The Business of Watches [001] Rolex, The Making of a Status Symbol With Author Pierre-Yves Donzé¶
Published on Wed, 3 Sep 2025 15:00:00 +0000
In the first episode of Andy Hoffman's brand new podcast, Author Pierre-Yves Donzé unpacks the business history of Rolex and why the brand's success isn't just about its watches.
Synopsis¶
In this episode of "The Business of Watches," host Andy Hoffman sits down with Pierre Yves Donzé, a professor of business history at Osaka University, to discuss his groundbreaking book "The Making of a Status Symbol: A Business History of Rolex." This represents the first comprehensive academic business history of the world's most dominant watch brand, which controls roughly one-third of Swiss watch industry sales.
Donzé explains how he overcame Rolex's legendary secrecy—the company maintains private archives and its CEOs rarely give interviews—by mining government archives, business records, and trade journals across Switzerland, the UK, and the US. His research reveals that Rolex founder Hans Wilsdorf was first and foremost a trader and marketer rather than an engineer, which shaped the company's customer-focused approach from the beginning. The partnership with movement manufacturer Egler in Bienne was critical, allowing Wilsdorf to focus on branding while Egler handled technical production.
The conversation traces Rolex's evolution from a London-based import operation that relocated to Geneva during World War I to avoid British tariffs, through its development of the Oyster waterproof case and Perpetual automatic movement in the 1920s-40s, to the establishment of its core model lineup (Submariner, GMT-Master, Daytona) in the 1950s-60s. Donzé emphasizes that under André Heiniger, who succeeded Wilsdorf in 1963, Rolex pioneered a revolutionary marketing shift: rather than talking about watch specifications, they focused on excellent, successful people who wore Rolex watches. Working with American advertising agency J. Walter Thompson, they created the narrative of Rolex as a symbol of achievement and excellence, targeting not just the ultra-wealthy but the aspirational upper-middle class in what Donzé calls "accessible luxury."
This strategy proved crucial during the quartz crisis of the 1970s-80s, when competitors like Omega shifted to quartz technology and faltered. Rolex remained focused on mechanical watches because, as Donzé explains, "Rolex was not a watch anymore, it was a discourse, a narrative on excellence." The company's financial structure—owned entirely by the Hans Wilsdorf Foundation since 1960—allowed it to reinvest profits rather than distribute dividends, funding vertical integration and maintaining independence. Today, under CEO Jean-Frédéric Dufour, Rolex has added luxury industry experts to its board and continues its dominance while carefully introducing technical innovations within its established aesthetic framework.
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Transcript¶
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| Andy Hoffman | This episode of the business of watches is brought to you by Panorai. 2025 marks the year of the Luminore, a celebration of bold Italian design, technical innovation, and the legacy of Panorai's most iconic collection. Welcome to the business of watches where horology meets high finance and each tick tells a story of markets, margins, mishaps, and mechanical mastery. I'm your host, Andy Hoffman, Senior Business Editor at Hodinky. In this series, we dive deep into the global watch industry, a place where centuries-old craftsmanship intersects with billion-dollar valuations, executive brand strategy, and investor speculation. From Swiss valleys to Silicon Valley, we trace the movements shaping this uniquely resilient sector. Just how big is the business of timekeeping? Well, some estimates place the entire watch industry from ultra-luxury maisons to smartwatches and micro brands at north of $100 billion globally. But behind that figure is a complex web of legacy, innovation, and ever shifting consumer tastes and demand. This is the podcast for collectors, analysts, watch buyers and sellers, and anyone who's fascinated by the intersection of wristware and wealth. Because if time is money, then money is most certainly time so let's get down to business so if we're gonna do a podcast about the business of watches, there's really only one place to start. That's with Rolex, which is by far the biggest player in the Swiss watch industry, accounting for about one-third of overall sales. When I started covering the Swiss watch industry as a business reporter a few years ago, Rolex's position at the top quickly became evident, and living in Geneva, I began to realize just how important and influential the company and the foundation were to the city. And so I looked for some books on the business history of the company, and to my surprise, there really weren't any. There were scores of books about Rolex watches, but few, if any, focusing on how this Swiss watch brand's business became number one. There's a pretty good reason for that. I've covered a lot of private and even secretive businesses and companies in my time, including Swiss based commodities traders, a massive but notoriously furtive group of private companies that make billions moving oil and metals around the world and profiting from changes in prices. The traders seemed extremely opaque and secretive, that is, until I started covering roles It's a private company which has been owned and controlled by a charitable trust foundation in Geneva, named for Rolex co founder Hans Willsdorf since 1960. There were no business books on Rolex because the company disclosed almost nothing about its operations, and its archives remained private and inaccessible to the public. Rolex executives, including its CEO, didn't give interviews about the watchmaker's business. Analysts were left to make estimates about the company's sales and profit. Now, I say there were no business focused books on Rolex, but that changed in twenty twenty four when Pierre Yves Donzay, a professor of business history at Osaka University in Japan, published La Fabrique de l'Excellence, un Histoire Dorolex, which translates roughly to the factory of excellence, a history of Rolex. Recently, the book was translated and published in English for the first time. It's called The Making of a Status Symbol, A Business History of Rolex. It is quite an achievement by Donze, who is Swiss and was born in the watchmaking hub of La Chaux de Fond, and has written several other books about the Swiss watch sector, including a business history of the Swatch Group. To produce the first fulsom business history of Rolex, he relied on traditional academic research using, primarily archive materials to build his story and narrative. Donz scoured big government and business archives, records and journals in Switzerland, the UK, and the US to produce an academic work that for the first time sheds light on how Rolex really became number one. And while he informed the company of his project, they did not assist his research, nor did they make the company archives available. So how did he do it and more importantly, what did he learn? Here's our conversation with Pierre Yves Donzay, author of The Making of a Status Symbol. Welcome Pierre-Yves d'Anzai, professor of business history at the University of Osaka, who has uh just published his uh book about the business history of Rolex in English for the first time. It was published in 2024 in French for that market, and now it's been translated into English. So, Pierre-Yves, Professor Danzé, welcome and thank you for joining us. You have been covering and writing about the business history of uh the Swiss wash industry for many years. Uh, you've published several books uh on the topic and specific books on specific companies, but you had never written about Rolex and the business history of Rolex. This is the most important and biggest Swiss watch company. Why? Yeah |
