Business Breakdowns
· John Reardon
[00:00:00] S1: Sure. In my period of time, there was from 2000 to 2010, so it was a very different era, but it was also a very important era of transition of the company from being this unknown. I remember telling my parents and might work for Patek Philippe. The first answer is who, what, where. They had no clue. It's why can't you get a job at Rolex, I think I heard, and ultimately, it was an adventure moving into the company of Patek Philippe and just to share a quick story. I thought it was a joke at first when I received a phone call from a headhunter saying that, "We're interested in hiring for an important Swiss company to work for the distributor as a sales rep in New York." I was working at Sotheby's at the time. So I was quite happy with my job, but I remember telling this headhunter, "Unless you're Patek Philippe, the conversation is over." And she said, "Yes, it's Patek Philippe." So I said, "Let's talk." It was a dream come true. Even though I still thought it was a joke because Patek Philippe doesn't call, but after a long series of interviews with the headhunter, I eventually was able to meet the principals of Patek Philippe in New York, and I remember, wow, countless interviews with the President and with the Vice President, Tania Edwards, who happens to be my colleague and co-founder of Collectability. We still work together to this day. Tania was Vice President and Head of Marketing of Patek Philippe U.S.A at the time. And going through that interview process with these individuals, I felt like I was trying to get into the CIA, and then it took another 6 months until I eventually had a job offer. And then finally, I made the jump.
· Matt Reustle
[00:00:00] S0: Once working inside the organization, again, any rough size of how many employees are there? How much is going on in the U.S. versus in Switzerland? And anything else that you can share there?
· John Reardon
[00:00:00] S1: Sure. In New York, it was small. I mean it was also the service center, so it's distribution, and it was all sales and education for Patek Philippe U.S.A. was based out of the Henri Stern Watch Agency as it is today. I think it was 48 people at the time. And today, I think it's 100. So it has doubled in size, but it was a small culture. You truly felt during my time that you worked for a family company. You truly felt like the Stern family had your back. And I remember being told, "Every decision that you make, everything that you do when you speak to a client and consumer or a retailer, imagine that Mr. Stern is standing there with you." This omniscient presence of Philippe Stern judging everything that you say and everything that you do, which was overwhelming, but also comforting, and you just knew what to say. You tried to always do the right thing. You tried to be there for the customer at all times was always put at the focus of every decision. And that was a lot of fun during that period of time. It felt like a small company. And what people perceived as the outside, as I looked at the outside and just respected this company so much, it turned out to be true when I was in the inside. And that was just a beautiful thing. I absolutely to this day, I don't work for the company anymore, but I do feel as though I still represent the values of the company as best as I can, and it's going to be around a lot longer than any of us. Patek Philippe is here to stay.
· Matt Reustle
[00:00:00] S0: Yes, it speaks to the power of the brand, that 2 people working inside the organization split out, but remain very much attached to the organization and everything they've done. I think that tells you a little bit about the culture. On the distribution point, you've mentioned how it can be a bit of a painful process for any new prospective buyer trying to purchase a Patek. Can you just share what is the distribution strategies of working with authorized dealers? Are they doing any of this direct? Anything that you can share there in terms of the sales process?
· John Reardon
[00:00:00] S1: A lot has changed during my time at Patek Philippe, so I'll do my best. When I was there, we had 126 points of sale in the United States. Now they're under 40 points of sale in the United States. So it's a complete change in consolidation and strategy. Back when I was there, so I went back 20 years ago, you could buy a Nautilus 5711, which retailed at the time, for $18,000, $19,000. I remember retailers had a tough time even selling it for $15,000, and it's a watch today that's worth 6 figures-plus. So it was a different era. It was truly sales-driven during that period of time. The sales were driven through education. No coincidence that my company now is just obsessed with the education of all things, Patek Philippe because that's what I grew up with is when you learn and study and compare, all roads do come back to Patek Philippe, the vintage and modern. So in answer to your question of how does it work today? I think it's different. It's not as much about education as it is about allocation. It's about what have you bought from a particular retailer? And are you entitled to buying the piece that you want to own next. It's a different storyline. It's not one that really captures my heart. It's more about money than knowledge, and that, I think, is one of the brand's biggest struggles today. Now I'm speaking as an outsider because I know I can't go walk into a retailer and buy the watch that I want, but I also know that people that have $1 billion in the bank can't go walk in and buy the watch that they want from a retailer. It's very democratic in that way. You just can't have the watch that you want. What you do need to do is build trust over time and almost build your reputation with the company in order to be allocated the pieces of your dreams, and I don't think they do it on purpose, but it's almost like a gamification. It's fascinating to see how end consumers bite into this or engage in this game that can go through decades in order to buy the watches that they want. And indeed, I speak to collectors all the time. They'll buy pieces they actually don't want in order to preserve relationships to get the watches that they do want, and they'll spend hundreds of thousands of dollars to preserve this relationship, and they'll never sell any of their pieces because they don't want to get in trouble in the meantime.
· John Reardon, Matt Reustle
So it is really an interesting thing, and it probably exists in the car collecting world. I've heard Ferrari collectors jump through hoops, all day long, and that certainly does also happen with Patek Philippe collectors. [00:00:00] S0: It's quite interesting, whether it's thrilled of the chase, or you want what you cannot have, but the ability to stroke on emotion and what that can do in terms of consumer behavior. With the points of sale, are these actual Patek-branded dealers? Or are they individual existing watches of Switzerland and authorized dealer types that are selling on behalf of Patek? [00:00:00] S1: There are authorized dealers. In the United States, there's no Patek Philippe-owned boutiques. For example, here in the New York, New Jersey area, Wempe, Tiffany, London Jewelers, these are powerhouses that go back generations. Those are the retailers that represent the area, but it's just so shocking for me to see less and less retailers out there. The good news is, in theory, they should have more watches at each point of sale. That hasn't proven to be true yet, but I think over time, we'll start to actually see watches in cases again.