Invest Like the Best with Patrick O'Shaughnessy

Rolex: Timeless Excellence

Tue Jun 06 2023

RolexLuxury WatchesWatchmakingExclusivity

Description

The episode provides an in-depth look into the highly secretive and non-profit business of Rolex, its history, innovations, success, and challenges. Rolex is known for its longevity, craftsmanship, and commitment to excellence. The brand's marketing strategy focuses on creating awareness while maintaining exclusivity. Rolex produces around a million watches per year and has its own production facilities. The episode also explores the impact of Rolex in the luxury watch market and the controversies surrounding the brand's elitist buying experience. Overall, it showcases Rolex's enduring global recognition and style.

Insights

Rolex's Commitment to Excellence

Rolex commits to working only with the absolute best and values talent as well as genuinely good people when choosing brand ambassadors. They prioritize excellence in various fields and have long-term partnerships with ambassadors like Jack Nicklaus since 1967.

Rolex's Innovations in Watchmaking

Rolex is known for its innovations in watchmaking, including components like pare chrome balance wheels and shock-absorbent systems. They focus on product iteration and demand creation, planning for the long term.

The Challenges of Exclusivity

Some customers are turned off by the elitist buying experience of luxury watch brands like Rolex. The issue of exclusivity and judgment based on social status can lead customers to seek alternative sources or spend their money elsewhere.

Chapters

Rolex: A Highly Secretive and Non-Profit Business
The History and Innovations of Rolex
The Success and Impact of Rolex
The Challenges and Controversies Surrounding Rolex

Summary

Transcript

Rolex: A Highly Secretive and Non-Profit Business

00:01 - 17:45

Rolex is a highly secretive business owned by a foundation and run as a non-profit entity.
Rolex is known for its longevity and craftsmanship.
Rolex watches are known for their reliability and symbiotic relationship with the wearer.
The luxury strategy behind marketing Rolex involves creating awareness while maintaining exclusivity.
Rolex's marketing efforts have elevated the brand's status over time.
Rolex produces around a million watches per year with an average wholesale price of $7,000.
The board members of Rolex remain largely unknown to the public.
Rolex is known for its secrecy and will not disclose information about its private art collection or real estate holdings.

The History and Innovations of Rolex

17:21 - 39:51

The history of Rolex dates back to 1905 when Hans Wilsdorf founded the company in the UK.
Wristwatches were not popular at that time, but Wilsdorf focused on making them.
In 1908, Wilsdorf created the company called Rolex and submitted a wristwatch for testing at an observatory.
No wristwatch had ever been submitted for testing before, but Rolex passed the test with an AGLER-powered watch.
Rolex watches were high-performance calibers with a special escapement, making them the Formula One cars of watchmaking.
The three tenets of Rolex watchmaking were precision, accuracy, waterproofness, and self-winding.
The Oyster case, which provided waterproofness, helped solidify Rolex's reputation when a woman successfully swam the English Channel wearing a Rolex around her neck.
Rolex patented the first self-winding movement using a rotor in 1933.
In the post-war era, Rolex created their first sports watches including the Submariner, GMT, Explorer I, Daytona, Sea Dweller, and Explorer II.
Rolex watches had similarities with other brands at that time due to shared suppliers and movements.
Rolex started bringing production in-house in the 90s, reducing suppliers from 27 to 4.
Rolex has four production facilities now, including one for movements that was acquired in 2004.
Rolex has its own foundry and makes its own steel and gold.
Rolex creates machines to test their watches, including a machine that can open and close a Rolex clasp a thousand times a minute.
Rolex uses internally flawless stones and created a machine to sort them at scale.
Rolex HQ in Geneva has hundreds of people finishing watches by hand.
Rolex facilities are larger than they appear from the outside, with several stories below ground.

The Success and Impact of Rolex

39:22 - 56:46

Rolex commits to working only with the absolute best and forgoes opportunities until they have been validated as the very best.
They prioritize excellence and being the best in the world, whether it's in music, sports, or other fields.
Rolex values not only talent but also genuinely good people when choosing their brand ambassadors.
Unlike other luxury brands, Rolex maintains long-term partnerships with their ambassadors, such as Jack Nicklaus since 1967.
Rolex is committed to meaningful relationships and core tenets like motorsports, tennis, sailing, and golf.
Their strategies continue to deliver success decade after decade.
Rolex innovates in watchmaking with components like pare chrome balance wheels and shock-absorbent systems.
They know what they're good at and focus on making watches rather than selling them directly. They rely on authorized dealers for retail sales.
Rolex sells their watches wholesale to retailers who make a profit margin of 20% to 50%.
Rolex has the self-control and foresight to walk away from a significant portion of retail sales.
Luxury watch brands like Rolex, Omega, and Tag Heuer have benefited from the Apple Watch's impact on the market.
Continuity of design is crucial in creating iconic consumer goods, as seen with Rolex's timeless designs and other products like the Porsche 911 and Hermes Birkin bag.
Rolex creates watches with multi-generational appeal, allowing people to pass down timepieces as heirlooms.
Rolex plans for the long term and focuses on product iteration and demand creation.

The Challenges and Controversies Surrounding Rolex

56:16 - 1:03:05

Some people are turned off from luxury watch brands like Rolex and AP because of the elitist buying experience.
Customers are often asked personal questions and judged based on their social status before being allowed to purchase a watch.
This exclusivity has led some customers to buy watches from alternative sources or spend their money elsewhere.
The luxury market has been driven by easy access to capital, causing prices to continuously rise.
When the market tightens, people realize that watches may not always go up in value and lose interest.
Luxury brands should treat all potential customers with respect as demand is not guaranteed forever.
Finding good salespeople who understand the brand and its customers is challenging for luxury retailers.
Salespeople who lack knowledge about the products they sell can give a negative impression to customers.
Being denied a purchase after achieving personal success can be demoralizing and insulting for customers.
Rolex acknowledges this problem but finding a solution is difficult.
Waiting lists are not reliable as connections or previous purchases often determine who gets a watch.
The issue of exclusivity will continue unless changes are made in how luxury brands interact with customers.
Luxury brands need to find a balance between aspiration and accessibility for their products.