| Pierre Yves Donzé | . Yes, um uh hello Andy, thanks for the invitation. It's a pleasure to uh to be with you here today. Uh yes, you are right. Uh I've been studying the watch industry in Switzerland and globally for about fifteen years looking at many aspects. And I wanted always to do something with Rolex. But you know the most important when you are historian is to use archives, to use original documents to avoid, you know, all the narratives that we are surrounded by in in the watch industry, just to to to go back to uh to real documents to understand how uh this industry developed and so I could do it for for many uh aspects different cities different countries different companies but not relates because they don't open their archives to uh to uh historians. And so it was a as we know, you know, it's a very secret companies. Uh the CEOs since uh decades have never done uh any interviews. So the information is very rare. So it's very, very hard to to to to work as a historian on Rodex. Yeah, despite his number one uh company in the world. Absolutely. And so what convin |
| Andy Hoffman | ced you or made you believe that you could write uh the book about uh about Rolex and you know that gave you the confidence to do |
| Pierre Yves Donzé | so I think there are different factors. First one is time. I spent as I said about fifteen years in archives, looking at different aspects of the watch industry. And even if if I have never been to uh Rolex archives, uh you find always some documents about Rolex elsewhere because the company was in contact with so many institutions, government, trade associations, uh other companies that you always found the name of Rolex. So it convinced me that it's possible to do something on this company, looking, you know, f from another perspective, from the stakeholders of this firm. And uh so it's just time and experience spent in in uh working on this industry that gave me confidence for that. And second also is that you need also to have a good I would say a good point, a good research question to not only the history of Rolex for me is to understand how Rolex became uh a status symbol, no more watch, but a narrative on success. And if you if you start in this perspective, you can look for information in different perspectives. Absolutely. And and |
| Andy Hoffman | uh the title of the book in French is uh La La Fri uh La Fabrique d'excellence. In English you are calling it uh the making of a status symbol. Should we read anything into that um in terms of that that ch that change in title |
| Pierre Yves Donzé | ? No, it was a suggestion by uh the publisher because I wanted to have something better for the English speaking market, according to them, and they gave me a few suggestions and I like it. Because it's it's difficult to translate perfectly French of the manufacture of excellence. What does it mean? Excellence. But it's also the excellence of the users of the watch. And it makes a narrative on success and excellence. And in English it it's not it's not similar if you use the word excellence and in French. So to to translate not literally, but the the spirit or of the title was better toward the making of a status symbol. Fair enough, yeah, makes sen |
| Andy Hoffman | se. Makes sense. And indeed, so let's start at the beginning uh with Hans Wilsdorf and and you know, the um the the founding of Rolex and even before the founding of Rolex, y what were the important determining factors that you discovered about Hans Wilsdorf in his early life and then leading up to the founding of Rolex that set the stage for this company for looking at res |
| Pierre Yves Donzé | erve I think there are two important points uh related points. First is that he was a trader. No, he was not an engineer, he was not a producer. So he started selling watches. And this is very important to understand all the development of his company, of his brand because he gave attention to customers to the market first. He knew people, he knew what they wanted, what they didn't want, and after he went back to Switzerland to find suppliers thinking about marketing it was quite uncommon at the time for the big names. If the if you think about Omega, Longin, they all started with manufacturing and so it gives another perspective on the develop uh brand develop And related to that, he was looking for a hit product for very early on. But he didn't know what we always said, you know, he either the oyster. Of course the oyster became a good innovation, very famous, but after when he was developing the oyster, he didn't know it would become a so big success. So he tried developing other watches at the same time. And it's just really what is the entrepreneur. Uh you know, it's just uh you make some uh attempts, you uh invest in developing different products, you hope that one of them will work, and you see. And after you know he he saw the oyster works and he pushed all his energy in this direction. But it's not, you know, genius that one day w woke up and had the idea to make the oyster. There's a lot of uncertainty in the process of developing uh an innovation. And I think this this is interesting to understand the beginning of of uh of Wilsdorf |
| Andy Hoffman | . Absolutely. And and I mean, talk about I mean, and you track the the number of patents and trademarks and I mean he had many model lines, many different types of watches uh that he was creating before eventually settling on the oyster and and then you know the oyster perpetual. But he was trying lots of different models, case shapes, and innovations in wat |
