The Business of Watches [41] Czapek & Cie. Chief Executive Officer And Co-Founder Xavier de Roquemaurel

0:00Welcome to the Business of Watches, the Hodinkee podcast where we go behind the scenes and talk to the executives and the leaders making things tick. Today, we are in Geneva. We are on the Quai de Bergh, fittingly, and we are at Chapek's new boutique, its new store, its new magazine. And I am joined by the CEO and co-founder of Chapek, Xavier de Roque-Morrel.

0:32Xavier de Roquemaurel:Fantastic. You nailed it. That's the way to say it. I know it's a challenge. Thank you, Xavier. Hello, everyone. Very happy to be with you. You have Zombie Xavier live. Indeed. Zombie because it's only two days after Geneva Watch Days. and there was no break. So I worked yesterday at the manufacturer because this is the heart, this is the start. And today I'm at the store in Geneva. Excellent. And so, yes, we are on Quai de Bergh and there is a great historic tie back to Chappik and the brand and its history. Yeah, why is it, you know, 10 years on with the brand? It's great and it's an accomplishment for you to be back here on Quai de Bergh.

1:19Talk about that. It is the key element.

1:22Xavier de Roquemaurel:It took me a week to understand it. Because I was like, you know, everybody is very elogious on the boutique. Why is that? I mean, we've been working at every detail. It's 18 months of work. And I've been so much inside it, upside down, that I don't see anymore the beauty of it. But I know it's nice. It's beautiful. But why it's so elogious? And then I understood because of the logic that we have followed, because of the tribute we make to François Chapek, because it's as if really he was alive and that we try to not. well we continue on the track that we have we have taken since the beginning to be true to him to be true to watchmaking to be true to autorlogerie to be true to collectors to be true to everyone who jumps in that train or in that boat or in that spaceship name it the way you want and have that dream of continuing of a journey that is a never ending journey and that is inviting us every day to invent, to create, to discover.

2:41Xavier de Roquemaurel:That's the journey we're on. And it's a journey that has this store as a milestone because this is where the cabinetry were. Yes. And it's the opportunity to explain to everyone what it was like then. And so let's talk about that history. I mean, this is a brand that was sort of revived, restarted by you. You're a French-born businessman. You worked in many other sort of factors, elements in the business world before coming to Swiss watches. So talk about who Francois Chapek was and how we restarted the brand and the links to here in Quai de Beurre. It also took me some time to understand why this was actually an advantage in watchmaking, to not be neither a watchmaker, a constructor, to be not even a designer, to be a sort of a unexpected element in the recipe that makes the recipe become special.

3:44Xavier de Roquemaurel:We can come back on that. So I had worked in different sectors, as you have understood. And probably, I mean, working at Mars, working at L 'Oréal were an excellent element to build my knowledge and my approach. Because they are so opposed, the two of them. So it's very interesting to see how two groups which are opposed can achieve different type of successes. And then I went back to school in Barcelona, learned the Lujan language. discovered that learning language was not impossible. And I worked working for Lueve. And here is where I probably got an infusion of learning how to use creativity in your mindsets, recognizing that I loved beauty since the beginning and that was my attraction, my driver, my motivation, and craftsmanship.

4:39Xavier de Roquemaurel:the fact of creating or helping people to create with their own hands and orchestrating that I think I was also marked when I studied my studies by the story of Pedro and Augustine Almodovar where Pedro is a genius that is in the front side you know the director of the movie and Augustine is in the back helping Pedro to create and I felt that was my job to be Augustine somehow to be in the back and help designers help constructors help watchmakers to achieve their dream you know that's that's what that was I was attracted by that idea indeed and I was always a big fan of Pedro Almodovar so oh that's cool I liked it even more for that reason so in Louisville I had the chance to be product manager and learn how you really rethink the product from the angle of how the market is going.

5:47Xavier de Roquemaurel:What is the new silhouette that is proposed in the last fashion show? How much does that involve us into changing our designs and to thinking the future differently? So I do a lot of traveling as every CEO does, but I try to always infuse one day of culture visits in every trip. So not just, not like meetings, business meetings, to really go deep into what's going on in that city right now. What's happening? What are the trends? And I love to spend time in Iseitan, for example, or other places in Japan. I love to spend time in New York, in other areas. I mean, you can learn everywhere, But big cities tend to approach, to attract people who set trends or discover trends.

