Business Breakdowns
· 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.
· John Reardon
[00:00:00] S1: Sure. So the story starts in 1839, a Polish nobleman named Antoine Norbert de Patek, he decided that he wanted to start a watch company, and he was in the Polish Cavalry and went to Geneva. It was the center of watchmaking in that period of time. And he and his partner, this gentleman, named Mr. Czapek, François Czapek, started this company and their idea was to sell to Polish nobleman friends and eventually, ironically, their former enemy, the Russians to sell some of the finest Swiss watches ever made. The whole goal of the company was to move it back to Warsaw eventually, and that never happened. It stayed in Geneva. History has a funny way of changing people's goals as time evolves, but for those of you that have your own business, nothing happens as you imagine, it will in the future, and that was true with Mr. Patek and Mr. Czapek, and these 2 gentlemen did have a falling out. And after 5 years, Czapek left and started his own company, and Patek found a new partner, a gentleman named Mr. Philippe. Adrien Philippe was a watchmaker, the inventor of stem-winding and stem-setting so each of you out there that has a watch that's mechanical on your wrist, when you wind it and set it. There's at least 8 parts that came from Mr. Philippe and his mind and his brilliance from the mid-19th century. So I've heard the curator of the Patek Philippe Museum say this many times, "Each of us does have a little bit of Patek Philippe on our wrists already." So this really put Patek Philippe in the map from the very beginning in the 19th century. And soon they had the ultimate celebrity endorsement in the 1850s, when Queen Victoria bought a watch for herself and then bought a watch for her husband, Prince Albert. And then everybody wanted to own a Patek Philippe, and the rest is history. I mean, there were ups and downs along the way, but the 19th century was this meteoric rise of the brand, Patek Philippe, and the idea was to make the best watch and that value and that commitment to making the finest watch continues to this day.