back to the Perpetual on your Rolex watch, you can imagine that adding this element of self-winding to the insane complexity that has been developed over centuries, with extreme tolerances already in these watch movements, is not exactly trivial.
You can’t just code it up in software.
No. In particular, remember the mainspring that stores 3 days’ worth of energy inside the barrel, all coiled up. There’s a ton of resistance on that.
If you pop open the crown on a watch and turn it with your thumb, it’s kind of hard to turn. If you’re going to come up with a self-winding mechanism, you need some way to use mechanical advantage to wind something that’s already wound really tight even tighter.
So here we are in the late 1920s. Around this time, a British watch inventor named John Harwood comes up with an automatic system for watches.
Interestingly, that wasn’t his end goal. He was trying to create a waterproof system, just like Rolex was.
The way he went about it was to say, “As we were talking about, it’s the winding crown that’s the weakest link in the waterproofness of the watch. What if I just start by eliminating the winding crown? Can I do that?”
Supposedly, he gets inspired one day by watching children play on a seesaw, and that gives him the idea for his method: something called the hammer system, where a hammer goes up and down and hits different ends inside the watch as the wrist moves around.
You could imagine that turning a crank—crank, crank, crank, crank.
He invents this system, and just like his Swiss counterparts who invented what became the Oyster system under Rolex, he patents it.
What he decides to do is, rather than making a watch out of this, he’s going to create a company that is just an IP company and license this self-winding IP to other watchmakers.
He does that, and a couple of watchmakers take him up on it and incorporate it into their products.
However, it doesn’t prove too popular in the marketplace because, as a consequence of how he designed the system, the manual-winding capability and the crown are eliminated.
So if your watch stops, if you don’t wear it and lose the charge in the mainspring, good luck getting it going again.
You have to wear it for days or whatever just to get the energy back in there, and then you can set the time.
Oh, interesting.
It’s a pretty big flaw in the watch. But because of how the patent was granted—at least in the United Kingdom—he and his company end up holding the rights to all self-winding watch technology.
Wow. That is broad in Britain.
No matter what the method is, or at least that’s my understanding.
So Hans, of course, sees this. He knows he needs an automatic system for the Oyster to really unlock the potential of the product and fully break the wristwatch product for the marketplace.
But his hands are tied. He can’t do anything in Britain as long as Harwood has this patent. And Hans knows that ultimately the method Harwood uses isn’t good. He’s not going to license from Harwood because he knows it’s an inferior implementation.
Yes.
Fortunately, fate strikes and the market does its thing. In 1929, Harwood’s company goes bankrupt, probably aided along by the stock-market crash of 1929 and the entry into the Great Depression.
Finally, the door is open for Hans and Rolex to complete the product.
While we’re here in 1929, just a quick reference point for folks: There was an article published at this time that said you could get a Rolex for as little as $25. Even inflation-adjusted, that’s about $450 today, or for as high as $1,000, which is about $18,000 today.
Rolex’s top of the line today is a lot more than $18,000, and the bottom of its line is a lot more than $450. But that gives you a sense of the type of wealth you would need to purchase a Rolex at this point in history.
It was a meaningful purchase, but not a purchase reserved only for the elite class.
Definitely not. Rolex at this point is not a luxury brand.
Correct.
It’s going to transform into one over the ensuing decades, but not yet.
Hans was really focused, and his genius and contribution to the field was creating the product of the wristwatch. He wanted the wristwatch to be on every wrist in the world.
Which he achieved.
So here we are in the early 1930s. After a couple of years of work, Rolex finally cracks it and patents its own rotor, or self-winding system, which is still to this day the primary method of self-winding across the entire industry.
This is a perpetual rotor at the back of the watch case that spins around in both directions and captures kinetic energy as the wearer moves their wrist around.
Importantly, unlike the hammer movement, it spins 360 degrees freely in either direction, so it isn’t hitting anything.
One of the other problems with the Harwood system was that when the hammer struck each end, it made a noise.
Yes. You’d wear your watch and it would go, “Clack, clack, clack, clack, clack.”
One of the initial marketing points of the rotor system—the Perpetual system that Rolex comes out with—is that it’s silent. They call it the silent self-winding system.
That’s really interesting.
It’s genius. You can imagine—I’m sure people have seen videos or photos of a self-winding watch—imagine a disk that sits around a center point, and then cut off half the disk.
Whenever you’re swinging your wrist around—or because it’s a near-frictionless system, whenever you tilt the watch at all—the heavy side of the rotor falls down due to gravity to whatever side is lower.
You’re constantly, all day, inadvertently spinning this Perpetual rotor around and around, using it to wind the mainspring.
It’s an incredible innovation and feat of engineering stacked on top of all the other incredible feats of engineering that go into mechanical watches.
When they first start, you’re adding a new layer to the movement in the back of the watch, and it makes the watch back protrude a little bit.
The Bubbleback.
Yes. These early Oyster Perpetuals that are first launched into the market are known by collectors as Bubblebacks, because the back of them sticks out a little bit onto the wrist, off the lugs.
It’s so cool.
The other fun thing about this is that it’s legitimately an invention by Rolex. Oyster was licensed. The credit for how accurate the watches were was really Aegler innovation. This is the first time we’re really seeing Rolex R&D figure out a brand-new breakthrough contribution to the watch world.
Yes.
Once this is in place, these are the 3 key pillars of Rolex technology—and really all mechanical wristwatch technology of quality from this point forward.
You’ve got accuracy: the chronometer, observatory-certified. You’ve got waterproofness, or element-proofness, via the Oyster. And now you’ve got self-winding with the Perpetual.
Oyster Perpetual.
Here it is. It’s all here.
So in 1934, they launch the full system: the Oyster Perpetual Chronometer. The Bubblebacks are known by collectors.
For the first time, they introduce a new look for the watches: a two-tone mix of steel and gold for these new Oyster Perpetuals that they call Rolesor.
Rolesor really rolls off the tongue.
Right there on your wrist, David.
Right there on my Datejust—not on my Daytona. This is the golden-steel mix. The center link is gold, and the outer 2 links are steel.
Now you’re talking about the bracelet. For a long time, bracelets were made by third-party companies. Rolex contracted them out.
But that look also goes onto the case itself.
The bracelet usually echoes the case.
Combining gold and steel within one watch encasement was a new look from Rolex at this time.
You know what else carries through to today, which is kind of interesting? Rolex—and most tool watches—have fluted bezels. The fluting is because it makes it easier to grip. When you need to screw the back off, that was the original reason for fluting: It gives you a screw head, effectively, to get leverage to pop it off.
Yes.
So while we’re in the early 1930s, just to breeze through a bunch of other interesting things that are happening, the crown logo—the 5-point crown—starts appearing for the first time in 1931.
1931 is a weird year because Rolex is just starting to figure out this perfect product mix, and at the same time the world is heaved into a Great Depression and the British pound is devalued. Exports out of Britain drop by two-thirds.
A crisis happens, so Rolex is looking to internationally diversify. They open new offices in Paris, Buenos Aires, and Milan. They organize trips to South America, the West Indies, China, and Japan. They’re really trying to figure out how to stabilize things while the world is in crisis.
But they’ve got the right product in the market.
I feel like there’s an old Sequoia saying—or at least a Mike Moritz saying—that recessions are the best time to innovate, because coming out of the recession you’re going to have the best product ready to hit the gas.
And fewer competitors.
Exactly.
I’ll say, very interestingly, that in 1932 Omega released a waterproof watch. This was considered to be the world’s first dive watch. No one talks about this today. You hear “dive watch,” and you think Rolex.
You think Submariner.
I’ve got some really, really fun World War II dive-watch material in a second.
Great.
Before we get to World War II, 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 consolidate power.
This is when Rolex goes to Aegler and says, “We want to take all of your production.”
Gruen stops buying movements from Aegler. This is where I think Rolex may have bought the shares back from Aegler, but again, we don’t know and never will, because no one at Rolex will ever talk about that.
This is also when Aegler adds Rolex to its name: Aegler Manufacture of Rolex Watches.
Take us into World War II.
At the beginning of the war in 1940, remember that Rolex is in Switzerland exporting to the United Kingdom, which was still by far its biggest market. Supply lines from Central Europe to the United Kingdom are cut off after France falls.
Rolex and all the other Swiss watchmakers are like, “Well, shoot. If we can’t get to England, we’ve got to find other markets to sell to.”
It’s like the beginning of COVID, when all these companies were making other products and doing all sorts of things.
This is my very favorite sidebar piece of trivia.
I have no idea where you’re going.
Do you know what Rolex did in Italy during this time?
I have no idea.
They’re casting about. They’re trying to find something.
Their retail partner in Italy gets a contract from the Italian Navy to supply watches to its divers. This Italian retail partner comes to Rolex and says, “We’ve got a contract for dive watches. Can you make dive watches for us?”
Rolex is like, “Yes, sure, we can do that. We’re sitting on our hands here at our factories.”
Which is funny because this is a decade and a half before the Submariner.
Yes, yes, yes.
This is the first dive watch that Rolex makes. Can you guess the name of the Italian retail partner?
I feel like it’s going to be a car company. I don’t know.
No, it’s even more on the nose.
This is Panerai.
This is the Panerai watch. Anyone who knows Panerai knows its famous, very Art Deco-style dive watch. It has 2 main models now: the Luminor and the Radiomir.
Panerai was a retailer before World War II. They weren’t a watchmaker.
Whoa.
After the war, Panerai kept going, making these watches.
Isn’t that amazing?
Totally amazing.
This also underscores another reason why Switzerland was such a watchmaking powerhouse. This is a very engineering-heavy, industrial thing, and Switzerland didn’t have to devote any resources to the war because it was completely neutral. All of its craftspeople, machinists, and everyone else could keep making watches.
So here they are, selling to the Italian Navy on the Axis side. Meanwhile, the thing they’re most focused on is trying to figure out some way to start re-exporting to Britain, selling to their old main market on the Allied side.
They figure out later in 1940 how to get watches back into Britain. They launder them first through Spain and Portugal, then through the Strait of Gibraltar to get them up to Britain.
This becomes critical because World War I made the market for the wristwatch, but World War II made the precision-wristwatch market super important.
If you’re a soldier in the trenches in World War I, you need to coordinate movements and time and whatnot. If you’re a military service member in World War II, it’s a very technical war involving a lot of technology, airplanes, aircraft carriers, synchronized attacks, tanks, stealth, and all sorts of things.
The Battle of Britain is such a key moment and key theater in the war. All of these British Royal Air Force pilots are wearing Rolex watches because, at this point, Rolex makes the best wristwatches—the most accurate and the most weatherproof against all the elements.
You’re going through all sorts of pressure changes, going up and down. These cabins, if you could call them that, of World War II fighter planes have no pressurization. These watches need to withstand a lot of elements. Usually, you’re navigating by them. You might be flying in the dark.
It’s super important stuff.
Again, I would push back. I suspect Omega was the leading brand at this time. Omega was thriving in the 1940s and 1950s, even into the 1960s, in the Swiss watch world.
That’s definitely true.
Rolex wasn’t the only company selling to both sides here.
Nonetheless, World War II is really changing the nature of what you need out of a wristwatch. Air battles are maybe the most visceral example, but then you start to think about all the other things that went into World War II: radio communications, radar, early computing, nuclear weapons and the technology coming out of that, and the scientists building all these things.
Time is a really, really important element for this stuff. You’ve got the birth of a new military use case, which soon transitions to a professional need for watches and for time in the world.
So interesting.
Coming out of the war is really when Rolex starts to figure out its product lineup.
We talked about how they had the perfect product at the perfect time with this Oyster Perpetual, officially certified chronometer. What that looked like in product form was all kinds of different watches. They all said that, and that’s how they all worked, but the cases were everything you could imagine.
It wasn’t like you could browse on their website and see, “We make these 6 main families of watches, with these sub-variations underneath it.” It was far from it.
You look at these old advertisements and catalogs and you’re like, “I don’t even know what that thing is called,” because it looks so different from everything else.
As they’re coming out of the war, they’re starting to figure out a standardized product lineup. Not quite yet, but soon they’re going to build a brand around each one of these things—who it’s for and what it says about you if you wear this type of watch.
You’re foreshadowing tool watches, or sport watches: a watch for a specific technical use case, or more accurately, a watch that says something about you as the wearer.
That is the legacy of World War II to come on the product side. But first, just on the market side, as soon as the war is over, there’s no more European market. Europe is in shambles.
But you know what market there is?
America.
Returning home. You know who is at the top of the New World Order now, at least on the capitalist side? I don't think Communists were buying a lot of Rolexes.
I'm sure there are some crazy stories about black-market communist dealers of Rolexes to Russia after World War II. There must be. I'm pretty sure Castro famously loved Rolexes. I think he even wore 2.
There are photos of him wearing 2 Rolexes.
Amazing. Hang on—I'm looking. Nothing screams communism like multiple Rolexes on your wrist.
Here it is. He's wearing, I think, a Rolex GMT and a Submariner on the same wrist.
Yes. He referred to 1 as a backup in case the first stopped working, but that's extremely unlikely. I suspect it was to keep Moscow time.
Or he just wanted to wear 2 Rolexes on his wrist because he could.
Yeah, exactly.
The non-black-market market for Rolex after the war was America. If you're going to go somewhere, you're going to go to America, and Hans and the company devise just about the most genius 3-putt scheme to get there imaginable.
3-putt scheme?
Get this. In 1945, Rolex would never 3-putt.
Tiger Woods wouldn't.
Rolex brand testimony. In 1945, right after the war ends, is also the 40th anniversary of the founding of Wilsdorf & Davis—the Ruby Jubilee of the company. For the occasion, Rolex launches its finest model yet, the Datejust. This is the first modern Rolex, still an iconic watch sold by the company today.
It's just beautiful. I've got 1 here in front of me. For a lot of people, if they don't picture a Submariner when they hear “Rolex,” they picture a Datejust or a Daytona. But we'll get to that.
Launched alongside the Datejust is the Jubilee bracelet, the iconic beaded Rolex bracelet we all know today. Hans wanted to get into the American market, and he initially wanted to call it the Victory bracelet. His Swiss colleagues were like, “That's not very Swiss. We are neutral.”
So it becomes the Jubilee bracelet.
Beautiful. It goes great with a fluted bezel. It adds a little more pizzazz to the wrist. Around the same time, Rolex manufactures its 50,000th officially certified Swiss chronometer, and it just happens that the model is the new Datejust.
So Hans decides he's going to give this very special Rolex watch to the Swiss General Henri Guisan, who led Switzerland through the war—a national hero in Switzerland, the Dwight Eisenhower of Switzerland, one might say.
What does it even look like to lead Switzerland through the war?
That's a good question. A lot of sitting.
Remember, this is a 3-putt. This is just the first putt here. Guisan gladly accepts this great watch. Rolex is really ramping production now, so a few months later they make their 100,000th officially certified chronometer.
Oh, this 1 goes to Winston Churchill.
This 1 goes to General Guisan, the newly christened Rolex connoisseur, who says, “Would you please, on our behalf, offer this to your dear friend Sir Winston Churchill?”
There it is. Winston Churchill accepts. Now Winston Churchill is a Rolex man.
