Acquired Podcast Episode Summary: Rolex Release Date: February 24, 2025

Hosts: Ben Gilbert and David Rosenthal
Podcast Description: Every company has a story. Learn the playbooks that built the world’s greatest companies—and how you can apply them as a founder, operator, or investor.

Introduction: The Enigma of Rolex

00:00 – 01:03

Ben and David open the episode by showcasing their own Rolex Daytona watches, highlighting the brand's iconic status and its enigmatic nature. They emphasize Rolex as one of the world's most renowned yet least transparent companies, privately held by the Hans Wilsdorf Foundation. Ben remarks, “Rolex is a cascade of paradoxes... they make watches that everyone wants to buy, but nobody seems to be able to get” ([00:31]).

The Founding of Rolex

01:03 – 07:55

The story begins on March 22, 1881, with the birth of Hans Wilsdorf in Kulmbach, Bavaria. Despite Bavaria's recent unification with the German Empire, Hans felt like an outsider due to his Protestant faith and lack of national identity. Orphaned at 12, Hans was sent to boarding school, where he excelled in languages and developed an affinity for Switzerland. This early independence ingrained in him a meticulous attention to his possessions, which later influenced Rolex's commitment to craftsmanship and quality.

Early Career and the Birth of Wilsdorf & Davis

07:55 – 20:17

Hans moved to Geneva and worked for pearl merchants before joining Cuno Corten, a major player in the Swiss watch export industry. His role as a secretary exposed him to the intricacies of the watch value chain and retail relationships, particularly with British retailers. In 1905, at age 24, Hans co-founded Wilsdorf & Davis Limited in London with investor Alfred James Davis, aiming to import and assemble high-quality Swiss movements with British cases.

Innovating Timekeeping: Chronometer Certification

20:17 – 31:45

Driven by a passion for accuracy, Hans began testing pocket watches, leading to the first chronometer certification. This milestone allowed Wilsdorf & Davis to market certified precision timepieces, setting Rolex apart in a market where wristwatches were still novel and primarily worn by women as "wristlets."

The Introduction of the Rolex Brand

31:45 – 42:29

In 1914, amidst growing anti-German sentiment due to World War I, Hans rebranded Wilsdorf & Davis to The Rolex Watch Co. Ltd., solidifying its Swiss identity. Post-war, Rolex moved headquarters to Geneva in 1919, embracing Switzerland's rich watchmaking heritage. The partnership with Jean Aigler, movement maker, became foundational, with Rolex later acquiring Aigler in 2004 to bring movement production in-house.

Pioneering Waterproof and Self-Winding Watches

42:29 – 73:32

Rolex's dedication to innovation led to the creation of the Oyster case in 1926, the world's first waterproof wristwatch. Utilizing a marketing stunt with Mercedes Gleitz's English Channel swim, Rolex showcased the Oyster's durability. The perpetual self-winding mechanism, introduced in the early 1930s, revolutionized wristwatches by eliminating the need for manual winding, enhancing Rolex's reputation for engineering excellence.

In 1945, Rolex launched the Datejust, its first modern watch, introducing the Jubilee bracelet and standardized production, which cemented Rolex's position in both professional and luxury markets. The partnership with celebrities like Winston Churchill and Dwight D. Eisenhower, as well as James Bond's association, bolstered Rolex's image as the watch of leaders and achievers.

Navigating the Quartz Crisis

73:32 – 191:53

During the 1970s and 1980s, the Swiss watch industry faced the Quartz Crisis, where quartz technology threatened traditional mechanical watches. While most Swiss brands succumbed—leading to the formation of conglomerates like the Swatch Group—Rolex remained independent under the Hans Wilsdorf Foundation. Instead of pivoting to quartz, Rolex doubled down on mechanical excellence and brand prestige. This strategic decision allowed Rolex to thrive, capturing 30% of the Swiss watch industry's revenue by focusing on high-quality, vertically integrated production and maintaining strict control over supply to preserve exclusivity.

Strategic Marketing and Brand Management

191:53 – 265:57

Rolex's marketing strategies were pivotal in its sustained success. Collaborations with J. Walter Thompson and IMG transformed Rolex into a lifestyle brand. Iconic advertisements positioned Rolex as the watch of those who "guide the destinies of the world," aligning the brand with excellence and leadership. The Daytona's association with Paul Newman created an enduring cult following, significantly impacting Rolex's presence in the secondary market and auction houses.

Vertical integration, including the acquisition of movement manufacturers and consolidation of production sites, ensured Rolex's ability to maintain quality and control over its products. This approach, combined with selective marketing and strategic partnerships, solidified Rolex's dominance and high operating margins.

Current Market Position and Legacy

265:57 – End

As of the podcast's release, Rolex commands an estimated 30.3% of the Swiss watch industry's revenue, vastly outperforming competitors like Omega and Patek Philippe. With annual revenues around $11 billion and operating margins near 40%, Rolex exemplifies a highly efficient, vertically integrated luxury brand. The Hans Wilsdorf Foundation's prudent financial management and extensive real estate holdings further secure Rolex's legacy and operational stability.

Rolex's success is attributed to its unwavering commitment to craftsmanship, strategic marketing, and effective brand management. By maintaining a focused product lineup and leveraging its reputation for precision and durability, Rolex continues to thrive in a market that has largely shifted towards quartz and digital timekeeping.

Notable Quotes

• Ben Gilbert ([00:31]): "Rolex is a cascade of paradoxes... they make watches that everyone wants to buy, but nobody seems to be able to get."

• David Rosenthal ([02:14]): "This is the basis of it."

• Ben Gilbert ([03:35]): "This was the first product, they hit escape velocity."

• David Rosenthal ([36:57]): "They have to do a big launch. I don't want to just buy regular ads in the newspaper here."

• Ben Gilbert ([40:36]): "And now they have streamlined their operations to be extremely efficient."

• David Rosenthal ([127:07]): "He [Andre Heiniger] was a true visionary..."

• Ben Gilbert ([189:56]): "Playing like a piezoelectric effect enhances our chronometer precision."

Conclusion: The Rolex Playbook

Rolex's journey from a niche watch importer to a dominant luxury brand is a testament to strategic foresight, relentless pursuit of quality, and impeccable brand management. By focusing on mechanical excellence, controlling production, and aligning the brand with global leaders and achievers, Rolex navigated industry crises and technological disruptions effectively. The company's ability to maintain exclusivity through controlled supply and foster a strong identity in both primary and secondary markets ensures its enduring legacy and market leadership.

For those looking to emulate Rolex's success, the key takeaways include the importance of vertical integration, strategic marketing, maintaining brand prestige, and the relentless pursuit of excellence.

Attribution: This summary is based on the transcript of the "Rolex" episode from the Acquired podcast, hosted by Ben Gilbert and David Rosenthal.