The Business of Watches [028] Studio Underd0g Founder Richard Benc

0:00Welcome to the Business of Watches, the Hodinkee podcast where horology meets high finance and we go behind the scenes with the executives driving the industry. This week, one of the UK's biggest watchmakers and a brand that's only about five years old. We talk with Richard Benc, the founder of Studio Underdog. We discuss the rapid growth of the irreverent brand and how he's managing getting bigger while staying true to the company's roots. But first, let's catch up with some business news making headlines in the watch world. Secondary market prices are rising. After years of declines, prices on the secondary watch market are stabilizing and posted gains of more than 1 % for three consecutive quarters, according to an analyst report from Morgan Stanley and Watch Charts.

0:52An index of pre-owned watches compiled by watch charts rose 1.9 % in the first three months of the year from the previous quarter, led by gains from a wide swath of brands, including Longines, Patek Philippe, and Zenith, the data shows. It's the first time since 2022 that prices have climbed significantly for an extended period. The results suggest a broad recovery in secondary market values, driven by rising prices on the primary market, tariffs on watches entering the U.S., and increased confidence and interest in the market for pre-owned premium watches. The gains were broad-based, with 25 out of 35 brands' tracks showing gains during the period from January to March.

1:40And another Cartier record price tag. Christie's snatched the title of selling the most expensive Cartier wristwatch at auction with a rare 18-karat gold Cartier London crash from 1990 that fetched about$2 million at Christie's Geneva Important Watches sale in May. The watch beat out the previous record holder, another Cartier crash, this one from 1987, that sold for$1.99 million through Sotheby's in Hong Kong just a few weeks before. The Cartier crash wristwatches that were made before 1991 are extremely special, and the market has changed. In other auction news, a Patek Philippe First Series$24.99 in pink gold sold for about$10.25 million in Hong Kong last weekend.

2:31At that price, it's the most valuable timepiece ever sold at auction in Asia and the most expensive watch sold at auction this year. And it sets a new record for the$24.99 reference. Auction prices have been soaring so far this year, with record results for the big three, Philips, Christie's, and Sotheby's to start the year. For more on these stories and more business news, head on over to Hodinkee.com. And now here's our conversation with Richard Bentz, the founder of Studio Underdog.

3:09Well, Richard Bentz, the founder of Studio Underdog, welcome to the business of watches. Where do we find you this morning? We are speaking remotely. You are in Brighton.

3:22Richard Benc:I'm in Brighton. Yeah, I've got you up nice and early this morning to get this conversation done first thing. So the sun's out. We've had a bit of a heatwave in the UK over the last week or so. So I'm enjoying it. Excellent. So let's talk about Studio Underdog, which is your brand, an independent brand, a UK-based brand. Where are you at now in terms of production? How big is Studio Underdog? You're actually among the biggest UK-based watchmakers. This really is the business of watches, isn't it? Straight in with the numbers. No, we're relatively public. I know some of the brands you speak to often will kind of give ranges, but we're fairly transparent.

4:10Richard Benc:So in terms of our output, last year we did, I believe, 14 ,600 watches and we're a British brand. And we've decided that it would be a good idea to assemble all of these watches here in the UK, which is easier said than done. It's an industry that doesn't really exist. The infrastructure isn't really there. So it's something that we've had to slowly build out ourselves. And even though we're a young brand, five years old, it still feels relatively slow. Absolutely. And we'll talk about that in sort of the, you know, some of the business moves that you've made in terms of, you know, fostering that assembly and that whole infrastructure in the UK.

4:52But let's talk about, I mean, you're a relatively young brand, as you say, you started in 2020. I mean, what is the history of Studio Underdog? I mean, we all kind of know it as watch enthusiasts. It's been around for a while, but I mean, this was something that you basically that You started, I think, during COVID. You know, that's not that unusual a story. But I mean, you know, tell me what you were doing before and how Studio Underdog sort of came about.

5:20Richard Benc:Sure. So my background's in industrial design. That's what I studied. That's what I absolutely love. I didn't really know the watch industry existed until my early 20s. But when I discovered it, it felt like a bit of a match made in heaven because my approach to design, I always found myself gravitating towards designing small objects because then the devil's in the detail. So I worked in the industry for a few years, about six years, designing watches for some other brands, mostly fashion brands. The first watch I designed was a Minions watch, a watch for children. So humble beginnings for sure.

6:01Richard Benc:But I got a few years of experience under my belt and then COVID happened, COVID came and I was stuck at home trying to figure out what I wanted to do. And I decided to use that newfound spare time to start plugging away at a bit of a passion project, something that had been burning away in the back of my mind for quite some time. I decided to actually sit down and put pen to paper and that was it. It was really quite an organic growth in the early days. I launched in March 2021. I think I managed to sell 250 pieces in my initial batch and over the years we've just scaled that up. More people have discovered the brands, more people have got hands-on and been impressed and yeah it's been a a real organic growth to what started as a passion project.