Less than 1 year later, Rolex makes its 150,000th officially certified chronometer, once again in the new top-of-the-line Datejust model. Who does Hans go to for this 1? Not directly, but with some influence from the fact that his friend Sir Winston Churchill wore it, he goes to General Dwight D. Eisenhower, American hero, leader of the Allied Forces, architect of the Allied victory in this new world order.
And Eisenhower, because his good friend Churchill wears Rolex, says, “How could I not accept?”
So now Dwight Eisenhower becomes a Rolex man. A few short years later, in 1952, Eisenhower becomes president of the United States of America with his iconic gold Rolex Datejust on his wrist at almost all times.
And this is the first time Rolex gets the idea of what all of its future marketing and positioning will be: those who command the world wear Rolex.
At this time, Rolex finally brings on a third-party advertising agency, the J. Walter Thompson advertising agency in New York. After Eisenhower becomes president wearing his Datejust, Rolex and J. Walter Thompson launch a campaign in the United States.
Almost literally what you said, David.
The tagline of the campaign is, “Men who guide the destinies of the world wear Rolex watches.” They printed this all over magazines across America, and maybe the world too. I don't know. It's incredible.
“Men who guide the destinies of the world wear Rolex watches.” Shameless. There are so many things to say. Obviously today that would be “people,” not “men,” but it's also literally true. You've got Eisenhower, Churchill, and Castro all wearing Rolexes.
I'm going to save for later some of their advertising campaigns from the 1960s and 1970s, but there are a few sentences that we have to say. 1 is, “When a man has the world in his hands, you expect to find a Rolex on his wrist.”
This is Don Draper. This is better than Don Draper.
“A Rolex will never change the world. We leave that to the people who wear them.”
We could just end the episode here. That is brand positioning. The fact that they engineered getting 1 on the wrist of the president of the United States is so genius.
Interestingly, even though they started with Mercedes Gleitze and this idea of human achievement and accomplishment at the top of their field, they aren't doing that in this era. It is about the people who command the world. They later come back to achievement and the people who are scientists. I'll save it for the 1960s and 1970s, but this is a very clear positioning of those who command the world.
The problem with “those who command the world,” as gangster as it is, is that ultimately you're talking about a small market. It's great aspirationally, and it helps the brand halo, but more people—especially as we enter the 1950s and 1960s—want to be Arnold Palmer, shall we say, than want to be Dwight Eisenhower.
1 final little product sidebar on the Datejust that I love: the original Datejust had the date window. It's called the Datejust because it's a regular watch with a little window on the dial that has the number of the date of the month in place of the 3. If you're picturing 1 today, you probably picture the magnifier sitting on the date window—the Cyclops eye, in Rolex marketing speak.
The legend of how that came about is that Hans's second wife, Betty Wilsdorf Metler, loved the Datejust. His first wife, Anna, died tragically in 1944, right before the end of World War II. That is when Hans set up the Hans Wilsdorf Foundation and put all of his ownership of the company into it. Famously, he never had any family heirs; there was no 1 to pass the company to, so he created this foundation.
Betty loved the Datejust, and the Lady-Datejust is still, I believe, the single bestselling model in the Rolex catalog, but she had a tough time reading the small numbers of the date in the window. As the story goes, 1 day while Hans was getting ready in his bathroom in the morning, he was wearing a Datejust and a drop of water dripped onto it right above the date window. It magnified the date.
I tell you, you can't make this stuff up.
They made this stuff up. He shouts, “I got it! I got it!” It's like the Eureka moment in the bathtub, and that is the inspiration for the Cyclops window of the Datejust.
If you're at Rolex and you're listening to this and you want to tell us it really is true, hello@acquired.fm. We will happily come to Geneva and talk to you about it.
6. Rolex Creates Professional Watches
As you were saying, the Datejust is a dress watch. It's a watch that you wear if you are commanding the world, wearing a suit, and among other respectable people. What Rolex does from 1950 onward is say, “Of course we make that, but we want to make a watch that you can wear while you're doing your extreme activity and that will look great when you show up to dinner afterward.”
And that is the core of the brand today, built in the 1950s under André Heiniger.
Sports watches. It's the Submariner, the Explorer, the GMT-Master, and the Daytona—the modern sports watches. Like you said, these are very different from what Churchill and Eisenhower are wearing.
André Heiniger is the second CEO of Rolex after Hans. André joined the company in 1948, right after the war. He was a former lawyer, I believe, by training. He first went to South America and ran the South American market for Rolex, then came back to headquarters in Geneva and became the director of marketing.
He's the 1 who brings on J. Walter Thompson. He's the 1 who does the “Destinies of the World” campaign. In 1955, I believe, he becomes the director of watches. Bringing on J. Walter Thompson, revamping the marketing message, and opening up the American market—really the US market—that's sort of his purview here. Later on, he starts working with Mark McCormack and IMG, which we'll get into for the testimonials.
What Heiniger realizes is that all the technology, engineering, and innovation that went into Rolex in the 1930s to perfect the product of the wristwatch is no longer defensible. You mentioned Omega, but basically anybody else—certainly any other Swiss company—can make a perfectly on-par watch with what Rolex can make at this point.
There are 30 Swiss companies doing this, especially because of the ébauches. All of the component manufacturers are outside the brand. You just go around to all the component manufacturers—Rolex is a little different because they have Aegler—but in general, you can find all the different tiny shops making each of these components and buy them to make a watch.
Exactly. All the things Hans was a genius at kind of aren't going to cut it in terms of differentiation for this new era. What Rolex needs to do now is move beyond what the actual product is on your wrist to what it says about you that you're wearing it—to the brand of the company itself, what it signals, and what it means about you.
This is the first step toward becoming a luxury brand. I don't know that André and the company were thinking about it necessarily as luxury yet. It's not really luxury yet; it's much more lifestyle at this point. It would later become luxury, but this is his real genius.
From 1953 to 1955, Rolex—and again, Hans is still running the company; he dies in 1960—launches a whole suite of wild new models, very different from the Datejust and the Oyster Perpetuals we were talking about before. This is the Explorer, the Turn-O-Graph, the Submariner, the Milgauss, and the GMT-Master. These are what are initially called the tool watches.
But they quickly morph into becoming known as the sports watches.
The industry refers to them as sports watches or tool watches. Rolex calls them professional watches, which is kind of funny because it's the opposite of what you would expect. A professional watch sounds like the Datejust, but they're thinking of a professional driver or a professional race-car driver.
A professional pilot.
You'll continue to see this in everything in the Rolex universe. They don't want to be lumped into any category, so they refer to something entirely different, such that they can't be put into a box. They don't make sports watches; they make professional watches.
It's like the Vision Pro is not reality.
Exactly. There's this YouTube video describing “the Rolex way,” and they list all the things that they're not. It's not limitless because that's too limiting. Everything in the Rolex universe needs to be described in a way that's impossible to describe. It's simply Rolex.
Amazing. So, back to this suite of really world-changing tool watches—or at least watch-world-changing tool watches.
Professional watches.
I'm sorry.
The first is the Turn-O-Graph. As perhaps foreshadowed by that great name—
What a horrible name.
That's the least successful of these watches that they launch. You aren't going to be buying a Turn-O-Graph from authorized Rolex dealers these days.
But if you look at a Turn-O-Graph, what's the original 1 look like?
It looks like the GMT-Master. We'll get back to that in a second. The key feature of the Turn-O-Graph was that it had a rotating bezel around the dial, around the face of the watch, that you could use for timing different events.
Rolex marketed it as a watch for international businesspeople who were making international phone calls and needed to time the length of the call.
That's funny. Swing and a miss. Not exactly a romantic lifestyle you want to be associated with—saving pennies on your long-distance calls. At the time, I guess it was saving $10 at a time.
The next least successful 1 is the Milgauss.
I love this watch. This 1 is awesome.
It has a whole second life. It was designed in association with the engineers at CERN in Switzerland, the particle accelerator, for scientists working while exposed to strong magnetic fields. The idea was that the Milgauss was so well protected from magnetic fields that you could wear it in these environments and it would still tell accurate time.
You can understand why this would be a big deal. If you have a metallic hairspring as the primary thing making your watch tick, you walk into some of these environments that scientists are operating in and your watch is going to speed up or slow down.
A little more romantic than timing international business calls in terms of the inspiration for this, but not a large market for people who are scientists or aspiring to work in strong magnetic-field areas.
They discontinue it after a couple of years, but then bring it back in 2007.
It's awesome. It's got this lightning-bolt second hand. The colors are great, and it's got this really fun orange.
I've been contemplating whether I want to get an Explorer or a Milgauss. It's effectively the same watch, but the Milgauss has this very fun scientific origin and look to it.
I could totally see you rocking either 1.
It feels like me, doesn't it?
It does. You've definitely got the Explorer. You love exploring, backpacking, and you have that great iconic picture.
Is that picture of you and your dad still up behind you in your home studio?
Yeah, back in Iceland. But I feel like the Milgauss might be more you.
I know. Both great watches.
Both great watches. That's number 2.
The first really big 1 is the Explorer, like you were talking about. The story is so good. Supposedly, it was made in honor of Sir Edmund Hillary and Tenzing Norgay's summit of Mount Everest—the first human summiting of Mount Everest—in 1953.
I think it was 1953.
I believe it was 1953. They wore an Oyster Perpetual up there that was a prototype of what the Explorer would become.
All of these tool watches—sorry, professional watches—were prototyped in partnership with various people who were living these lifestyles and doing these human achievements. The legend is that Sir Edmund Hillary and Tenzing Norgay were working with Rolex and wearing Rolexes while summiting Everest. That is in the marketing today, and it is the lore around the brand today.
Importantly, both of them became official Rolex testimonees, or brand ambassadors, afterward. For the rest of their lives, they would tell you how much they loved Rolex. However, Edmund Hillary did not prefer his Rolex. He had a Smiths watch that he preferred to wear. I think Smiths was the official outfitter of the expedition.
Rolex was not.
I do believe both watches ended up on the summit. I think that's likely, whether they were on wrists, in backpacks, or whatever the deal was. It's just funny that the summiting of Everest is so tightly associated with Rolex.
They were interested. It was sort of there.
The Explorer was designed to withstand extreme pressure changes, to go up to the summit of Everest, and still work perfectly. Imagine yet another modern endeavor where timekeeping is critically important and means the difference between life and death. You need to rely on your watch when you're summiting Everest.
It's a really robust watch. There aren't a lot of moving parts or complications, and there isn't a spinning dial.
It's easily read in the elements.
Exactly. That's the Explorer. It goes on to become iconic and extremely popular, still to this day.
Then there's the Submariner, with an equally fun origin myth, shall we say.
If you separated Submariner from Rolex, Submariner might actually be a bigger deal. Submariner is its own whole franchise.
Absolutely.
Almost in the way that if you separated the Dallas Cowboys from the NFL, who's the more important brand? If you're going to get a Rolex and intend to have multiple, you kind of should start with the Sub because it's so iconic.
You're right. It is its own world. It was Sean Connery's watch even before he started playing Bond, and then he wore it in the movies.
All right, all right, all right, all right. Let's get into it.
The Submariner is Rolex's dive watch, the professional diving watch. It was not the first dive watch Rolex made; that would be the Panerai. But what you know is the Sub: a great dive watch that Rolex makes and that defines the category.
It works and is waterproof down to 100 meters in depth. Not a lot of people buying these things are going down to 100 meters, but there we go.
I think this is an overlooked thing about the category. That's 100 meters in depth. If there were no pressure changes and you weren't whipping your hand around, it's nice to have 100 meters of depth. If you're going 20 meters down and things happen, you might at some given second, while whipping your arm around or if something weird happens underwater, approach the limit even though you're actually far from 100 meters below.
To that point, I believe at some point Rolex starts testing its watches to significantly greater depths than advertised for this reason.
That's correct. Most of them, I think, have a 10% extra margin of safety, but the dive watches have an extra 25%.
You don't want to be like, “I've got a 300-meter-depth watch,” get down to 300 meters and think you're good, but then actually go to 305.
A 100-meter waterproof watch is nice even just for going in swimming pools. I'm not sure I'd want a 10-meter waterproof watch. It feels dangerous.
But it's not really about the waterproofness here. Around this time, in 1952 or 1953, much of popular culture is focused on a Frenchman named Jacques Cousteau, probably ringing a bell to many of you.
Yes.
Jacques Cousteau was the first world-famous undersea explorer. He actually invented scuba diving.
Interesting.
He was a total Renaissance man and genius. In 1953, he was filming the documentary The Silent World in the Mediterranean Sea, which would go on to win the Academy Award for Best Documentary in 1956.
The whole world was watching these exploits, discovering the depths of the ocean—this alien world—for the first time, along with Jacques Cousteau. He was doing so, going down in these machines while wearing Rolex watches.
Great marketing.
So great. Interestingly, there isn't an actual formal relationship between Jacques Cousteau and Rolex. Rolex was formally working with another undersea explorer who didn't become nearly as famous. Nonetheless, Jacques was a Rolex fan and was wearing Rolexes while doing all this, as was much of his crew. When the movie comes out, they're all wearing these Rolexes.
It's important to remember for people who scuba dive that you have a dive computer these days. Even when I got PADI-certified, in your very first dives you aren't wearing a dive watch; you're using a dive computer. At this time, though, a dive watch was a legitimate tool that you needed. It wasn't going to tell you your depth the way a dive computer does, but to know your total bottom time, you needed it.
In the same way, if you're summiting Everest, you need a watch. Even more so than summiting Everest, you really need a Submariner if you're diving. This isn't cute. This is an essential tool to complete this extreme task.
Yes.
That's great for the marketing. Then, in 1962, the first James Bond movie, Dr. No, comes out. As it is written in Ian Fleming's James Bond books—and of course Ian Fleming himself was a Rolex man—James Bond wears Rolexes.
I didn't know this until doing the research. Did you know that, at least according to Ian Fleming canon, James Bond's mother is Swiss and his father is British?
Kind of like Rolex itself.
Sean Connery wears a Submariner in Dr. No, and I believe Connery would wear Subs for all of his Bond movies.
As you said, in real life he was a Sub guy himself.
I think that's right. If you're trying to build a lifestyle brand—one of the first lifestyle brands in the modern world—there's nothing better you could do.
This persisted from 1962 until 1995, with GoldenEye, when Pierce Brosnan came in and they wanted to refresh Bond's brand image. They chose Omega for that 1.
Wow. That's really charitable of you to the Bond franchise.
No, come on.
Omega paid them a boatload of money for product placement.
They did eventually, but initially it was not paid placement.
I was almost certain 1995 was when they decided to bid out all the stuff.
Let's put it this way: if it was bid out, Rolex would decline to bid, because Rolex does not engage in paid product placement.
That's what I assumed. The only way Bond would stop wearing Rolex is if they were trying to reboot the franchise around Pierce Brosnan, who maybe is more of an Omega guy than a Rolex guy. There was some weird line about rebooting him with a more European, modern flair.
Come on. No way. I don't believe it. They freaking bid it out. There's no way James Bond is not a Rolex guy.
Eventually, Omega paid a boatload of money to the James Bond franchise. So much so that there's a bump in Omega sales every 5 years when a Bond movie comes out.
A huge bump. GoldenEye was when BMW launched the Z3 coupe, so GoldenEye was totally product-placement central. Now Bond movies are like—the whole budget is covered by product placement. They only exist for product placement.
