The Brand Age

March 2026In the early 1970s, disaster struck the Swiss watch industry. Now
people call it the quartz crisis, but in fact it was a compound of
three separate disasters that all happened at about the same time.The first was competition from Japan. The Swiss had been watching
the Japanese in the rear view mirror all through the 1960s, and
they'd been improving at an alarming rate. But even so the Swiss
were surprised in 1968 when the Japanese swept all the top spots
for mechanical watches at the Geneva Observatory trials.The Swiss knew what was coming. For years the Japanese had been
able to make cheaper watches. Now they could make better ones too.To make matters worse, Swiss watches were about to become much more
expensive. The Bretton Woods agreement, which since 1945 had fixed
the exchange rates of most of the world's currencies, had set the
Swiss Franc at an artificially low rate of .228 USD. When Bretton
Woods collapsed in 1973, the Franc shot upward. By 1978 it reached
.625 USD, meaning Swiss watches were now 2.7 times as expensive for
Americans to buy.
[1]The combined effect of foreign competition and the loss of their
protective exchange rate would have decimated the Swiss watch
industry even if it hadn't been for quartz movements. But quartz
movements were the final blow. Now the whole game they'd been trying
to win at became irrelevant. Something that had been expensive —
knowing the exact time — was now a commodity.Between the early 1970s and the early 1980s, unit sales of Swiss
watches fell by almost two thirds. Most Swiss watchmakers became
insolvent or close to it and were sold. But not all of them. A
handful survived as independent companies. And the way they did it
was by transforming themselves from precision instrument makers
into luxury brands.In the process the nature of the mechanical watch was also transformed.
The most expensive watches have always cost a lot, but why they
cost a lot and what buyers got in return have changed completely.
In 1960 expensive watches cost a lot because they cost a lot to
manufacture, and what the buyer got in return was the most accurate
timekeeping device, for its size, that could be made. Now they cost
a lot because brands spend a lot on advertising and use tricks to
limit supply, and what the buyer gets in return is an expensive
status symbol.That turns out to be a profitable business though. The Swiss watch
industry probably makes more now from selling brand than they would
have if they were still selling engineering. And indeed, when you
look at the graph of Swiss watch sales by revenue, it tells a
different story than the graph of unit sales. Instead of falling
off a cliff, the revenue numbers merely flatten out for a while,
and then take off like a rocket in the late 1980s as the surviving
watchmakers come to terms with their new destiny.It took the watchmakers about 20 years to figure out the new rules
of the game. And it's interesting to watch them do it, because the
completeness of their transformation makes it the perfect case study
in one of the most powerful forces of our era: brand.Brand is what's left when the substantive differences between
products disappear. But making the substantive differences between
products disappear is what technology naturally tends to do. So
what happened to the Swiss watch industry is not merely an interesting
outlier. It's very much a story of our times.Jaeger-LeCoultre's web site says that one of their current collections
"takes its inspiration from the classic designs of the golden age
of watchmaking." In saying this they're implicitly saying something
that present-day watchmakers all know but rarely come so close to
saying outright: whatever age we're in now, it's not the golden
age.The golden age was from 1945 to 1970 — from the point where the
watch industry emerged from the chaos of war with the Swiss on top
till the triple cataclysm that struck it starting in the late 60s.
There were two things watchmakers sought above all in the golden
age: thinness and accuracy. And indeed this was arguably the essential
tradeoff in watchmaking. A watch is something you carry with you
to tell you the time. So there are two fundamental ways to improve
it: to make it easier to carry with you and to make it better at
telling the time.Obviously accuracy is valuable, but in the golden age thinness was
if anything more valuable. Even in the days of pocket watches the
best watchmakers tried to make their watches as thin as they could.
Cheap, thick pocket watches were derided as "turnips." But thinness
took on a new urgency when men's watches moved onto their wrists
during World War I. And since thinness was more difficult to achieve
than accuracy, it was this quality that tended to distinguish the
more expensive watches of the golden age.There is one other thing watchmakers have pursued in some eras:
telling more than the time in the usual way. Telling you the phase
of the moon, for example, or telling the time with sound. In the
industry the term for these things is "complications." They were
popular in the nineteenth century and they're popular again now,
but except for one pragmatic complication (showing the date), they
were a sideshow in the golden age. In the golden age, as always in
golden ages, the top watchmakers focused on the essential tradeoff.