6:54And so, you know, talk about that process and what you did. I mean, yeah, you worked in the industry based in the UK, you designed some watches, but you know, how did you go about, you, I guess, had design ideas, but how did you go about creating, you know, assembling, building that first watch and also talk about, you know, the name Studio Underdog, which has been the name from the get-go, right?

7:19Richard Benc:For sure, yeah. That was the name from day one. I think it's a good representation of the brand, whether it's in its early days. I still think we're very much in our early days. We're a design-led brand. We act as sort of a design studio and we're very much the underdogs. This is what started off as a one-man brand, a brand based in the UK. We've got a long way to go to really kind of compete with some of the big boys or compete with the Swiss watch industry. So I think it's going to be a long time before we ever have to consider rebranding as the business grows, if we grow out of being an underdog.

7:58Richard Benc:I don't think that's ever going to be the case unless we take some market share from Rolex. I think we'll forever be an underdog. But how did you, you know, so you had a design in your mind. How did you, you know, go about actually producing these watches? Obviously, you were not a manufacturer at the time, although, you know, you certainly now have assembly and aftermarket facilities. But yeah, tell us about, you know, because this is the dream, I think, you know, for many people, how to start a watch brand. And it's not easy. Well, I think it probably, on the surface of it, when people hear about the brand and feel like it's come out of nowhere and certainly on day one, when we launched, we were probably looked more advanced and more established than someone might expect from a passion project that had been developed over a few months.

8:51Richard Benc:The reality was it was niggling away for years in the background. I spent six years in industry. That included not just refining my design skills, but that included trips to Hong Kong to meet suppliers. I suggest, you know, I get a fair few people asking me, enthusiasts looking to do something similar. And I say, the things you got to do is get over to the Hong Kong Watch and Clock Fair in September and take a trip to Switzerland for EPHJ, the supplier fair. Coming up next month. Coming up next month. And it really is, I thoroughly enjoy those trips, not only to connect and catch up with part of my supply chain, but it's kind of a bit of a Disneyland.

9:36Richard Benc:You can walk around these booths, you can go, I recognize that sapphire crystal. I know who you're working with. Oh, I've seen this bracelet. launched recently, I see what's going on here. So it's quite incredible to see and put the pieces of the puzzle together. So I certainly, when I came to market, I had a foundation. I had some relationships with the suppliers and partners that I wanted to work with. Unfortunately, because I had that relationship, they were willing to effectively invest or take that risk in me as a young entrepreneur looking to place initial orders that fell typically under their MOQ, their minimum order quantity.

10:16Yeah, I mean, that MOQ, as you say, I mean, this is part of the biggest challenge, I think, for new startup brands is that, you know, they're looking for components and suppliers, but indeed they fall under that MOQ. And so that's about relationship building, I presume.

10:32Richard Benc:Yeah, that's how it worked for me. And of course, we're fortunate now with the volumes that we're doing that, you know, those MOQ concerns are less of a concern as such. How did you finance this operation? Did you, you know, was that loans? Was it, you know, did you have investors? Did you use your own capital? How did it work? I guess a little bit of a mix of both. We don't have any investors. So to this day, we still don't have any investors. I had a little chunk of change that I was saving for a house deposit. And my parents advised me that it's probably not best to throw that into a new venture, considering whilst I am an entrepreneur, this is very much my first venture into entrepreneurship.

11:18Richard Benc:So what I wanted before I took that risk was a proof of concept. If I'd gone to any business advisor and said, I want to launch a watermelon-themed manual wound column wheel chronograph, and I expect it to be a huge success, I think I'd have been told to get real pretty quick. So I wanted to prove the concept. So my very first introduction was a crowdfunding campaign, where effectively, I managed to get around about 250 people to put their hard-earned cash down, a full 100 % deposit, effectively. It was like a subscription, as we say. Correct. And obviously, those people, those first 250 people took a risk.

12:03Richard Benc:One of those people happened to be Nicholas of Fears, actually. He was a supporter from the outset. And that gave me my proof of concept. Once I had those 250 people saying, look, we're going to take that risk. We're going to put the money down and hopefully we'll get a watch at the end of six plus months. That really allowed me to feel a lot more comfortable investing some of my own capital. And of course, we're not talking crazy numbers here. This was in the brand's infancy. Indeed. And so what should we think about? I mean, yeah, Studio Underdog watches are assembled in the UK. What should we think about in terms of, you talked about going to Hong Kong, you talked about going to EPHJ.

12:43Do you make any claims about Swiss made or anything like that? or how do you decide what components to use in various models? And is it important for you where those are sourced from?

