Why Rolex has no owner and no shareholders

Transcript

In 1945, a German watchmaker in Geneva did something that still sounds like in the stake. His wife had just died, he had no children, and so he gave his company away. He placed every share of Rolex into a charitable foundation. The company has had no owner sense, no shareholders, no earnings calls. It has never published a set of accounts in its life. People treat that as a quaint footnote. It is the entire reason Rolex works, because the obvious explanation for Rolex is wrong. Everyone assumes it is the best watch. It is not. Patek Philippe makes finer movements. Richard Mill charges 10 times the price, and a $20 Casio keeps better time, because quartz is more accurate than any mechanical watch ever made. Rolex is not the most expensive, the most complicated, or the most precise. An entry model costs around $7,000. A Submariner, about 10. It sits deliberately in the middle, and the middle turns out to be the most valuable place in luxury. Look at the numbers. Rolex makes roughly 1.2 million watches a year, and earns around 10 billion Swiss francs doing it. Close to a third of the entire Swiss watch industry by value. More than the next several brands combined. It steals sports models routinely sell above retail on the second hand market. It is the only mass-produced luxury object on earth that people pay extra to receive sooner. So what is it actually selling? Not craft, agreement. A Rolex is the one watch that every person on the planet reads the same way. Expensive enough to mean you made it. Reachable enough that a dentist, a footballer, and a sultan can all own the same one. That universality is why it functions less like a watch and more like a currency. You can sell a Submariner in any city on earth in an afternoon for roughly what you paid. No other luxury good behaves that way. And here is what people miss about why that is possible. The Submariner looks almost identical to the one launched in 1953. Rolex has not chased a single trend in 70 years. A public company could never do that. Investors would demand new models, bigger volumes, a smart watch. Rolex has no investors. The foundation lets it leave money on the table forever, which is precisely what keeps the money coming in. Now the part nobody selling you the dream mentions. Rolex insists it does not restrict supply, yet 1.2 million watches a year for a planet that wants far more is a choice. And in 2023, it bought Bukhara, its largest retailer, and launched its own certified pre-owned program. The company that claims not to manage scarcity now owns the shop, the wait list, and the reseal market. Rolex never built the best watch. It built the one watch everyone could agree on, and then made certain there were never quite enough.

Transcribed automatically from the video, so small errors are possible.