And, as always in golden ages, they did it beautifully. The best
watches of the golden age have a
quiet perfection that has never
been equalled since. And for reasons I'm about to explain, probably
never will be.The three most prestigious brands of the golden age were the so-called
"holy trinity" of Patek Philippe, Vacheron Constantin, and Audemars
Piguet. Their prestige was mostly deserved; they had earned it by
the exceptional quality of their work. By the 1960s they stood on
two legs, prestige and performance. And what they learned in the
next two decades was that they had to put all their weight on the
first leg, because they could no longer win at either of the two
things watchmakers had historically striven to achieve. Quartz
movements were not only more accurate than any mechanical movement,
but thinner too.The holy trinity at least had another leg to stand on. Most of the
other well-known Swiss watchmakers sold only performance. None of
those companies survived intact.Omega showed what not to do. Omega were the nerds of Swiss watchmakers.
They made wonderfully accurate watches, but they would have been
ambivalent, at best, about the idea of being a luxury brand. When
the Japanese got as good as the Swiss at making accurate movements,
Omega responded in the Omega way: make even more accurate movements.
They introduced a new movement in 1968 that ran at a 45% higher
frequency. In theory this should have made it more accurate, but
the new movement was so fragile that it destroyed their reputation
for reliability. They even tried to make a better quartz movement,
but there was nothing down that road but a race to the bottom. By
1981 they were insolvent and were taken over by their creditors.Patek Philippe took the opposite approach. While Omega was redesigning
their movements, Patek was redesigning their cases. Or more precisely,
designing their cases, because until then they hadn't.This is probably the point to mention what a strange beast the Swiss
watch industry was in those days. It was a kind of capitalism that's
hard to imagine today, and even then could only have been made to
work in a country like Switzerland — a network of small, specialized
companies locked into place by regulation. The companies that we
for convenience have been calling watchmakers were merely the
consumer-facing edge of this network. The holy trinity didn't design
their own cases, or even their own movements most of the time.In 1968 (that year again) Patek Philippe launched a new watch that
shifted the center of gravity of case design. This time they'd taken
their own designs to the casemakers and said "this is what you're
going to make for us." The result was a striking new model called
the Golden Ellipse. Somewhat confusingly, because it wasn't elliptical.
The new case was more of what UI designers would call a round rect:
a rectangle with rounded corners. And this new family of watches
was quite successful. But it was more than that: it was the pattern
for the future.
[2]How could merely designing a distinctive case be so important?
Because it turned the entire watch into an expression of brand.The trouble with the best watches of the golden age, from the point
of view of someone who wanted to impress people with the brand of
watch he was wearing, was that no one could tell what brand of watch
you were wearing. Until you got within a few inches of them, the
watches of all the top makers looked the same. That's the thing
about minimalism: there tends to be just one answer. Plus the watches
of the golden age were small by present standards. Watchmakers had
spent centuries working to make them smaller, and by 1960 they'd
gotten very good at it. So the only thing distinguishing one top
brand from another was the name printed on the dial, and dials were
so small that these names were tiny. The manufacturers' names on
the holy trinity's golden age watches are between half and three
quarters of a millimeter high. By taking over the case, Patek
expanded the size of the brand from 8 square millimeters to 800.Why did they suddenly decide to make their brand shout, after a
century of whispering? Because they knew they weren't going to beat
the Japanese on performance. From now on they'd have to depend more
on brand.There's a cost to doing this, which we can see even in this early
example of case-as-brand. Golden Ellipses are not bad looking. They
must have looked even cooler in the 1970s, when designers were
turning everything into round rects. But the Golden Ellipse was not
an evolutionary step forward in case design. Watches didn't all
become round rects. Watchmakers had already discovered the optimal
shape for the case of something that describes a circle as it
rotates.They had also discovered the optimal shape for the crown, the knob
on the side of a watch that you turn to wind it. But to emphasize
the distinctive profile of the Ellipse, Patek made the crown too
small, with the result that they're distractingly hard to wind.