6:42Xavier de Roquemaurel:And this is where you can feel the pulse. Interesting. What is very interesting, for example, we had a big surprise with one of our latest release in August. Yes. The Transparency is Blue, which was sold out in five days. 38 pieces, so it's not nothing. Not insignificant. 38 pieces is a significant number. and 5S is very short today. And that watch is funny because it's the sister of a watch that we launched two years before in green. Yes. The Viridian Green. Yes. And the Viridian Green was a question mark watch. Everybody loved it. Nobody was buying it. We didn't understand. We all thought it's because the crisis has started and people start to become cautious.

7:31Xavier de Roquemaurel:And now I'm starting to think the religion green was too advanced on its time. And right now, if you look at the creations that are popping a little bit, you see more and more sapphire dials, more and more effect of transparencies, but also shadow at the same time. So it's not clear. It's not full. If you want full watch porn and you see everything. But you have some touches of the dial is reappearing in a soft and light way. Indeed. It's a veil that is made of transparent mousseline, for example. It's something that highlights the movement without showing much of it. Okay, so it's interesting.

8:22Xavier de Roquemaurel:Without showing all of it, indeed. No, without showing all of it. A little more of a T. So you see, there is a question of trend, and for us it's great because we have very soon a release that this will be happening in New York. Okay. For Watchtime New York. An important watch with another sapphire glass that will be semi-transparent. Excellent. Revealing beauties. Super. Well, yeah, I mean, you continue to innovate and surprise and intrigue, and that is the mandate. of a brand. But you wanted me to explain a little bit the beginnings. The history, yeah. Why Chapek and who Chapek was and that link to Patek Philippe and how you brought back the name and the brand.

9:08Xavier de Roquemaurel:So Chapek, because the 10 years anniversary gave us the opportunity to deep dive into the history. And 10 years gave us also the time to make a network of people willing to help in that deep dive because you need the researchers. And we found a guy called Benjamin Czapla, a Polish guy who was in love with the story and he said, I'm going to do anyway a memoir, a thesis on that matter. So I'm going to search everywhere in Czech Republic and in Poland to understand the story. And he gave us a lot of keys that we didn't have before, a lot of findings that we didn't know. We had everything being reviewed by Pierre-Yves Donzé, who is our official historian based in Osaka.

9:58Pierre-Yves Donzé, you know, well-known academic scholar of the Swiss watch industry, yeah, based in Japan.

10:06Xavier de Roquemaurel:Based in Japan, university teacher, wrote an excellent book on Rolex. Yes, he's been a guest on the podcast. Okay, so it's very interesting. And we discovered that we somehow followed the same track as Rolex and Egler when we started Chapek. I didn't know that. So I learned a lot of things. I knew they were the best, the kings of pricing. And I got the confirmation by reading the book. But anyway, let's come back to Chapek. So Chapek was born in Semerice in the Czech Republic, the kingdom of Bohemia. exactly, at that time, and learned, he was not the firstborn, he was secondborn, so the farm of his parents was to be given to his older brother, and he was to find a proper job to have a way of living.

10:59Xavier de Roquemaurel:And so he was sent to learn watchmaking in Strelen, which was at the border between Poland, Germany, and Czech Republic. And he learned the mastering of watchmaking with some great clockmasters, actually. There was more clock made than watches. And then he moved to Warsaw. In Poland. Where he was a journeyman and working, making watches, repairing watches, having his own sort of independent watchmaker life. And as a journeyman, he was requested, or as an independent worker, a business person also. He was asked to defend the city against the Russians who were invading the East of Europe for not the first and not the last time.

11:48Xavier de Roquemaurel:It's a practice. Right. They were practicing. And he fought against the Russians in a battle called the Varzavyanka in 1830, 29, 30, 31. And he moved to, at the end of this defeat, because it ended up in the bloodbath. He moved to Geneva and registered as a watchmaker. So he was already a watchmaker. And there he met a man that was very important for the continuation of the story, which is called Moro. And then he met another man called Antoine Patek. Yes. And he introduced these two guys to watchmaking and to what he was doing. and together they decided to make a first company in 1839. And this company was called Patek, Chapek and Company, where Moreau was company.

