Business Breakdowns
· Matt Reustle
[00:00:00] S0: You never own a Patek Philippe. You merely watch over it for the next generation. I'll say it's the best marketing campaign in history, a campaign appropriate for the premier watchmaker in the world and a watchmaker that is worthy of a Business Breakdown. This is Matt Reustle, and our guest today is John Reardon from Collectability. John has worked at Sotheby's, the auction house. Then he spent a decade at Patek Philippe in the early 2000s, and he continues to write for Patek Philippe Magazine while he has launched Collectability, a brand dedicated to vintage and preowned Patek Philippe. We cover what makes Patek such a special brand. There is the almost 200-year history in the craftsmanship. There are the countless patents like that self-winding mechanism that powers all automatic watches today. This is a brand that keeps 2 chainsmiths on staff just in case. They do not want to lose that artisanal expertise and knowledge that exists with a few remaining chainsmiths out there, and what Philippe Stern did in 1989 could be worthy of a 10-episode series, so there is a lot to learn from this episode, a lot to learn from Patek Philippe, and it adds to a series of luxury episodes that we have now done across different categories. So please enjoy this episode of Patek Philippe. All right, John. I am very excited to have you here, and it's been one of the more fun research processes for me in terms of getting up to speed on Patek Philippe. And I was thinking about where the best place to start for this episode was. And I really wanted to capture why Patek is considered the premier watchmaker. And I thought the best way to do that might actually be to sketch out how Patek differs from another very well-known watch brand, Rolex, which is also thought of very highly, but I think Patek by any reasonable watch enthusiast is in a different category. So maybe, we can just start there with a simple sketch of how you would say Patek is differentiated from Rolex.
· John Reardon
[00:00:00] S1: Well, first of all, thank you, Matt, so much for having me on the show. You're opening with a tough question, a comparison to Rolex. Wow, where do I begin? A lot of people are obsessed with Rolex in the same way I'm obsessed with Patek Philippe, so with all due respect to the Rolex fans out there, I acknowledge they are the #1 brand in the world. They're the best sports watch in the world. And if you wear a Rolex, it does say something very special. All right. Now I'm going to answer it from a Patek Philippe perspective. There's a lot of people with BMWs out there, good for them. All right. There aren't so many with Ferraris. It's a different storyline. The car analogy is not perfect, but it gets the point across when it comes to exclusivity, history, handmade, and Patek Philippe at the end of the day, makes the finest watches that have ever been made in history. And this is my personal opinion, and I love to debate it all day long. And I hope we could talk about history recently because it's very important to understand the tradition of where Patek Philippe comes from. But ultimately, you're buying one of the most perfect forms that humankind has made of a mechanical object in history and whether it's a piece from 1839 or 2024, you're buying the best of the best. Yes, it is debatable, but ultimately, all roads lead to Patek Philippe. And when people dig deep and really understand the watchmaking, the technology, the artistry, the know-how behind a Patek Philippe watch, it comes out on top. I've worked now 3 decades in this industry. I've seen a lot of collectors go down the various roads of collecting many different types of watches and frankly, different types of objects and different types of art, and then the road always ends at Patek Philippe. And that is what really captures my imagination because it is humankind's closest, you would say, attempt to reach mechanical perfection that the world has ever seen, and that's an impressive claim to make.
· Matt Reustle, John Reardon
[00:00:00] S0: Absolutely. Yes, there were a few impressive claims there, and I think you planned it very well. You mentioned exclusivity. I read somewhere that Rolex makes more watches in a year than Patek has made over the history of their business. Is that remotely true? Are those production numbers in any way auditable to suggest that, that type of exclusivity is the right way to think about it? [00:00:00] S1: When I was working for Patek Philippe 20 years ago, we all knew that as a fact, but we were forbidden to state it. In the 1990s, at some point, Patek Philippe made its 1 millionth watch, so at that point of time, this is going back 20, 25 years, Rolex was making approximately 1 million watches per year. I think they're making more today. So yes, in our lifetime, we could make the claim that more watches are made by Rolex in 1 year than are made by Patek Philippe in their history. That's since changed. Patek Philippe production numbers are probably around 70,000 per year today, so the numbers just don't add up going into the 21st century, but in the very recent history, it was a fact.
· John Reardon, Matt Reustle
[00:00:00] S1: When I was working for Patek Philippe 20 years ago, we all knew that as a fact, but we were forbidden to state it. In the 1990s, at some point, Patek Philippe made its 1 millionth watch, so at that point of time, this is going back 20, 25 years, Rolex was making approximately 1 million watches per year. I think they're making more today. So yes, in our lifetime, we could make the claim that more watches are made by Rolex in 1 year than are made by Patek Philippe in their history. That's since changed. Patek Philippe production numbers are probably around 70,000 per year today, so the numbers just don't add up going into the 21st century, but in the very recent history, it was a fact. [00:00:00] S0: I like that. And I like that secret exclusivity even happening with inside the business. I think there's a lot of mystery with all watch brands, but interesting to hear how that was the case here. For those that aren't as familiar with the brand itself, can you set the stage if someone was actually trying to purchase Patek Philippe? What it would look like in terms of price? And I know that is a wide range, but also a process. Is this something that you could walk into a store and walk out with Patek today? Or is there something else that goes into this?
· John Reardon
[00:00:00] S1: Sure. My business is preowned and vintage, but I'm going to answer that on behalf of all of our retailer friends out there. So as an individual, walking in to buy a Patek Philippe from one of the Patek Philippe retailers in the U.S. or abroad, you're in store for a frustrating experience. Odds are they're not going to have the watch you want in the case. Odds are if there's a watch in the case, it might be reserved for another client already or simply not for sale. And this is particularly true with some of the more coveted pieces, some of the sports watches, Nautilus, Aquanaut, but it's even true with some basic Calatravas. And it's amazing that even a time-only Calatrava starts around $32,000 retail, U.S. today. So the cost of entry at the most basic level is quite high, and the odds are you can't buy it. Now if you're lucky enough to walk into a retailer's and find an Aquanaut for sale, a reference 5167A, and this is their entry-level sports watch. Retails were only $25,000. You're just not going to have that kind of luck in today's world because the secondary market value of that watch is $70,000-plus the moment that you buy it. Everybody knows this. You're not going to be able to buy one for that amount of money, and all day long retailers are basically telling end consumers, "I'm sorry. It's not for sale." So you could see, even at the point of sale, there's this amazing experience that sometimes, could start off as quite negative that you can't have the watch that you want. Hopefully, we can get into it soon, talking about the past because this wasn't always the case. This is something that we've experienced over the last 4 or 5 years, which is quite new to the watch-buying world.
· Matt Reustle
[00:00:00] S0: Yes. I want to get into the history and now is a great time to do it, but we could start at the very beginning, the founding story of Patek, who was behind the brand, was the idea of making the perfect mechanical timepiece, always the mission. Walk us through what those early years were like and how long ago it actually was.