[3]So even in this early example we see an important point about the
relationship between brand and design. Branding isn't merely
orthogonal to good design, but opposed to it. Branding by definition
has to be distinctive. But good design, like math or science, seeks
the right answer, and right answers tend to converge.Branding is centrifugal; design is centripetal.There is some wiggle room here of course. Design doesn't have as
sharply defined right answers as math, especially design meant for
a human audience. So it's not necessarily bad design to do something
distinctive if you have honest motives. But you can't evade the
fundamental conflict between branding and design, any more than you
can evade gravity.Indeed, the conflict between branding and design is so fundamental
that it extends far beyond things we call design. We see it even
in religion. If you want the adherents of a religion to have customs
that set them apart from everyone else, you can't make them do
things that are convenient or reasonable, or other people would do
them too. If you want to set your adherents apart, you have to make
them do things that are inconvenient and unreasonable.It's the same if you want to set your designs apart. If you choose
good options, other people will choose them too.There are only two ways to combine branding and good design. You
can do it when the space of possibilities is enormously large, as
it is in painting, for example. Leonardo could paint as well as he
possibly could and yet also paint in a style that was distinctively
his. If there had been a million painters as good as Bellini and
Leonardo this would have been harder to do, but since there were
more like ten they didn't bump up against one another much.
[4]The other situation when branding and good design can be combined
is when the space of possibilities is comparatively unexplored. If
you're the first to arrive in some new territory, you can both find
the right answer and claim it as uniquely yours. At least at first;
if you've really found the right answer, everyone else's designs
will inevitably converge on yours, and your brand advantage will
erode over time.Since the space of watch design is neither unexplored nor enormously
large, branding can only be achieved at the expense of good design.
And in fact if you wanted one sentence to describe the current age
of watchmaking, that one would do pretty well.Patek Philippe didn't know for sure that making visibly branded
watches would work. It was not even their only strategy, at the
time. They were finding their way. But it was the strategy that did
work, at least as measured by revenues.For it to work the customers had to meet them halfway. Patek knew
that not all their customers were buying their watches for the
performance they delivered — for their accuracy and thinness. They
knew that at least some customers were buying them because they
were expensive. But it was unclear how many, or how far they could
be pushed.To encourage them, Patek did something that none of the holy trinity
had done much of before: brand advertising. And what they talked
about was how expensive their watches were. A 1968 Patek ad explained
"why you are well advised to invest perhaps half a month's income"
in an Ellipse. "Like every Patek Philippe," the ad continued, "this
thin model is entirely finished by hand. Since a Patek Philippe is
the costliest watch to make, production is severely limited: only
43 watches are signed out each day for delivery to prominent jewelers
throughout the world."
[5]You can tell this is an early ad because they still mention thinness.
But there is no mention of accuracy. Presumably Patek felt that
battle was already lost.The next move was made by Audemars Piguet, who in 1970 commissioned
the renowned designer Gérald Genta to design their own iconic watch,
this one, daringly, in steel. The result, launched in 1972, was the
Royal Oak.
And Audemars Piguet's ads (for they too now started doing
brand advertising) emphasized its high cost even more dramatically.
"Introducing steel at the price of gold," one began. "You're looking
at the costliest stainless steel watch in the world — the Audemars
Piguet 'Royal Oak'. What makes it even more precious than gold is
the time that went into building it, by a vanishing breed of master
watchmakers." At the bottom of the ad they turn the traditional
formula on its head and describe their watches as being "priced
from $35,000 and down."The Royal Oak was also a step forward in surface area devoted to
brand. The Golden Ellipse had turned the watch face into an expression
of brand, but it used ordinary straps and bracelets. In the Royal
Oak, the watch face was integrated with a metal bracelet that
continued its design all the way around the wrist. When it said
"You're looking at the costliest stainless steel watch in the world,"
it said it with every square millimeter of surface area.Would customers buy this new approach? The initial results were
moderately encouraging. The holy trinity's sales didn't take off,
but they didn't go down to zero either. There were at least some
people out there responding to the new message. Perhaps if they
kept at it the number would grow.So they did. Encouraged by the success of the Royal Oak, Patek
Philippe commissioned Gérald Genta in 1974 to design a similar watch
for them. The design of the Royal Oak had been inspired by a ship's
porthole, so the design of this new watch would be inspired by...
a ship's porthole. It was called the
Nautilus, and it launched at
the Basel Watch Fair in 1976.In the Nautilus we really see the incompatibility of branding and
design. It was huge. The most expensive men's watches at the peak
of the golden age were typically 32 or 33 millimeters in diameter.
The Nautilus was 42 millimeters. And as well as being huge it had
gratuitous knobs on either side of the face, like a pair of ears.