I don't know. One of the sources I found on Watches of Espionage details that apparently the costume designer reached out to Omega and was given a Seamaster for free. There's even a quote: “There was no product-placement incentive in 1995 whatsoever. I went to them, and of course they were interested, but it was no more than helping us. They gave us watches for nothing.”
It definitely turned into a backup-the-truck boatload-of-money thing, but the Omega fans will insist that it was organic at first.
Maybe that's right.
Anyway, the point is that from 1962 until 1995, if you liked James Bond and wanted to have a little bit of James Bond in your life too, you wanted to wear a Submariner on your wrist.
It's perfect. James Bond does a lot of diving, then goes right from diffusing the undersea bomb with the Bond girl to popping up and going to a high-class dinner, all while wearing the same watch.
It's perfect.
A fun little coda on the Submariner: a few years later, in 1967, do you know the story of the Sea-Dweller, which I believe is still in the Rolex lineup?
It is.
Is this the super Sub, where you can go really deep?
The Super Sub.
Yes.
Rolex develops it in partnership with the French undersea exploration company COMEX. There was an issue where helium would get trapped in the watch in the Submariner, and the pressure would break it as you were coming back up.
They developed the Sea-Dweller, waterproof down to 600 meters, with a special helium-release valve.
This is ridiculous. No person who buys these is going to use this stuff, except for COMEX employees who are issued them.
But it adds to the romance. It adds to the idea that this is a lifestyle purchase.
If you're already taking us from Submariner to Sea-Dweller, you have to take us to Deepsea Challenge. That's the ultra-ultra version.
Yes. They developed a watch so thick that you aren't putting it on your wrist. They said, “What if we take this idea of the Submariner and then the Sea-Dweller and make this thing called the Deepsea?”
There was an earlier version before James Cameron, right?
The Cameron watch is the Deepsea Challenge, an extra-extra version. The Challenge is rated to 11,000 meters, whereas the regular Deepsea is rated to 3,900 meters.
So you get the Deepsea for 3,900 meters and the Deepsea Challenge to get to the bottom—11,000 meters.
James Cameron took the Deepsea Challenge on a manned submersible to the Mariana Trench, the deepest part of the ocean. The watch was clipped to the outside of the submarine because it would be useless to have it inside. Humans would be crushed by that pressure if they were on the outside, but the watch kept perfect time and kept all the water out all the way to the deepest part of the ocean.
Amazing.
And of course, James Cameron is a testimonee.
Of course.
That's going down to the bottom of the sea. Very romantic lifestyle association.
Isn't it interesting that all these watches have English names? What's the market here?
It's America.
Come on.
So take us airborne, David.
We've gone down. Now we'll go up. That brings us to the GMT-Master—the Greenwich Mean Time-Master.
In 1955, Boeing launched the 707 commercial jet airliner, based on an Air Force air-to-air refueling tanker design.
I didn't know that until this episode.
Neither did I. The next year, in 1956, Pan Am, the iconic American airline, begins flying intercontinental jet flights with the Boeing 707 for the first time. The Jet Age for the consumer is born, and along with it, jet lag. It's a new concept. If you traveled across continents before, you didn't move fast enough to experience jet lag.
Pan Am is worried about the effects of jet lag on its pilots. The pilots are going back and forth all the time across the Atlantic Ocean, the Pacific Ocean, or wherever, so they decide the best thing is to keep pilots operating on their home time. If the pilots are based out of New York, they need to operate on New York time even if they've just landed in London.
The way they're going to do that is by working with Rolex to develop a new professional watch for pilots that, for the first time, can tell time simultaneously in 2 different time zones.
Amazing.
Rolex takes the failed Turn-O-Graph, which isn't selling well but has the rotating bezel. Importantly, it's a bidirectional rotating bezel, because the Submariner is unidirectional.
Maybe not at first, but it eventually becomes unidirectional so that you don't accidentally screw up and do something you don't want to do with it.
They change the markings on the bezel from the 60-minute or 60-demarcation scale of the Turn-O-Graph to 24 hours. Then they add a fourth hand to the movement that moves on a 24-hour cycle.
All of a sudden, on a single watch face, you can keep track of 2 different time zones. The GMT-Master is born. You are the master of time with this watch.
Legitimately, it's very useful. Whenever you and I travel for Acquired, I set the complication in the lower right of my Apple Watch to home time. It's really nice to keep track of home time in addition to where I am.
Totally.
Eventually, they launch 2-tone bezels, the most famous being red on 1 half and blue on the other half.
The Pepsi model.
Yes. So cool. They do all these great limited editions—the Sprite, the Batman in blue and black. The community comes up with little nicknames for all the different color schemes. It's super fun.
This is for air travel and jet travel, but the pinnacle of 1960s and 1970s romance up in the air is not air travel but space travel.
Which brings us to the Apollo missions, for which the standard issue from NASA is the Omega Speedmaster.
I will say that this bolsters my case that in the 1940s, 1950s, and 1960s, Omega was the big brand. Rolex had a target in mind to beat, and that target was Omega.
Even though Omega was standard issue on the Apollo missions, not all of the Apollo astronauts chose to wear their standard-issue watches. If you go to Rolex headquarters, there's an incredible signed picture from Apollo 13—the Apollo 13 movie, signed by astronaut Jack Swigert, a character played by Kevin Bacon in the movie.
To my longtime friend René Jeanneret, who I believe was Rolex's head of communications at the time.
“Who enabled me to always be on time.” Jack—and maybe some of the other astronauts too—preferred GMT-Masters and wore their GMT-Masters during the Apollo missions.
Interesting. The Omega Speedmaster is famously the Moonwatch. It's the big blemish in Rolex's strategy of being the brand for people who accomplish the greatest heights in human history. But this is a great way to slide in and take a little slice of that history too.
By choice, by the astronauts' choice.
Much like Sean Connery.
What could be better? They're not going to wear this inferior product.
I'm sure this is Rolex's version of history, but supposedly NASA reached out to Rolex first because they knew that test pilots preferred GMT-Masters. There was a mix-up in Rolex's New York purchasing office that led to Omega being selected instead.
If you work at Omega, please contact us and tell us the real version of this story, because we know no one at Rolex is going to call.
Let's hear at least Omega's side of this.
Whatever the case, this is all building so much legend, lore, and romance around the ultimate lifestyle brand.
As I said earlier, this really is the architecture of André Heiniger. We talked about the J. Walter Thompson relationship, but I mentioned Mark McCormack and IMG. Starting in the mid-1960s with IMG is when Rolex really turbocharges and formalizes the testimonee, brand-ambassador partnership.
These professional watches are happening, but Rolex has also advanced its dress line. It's come out with the Day-Date, nicknamed the President.
It's ironic that the first president to wear Rolex wore a Datejust, not a Day-Date.
Future presidents wore Day-Dates. But back to IMG: IMG was the first modern talent and celebrity-endorsement agency. It was visionary of Mark McCormack to found it in 1960. He brokered tons of celebrity endorsements and worked with Rolex to sign the Big 3 in the golf world: first Arnold Palmer, then Gary Player, then Jack Nicklaus.
For their whole careers—and probably their whole lives—they were Rolex men.
That's effectively the blueprint for everyone from Federer and Tiger Woods forward.
In golf today, if you go forward to Tiger Woods, Annika Sörenstam, Scottie Scheffler, Jordan Spieth, Justin Thomas, Brooke Henderson, Lydia Ko—not everybody, but a large share of the best players are Rolex players.
When you list them off, it sounds like a large group, but I think the strategy is not “a lot.” The strategy is “only the best.”
A large share of the very best players. That goes for individual athletes, but also for the events they sponsor. Ben Clymer at Hodinkee pointed out to me that they don't just sponsor the PGA Tour; they sponsor the Masters. They're not going to mess around much beyond that.
Similar to tennis?
They'll do Wimbledon.
And now they do all 4 Grand Slams.
Arguably, tennis—especially post-Federer—is even more iconic Rolex than golf. They partner with many of the top players in the world, but Federer was transformational.
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.
There are a couple of interesting things about golf and tennis specifically for Rolex. The overall brands of the sports mesh very well with Swiss luxury watch companies. But going all the way back to the 1930s and the Wilsdorf days, proving that you could keep accurate time while playing golf or tennis was a key marketing message, because you've got shocks impacting the wrist from hitting balls all the time.
Think about that hairspring. Think about that delicate balance wheel floating there, carefully ticking back and forth. I don't really understand how it keeps working perfectly.
It is also the type of sport where you can be an elite, top-of-the-world player for a very, very long time, as opposed to other sports. Think about Federer's career, Arnold Palmer's career, and Jack Nicklaus. These people had multiple decades of dominance at the pinnacle of human achievement.
That's right.
That wraps up the iconic tool, sport, professional watches.
Ben, you haven't said anything about the model that both of us are wearing on our wrists right now: the Daytona.
The Daytona completely created a market of its own and changed the mechanical watch market period.
The Daytona, through a complete accident of history, created the modern watch-collector market.
All the crazy prices, auctions, and insanity that occurs today really is, in large part, because of the Daytona.
It's 1 component of it.
I don't want you to oversell it.
I've got a lot.
Before we tell that story, now is a great time to think about our good friend of the show, ServiceNow.
The Rolex Daytona
The instant worldwide sensation—or not.
7. The Daytona Creates Collectors
Unlike all of Rolex's other watches, the Daytona is a chronograph, or as Rolex calls it, a Cosmograph.
What is a chronograph?
A chronograph is a fancy term for a stopwatch. However complicated you thought a regular mechanical watch was, now add something like the Daytona, where you also have a full seconds hand on the main dial that counts seconds, another dial to count minutes, and another dial to count hours, all in addition to the regular watch function.
There are 4 dials on the watch face of the Daytona. Incredible.
It turns out Rolex had actually made a chronograph for a very long time. It was the first tool watch they introduced, way back before World War II, before André Heiniger, before anybody was thinking about this stuff. In large part it looked like this, but there was no craze around it.
In 1962, Rolex becomes the official timekeeper of the then-relatively-new Daytona International Speedway in Daytona Beach, Florida. To commemorate this great moment, the next year, in 1963, Rolex officially starts calling its chronographs—again, it had been making them for about 3 decades—Daytonas.
They thought about Le Mans because they were closely involved with the race in France, but the Rolex name needs international appeal and can't have silent letters that Americans can't pronounce. What's better than Daytona? You can look at the word and say it out loud.
Again, the market is America after World War II. What could be more American glamour in 1962 than Daytona Speedway, fast cars, movie stars, and a 24-hour race?
It's perfect.
A couple of years later, 1 of the leading men of the era, Paul Newman, stars in a 1969 film called Winning about being a race-car driver. After he stars in the movie, he develops a hobby of becoming an actual race-car driver. His equally famous wife, actress Joanne Woodward, gives him a Rolex Daytona for his racing activities with the immortal inscription on the back: “Drive carefully—me.”
We've been talking about romance, lifestyle, and brand development. It doesn't get more iconic than that.
You can totally see how this would set off an insane craze in the market.
Except it doesn't right away.
There are so many moments in Rolex history—and in all the stories we tell—where the company does everything in its power to align the stars perfectly and it doesn't work. Then a butterfly flaps its wings several years later and all of a sudden it does.
In 1969, Paul Newman stars in the movie. Sometime in the next year or so, Joanne gives him the watch. Paul Newman is absolutely iconic at this point. He's photographed all over the world, he's a leading style figure, and he's in magazines. This is his watch. He wears it for about 10 or 15 years.
Then, in 1984—long, long after the watch was given to him—his daughter Nell has her boyfriend over. Paul asks the daughter's boyfriend if he knows what time it is. The boyfriend replies, “I don't know. I don't have a watch.” Paul, on a whim, says, “Here, take this 1. It keeps good time,” and gives him the Paul Newman Daytona.
I actually didn't know this story. Swear to God, this is true. That watch sold at auction for the most money ever—$17.5 million, I think.
“Here, take the 1. It keeps good time.” At the time, the market for Daytonas—the secondary market for Daytonas—was about $200 for a watch.
To have been the boyfriend.
Two short years later, in 1986, for whatever reason, a bunch of dealers in Italy start snatching up versions of the Daytona from the era when Paul Newman's Daytona was made.
It's important to say that in Italy there was a real watch culture. This was true in various parts of Europe at this point in time, in a way that there wasn't in America. Rolex wanted to market to Americans because there was all this rising wealth and people wanted to celebrate their successes, but America didn't have a watch culture the way Italy had both a collecting culture and a style culture. That's why there were secondary-market dealers in Italy.
There is a rumor that around this time, in the early 1980s, Paul Newman had been on the cover of an Italian style magazine wearing the watch—obviously photographed before he gave it to the boyfriend. Maybe that was why people in Italy decided it was a cool watch. Nobody really knows, and nobody has ever been able to locate that magazine cover.
For whatever reason, a butterfly flapped its wings and Italians thought the watch was cool. Dealers started buying up the “Paul Newman-style” Daytonas. That's a specific style made by Rolex for a couple of years in the late 1960s and early 1970s. It had an Art Deco-style face and a very particular color scheme that featured red around the edges.
Around the track, where the minutes and seconds are kept.
Also a very particular font.
We should say that on the Daytona—and really on all chronographs—there's a cool feature around the edge that gives the watch its signature design. There are units per hour. I don't know if it's logarithmic, but maybe I should work out the equation in my head.
On the version I'm wearing, it starts at 400 and goes all the way down to 60. What that means is that if you press start, drive 1 mile, and then press the same button again to stop, wherever the second hand is pointed around the edge of the watch is your miles per hour for that 1 mile.
If I could drive 1 mile in 1 minute, the hand would come all the way around and point to the top, where it would say 60. It goes up to 400 because race-car drivers.
That's awesome. I actually didn't know that's what it did.
You own this watch.
I know, I know. I haven't thought about this watch in 15 years.
For anyone trying to figure out what's going on in David's world, David used to work in investment banking, and this was part of the uniform when you got out of college.
My dad has been big into watches for a long time. Starting probably when I was in high school and college, he got very big into watches and watch collecting.
Before the market took off in America.
Before it took off in any way in the US. I thought he was insane. I was like, “Why are you blowing all this money on watches?” Back then it wasn't even that much money.
I graduated and went to work in investment banking. Back then—and I'm sure still to this day—investment banking had a watch culture. My dad gave me a couple of watches to wear, 1 of which was this stainless-steel, white-face Rolex Daytona.
It was an incredible gift. Back then I thought it was super cool, and all my colleagues, especially the senior bankers, were like, “Who is this freaking kid?” This was not a “I got my first bonus, so I bought a Rolex” watch. This was an investment-banking watch. It wasn't an analyst watch.
Maybe if you made VP you would go get something like this.
It was odd for me to wear it. Paradoxically, it killed my interest in watches and my desire to wear them, because I realized it was weird for me to wear this watch. Then I thought, “You know what? I need to stop.” Especially when I got to the West Coast, I thought, “I should just not wear watches. This is too much. I need to get my bearings again.”
Exactly.
So then I didn't wear watches at all—nothing on my wrists—until the Apple Watch. I've worn that every day since, until we went to Taiwan and thought we should do a little Easter egg.
We broke out the watches from the safe.
The question going forward is, listeners, if you're listening to this a few months or years in the future: Do I keep wearing this? Do I go back to the Apple Watch? What do we do?
