the book I'm going to talk to you about today is nearly impossible to find it was first published in 1946 there's only a thousand copies ever made it's called Rolex Jubilee and then the subtitle is actually in Latin but when you translate it from Latin into English it literally means go with me and so it's a tiny four volume like history of Rolex and volume one was written by Hans wilsdorf who is the founder of Rolex and so he tells the
founding story of Rolex in his own words there's a lot of things that Al surpris you in this story the first one being that he was a sole shareholder of Rolex but the second one was that he was an orphan so he goes right into his early life and in one sentence he sets the entire stage for us he says I was born on March 22nd 1881 my mother's early death was soon followed by that of my father's and at age 12 I was an orphan
and there's a decision made by his uncles that is going to change the trajectory of hans's entire life they decide to sell the family business to pay for boarding school for the kidss that are left behind so he says my mother's Brothers decided that'd be wiser to liquidate the prosperous business which had belong first to my grandfather and then later to my father believing that in this way we children could be better prepared for life
without having to call upon anyone for help his life would have been very different without his uncles and that decision to actually liquidate the business and then take that money and actually send him to boarding school
which I'll get into why that's so important for the founding Rolex in one second but he talks a little bit about the fact that one of the best things his uncles ever did for him and his siblings was that they taught him self-reliant
keep in mind the words I'm reading you Hans is writing them he is in his mid 60s he's looking back at his life and so he says there uncles were not indifferent to Our Fate they made me become self-reliant very early in life looking back I believe that it is to this that much of My Success is due now this part is really important there's going to be a few times where I'm going to talk to you today about things that
happen early in Han's life he doesn't understand so you and I talk about this over and over again the the idea that the world is a classroom like the the the books that you're reading the Knowledge and Skills that you're acquiring the relationships You're Building you have no idea that the opportunities that they unlock in the future you just can't possibly predict it and so they're going to put him in a boarding school so I'm going to read
this to you and I'm going to say why this is so important to the founding of Rolex highly likely that if he didn't learn all these languages at this boarding school that there wouldn't have been a Rolex or his his career definitely would have been vastly different I'll to explain why in one second so says we're plac in a boarding school of excellent repute where we received that sound education so necessary to the man who has to make his
own way in the world I showed a particular liking for mathematics and languages the languages is so important and this inclination drove me to travel and work in foreign countries so this education in multiple languages I would argue is maybe the basis for his entire career it will lead directly to his discovery of the opportunity on which his life and career will then be devoted to and it happens relatively early in
his life because at the age of 19 he Hans is going to start working in the watch industry at 19 and he will do so for the next 60 years until his death now when I say it's the watch industry this is the thing that blew my mind because everybody knows the brand Rolex without a doubt one of the most valuable brand names in existence right but there was no such thing as a wristwatch industry for men at the time that Hans
is when he's 19 years old this is the most one of the most shocking things about me doing doing all this reading and research it's one I've been repeating all week to to friends that I've been telling about Hans and I believe it's to be one of the most inspiring parts of this entire story and I I'll go into that but so at 19 years old right he goes to this little city in Switzerland to get he has a job he's going to work as an English
correspondence and a clerk with a Swiss company called kuna Corton Now watch how this all ties together so kuna Corton it's a Swiss company all they do is they export Swiss pocket watches the watch industry like 99 maybe more than 99% of the watch industry at this time in history is pocket watches and so this company they act as import agents this is really important because he spoke because at this point Hans speaks
English German French I think there's a there's a few other languages that he actually speaks he gets a job where he handles the business correspondence of this relatively large import agent for Swiss watch manufacturers this business
is operating in a ton of different countries and a ton of different languages so this helps him get a really good understanding of international strategic marketing and I'm not sure there's a better form of education for a
young person learning business like when I was reading this section it reminded me exactly of what like a young Rockefeller so Hans is 19 where we are in the story Rockefeller gets a job when he's like 16 or 17 for this produce commission firm in Cleveland that's called huet and Tuttle and as a result of that job Rockefeller learns so many valuable skills he understands bookkeeping he understands contracts he's looking at shipping he's learning
about margins he's learning skills he's going to use for his entire career once he starts building his own company and when you're in a position like Rockefeller was in Ohio or like Hans is is in Switzerland like you can learn so fast so in the case of Hans like he's going to start working here at 19 by 25 he starts his own company that that's the company that's going to turn into Rolex and so Hans describes the time of
his life he says it was a big concern exporting about 1 million Franks worth of watches annually all grades of watches were dealt with although only a small proportion was manufactured by The Firm itself so I need to translate that for you in the late 1800s early 1900s when you hear the word concern we would call that a company today they would call what we would call a product they would call an article so this import
agents business for Swiss watch manufacturers was a pretty big business is what he's saying and the next sentence is why I said that decision made by his uncles to educate him to send him to the to the best school that school teaches in multiple languages why the the opportunity to found and develop Rolex was unlocked many years in the future and he says my work there provided an excellent opportunity to study the watch watchmaking industry