But you could recognize one from across the room.Of all the watches Patek makes now, the Nautilus is the most sought
after. It's perfectly aligned with what present-day buyers want —
basically, the loudest possible expression of brand. But in 1976
it was ahead of its time. In 1976 it was still a little too much.The watch that finally turned Patek's fortunes around was another
iconic design, the hobnail calatrava. The hobnail calatravas were
so called because they were decorated with tiny pyramid-shaped
spikes. That was enough to make them look distinctive. But except
for the hobnails they were basically golden age dress watches.The hobnail calatrava was apparently the brainchild of René Bittel,
the head of Patek Philippe's ad agency. It was not a new design.
Many watchmakers had decorated their cases with hobnails over the
years, and there had been a Patek model with them since 1968. But
in 1984 Bittel told Patek president Philippe Stern, in effect: make
this your standard design, and I'll create an ad campaign to identify
it in people's heads with your brand.
[6]It worked spectacularly well. The resulting watch, the
3919, is
known as the "banker's watch" because it became so popular among
investment bankers in New York in the 80s and 90s. Up to this point
Patek had been hedging their bets, making quartz watches as well,
and arguing defensively in their ads that quartz watches in fancy
cases were almost as laborious to make as mechanical ones. But the
ibankers bought the full mechanical story. They didn't even need
self-winding mechanical watches; the 3919 was hand-wound. So be it.
Patek stopped talking about quartz movements. And their sales, which
had been flat since the early 70s, were by 1987 on a clear upward
trajectory.It's hard to say for sure whether the critical ingredient was
Bittel's skill at advertising or a receptive audience, but as someone
who knew these investment bankers, I'd lean toward the audience.
These were the people for whom the term "yuppy" was coined. Living
expensively was one of the things they were best known for. If
anyone was going to adopt a new way to display wealth, it would be
them. Whereas if Bittel had sent the same message ten years earlier,
there might have been no one to hear it.Whatever the cause, something happened in the second half of the
1980s, because that's when all the numbers finally start going up
again. Up till about 1985 it was still not clear what would happen
with mechanical watches. By 1990 it was. By 1990 the custom of using
expensive, highly-branded, conspicuously mechanical watches as
status symbols was firmly established.
[7]Obsolete technologies don't usually get adopted as ways to display
wealth. Why did it happen with mechanical watches? Because the
wristwatch turns out to be the perfect vehicle for it. Where better
than right on your wrist, where everyone can see it? And more to
the point, what better to do it with? You could wear a diamond ring
or a gold chain, but those would have seemed socially dubious to
investment bankers. They might have been barbarians, but they weren't
mafia. Whereas nothing could be more legit than a gold watch. The
chairman of the company was still wearing one his wife gave him 20
years ago, before quartz watches were even a thing. If the increasing
pressure to display wealth was going to emerge anywhere, this was
the place.
[8]For men, at least. Women never really went for the idea of wearing
mechanical watches. Most rich women are happy wearing a Cartier
tank with a quartz movement. Why the difference? Partly for the
same reason that most buyers of steam engines are men. But the main
reason is that expensive mechanical watches now serve as de facto
jewelry for men, and women don't need de facto jewelry because they
can wear actual jewelry.It was critical, though, that mechanical watches were accurate
enough. A new 3919 would have been off by no more than 5 seconds
a day. That was nowhere near as good as quartz. Even the cheapest
mass market quartz watches were accurate to half a second a day,
and the best ones were accurate to 3 seconds a year. But in practice
you didn't need that kind of accuracy. If mechanical watches had
only been accurate to a minute a day they couldn't have made the
leap from keeping time to displaying wealth. It would have seemed
too manifestly unluxurious to have a watch that always had the wrong
time. But 5 seconds a day was close enough.
[9]This is an important point about the relationship between brand and
quality. Quality doesn't stop mattering when a product switches to
something people buy for its brand. But the way it matters changes
shape. It becomes a threshold. It no longer has to be so great that
it sells the product; brand sells the product; but it does have to
be good enough to maintain the brand's reputation. The brand must
not break character.It was a lucky thing for the watchmakers that yuppies arose just
in time to save them. Or maybe not so lucky. Because the evolution
of the market that yuppies represented has continued with a vengeance,
and watchmakers have perforce been dragged along with it. If they
don't make gigantic blingy watches for buyers in Hong Kong and
Dubai, someone else will. So that is what they now find themselves
doing. And what began with a few comparatively subtle examples of
the conflict between branding and design is now an all out
war on
design.The present era of mechanical watchmaking doesn't yet have a name.
But if we need one, it's obvious what it should be: the brand age.