12:49Xavier de Roquemaurel:And that was the beginning of another company that you cited. But, you know, according to the Swiss law, I cannot cite them. I see. Yes. I can only speak about the past or about people. Right. But I'm limited. So it was a six-year contract. And at the end of the six years, there was some tension between the two men where Antoine Patek was willing to have Chapek working more at his bench and Chapek was willing to be traveling more to different places inside continental Europe. Right. So at the end of the six years, well, they part ways and Antoine Norbert Patek went on to create another company.

13:33Xavier de Roquemaurel:Another company. taking the legacy of the first one. So you see that this is a continuity. And Czapek restarted from zero with a new partner called Gusebski, who has a man very important for the Polish cause. And the two of them created Czapek & Company. We have to make a slight parenthesis on the Polish cause or a slight description. Poland for 123 years ceased to exist. It was invaded in 1795 and it was splitted in three between three giants, you know, the Austrians, the Germans, the Prussians and the Russians. Because Poland was extremely wealthy and flat. So hard to defend. Indeed. Wealthy.

14:26Xavier de Roquemaurel:Not like Switzerland. Very interestingly, the wealth of Poland was created by an extremely interesting integration of the Jews into the business and into the power without giving them so much power, but having them as becoming, if you want, the accountants of the country. So it's very, very, very interesting thing that made that it was named the second Terpromise. Yes. Okay, Promise land. Yes. Very interestingly. So they were invaded and Chapek never could become Polish. Right. We don't know if he would have become Polish if he had had, and if he had had to give up his Bohemian passport. Right.

15:13Xavier de Roquemaurel:So let's not make inference. We know he changed slightly the spelling of his name to make it easier to pronounce in Poland and in Switzerland. by writing C-Z-A-P-E-K, which is a police spelling. Yes, exactly. And in Czech, there is an hashtag with a little V over the C, and nobody knows what to say. Okay, that's the beauty of Czech. If you want to scratch your head, learn Czech. Good advice. So it's an interesting story. It's another... in the history of mankind and of Europe, it was a moment of rebellions, revolution, uprising, invasions. It was a moment where every border was changing every half century.

16:08Xavier de Roquemaurel:So that's the fruit of his history. The end of Chapek history comes with La Commune, which is another uprising in Paris where the people from Paris actually reject the government and that also ends in a bloodbath and that's the end of the Chapek boutique in Paris. So it's the beginning and it's the end at the same time. It's everywhere. And I think this is important to keep in mind. Now, in Geneva, they have success, immediate success because there is a big diaspora of Polish people inside Europe and they go to Place Vendôme in Paris because Gruszewski has a friend which is nephew of Bonaparte.

16:57Xavier de Roquemaurel:Right, Napoleon. It's one of the members of the Napoleon family. I see. And they become suppliers of the Napoleon family, of Napoleon III, as much as other members. Plon Plon was one of them. Jérôme Bonaparte was one of them. Different people were having different. So that's why you find some pocket watches with N of Napoleon, but always with a different N. Right. Ah. Okay, because these were different members of the family. Okay. Okay, and I missed on auction to buy one that was given by Napoleon III. That's the one I missed, but you know, you cannot be everywhere. That's the reality of a CEO.

17:40Xavier de Roquemaurel:We are not Superman. Certainly not. So, basically, he goes after to Warsaw to open a store in what is the Champs-Elysées of Warsaw. Right. Develop his business. And in 1870, the business becomes dormant. It's the end of the first period. Yes. And the second period is reborn in 2015. Indeed. By Harry, Sébastien, and myself. Yes. That's the revival. So talk about who was involved at the beginning, how you financed the relaunching of the brand. So I was looking for a job and I think the fact of having lost my job was critical in the success because it's a reset that is also a mental reset. a moment where you question yourself deeply, you think you're a failure, and to exit from that syndrome of being an imposter or being a failure, you have to learn where you're good.

18:43Xavier de Roquemaurel:And you learn how to strengthen where you're good and to do better what you're not good at. And I think that's the best step to, because when you are an entrepreneur, you face so many difficulties that you need to be armed. So you need to go down the hole once, get out of it to know that, okay, you can do it every year. It's okay. You're ready for that. Because that is the job to do it over and over again, isn't it? The beginnings are really tough. Yes. Really tough. So I was networking like crazy to find a job for the family. I've got five kids, so it was a very stressful moment. And a friend who is working at AP put...