closely and to examine every type of watch produced both in Switzerland and abroad so a few years later he's going to switch to another firm and move to London and this is what he said about this time and he's only going to last two years before he starts his own company two things struck me most forcibly that's an interesting writing most forcibly about my new employers on one hand their commercial competence and
on the other hand their lack of specialization and now looking back after having done all this other additional reading and research that sentence is really important to me because he's talking about like you know they're very commercially competent right in other words they have their together they're running a great business Hans will do the same but then he says their lack of specialization so this is something I've been talking
about non-stop this week that is frankly very inspiring to me and you see it over and over again in the stories I think that's why reading business biographies is far superior than reading just business books because in every single life of an entrepreneur you like grope your way to what you're doing there's all these like false starts dead ends you can just see as you go through not only H's life but everybody's life it's
just like they're trying they figure it out a little bit along the way and they also ape and copy right people that became before them experiences they had before them so when he starts out this is the the one of the most aspiring things because like Rolex is so unbelievably focused today they know what they're great at and they focus relentlessly on her but in the very beginning Hans had no idea and what I mean by that is he had you know I don't
know 15 different brand names he wasn't making watches at all he was just reselling them he was really A Gifted marketer which I'll get to in a minute when you think about lack of specialization is this like their focus on luxury Royal Le's F focus on luxury watches he was selling cheap watches you know mid-grade watches really expensive watches he is constantly experimenting using that action as a form of Education
right it gives him information back and then you see him adjust slowly over time and it is through that process that he uncovers or discovers this phenomenal opportunity and this is when he describes founding the company that's
going to turn into Rolex I soon gain confidence in my s and in 1905 at the age of 24 I decided to set up in business feeling that my training and education had prepared me to stand on my own and so he starts this company called
wisdorf and Davis and he says they had we had modest Capital at our disposal so will this is fascinating too about again this this constant iteration that you see throughout the life of Hans wilsdorf so wilsdorf and Davis was they were not watch manufacturers they purchased watches from Swiss manufacturers think about his experience that he had he worked for two firms that did this I like oh I can do this too right let me
draw another analogy to Rockefeller did Rockefeller jump from hulet and Tuttle this produce commission house into Standard Oil no what did he do he quit and started his own produce commission house and then that opportunity led him to this accidental discovery of realizing hey I can actually become one of the first oil refiners so again this is fascinating so wisdorf and Davis they're not watch manufacturers they
purchase watch watches from the Swiss Watch makers right from Swiss I keep saying swish I don't know why I'm adding it an H on there from Swiss manufacturers and then would sell them to retailers but I love this idea where
he starts out he's just got an office he's got no money so what are you going to do like you can't make them yourself you just got to sell them when they're talking about they're importing watches they're talking about pocket watches if
you only remember one thing from this episode the only one thing is it's like the power of belief the reason Rolex is what it is today the reason that we're talking about Hans you know what 80 years after he died something like that it's because his belief this belief in the wristwatch for men which did did not exist when he started believing in it Hans is a huge collector of pocket watches which I think is also important
he's working in the industry he collects pocket watches when you collect something when you see something you see its flaws and you see what should be improved you see that with the way Hans was thinking about developing a new market for wristwatches because he saw the the deficiency of the pocket watch industry because he was he so intimately involved in it and so he's describing what the state of this industry was when
he was 24 years old when he started his first company he says at this period the wristlet watch so this is hilarious they do not call them wrist watches right they called them either wristlet watches they would also call them bracelet watches and the reason they call them bracelet watch is because at this time only women would wear wrist watches and so he talks about this the fact was for men the wrist watch or the bracelet
watch was an object of derision the idea of wearing a watch on one's wrist was at this time thought contrary to the conception of masculinity one guy remarked that he wouldn't be caught doing such an unrefined thing meaning wearing a watch on his wrist he said you'd be likely to catch him in a dress as you would to be wearing a wristlet and this sentence says everything prior to World War I wrist watches for men did not exist that blew
my mind prior to World War I wrist watches for men didn't exist and the reason that people that men in World War I in uh War uh wrist watches they were known as trench watches and they did that so they could coordinate movement on the battlefield that is the very beginning of the wristwatch industry for men and so Hans talks about the fact that hey you know of course if the public is skeptical then of course the
existing players in the industry are going to be skeptical I think this is why it's so important that he was somebody young usually people younger coming into Industries they they see all the things that all the flaws that they
could fix he says watchmakers all over the world remain skeptical as to its possibilities meaning the riskwatch for men and believe that this new fangled object was bound to prove a failure their argument against the wrist watch
were the following and they're legitimate arguments these are essentially the way I you would think about what he's describing here it's something you and I have talked about over and over again that problems are just opportunities and work close business is problems so the best companies are just effective problem solving machines and so they're like no you have all these unsolved problems first the mechanism required by this