| Pierre Yves Donzé | ches looking for that hit. Yes, but it was common also in the watch industry that explained at the time. If you look at all the brand names which which would become famous later, had a broad range of products. It it it was uh the philosophy of selling watches at the time, it was not having a few core product very easy to e-notify with the design, is making anything as long as you can sell them. And the brand name was attached to the precision. If your if if your watch is precise, it's enough to have a good reputation after you adapt the design. And that's what we Wizov uh targeted first, you know uh uh precision was very important for the beginning and after you adapt the design to the market |
| Andy Hoffman | . Indeed. And and what did Rolex do and Wilsdorf do in terms of telling the story of that precision or trying to make Rolex stand out from |
| Pierre Yves Donzé | competitors? First we need to to uh to be aware that Rolex was quite a small company before the war. Before the war. No, it's it was a a uh a small and a new company. And so the first objective of Wizov was to catch up with the big names with Omega Longina, IWC, etc. And he was a follower in terms of of of of communication. So he just wanted to establish his name, Rolex, as one of the best uh brands among precise uh watches. Uh it's easy to say, but it was very hard to do., uh actually So it's already a great achievement. When you start a company after nineteen hundreds, you have already lots of big names established on the market. So here the followers uh marketing strategy yes in in this first period |
| Andy Hoffman | . Absolutely. And then you know, but trumpeting the certification, the whether, you know, it can't cost came later, but um the chronometer certification and the observatory achievements and wins was this different Rolex doing this or was this what everybody else was doing? You say you mean he was a follower basically, but he did establish Rolex |
| Pierre Yves Donzé | 's you know precision. Yes, uh a few differences. Uh for chronometry, he was among very from very uh early on, Rolex was among the top five uh brands and fighting especially with omega to have records in different observatories uh etc. So it's not something very specific. But what was very specific is uh not really chronometry, but you have kind of uh watch office controls, you know, like what is a cusk today. The origin of the cusk you have is watch office controls, not observatories, delivering certificates for a good quality of precision. And Wilsdorf and Egler, because they were together, they were among the first to understand the power of these certificates for communication to to mass advertise uh how numerous uh certificates you were able to get was uh very important. There was a first and soon copied by Omega and then Omega and and Rolex nearly until today had a domination over what we would call later the Cosk uh certificates. And indeed, and you mentioned E |
| Andy Hoffman | gler, which is the movement manufacturer uh based in uh Bill in Bien. Talk about how that relationship with Egler, the movement manufacturer, differentiated Rolex and had basically two quite separate parts of this company, and they were separate companies that allowed Rolex to go down the path that it did. Talk about Egler and how important they are to the history of Rolex |
| Pierre Yves Donzé | . Yeah, it's very important. As I said in the beginning, you know, Vinistov could focus on trade, marketing, and branding. He was able to do that because he had a good partner from very early on that supplied him very high quality watches. So there's a was a division of work between both. And all the job of Egler was not to sell. It was to produce and to produce high quality watches. The beginning of Eggros factory goes back to the late 19th century, so before Rolex was born. And from very early on he focused on a high quality uh watches and had different partners. This is very important to understand. Uh Vilsov was only one of the main partners of the main uh consumers actually, of Egro. And how should I say that Egler has different partners for different markets? He had a kind of of division of the big markets in the world by consumers. So Vizov had UK, Asia and British Empire at the beginning. In America, it was Greenwatch. And then in Germany, they had different partners. So that's why Wilson was not in the US before World War II because Egler had another partner. And if you think about that, you understand the power balance between both partners, between Egler and Vislov was in favor of Egler. Egler was stronger until the war because he was able to be to to make good watches. And the the relation changed after the war when uh Rolex became uh fast growing and then Geneva, so the marketing side became stronger than the producing side. As I had an access to the archives of the company, I don't know very well the the capital of relation between the two companies, the Bien manufacture and the uh Geneva marketing company. But if you look at the board of members, as I explained in my book, you can see the share lots of board members which suggest that there were very soon some uh cross shareholding between co both companies. So they were independent but very very close. They were managed as a whole from uh very early on. |
| Andy Hoffman | Indeed. And I I think you uh point out in the book that there is evidence at certain times that Egler uh had uh shareho shareholdings in in Rolex and Rolex had shareholdings in Egler, is that right? Yes, yeah, exactly. And you know, you talked about the the post-war period, but let's go back. I mean, you know, how did Rolex end up in Geneva and in Switzerland? I mean, you know, originally um it was started in London, it was um Willsdorse and Davis. And you know, during the first world war basically is when that decision was made. What was it it's kind of a a a contemporary or current topic because it had a lot to do with tari |
| Pierre Yves Donzé | ffs uh in the UK. Yes, exactly. Tariffs and taxes. So the two main uh main reasons. As you said, World X is a company started in the UK and they imported watches from Switzerland and selling them to the British Empire. But then during World War One, two things changed in in the environment environment of Worlex. Due to the war, it was important to pay uh for the war, and the British government developed, among others, two uh import uh two important uh institutions. First is uh tariffs. You know uh import tigrifs became very expensive. And so you, if you import your watch is from Switzerland to UK, of course you need to pay taxes, but when you have all your sales organization based in London and when you re export to another country, you know it's it's a waste of money to pay taxes just to enter UK and then to re export to another country. So the first point to avoid these taxes when you re export watches, what did uh Vizov uh do a lot? And second, also to pay for the war, the British government increase taxes on profit. Even if you make profit outside of the UK, you must pay taxes on that. And so vis-a-visnant to pay taxes for what she sold uh outside of the UK. And so for these two reasons, he moved the company to uh Switzerland. Uh so you can export it directly from Switzerland to uh to your final uh country of destination and uh and taxis were much lower in in Switzerland because Switzerland was not in a war and uh it's the start of the Swiss uh fiscal paradise, by the way. Uh but anyway, so it is for this reason that during the war, uh Wizov had some British employees also, as I mentioned in my book, he has some uh kind of funny uh articles in in in local newspapers in Swiss saying that all these uh British employees come to Bil or to Geneva. Maybe they're spying how how Swiss make watchis, etc etc. But actually it was a transportation of the company, Wallax Company, to Switzerland, to Geneva from 1920. |
