Business Breakdowns
· Matt Reustle, John Reardon
[00:00:00] S0: You mentioned the history was always selling to noblemen. It sounds like Henry himself was a prominent person, someone with wealth. When I think of Rolex, some of those early advertisements were for people climbing mountains, people diving. You very much attached it to activities and professions. Was Patek always the dress watch or something very much driven towards the wealthy and looking for something exclusive? [00:00:00] S1: It's a good question. First, it was. The watches were marketed specifically to noble people of the Western world, but then it expanded. Patek Philippe was selling to pieces to the kings and queens globally. And for the United States, the kings and queens were the Titans of Industry and people like James Ward Packard of automobile fame and Henry Graves Jr., were the Titans of Industry, people like J.P. Morgan were watch collectors, Henry Clay Frick, the Vanderbilts. And one of the fun things is when we find these amazing watches out there today, you could tie down the history very quickly because often they had their initials or names on the back. So here's a sound bite for you. Rolex would ultimately be sold to the people that were climbing the mountains, but Patek Philippe watches were being sold to the people that own the mountain.
· John Reardon, Matt Reustle
[00:00:00] S1: It's a good question. First, it was. The watches were marketed specifically to noble people of the Western world, but then it expanded. Patek Philippe was selling to pieces to the kings and queens globally. And for the United States, the kings and queens were the Titans of Industry and people like James Ward Packard of automobile fame and Henry Graves Jr., were the Titans of Industry, people like J.P. Morgan were watch collectors, Henry Clay Frick, the Vanderbilts. And one of the fun things is when we find these amazing watches out there today, you could tie down the history very quickly because often they had their initials or names on the back. So here's a sound bite for you. Rolex would ultimately be sold to the people that were climbing the mountains, but Patek Philippe watches were being sold to the people that own the mountain. [00:00:00] S0: I like that quite a bit, and there is something associated with their process for keeping track of the watches that are sold and the archives and being able to trace that back. Can you share about what happens there? It's something that I read about, but I didn't fully capture or understand relative to other brands and watches and how they have historically tracked what they produced.
· Matt Reustle, John Reardon
[00:00:00] S0: I like that quite a bit, and there is something associated with their process for keeping track of the watches that are sold and the archives and being able to trace that back. Can you share about what happens there? It's something that I read about, but I didn't fully capture or understand relative to other brands and watches and how they have historically tracked what they produced. [00:00:00] S1: And it does come down to tracking. It's almost a historic blockchain type of thought pattern is that any watch that was made by Patek Philippe from the very beginning is documented in the extracts from the archives, which you could request from Patek Philippe. You have to pay for them for CHF 500 each, but you're able to get a copy of the birth certificate of that watch to find the date that it was made, seeing the movement, the case numbers. They won't tell you who it was sold to, but Patek Philippe very carefully guards that. Can you imagine their client list through history? But at the end of the day, Patek Philippe has records of every single watch they ever made, and they're willing to share that information. And that has made buyers at auction and collectors out in the world, very comfortable to know that they could get these documents and see the blockchain of where that watch came from, when it was made and some details, sometimes, the dial description, case description and that's very comforting for people to have that connection to this little room in Geneva that holds all these secrets from the past.
· John Reardon, Matt Reustle
[00:00:00] S1: And it does come down to tracking. It's almost a historic blockchain type of thought pattern is that any watch that was made by Patek Philippe from the very beginning is documented in the extracts from the archives, which you could request from Patek Philippe. You have to pay for them for CHF 500 each, but you're able to get a copy of the birth certificate of that watch to find the date that it was made, seeing the movement, the case numbers. They won't tell you who it was sold to, but Patek Philippe very carefully guards that. Can you imagine their client list through history? But at the end of the day, Patek Philippe has records of every single watch they ever made, and they're willing to share that information. And that has made buyers at auction and collectors out in the world, very comfortable to know that they could get these documents and see the blockchain of where that watch came from, when it was made and some details, sometimes, the dial description, case description and that's very comforting for people to have that connection to this little room in Geneva that holds all these secrets from the past. [00:00:00] S0: Where is the identifier on the physical watch that allows them to do that? [00:00:00] S1: Ultimately, it comes down to the movement number, and in the early years, the movement number and the case number were identical. Today, there's a movement number and the case number, so each and every watch has these 2 unique identifying numbers to connect to the archives credible.
· John Reardon, Matt Reustle
[00:00:00] S1: Ultimately, it comes down to the movement number, and in the early years, the movement number and the case number were identical. Today, there's a movement number and the case number, so each and every watch has these 2 unique identifying numbers to connect to the archives credible. [00:00:00] S0: And you talked a little bit about the handmade process that's relative to being something that's machine-made. Can you talk about how many hands are involved, what the process looks like, just to make one watch and anything that you can share on that?
· 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.