type of watch must of necessity be small and delicate and could therefore never withstand the violent gestures of the hand and arm second dust and water would rapidly spoil the mechanism he's going to solve that problem too third accuracy and regularity of working could never be attained with such small so small of a movement that's the third problem that he is going to solve back to Hans in spite of all of this I kept my faith in
the wristlet watch and was determined to see what could be done now this is the crazy thing so he's writing that as a 65-year old man I found a quote when he is 33 in 1914 this guy really believed in this he says my personal opinion is that the pocket watches will almost completely disappear and that wrist watches will replace them definitively I am not mistaken in this opinion and you will see that I am right that is insane
He's 33 years old when he's saying that so he says the task I undertook meant the overcoming of enormous difficulties he just laid out all the problems that were preventing other people from doing this and yet today after 40 Years of striving it seems to me that I have surmounted them and I believe that in doing so I've have contributed to the development of the watch watchmaking industry in general and then it gets
even more fascinating because then you could tell he he he's thinking like an entrepreneur you know he wanted to build wealth as you can imagine an orphan wanting to do so right and so essentially he he identifies like well this pocket watch the pocket watch industry is never going to grow because how are we using it po at the time pocket watches were passed down from father to son then from son to grandson and they're also hidden in your pocket
and Hans is looking at this is like this is a big problem and so what he realizes like if he could take it out of the pocket and put it on your wrist right there's going to be more wear and tear but you're also going to see it so he says the wristwatch was bound to bring about a certain revolution in the industry it would have to cause an increase in sales not only on account of its novelty but also because by its very
nature it called for more frequent renewal more exposure to damage than the pocket watch that is actually really shrewd observation was just like well you're going to buy one pocket watch and it's going to last for 100 years no one sees it it's protected of course this this industry is going to be so much smaller than the wristwatch industry could be if we can just convince men to wear these damn wrist watches and then he also had like this
shrewd insight to human uh nature and human psychology because you know it's hidden in your you don't see the product being used but now if I break take that product that that was hidden in your coat and I put it on your Watch What Happens becomes a fashion accessory and so people see it it helps the product spread and so he says the wrist watch is the type of product of which each individual likes to have not only one
but several and then this may be the most important sentence I read from Hans or about Hans because this is just incredible sentence because Hans had the highest order bit that other people in the watch industry didn't and that was
belief and this is what he said I had very early realize the manifold possibilities of the wristwatch and feeling sure that they would materialize in time I resolutely went on my way Rolex was thus able to get several years
ahead of other watch manufacturers who persisted in clinging to the pocket watch as their Chief product this is something that cannot be skipped over so Steve Jobs had this idea and I heard him say it right before he died this is like two years before he died he was giving this interview think he was on stage with Bill Gates if I remember correctly but he talked about the highest order bit and so I actually had a look that up what did that mean
when I heard Steve said it and he's he's ref he's using a computer reference he says in Computing the highest order bit also called The most significant bit is the bit position in a binary number having the greatest value and so in Steve's case what he's talking about on stage is the fact that you got to love what you're doing you got to have passion because if you're doing anything that's worthwhile it's so difficult that
if you don't love it you don't have passion you're going to quit because the people that quit doing things they don't love they're sane people and that this love and passion for what you're doing can make you in some ways irrational and that irrationality is rewarded because you just don't give up you have this like dogged determination so I understand who am I going to argue with Steve but I don't know I obviously
believe that I'm like completely obsess what I'm doing but I think actually the highest order bit it's belief it's belief in yourself and it's belief in your idea and in hans's story that's certainly the case it wasn't passion and love it was belief that he saw an opportunity and he was willing to pursue it and to actually change the entire industry and you know what I thought of when I read this section the first thing this I mean this happened
instantaneously too which is fascinating because this is one of the most important things I thought of this paragraph in Ted Turner's autobiography this is episode 327 and it's just remarkable because Ted is looking at the landscape right he's he's like I'm going to make the world's first 24-hour News Network that idea led him to become a billionaire but he's analyzing this he's like wait I don't understand this why am I seeing the
opportunity that no one else is and so this is from this is the paragraph that I thought of when I was reading this Hans describing the opportunity that he saw and this is Ted Turner writing in his autobiography clearly the companies for whom the economics of a 24-hour News Network would have made the most sense were the big three broadcasters right so ABC CBS NBC why because they already had most of what was needed they had Studios
they had bureaus they had reporters they had anchors they had almost everything but a belief in cable Ted Turner had had the highest order bit he didn't have a studio he didn't have the bureaus he didn't have the reporters he didn't have the anchors he'd have to go and collect and build that but he had something they didn't he had a belief in cable and the crazy thing is like there's a great description of this I got to read this
story because it's hilarious Ted Turner is 38 years old when this story happens and this guy interviewed in his autobiographies saying that they just happen to wind up being on a plane together they wind up uh sitting next to each other and he says as soon as we get airborne Ted pulls out a copy of the Delta lines Delta Airlines magazine he turns to the map of United States and starts explaining how he's going to
