The Business of Watches [001] Rolex, The Making of a Status Symbol With Author Pierre-Yves Donzé

0:00This episode of the Business of Watches is brought to you by Panerai. 2025 marks the year of the Luminor, a celebration of bold Italian design, technical innovation, and the legacy of Panerai's most iconic collection.

0:20Welcome 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 Hodinkee. 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 microbrands at north of$100 billion globally.

1:11But 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 riskwear and wealth. Because if time is money, then money is most certainly time. So let's get down to business.

1:40So if we're going to 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.

2:22There 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 Rolex. It's a private company which has been owned and controlled by a charitable trust foundation in Geneva, named for Rolex co-founder Hans Wollsdorf since 1960.

3:12There 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 2024, when Pierre-Yves Donzay, a professor of business history at Osaka University in Japan, published La Fabrique de l 'Excellence, Une Histoire de Rolex, which translates roughly to The Factory of Excellence, A History of Rolex.

3:59Recently, 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 Danze, who is Swiss and was born in the watchmaking hub of La Chaux-de-Fonds and has written several other books about the Swiss watch sector, including A Business History of the Swatch Group. To produce the first fulsome business history of Rolex, he relied on traditional academic research, using primarily archived materials to build his story and narrative. Danze 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.

4:52And 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 D 'Anzé, author of The Making of a Status Symbol.

5:18Welcome Pierre-Yves Danzay, professor of business history at the University of Osaka, who has just published his 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 the Swiss watch industry for many years. You've published several books on the topic and specific books on specific companies. But you had never written about Rolex and the business history of Rolex.

6:09This is the most important and biggest Swiss watch company. Why? Yes. Hello, Andy. Thanks for the invitation. It's a pleasure to be with you here today. Yes, you are right. I've been studying the watch industry in Switzerland and globally for about 15 years, looking at many aspects. And I wanted always to do something about Rolex. But the most important when you are a historian is to use archives, to use original documents to avoid all the narratives that we are surrounded by in the watch industry, just to go back to real documents to understand how this industry developed. and so I could do it for many aspects, different cities different countries, different companies but not Rolex because they don't open their archives to historians and so as we know it's a very secret company the CEOs since decades have never done any interviews so the information is very rare so it's very very hard to work as a historian on Rolex despite it is the number one company in the world.

7:25Absolutely. And so what convinced you or made you believe that you could write the book about Rolex that gave you the confidence to do so? I think there are different factors. First one is time. I spent, as I said, about 15 years in archives looking at different aspects of the watch industry. And even if I've never been to Rolex archives, you find always some documents about Rolex elsewhere because the company was in contact with so many institutions government, trade associations other companies that you always find the name of Rolex so it convinced me that it's possible to do something on this company looking from another perspective, from the stakeholders of this firm so it's just time and experience spent in working on the VZ industry that gave me confidence for that.

8:26And second also is that you need also to have a good, I would say, a good point, a good research question. It's not only the history of Rolex, for me it's to understand how Rolex became a status symbol, no more much, but a narrative on success. If you start in this perspective you can look for information in different perspectives. Absolutely. And the title of the book in French is La Fabrique d 'Excellence. In English, you are calling it the making of a status symbol. Should we read anything into that in terms of that change in title? It was a suggestion by the publisher. They wanted to have something better for the English-speaking market, according to them.

9:20And they gave me a few suggestions, and I liked it. Because it's difficult to translate perfectly French. There's a manufacture of excellence. What does it mean, excellence? I discuss a lot in the French edition that excellence is the excellence of the watch, 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's not similar if you use a Rolex in French. So to translate not literally, but the spirit of the title was better to have the making of a stitisk symbol. Fair enough. Yeah, makes sense. Makes sense. And indeed, so let's start at the beginning with Hans Wilsdorf and the founding of Rolex.

10:09And even before the founding of Rolex. 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? Looking at Wilsdorf, I think there are two important points, related points. First is that he was a trader. 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 this company of this brand because he gave attention to consumers 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 market it was quite uncommon at the time for the big names if you think about Omega, Longines they all started with manufacturing and so it gives another perspective on the brand development.