| Andy Hoffman | Indeed, indeed. And so that transition, that move was made. How did Switzerland the, move to Switzerland, impact Rolex in the short term and then over the long term? I mean, obviously Switzerland you know cemented itself as the center of of fine watchmaking, but what did it mean for Rolex |
| Pierre Yves Donzé | ? It means especially that product development was much more actively done by Wilstorff. You know, as long as you are based in London and you come a few times a year to Sitzon to buy watches, you don't have so much impact on product development. You trust completely Eggler. But going back to Geneva, it's not only to sell C so for decoration, you know, case making uh Wizard invested from very early on in the twenties in a in a case company and then so you you you you start to uh to be closer to all the suppliers of external parts. You can start thinking about design and uh you can start thinking about the oyster you know making a waterproof watch because as I explain uh Wilsov tool the lot or as a Jura region to talk to casemakers, to buy patents and so on. So you must be in Switzerland to be close to suppliers to discuss and to develop your products |
| Andy Hoffman | . And so let's talk about the Oyster case and then the the Oyster Perpetual, the the automatic movement. Uh I mean Rolex and Wilsdurf were not first in either of these things, but how did he and the company become known for the Oyster Perpetual? And you know, what what was the process of developing that waterproof and then automatic wind |
| Pierre Yves Donzé | ing watch in Switzer Yes, you're completely right. It was kind of collective innovation, especially for the water waterproof uh watch, because there were lots of case makers. It's more than watchmakers, it's a problem of the case, you know, so case makers were developing so waterproof uh or trying to make waterproof cases, applying to patents, uh, etc. And what you can see is that Egler and Wilsorf also applied for their own patents, but uh they also purchased patents a lot. So because they understood the power of these uh of these um these innovation and they wanted to keep it for themselves. So there's a really a patent strategy not only based on innovation, it's really to control uh an innovation and not to allow any copies. They went to the court and so lot against um counterfeiters. So they really understood the power of being of being the the only one to to to control this new uh new product. And then after it's not enough to have technology and innovation, you need a narrative. And uh they understood that you need to communicate to consumers about the oyster. So also the name itself shows that it's waterproof and you know they displayed some uh some oyster watches in aquariums, i in in uh in some stores. They developed lots of stories with uh Mercedes Glazer, you know, uh swimming in the swimming the channel is all these famous stories were put together to uh make the uh a unique narrative for for the consumers. But at the same time they continue to to develop the low uh broad runs of models because they didn't know it would work. That's how uh Vizoff worked, you know uh integrating technological innovation and a and a narrative in developing a product. And for for the perpetual movement, it's a bit similar. It was much more developed within the company. It was less uh a collective innovation and it took much more time to make a stable, high quality perpetual |
| Andy Hoffman | We're proud to have Panorai supporting the business of watches. For this episode, we're spotlighting the new PAM 01574, a Luminore GMT power reserve in a sleek 44mm black ceramic case. It features a sandwich dial, dual-time functionality, a three-day power reserve, and Panerize new click-release strap system for easy swaps. This reference represents Paneri's forward-thinking approach to its Luminar collection, combining heritage, high-tech materials, and bold design. And it's just the beginning. Expect more exciting Luminar launches throughout 2025. Alongside the depths of time, a historical showcase taking place this October at Casa Panorai, Madison in New York City, and this November at Panorai, Miami, Design District Boutique. Experience never before seen archival pieces and exciting novelties up close. Learn more at Panorai.com or check the show notes. Thanks again to Panorai for their support of the business of watches. And now back to our chat with pier yves danzay author of rolex the making of a status symbol you know you track in the book uh patents and trademark filings. And there's a distinct pattern with the company. There are certain periods which are extremely active and busy in terms of patents and trademark filings. And then there are others that are uh r relatively quiet. Talk about th those patter |
| Pierre Yves Donzé | ns and what was going on there. Yeah, yeah, exactly. So uh Rolex didn't innovate at the same uh level during all its history. One important period is precisely from the early 20s to just after World War II. Lots of innovation to develop the waterproof case and the perpetual movement and after also developing the uh after the war all these famous uh collections uh that would make uh Rolex over famous. But once this portfolio of product was nearly finished with the Cosmograph, Rolex stopped innovating technically for a while because I had developed enough goods, enough uh product for different technical uh technical uh watches, you know for the chronometer, uh the uh diving watch etc etc then they stopped innovating in terms of of product development, focusing more on marketing in the 50s, 60s, and early 70s. |
| Andy Hoffman | Indeed, and and you know, as you point out, in the 1950s, basically those model lines and then up to the um Cosmograph, I guess in nineteen sixty-three. I mean, you know, those are the models that we basically still see today that keep getting iterated on and and and slowly improved. You know, talk about how uh Rolex was able to basically come to the conclusion that they had the models and the and the and the the watches that um could carry them forward and how, you know, small that was in terms of a model lineup as compared to uh what they had been and their competitors. It was very focused |