become a billionaire and he quotes Ted here goes make sure you buy my stock I'm going to be a billionaire and why and he just lays out this entire thing and then the story ends perfectly he says his enthusiasm was so genuine and so infectious that I'll never forget it so go back to that this is what what a sentence I had very early realized the manifold possibilities of the riskwatch and feeling sure that they would
materialize in time I resolutely went on my way Rolex was thus able to get several years ahead of other watch manufacturers who persisted in clinging to the pocket watch as their Chief product if I remember correctly Ted Turner had like 11year head start on everybody else it's absurd okay so how does he start acting on this belief I think one thing that's important to understand the story of Hans wilsdorf is the fact that he
understood the opportunity better than anybody else and he would invest heavily in developing the technology that he needed to bring it to fruition and so again it goes back to this idea that the whole world is a classroom that you never know how your previous experience the things that you're learning will be use in the future this you know knowledge skills relationships all these things compound so you know years before
he founds his own company he's working at that firm in Switzerland and he hears about this guy named Herman egler and Herman's Innovation that he made in 1902 was these movements that you need inside of a watch he made movements that would work in smaller watches and so Hans is going to learn this many years before he's able he has actually the company to actually use it but he says my interest had been roused by this Innovation as
the the mechanism created by agler right had proved very successful from a technical point of view as well as being accessible in price so then after founding my firm in 1905 I go and place an order with egler this was the first step forward in our climbed success so I need to bring there's a bunch of other things I read uh to to prepare for this podcast uh I'll leave all of them linked down below I pulled out a bunch of
different books uh but this podcast my friend Patrick did it's one of the best business podcast I've ever heard in my life I don't even know how many times I've listened to it now it is an episode of business breakdowns I will link it
down below but if you just go on your podcast player look for business breakdowns and then search just search Rolex it has a great name too Rolex Timeless Excellence my friend Patrick interviewed Ben Kimber Ben's the founder
of hinki he got access back in like 2015 he's one of the first people roox because they're super super secretive but he was one of the first people to actually go and Tour all of their four manufacturing uh facilities so he wrote this fantastic article that I also reread and then uh he talks a lot about the history of Rolex and then how they operate today but the reason I need to bring this up is cuz egler is a very
important name in the history of Rolex from the very start of Rolex agler is actually the one manufacturing the watches that were sold as Rolex watches buying these movements from agler is what Hans describes is his very first step forward in our clim to success now the crazy thing the reason I bring this up is because I also love like an old school keep your word mentality so Hans and the founder of agler had a handshake deal for7
years and the deal was that agler would make movements solely for Rolex and when they say there's a great line in the podcast episode when he's like when I say an actual handshake deal I mean a handshake deal there was nothing on paper there was nothing in writing all the way up until 2004 when Rolex finally buys agler undoubtedly undoubtedly at that point in 2004 Rolex is already making selling you know billions of
dollars worth of watches that's nuts and I just love that you know two founders of companies coming together say hey we're going to work together I'm a man of my word we're going to seal this with a handshake and that relationship and
agreement was unbroken for seven decades that's one of the coolest things I've ever heard and so Hans is going to describe so you have the manufacturing and the making of Rolex watches or what's going to be sold under Rolex
brand which I haven't even got there yet is going to happen in Switzerland he's still in London so the design and the sales is separate from the manufacturing and so he would travel from London to Switzerland several times a year and he says I would bring with my collabor ERS new and personal ideas demanding that they be realized in this way hundreds of models were conceived and launched all across the world he's selling this again
this goes back to the world's entire classroom you have no idea how you're going to use all the the experience you have remember he was he worked for an importer they were taking Swiss watches and sending them everywhere so he's just doing the same thing now with his own products and as we'll see he's a master marketer which I'll get into a minute but he's having immediate success this is how both a new fashion and a great
commercial success sprang from an apparently full hearty idea he's referencing the fact that everybody around him thought what he was doing was silly men are never going to wear these watches soon we were placing orders for
tens of thousands and to the uninformed must have appeared extremely audacious young people when I read that I thought of one of my favorite things Winston church ever did he had a personal motto that he'd repeat he would say aloud to
himself always more audacity Hans when a young man was he was many things but one of the things he was he was definitely audacious I love the idea it's like these guys are crazy they they are extremely audacious young people and so at this point I need to be clear about something this is not Rolex he's selling under a ton of different brand names he's eventually going to realize hey I don't want to just be sit in the middle
right I don't want to be a middle man I want like all the value creation is going to be if I own my own brand and this is what I meant about this like constant iteration this trial and error I'm going to read some of the brand names he had they're they're freaking terrible and so at this point pre you know doubling down on this fantastic idea of he hasn't discovered that yet so what he's doing is like there's a bunch
of other brand names that he's he's experimenting with he had this idea this is hilarious too because I was reading about this because you know Rolex isn't now there's I don't even think there's such thing as a cheap Rolex right and so he had this idea he's like well I can supply a watch for every pocket and what that means is like let's say you can order you know I'm making these numbers up like a $5 watch or a $100 watch or
