ROLEX: The Most Secretive Business In The World

how does an orphan with no money or connections build the most famous watch brand in the worlds a lot of rolex's history is shrouded in mystery and secrets but today we're looking deeper into the incredible rags to riches story of Rolex and answering the question why are Rolexes really so expensive the story of Rolex begins with Hans willsdorf the company's Innovative and mysterious founder Hans was born in Germany in 1881. to parents Anna and Jonah wilsdorf and his early childhood was filled with love laughter and happiness but that was cut tragically short when at age 12 both his mother and father passed away unexpectedly just a few months apart Han suddenly went from having two loving parents to being an orphan and he had to go live with his uncles who sent him off to boarding school initially Hans became very depressed by all this but eventually decided to throw himself into his schoolwork as an escape he seemed to particularly enjoy learning different languages which would later pave the way for him to move abroad once he'd finished school a nurse after graduating hands went to work in Switzerland at a company called Kuno Corton a large exporter of a variety of different pocket watches since Han spoke German English and French he worked as a clerk and correspondent for the firm however the company also manufactured some of their own watches and so this role gave Hans a great opportunity to understand watch construction and study the watchmaking industry closely whilst a lot of hands job involved repetitive tasks like wending hundreds of watches each day during his time there Hans developed a deep appreciation for the craft and became obsessed with the idea of creating perfect watches then in 1903 hands moved to London to work for another company where he had a bigger role as he was involved in getting new sales and clients this gave him a good understanding of what made one watch brand stand out from another and also how crucial marketing was to a Brand's success was these different jobs were quite enjoyable Hunter was already dreaming much bigger and wanting to implement the skills he learned for himself and in 1905 at the age of 24 Hans decided to start his own watchmaking firm he had a small amount of money he'd saved up which he invested in the business but most of the funding came from his brother-in-law Alfred Davis who became his co-founder together they created the willsdorf and Davis company and began importing watches from Switzerland to sell in the UK however in those days wristwatches were nowhere near as popular as they are today and were mostly regarded as women's jewelry in fact panzer's friends even tried telling him a watch with such a small and delicate mechanism would be flimsy and break too easily and that a watch so small wouldn't be accurate instead pocket watches were strongly preferred but Hansville wrist watches were much more convenient and elegant and is quoted as saying my personal opinion is that pocket watches will almost completely disappear and that wrist watches will replace them definitively Hans felt Mages needed to be higher quality so hands ignored all his critics and took all of the company's money to make one of the largest orders of wristwatches ever booked at the time he was buying everything that wristwatches would become the future of the watch markets everyone thought he was crazy and even his business partner wasn't sure it was a great idea but it was hand reportedly met with many different watchmakers who were considered masters of The Craft and tried to learn at least one new lesson from each of them Hans then used an old connection from when he'd worked in Switzerland to import Swiss made mechanisms so they could begin creating high quality wrist watches of course Hans new quality alone wasn't going to be enough and that brand recognition was going to be the most crucial element of all and that all began with having a memorable name now the origin of rolex's name is slightly curious hans's claim that he initially tried combining random letters of the alphabet in every possible way to come up with hundreds of unique names but none of them felt quite right but then Han said while he was riding to work one day a genie whispered in his ear the name Rolex now regardless of where the name really came from it was perfect Rolex is short and memorable but also easy to pronounce in any language Plus Rolex felt like it had style and authority to it and this hand started printing it on the dials of all his watches which also helped build up brand recognition in fact a few years later they changed the entire company name to Rolex watchco limited very quickly their new wrist watches began to sell well in 1910 Rolex became the first wristwatch to be awarded the Swiss certificate of precision and then in 1914 the British coup Observatory awarded a Rolex watch a Class A rating which no other watch of that kind had been given before Rolex was starting to develop an association with quality which helped attract even more sales but then in 1914 the first world war broke out by this point Rolex headquarters in London had more than 60 employees on its payroll and become the export Center to every Market the company sold to however during the war Germany became Britain's enemy and since Hans was of German descents with a German name and a German accent tensions began to rise not just that but the British government imposed a wartime import duty of 33 on all luxury goods So to avoid any conflict and to get some major tax benefits Hans decided to move Rolex headquarters from England to Switzerland which was neutral during the war and thus whilst many watch companies went bankrupt during World War One for Rolex it was actually a very successful time because their wrist watches became a favorite amongst the military for their reliability and convenience over pocket watches but undoubtedly the real rapid growth of Rolex can be attributed to hanza's marketing instincts as early as the 1920s Hans was putting his watches on explorers athletes Racers aviators and countless other successful people which created a connection in consumers Minds between High Achievers and Rolex Hans also ran hundreds of expertly placed ads on the radio and in newspapers as he understood the value of product placement decades before most of his competitors would catch up then in 1926 Rolex created the world's first commercial fully waterproof watch