Patek Philippe: Watch Perfection - [Business Breakdowns, REPLAY]

· 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.

· Matt Reustle

[00:00:00] S0: Who was buying in those auctions? Was it a different crowd in terms of the art community, or was it still people who would wear these watches? Did it introduce anybody else to the brand?

· John Reardon

[00:00:00] S1: In the late '80s, there was a lot about the Japanese. The Japanese were leaders in watch collecting. It was a lot about the Italians, which continue. They invented watch collecting. I give them credit for that. The Italians were driving that from the beginning. There were some very obsessive, which are still in the game today, American collectors that wanted to own the best at any price, and there was old-school European collectors that wanted to buy too. And then there was a sprinkling of South American collectors. This just was a global event. Everyone had their own reasons to buy, and they were all chasing to own some of the most coveted Patek Philippe watches, but that's not the only thing Philippe Stern did in 1989 that was so impressive. He launched the concept of limited edition watches for the first time, inspired by vintage pieces that the company made Minute repeaters came back into the modern production line for the first time since the early 1960s. In 1989, it was just a culmination of the celebration of watch making through the auction limited additions and of course, a series of books educating why Patek Philippe is what it is. And all of a sudden, everyone was talking about the brand. Even Saturday Night Live did a piece about a watch called the Caliber 89, which they called the turnup, which was the watch that was the first piece that was more complicated than the Henry Graves' 24 complication. Patek Philippe made in 1989, one with 33 complications, so this was in pop culture, the most desirable across the board as a brand. People knew that Patek Philippe was #1, and the brand itself outlined very clearly why they were #1 in the world and did it. It's funny in a humble way, but in a very bold way at the same time. It was the ultimate humble brag, we'll call it, that put them on the map.