13:00Richard Benc:Absolutely. And it was a question that I've asked myself a hell of a lot because to commit to assembled in Great Britain, I guess if you wish to call that a label as such, that carries little to no weight compared to the likes of Swiss made, right? But for me, I felt there was real value in, it's quite an honest message. It's a part of the process that we're doing. It's something that we are proud of. We're willing to talk about it. And whilst maybe it carries 5 % to 10 % of the weight of Swiss Made, it's something that we have real ownership of. Many brands that come to market, if you wish to meet the criteria for Swiss Made, factory supply chain will help you do that.

13:42Richard Benc:And of course, there's absolutely some loopholes that brands are able to leverage to meet that label and also be able to offer product at a competitive price. We source materials, movements from all over. Our straps are made by a British independent here in the UK. Our movements, we use Chinese movements. We work quite closely with Seagull, which is a relationship that is really important. Maybe something we'll touch on in a little bit more detail shortly. And of course, the likes of Salita as well. And then you've seen through some recent collaborations, we've had the opportunity to work with, I guess, a different part of the Swiss supply chain, which has been a real eye-opener as well.

14:30Richard Benc:So it gives us a huge amount of freedom and flexibility, bringing everything here into the UK, assembling it ourselves, gives us a huge amount of control. And I guess, yeah, I guess this is me admitting that maybe I'm a bit of a control freak. Well, indeed, I mean, you know, this is a, as the entrepreneur and the head of this venture, I mean, that's kind of a necessary thing. But, you know, you've grown quite a bit since those days, since that launch in, I guess, 2021 that started in 2020. Talk about where we're at now. You said you made about 14 ,000 watches last year, which is not an insignificant size, right?

15:11I mean, that's quite a fair bit of volume. And so, yeah, I mean, I think the most recent interesting transaction you did in the biggest business step that you've made is you acquired full control of the assembly facility

15:27Richard Benc:and company, I think it's called Horologium. Is that right? Bit of a mouthful, absolutely, yeah, Horologium. Yeah, and so talk about why you did that and where you are in terms of staffing and size now and what your operation looks like. Sure, so as I said, if I was going to champion this assembled in Great Britain message, I really felt like I needed to have ownership of that. There was a small risk that through working with a third party, you don't have that level of control. If the team at Horology had decided that they no longer liked the sound of my voice anymore, that would put me in quite a predicament and vice versa.

16:07Richard Benc:You know, we had got to the point where because of the growth of the brand, we were close on 90 % of their revenue and that's not a good position for them to be in as well. Completely dependent on your business indeed. Yeah, yeah. Exactly. So it was a bit of a, we both felt like we were in a risky position And there was some obvious solutions, really. The first step that we took to de-risk was back in July 2024. So we became a minority shareholder, which gave a little bit more comfort. That really cemented the relationship and was more of a gesture in the fact that neither party were going anywhere and we could both kind of rely on each other.

16:48Richard Benc:And importantly for me, I could start to communicate this assembled in Great Britain message with a little bit more confidence. In December of last year, so December 25, that minority stake increased to full ownership. And there was two key reasons for that. One, as I touched on before, huge level of control. You know, we really get to own that process, pull as many small levers as we want to make tweaks and refinements and optimizations, and also making sure that everything that side of the business did was in the best interests of Studio Underdog as the key brands. The other thing that we gained access to was opportunity.

17:35Richard Benc:We, as a young brand, five years old, most people know us from the digital realm. They've seen this online brand come to market and maybe they had an opportunity to meet us face-to-face at events, but this gives us a real home. So we, you know, as part of the acquisition and over the last few months, we've been slowly making the building ready, which we've coined the doghouse. So we plan to open our doors and allow customers to come and meet us. We'll have a showroom. We'll have an assembly experience. So it also unlocks a huge number of opportunities that we just wouldn't have been able to execute, certainly to the level that we plan to execute this year without that deal going through.

18:18Indeed. And so, you know, this is going to give you a physical, in fact, a bricks and mortar presence in the near future. Is that, you know, it's interesting. I mean, obviously, you started as an online only brand. What's your sense now of, you know, how you find more clients or people interact with watches? I mean, how important is it that people have a chance to see, touch and feel products before buying them? particularly in your price range, which is obviously more approachable and entry level with not everything, but most of your products?

18:56Richard Benc:I think there's no question it's important. That being said, 96, 97 % of the volume that we do is direct to consumer through online sales. And I'd imagine the vast majority of those sales may have not had the opportunity to get hands on before. That is where it's so critical for us to be as transparent and open as possible. The research that customers will do will often be reading up on the brand, reading reviews from independent writers. I believe we've got a few hands-on pieces on Hidinki as well. So I'm sure that's gone a long way. There's no question. but as the brand matures and levels up whilst we don't expect the sell-through within our showroom to to be a considerable part of the business even the sheer fact that it exists will move the needle as far as i'm concerned it gives us it gives us a door if someone has a service request knowing that if they really wanted to they could come and they could knock on the door and we'll be there and we've got nowhere to go.