$2,000 watch it's like I want to I'm going to serve every single aspect of the market which obviously they don't do any anymore this is his iteration is like learning from experience I thought he the note of myself has actually made me chuckle CU I've done a bunch of episodes on these uh the early automobile industry Founders and I go oh Hans was GM General Motors before focusing in on Ferrari like that's the way I think about it and so listen to
some of these brand names I love this because I you know you've heard me struggle with naming stuff all the time and think about last week Steve Jobs or the week before Steve Jobs thinking calling the iMac the macman like the just terrible ideas so I I take solace inspiration with the fact that like oh everybody struggles with this stuff and so even you know Rolex is one of the best names I've ever heard one of the
best Brands ever existed and before that he had unicorn Rollo elvir roll watchco Falcon genx lonx Rolex rolexus Lexus hoffex and winex he even used different variation of the Rolex name itself he had the Rolex watch company he had the RWC Limited and he would even combine Rolex with other brand names and this again this is where he just realized this is a terrible idea I'm trying to sell every single price point on a watch so
uh there was one Marone named after the inventor of the radio and so he had one called the Rolex Marone and all that did was allow people to think that they're buying Rolex but they're getting it at a cheaper price and so it's through all this trial and error where Hans realize like oh this is a terrible idea I'm cannibalizing sales like this doesn't make sense I'm going to focus and so this is where in 1908 he's like okay
okay I'm going to have like one single brand name and a brand that I can invest in for the long term so he says it was time to think of giving our watches a name of their own a trade name what we would call a brand name a brand name which could be inscribed on the dials I was well aware that unless I succeeded in making rat known under its own name that my prospects would be limited he would just be a middleman right and so
there's actually a letter that he wrote in 1958 where he's talking about how he came up with Rolex he had a series of traits that the name had to have and for for him to select it and so he said I needed a short name it had to be five letters or less because it has to be able to fit it has to look good on the actual watch it has to be easy to pronounce in every language it has to have a good ring to it and it has to be
easy to remember and so when I was thinking about this I was like how great he did in selecting the name Rolex if you listened to last week's episode about how Steve Jobs sold one of the ideas main ideas from how Steve Jobs
communicated how he sold his ideas to people was that if you can make them ideas easy to understand then they're easy to spread ideas that are easy to understand or easy to spread and I think you see an echo of that idea with hans's
naming and actually picking like this is the brand that I'm going to build and the one I'm going to invest in for the rest of my life so now that he has a name he does something that's really really smart again this is very uncommon for watchmakers to advertise directly to the public not only does he do so but he Rolex continues to do so so he says I decided to launch the Rolex trademark by means of an intensive advertising
campaign this policy entailed an annual expenditure of more than 12,000 British pounds not for one year alone but for several in succession so I want to go back to how important this is I want to go back to that business breakdowns episode on Rolex called Timeless Excellence so it says Rolex was effectively the first people to have real marketing dollars put behind a watch Rolex did this in a concentrated way and they have continued to do it in
a way that is simply just unmatched by others in their industry Rolex has been the number one brand for watches in the United States historically speaking from the 1950s to today now I want a fast forward way ahead in the story many many years after Hans died because I think this this idea is so important and I'm going to show where I've seen this idea other people use this idea successfully as well in a different industry uh so go
back to the transcript from this episode The the financial crisis of 2008 all the other brands the competitors you know Omega tagu all these other the brands that are quote competitors to Rolex when the financial crisis happens in 2008 they pull back on their marketing Rolex did not Rolex put the pedal down and it was really 2008 9 2010 which really elevated Rolex in the United States to a level that it is today if you speak to
them directly meaning Rolex the company directly they'll credit that period as a turning point for them in the US now what is incredible is Izzy sharp who's the founder of Four Seasons this is episode 184 episode 184 if you haven't listened to it you should his autobiography is incredible Izzy sharp did the exact same thing this is what he says in his autobiography right founder Four Seasons it's tempting during a
recession to cut back on consumer advertising at the start of each each of the last three recessions the growth of spending on such advertising has slowed by an average of 27% but consumer studies of those recessions have showed that the companies that didn't cut their ads had in recovery captured the most market share it's exactly what happened with Rolex in 2008 2009 2010 we did not cut back on our ad budget this is now
founder Four Seasons again we did not come back on our ad budget in fact we raised it to gain brand recognition which continued advertising sustained is much easier to sustain momentum than restart it so think about how important
that intuition was he like well I'm starting a new name all these other watchmakers they're not advertising like why don't we why why would we advertise it doesn't make sense other products are advertised we should do that and I'm
going to do an intensive L is the words to use I'm going to do an intensive advertising campaign and not just this year but several years in succession and then this is nuts I know I keep saying that because this whole story is nuts because it the industry today in large part to the to what Hans and Rolex did is completely different so at this time you have your own watch brand but you don't have your own stores so you're
selling to retailers at the time the watch brands don't have the names on the watches the retailers would buy the watches and put their name on it and so Hans talks about being one of the first people like no no no like I'm going to sell you my I'm going to wholesale my watch and you're going to put my brand name on it not yours I think it was like a decade or a decade and a half if I remember correctly where he had to fight