19:28Xavier de Roquemaurel:and myself in contact. Harry bullshits me, but nicely. He doesn't want to tell the whole story. He wants to see who I am. We decide to meet again, but I tell him, look, this is serious autorlogerie. We should have a watchmaker at that table. I know one. And it was Sebastian who was bored in the job he was doing and dreaming of more, you know? And so we see the three of us and it's actually relatively fast because Sebastien says, the prototype watch that you made, Harry, is really not that great. And Harry says, it's not that watch. It's not that prototype. Actually, it's not watches. It's a company.

20:08Xavier de Roquemaurel:It's a company and I own it. I re-registered it in Switzerland and I re-registered the brand. Both are re-registered and we can relaunch it. And this is Chapek. And this is Chapek. And so I said, okay, let's do a barbecue. It's a detail, but it's a detail with importance. This means let's share. Let's share that moment beyond what is just a meeting room. Let's have fun. Let's approach it in a barbecue in a very informal way. And let's share whatever we have in the fridge. And we realized that we took a few decisions very quickly that were strategic without knowing they were strategic. So we had no phones, but we had the brand and the company registered.

20:54Xavier de Roquemaurel:we could pull 15 ,000 Swiss francs so that was the funds we had and we said okay how should we finance it and the temptation is to think that there will be a fairy on the cradle that will be a billionaire that will give his money and never interfere. Benign angel investor always smiling and always nice and we know it's not true because on the lake the wind changes and people can be speaking to the ear of the person and telling them, ah, look at what they do and what they don't do. It is very difficult to make a brand. It is very difficult. And people are always prone on giving advices or having opinions.

21:39Xavier de Roquemaurel:And I invite them to try, you know, before making fast opinions or fast advices. It's a challenge because it's always a balance. And when you want to go too fast, you screw. You screw yourself. You destroy everything. We live with eight turtles in the... Not eight, no. We had kids. Thirteen turtles now in the garden. We had little babies this year. And I love the turtle for that reason. It goes fast because it goes slow. Yes. It goes far away because it goes slow. So you look at the turtle, it's there, you think it's there, then it disappeared. And it's five meters away, you don't see it moving.

22:19Xavier de Roquemaurel:But going, you know, always out. though. So we decided to do crowdfunding equity to finance a company. And that decision, I mean nothing is new in watchmaking or else. You improve, you develop, but the main ideas, they're all there. So the crowdfunding equity was really something that people were doing a lot, a bit in France, but much more in England. where people would go out and sell shares of their company, not in the street, but in salons where other wealthy people would meet up. That created, of course, some scandals of, you know, fraud or else, but that also created beautiful stories of beautiful projects that took place.

23:12Xavier de Roquemaurel:I think that the Panama Canal was... Panama Canal. Finances, let's say, it's the same way. I think that was the same idea behind it. Or it's another canal. I have to check the story. But anyway, we did the same in modern way, using the digital world, the social network, the internet, the platforms, to actually pull people from England, France, and Switzerland into Chapek as shareholders. And we opened it worldwide. Right. So you did this on, so there was a website, or how did it work? But it wasn't Kickstarter. It wasn't Kickstarter. Because Kickstarter is selling a product. Yes. We were selling shares of the company.

23:57Xavier de Roquemaurel:Right. If you scrap when you do a product, you don't go to jail. If you scrap when you sell shares of your company, you go to jail. So it's a different legal code or legal framework. Yes. It's a different story. So we really needed the help of Razor's then and Crowd4Engel in England to be legally okay. But what we realized is that every country had its own rule. USA had a different rule set by the SEC. Germany had another rule, etc. But because the legal framework of England, France and Switzerland were so different, we were kind of covering every aspect of every rule. And therefore, we could say yes to anyone knocking the door and saying, hey, I'm interested.

