Business Breakdowns
· 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.
· Matt Reustle
[00:00:00] S0: Absolutely. Yes. I think it has a place, if it's not the greatest of all time. It is certainly in a very small handful of other campaigns in that category. You referenced before that 1989 auction, and in the little research I did, it did seem like Patek embraced auctions differently than other heritage brands, watch brands. How involved were they? You mentioned they were both consignee and a buyer in these auctions. How important was that strategically for them? Obviously, there's a big secondary market. Talk a little bit about the auction space, which you have quite the history in yourself.
· John Reardon
[00:00:00] S1: Going back to 1989, the idea of a single brand auction was just quite foreign. There were Habsburg Feldman/Antiquorum. They did it with a couple of other brands. Off the top of my head, I think Cartier, Omega had a sale, but Patek Philippe was the first really the brand itself was fully behind it. And even their advertisements were both Patek Philippe and the auction house hand-in-hand and the PR machinery of the auction houses and the brand itself work together. So this was all just uncharted territory. Now that was all great and it worked because there was such a small community of people that were even interested in auction at that time. But over time, people will be like, "All right. Well, the brands are gaming the auctions." Because then all of a sudden, we saw every brand have an auction. They saw what Patek Philippe did and they're like, "Oh, let's try the same." And it was in the early 2000s that Patek Philippe significantly backed off from auctions. They just stopped. Their museum has everything they could ever imagine that they could want. So they weren't active in buying, and this was my era in the auction world. It was frustrating that Patek Philippe was not buying the top pieces at auction anymore, but the beauty of it was it was a pure form of a marketplace. The momentum was already going and collectors and individuals, sometimes, investors and buyers of all sorts, they were buying Patek Philippe at auction, so the prices just kept going up, up and up and as Patek Philippe backed off completely, the prices just kept going up furthermore.