11:12And related to that, he was looking for a hit product for very early on. But he didn't know what. We always say, you know, 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 was really what is the entrepreneur, you know it's just you make some attempts you 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 a genius that one day woke up and had the idea to make the oyster there's lots of uncertainty in the process of developing an innovation.

12:07And I think this is interesting to understand the beginning of Rilsdorf. Absolutely. And I mean, talk about, I mean, and you track the number of patents and trademarks. And I mean, he had many model lines, many different types of watches that he was creating before eventually settling on the Oyster and then, you know, the Oyster Perpetual. But he was trying lots of different models, case shapes, and innovations in watches looking for that hit. Yes, but it was common also in the watch industry that he explained at the time. If you look at all the brand names, which would become famous later, had a broad range of products.

12:51It was 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 watch is precise, it's enough to have a good reputation after you adapt the design. And that's what Wilsdorf targeted first. Precision was very important from the beginning and after you adapt the design to the market. Indeed. 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 competitors?

13:35First, we need to be aware that Rolex was quite a small company before the war. It was a small and a new company. And so the first objective of Wiesdorf was to catch up with the big names, with Omega Longines, IWC, etc. And he was a follower in terms of communication. So he just wanted to establish his name, Rolex, as one of the best brands among precise watches. It's easy to say, but it was very hard to do, actually. So it's already a great achievement. When you start a company after 1900, you have already lots of big names established on the market. So he had a follower's marketing strategy.

14:26in his first period. Absolutely. And then, you know, but trumpeting the certification, whether, you know, cost came later, but 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, I mean, he was a follower, basically, but he did establish Rolex's, you know, precision. Yes, a few differences. For chronometry, from very early on, Rolex was among the top five brands and fighting, especially with Omega, to have records in different observatories, etc. So it's not something very specific. But what was very specific is not really chronometry, but you have kind of watch office controls, like what is a COSC today?

15:23At the origin of the COSC, you have these watch office controls, not observatories, delivering certificates for a good quality of precision. And Wilsdorf and Eglard, because they were together, they were among the first to understand the power of these certificates for communication. To mass advertise how numerous certificates we were able to get was very important. It was a first and soon copied by Omega and Rolex, nearly until today, had a domination over what we would call later the COSC certificates. And indeed, and you mentioned Egler, which is the movement manufacturer based in Beale and Bien.

16:09Talk 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. Yeah, it's very important. As I said at the beginning, you know, Vilsdorf 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 was a division of work between both. And all the job of Hegler was not to sell.

16:56It was to produce and to produce high-quality watches. At the beginning, Hegler's factory goes back to the late 19th century, so before Rolex was born. And from very early on, he focused on high-quality watches and had different partners. This is very important to understand. and Wilsdorf was only one of the main partners, of the main consumers, actually, of Egler. And how should I say that? Egler has different partners for different markets. He had a kind of division of the big markets in the world by consumers. So Wilsdorf had UK, Asia, and British Empire at the beginning. In America, it was Grünwoch.

17:42And then in Germany, they had different partners. So that's why Vilsloff was not in the US before World War II, because Egler had another partner. And if you think about that, you understand that the power balance between both partners, between Egler and Vilsloff, was in favor of Egler. Egler was stronger until the war because he was able to make good watches. And the relation changed after the war when Rolex became fast-growing and then Geneva, so the marketing side, became stronger than the producing side. As I had access to the archives of the company, I don't know very well the capital of relation between the two companies, Bien Manufacturer and the Geneva Marketing Company, but if you look at the board of members, as I explain in my book, you can see they share lots of board members, which suggests that there are very soon some cross-shareholding between both companies.

18:48So they were independent, but very, very close. They were managed as a whole from very early on. Indeed. And I think you point out in the book that there is evidence at certain times that Egler had shareholdings in Rolex and Rolex had shareholdings in Egler. Is that right? Yes, exactly. And you talked about the post-war period, but let's go back. How did Rolex end up in Geneva and in Switzerland? Originally, it was started in London. It was Willsdorf and Davis. And during the First World War, basically, is when that decision was made. It's kind of a contemporary or current topic because it had a lot to do with tariffs in the UK.