| Pierre Yves Donzé | . Exactactly.ly, ex This is the first point. Because the this is what we call the uh the global models, you know, in global communication. Before the war, companies, Rolex included, had a very, very broad range of products for each market, for each uh consumer that developed uh different design. But it started to change during the war, just after the war, it's not only Rolex. Omega was a promoter with a constellation, constellation, and all uh these models. And he uh Rolex was still a follower. But the difference is as you said, they were much more focused. They gave up other uh non global products. So nearly all the the products of Rolex were global. So it means global it means the same image, the same design, the same name around the world. A cosmograph is a cosmograph everywhere, same price, same design, same communication. And they didn't allow, nearly didn't allow watches that didn't enter this collections. So this is how our Rulex is important. And second, what is important in the 60s, and it was a marketing innovation of Heineger, who succeeded Winsdorf. What he did actually is when he started V's uh strategy, his narrative on the excellence of the consumers, on uh making uh Rolex a watch of successful people and powerful people. The idea is that if we have developed, if we have made the perfection, we have the perfect watches, you don't need to update perfection. Actually, it makes your narrative much more powerful, you know. If if you claim they're the best, the cosmograph is the best chronograph, what should you develop a new one in a few years later? Now we keep focused on that. It made the narrative on perfection really really relevant and I think you can focus on the consumers. Yeah how our consumers are also excellent people, also the best, like our watches are the best. And uh so that's why I I I argue in this book that Heineger who uh made Rolex the status symbol was very conservative for product development, ultra conservative, but very innovative revolutionary for market |
| Andy Hoffman | ing. Indeed, yeah, let's talk about that because obviously Hans Wilsorf dies in nineteen sixty. He had already set up the Hans Wilsor Foundation, uh, which uh just sort of oversaw the governance and and structure of uh of Rolex. But indeed what was because obviously succession uh can be a major issue for many companies. How did it go at Rolex and how was it governed? Um, because there were contrary to um uh a lot of the narrative that's out there, there were relatives of Hans Wilsdorf at the company who were in executive positions. What happened there? Why did why did um uh for example the nephew of Hans Wilsdorf not end up running Rolex |
| Pierre Yves Donzé | . Yes, uh Foundation, uh Wilsorf Foundation, as you say was became the owner of the company when Wilsorf died, but no, that in 1960, but you need anyway to appoint a new CEO to to run the company. And there were a team around Vizov, a team of executives, five or six, and one of them was his nephew. And uh my assumption was that he uh he wanted his nephew to succeed him because uh he asked him to take his name Vincedorf and he appointed him uh director when he was in his late twenties or very young executive, taking the name of his stuff shows a will to uh to continue uh of the family business. But uh the new owner sh owner ninety six, uh visa foundation, didn't appoint any CEO. But uh it means there's some conflicts between the owners, you know. Why should we appoint a young nephew to run such a company? It's too risky, maybe he was not talented enough. And the understood among the team was another guy who was much more promising. He was Andre Heiniger, the sales director. And he became CEO in nineteen sixty three or four around this |
| Andy Hoffman | How did and you you know you alluded to it before, but the model lines and the watches had been established, the excellent watches, and so the narrative and the focus, uh, and the obviously the manufacturer with Egler in uh Bien continued, but the focus then for the company became with marketing, image, and talking about the Rolex customer. So talk about that, how how you know the narrative developed of these excellent watches that, you know, made by uh created by an excellent man for an excellent consumer, this is really an important uh factor in in differentiating Rolex, isn't it, compared to their competitors |
| Pierre Yves Donzé | ? Yeah, I think it's the most important factor because other companies had also good watches, uh X and watches, but the Rolex was the first to stop talking about products and to talk about who were uh its consumers. Uh in the in the sixties uh mostly. If you look at advertisement of all other companies, they still talk about watches and why watches are good, precise, excellent. But at the same time, we're like stopped talking about what she is. They stopped chronometry competition. They're talking about you know a story of consumers using their product to show how special they are, how excellent they are. And this idea was not a Swiss idea. Swiss were good at engineering or making the best watches, but they were not good at selling watches. So this knowledge came from outside. It came from the US because Americans are very good at selling things, as we know. Or more precisely, it was a company, J. Walter Thompson, which was the largest uh advertising company uh of the world after the after World War II. And uh there is some personal connections between Winsdorf and uh and a Swiss employee from uh former Swiss Employee of Viz company and so these but these relations through the London Agency of the American firm started and uh and I use the archives of this firm uh too and these archives are are available and they show precisely what happened during the meetings between the Swiss engineers and the uh US uh marketers. And what is very interesting just after the war, the Americans were complaining that the Swiss came with new product and wanted to communicate with innovation with technical facts. And the Americans said it's finished. We shouldn't talk about that. We should talk about uh uh a a nice story about the users to show the excellence of the users and so that's what the did |
| Andy Hoffman | and it's I mean talk about some of the the the advertising campaigns. I mean this is the era when we see the the the famous campaigns. I mean if you were speaking at the United Nations tomorrow you'd be wearing a Rolex. If you're flying the Concord uh uh tomorrow, uh you'd be wearing a Rolex. Yeah, talk about and this is, you know, really coming from the American uh side of the agency, J. Walter Thompson. Uh this is crit |