under the name of oyster and Hans had the perfect idea of how to Market that too as he'd heard about a woman who was going to swim in the English Channel and Hans convinced her to do so wearing rolex's new waterproof watch after over 10 long hours in the cold water she emerged with the Rolex Oyster completely intact generating lots of headlines about rolex's new product Hans then told Rolex dealers to display the waterproof oyster watches in fish tanks in their windows with real fishes swimming around the watch which inevitably caught the eye of people walking past the next big groundbreaking milestone in rolex's history came just five years later when rolex's Engineers developed the Perpetual rotor which automatically wound a watch something that had been previously considered impossible Hans also made it his mission to ensure the most popular people in the world wore a Rolex especially those involved in daring challenges for example the first flight to Everest was performed by a crew wearing a Rolex Oyster and Malcolm Campbell wore a Rolex watch when he set a land speed record in Utah back in 1935 and so it was really this combined strategy of great marketing mixed with new innovations that allowed Rolex to keep rapidly expanding and become more and more popular like how in 1945 on the 40th anniversary of the company Rolex released another new model called the datejust the world's first automatic watch to feature a date window on its dial however shortly before the ceremony to announce this Hans was struck by another tragedy when he lost his beloved wife Florence who passed away due to an illness his wife had been with him through thick and thin and this was obviously a devastating period for him he'd been orphaned at 12 and was now widowed at 63 with no children Hans was a master of watches but not a master of time and it was beginning to think more about his own mortality and thus Han spent the next few years developing a way to ensure the future of his Empire that he'd built from scratch would be kept in good hands that's why in 1946 he established the Hans Will's door foundation and transferred his 100 ownership stake in Rolex to the foundation to this day this organization still maintains full ownership and control of Rolex and since it's a foundation and not a company there are no Corporation taxes on any profits instead a large percentage of the money goes towards charitable causes including education grants and the training of watchmakers although it's reported not all of the money goes to charitable causes but since Rolex is owned by the trust there are no shareholders and no requirements to disclose its Financial activities this structure allows Rolex to maintain a very high level of secrecy so despite being the most well-known watch brand in the world very little is known about the internal affairs of the company including how the company is being managed who exactly manages it how much money the company is making or what they're doing with that money and so some might say the foundation is merely a clever way to protect the wealth and power of Rolex and its subsidiaries rolex's employees also have strict non-disclosure agreements and it's reported no photos or even allowed inside the Rolex building and thus Rolex operates from the Shadows making it nearly impossible to critique anything Rolex does because no one really knows what we do know is that when hands died in 1960 the new owners of Rolex continued to help the company go from strength to strength however there was one major road bump in the 1970s when the quartz Revolution came which was the introduction of battery operated watches that were more accurate and much easier and cheaper to mass produce as a result of this these quartz watches flooded the market and many mechanical watch manufacturers went bankrupts between 1970 and 1988 Swiss watch employment fell from 90 000 to 28 000 and yet despite this Rolex was fine so the question is what makes Rolex different why can they continue to judge so much for their watches before we get to the next chapter quick question do you sell anything online because if you do I'm about to make your life a lot easier with our video sponsor ship station it's clear we're heading for a very busy shipping season and I know firsthand if you don't plan ahead things can get stressful but imagine if I told you that you could handle your shipping from different platforms like Amazon Etsy eBay and Shopify or from one simple 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much money to get a Rolex even the most entry-level model would set you back many thousands of dollars so why are people willing to spend so much to buy a Rolex when this similar watch is so much cheaper and we've all got the time on our smartphones anyway well when you Google this the answer seems fairly straightforward that basically says Rolexes are just really well made that's ultimately why they're so expensive because you you're buying something that will last you a lifetime presumably this is a nice sentiment that Rolex charge so much because their watches will stand the test of time but of course that's certainly not the full story you don't need to drop tens of thousands of dollars just to get a watch that'll last a long time so firstly let's stay be obvious Rolex is not just a watch it's a status symbol in fact it seems to be a fairly universal symbol of wealth from rappers on the streets of New York to members of the British royal family countless iconic figures have worn Rolexes including John F Kennedy Winston Churchill Steve McQueen Elvis Presley Martin Luther King and many more and this level of status is clearly thanks to rolex's high visibility marketing strategy where it Associates itself with success for example Rolex is the official timekeeper for both Wimbledon and formula one and they sponsor many prestigious events that wealthy people watch or attend such as equestrian and golf championships you'll also see Rolexes in movies like James Bond wearing a Rolex and the company pays big stars to endorse the product like Roger Federer reportedly earning 8 million dollars per year from Rolex now of course a Rolex is not just all hype and marketing Rolex does use very premium materials which are rigorously tested to a high standard which of course comes with a higher price tag and clearly there is manual work required by hand to create high quality mechanical watches and so salaries are some of the highest in the world