19:42Yes, exactly. Tariffs and taxes. So the two main reasons, as you said, Rolex as a company started in the UK and they imported watches from Switzerland and selling them to the British Empire. But then during World War I, two things changed in the business environment of Rolex due to the war. It was important to pay for the war. And the British government developed, among others, two important institutions versus tariffs. Import tariffs became very expensive. And so if you import your watches from Switzerland to the 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, it's a waste of money to pay taxes just to enter the UK then to re-export to another country so the first point, to avoid these taxes when you re-export watches what did Vizof do a lot and second, to pay for the war the British government increased taxes on profit even if you make profit outside of the UK you must pay taxes on that and so he didn't want to pay taxes for what he sold outside of the UK so for these two reasons he moved the company to Switzerland so you can export directly from Switzerland to your final country of destination and taxes were much lower in Switzerland because Switzerland was not in a war and it's the start of the Swiss fiscal paradise by the way But anyway, so it's for this reason that during the war, Wieshoff and some British employees, as I mentioned in my book, he has some kind of funny articles in local newspapers in Switzerland saying that all these British employees come to Beale or to Geneva.

21:48Maybe they're spying how Swiss make watches, etc., etc. But actually, it was a transportation of the Rolex company to Switzerland, to Geneva from 1920. 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 cemented itself as the center of fine watchmaking. But what did it mean for Rolex? It means especially that product development was much more actively done by Vilsdorf. You know, as long as you are based in London and you come a few times a year to Cicelon to buy watches, you don't have so much impact on product development.

22:38You trust completely regular. But going back to Geneva, it's not only to sales, it's also for decoration. You know, case-making. Wilsdorf invested from very early on in the 20s in a case company and then you start to be closer to all the suppliers of external parts you can start thinking about design and you can start thinking about the oyster you know making a waterproof watch because as I explained Wilsdorf toured a lot or as a Giro 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. And so let's talk about the Oyster case and then the Oyster Perpetual, the automatic movement.

23:30I mean, Rolex and Wilsner were not first in either of these things, but how did he and the company become known for the Oyster Perpetual? And what was the process of developing that waterproof and then automatic winding watch in Switzerland? Yes, you're completely right. It was kind of collective innovation, especially for the waterproof watch, because there were lots of casemakers. It's more than watchmakers. It's a problem of the case. So case makers were developing waterproof or trying to make waterproof cases, applying to patents, etc. And as you can see, that Agler and Wilshoff also applied for their own patents, but they also purchased patents a lot.

24:23So because they understood the power of this innovation and they wanted to keep it for themselves. So there's really a patent strategy, not only based on innovation, it's really to control an innovation and not to allow any copies that went to the court and so lot against counterfeiters. So they really understood the power of being the only one to control this new product. And then, after it's not enough to have technology and innovation, you need a narrative. and they understood that you need to communicate to consumers about the oysters the name itself shows that it's waterproof and you know they displayed some oyster watches in aquariums in some stores they developed lots of stories with Mercedes Glitzer you know swimming in the channel all these famous stories were put together to make a unique narrative for the consumers.

25:32But at the same time, they continued to develop a broad range of models because they didn't know it would work. That's how Visoff worked. Integrating technological innovation and a narrative in developing a product. And for the perpetual movement, it's a bit similar. It was much more developed within the company. It was less a collective innovation, and it took much more time to make a stable, high-quality perpetual watch. We're proud to have Panerai supporting the business of watches. For this episode, we're spotlighting the new PAM01574, a Luminor GMT power reserve in a sleek 44mm black ceramic case.

26:20It features a sandwich dial, dual-time functionality, a three-day power reserve, and Panerai's new click-release strap system for easy swaps. This reference represents Panerai's forward-thinking approach to its Luminor collection, combining heritage, high-tech materials, and bold design. And it's just the beginning. Expect more exciting Luminor launches throughout 2025. Alongside the Depths of Time, a historical showcase taking place this October at Casa Panerai Madison in New York City and this November at Panerai Miami Design District Boutique. Experience never-before-seen archival pieces and exciting novelties up close.