| Pierre Yves Donzé | ical. Even if it was a London agency first, but they were American in London, uh mostly, so it was really an American idea. And it started in the 50s, as you said, with this company, if you if you would talk uh at the United Nations, you would wear uh Rolex and so on. It starts focusing on the men of power, politicians, military, etc. But especially military and state men in the fifties, the idea of the powerful men or white men especially. That what changed in the sixties with social change, you know, sexual revolution, etc. It's clearly explained in in the documents of the agency that we need to adapt a bit v stocke because people are not fascinated so much by politicians anymore. They are much more attractive men actually in society that come from sports, from business, from adventure, or for culture later. But from the 60s we can see, for example one of the first examples, a very good example is uh the the golfer, the American golfer Arnold Palmer. Uh he was a star around the world, and uh he was an excellent golfer living uh you know excellent life, and so he embodied these values of Wallax and people could identify with him because he was seen as a cool uh guy and that we wanted to follow him. Jean-Claude Kiry uh in ski is exactly the same and but men you know i'm talking about just on purpose on men because rolex was still uh uh a brand for men even if there were watches for women but all the narrative was focused on men. And no more the powerful man, but the successful man. |
| Andy Hoffman | It wasn't only sports figures. I there's a a part in your book where you highlight uh I believe it's Arnold Palmer's agent, international management, who is also um highlighted in a uh in in advertising as the as the kind of Role |
| Pierre Yves Donzé | x man, the Rolex customer. Yeah, yes, exactly. Company managers, entrepreneurs were also very very important or was also a CEO of Panam or these very successful businessmen where target is consumers of Rolex, but also for the narrative to show you know we can identify we want if you are a white man from middle classes in the sixties, you would like to become a successful businessman or successful uh sportsmen, and you can identify to to this uh to this narrative |
| Andy Hoffman | . And at this point, talk about where Rolex was in the market in terms of sales and compared to its competitors, I guess it's in you know the nineteen sixties and um leading up to when Rolex sort of consolidates its position at the top of the market. But um where were they in production and where were they in price compared to others? I mean this was still an attainable watch for the for the middle class |
| Pierre Yves Donzé | . Yeah, yeah absolutely absolutely the I I have lots of numbers in my books about about uh the evolution of the price from the fifties until today. But uh grossets or estimates of gross sets I used as some uh interviews of CEOs sometimes the New York Times or more recently the the numbers given by uh Fontouble Bank or Morgan Stanley. Uh I'm not going to repeat all these numbers here. Sure. But what what we can see is the position which is important is it's what I call accessible luxury, which was a segment which did not exist so much in the sixties. You had normal watches, precise watches, a bit pricey because they are very precise, and you had a few luxury brands, like Vachon Constantin, Patek Philippe, very pricey because they use gold, diamonds and etc. It's have complications. It was not the position of Worlex. It's not uh you know making a few uh luxury watches, is to target the mass market. It's uh tens of thousands and then hundreds of thousands of very high quality watches. And then if you want to sell volumes, you need to be positioned in a mid uh mid market. And at the time it was the target was middle classes or upper middle classes. So it was not uh inaccessible for for most of people. And uh it stayed in this position for a very long time. And what made the success if it we started in the late sixties in the US, you know, with economic growth, with social change, you know all uh men, especially men in in uh uh in in the cities of the eastern uh eastern coast, New York, Boston, etc., loved the story about uh excellence social distinction through a product. It was completely new in the watch industry and it made uh really uh Rolex successful from the late sixties. It be it uh according to my estimates, uh Rolex overcame Omega and established as number one uh in the late uh sixties and get this position to the |
| Andy Hoffman | indeed and the and the key to this is is making a Rolex watch a status symbol a symbol of success. Uh, and that is is that all through marketing and testimonies? I mean, what other ways does does Rolex convey that idea and that position as a status symbol? I mean it becomes associated with specific sporting events and and sports uh at this point, but certainly not all. It's very speci |
| Pierre Yves Donzé | fic. Yeah, as we say advertisements. They selected very uh strictly uh the the magazines, the newspapers where they appeared. This is uh very very important. Uh they selected very well uh the ambassadors from sports, from uh culture and always to be uh selective. You know, they were uh among the first to go to Polo uh for example. It was intified as a good target where nobody was and it was so the idea of social distinction or uh starting to go to culture started especially with uh a partnership with Pasingo Domingo in Singapore, when there was a important concert in Singapore, it was an opportunity to move to Singapore and to culture because the classic music and then later cinema were understood to be also in an embodiment of excellence. And then finally you have also the Rolex Prize for uh enterprise, which shows uh exactly the same that you know it's uh uh special people, excellent people are awarded uh by the company to uh to achieve uh their dreams because they are excell |
| Andy Hoffman | So it you know at this period in the Swiss watchmaking industry we're headed you know in the nineteen seventies uh you know seventy five to eighty-five. I mean this, is, you know, what some call the quartz crisis, others call the the quartz revolution. You've written books on this, but talk about um you know um what happened to the industry, but specifically how Rolex uh operated and the outcome for Rolex was completely different. This is where Rolex truly cemented its place at the top of the Swiss watch industry |
