← Openwork: Inside the Watch Industry
Openwork: Inside the Watch Industry
How Watches Get Allocated – It's Not Just Spend History – Episode 80
00:54:33
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- [00:01]
A
We can all relate to being a good customer and a supporter of a given business, whatever it is, and feeling like we're entitled to special treatment. Now that's what I call openwork, a podcast from Collective Horology. I'm Gabe Riley, co founder of Collective.
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B
And I'm Asher Rapkin, somehow still co founder of Collective. Collective Horology is an independent watch retailer based in Southern California. We carry a wide range of independent brands including David Kando, Holtonrix, Renault, Tixier and more. Or to learn more about us and check out our available inventory, visit collective horology.com or actually, why don't you just come and visit us at Open House? This is our third annual open house event being hosted in Hollywood, Los Angeles, California.
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A
Is it the Hollywood district neighborhood area?
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B
The Hollywood Province.
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A
The Province. The Count. No, that's the LA County.
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B
Join us in the province of Hollywood, Los Angeles County.
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The city of Los Angeles. The Hollywood neighborhood.
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B
The hamlet of Hollywood.
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A
Yeah, there you go, the hamlet.
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B
Oh, we're a little punchy today, huh? So Open House is on Saturday, June 6 and will run from noon to 6pm it is free, of course, as it always has been, but does require registration. All you got to do is head over to HTTP collective horology.com openhouse can
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A
I read all the brands? I want to read all the brands.
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B
I want you to read all the brands. But as a reminder, we'd love for you to bring your plus ones. Just make sure that you register them separately so that they are also on the list. We're closing in on our last few available slots here, so we' love to make sure that we can accommodate you and not have to tell you that it's a waiting list. Gabe, who's showing up?
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A
Well, not even the brands can bring plus ones. All of them had to sign up. So here's the full list of all the. Of all the brands. Armanstrom, Carl Suki and Zone Chapek, David Kando, Dominic Renault, Fierce Fleming, Holen Ricks, J.N. shapiro, Ming Renault, Tixie A.C. dominique Renault couldn't just bring a. A plus one. Renaud Tixier had to sign up as well. Sartori Biard, Singer, Reimagined and Speak Marin. We are thrilled to have all these people there. Yeah, that's. It's like 14 brands. Yeah, it's incredible. We are so excited. The number of brands is bigger than ever before. We already have more signups than ever before. We have a bigger space, so that's good. But we will reach the point where we can't accept signups anymore. So if you're thinking about doing it, make your decision. If you're gonna come, sign up. If you're gon to bring a friend, have them sign up. Now is the time. We're recording this on May 6, exactly a month away. Yes, in just 31 days. Because May has 31 days. In just 31 days, we will, we will be doing open house. Can't wait. All right, well, you know, I'm always asking people for listener questions, feedback, suggestions.
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B
We did get feedback. Pronunciation of jlc, which I'm not going to say here because I feel like you're kind of, you're kind of damned if you do and you're damned if you don't. If I pronounce it with a French accent, maybe I sound a little. Exactly. If I say Jaeger Lacoute, I sound like an American mispronouncing it. You can't win. So officially it's just going to be
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A
JLC from now on. The artist formerly known as Jaeger LeCoultre is JLC.
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B
There you go.
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A
All right, so we did get another listener question that was actually productive and helpful and inspired this show topic. And I'll read you the question we got. Okay, so here it is. I was wondering if you could talk about the so called allocation process. How do brands and ads make decisions about who they offer the most in demand watches to? Which factors do they consider spend, celebrity status, actual interest? How do you guys approach it? Is, is it any different from the, the industry standard? And I think, you know, this question is really, I think, kind of getting at a lot of the closed door deliberations that happen first.
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B
I just want to thank listener Terry Stern for his question. Sorry, go on.
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A
I mean, it's at Terry underscore, underscore
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B
stern, aol.com backslash Tilda Patek.
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A
But yeah, thank you for the question. And I think, you know, the question is kind of getting at how are a lot of these sort of mythical really in demand pieces like AP's, Patek Philippe, desirable Rolex things being allocated? And the truth is, you and I don't really know. I mean, we, we know other dealers, we know people who have been in those shoes, but like, we've never been in the room where that stuff happened. So we're not the best people to answer that question. But we can certainly discuss the various different ways watches are allocated.
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B
Sure.
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A
And, and the trade offs because it is true sometimes watches are kind of allocated or, you know, desirable watches are allocated behind closed Doors, but actually most of the time they're not. There's a, of models for this and I think there are trade offs. I think a lot of people are very clear obviously on what the consumer trade offs for this stuff is. You know, it's like, it's pretty obvious why, like a closed door decision about who gets a watch sucks. You know, if you're not the person who gets it or feel like you never even had a shot, totally get that. But there, that's not the only way these things are done. And there are trade offs both for customers and I think trade offs on the industry and the business side that are worth highlighting as well. So we'll talk about. I think I came up with five different models for how watches are allocated and we can talk about like what the calculus is.
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B
Came up with these.
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A
Well, off the top of my head, like I, in inventorying all the ways I think watches are generally allocated or at least let's talk about how desirable in demand watches are allocated.
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B
I mean, I'm looking, I could think of. These are, these are definitely some clear models. And I want to preface this by saying that the reason these models exist largely is because people have put the time and the effort in to try and think about how to do something equitably and fairly.
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A
Yes. You know, or if not equitably and fairly, make the best decision or the most fair decision among a bunch of bad trade offs.