so he said something like you you know when I first started doing this one out of six they they would agree like one out of six watches could have my name on it then it was two out of six then three out of six and then finally five out of six and insisting on doing this is actually really really important because he also is a perfectionist and so he realizes like oh quality I said in the Steve one of Steve Jobs episodes I just
did that quality was his survival strategy I would say for Hans was the exact same thing he's determined to produce the best W wristwatch possible and we'll go into how accurate and the ways he was did really smart like marketing around that too so he he thought that was a key to success like I just have to be the best possible and he's not going to be able to do that unless customers demand that they get a Rolex and not just same watch which is
just renamed by whatever shop they happen to be buying it from and insisting that the name is seen because before the the the brand name could be seen inside the watch but no one the customers are not opening up the watches and so I think this idea is really really important I'm going to read a summary of this entire section to you he also realized that he would get better orders and more control over the
wholesale price of his watches if he could build up demand so that customers would go in the shop and ask for and insist on a Rolex watch by name by his branding and advertising campaigns Hans effectively turned the tables on the retailers no longer would he have to approach retailers and ask them to stock his watches customers would demand Rolex branded watches and the retailers would have to come to him so as you already know I'm obsessed
by these people that identify a handful handful of principles they know what's important to their business and they just execute on those princi principles they repeat them for decades and that's exactly what Rolex did that's exactly what Hans did he had essentially three things that and it took him what I'm about to describe to is going to you know take two decades maybe to actually fulfill to the degree that he wanted to
because remember he starts his company back in 1905 the first waterproof watch is one to be one of his three tenants isn't going to happen for 20 years after that and I think another six years after that till he gets to Perpetual so he has
three things he wants he goes I want the watches to be precise which he he handles that product that problem first uh number two I want them to be waterproof and number three I want them to be self-winding and so the first
thing he does is like okay my watches again he's a perfectionist they have to be the best in the world so he goes to agler and he's like how can we improve the timekeeping of the watches and one thing that Charlie Munger says in poor Charlie domac is that social proof is a form of Leverage and so what Hans does here is very smart he insists he goes to agler and he's like hey I want to get certificates of performance from
independent testing establishments and so these are actually like astronomical observatories they'll test how good these pieces are at eke keeping essentially and so there is a letter that Hans writes to agler in 1912 and he's like hey we need to produce a wiat that's capable of achieving an observatory timekeeping certificate two years later in 1914 agler actually solves that problem for Hans and so Rolex achieves the first class a
certificate ever to be awarded by an observatory for a wristatch this is what Hans says in his autobiography another red letter day that development of our firm was when a small Rolex wristwatch won a Class A certificate at the famous Q Observatory this was on July 15th 1914 and it was a day I shall never forget and keep that in mind he is writing uh about this 50 years later and so the reason I brought up what Charlie merer
said is because he uses this social proof right saying what's funny is I read a bun there's so there's so many Fantastic uh old Rolex ads that that were published When Hans was alive and if you look at them like they a lot of their ads say like the first the only so they'll say like the world's first self-winding watch the world's first waterproof riskwatch another ad I found that says the Rolex Still Remains the
only riskwatch in the world to gain certificates at Q and so if you think about that insistence on this idea to get to become the first to get the certificate what happens that makes your ads more effective it's one form of
Leverage stacked on another people are busy if they're in the market for a wristwatch right they want to have one that's most accurate and guess what there's only one brand in the world that has proven it keeps it keeps time so
precise that went that extra step to get it tested to get an observatory timekeeping certificate that is another example of doing as much work as possible for the customers we talked a lot about the last two weeks for for Steve Jobs Hans is doing the same thing it just makes it your decision easier oh okay oh I want a precise obviously you want a precise wristwatch oh these are the most precise okay cool that makes my
my buying decision so much easier and so that is in 1914 now he wanted the the second part he's got that three part he's like I want him to be precise I want him to be waterproof I want to be self-winding and so this goes back to what I told you about one of the most important things to understand about Hans is the fact that he understood the opportunity better than anybody else and he would invest heavily in developing
the technology to bring his ideas to fruition and that means he didn't have to invent it himself he would buy the inventions of other watchmakers and then combine their ideas with his efforts and look at how fast he would move so
there's two inventors they're in Switzerland they F they file a Swiss patent and they create the world's first waterproof seal for a wristwatch the patent is granted and published on May 1926 Hans buys the P patent in July two
much 60 days later he already owns the patent and what does that mean he owns the patent so of course now this new innovation is only it's exclusive to Rolex watches you see how he's stacking one advantage over another he's like hey we have the most accurate wristwatch in the world here's proof oh now we have this new technology guess who owns the patent we do you can only get it here and so this is the creation of the
oyster watch which still the oyster classification that's waterproof and so in his autobiography he's laying out like this is all the problems I had to solve and this is why I had to solve them in sequential order and how once
they're solved gives me just an unfair advantage that no one else has so he says on looking back into the past I find that in developing and extending my business I've always had certain AIMS in mind this course from which I never