The golden age ran from 1945 to 1970, followed by the quartz crisis
from 1970 to 1985. Since 1985 we've been in the brand age.This won't be the only brand age. Indeed, it's not even the first;
fine art has been in its own brand age since the establishment of
the Barr canon in the 1930s. And since we'll probably see more of
this kind of thing, it would be worth taking some time to look at
what a brand age is like.How are things different now from the way they were in the golden
age? The best way to answer that might be to imagine what someone
from the golden age would notice if we brought him here in a time
machine.The first thing he'd notice, if he walked through a fancy shopping
district, is that all the prominent watchmakers of the golden age
seem to be doing better than ever. They're not only all still around,
but most now have their own boutiques instead of depending on
jewelers to sell their products as they used to back in the day.In fact this is an illusion. Only three watchmakers survived the
dark days of the 70s and 80s as independent companies: Patek Philippe,
Audemars Piguet, and Rolex. All the rest are owned by six holding
companies, which reinflated them as it became clear that mechanical
watches would have a second life as luxury accessories for men.
Instead of separate companies they're now more like the brands
that got rolled up into the big three American automakers: they're
ways for their parent companies to target different segments of the
market. So Longines, for example, no longer competes with Omega,
because the company that owns them both has assigned it a lower
tier of the market.
[10]There's a reason the Vacheron Constantin boutique looks so much
like the IWC and Jaeger-LeCoultre boutiques, and for that matter
the Montblanc and Cartier boutiques. They're all owned by the same
company. It's similar with clothing brands, incidentally. When you
walk through a town's fanciest shopping district, what seem to be
the shops of lots of different brands are actually owned by a handful
of conglomerates. That's one reason these districts seem so sterile;
like suburbs built by a single developer, they have an unnatural
lack of variety.When our time traveler peered into the windows of these shops, the
first thing he'd notice would be how large all the watches were. This
would surprise him, because in the golden age, as indeed in all the
preceding centuries, big meant cheap. An expensive golden age men's
watch might have been 33 millimeters in diameter and 8 millimeters
thick. An expensive watch today will be more like 42 millimeters
in diameter and 10 millimeters thick — more than double the size.
It would astonish our visitor to look through the windows of what
were clearly very fancy shops and see what seemed to be cheap
watches.
[11]We know how this happened. When watches switched from telling time
to telling brand, they grew in size to be better at it. And not
just in size, but in shape too. That's another thing our time
traveler would notice: the surprising variety of strange case shapes
and awkward protrusions that have been produced as the centrifugal
tendency of branding played out. What, he'd wonder, is going on
with the huge guards on the crowns of those Panerais? What do people
do with these watches that makes the crown need such protection?
And why would a crown guard have a message engraved on it saying
that it's a registered trademark? It's obvious to us what's going
on here, but imagine how confusing it would be to someone from the
golden age, when form followed function.
[12]As he puzzled over this strange assortment of bulky watches, he'd
notice a further pattern. He'd realize that a surprisingly large
number of them looked like a specific brand of bulky watch he was
already familiar with.I haven't talked about Rolex so far, because Rolex didn't have to
do much to adapt to the new era. They already had one foot in the
brand age during the golden age. Early in their history they put a
lot of effort into making their watches better, but they "stopped
taking part in competitions in Geneva and Neuchâtel at the end of
the 1950s," and from about 1960 "largely abandoned research into
mechanical watchmaking."
[13]
The reason was not that they'd become
lazy, but that they'd discovered they could make sales grow faster
by marketing their watches as status symbols. So that became their
focus during the 1960s, and by the time the quartz crisis hit ten
years later, their customers were self-selected to be people who
didn't care that much what was inside a watch, so long as it was
recognizably a Rolex.And they were far ahead of other watchmakers in that department.
They already had in the 1940s what we saw Patek Philippe and Audemars
Piguet struggling to create in the 1970s and 80s: a case that
immediately proclaimed the brand of the maker. The Rolex look seems
to have evolved organically, but once it did, they realized how
important it was. In fact they pitched it as one of the features
of their watches. A 1960s Rolex ad says "You can recognize its
classic shape, carved out of a block of solid gold, from the other
end of the conference table."Indeed Rolex was ahead of its time in both dimensions: their cases
were not merely recognizable, but big too, at least by golden age
standards. That was not the result of clever marketing, though. It
was a byproduct of the founder Hans Wilsdorf's obsession with
building waterproof watches.As its name suggests, that was the raison d'etre of the Rolex Oyster.
