Business Breakdowns
· 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.
· Matt Reustle
[00:00:00] S0: Yes, it seems to be an incredible campaign in order to take what they were already doing with the production quality and its history and its heritage, but really show it off to the world. And I think I mentioned before we were recording, the word narrative can get negative connotation associated with it, but it's really controlling the narrative about your brand, and they seem to do it so beautifully there. I want to bring up the marketing campaign. I think it's something that many people become familiar with Patek Philippe because of this marketing campaign and how powerful it was. And the famous line, you never actually own a Patek Philippe. You merely look after it for the next generation. Do you have any insight? It seems like it coincided early '90s era, which would have been alongside that 1989 campaign by Philippe Stern. So anything about that campaign that stands out to you? It's just incredible, and it continues to this day.
· John Reardon
[00:00:00] S1: It's amazing when you talk to someone that doesn't know or think about Patek Philippe, one of the first things they say is, "Oh, is that, that ad campaign, you never actually own a Patek Philippe?" I love that. I hear that all the time from people that aren't in too watches, but that came from a very specific place in history. In the 1980s or starting in 1989, the ad campaign was called, tradition is our future, and I think to understand Patek Philippe's business strategy, you have to understand, they don't exist in the past, present or future. They exist in all 3 places at the same time, and I think this is fascinating from a marketing point of view. They're very proud of what they've done in the past and they lean on the past. They're absolutely obsessed with what they're doing now and how that reflects the past, but they're always looking towards the future at the same time. When I was there, decisions aren't made about the quarter or the year, they were, what about 10? What about 15 years from now? Even when I was working there 20 years ago, they were talking about the 200th anniversary in the year 2039, which we're all looking forward to, which is quickly approaching, so the idea of tradition is our future is ingrained in their DNA. And in 1995, this campaign under the leadership of Philippe Stern once again. "You never actually own a Patek Philippe. You merely look after it for the next generation," really caught upon the emotional angle of this timelessness of past, present and future. Earlier campaigns were focused like long-form journalism and great descriptions of why Patek Philippe is technically the best, why there's the craftsmanship, why their artistry is the best, but people didn't sit down and wanted to read a book. They just wanted to be told why. And I think emotion is one of the greatest ways to convey that. And that campaign is still brilliant because it just captures the heart of giving a watch to your son or daughter and imagining your grandkids having that piece in the family, and that transcends all other messages, and that's what people walk away and remember to this day.