plus the company also invests heavily in its own scientific labs to research and create new watches however an interesting post from someone who spoke with a watchmaker estimated that a Rolex that sells for around 7K could only be around 700 to make and some other estimates put their profit margins as up to 20 times the cost of making the watch with the rest of the profits being spent on rolex's advertising and sponsorships to keep the brand exclusive and desirable of course if Rolex didn't do that it wouldn't have the same status which is why most people want a Rolex in the first place and admittedly because of rolex's secrecy we don't know the exact cost for sure but what is clear is that even though Rolex watches are high quality a lot of watch enthusiasts say there are higher quality watches at cheaper prices Rolex are not the rarest or most expensive watches in the world and the extremely wealthy or Die Hard watch enthusiasts are much less likely to get a Rolex as there are other luxury watch brands they'd likely prefer the difference with those other brands is that they spend much much less on marketing which is why most people outside of a watch can Community have no idea they even exist instead Rolex is an upper middle class aspirational brand because whilst they are relatively expensive they are obtainable to the middle class a Rolex is Affordable if someone really saved up so with Rolex you're evidently paying a lot for the brand and its Prestige there's even a rumor that Hans once said only great marketing is needed to make a company successful because of course high prices enable Rolex to pay more influential people to wear their products or sponsor prestigious events which creates more demand which allows them to charge higher prices however in order to still maintain this image of prestige and exclusivity Rolex only sell their watches through authorized dealers and there's generally not special offers or sales in fact Rolex reportedly even repurchase Old Stock from stores to make sure no excess stock is sold at discounts because being perceived as a discount product would be bad for the brand image and they don't want to make their products seem easy to obtain a great example of this is when Hans realized they were missing out on a lot of sales from people who couldn't afford a Rolex but rather than make a cheaper Rolex model they introduced a separate brand called Tudor the watches are very similar but they were made under a different brand name so they didn't risk diluting rolex's brand by making it too accessible and affordable and thus damaging rolex's position as a status symbol but this goes even further as it's believed that Rolex artificially create scarcity for their products you see Rolex makes about 800 000 to 1 million watches per year which is way less than the demand for their watches but the reason for the shortages is likely that they deliberately limit the supply to keep the demand High which allows them to keep pricing high as the wait time can range from 6 months to 3 years authorized dealers have sometimes claimed that the company is under supplying the market to drive the price up and engaging in price fixing worldwide to maintain the value of their watches because what's it's true their watches do take time to make it's unlikely to be as much time as some say because there are reports that a single Watch takes a whole year to produce as Rolex doesn't Outsource production when in reality there are conflicting reports that question that and suggest some small parts of the watches are out source and that contrary to popular belief Rolex watches are not entirely made by hand with machines being used at some stages again this doesn't mean Rolexes aren't high quality there's clearly a lot of work and precision goes into each one but what it does mean is that if Rolex really wanted to produce more watches they probably could but they prefer there to be some unfulfilled demand and a waiting list that's not a limitation because of how long each watch takes to make it's just a smart business strategy what's perhaps most interesting about this is that Rolex can be described as a veblum Goods which is a product that contradicts normal supply and demand because when you're normally buying something let's say a pint of beer the lower the price the more the demand if a bar cut their price to one dollar per pint people will be queuing up and buying loads but on the flip side the more that the price increases the less people would want to buy it however with a veblum good when the price increases the demand increase is two in other words higher prices lead to more people wanting it that's because weblin goods are often purchased for signaling status for example if Rolex started slashing their prices passively there'd likely be less demand as Rolex would lose its premium perception if everyone had one the good news is even though a lot of rolex's price doesn't just come from the quality of the watch that doesn't mean it's not worth it thanks to rolex's Rich Heritage and reputation they generally hold their value or can even increase in value if well maintained thus allowing people to view it as an investment there will still be worth a similar price even years after use something with very few other watch brands have achieved the crazy part is Rolex was initially considered more of a tool watch for its utility than a fine watch or collector's item but through its marketing and sales strategy the brand has moved towards luxury instead and subsequently become one of the most valuable brands in the world given the huge adversity hands faced from an early age it truly is incredible what he managed to build and this story of Rolex undoubtedly has some useful business lessons for all of us but now if you want to see an even more insane entrepreneurial success story check out my video on the controversial life of Cornelius Vanderbilts I think you'll really like this one but either way thanks for watching this video to the end you are a legend and I'll see you in the next video cheers [Music]

Channel: MagnatesMedia

Views: 1,134,184

Keywords: Rolex, why are rolex watches so expensive, why is rolex so expensive, why are rolexes so expensive, the story of rolex, the untold truth of rolex, how an orphan built rolex, rolex story, rolex documentary, rolex business story, business stories, hans wilsdorf rolex

Id: IbwYuT8_c00

Length: 17min 26sec (1046 seconds)

Published: Sun Sep 18 2022