| Pierre Yves Donzé | . Yeah, yeah, this was uh important po uh turning point. A first point uh important to to uh to have in mind when you talk about that is that uh the Swiss were not late in developing quartz watches uh the Japanese were the first to market uh to launch the market uh a quartz watch, the Seiko Astron, in sixty nine, but the first prototype was Swiss. Uh so Swiss were from uh 66. So the Swiss were very good at making research, like the Japanese or the American. Making prototypes was easy. And Rolex developed its own prototypes also in the from the late 60s, early 70s, because the management understood that we need to be able to master the tech this technology in case of. It was not to sell it,. it It was to master it. So WordX was able to have course, they produced a few, but they kept focused on their own collections. They don't they didn't develop specific collection for course watches, the aesthetics kept the same and the message kept positioned at the same. Why? Because Rolex was not a watch any longer, it was a discourse, a narrative on excellence. And uh you don't care about quotes. It's better to keep focused and as you are. If you continue mechanical uh watches you can you can still claim as I explained before that uh if you make already the perfect watch you don't need to update it and and you continue as you are and Rolex never felt any crazy or never it's a felt for two one or two years, yeah decline of of sales, but you know it was also high Swiss franc at the same time. In a long term perspective, there's no crisis at all for for for Orex during the seventies. But for competitors, if you think about Omega, which was the most important competitors, they decided to shift they decided for a strategic shift to quartz. No more chronometers uh uh with mechanical watches, it's quotes for is the future, like Seiko did the E in Japan. And then you know all your narratives and marketing strategy must or should uh follow this change and it was uh yeah the big fail of Omega during the the watch crisis and that's also one of the reasons why uh uh Rolex was able to to uh strengthen its position as number one in the world because it was not a watch anymore. |
| Andy Hoffman | Indeed. But it it was quite interesting to me and and I hadn't realized that I think in around nineteen seventy five, with that strong Frank and with the crisis that was going on, Rolex actually slowed down production, actually used short-time work for a brief very brief period of time. And they certainly were impacted by the crisis for a brief period of time, but then over the same period they basically doubled the number of employees they had and and and and their production, correct |
| Pierre Yves Donzé | ? Yeah, yeah, exactly. Exactly so. Uh I don't know the the exact reasons of uh the two years of decline of of production it should be uh in in the archive somewhere. But what what is important is that it is a comeback. You know after a few years it is going back to growth. While for other companies is when the crisis became uh more and more important. So the first sign of the crisis in Switzerland is due to high Swiss franc. You know at the end of Bretton Woods and Oil Shock, the Swiss franc became suddenly very high and all the industry collapsed after seventy-four. So of course Rolex was also uh was also impacted, but I would argue it's more it's kind of conjunctural a crisis, it's not something structural, uh, due to uh technical change and uh etc. |
| Andy Hoffman | You know, we touched on it before, but let's talk more about I mean, all the advertising, the messaging w really seemed to be centered around men, men of excellence, men of power, and Rolex as a status symbol. You know, how did Rolex uh is a very strong player in the women's uh watch market today? And and and this started quite a long time ago. How did they carve out that area in the market and and that you know was perhaps different than some of their competitors |
| Pierre Yves Donzé | ? Yeah, at first they had different watches outside of the main narrative, of course, because the narrative was centered o on men and they had different different models. The collection Celini for example had lots of watches for women and the narrative was not excellent, you know it is something a bit different. So the American agency said in uh the late uh sixties, early seventies that they should stop doing uh these uh strict separation because some women also like this idea of status symbol, this idea of success is not only a value for men, a woman can identify themselves with that. So for that you need both to develop oyster models for women using the same design but smaller, etc. Well what the company did from that point. And second you need also to adapt your narratives, your advertisement to use also women of excellence. And it's when in the during the seventies uh the Rolex started also to have woman ambassadors especially from tennis. Yes. Uh I have a picture in the book about that, you know, tennis woman but showing exactly the same uh the same message is excellent. So women can also be excellent and can also like this message and on social status. And then after it did it continue to develop uh in this direction. So no more or just a half separation, still some watch is specifically addressed to women, but mostly as we have today, it's within the same collections. |
| Andy Hoffman | Yes. And and what is your you know, from your research and and and understanding, I mean, y do you have any estimate in terms of you know what percentage of sales are are to women or are what w would be seen as women's watches and how that's ch |
| Pierre Yves Donzé | anged? No, I don't I don't have any any uh precise numbers or estimates |
| Andy Hoffman | Indeed. Because as you say, I mean, you know, there are there are archives. You haven't had access to them. Uh you have to find um uh sources elsewhere uh to build uh your story and and your narrative. I mean, is that secrecy an important part of the Rolex story? Um, I suppose it is in terms of them telling their own story and controlling the narrative. Yes, secre |
| Pierre Yves Donzé | cy is important because it makes all of this narrative based on excellence even stronger. More I would say more than secrecy is silence, which is important. You don't talk. We don't need to talk. Just look at the product. And that's enough. And it it's you know you know even today COD4 is nearly never interviewed, there's a few exceptions, but if uh Heiniger had nearly no interviews, so it it was a long tradition for more than fifty years not to talk to the media because just look at the watch and there's nothing to say. This very powerful uh position. If you start to talk too much, like uh other CEOs for many other boards, they talk about themselves, what they do, etc. But we don't need to talk about we do we don't do anything, just look at the product. This is the best. And there's nothing to add. It's very powerful if you think in this direction. So that's why silence is very important |
| Andy Hoffman | . Yes, no, it's a it's a very good point. And you talked about the different CEOs, there's Mr. Heinegger and uh his son was the a CEO at at some point. I mean talk about uh the the the CEOs that Rolex has had over the years since since Hans Wilsdorf and um also then the governance of both uh Montreux Rolex SA, now Rolex SA, and then the Hans Wilsdorf Foundation, what kind of people were on the boards of these two entities over the years and how has it changed |