24:49Xavier de Roquemaurel:Yes. So we published what is called a prospectus, explaining the project. And then we welcome people from many different countries, many more than just France, England, and Switzerland. And so step by step, we had like 10 nationalities, 20 nationalities. I should check today. We have 250 shareholders. And I would imagine that there are probably 30 to 40 nationalities among these shareholders. So it's really worldwide. From Japan to the U.S. So it's truly international in its ownership. From Norway to South Africa. But it was resident, not national. So I'll find Indonesia. And so how much equity in the company did you sell and distribute?

25:40And then how much did you raise? And then we'll talk about where you are now.

25:44Xavier de Roquemaurel:We started as a Société Anonyme. So we had 100 ,000 shares and we made six fundraise. This is very important in terms of strategy. It's very important to have people around you to help you and listen to them. Ask them and listen to them. So on the field where they are experts. Yes. Not on the what's making or not on the what strategy, but on the field where they are experts. And we had a guy called Jan Sikora, based in Prague, chairman of Wooden Company, which is a financial firm. And he really spent time explaining to me what would be the right way to do it. And basically what we did was to be Spartans.

26:31Xavier de Roquemaurel:To be Spartans. Yes, we are Spartans in the company. And Leonidas is my king. and we so always raise not enough to be secure live with insecurity because this forces you every night I say every night I was going to say every day but my tongue went from day to night so it made every night because it's really during the night that your brain continues to work to make the right decision between option A and option B. You cannot afford both. And you have to not afford both to be forced to choose the right one. Interesting. And it's in that choice that you create the value and that you do, you accomplish what is the most critical for an entrepreneur which is focus, focus, focus.

27:26Xavier de Roquemaurel:Focus on what will save your company next day, next week, next month, next year. This is what you have to achieve. So, by raising not a lot every time you just can achieve one, two, three milestones and then you raise again and you tell people well I achieved this milestone with what I raised before. This has a lot of benefits because you don't dilute yourself too much. Exactly. By raising a limited quantity every time. So it's a double benefit for an entrepreneur and for the company. So six fund raise we raise about five million a little bit more. So between five and six, we would say just below six.

28:10Xavier de Roquemaurel:And we... Five main Swiss francs? Yeah, five main Swiss francs. And that was enough for us to really manage the evolution of the company. Now, the danger is even worse after. The beginnings are really tough. You wake up one day then you realize that you walk on a cliff. And the following day or the following year, you realize that you're not walking on the cliff. it's on both sides you know you're working on an arete at the top of the mountain you can fall on the right you can fall on the left it's very easy so you have to be very careful danger on both sides yeah so but the scale up is the most dangerous the scale up is the most difficult growing yeah scaling up because there is an acceleration it's like you're in a Pilatus but you go closer and closer to bigger and bigger mountain right so even if your plane is super and fast and agile I love the Pilatus.

29:06Xavier de Roquemaurel:Then it becomes tough. It's becoming difficult. And so you raised these funds, started producing watches. At this point, how much of the company equity then is in? You say there's about 250 shareholders now. So we raised between 2016, starting the campaign, and 2015 when we launched the company. We launched the company with the watches, but they were not yet to be ordered. That was just to show what we were doing, but we launched with the equity crowdfunding campaign that ended up in the beginning of 2016. And we finished the, I would say, the first stage of the fundraise at the end of 2019. Right.

29:49Xavier de Roquemaurel:So that was really the startup period. I see. We raised again a little bit this year. You did another raise this year. Because of the challenges of the scale-up. Yes. because the scale-up suddenly changes so many elements that you need extra cash. And when I first met you, this is maybe in 2022, 23, and you were really blowing up. The Antarctic was a huge hit. People were scrambling to get their hands on that watch. And so, yeah, where are you now in terms of production? How many watches are you making a year? And how have things shifted? and how have you shifted models and average price and things like that in response to the shifts in the market?

30:35Xavier de Roquemaurel:So it's true that there was a lot of excitement when we launched. But this excitement was also a little bit like the guys who are slowing down when there is an accident on the highway. They want to see these three ludicrous guys who are going to die in the next coming months, you know. Right. So our little booth on the floor 2.2 of Baselworld was packed, but very few orders. And we actually sold in that first Basel world one watch to one retailer for himself. It was Mateusz Pruszynski. So I hold it, I hold him in my heart. And, but that, you know, you have to start in a way. And that was good because we immediately sold online after that, thinking that's the only way to survive.