I don't know. We'll see.
What you're foreshadowing here, though, is the hype over the Paul Newman dial. To be clear, I am not wearing a Paul Newman dial.
The hype trickled out into the rest of the Daytonas and made any Daytona extremely desirable. Sticking with the Paul Newman models, in 1986 prices for some of these models shoot to $330,000 or more.
For a watch that Paul Newman gave away to his daughter's boyfriend 2 years before and that was worth $200.
You're right that this 1 event didn't create the global watch-collecting and investing market. But it was absolutely part of it. It was a huge moment of, “These things aren't just purchases. They're investments, and you can trade in them.”
Put a pin in that. There's a whole world of the 1970s and 1980s—a parallel universe to Rolex—that we're going to go into here in a minute.
Before we do that, it's worth resuming our history of Rolex advertising. Concurrent with releasing all of the professional watches, Rolex expanded its aperture in marketing. It went from “Men who guide the destinies of the world wear Rolex” to suddenly having scuba divers, pilots, and race-car drivers wearing professional watches for their craft.
We can probably sell a lot of watches by selling that lifestyle.
This is where the expansion goes from commanding the world to human achievement: those who sit atop their fields.
From 1967 to 1970, they launched the “If You Were” campaign. Google this—we'll put some links in the show notes. It used big, bold Helvetica font: “If you were flying the Concorde tomorrow, you'd wear a Rolex,” with a picture of the Concorde going supersonic and a picture of the GMT-Master.
So great.
This is what pilots at the top of their field are wearing. They stayed a million miles away from features. It was all lifestyle advertising: this is the person you would be if you owned this watch.
There's a version saying, “If you were speaking at the UN tomorrow, you'd wear a Rolex.” There's the Concorde, climbing, diving down to great depths, taming oil fires—I think there's even 1 where they're walking in a volcano. It's a brilliant campaign.
It's everything we've learned from the Mad Men era of advertising. It's completely the opposite of the Mercedes Gleitze era. They're leaning heavily into, “Who could you be?”
I think this was the first real step in what made Rolex a challenger to Omega, which had been the standard big Swiss watch brand. Rolex was the 1 to bring lifestyle advertising to bear.
I know I keep harping on the Omega thing. Omega was also worn by the soldiers in the Boer War that Hans had recognized, so they had the history too.
They had the history too.
Those ads were Peak Rolex lifestyle era. This second era of Rolex was about moving beyond the product to sell the lifestyle. The Daytona was part of that.
Then, in the 1980s, when the Italian thing and the Paul Newman thing happened and the collector market was built, it was the first real big move Rolex made into the luxury world. It created the 1 model in its lineup that had real hype around it, and that stayed true for decades.
Even in 2010 or so, you could walk into a jeweler who was an authorized Rolex dealer and just buy something out of the case. You could buy a Submariner, Explorer, GMT-Master, or Datejust, but you couldn't buy a Daytona. From the 1980s forward, that was always the spot in the lineup where they'd say, “We'll have to call you about that 1.”
Today, if you want to buy a Rolex of any model, you go in and put your name on the waitlist. At some point—maybe a couple of months, maybe a couple of years—you'll get the call that your model is available.
The Daytona is the only model where there is no waitlist.
I don't think that's true.
Is that not true?
It's impossible to say because Rolex works through authorized dealers, so it's not up to Rolex. It varies greatly from dealer to dealer. I think they're actually called Rolex retailers now; they changed it from authorized dealer.
At least historically, it might be changing amid the insanity right now. If you browse the forums, the lingo I read is that the Daytona is not a waitlist; it's a wish list.
That's awesome.
Most other models: if you want 1 and get on a list at an authorized dealer, at some point your turn will come up. With the Daytona, you express desire.
I have a few things to say about this, but let's wait until we get to the present day. The entire watch industry is going to fall apart and get rebuilt from scratch, and we have the period in between where we currently are and where we'll end up.
All right, let's go there.
This was a whole side quest that I did this episode.
Nice term. Look at us getting all Gen Z.
You and I interpreted the assignment differently.
Do an episode on how?
You're pandering to Gen Z right now.
What is “side quest” and “interpreting the assignment”? I don't even know.
Anyway, we interpreted the assignment differently. You heard, “Do an episode on Rolex,” and viewed it as, “Go as deep as possible on the entire history of the brand itself, the company, the relationship with Aegler, and each watch model.” I heard it as, “Go fully understand the entire watch industry and contextualize Rolex's role within it.”
Here's my best David Rosenthal impression for the Quartz Crisis. I have 2 huge thank-yous for this section: Ben Clymer, the founder and CEO of Hodinkee, whom I spent hours pestering and having phone calls with, and whose site I probably read 30 times; and Joe Thompson, the journalist in the industry, most recently the executive editor of Hodinkee.
Over the last 40 years, Joe has written all the canonical pieces. He was the editor of WatchTime magazine, one of the only people ever to interview a sitting Rolex CEO, and lived through the Quartz Crisis firsthand. He was flying around to Geneva, Taiwan, and Japan and reporting on it live.
You've mentioned the Quartz Crisis, also known as the Quartz Revolution. What is this?
8. Quartz Destroys Mechanical Watches
Here we are in the early 1970s. The Swiss are riding high. They're the undisputed champions of watchmaking. At 1 point, the Swiss made as much as 85% of the world's total wristwatches—85% of the market.
This is in 1945, right after the war.
Right. They made 19 million of the total 21.5 million watches that year.
Another way to contextualize it: watchmaking is an extremely difficult, specialized skill, like TSMC and Taiwan making semiconductors. In 1945, 19 million watches were produced by 2,500 individual companies, 90% of which employed fewer than 50 people.
Completely decentralized means of production. In many ways, the Taiwan metaphor totally extends. It's like Switzerland was Hsinchu Science Park, and all these companies sort of knit together and collaborate.
Exactly. This is an industry built on skilled labor, fragmented across a ton of suppliers, with very little vertical integration. Someone makes the movement, someone makes the hands, someone makes the case, and all this happens in 1 of the most expensive labor environments in the world.
Geneva isn't cheap.
It's kind of amazing that there was this labor-intensive industry in Geneva.
That was 1945. 3 decades later, in 1973, it's still going strong. The Swiss peaked at almost 90 million watches made in 1973, up from 19 million 28 years earlier. They're now making 90 million watches a year by this crazy production process.
We keep alluding to the Quartz Crisis, but quartz wasn't the first revolutionary technology supposed to disrupt mechanical watches. There was a half-step along the way—a technology that turned out to be a detour, not the future.
I would guess digital timekeeping, but that's quartz. What else vibrates like a quartz crystal? What do you think could oscillate to keep time?
Something radioactive?
A tuning fork.
That's a great, weird thing in history. Part of this also comes from Mark Bridge's great research paper. The whole Swiss watch industry had marketed that you could judge the quality of a watch by its timekeeping. Suddenly a tuning-fork watch comes out, and mechanical watches are no longer the best at timekeeping.
There's this crazy watch, the Bulova Accutron. In practice, though, the Accutron wasn't disruptive technology in the Clayton Christensen sense. It was a sustaining innovation: it took the existing thing and made it a little better. The watches still required hundreds of components and handmade craftsmanship.
So they're still difficult to make.
Exactly. This meant that existing companies would have to integrate it into their own workflows. There wasn't a wide-open window for a new entrant to use it as a disruptive force.
The thing you need is a new producer coming in and taking a radically simpler approach—say, a Japanese company.
Quartz. We all think of quartz as coming from Japan and Seiko. People had been exploring quartz technology for a very long time. The first quartz clock was created all the way back in 1927.
Do you know where?
I know the Swiss themselves were doing big industrywide consortiums.
That was in the 1960s and 1970s. In 1927, who could possibly be doing research with quartz technology for timekeeping?
I have no idea.
Bell Labs.
Bell Labs.
In New Jersey. The first quartz clock was created there.
Unfortunately, in 1927 the Bell Labs quartz clock was the size of an entire room.
The ENIAC of clocks.
How do quartz watches function?
Instead of the mainspring in a mechanical watch, you have a battery. Instead of an escapement, you vibrate a quartz crystal. Quartz has this crazy property where, if you apply an electrical current and shape it a certain way, it vibrates at exactly 32,768 hertz.
That's right. I remember seeing that number. It's weird.
This is called the piezoelectric effect. Interestingly, that was discovered all the way back in 1880 in Paris.
The other important thing to know about a quartz watch is that it requires an integrated circuit. The modern quartz watch depends on an IC to count the quartz vibrations and transform them from 32,768 hertz to 1 hertz—to tick 1 second at a time—or, if you're using a digital watch, to increment the seconds by 1 each time.
By the early 1970s, you've now got integrated circuits.
Exactly. The first quartz watch that hit the market, in 1969 from Seiko, depended on the invention and miniaturization of the transistor and integrated circuit before it could happen. That's why we're stuck waiting from the 1920s until 1969 before it can be used in a watch.
The whole thing is Bell Labs.
Exactly. Everything we've talked about so far is a manufacturing story, a craft story, and an apprenticeship story. This is a technology story.
Amazingly, as you pointed out, the Swiss did see this coming. Like Kodak, which famously invented digital photography in its lab, the Swiss saw what happened with the tuning fork and wanted to be ready.
In 1962—7 years before the Japanese debut of the Seiko Astron—there was a quartz chronometer in a lab at the Centre Électronique Horloger, or CEH, in Switzerland, that was twice as accurate as a mechanical watch. They just didn't have an impetus to be first to market.
Why would we? This is really dangerous for our industry. We've made it. Let's keep this in the lab.
Over in Japan, the Seiko Astron launches in 1969. You would not have guessed it was going to disrupt the whole industry. It cost as much as a new car and wasn't more accurate. It could be off by up to 5 seconds a day.
So what's the big deal?
Just like semiconductors, they get on the learning curve. It's a technology story based on semiconductors, so the price-value curve it follows looks much more like the early PC from the Microsoft episode we did.
The fact that it's in watches, because that's the consumer need being filled, isn't relevant for predicting how much better it's going to get. You should be looking at the technology.
The quartz watch starts at a Toyota Corolla price point and comes down in price a ton. It used far fewer parts and required very little know-how to assemble. You could invest upfront in machinery and have very low variable costs and labor costs. For the first time in watchmaking, you had economies of scale and operating leverage.
It was a technology product in an artisan market.
This whole thing happens so fast. In the early days, the Swiss industry—and a lot of makers, including Rolex—released their own quartz models too.
Hold on to that for a second.
Here's how the Quartz Revolution went. The Japanese think of it as the Quartz Revolution; the Swiss think of it as the Quartz Crisis.
By the end of the 1970s, you could get a quartz watch for cheaper than a mechanical watch, and it was more accurate. In 1979, mechanical watches were, for the vast majority of scenarios, functionally obsolete.
Unless you're an astronaut, pilot, or adventurer who prefers a spring over a battery that could die, there's no practical reason to buy a mechanical watch again. The Olympics were being timed with quartz timepieces.
Omega quartz at the Olympics.
Interesting.
Obviously, this isn't the end of our story. Mechanical watches would go on to become a better business than ever—50 years later, very different, but much greater in revenue than ever before.
There were a few iterations of how this went. American firms tried to make quartz watches with LED technology. The Hamilton Pulsar came out in 1972. These were really cool to look at, but in the long run they were a complete failure. You had to push a button to turn on the LED, so it took both hands to read the time: 1 to wear the watch and 1 to push the button.
Some companies followed into the market starting in 1974. They will be very familiar to Acquired listeners: National Semiconductor, Fairchild Semiconductor, and Texas Instruments.
There we go.
Then came Commodore, Intel, HP, Hughes Aircraft, and dozens of other companies.
Hughes Aircraft got into the market?
Yes. These companies made integrated circuits and thought they could make consumer products around them too, because they made the internals.
But they weren't great at building brands. They were all B2B companies. They were also horribly commoditized. This market immediately became a commodity, had no barrier to entry, and all the profits were arbitraged out.
LED was the failure. The next step was 2-fold: quartz movements powering analog watch faces, which started with the Seiko Astron, and digital LCD watches with liquid-crystal displays.
Digital LCDs ended up being vastly superior to LEDs since they were always on, and they also worked on a quartz movement. Seiko, Citizen, and later Casio were extremely successful for a time making these in Japan.
Hong Kong became the powerhouse for inexpensive manufacturing of all this, along with Taiwan, South Korea, and mainland China.
By 1980—just a few years in—Hong Kong was already exporting 126 million watches a year, half of them digital.
Switzerland at its peak made 90 million.
And then, a few years in, Hong Kong has 126 million. By 1981, Japanese watch exports surpass Switzerland. Seiko was great at brand building, advertising, and messaging in a way that the American B2B semiconductor firms were horrible at.
By 1985, just 4 years after Japan meets Switzerland, Japan's exports are 3 times Switzerland's.
That's incredible.
Now that you know this, this is the backdrop in which the Paul Newman craze happens.
The Swiss market's global share falls from 85% at its peak in 1945 to just 15% by 1980. The number of firms falls from 2,000 companies in 1960 to fewer than 500 in 1980. It was absolutely destroyed.
Quartz accounted for only 3% of units in 1975. By 1979, 31% of new watches were quartz-powered. From 1975 to 1981 or 1982, you have a complete running of the table. For the old reason to buy a mechanical watch, there is zero reason to buy 1 anymore.
This is massively impacting the entire Swiss economy.
It's an extinction event for this huge industry.
There's a whole separate story about the founding of the Swatch Group, how many Swiss brands were rolled together, how a bunch went bankrupt, and how some were sold off to conglomerates.
Interestingly, Rolex was independent. It was owned by a foundation and had no shareholders. It also managed to resist joining the Swiss cartel that was colluding around a national strategy. It could do its own thing.
The whole watch world by volume became almost entirely quartz. The market for time-telling as a function went entirely to quartz, full stop.
But a new massive market emerged that had been lurking in niche auctions: watch aficionados who valued pieces for their complexity, artistry, and rarity.
Rolex figured out how to build an enormous, bigger-than-ever business in this completely new market—enthusiasts who drive excitement, the auction-house world, and a lifestyle aura of success.
This is where we told the story as part of the Daytona story, because that's where it belongs. The Italian affair, the Paul Newman affair, was the luckiest thing that ever happened to Rolex. It gave them the golden opportunity to do that.
This is finally clicking in my head. It's not that the mechanical watch made a comeback. It's that an entirely new market emerged, and it turned out to be the perfect market for the mechanical watch after its initial market got wrecked.
I think there's another level of nuance. Rolex was better positioned than most of the other Swiss companies because it had already transitioned to lifestyle. But that would not have been enough.
Eventually, Seiko and Citizen were also going to transition to lifestyle companies. What you say about yourself by wearing your watch isn't defensible in the long run against technology disruption. Wearing an Apple Watch—what model, style, or band you have—says a lot about you too.
What is defensible is a luxury strategy. A luxury strategy expands to managing the entire market and overall brand management. It means managing the secondary market and supply on it. It means doing things like pulling a model from the market when the Paul Newman craze is happening. It means vertically integrating to ensure absolute product consistency. It means instituting waitlists, killing or pausing your most successful products, and not changing your price in response to demand shifts.