| Pierre Yves Donzé | ? For for a long time uh people were very similar with the foundation, with the foundation and the boards of of Rolex. There were people from outside of Watch Business actually, from uh high families, uh bourgeoisie from uh from Geneva working in finance, university professors, uh lawyers, etc. So they were uh checking if the business was going well, but they were not executive uh directors that didn't participate in the business of uh of the company. Uh even in the board of of works, uh representatives of of the foundation also to check if if everything was going well, especially for finance. Finance is the important part of the story. And uh what changed is during the last ten years with the rail of Dufour, we can observe that in Rolex uh boards we have people from the luxury business from different company other companies with an experience in luxury business that are appointed. They have no relation with the Wilson Foundation, but they have knowledge about luxury business. And my assumption is that they uh support somehow Dufo, sometimes with some advice for some specific issues to be really a powerful uh luxury company and it worked uh it works very well because under Dufour Works uh say it's uh doubled and uh it be and it's really recognized as a very modern luxury uh brand tod |
| Andy Hoffman | Absolutely, absolutely. So yeah, there's more expertise on the board these days in terms of the the the the product category and that has translated into um more sales. Could just talk briefly about the structure of you know the foundation, the revenue that Rolex uh uh SA generates and how that gets distributed and how that is um obviously different than other watch |
| Pierre Yves Donzé | brands. So yeah, Rolex is not uh listed. Rolex has only one shareholder, uh which is uh WizOf Foundation. It's a foundation, so they don't need to advertise anything. So that's why we don't know anything about the business. But I make a comparison in my book with uh Richemont and uh swatch group from the 90s showing that they distributed billions of Swiss francs as dividends, or especially like Richmond, to purchase their own shares. That's something that Rolex doesn't have to do. So all these billions not distributed or wasted through a share repurchase are uh reinvested in finance by uh Wizard of Foundation, which is really, really rich. We don't know very, very well. I have a few numbers in in the book, some estimates, but what is important, it gives a freedom to uh Rolex because they have cash. They have enough cash to purchase a company, to develop the firms. They don't rely on banks, they don't rely on financial markets. They are free and independent. Thanks to all of these money accumulated over the year and reinvest it which is uh something very important, especially if you compare with other luxury companies that distribute so much money to the |
| Andy Hoffman | owners. Indeed. And and you know, one of the things we've seen that um that uh deployment of uh capital has been in consolidating um most of the company's suppliers, um, components, bakers, and obviously Egler, the being the most important one in in 2004, and um then the the Boucher acquisition a retailer a couple of years ago. Do you expect that sort of you know consolidation to continue to for Rolex to become even more vertically integrated um from re you know from production to um retail? Um uh yeah, but is is that where they're |
| Pierre Yves Donzé | going? I I don't know at all, but uh the if you look at history, you can see long-term perspective from the 90s during the last uh 30 years, as you say, there's a vertical integration which started with production. And they have nearly verticalized everything. So now they do everything by their own and they started to move to retail. So some business journalists say it's just an opportunity to take over Burr. But we never know. Is it an opportunity or the first step of something bigger? We don't know yet, but they have cash. They've already verticalized all production. So it it looks very natural to continue vis not vis uh viz uh integration uh with uh with retail |
| Andy Hoffman | . And you know, in the past couple of years uh we've seen some interesting new sort of uh product development from Rolex. Obviously, we've just seen uh the land dweller, which um design-wise seems to be quite an amalgam of uh of of previous Rolex models, but is the innovation of a new escapement, a new high frequency movement for Rolex. You know, those changes in product that you've seen we've seen over the past couple of years. What does that tell you about the business strategy uh at |
| Pierre Yves Donzé | this point, if anything at all? No, uh it's very important and it shows that the company is not ultra conservative as it used to be with with Heinegar because consumers are changing and you need you need also to show that you you innovate somehow like like competitors and like Oudmar Pigue and others always do something a bit new technically to show you are still on the top of of of the watch uh history, uh in some sense, but you do that within a kind of aesthetic framework, which is Rolex. So don't try to launch a completely different product. Technically it's is new, but if you look at the design, you recognize it's a Rolex. This is very very well done. So you you integrate in uh you integrate uh innovation within your tradition, within your general narrative of excellence. So he doesn't break all the work done until the time about how excellent as a watch watch is developed during the 50s and early sixties |
| Andy Hoffman | . And last thing, I mean, what in all your research for this book, what for you was the most surprising or interesting or you know, newfound discovery you think that you made in that uh effort? |
| Pierre Yves Donzé | The most surprising was these meetings between uh the managers from Geneva and uh the marketers from New York. Uh collaboration between Rolex and John Walter Thompson showed really that uh the the American side had a very important role in building the strategy. They were not only the suppliers of your nice pictures for advertisement, but they contributed to really make the strategy. And uh before looking at the archives, I thought they they had a more passive role. They were just you know following uh the request from Geneva. But it's not the case. It's really uh uh a cooperation, a co-creation, the idea of Rodex as a status symbol is both a Swiss and an American innovation |
| Andy Hoffman | . Well, we should probably leave it there. But Pierre Yves Danzé, professor of business history. Thank you very much for joining us. And yeah, we look forward to uh your next academic work on the Swiss watch industry. Thanks, Andy, for for the invitation. And that's the business of watches for this episode. We hope you enjoyed. Please head on over to hodinky.com where you can join the discussion and leave any comments or questions about this episode or the business of watches in general. Who knows, we might even answer your question on a future episode. We'll be back in two weeks with a fresh episode of the business of watches. Until then, I'm Andy Hoffman, and I'll see you on hodinky.com. |