Watches like the Oyster were designed to be tough, like Jeeps. In
the golden age there were two poles of watch design. At one end
were tool watches, which were thick, tough, and usually made of
steel. At the other end were dress watches, which were thin, elegant,
and usually made of gold. But Rolex blurred the line between them.
When they made thick, tough watches, they made them out of gold as
well as steel. The result was a sort of luxury Jeep. And if that
phrase didn't ring a bell in your head, stop and think about it,
because that is exactly what everyone is driving now. That's what
SUVs are, luxury Jeeps. What happened to watches is the same thing
that happened to cars. And indeed if our time traveler turned and
saw a Porsche Cayenne pass by and realized what it was — a huge,
pseudo-offroad vehicle meant to recall the Porsche 911 — he might
have been even more shocked than he was by the watches he'd been
looking at.
[14]If the time traveller walked into a Patek Philippe boutique and
actually tried to buy a Nautilus, he'd get the biggest shock of
all. They wouldn't sell him one. Because at Patek he'd encounter
the most extreme brand age phenomenon: artificial scarcity. You
can't just buy a Nautilus. You have to spend years proving your
loyalty first by buying your way through multiple tiers of other
models, and then spend years on a waiting list.
[15]Obviously this strategy sells more watches. But it also supports
retail prices by keeping watches off the secondary market. A company
using artificial scarcity to drive sales can't allow too many of
the scarce models to leak into the secondary market, or they stop
being scarce. The ideal is the watch equivalent of carbon sequestration:
for the people who buy their watches to keep them till they die.To push the market toward this ideal, Patek squeezes from both sides
of the sale. They weed out flippers by making the path to the scarce
models so costly in both time and money — so inconvenient and
unreasonable — that only a genuine fan would endure it. The lower
tier watches sell for below retail on the secondary market, because
Patek doesn't restrict their supply, so a would-be flipper should
have to spend years making money-losing purchases before he could
even get something he could flip at a profit. Apparently some people
still manage to beat this system though, so Patek's countermeasures
don't end there. They keep a vigilant eye on secondary sales to see
who's selling their watches. Auction listings usually include serial
numbers, so those are easy to trace, but if necessary they'll rebuy
their own watches on the secondary market to get the serial number
and trace the leak. They buy hundreds a year. And when they catch
someone selling watches they don't want them to, they don't just
cut off that customer. If a retailer's customers are responsible
for too many such leaks, they'll cut off the whole retailer. Which
naturally makes retailers eager to help them police buyers.There will of course always be some leaks into the secondary market.
Even the most loyal customers die at a certain rate. And in fact
it's critical for Patek that the secondary market continue to exist,
because it's one of the most valuable sources of information they
have about the most important question they face: how fast to
increase the supply of the top tier watches. Their scarcity helps
drive the purchases of all the others, so those that do make it
into the secondary market should always sell for above retail. And
I'm sure Patek leaves a large margin for error when increasing
supply, because if secondary market prices for these watches get
close to retail prices, you're getting close to a price collapse
— which, since people now buy these watches as investments, would
have the same disastrous cascading effect as the bursting of an
asset bubble. It wouldn't just be like the bursting of an asset
bubble. It would be the bursting of an asset bubble. That's the
business an elite watchmaker is in now: carefully managing a sustained
asset bubble.
[16]This is an instance of what I call the comb-over effect: when a
series of individually small changes takes you from something that's
a little bit off to something that's freakishly wrong. I'm sure
Patek didn't cook up this whole scheme in one shot; I'm sure it
evolved gradually. But look at what a strange place we've ended up
in. Back in the golden age the way you bought a Patek Philippe was
to go to a jeweler and give them money. Now Patek is policing buyers
to maintain an asset bubble.The most striking thing to me about the brand age is the sheer
strangeness of it. The zombie watch brands that appear to be
independent and even have their own retail stores, and yet are all
owned by a few holding companies. The giant, awkwardly shaped watches
that reverse 500 years of progress in making them smaller. The
business model that requires a company to rebuy their own watches
on the secondary market to catch rogue customers. The very concept
of rogue customers. It's all so strange. And the reason it's strange
is that there's no function for form to follow.Up to the end of the golden age, mechanical watches were necessary.
You needed them to know the time. And that constraint gave both the
watches and the watchmaking industry a meaningful shape. There were
certainly some strange-looking watches made during the golden age.