A purely lifestyle company wouldn't do all those things.
Remember Fossil, the US watch company that is now basically bankrupt? It was a lifestyle watch company, but it wasn't a luxury company.
That was the fashion-watch craze, where quartz technology enabled a wave of $25 watches. You could own 5, 6, or 7 and wear them with different outfits. That was an interesting market for 20 years before technology obsoleted it too, with the smartwatch.
Interestingly, do you know what Swatch stands for?
I always thought it meant Swiss watch group.
That's the common perception. It means “second watch.”
These watches are so cheap you can have a second 1.
Exactly. It's a viable lifestyle strategy. These watches are so cheap you can have a second 1, and each says something different. It's a fashion strategy, but not a luxury strategy, and it's still subject to functional displacement, as happened with the Apple Watch.
So we're at the complete demise of Switzerland, thinking about how it could get better in the future. But there's a whole parallel story: the renaissance of mechanical watches and how they come to fill this new market.
Before we do that, we want to thank 1 of our newest sponsors here at Acquired, Huntress.
How did Rolex respond to the Quartz Crisis?
9. Rolex Chooses Mechanical Luxury
We knew that there was a transition to luxury and that it was in response to the Quartz Crisis, but you go read everything out there and nobody actually chronicles this. They talk about the Quartz Crisis, the creation of the Swatch Group, and saving what's left of the Swiss watch industry. Separately, they talk about Rolex through the years building the lifestyle brand with all the race-car stuff and advertising.
But Rolex was in Switzerland during the Quartz Crisis. Please connect these dots.
The end of the story—spoiler alert—is that Rolex is doing more than $10 billion in annual revenue, way more than any other company in the space.
Rolex is 30% of the revenue in the entire Swiss watch industry.
It's insane.
There's a lesson here. In part, the lesson is that it is incorrect to describe markets by the products in them. You should describe markets by the job to be done.
The market of wrist-based time telling was no longer available to the Swiss; it entirely went quartz. But there was a market for something different that the Swiss were great at if they were set up, positioned, and managed correctly.
This isn't the high end of the watch industry and the low end of the watch industry. These are 2 completely different customer needs.
There's an arc to this story. Rolex sits back, sees what not to do, sees what to do, and then does it.
Here's my attempt at chronicling what happened. I would love feedback from watch nerds if there's anything I missed, but this is how it seemed after reading 5 books and talking to Joe, Ben, and all sorts of friends in and around the industry.
There are 3 concurrent stories here, none of which are Rolex. There's the Omega story, an unlikely corner of Swiss watchmaking with Blancpain, and the auction houses. Once you understand those, you understand the Rolex story.
First is Omega. They blew a lead in the ninth. That's the only way to put it.
You're being my foil throughout the episode, saying Omega was also big—maybe bigger than Rolex—the whole time.
Coming into the 1970s, Omega has its watch land on the moon in Apollo 11. It's the sponsor of the Olympics. It's an iconic brand.
Joe Thompson tipped me off to this: in a Gallup study conducted in 1978, they asked, “Have you heard of Rolex?” 8 out of 10 Americans answered no.
Wow.
Less than 20 years later, 8 out of 10 said yes. Rolex did something incredibly right between 1978 and 1998 to go from 20% brand awareness to 80%.
As late as 1977, in the Quartz Crisis, Omega was still the third-largest watch brand in the world behind Seiko, the darling of the Quartz Revolution, and Timex, the volume player on the American side of quartz.
In many ways, Omega should have been Switzerland's most likely horse to ride out the crisis. But it reacted extremely poorly.
What did it do first?
A whole bunch of models.
What did it do second?
It went heavily into quartz.
What did it do third?
It threw the kitchen sink at strategy. It made a bunch of models at a broad range of price points, diluted the brand, and licensed the brand out to other companies.
From afar, it looks like panic, rather than asking, “What are we uniquely best at in the world, and how do we lean into that?”
Omega thought the quartz thing was essential to get right because it was the future, so it switched production to quartz. That's essentially what the whole Swiss industry did. They either fell into the trap, went bankrupt, or got rolled up—Breitling, Heuer, you name it.
The glaring issue in hindsight is that quartz required a completely different set of competencies: a different culture, headcount, and cost structure.
As you said earlier, quartz is fixed cost. It's a technology business with fixed-cost leverage. Swiss mechanical watchmaking is a variable-cost business. They happen to both tell time, but the means by which they do so—and the types of companies you need to build—are entirely different.
The other thing that killed Omega is that it had local agencies. Omega would import its movements, and then the agencies could design their own cases to suit the local market. There weren't internationally standardized models to build a brand around.
That's a major luxury no-no.
A Birkin is a Birkin.
Exactly.
Rolex, by the late 1970s, is importing whole watches. It has its core 6 or 7 watches that people find iconic and is leaning into the idea that you need 1 single global brand and product line.
It's funny that if you look at real enthusiast historians, they bemoan that Rolex stopped innovating after the golden era in the 1950s, when it introduced all the sports watches.
No, that's the point. They got the core product lineup set, and then they rode that horse. Once you create the Porsche 911, you should tweak the 911 once every 7 or 8 years. That way, you can buy a 911 just like your grandfather bought a 911.
To close the Omega story: this is the company that governments and militaries wanted to work with, the company Rolex was trying to beat with its innovative ads and positioning, and the first company to launch a dive watch before the Submariner.
Omega rushed into fighting the Quartz Crisis head-on when it simply wasn't built to do that.
This is where the divide appears. Rolex becomes Rolex, and Omega doesn't become that brand. Omega makes cool watches, but it isn't the brand paying MGM to be in James Bond movies.
Rolex had the cash to wait. It was privately owned, very successful, and wealthy. It could take 2 or 3 years and see how things played out.
If your ownership structure is different, or you have debt, or you're not as profitable, you don't have that luxury. You don't have the margin of safety.
Chapter 2: a guy named Jean-Claude Biver, an executive at Omega, resigns out of frustration.
This thing sucks. They're so timid.
He's the Morris Chang of Omega.
In 1983, Biver buys Blancpain, which had been popular in the 1950s but had disappeared. He buys it with the idea that he will resurrect it as a mechanical-only luxury brand.
The rest of Switzerland was thinking, “How do we take our big, bloated, old-world companies and ride out this technology transition?” Biver says, “I'm just going to buy the brand.” The goal is limited-production, handcrafted watches. Scarcity and the high cost of making them will lead to high prices.
He picked up the brand because everyone was panicking. In inflation-adjusted terms, I think he paid about $16,000.
This is like Bernard Arnault buying Dior out of Boussac.
Exactly. Biver would later sell Blancpain a decade later for 60 million Swiss francs. Back then, that was real money.
He comes up with a marketing slogan to describe the essence of the brand: “Since 1735, there has never been a quartz Blancpain watch, and there never will be.”
It's a great slogan because quartz is 13 or 14 years old, but he invokes 1735. For the first few hundred years, it was impossible to have a quartz Blancpain.
Perfect. The idea is that if you want to buy a commonplace, machine-made quartz watch, go right ahead. If you value traditional craftsmanship, buy Blancpain. They are selling champagne and caviar, and the other companies are selling calculators over there.
Rolex is watching this play out and thinking, “That's the playbook.”
Joe Thompson has a great quote that it was a feat of jujitsu to take the weakness of the mechanical watch—old technology, inaccurate, labor-intensive, expensive to produce—and turn those things into strengths: old-world craftsmanship supported by artisans, in accord with 400-year-old traditions, to make rare, expensive masterpieces.
Blancpain and Biver deserve credit for the move, but in practice they had nothing to lose. It was a fun Hail Mary. I don't think Biver could have predicted how well this strategy would work for Rolex.
Blancpain had the right strategy at small scale, with nothing to lose.
Chapter 3: the auction houses.
The mechanical-watch renaissance came first from auction houses. What do auctions value? Rare things. For a long time, that meant vintage pieces—old things, mostly falling apart, where the surviving examples could command a lot of money.
Mechanical watches were becoming rare because the whole market was disappearing. Companies were going out of business. A few extremely high-end producers, like Patek Philippe, could fetch more than ever at auction, even for new watches.
Patek is the poster child. It came out with the Calibre 89. Have you heard of this watch?
I'm very familiar with Patek Philippe, but I haven't heard of this watch.
You don't wear this on your wrist. It weighs multiple pounds, and you hold it with 2 hands. It's the most complicated watch ever made.
Wow.
It required computer-aided design to manufacture. The strategy in 1979, internally at Patek, was that for the big anniversary celebration in 1989, they wanted to make the most complicated watch ever made.
It had something like 30 complications. It made people go nuts. At auction, it sold for more than $3 million—a landmark high. It was mentioned on Saturday Night Live in a skit: “Who would pay $3 million for a watch?”
A completely high watermark.
It kicked off the new craze of complication makers. People saw it and thought, “I have to add as many complications as possible to my watch.” They got a little goofy.
Interestingly, Rolex never participated in that.
They do their own thing. They want to make the best-engineered, extremely functional, extremely reliable watch—not the most flamboyant, artistic, or complicated.
The 911 you could have bought 30 years ago is the 911 you have today, but today's 1 is better engineered.
Exactly.
This auction-house story, from 1977 to 1985, is essentially the only interesting part of the mechanical-watch world. Then it sparks the idea that new mechanical watches, especially crazy complication watches, can be interesting too.
Around 1985, the Paul Newman dial goes nuts in Italy.
I think a huge piece of this story is that the auction-house market sparked interest in new watches.
It highlighted rarity.
So we've got Omega—what not to do. Blancpain—what to do at small scale with nothing to lose. The auction houses took the used market, for lack of a better term, and sparked the new market. What's Rolex doing?
At first, Rolex explored quartz like everyone else, but very carefully. The Oysterquartz feels profane to even say.
I kind of want one. I think they look extremely cool. They're angular, and the integrated band into the watch face is great.
Rolex poured a huge amount of R&D into quartz watches but didn't productize most of it. It did small runs of the Oysterquartz, a very Rolex way to do quartz that many people have called overengineered.
It pretty quickly got to the idea that if it wanted to lean into mechanical watches as a differentiator—despite being a worse timekeeper—and emphasize the complexity of the mechanical process, it should lean into that romance.
Quartz violated Rolex's ability to tell that story.
There's a great passage in the book Electrifying the Wristwatch by Lucien F. Trüb. It says:
“André Heiniger was a true visionary. His opinion was that the originally very costly quartz watch would soon be commonplace. This had already happened with transistor radios, TV sets, and pocket calculators. Top-quality mechanical movements would always remain expensive and exclusive due to the large amount of highly qualified labor required for manufacturing these parts and assembling them. The inescapable fact that a mechanical device can only tell time approximately could easily be hidden by writing ‘Superlative Chronometer Officially Certified’ on the dial. Wealthy people don't need an instrument that tells time. They want a beautiful and exclusive object on their wrist.”
It's an amazing full-circle moment back to the original wristwatch market, which was ladies' jewelry. Part of the signaling was that you didn't care about the accuracy of the time; you cared about the beauty and what it said about you.
Exactly. I was trying to determine whether this was a risk Rolex took—whether it was counterintuitive. I asked Joe Thompson. He said that in the late 1970s, every watch reporter knew 1 thing: mechanical watches were doomed. Every company told you that, including the Swiss companies.
It was tremendously ballsy to continue emphasizing the mechanical watch.
Or, like Morris Chang, “I bet the company, but I knew I'd be right.”
They took their time. They waited, watched what not to do, saw the Blancpain playbook of what to do, and then hit the gas. They were also starting to see what was happening in Italy, as you described.
The other thing making the Italian market take off was that the Daytona became part of a uniform. For young men, wearing a bomber jacket and a stainless-steel chronograph on your wrist was a look.
I need to get a bomber jacket now.
Midlife crazies here we come.
I think your thinking about Rolex's independence is exactly right. In 1944, when Hans's first wife died, he created the Wilsdorf Foundation and put all his ownership into it, much like the IKEA foundations we talked about in that episode.
The primary purpose of the Wilsdorf Foundation is to ensure the continued operation of Rolex. It is even more ironclad than IKEA's because IKEA is a rat's nest of different structures and country foundations. Rolex is 1 foundation in Switzerland, which has the most privacy- and foundation-friendly laws in the world.
The foundation is also charitable and disperses huge amounts of money, much of it locally in Geneva. But make no mistake: it isn't responsible for shareholder returns. Number 1 is the continued operation of Rolex. It can have 3 bad years in a row and the CEO might not get fired.
They're playing a long game.
Very emblematic of that: in 1978, in the middle of the Quartz Crisis, when Omega was throwing things at the wall, Rolex releases the Sea-Dweller 4000.
More of the same.
Exactly. “What should we do? More of the same. Let's go down to 4,000 meters.”
Rolex had a built-in hedge. It would have been in great shape if it needed to go quartz. It had the brand and the technology to do it well. It had the Oysterquartz. It just hoped it wouldn't come to that.
If Rolex had gone quartz, it would probably be fine today. That would have been a way to build a good business. The way to potentially build a great business was to try this crazy Blancpain strategy at scale with 1 of the biggest and most successful brands in the world.
The important thing is that Rolex maintained the option to play the strategy Omega was playing if it needed to. It hoped it wouldn't come to that.
And it didn't.
By 1989, it was extremely clear the strategy was working. Along with Patek Philippe, Rolex had record sales and record profits.
Patek was similar in strategy. It had early exploration into quartz, but came to the same conclusion: “Our company isn't going to be good at this, so we either need to die trying or lean into this heritage and handcrafted-craftsmanship thing.”
It was an easier decision for Patek because it was only making 9,000 watches a year. Rolex was making about 100,000.
As you said, it was a very well-managed but ballsy decision on Rolex's part.
Patek is also, at least today, in a very different part of the market from Rolex. It's in the dress-watch and complication world.
Listeners, we've been lying to you this whole episode. Rolex is not actually a luxury company.
I totally disagree. That's my opinion.
It's arguably not even a craft product. It's an exceptionally well-made industrial product with exquisite engineering and amazing branding.
The luxury world of watches is Audemars Piguet, Patek Philippe, and others. These watches sell for 8, 10, or 30 times as much as Rolex watches, and they produce far fewer of them.
Rolex is an industrially engineered, beautiful, consistent, reliable product. It's not art, complications, or fashion. It's mass-produced. It sells 1.1 or 1.2 million products a year.
Maybe our definitions of a luxury company are different. If you define a luxury company as the most expensive, highest-end items, I agree that Rolex isn't that. That's Patek and some of the other low-volume companies.
The reason I think Rolex is a luxury company extraordinaire is that it manages the market rather than participating in it. That's what Hermès does better than anybody else. It manages the market, and Rolex does the same thing.
Rolex is completely in control. It could sell its products for much more than it does, but it doesn't because that is the right long-term decision.
There are a bunch of other elements of the luxury strategy that come into the next CEO, André Heiniger's son Patrick, who takes over in 1992.
If we look at luxury versus premium, using the definitions from the LVMH episode, Rolex is absolutely luxury. You're not buying Rolex for its features. You're buying it for what it says about you.
It is a high-volume luxury player, in comparison with Patek Philippe or Audemars Piguet.
The Birkin bag is a good comparison. Price-wise, they're similar. You get a Birkin for $12,000 or $15,000—an insane amount of money, but relative to what they could charge or what the secondary-market prices are, it's similar.
