Business Breakdowns
· Matt Reustle
[00:00:00] S0: And privately held, I think, makes that a lot easier to remain that way versus being a public business. When I think about other risks that have come up over the years, obviously, the quartz revolution was something that was big. Now to some extent, you have electronic, whether it's Apple Watches or performance-based watches. How has the business typically dealt with that? When you go back to that quartz period, was there anything that they did uniquely or in a way that they handle that? And then do you look at what's going on, anything related to the Apple Watch or anything else that comes to mind when you think about evolving as a business?
· John Reardon
[00:00:00] S1: One of the things we could learn from Patek Philippe historically is how they dance between evolution and revolution, and it's very interesting to look at what happened with quartz revolution, where all of a sudden, all these mechanical timepieces were considered obsolete and Patek Philippe really doubled down with explaining the history of the craftsmanship and the tradition as being assets of value. The result of that equation is luxury in its finest form as quartz watches, they were expensive in the '70s, and they spend hundreds of dollars, but soon they were a matter of cents where you could buy a quartz watch for under $1, but Patek Philippe went the other direction and just went to the height of the market in making some of the finest handmade pieces imaginable. Now fast forward to the technological revolution Patek Philippe doubled down in the same way. Everyone was saying, "Oh, everyone's going to wear an Apple Watch. So who's going to be wearing a $0.5 million Patek Philippe minute repeater?" It's completely met obsolete. What's so surprising is now you see people have an Apple Watch on one wrist and their Patek Philippe on the other wrist, and it shows that the 2 can coincide. What people forget is by collecting watches. It's part of the community. It's the ultimate connection to like-minded individuals that want to own the best. And people might want to join a country club or a private jet ownership or you name whatever you connect to the world with. But when you own a Patek Philippe, you are connected to an international community of people that really are truly like-minded. I've just seen this so many times. Men and women just connecting in business and in life, based on the watch on their wrist. I mean the connections that people make, just based on what watch they wear is absolutely extraordinary. Why settle for the second best when you could buy the best?
· Matt Reustle, John Reardon
[00:00:00] S0: And I think I've heard you say before, once you go down the rabbit hole and buy one, usually, that is not the last that you end up owning in terms of addiction. [00:00:00] S1: It's a wonderful addiction. Yes, it's true. Very few people only own one. [00:00:00] S0: This has been an absolutely fabulous conversation, history lesson. We try to close these out with just general business lessons that we can take away from whatever company we're examining in the episode. What do you think are the standout lessons from Patek that you might be able to apply elsewhere in life or just thinking about your own business?
· John Reardon
[00:00:00] S1: Well, it's so cliche, but Patek Philippe has brilliantly navigated now, well, soon to be 200 years of history by never putting all their eggs in one basket. When a company focuses on one product or one style, and they're just so hyperfocused on being the best, but in a very limited scope, you're at risk in a wider marketplace. Patek Philippe has always navigated the 19th century ups and downs in the economy and certainly in the 20th and now early 21st century by being true to making the best but of a wide product line. Yes, they make sports watches. Yes, they make dress watches, but they've always made clocks, also jewelry. There's been a wide array of different types of product offerings that they've made throughout their history. So there's always something for everyone. So I think that's very important because if you look at other watch brands, they're focused on one particular aesthetic, one particular look, and that's highly risky. If the world changes really fast and all of a sudden, I'll be obnoxious. Your 60-millimeter watch all of a sudden is out of style because it's too big. Then your brand is done. Patek Philippe has always offered something for everyone, and it's also very, very focused on an important women's line as well as a men's line, simple watches and also complicated watches, so there is something for everyone in high-end horology within the world of Patek Philippe. That's the first lesson. Never put all your eggs in one basket. The other thing I think they've really navigated is how to run a family business, which is not easy, and it comes back to that idea of dynasty, where from one generation to the next time change. There's always an ebb and a flow, but Patek Philippe by always thinking in the past, present and the future, at the same time, they're able to make decisions that are not shortsighted, and I think the business world can learn a lot about branding, by looking at how Patek Philippe has navigated their history. And it's a master class in understanding how to protect your brands at all costs, take enough risk to build your brand, but never be too hyperfocused in one particular product, or you could lose everything. And by being a family-run business, they've been able to navigate that absolutely brilliantly, generation after generation.
· Matt Reustle, John Reardon
[00:00:00] S0: Absolutely rings true. And I think in my own research and a lot of the things that you've done on 1989 and the real strategic shift that happened there, there's so much interesting lessons to learn from that. And I've been stuck on that really for the past 1.5 weeks thinking about how thoughtful the approach was and how much they really just controlled the message that was going out there and aligning it with what they had done for years and years and years. So thank you very much, John. This was a masterclass in terms of this business, and we really appreciate you coming on. [00:00:00] S1: Thank you for your time, Matt, and absolute pleasure to be part of your show. It's been a lot of fun today. Thank you.