Business Breakdowns
· John Reardon, Matt Reustle
[00:00:00] S1: And it does come down to tracking. It's almost a historic blockchain type of thought pattern is that any watch that was made by Patek Philippe from the very beginning is documented in the extracts from the archives, which you could request from Patek Philippe. You have to pay for them for CHF 500 each, but you're able to get a copy of the birth certificate of that watch to find the date that it was made, seeing the movement, the case numbers. They won't tell you who it was sold to, but Patek Philippe very carefully guards that. Can you imagine their client list through history? But at the end of the day, Patek Philippe has records of every single watch they ever made, and they're willing to share that information. And that has made buyers at auction and collectors out in the world, very comfortable to know that they could get these documents and see the blockchain of where that watch came from, when it was made and some details, sometimes, the dial description, case description and that's very comforting for people to have that connection to this little room in Geneva that holds all these secrets from the past. [00:00:00] S0: Where is the identifier on the physical watch that allows them to do that? [00:00:00] S1: Ultimately, it comes down to the movement number, and in the early years, the movement number and the case number were identical. Today, there's a movement number and the case number, so each and every watch has these 2 unique identifying numbers to connect to the archives credible.
· John Reardon, Matt Reustle
[00:00:00] S1: Ultimately, it comes down to the movement number, and in the early years, the movement number and the case number were identical. Today, there's a movement number and the case number, so each and every watch has these 2 unique identifying numbers to connect to the archives credible. [00:00:00] S0: And you talked a little bit about the handmade process that's relative to being something that's machine-made. Can you talk about how many hands are involved, what the process looks like, just to make one watch and anything that you can share on that?
· John Reardon
[00:00:00] S1: Absolutely. And the answer changes throughout history. It's fun to think in the 19th century, Patek Philippe was working with subsuppliers, and this is just how the Swiss industry worked. There were various people in the mountains. There was the dial makers. There was the case makers. There was the main spring makers, and they would piece it together and ultimately, brand each watch, and this is the same with Audemars Piguet, Vacheron Constantin. I mean, this is just traditional Swiss watchmaking. What we see throughout the 20th century is consolidation from more vertical manufacturing and especially, after the quartz revolution in the 1970s, things get very interesting as the watch brands, the major houses were trying to basically buy out all of these small makers, the ones that survived and get all of these craftspeople under the same roof. And that's the story of the late 20th century. Now early 21st century, I think it's very interesting because there's more money, there's more growth. And of course, there's CAD design, which has been around for over 40 years and of course, various machining and CNC machines. For those that visit any of the manufacturers today in Geneva, they're shocked of how much is actually made by machines. What differentiates Patek Philippe is, yes, there are parts that are made by a bench machine, but there are humans that are actually finishing each movement. And that's almost like the fingerprints. The DNA of each individual piece is different because there's actually humans that are not just assembling the piece, but finishing each individual piece within each watch.
· Matt Reustle, John Reardon
[00:00:00] S0: Would that show up anywhere? When I think about humans, it might actually leave a mark, whether it's where the dial is or the stamping of something, is there anything that actually shows up in output that shows some type of human touch to it relative to what machines would do? [00:00:00] S1: I probably shouldn't share this so publicly, but when I was at Patek Philippe, you would see the mistakes that were made because they would come back. You would see in very few occasions, dials with numbers that might be upside down or placed the classic upside down postage stamp. We see some really silly mistakes that would happen and come back from a QC perspective, but I always found comfort in knowing that a computer would not make these mistakes. A human would put #2 upside down or something that's rather than 12, 21, I mean just something ridiculously stupid, and it's so funny that some of those things would actually make it to the end consumer and Patek Philippe made it very clear that no one was going to hear about these things or ever see these. Now occasionally, some of these mistakes show up at auction and bring extraordinary prices, and it's a classic case of sometimes, the truth of the mistakes that humans can make is a wonderful thing to see. When you see these errors occur, it's very rare, but it happened.
· John Reardon, Matt Reustle
[00:00:00] S1: I probably shouldn't share this so publicly, but when I was at Patek Philippe, you would see the mistakes that were made because they would come back. You would see in very few occasions, dials with numbers that might be upside down or placed the classic upside down postage stamp. We see some really silly mistakes that would happen and come back from a QC perspective, but I always found comfort in knowing that a computer would not make these mistakes. A human would put #2 upside down or something that's rather than 12, 21, I mean just something ridiculously stupid, and it's so funny that some of those things would actually make it to the end consumer and Patek Philippe made it very clear that no one was going to hear about these things or ever see these. Now occasionally, some of these mistakes show up at auction and bring extraordinary prices, and it's a classic case of sometimes, the truth of the mistakes that humans can make is a wonderful thing to see. When you see these errors occur, it's very rare, but it happened. [00:00:00] S0: Yes. And it's almost an audit in the sense that it proves that there's humans actually involved. It reminds me a bit of sports memorabilia and error cards and how much those can fetch at times. Super, super interesting. I want to hit another key moment in the history and that was the year of 1989. I know there was a lot going on in this year, but I thought you could just lead us, however, you think makes most sense with what happened at Patek in 1989.
· John Reardon
[00:00:00] S1: Sure. I did a video on our Collectability YouTube Channel digging deep into 1989 and how it's such a pivotal year in the history of Patek Philippe. It was all engineered by the genius of Philippe Stern, who is today the Honorary Chairman of Patek Philippe, and at the time, he was President. And at that point in time, Patek Philippe was having an identity crisis, trying to figure out how does it connect with the world that was obsessed with technology moving forward and accepting quartz as the new norm on the wrist and trying to differentiate itself through being a luxury good. And Patek Philippe was -- the sales weren't. It's not like today. I mean, you can go into a store you could buy anything you want back then, so I wish I had a time machine. But what Philippe Stern is he brilliantly engineered I think, the ultimate watch market coup in history. And it was a multipronged attack. I almost think of it from like a military perspective. At first, he wanted to make people understand that watches were art, so he connected with the world's leading watch auction house at that time, Antiquorum, otherwise known as Habsburg Feldman and put together a Patek Philippe, Art of Patek Philippe sale. Indeed, Patek Philippe was one of the major consignors of that sale, and they were also a major buyer. So this was a way to show the world that Patek Philippe historically had pieces that people have a huge desire to own and modern watches, which has the same type of obsession and desire. And it was a collection of watches of Patek Philippe of that were brought around the world. Many people saw the historical breadth of production for the first time, and it was a huge media event for 1989 to see these watches sell for such extraordinary prices. That's what kicked off the modern era of Patek Philippe at auction.