Take us to 1990.
10. Rolex Controls Its Market
In 1992, André retires and his only son, Patrick, takes over as CEO. Patrick had joined in 1986 as commercial director, right at the height of the Paul Newman craze.
What he really did within Rolex was vertically integrate the company. Most importantly, he presided over the acquisition of Aegler in 2004, for a rumored roughly 1 billion Swiss francs. Rolex bought Aegler and made it officially in-house.
He also consolidated all the factories. Every physical location where parts that went into Rolex watches were made—whether in-house or by third-party suppliers, from about 30 locations throughout Switzerland—was reduced to 4 large, consolidated sites where Rolex owns and produces everything in-house.
This is super important.
It's all in service of the luxury strategy of brand management.
I owe a big thank-you to James Dowling, 1 of the co-authors of The Best of Time, who helped me understand what you were talking about earlier with Omega, where it had a core movement but different end models and cases in different regions.
That is the absolute opposite of what you need to do as a luxury company. You can't have 1 that's better than another, different levels of quality, or imperfections in certain markets.
That's critically important because the clientele buying these products is global. They're comparing them with one another.
You can't sweep this under the rug in the watch industry because of the history of fragmented suppliers providing different parts to different brands. There was wide variation in quality among products.
Patrick said, “We need to make sure every Submariner that comes in a Rolex box is of uniform quality.” So he shrank the suppliers from 27 down to 4.
Rolex bought its bracelet maker. It started forging its own metals in-house—gold, steel, and proprietary materials beyond its famous 904L steel. It brands them as Rolex innovations: Oystersteel and Everose.
It already had a lot of control over its future through private ownership, but now it really does, because production is also in its own hands.
This builds into the lore. Just as Hermès has artisans it trains, its own schools, and its own pipeline, Rolex has the same thing in these 4 megasites. It has its own technology, people, and machines.
Ben Clymer has an unbelievable piece on Hodinkee about his experience touring the facilities. You read it, see the photos, and hear them talk about making all their machining and tooling in-house.
There's 1 giant hallway. Ben and James ask why it's so big, and Rolex says, “We designed it so that the width of our biggest machine is multiplied by 2, so we can get bigger ones in the future.”
It's all about vertical integration. It creates the uniformity, myth, and uniqueness of what you're buying when you buy a Submariner or Daytona.
It's true. After reading Ben's piece, I took a step back and thought, “Rolex actually is the highest-quality thing.”
Who else makes its own machine, then opens and closes the clasp 1,000 times in a few minutes to test it? Who else forges its own metals, makes all its own movements, and quietly invents new components without advertising them because it just wants to make the watch a little better, even while keeping the same reference number?
It's going to absurd lengths to make these the highest-quality engineered and produced products in the entire industry—or in any industry.
That's the product and production side, and that's the story of Patrick's time as CEO.
In 2008, sadly, he develops health issues and passes away far too young. Leadership transitions first to Bruno Meier, who had been the CFO, and then in 2011 to Gian Riccardo Marini, a 40-year Rolex veteran who had come up through Italy.
It's strange to have 2 new CEOs in short succession. Over 90 years, Rolex had 3 CEOs.
That speaks to the ethos of small, iterative changes over long periods of time.
What other companies had 3 CEOs in the better part of a century?
It was an accident of timing. They then had 2 CEOs with relatively short tenures because they were older, but both were long-term Rolex veterans.
What they do together through 2008 and the financial crisis is the other side of the equation: the demand side that cements Rolex, in my mind, as a luxury player.
The financial crisis was huge for the watch industry in a counterintuitive way. I lived through this as a banker on Wall Street right out of college. I graduated in 2007, and the first year I was on Wall Street—before the crash—was the height of watches. It was borderline acceptable for me to wear my Daytona because times were good. Everybody was spending bonuses on Swiss watches.
Then the crash happened and all of that dried up overnight. Austerity was the name of the day. It hurt a lot of other watch brands, which cut their prices to try to save revenue.
Rolex didn't do that. It didn't cut prices, and it didn't stop sponsoring the US Open.
Rolex also zeroed out ad spend.
Rolex didn't cut prices or stop sponsoring the US Open.
If you're Rolex, you think, “How long is this financial crisis going to last? 5 years? What's 5 years? It's probably more like 2. We don't have shareholders. We don't need to make our quarter or next year. We have enough cash cushion to ride this out, so we're going to make the right 5-, 10-, and 20-year bets. This is all noise.”
Interestingly, Rolex massively doubled down on marketing spend in the United States during the 2008 financial crisis.
Everyone else was cutting marketing spend and prices on existing products to move inventory. The first time I saw this, I thought, “Who at Rolex made this decision? How could you possibly make this bet?”
As you learn more, it becomes the obvious move. There's a secular trend: the American watch-aficionado market wasn't really a thing until the early 2000s, but it was taking off.
This is when Ben founded Hodinkee.
Enthusiast blogs, YouTube channels—not yet in 2008, but they were coming. Rolex and other Swiss brands used to throw events to generate interest in their watches. Someone told us that old fuddy-duddies would show up, or the events would be for Chinese tourists and be held in Chinese.
That's how small America's watch-aficionado market was in the early 2000s. By 2006, 2007, and 2008, it was taking off. In retrospect, it was logical to double down and go get that new customer.
The easy half of that decision was to keep going during and after the Great Financial Crisis. That's the textbook playbook.
The hard thing was that the watch industry bounced back in the next couple of years. Once zero interest rates kicked in, by 2011, 2012, and 2013, the market was beyond where it had been in 2007.
Many other brands did a whiplash seesaw. They priced high and tried to become exclusive before 2008. Then 2008 hit, they panicked, cut prices, and cut marketing spend. Then the market roared back, and suddenly they raised prices and tried to cash in.
What does Rolex do? It stays the course.
It doesn't raise prices, but it controls supply.
It raises prices slowly every year. It's a modest annual increase that sets the floor. If it does that over enough decades, everyone believes forever that these things will appreciate.
It's almost like the Fed. It's guaranteeing a certain rate of return.
There's a great New York Times article from the last couple of months about this dynamic. Other luxury houses raised prices during the post-COVID craziness and priced themselves out of the market once the reset happened. Hermès didn't, and Rolex followed the same playbook over the last 10 years: it didn't price-gouge itself out of the market, intentionally limited supply, let the secondary market go nuts, kept an even keel, and is now stronger than ever after the reset.
Have they gone too far in their unavailability? A common narrative is that Rolex has burned its biggest fans. The waitlists are out of hand, authorized dealers are disrespectful, and Rolex is intentionally limiting supply.
One dimension where Rolex has historically been different from Hermès and other luxury companies is that it doesn't control the last mile of retail or the customer relationship. It has always had the authorized-dealer model.
These crazy waitlists are somewhat out of Rolex's control, in a way that Hermès, Louis Vuitton, and Chanel manage their own customer relationships.
Rolex does have its own stores. This was 1 of my big questions during the research: why doesn't it have its own stores? This works well for LVMH, Hermès, and others.
The key difference historically is that Rolex is a 1-category company. Hermès can have its own stores because it sells furniture, ready-to-wear, jewelry, and handbags. Even though it sells fewer Birkin bags than Rolex sells watches, the totality of the products supports a dedicated retail footprint.
I don't buy that for a second.
Why not?
Rolex has 1,500 authorized dealer locations. If all 1,500 were Rolex stores, it would do a great job paying rent. It doesn't need to sell many other things to lure people into the store.
I think that's true now, which is why I think the 2023 purchase of Bucherer matters.
All right. Let's have that debate and then come back to scarcity.
Why did Rolex buy Bucherer in 2023?
It spent a rumored 5 billion Swiss francs—maybe 5.5 billion—to buy 1 of, if not its largest, single retail partners. Bucherer has a 100-year-old relationship with Rolex. It was 1 of the first retail partners in the early days.
The Bucherer alliance, along with the Aegler alliance, helped Rolex stay out of the Swiss cartel. In many ways, Rolex has Bucherer to thank for its independence and freedom while the rest of the industry was panicking.
The question is why Rolex should own its retail. It already owns everything else.
There is control over the buying experience and, to your point, list management. As waitlist management becomes more important, that becomes more critical.
That's legitimate. There's also more margin and full visibility into customer data.
They don't get that today. Rolex doesn't have customers' email addresses, names, or addresses because that data belongs to the authorized dealer. Rolex doesn't actually know who's buying or liking its products, which is crazy for a modern company of this scale.
The elephant in the room is that all these authorized dealers sell other brands. Bucherer sells Omega, and it uses being a Rolex dealer to attract those brands and customers who buy other things.
Once you have Rolex, you're a made man.
Historically, Rolex has said that's fine: sell Patek, Audemars Piguet, and Omega in the same location. Will that change now?
Let's walk through the logic. Rolex mostly didn't need to take on the burden, fixed cost, or complexity of owning retail. It dictates how its products are sold, displayed, and marketed, with exacting standards. Over time, retailers have less room to differentiate their own brand and experience. Increasingly, you walk in and think, “Is this a Rolex store?”
Rolex doesn't have to operate the stores. It has about 16,000 employees doing $10 billion in sales. It's an incredibly efficient business from a headcount perspective.
Industrywide, third-party retailers make a 37% gross margin after marking up from wholesale. For Rolex, it's lower—Rolex retailers only get to keep 33% or 34%. I've heard that went down 1 percentage point this year.
Rolex gets to have its cake and eat it too: it doesn't own retail stores but has many of the benefits of a highly controlled retail experience.
I think your points are valid about Rolex increasingly wanting the customer touchpoint, especially for waitlists.
Rolex doesn't necessarily do things for gross margins. It's a foundation-owned company. It does things for long-term strategic reasons.
If you buy the premise that operating its own retail locations would pressure Rolex to put more things in those stores than the 6 or 7 core models—and you probably couldn't walk out of the store with one of those anyway—you'd be going to sign up for a waitlist.
That's a very different experience from Hermès retail. You can't walk out with a Birkin, but you can walk out with a scarf, piece of furniture, or Apple Watch strap.
It's astounding that Rolex has had the discipline to remain just a watch company. Imagine the opportunity to become a diversified luxury company: Rolex jackets, sunglasses, fragrance, luggage.
Why isn't Rolex in luggage? It could make 904L-steel carry-ons and make Rimowa look like child's play.
I suspect this is part of why it hasn't gone directly into retail.
Maybe, but I don't think so.
You think Rolex is going to give in to customers who want other things in the store, or ignore all the free money from Rolex luggage?
I could be wrong, but imagine what it takes to operate these retail locations. You're competing for physical space with LVMH in the most expensive, highest-rent, highest-end places on Earth.
You may not care about margins and may be able to take the hit, but shoppers want an experience and to walk out with a product. If there's a Rolex-only store with 6 or 7 models that you can't walk out with, what is it doing?
High-end Bonobos.
A high-end Bonobos where you have no idea when you'll get the call.
Compare that with Bucherer. You can't walk out with a Rolex, but you can walk out with a bag full of TAG Heuers.
The market isn't exclusive. Anybody who's a watch collector isn't just a Rolex collector. Someone who loves Rolex may also own a Panerai or something else.
So why did Rolex buy Bucherer?
It will improve the economics of watches sold through Bucherer, and it will give Rolex leverage over other retailers. But it didn't need that leverage. It can say, “If you want to remain a Rolex authorized dealer, you need to invest a lot of capital in rebuilding this part of the store. We'll get back to you in December about whether we're renewing your contract next year.”
It already has all the leverage.
It will also let Rolex have a tighter grip on watch allocation and customer touchpoints, including waitlist management. I agree that's a huge liability right now, but Rolex didn't need to own the authorized dealers to do that.
It could put a clause in next year's contract saying, “We're managing the list. You can't maintain your own waitlist. If we catch you doing that, you lose your license.”
Great point.
Maybe Rolex felt that wasn't ethical—that it was the dealer's business and it had to let the dealer run it. But it could have solved the issue without buying a company representing 8% or whatever of total sales.
The biggest reason may be that Rolex didn't want anyone else to buy Bucherer. It's a 100-year relationship, the family had no one to pass it to, and they were looking to sell.
Rolex is a private company and doesn't want someone else owning an asset with visibility into Rolex, since Bucherer sells so much of its inventory. It doesn't want a public company reporting how many Rolex watches were sold through it. That would be horrible for Rolex.
LVMH would have loved to own Bucherer. It owns Sephora. You don't think it wanted Bucherer?
Bucherer also comes with Tourneau, the American retailer, which I'm sure Rolex doesn't necessarily want to own. But here it is.
I think the reason was to keep anyone else from buying it.
The reason people are up in arms about not getting calls from authorized dealers is that waitlists were really only a thing until around 2015 for steel Daytonas. For the rest, you could just buy them.
It's this new notion of having the privilege to spend $7,000 to $20,000 on something and being told no by the local jeweler. That's crazy. Most of the time, they'd say, “Absolutely. Let me walk you to the checkout.”
Rolex could put waitlist management in the contracts, manage the list, and publish how it works. It could earn a lot of customer goodwill without buying retailers.
It absolutely could.
I don't think Rolex wanted to be in the luxury business. I think it wanted to be a lifestyle brand with fantastic engineering, to keep making things a little better every year, and to have the best brand it could with customers.
Luxury happened to it. It didn't have much choice after the Quartz Crisis.
I heard an anecdote that Richemont, particularly Cartier, decided to start acting like a luxury watch brand and reconvened the watch industry around itself in a luxury way.
For example, instead of competing with Baselworld or the Basel Fair, Richemont started its own event in Geneva and said, “The industry gathers here in Geneva now. We're going to be fancy about it. No one's eating bratwurst on the show floor. We're going to sell watches with champagne and caviar and a presentation ceremony.”
If you're not doing that, that's what watches are now.
I can believe that. Go back to Hans Wilsdorf. That wasn't his vision for the company. His vision was a Rolex watch on every wrist.
I don't think Rolex drove that shift. The industry went that way, and Rolex happened to be the most prestigious high-volume player. It's figuring out what it means to be an accidental luxury brand.
I can believe that.
Now that we're in scarcity land, have they gone too far in their unavailability?
The main reason Rolex didn't ramp production to meet demand isn't positioning, and it isn't “We're a luxury brand; we don't do that.” It's that Rolex doesn't want to destabilize the business.
Good times come and bad times come. It doesn't want to be the brand that ramped production 20% in 1 year and then had to slash MSRP, embarrassing customers who bought at full price and suddenly see the product discounted 20%.
That's a horrible way to destroy a brand.
Cartier overproduced watches in 2016 and had to destroy hundreds of millions of dollars of inventory. That doesn't happen to Rolex.
It makes very incremental, slow increases to production over time. That's what has served it well. It never wants to be close to the line of real demand.
There's a business-physics lesson here: it's very hard for a business to become smaller than its largest-ever size.
It's like a down round in venture-backed companies. Customers and employees don't like it, and it's hard to shrink overhead to rational new realities after a bubble pops. It doesn't feel the same as when it was always having its biggest, best year.
Rolex doesn't want to be in that position. It's conservative to a fault with slow, modest increases in production, and slow changes.
When a bubble brings in a lot of new fans, it's an immovable object meeting an unstoppable force. Rolex isn't going to meaningfully ramp.