deviated keep the main thing the main thing is what he's saying perhaps these aims can be summarized as follows number one I have to create watch designs suitable for both men and women done number two I have to standardize a range of movements of different sizes done number three to obtain a high degree of quality that our watches whatever the Cali caliber should be recognized as chronometers by the observatories that's
the Q uh certificate done next one to maintain this High degree of precision by protecting the movements against the penetration of dust and impurities the danger to which the wristatch is particularly exposed and that was why he needed this this patent this waterproof seal that proved so important it's going to unlock his abilities to do the Perpetual in a minute but he talks about he tells us in his own words why this is
so important this last Point presented a problem which could only be resolved by protecting the movement against all outside influences to my technical assistance my refrain my constant refrain was from the very earliest days we must succeed in making a watch case so tight that our movements will be permanently G guaranteed against D damage caused by dust water heat and cold only then will the perfect accuracy of the Rolex be
secured why am I reading this all to you because he's going to tell us why this is so important this seemingly insolvable problem has been solved the waterproof case was finally created in 1926 this invention was applied exclusively to the Rolex watch the fact is like an oyster it can remain an unlimited time underwater without detriment to its parts the name Rolex Oyster has become famous throughout the world and I love that he said that the
name becomes famous because it sets up for the next part how did the name become famous well remember Hans is a gifted marketer he takes an event and he's going to do this multiple times he takes an event that's already getting a lot of attention and inserts his product and therefore amplifies and leverages that existing attention and so there was a secretary named Mercedes who had swam the English Channel before she was is
doing it again he hears about this so he's like okay wear a Rolex Oyster around your neck and so she goes for another attempt this time she actually fails she I think she's she gets uh like 10 hours and then her there's like muscle cramps or something like that but the fact is no one since she'd already done it that was like kind of irrelevant to the story because it's still being covered the fact that she was in these
freezing cold water in November swinging the English Channel and that the Rolex was around her neck it survived and kept perfect time for the entire 10 hours and even after the fact of when she was swimming the channel so what do he do he takes that it's been covered and then he runs this gigantic ad and he has a great line when he describes it he says that they found the watch was still running as perfectly as it had as if it had
never left dry land and so he says the event caused a sensation at the time for the waterproof watch was still unknown to the general public on November 27th 1927 I reserved the front page of the Daily Mail newspaper at a cost of a ton
of money for an ad proclaiming the success of the first waterproof watch this was the first step in the triumphant rise of of the fame of the Rolex Oyster but look at how fast he moves so this is invented in May 1926 he
buys it in July 1926 the next year he takes advantage of this news event this you know this event that's going to get a ton of idea Eyes On It Anyways amplifies his product that same year in 1927 he goes and creates these window displays and all of the retailers that are now going to sell his watch and so this is how he describes it we devised special window displays that which gave the buying great pleasure the chief
feature was an aquarium with other plants and goldfish and in it was plunged an oyster watch which was the only watch in the world that was as watertight as an oyster this same year he gets one of the top British actresses and that he starts running ads the the ad is one of the top British act actresses her hand is in like a goldfish Bowl so half of her arm is in a tank and then you could see that she's wearing the
watch and so he'll uses idea over and over again and one of the things that Rolex does it's phenomenal is like they always associate themselves with the very very best so another British guy named Malcolm Campbell he broke like the land speed record in a car like nine different times and the last time that he did it Hans learns that Malcolm Campell had been wearing a Rolex when he broke the speed record and so then he
starts publicizing he starts running ads broadcasting that during this record-breaking land speed attempt the driver was wearing a Rolex so Hans is doing this in the 1920s he does do this until he dies he does this over and over
again he wanted to place Rolex watches on the wrist of as many high-profile people like extreme Achievers he would go around and identify these these leaders or these high Achievers and he would give them Rolexes and then they'd
be photographed wearing them Winston Churchill uh Dwight D Eisenhower before and during that he uh got elected to the Pres American presidency and keep in mind he's giving these watches to Churchill and jois and how this is post World War II he's aiming straight to the top you know the greatest leaders in World War II There's an actual ad that's run around this time that was excellent the the the tagline is men who guide the
Destinies of the world wear Rolex watches Chuck eer the pilot who broke the sound barrier for the very first time he was wearing a Rolex watch that was an ad the expedition that first summited Mount Everest some of the
people on the team were wearing Rolexes the same year they get to the deepest level another team went to like the the at the time the deepest level uh that human gone to in the sea I think it was like 10,000 or 12,000 ft underneath and
so they run an ad from the top of the world to the Bottom of the Sea Rolex proves Dependable but this constant positioning of Rolex is the very top we are only associated with the very best you go and look at these taglines they would say over and over again Rolex the Masterpiece of watch craftsmanship sold exclusively by quality Jewelers so I'll come back to the ads because I really think the studying the advertising and
marketing of Hans like he was a legit gen genius in this domain but I want to I'll come back to that I want to go back to that third pillar that he was trying to do so he starts off with number one I want the watches to be precise he's done that number two I want them to be waterproof he's done that now he says I want them to be self-winding which he's going to call perpetual and so not only is this an example of him him having to