20:07Richard Benc:So I think that makes a real tangible difference as well. I'm looking forward to welcoming people through those doors and I'm hoping the people that do make the effort to come will be a microphone really for the incredible things that we're doing to showcase what assembly in Great Britain actually means, what that looks like to see part of the industry here. You know, the volumes we're doing are great as far as I'm aware with the largest assembler of mechanical watches in the UK. That's not to say we're a big business. That's to say it really doesn't exist. So we've been growing that side of the business out.

20:45Richard Benc:It's not easy hiring, finding that level of expertise. We've recently introduced over the last six months, a training scheme and system. We've got, I believe, three new starters joining in the coming weeks, which will help us increase our output, of course. So yeah, we're looking forward to really showing this flourishing and growing business and being proud of it, really. Yeah, no, it's quite interesting and quite unique and unusual. There are, of course, other UK-based watch brands. You know, we had Mike France from Christopher Ward on the show quite recently. There's Braymont. You mentioned Fears, who you've done collaborations with.

21:27You know, what, if anything, did you learn from or take away from, you know, the experience of any of those brands in how you've gone about building Studio Underdog? Obviously, you know, you know, Braymont is one we think of that's been sort of high profile over the past more than a decade. And, you know, they've had their ups and downs as a UK brand, you know, manufacturing, et cetera, et cetera.

21:55Richard Benc:A huge amount. There's no question. when I was very fortunate, and I think it's something that's potentially quite unique to the British watchmaking space, is as I was starting my brand, I was knocking on doors. I was really trying to pick people's brains and I was very surprised to have those doors opened rather than me being pushed away as, hold on, you're coming here as a potential future competitor to pick my brain. That was not the case. So I've got a great relationship, a great friendship with Nicolas Afires. As I said, he was one of the early supporters from the outset. Mike France was hugely accommodating, has given me some great advice over the years.

22:37Richard Benc:Even Davide, I have a really good relationship with and I've been to visit the wing. Davide, very much. Absolutely, yeah, to see the work and the scale of the business that they're operating. So I've been able to pick a lot of brains. There's a lot of bits of advice that I have categorically ignored or gone in the total opposite direction of. But there's even more advice that I've very much taken on board, which has helped to shape the brands to an extent. But with all that said, this assembly part of the process for me certainly is kind of new territory. We're trying to do it in a slightly different way as to maybe others have done before.

23:19Richard Benc:despite the business that I'm growing and running, I'd actually say I'm quite risk averse. So I like to think the decisions that I make are relatively strategic and well-grounded. Who knows, maybe in a few years' time, people will say otherwise. I've got some advice from very reputable people in industry that assembled in Great Britain is not the way to go. Don't do it rich. But, you know, I have to carve my own path. Indeed, indeed. So let's talk about some of your product offerings now. I mean, remind me, you know, what the price of that first watch and was the watermelon watch the first watch?

24:02I think it was. So what was the price on that? What was the movement inside? And then, you know, where are we now in terms of your average price? and you have some models that are permanently in the collection, then you continue to do collaborations and special limited editions and those things.

24:21Richard Benc:So the O1 Series Watermelon and the other products within that collection, they're currently at£550. They use a manual-owned column wheel chronograph from Seagull, which allows it to be that competitively priced. We're on the third generation of that, So we've made some incremental improvements over the years. We have our O2 series, which is our field watch. We're working towards a new generation of that, which hopefully should be launching in the coming months. That's around, I believe, the 850 pound mark with a Swiss Sellita movement. And we've got our O3 series, our Salmon, which is, I believe, around 1750 GBP.

25:06Richard Benc:And that, again, is a Sellita, a monopusher SW510. So I'd say we're quite competitively priced. The majority of the sales that we do are our 01 series followed by our 02 series. I think we're able to offer a huge amount of products, again, because we focus on the D2C model for quite a competitive price, you know, whilst offering a lot of fun. What we say is we make serious watches for serious collectors that don't take themselves too seriously. And I'd imagine a lot of people would just assume studio underdog, they start with the fun they start with the play but the reality is that the play and the fun comes almost at the end as a bit of a twist as such yeah no it's it's quite interesting but I mean you did I think I was um covering the industry back in 2022 when you came on board and it was just it was quite um fortuitous timing I mean you know the world was looking for you know there was there was almost a shortage of product and you really were able to make a splash and everybody sort of, you know, picked up on the brand.

26:14I mean, was there any specific initiatives or, or, you know, moves that you made that, you know, got you that, um, that profile because yeah, you, you made quite a splash when you, when you started.