The biggest thing it has done is start construction on a new production facility, which will open in 2027 or so. Even that might be a 10% or 15% bump.
Rolex is probably torn. It doesn't want customers whose demands it can't meet, but it also doesn't want to destabilize the next 100 years.
New demand is a risk if you're taking a very long-term view. Managing valuable customers who want a long-term relationship with you and are angry while protecting your stability is hard.
Coming back to the waitlist, I think the positive justification is making sure people who become clients, buy products, and participate in the brand really want it and aren't just there because it's the hot flavor of the week.
Rolex cares about that, but not as much as Patek Philippe. Patek wants to appease collectors and true fans.
Rolex acknowledges that it's commercial. It's here for executives who get promotions, doctors, dentists, lawyers, and finance people. That's its bread and butter. It doesn't want to lose the brand patina with that huge volume of material wealth in aggregate.
James Dowling put it to me in a visceral way: the typical Rolex buyer isn't comparison-shopping against Patek or another brand. They're comparison-shopping against, “Do I buy this Rolex, or do I upgrade my 911?”
That's interesting.
There's 1 more rumor that should justify Rolex. It isn't happy that it can't make enough watches. I maintain that a steel Daytona, a rainbow model, or something rare can stay rare, but Submariners should be on shelves—or at least you should get the call 2 weeks later.
I heard that from 2020 to 2022, Rolex asked employees to come in 6 days a week instead of 5 to meet demand.
If that's true, it's pretty telling about how Rolex feels.
There's 1 more piece of the Rolex corporation and story that puzzled both of us. When we were in Taipei to interview Morris Chang, we went into Taipei 101 and walked by Tudor. It was an authorized dealer with both Rolex and Tudor.
I think a lot of authorized dealers—or maybe all of them—if you take Rolex, have to take Tudor.
What is Tudor?
Like the British royal Tudor family?
Tudor is Rolex's sub-brand. Technically, it's another company owned by the Hans Wilsdorf Foundation. In practice, sure, it's Rolex's sub-brand.
To your earlier point, if you're going to argue that Rolex doesn't want to be a luxury company, a textbook violation of luxury strategy is having a sub-brand. We were asking, “What the hell is this Tudor thing?”
If you look at Tudor's products, a lot of them are Rolex products.
Tudor was started by Hans Wilsdorf in 1926 with the stated purpose of being a more affordable brand than Rolex while maintaining high quality standards. Originally, Tudor used Rolex cases and bracelets with off-the-shelf movements from ETA, now part of the Swatch Group, instead of the movements Rolex was getting from Aegler.
You look at it and it looks like a Submariner.
You walk into a Tudor authorized dealer or go on the website and think, “That looks like a GMT-Master. That looks like an Explorer. That looks like a Submariner.”
It almost feels like a knockoff, except that Rolex knockoffs are shockingly good. You could go a decade owning 1 and not realize it.
For the longest time, we wondered what was going on. Then we realized the real limiting factor in Rolex production is movements. Movements are hard to make, and all Rolex movements are Aegler movements—or now in-house Rolex movements.
Tudor does not use Aegler or Rolex movements. It uses third-party movements.
So Tudor is a release valve. It can ramp up production of the Tudor Submariner, GMT-Master, Explorer, or whatever with third-party movements.
What do you mean by “release valve”? Customers can't get a Rolex, so they get a Tudor?
I think that rarely happens. But Hans's original vision was that everybody should be able to own a Rolex. This is 1 way for that to happen.
I don't think that's it. Tudor is a shockingly low percentage of Rolex's production—less than 1%, if that.
If that were the strategy, they would sell Tudors in volume. Take the Black Bay, the Tudor Submariner, at $4,000. Most people don't know or care about the Black Bay. If they walk in thinking they want a Rolex, they aren't walking out with a Black Bay. Tudor sells so few of them.
So what are they doing?
I think Tudor is an innovation lab. It's a way to protect the Rolex brand. If there's something new and interesting that might be a fad in the watch world, Tudor can implement it and figure out how to produce it.
If it flops, that's fine. Watch aficionados who know Tudor expect it to come out with weird stuff that flops. If it's durable, Rolex might get it in 5 to 10 years with more polish and thoughtfulness.
Tudor has tested dial colors, ceramic bezels, titanium watches, and many other things that are slowly making their way into Rolex.
The key thing is that Tudor can compete with Omega and TAG Heuer in the midmarket, so Rolex doesn't have to punch down.
I heard a great phrase: “The shield protects the crown.” The Tudor shield protects the Rolex crown. Rolex never has to risk doing something dumb in chasing a competitor. Tudor can figure it out.
It's like the LP show as an innovation lab. If something is interesting but doesn't belong on the main show, or there's no place for it in the lineup, it can still provide value.
The real watch nerds will tell you they love Tudor. Even though it's a $4,000 watch, the movements are incredibly high quality, and consumers may be getting a pretty good deal.
If I go buy an Explorer tomorrow for its MSRP—$8,000 or so—Rolex makes phenomenal margins on it. Tudor doesn't sell many, so $4,000 is only $2,500 wholesale for a high-quality movement, with low economies of scale. Whatever fixed costs exist aren't being amortized across many watches.
I'm sure Tudor isn't losing money, but it may be a great deal for customers.
You're right. I like your rationale better than mine.
We both had a lot of conversations trying to figure this out. We were texting each other: “What are they doing? This is the worst luxury company ever.”
Level-set us on the company today.
First of all, nobody knows.
There are 2 good ways to guess. 1 is our friend Arvind Narayanan, who did an amazing long-form write-up of the business of Rolex and found excellent public sources. The other is the Morgan Stanley–LuxeConsult industry report, which sent us a copy in preparation for the episode.
We made our own estimates, looked at the Morgan Stanley report, and thought that the most reputable, well-connected person networking with the dealers was probably within 10% to 20% of the truth.
They make about 1.1 million watches a year, maybe a little higher. Morgan Stanley says 1.24 million, so think 1.1 to 1.2 million.
That sounds right.
For revenue, think around $11 billion in sales.
The interesting thing is market share. Rolex's share of the Swiss watch market by revenue is insane. Morgan Stanley and LuxeConsult estimate it at 30.3% of the entire Swiss watch industry.
Nobody else comes close. Cartier and Omega are at 7.5% each. The number 2 and number 3 players combined are at slightly less than half Rolex's scale.
Patek Philippe is at 5.6%. Audemars Piguet is at 5%. Then you have massive fragmentation.
Rolex makes something that isn't crazy expensive, but sells the absolute crap out of it on a unit basis.
That was revenue. In units, Rolex makes roughly 15 times as many watches as Patek Philippe and 22 times as many as Audemars Piguet.
People talk about these brands in the same sentence, but they're completely different segments.
Rolex's average selling price—not the listed Rolex price, but what retailers sell it for—is around $113,000. Audemars Piguet is $48,000, Vacheron Constantin $38,000, and Patek Philippe $40,000. They're totally different categories.
This is part of my argument that Rolex isn't really luxury. It has found the sweet spot in the market. If you think of a curve with units and price, Rolex found the spot where it can maximize revenue: sell an absolute ton of watches that let people express something about themselves while staying away from the true luxury market, where production is very limited.
It's almost its own category entirely.
The secondary market lets Rolex do this. Even though its model lineup has remained stable for decades, the tiny changes in reference numbers and models create incredible scarcity and rarity for people who care.
You segment the market. Certain flavors can become the several-hundred-thousand-dollar Rolex market or the multimillion-dollar Rolex market.
Rolex can participate in what Patek and Audemars Piguet participate in through the secondary market, or through special editions in the primary market.
The rainbow-dial Daytona is pretty baller.
The Emoji watch.
Exactly. Rolex can make these extremely expensive special editions, both in the secondary market and through limited-edition primary-market watches.
If Rolex weren't as strong in the secondary market, it wouldn't have permission to release special editions selling for several hundred thousand dollars in the primary market.
What it has done so brilliantly is create something the whole world knows about—something everybody sees as a sign of success, of having made it. If you have one, you're like those divers, pilots, and explorers.
As global wealth grew, Rolex got to index into that.
A Rolex is a lot of money, and it isn't accessible to most people. But if you work a solid white-collar job in America, get a big promotion, have a major life event, or have a child, is it reasonable that you could purchase one?
It's right on the edge of unreasonable, which is exactly where it needs to be.
If you make sacrifices, you can probably do it, depending on your salary.
Since the 1950s, there's been a wealth class of doctors, lawyers, finance people, and recently tech people who can buy a $10,000-plus watch if it's what they choose to buy.
It's a sweet market. It's an almost-unreasonable thing that a lot of people can buy.
To your point about luxury, I still maintain that Rolex is managed in the same fashion as the world's best luxury brands, even if it sounds more like a BMW or Mercedes.
Cars are expensive and you need 1 anyway. You can spend a lot of money on a 911, but you have the functioning alibi of needing a car you like driving.
No one says, “I needed this because I needed a purse to carry things.”
Nobody needs a watch anymore. It has no functioning alibi. It's a pure display of, “I feel like a better version of myself when I wear this.”
I genuinely love the engineering. It's unbelievable. But the alibi is much weaker than in other categories, which probably isn't an accident; it coincides with the takeoff of watches as luxury items.
You said Rolex has found the ideal point on the curve. It multiplies 2 pretty big numbers together instead of 1 big number and 1 small number.
They have high volume and high dollars per unit.
Exactly. That makes the whole thing confusing.
Calling this the high end or middle of the watch industry is wrong. Mechanical watches serve an entirely different job to be done than they did in the past.
This is a new industry with nothing to do with telling time. It's goofy to compare it with smartwatches, quartz watches, or fashion watches just because they look similar and occupy wrist real estate.
We should define markets by the actual job to be done for customers. Coming out of the Quartz Crisis, Rolex found a completely new job to be done for its product and had positioned itself there during the previous 2 decades with professional watches, tool watches, and advertising.
Exactly.
Employee count: Rolex has about 16,000 people worldwide, around 9,000 of them in Switzerland.
The Swiss watch industry is about a $35 billion wholesale market across all players, including the high end, Omega, Swatch, and everyone else. Rolex does about $11 billion of that.
Where it gets interesting is when we zoom out from Swiss watches. Switzerland produces only 2% of the world's watches.
And everything else is a $10 piece of crap.
Switzerland makes around 177 million watches a year, while estimates put total global production between 700 million and 900 million.
That includes smartwatches, cheap $25 watches, and everything made in Hong Kong and China.
The 2% of units made in Switzerland accounts for 45% of the dollars in all watches.
Apple alone ships more Apple Watches every year than the entire Swiss watch industry.
The smartwatch industry is estimated at around 80 million watches a year. Apple may do 30 million to 50 million, depending on the year.
The 17 million Swiss watches include Swatches, fashion watches, and quartz watches. It's true that 45% of dollars come from 17 million watches out of 700 million to 900 million, but it's even more concentrated because the quartz watches don't contribute much revenue.
86% of Switzerland's watch exports come from mechanical watches. The move during the Quartz Crisis to lean into mechanical really worked from a dollar perspective.
40% of all watch revenue in the world comes from Swiss mechanical watches.
Amazing.
Now look at net profit. Rolex has 30% of the Swiss market by revenue, but probably more than 30% by profit.
Morgan Stanley and LuxeConsult estimate that of the $35 billion in total revenue for Swiss manufacturers, there is about $11.8 billion in total profit, implying an industrywide operating margin of 29%.
Do you think Rolex has only a 29% operating margin?
No. There are people in this category with negative operating margins—big conglomerates trying to get into watches and not generating much profit.
Estimates are between 30% and 40%. I would bet it's closer to 40% for Rolex. My best guess is that while Rolex accounts for 30% of industry revenue, it accounts for around 40% of total Swiss watch-industry profit.
Agreed. It's also vertically integrated except for retail, which should create a better profit structure.
Then you get to the balance sheet. They're generating something like $3 billion to $5 billion a year, maybe more. They've done $2 billion to $3 billion for at least a decade or 2.
It's not crazy to think they have accumulated more than $50 billion in cash before investment returns.
It's totally an IKEA situation. There's a lot of cash sitting there.
The Hans Wilsdorf Foundation doesn't publish numbers publicly, but people estimate that it gives away around 300 million Swiss francs every year. By your numbers, that's about one-tenth or less of the cash the business generates, and it still makes Rolex 1 of the most active annual-disbursing foundations on the planet.
It's unbelievable. It's a broad base of philanthropic initiatives—environment, science, arts—and not just things that help Rolex. It's a legitimate charitable foundation.
A core part of the foundation's mission, which Hans put in its bylaws, is to help the city and people of Geneva. Over the years, it seems to have concluded that the best way to do that is often just to give people money.
If a family can't make rent or has a health issue, it can apply for grants and receive money. The foundation doesn't make a big deal about it.
One thing Rolex definitely does with its money is own some of the most expensive real estate in the world. It owns buildings in Switzerland, prime real estate around Bond Street in London, and property in Milan, Melbourne, Tokyo, and New York.
There's a gorgeous new building about 1 block from Rockefeller Center and Radio City Music Hall. The old Rolex building was nice, but the new 1, scheduled to be done next year, looks unbelievable.
They own a building in Manhattan. You've got to put the money somewhere.
They own a lot of real estate in Geneva, a big service center in Dallas, and the school in Pennsylvania. Hilariously, they just bought the building where Omega has its flagship store in Geneva.
Omega makes a rent check out to Rolex every month.
Amazing.
That's not asset management. That's spite.
I don't know.
It's pretty funny.
It's a safe assumption that there's a boatload of money sitting there.
How would you value Rolex if it were publicly traded?
You could use a sector multiple from other watch companies, but applying the Swatch multiple isn't right. Maybe Patek Philippe, since it's vertically integrated and has a strong brand, but it's privately held, so we have no idea.
You could use conglomerates like LVMH or Richemont, but there's too much other stuff in there. Rolex is a pure-play, single-brand company with the leading brand in the sector.
There's only 1 comp for this business. Maybe 2 with Porsche and Hermès.
That's where I was going: Hermès.
Porsche trades at 15 times earnings. Hermès trades at 60 times earnings, or roughly a 20 times revenue multiple. My best estimates for Rolex's growth rate are in the same neighborhood as Hermès, and Hermès's margins are also similar—around a 40% operating margin.
That's where Rolex differs from Porsche. If the growth rates and operating margins are similar, and it's a single premium brand that's best in its sector, you could value it like Hermès.
We don't know Rolex's earnings, but you can back into something like $3 billion to $4 billion a year pre-tax.
You could also use a revenue multiple. There are many things Rolex could do to improve operating margins, but it doesn't do them because they would erode its positioning.
The range is too wide to give 1 number, but plausible scenarios go from $40 billion or $50 billion to $200 billion.
That's enterprise value before assets.
There's no way this business is worth only $40 billion. I don't know whether it's worth $200 billion, but it's worth more than $100 billion before assets. Market cap includes assets, so if it traded publicly with these assets, it would probably be among the top 50 companies in the world.
It could be worth more than American Express, Goldman Sachs, Adobe, Pepsi, Disney, Qualcomm, or AT&T.
I like the Rolex business better than a lot of those.
All of this feels profane because they would never do it.
If I bought Rolex shares, I could never do anything with them. I could never sell them.