solve another long-standing problem but it is another example of something that pops up in the books that you and I talk about the fact that opportunity unlocks more opportunities in the future so he talks about in his autobiography he's
like listen the creation of the perpetual watch Whose movement is self-winding and guaranteed to run without interruption this idea of course had preoccupied many famous horologists of the past I am not a watch guy I don't
own any watches my wife has a hard enough time getting me to wear a wedding ring I'm very minimalist right so I didn't know what the hell that word was so I looked it up all that is is a horologist is just a person or company that makes or repairs clocks and watches they're also referred to throughout history as a clock maker so what Hans is telling us is like listen this is not I wasn't the first person to notice this
this is a problem I was the first person to solve it and I wouldn't have been able to solve it if I didn't solve the waterproofing first he said the waterproof watch had in itself marked a great step forward towards the realization of this new achievement an automatic watch can function with the utmost regularity only if the movement is placed in a waterproof case what he's telling you is oyster unlock the
opportunity for Perpetual it had been my belief that the watch of the future is the perpetual watch in other words the automatic or self-winding watch in this field too Rolex has been a Pioneer without the waterproof watch the Perpetual could never have been discovered and so I need to repeat that cuz it's so important without the waterproof watch the Perpetual could never have been discovered now something's also interesting this is
like a centuries old problem they're going to run a fantastic ad talking about like about how they solve this this Cent old problem and there's a great line that I found in this Rolex blog that talks about that it says inventing the automatic wristwatch that could wind itself was the dream of the ages in the watch world for centuries many famous watch makers had tried to perfect the automatic or self-winding watch but none were successful there's
an important principle here for that you and I can apply to our own work and the fact that the more work that you do for the customer the the the easier you can make for the customer the greater the market can be so before I read this section about why this was so important because you know why constantly whining a watch is a pain in the ass it's not convenient it's not as convenient as a perpetual watch Steve Jobs put this best
when he was talking about the difference of you know this hobbyist culture in the early like personal computer industry and he says my vision was to create the first fully packaged computer we were no longer aiming for the handful of hobbyists who like to assemble their own computers who knew how to buy Transformers and keyboards for every one of them there were a thousand people who would want the machine to be ready to
run in other words if we can make this easier we can expand the market by a thousand turns out he drastically under underestimated that probably expanded the market by 10 million or 100 million or whatever the crazy number is and so when Rolex creates this Perpetual automatic watch it eliminates the need to ever wind a watch again and so they run this incredible ad that the headline is Master horologist dream is realized
104 years after his death and it tells the history of this guy in theory had invented the world's first self-winding watch but he what he she made was imperfect in practice and now us Rolex the only watch company in the world has perfected you know they they they essentially honor him they say he was a great watch maker maybe you know maybe the greatest ever and now his dream is finally realized 104 years after his
death and he was realized by Rolex oh by the way do want one and then right before Hans dies he gives this interview and I found a transcript that was translated from French and I think he does a wonderful job summarizing the impact that his 60-year career had on the industry that he in large part created I entered the watch business as a young man at 19 years of age that was 60 years ago when wrist watches didn't exist wrist watches
for men didn't exist at all men wore pocket watches which went from father to son and son to grandson and the opportunity for the watch industry to grow was extremely limited as sales were very slow as a young man I understood it would be very diff ult to obtain results in an industry that had little chance to make lots of money watches were cheap and the quality was not very good especially since there was no Factory
able to produce small watches which was necessary for wearing them on your arm the wristwatch was the peak of my career as I foresaw the total development of the wristwatch for the Swiss Watch industry I can say I was one of the
initiators in the whole watch industry I was not only the the first to understand the potential of the riskwatch but I also made personal efforts which contributed largely to development of the industry I think it's absolutely
incredible to be able to hear the words of somebody had six Decades of experience in his industry and then the last idea I want to leave you with I think speaks to just how unique Hans in his story truly is in 1944 Hans set up the Hans willsdorf trust which owns and controls Rolex to this day he brilliantly set up the bylaws of his trust so Rolex could never be sold or made public so it would never have to worry about catering to anything
but making Timeless watches if you think about it this means H's vision is still very much alive and being executed on a daily basis despite the fact that he passed away more than half century ago how many people can you think of that build a worldclass business and 50 years after they pass away the company keeps going as if they were still running it and that is where I'll leave it as far as buying the book there's I can
only find one copy available it's like $500 but there is a series of other sources that I use for this podcast that I highly recommend I'll link all these Rolex Enthusiast blogs which I thought were fantastic I also used subjects or
ideas rather from the book The luxury strategy which I highly recommend it reads like a textbook uh but it's actually fascinating the subtitles break the rules of marketing to build Brands I'll probably do an episode on it uh in
the future and then of course what I would do now is listen to that business breakdowns episode on Rolex called Timeless Excellence it covers the history of Rolex but also how they operate the business in present day it'll blow your mind so I will leave that link down below or you can just search business breakdowns Rolex and it'll come up in your podcast player that is 351 books down 1,000 to go and I'll talk to you again soon