They weren't all beautifully minimal. But when golden age watchmakers
made a strange-looking watch, they knew they were doing it. In fact
they give the impression of having done it as a deliberate exercise,
to avoid getting into a rut.That's not why brand age watches look strange. Brand age watches
look strange because they have no practical function. Their function
is to express brand, and while that is certainly a constraint, it's
not the clean kind of constraint that generates good things. The
constraints imposed by brand ultimately depend on some of the worst
features of human psychology. So when you have a world defined only
by brand, it's going to be a weird, bad world.Well that was dark. Is there some edifying lesson we can salvage
from the wreckage?One obvious lesson is to stay away from brand. Indeed it's probably
a good idea not just to avoid buying brand, but to avoid selling
it too. Sure, you might be able to make money this way — though I
bet it's harder than it looks — but pushing people's brand buttons
is just not a good problem to work on, and it's hard to do good
work without a good problem.The more subtle lesson is that fields have natural rhythms that are
beyond the power of individuals to resist. Fields have golden ages
and not so golden ages, and you're much more likely to do good work
in a field that's on the way up.Of course they don't call them golden ages as they're happening.
"Golden age" is a term people use later, after they're over. That
doesn't mean that golden ages aren't real, but rather that their
participants take them for granted at the time. They don't know how
good they have it. But while it's usually a mistake to take one's
good fortune for granted, it's not in this case. What a golden age
feels like, at the time, is just that smart people are working hard
on interesting problems and getting results. It would be overfitting
to optimize for more than that.In fact there's a single principle that will both save you from
working on things like brand, and also automatically find golden
ages for you. Follow the problems.The way to find golden ages is not to go looking for them. The way
to find them — the way almost all their participants have found
them historically — is by following interesting problems. If you're
smart and ambitious and honest with yourself, there's no better
guide than your taste in problems. Go where interesting problems
are, and you'll probably find that other smart and ambitious people
have turned up there too. And later they'll look back on what you
did together and call it a golden age.Notes[1]
The Bretton Woods agreement didn't fix exchange rates between
currencies directly. It fixed each relative to gold. Obviously this
also fixed them relative to one another.[2]
The Golden Ellipse isn't quite a round rect, because the sides
aren't quite flat. It's similar in shape to the superellipses
popularized by Piet Hein in the early 1960s, and in fact that may
be where they got the name. But mathematically it's not an actual
superellipse. My guess is that Patek's designer just experimented
with French curves till he got something he liked. And to be fair
it is a good shape.[3]
It was ironic that Patek Philippe of all companies made this
mistake, because Adrien Philippe was the inventor of the modern
crown. But they must have realized what they'd done, because later
Ellipses have if anything excessively prominent crowns.[4]
The high ratio of design space to practitioners in fine art
has combined with the practical importance of attribution to give
people the impression that painting in a distinctively Leonardesque
way is what makes Leonardo good. The most dangerous problem faced
by curators, art historians, and art dealers — the one that has
the worst consequences if they get the wrong answer — is attribution.
So inevitably they spend a lot of time thinking and talking about
the features that distinguish the work of one artist from another.
But those aren't what make artists good. What makes the line of a
woman's cheek in a Leonardo drawing good is how good it looks as
the line of a cheek, not how little it looks like lines made by
other artists.Because painting has such prestige, the myth that having a distinctive
style (rather than painting well) is the defining quality of great
artists has in turn given cover to a lot of bad design in adjacent
fields. A brand that does something hideous to distinguish their
products can say "Like all great works of art, ours have a distinctive
style," and people will buy it.[5]
An ad that Patek Philippe ran in America in 1970 famously
described a Patek 3548 with a gold bracelet as a "$1700 trust fund."
Was it actually a good investment? In the very best case a dealer
might pay you $20k now for one in unworn condition with its original
box and papers. That's about a 4.5% rate of return, which is not
absolutely terrible. But apparently the average rate of return on
S&P 500 stocks over this period was more like 10%, if you reinvested
all the dividends after paying taxes on them. The average rate of
return would have been over 9% if you merely bought a lump of gold
that hadn't been made into a watch. So, not surprisingly, the ad
wasn't very good investment advice.[6]
Tania Edwards, who ran US marketing for Patek Philippe in the
90s, said that Bittel literally sketched the design of the 3919 on
a piece of paper. This sounds odd to me, because the 3919 looked
exactly like the existing 3520 with the addition of sub seconds (a
small dial with a second hand above 6 o'clock). Why would you sketch
a design almost identical to an existing watch when you could just
point to the existing watch and say "that, with sub seconds." What
this story does show, though, is the degree to which people within
Patek felt their ad agency was responsible for the design of the
3919.[7]
If I had to date the turning point for mechanical watches
precisely, I'd say 1986. Unit sales of Swiss watches rebounded in
1985, but revenue didn't, which means what we're seeing is the boom
in cheap quartz Swatches. Indeed, sales of mechanical watches must
have been down if revenue was flat despite the sale of all those
Swatches. Whereas in 1986 revenue turns sharply upward even though
unit sales only increase by a little, which implies a corresponding
increase in sales of expensive mechanical watches.[8]
There is of course another reason some people are into
mechanical watches: because they're interested in old technology.