You'd have to ask why you were getting the shares and who was selling them to you. It might be a fake.
We didn't talk about the fake market in much detail, but I think it was great for Rolex for a long time. Rolex was certainly—and probably still is—the most-faked watch brand, if not the most-faked brand in the world.
That was good for Rolex while it was raising awareness and building prestige. In the 1990s and early 2000s, it was probably a good thing.
Going to New York and hoping to buy fake Rolexes on Canal Street adds to the myth and legend.
Exactly.
Now it probably isn't a big deal. It's also strange that the fakes are so good. You can go to reasonably reputable online retailers and not be sure you're getting an authentic Rolex. Often it's the wrong movement in the right case, or part of it is counterfeit but not all of it.
Let's move into analysis.
Power. This is where we use Hamilton Helmer's framework of 7 Powers to analyze what helps a business achieve persistent differential returns—what makes it more profitable than its closest competitor.
Quite a task for us here.
Should we just move on?
For new listeners, the 7 Powers are counter-positioning, scale economies, network economies, switching costs, process power, branding, and cornered resource.
I think the interesting thing is to stack them against the closest competitor. In some senses it's Patek, in some senses Omega, and in some senses Apple.
I completely disagree on Apple. I'll go to the mattresses on Rolex. It's not a time-telling device. It has nothing to do with function.
I agree. However, there's only so much real estate on your wrist, and most people aren't going to wear 2 things on 1 wrist.
I've been dual-watching all week—1 on each wrist—and it's a little much.
Do you feel funny?
A little funny.
You're right. It is competitive for wrist real estate, and it's irrelevant that they both tell time.
Neither of them tells time. One is a piece of craftsmanship on my wrist, and the other is notification center and fitness.
That's a huge reason I wear my Apple Watch. I've worn it to bed every night for 9 years to track calories and sleep.
Same.
I don't compare their prices because they don't achieve the same function. If I buy a Rolex, I'll pay about 10 times what I paid for my Apple Watch.
This is a silly exercise because the whole point of the episode is that Rolex doesn't have competitors. There's nobody for it to counter-position against.
The interesting question is what gave Rolex power in the 1940s, 1950s, and 1960s. Today it's almost boring: it's branding and category ownership.
When did Rolex actually take risk? Outsize winners with outsize rewards often come from doing something risky or counterintuitive at the right time.
I think Rolex made rational decisions and executed better than anyone else. The 3D chess to get Eisenhower's watch, the lifestyle marketing, working with J. Walter Thompson and IMG, and the testimonials—they just did better than everyone else, and that advantage compounded.
Was the Quartz Crisis really a risk? Rolex looked around and was in a privileged position with the resources and structure to make the decision. The same thing happened in 2008. It did the logical thing and had the structure and resources to pull it off.
It's dangerous to speak for Rolex because Rolex doesn't speak and nobody speaks for it. But I suspect its answer would be some version of continuity.
There have been major changes and different eras, but Rolex stuck with a strategy, positioning, product lineup, and culture longer than almost anybody else.
The 1 time it really took a risk was the Aegler order.
Yes. That isn't the answer for why it has 30% market share today, but it was huge. The order was 5 times the capital Rolex had in the business.
So it was either a multiyear order, financed, or both.
I'm sure Aegler extended credit.
Since then, Rolex has made very shrewd decisions and executed immensely well. That feels very Swiss.
It does.
Another weird playbook question: Rolex occasionally makes exceptions, like the jigsaw-puzzle Day-Date, the Emoji watch, or the Domino's Pizza deal.
They have just enough whimsy.
It's not a cohesive weirdness. You look at Hermès and all the fun they're having is the same kind of fun. Rolex makes 1 befuddling decision every 10 years that doesn't seem impactful to the strategy.
Tudor with Tiger Woods as spokesperson is another 1. Why would you put Tiger Woods on Tudor?
They occasionally have these very odd things where you wonder how they made it out the door.
Sometimes it works. The relaunch of the Milgauss was an awesome decision.
The product naming is funny too. The Milgauss used to be basically a Submariner, and when they relaunched it, it was basically an Explorer. The only things they share are the name and the ability to withstand 1,000 gauss.
The GMT-Master II is basically a GMT-Master. What does “II” mean? When they release a sequel to a watch, it's the Hulk. The Deepsea is both a Deepsea and a Sea-Dweller.
Their product naming is confusing.
Let's analyze smartwatches for a minute. The Apple Watch came out in 2014. Was that the best thing to ever happen to Rolex, Audemars Piguet, Patek, and others?
It raised awareness for the category. Suddenly people were wearing something on their wrist and spending hundreds of dollars on it. They became open to spending thousands of dollars on it.
I never thought about that. I had a smartphone, so I hadn't worn a watch in a long time. Then I saw other people I looked up to doing it and thought, “I could potentially go up 1 level from a smartwatch.”
It was a strange progression that definitely helped them. However, it destroyed the low end of luxury: Longines, Tissot, TAG Heuer, and anybody making a $500 to $1,000 mechanical watch.
Why buy an obsolete thing for the same money as an Apple Watch?
There's a great New York Times piece from before the Apple Watch that quotes someone at Apple saying Jony Ive was bragging around the company that the forthcoming watch would destroy the Swiss watch industry.
He was both 100% right and 100% wrong. He was right that the low end of the Swiss industry, to the extent it existed after the Quartz Crisis, was destroyed. But the high end—and especially a gold Apple Watch—was not.
The Apple Watch decimated the low end, but no one took the high-end edition seriously. It addressed a new market. High-end watch people weren't going to buy an Apple Watch, but for new Apple Watch customers there was no reason to buy a $10,000 watch.
For a small subset who bought Apple Watches, it became a gateway to the high-end mechanical-watch industry. That subset is small, but it spends a lot of money.
The Apple Watch also destroyed the fashion-watch industry. We didn't have room for the whole Swatch Group and Fossil story, but in the 1990s quartz watches made $25 watches possible. That market went away with the Apple Watch.
Fossil's stock is down 99% since the Apple Watch came out.
That product category doesn't exist anymore.
It would be amazing—and will never happen—if there were an Apple Watch Play for high-end mechanical watches, like CarPlay or Android Auto.
What would that mean?
Wear a Rolex and get the fitness tracking.
I don't understand how that would work.
Is there someone at Rolex working on this? Does Rolex treat it like quartz, or feel entirely safe? Is there a research lab trying to figure out what a Rolex smartwatch looks like?
I'm sure there is, and they won't release it unless they absolutely have to.
Those people must be parasites around the building.
Talking about smartwatches reminds me of another moment we didn't discuss: when cell phones became popular, around 2002 or 2003, and certainly by 2010 when smartphones were popular. That was when you stopped needing a watch.
Before 2005, you needed a watch. Everybody needed one. Now it's something you don't need.
There's no functional alibi anymore. Everybody needs a car. You can buy a 911, but you have the functioning alibi that you needed a car.
Tell your spouse, “I needed this because I needed a purse.”
Nobody needs a watch. It has no functioning alibi, so it is a pure display of feeling like a better version of yourself when you wear it.
I do genuinely love the engineering, but it's a much weaker alibi than other categories. That probably coincides with its takeoff as a luxury item.
Why did this become the status symbol associated with success? Why this 200-part steel thing on your wrist?
Easy answer: for most of the 20th century, it was the only socially acceptable form of male jewelry. The women's watch market was also big and important, but it bled into jewelry. In the men's world, this was men's jewelry.
You could wear your wedding ring and your watch—the only broadly socially acceptable jewelry for men.
For a long time, you needed 1. There was a functioning alibi, but there wasn't for jewelry for the practical man who didn't need jewelry.
Can a status symbol remain a status symbol after you get 100 years away from the last time it had utility?
Thirty or 40 years is 1 thing. You remember your parent or grandparent using it. But what about 5 generations after anyone legitimately believes its utility is justified?
Is there a risk this becomes like the home telephone, fax machine, or some other technology that had utility, became a status symbol, and then got so far from its utility that it failed to be credible as a status symbol?
Maybe they become bracelets and jewelry.
I could see that.
I don't know the real answer. I don't think it's happening anytime soon.
I have 2 more points. The first is that the slow iterations and stable lineup help customers feel smart.
There's value in the fact that when I look down at my wrist and you look down at yours, what Rolex sells today is pretty much the same thing. That means I made a good decision 20 years ago when I bought this.
You'd feel dumb if you bought a Turn-O-Graph, just like you'd feel dumb if you bought an iPhone 3G and then 2 years later the iPhone 5S was out. It helps Rolex's long-term value to make customers feel they made a good decision when they bought the product.
The last thing: have you ever heard the phrase “former Rolex employee”?
No. I'm sure that's by design.
I only saw it once in the research. You start working at Rolex and stay there. It's a loyalty thing, but also an incentives thing. Rolex pays well, has great benefits and perks, and is the best company in the industry.
It works well for secrecy, and it's doing cutting-edge work. It's not like you're just cranking the same machine every day.
I'm sure many people are doing the final finishing on their 10,000th Submariner.
But the parts, processes, and methods are constantly changing.
That's true.
Quintessence time. Let's land the plane.
I often have a blank going into this because I feel like we arrive there throughout the episode. Mine is that Rolex is positioned at the perfect point on the curve of price and quantity.
It's the most optimally positioned supply-and-demand curve company we've ever covered. That's how you get 30% of market share by revenue and produce $10 billion a year making watches.
It makes millions of people feel they're buying something very special. They are, and that's why I admire the company.
I've got 1 more addendum to my quintessence. There's no way to know for sure, because Hans has been dead a long time, but he seems like he was a really good person.
That's not always true of the protagonists or founders we cover on Acquired. Maybe I'm wrong and he was a big jerk, but it has been lost to history because there's not that much information about him.
He seems genuinely good. He loved and was devoted to both of his wives, then devoted himself to the company and its legacy even though he never had children. Putting the foundation together was motivated by the long-term legacy of the company, but the foundation gives away 300 million Swiss francs a year, with a large portion going directly to people in need in Geneva, his hometown.
That's amazing. He also made his secretary in London, Mercedes Gleitze, a star in 1927. He seems like a genuinely good person.
People ask whether you have to be a certain kind of person to found a company like this. I think you have to be crazy, but some people ask whether you have to be ruthless or bad.
The world is a microcosm: some people are good and some are not. You have to be extremely something, and that extreme quality has to fit your product, market, and timing.
My thesis is that calling Rolex the high end or middle end of the watch industry is wrong. Mechanical watches are an industry today serving an entirely different job to be done than they served in the past.
It's a new industry with nothing to do with telling time. It is goofy to compare it with smartwatches, quartz watches, or fashion watches just because they look similar and occupy wrist real estate.
We should define markets by the job to be done. It's incredible that after the Quartz Crisis, Rolex found a completely new job to be done for its product and had positioned itself there during the previous 2 decades with the professional watches, tool watches, and advertising.
I couldn't agree more.
Here is the thing to leave you with: Rolex is the watch you want when you start getting into watches, but it's also the watch you end up at after you study the whole industry.
You go through exotic steps along the way, with more artistry, more complications, and certainly more expensive price points, but when it comes down to the most exquisite engineering, quality, serviceability, precision, water resistance, and self-winding, amazingly the brand with mass appeal—the 1 all the newbies want, which sells a million a year—is also 1 of the highest-quality watches.
A different version of this, which I read somewhere in the research, is that Rolex is a company you like more the more you study it.
I didn't want to record this episode because it meant I was going to stop researching. I loved bathing myself in this industry and this company and its products.
I have good news for you. If you decide to go down the watch rabbit hole, it's deep. The watch blogs, Hodinkee, and everything beyond it—it goes very deep.
When you describe the curve, it starts with Rolex and ends with Rolex. It's a company that owns its category.
The comparison is Apple. Go to Rolex's website and click on any watch. It looks like an Apple product page. It names the components inside—the proprietary Parachrom hairspring, like a neural engine, or a Liquid Retina display.
Its YouTube channel looks like Apple's high-gloss promotional videos: products whizzing through space and plunging into water. The product is mass-produced and high-margin. There's a big brand premium, but it is also the highest-quality engineering in the industry.
The financials look so good because Rolex found the spot on the curve that lets it multiply 2 large numbers: units and dollars per unit.
Billionaires have iPhones, and people buying their first smartphone have iPhones. Unlike handbags or cars, the phone and smartwatch category has a single company that defines it: Apple.
Rolex and Apple are mirror-image companies in a lot of ways.
I guess we have to do Apple now.
That isn't going to be 1 episode.
No. In retrospect, this shouldn't have been 1 episode either. I don't know where we would have broken it up.
Thank you, listeners.
This was a blast.
It really was.
I have 1 piece of trivia for you before carve-outs. Can it top your Panerai trivia?
I'm proud of that 1.
Rolex has become so sophisticated in manufacturing that it uses ultraviolet lithography in making its watches.
Hell yeah.
It's not etching silicon—God forbid Rolex should get anywhere near a semiconductor. It's etching a very specialized, precise type of gear. In the Rolex Daytona, it ensures the teeth mesh perfectly, so when you start the chronograph, there's no jumping or accidental kickback. It starts exactly right.
That's amazing. I have 1 more piece of trivia for you.
Go on.
What watch company holds the record today for the watch that has gone deepest in the ocean?
This has to be a trick question. Of course it's Rolex. It went down to the bottom of the trench.
Omega.
How did Omega go deeper? I thought Rolex went down the trench.
The Rolex Deepsea Challenge happened in 2012. In 2019, the Omega Seamaster Planet Ocean Ultra Deep Professional went 20 meters deeper.
What did they do, drill a hole in the ground at the bottom of the trench?
I think they found a deeper part of the trench.
This is the classic Omega versus Rolex thing. Technically, something else sits at the top, but for all intents and purposes, Rolex does.
Amazing.
I have 1 carve-out. My family has been very sick with the flu over the last week, and I've had zero time for anything else. I owe an extreme debt of gratitude to Joe Brumm and the Australian Broadcasting Corporation for creating Bluey, the most wonderful children's cartoon ever.
My 3-year-old and millions of others sit and watch it, and I can watch with her without wanting to rip my eyeballs out.
My 15-month-old will be into that soon enough. I'll take your recommendation.
It's so good. There's no comparison. It's the greatest children's content ever created.
You're in for a real treat.
I have 2 carve-outs. On the podcast Armchair Expert, David and I joined Dax and Monica a couple of weeks ago to review the business of the NFL. It was fun to update our episode and do it with Dax and Monica, who are great.
My second is an app called ElevenReader by ElevenLabs. I'm sure it does more, but the thing I use it for is amazing. You paste in a link or upload a PDF, and in a convincing AI voice that sounds remarkably human, it reads you something that was text.
I'm the person who, 15 years ago, was highlighting emails, right-clicking, and using Apple's built-in speech function to read things because I'm much better at processing information auditorily than visually.
For this episode, I had so many PDFs to read as research—things that weren't audiobooks or podcasts. I willed myself to read 2 physical books because this Rolex material is mostly coffee-table books, with nothing available on Kindle.
ElevenReader saved me by letting me listen to much of what I needed to research. It's an excellent app if you like turning text into a compelling human-narrated voice.
You have the opposite research-consumption style from me. I need physical hard copies with a pencil that I'm writing on. You're best on a 10-mile run, listening to something and stopping to take notes.
I love it.