27:07Learn more at Panerai.com or check the show notes. Thanks again to Panerai for their support of the business of watches. And now back to our chat with Pierre-Yves Donzay, author of Rolex, The Making of a Status Symbol. You know, you track in the book 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 relatively quiet. But talk about those patterns and what was going on there. Yeah, exactly. So Rolex didn't innovate at the same level during all its history.

27:57One 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, after the war, all these famous collections that would make Rolex over famous. But once this portfolio of product was nearly finished with Cosmograph, Rolex stopped innovating technically for a while. Because I had developed enough goods, enough product for different technical watches. you know, for the chronometer, the diving watch, etc., etc., then they stopped innovating in terms of product development, focusing more on marketing in the 50s, 60s, and early 70s.

28:54Indeed. And, you know, as you point out, in the 1950s, basically those model lines and then up to the Cosmograph, I guess in 1963, I mean, you know, those are the models that we basically still see today that keep getting iterated on and slowly improved. Talk about how Rolex was able to basically come to the conclusion that they had the models and the watches that could carry them forward and how small that was in terms of a model lineup as compared to what they had been and their competitors. It was very focused. Exactly. This is the first point, very, very important, because this is what we call the global models and global communication.

29:49Before the war, companies, Rolex included, had a very, very broad range of products for each market, for each consumer that developed different designs. But it started to change during the war, just after the war. It's not only Rolex. Omega was a promoter with the Constellation and all these models. And here, Rolex was still a follower. But the difference is, as you said, they were much more focused. They gave up other non-global products. So nearly all of 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.

30:35Same price, same design, same communication. And they didn't allow, nearly didn't allow watches that didn't enter these collections. So this is how Rolex is important. And second, what is important in the 60s, and it was a marketing innovation of Heinegger, who succeeded Winsdorf. What he did, actually, is when he started this strategy, his narrative on the excellence of the consumers, on making 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.

31:19It makes your narrative much more powerful. you know 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 after you can focus on the consumers yeah how our consumers are also excellent people are also the best like our watches are the best and so that's why I argue in this book that And Heinegger, who made Rolex the status symbol, was very conservative for product development, ultra-conservative, but very innovative, revolutionary for marketing.

32:05Indeed, yeah. Let's talk about that, because obviously Hans Wilsdorf dies in 1960. He had already set up the Hans Wilsorf Foundation, which just oversaw the governance and structure of Rolex. But indeed, what was, because obviously succession can be a major issue for many companies, how did it go at Rolex and how was it governed? because there were, contrary to a lot of the narrative that's out there, there were relatives of Hans Welsdorf at the company who were in executive positions. What happened there? Why did, for example, the nephew of Hans Welsdorf not end up running Rolex? Yes, the Welsdorf Foundation, as you said, became the owner of the company when Winsdorf died.

33:05But now, that is 1960, but you need anyway to appoint a new CEO to run the company. And there were a team around Winsdorf, a team of executives, five or six, and one of them was his nephew. And my assumption was that he wanted his nephew to succeed him because he asked him to take his name, Winsdorf, and he appointed him director when he was in his late 20s. So a very young executive taking the name of Wilsdorf shows a will to continue the family business. But the new owner in 1960, Wilsdorf Foundation, didn't appoint any CEO. It was still a team of executives without a boss, which is quite strange, but it means there are some conflicts between the owners.

33:58You know, why should we appoint a young nephew to run such a company? It's too risky. Maybe he was not talented enough. And they understood among the team was another guy who was much more promising. He was André Heineger, the sales director. and he became CEO in 1963 or 4, around these years. We don't know exactly the dates, but it means during three, four years he was no CEO and then Heiniger was able to establish the most powerful among them. How did, and 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, and obviously the manufacturer with Egler in Bien continued, but the focus then for the company became with marketing, image, and talking about the Rolex customer.