And if you are genuinely interested in mechanical watches, there's
good news. You don't have to wear a billboard on your wrist or pay
a lot to own one. Just buy golden age watches. They still keep good
time, they're much more beautiful, and they cost a fraction of what
new watches cost.The key to buying a golden age watch is to find a good dealer, and
the best way to recognize one is by how much they tell you about
the watch. A bad dealer will just have a lot of fluff about the
prestige of the brand and the sleek lines of the case. A good dealer
will tell you the model number of the watch and movement, have lots
of pictures, including some with the case back open, give you
dimensions, disclose all damage and restoration, and tell you exactly
how accurately the watch is running. Good dealers tend to be watch
nerds themselves, so they're into this kind of thing.(There are a few independent watchmakers trying earnestly to make
good mechanical watches now, but their efforts show how hard it is
to do good work when the current is against you.)[9]
Oddly enough it might have helped that the 3919 was hand
wound. If a watch runs for long enough, 5 seconds a day starts to
add up. After three months a watch that gains 5 seconds a day will
be 7 minutes fast. But with a hand wound watch you occasionally
forget to wind it, and it runs down. And when you wind it again you
reset it — on average to a time about 30 seconds behind the actual
time. So if you forgot to wind a 3919 every two weeks or so, it
would rarely have shown the wrong time.[10]
There's one brand still waiting to be reinflated: Universal
Genève, which was one of the big players of the golden age but since
1977 has been little more than a brand name passed from acquirer
to acquirer. They're scheduled to come back to life later this year,
no doubt with stories about their long tradition of watchmaking.[11]
More precisely, a high ratio of size to accuracy meant cheap.
It's easier to make a larger movement keep good time, but between
two watches of the same accuracy, the larger was usually the cheaper.[12]
Their form did once follow function. They were originally
diving watches. But they're long since obsolete for this purpose.
Present day diving watches (now called dive computers) are digital
and tell you much more than the time.[13]
Rolex was awarded an average of 16.6 patents per year in the
1950s, but only 1.7 per year in the 1960s.Pierre-Yves Donzé, The Making of a Status Symbol: A Business History
of Rolex, Manchester University Press, 2025.[14]
Rolexes also shared something more specific with SUVs:
aspirational manliness. An internal 1967 report by Rolex's ad agency
J. Walter Thompson explained the idea they were trying to convey: "Because a Rolex is
designed for any situation, however rough or dangerous or heroic
or exalted, it implies that the man who wears it is, potentially,
a hero."Reprinted in Donzé, op cit.[15]
This business model only works when purchase decisions are
driven mainly by brand. In a normal market, if one manufacturer
restricts production, customers just buy from whichever competing
manufacturer offers something as good. It's only when customers are
seeking a certain brand rather than a certain level of performance
that you can manipulate them by restricting its availability.[16]
Of course the first question one has on noticing a bubble is:
will it burst? The reason ordinary bubbles eventually burst is that
speculators get overoptimistic, but in this case the CEO of Patek
Philippe controls the "money supply" and can thus take measures to
cool down an overheated market. So there are probably only two
things that could cause their specific bubble to burst: if his
successor is not as capable, or if the whole custom of wearing
mechanical watches goes away. The latter seems the greater danger.
People aren't going to wear three things on their wrists, so all
it would take is for there to be two popular devices that were worn
on the wrist, and mechanical watches would start to be seen by the
next cohort of young rich people as an old guy thing. It's hard to
imagine a luxury watch brand surviving that.Thanks to Sam Altman, Bill Clerico,
Daniel Gackle, Luis Garcia, the
people at Goldammer, Jessica Livingston, Ben Miller, Robert Morris,
John Reardon, D'Arcy Rice, Alex Tabarrok, and Garry Tan for reading
drafts of this.