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B
Yeah. And to do that by looking at a few different, few different audiences that they need to serve, which I think is important. Before we discuss this, every authorized dealer is fundamentally a business. And businesses tend to want to look at how to build, develop and maintain long term relationships with their clients. Because whether you are a dentist who wants to make sure that somebody comes back for their quarterly or annual or whatever cleaning, whether you are, you know, a editor who wants to make sure that somebody continues to avail themselves of your services, a lawyer, a restaurant, whatever. We all think about how do we show that we appreciate and care about our clients and the business that they bring in the door and how do we do that in a way that is equitable so that we also don't put all of our eggs in one basket. When I say we, I'm referring to just business people that we don't put, you know, eggs all in the same basket such that, you know, one client represents an outsized and outsized, frankly, liability to the business.
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A
A good point. There's a risk in that too. I think, you know, it's obvious to Say like, oh, well, in most businesses the good clients, the repeat clients get all the attention and sort of first right of refusal. But you're right, there actually is a downside to that.
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B
Absolutely.
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A
The more you do that, the less you're diversifying your customer mix and the harder it is to bring new people in the door. So I would, I wouldn't assume you're right in any of these situations. I wouldn't assume that the industry, it's not just dealers, brands also allocate things directly to. I wouldn't just assume like the only interest out of hand is, is rewarding the people who already have, have purchased.
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B
Totally. I mean, you know, retailers receive allocations of the watches that they then allocate to clients and you know, talk a
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A
little bit about that because there are decisions, brands, how it's, there is this trickle down. You're right, because like the dealer can only allocate what they've been allocated and the brand is going to make a decision about how many watches, again, in the case of a desirable reference, how many watches they're going to give to any particular deal.
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B
I'm actually going to talk about that by giving. Let's start there because that's really where it all begins. And I'll start by saying that recently Gabe and I were in a ad which we, I wouldn't say we're friends with them or anything but like, you know, at a cordial relationship enough to just drop in and say hi. And it was a boutique that had two brands, one, you know, on either side. And I went and I spoke to the boutique. Gabe actually was buying a watch at the time for himself and I went to the other side to talk to them.
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A
We buy watches just like everyone else.
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B
Exactly. And in this particular instance, you know, without being specific about what boutique or where, this was Breitling, this was a Breitling boutique. Not owned by Breitling, was owned by a retailer, but was a fully built out Breitling boutique. So while Gabe was buying the watch that he was buying next door, I went over to the Breitling boutique and I asked if I could take a look at one of the Artemis cosmonaut watches because I think that watch is kind of cool.
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A
Oh, those are cool.
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B
I mean, I'm a space guy, so like, you know, you slap a, slap a bird on it and I'm interested. But anyway, and I asked them and of course they said, you know, they didn't gaslight me or anything. They're just like, look, man, I wish I could there were 400 of those made and we were allocated two and they were gone before, before we ever received them. And I asked them kind of jokingly, I'm like, oh, but what about that boutique status, huh? I mean like, look at what you've built here. And they kind of looked at me and they're like, yeah, that's why we got two. Exactly. And when you think about how many doors Breitling has, for example, versus and then you divide 400amongst.
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A
So maybe a shop in shop gets one and a dealer that just carries Breitling gets none.
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B
That's it. So if you're, if, if that's the case, if you only get two of a 400 piece limited run. Right, so you're getting half a percent. No.
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A
Yes. Well, I don't know. I'm bad.
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B
Yeah, you're getting half a percent.
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A
400. Yeah.
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B
Of the total production of that watch. That's really, really difficult. You're going to have to have a model for that. And we hear this too from independent, from independents as well who might make say 25 of something. But there's 40 doors. That means not every door is going to get one, some might get two. And this is just the simple, this is just simple math. So we start with this reality.
- [10:28]
A
So the first. Well, the brands have to make a decision about how they allocate that stuff in the first place. So I think you're right. The considerations, the brand, the, the brand themselves is going through and let's say this is the instance. Well, let's take Breitling. I'm, I did. They have company owned and operated, they do boutiques. Okay. So they have watches, they're selling directly through their own boutiques and, or online. Then they have dealers who have made varying levels of commitment to them who have built out a dedicated Breitling boutique that looks to anyone walking down the street like it's just a Breitling store.
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B
Absolutely.
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A
They have dealers who have invested in shop and shop. So like doing a, a major Breitling build out within a multi brand boutique, more than just having a display or whatever, then there are the dealers who have displays. So that's one, you know, those are varying levels.
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B
And then there's like airport dealers or smaller shops or things like that that have a couple of Breitlings, but they aren't necessarily the level of build out.
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A
But there's, there's, that's one vector. Then it's like how long has the dealer been in the network? How many watches does the dealer turn over? Because of course the more watches that the dealer is selling, the, the better a customer they are to Breitling. And Breitling wants to take that into account. Does the dealer pay their invoices on time or even early? Like so there are all these things that go into the brand's calculus over how many watches am I giving a given deal. There's a lot of factors that, that, that need to go into effect and that has nothing to do.
- [11:56]
B
And then on top of that it's also just general business equitable fairness. Like sure, we still want to be consistent. We want to have like we want to be, we want to make defensible decisions.
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A
When we open a dealer it should mean something and they watches. So all of that stuff we just talked about and there's a lot of considerations the brands need to wade through there happen before a watch is ever even sold or offered to the customer who walks in. There's all this stuff that has nothing to do with the customer themselves. Yeah, all the stuff that had nothing to do with you, how many Breitlings you've ever owned, how much you like the watch, how ready you were to commit on all of this. Whether or not that watch was in the store had nothing to do with you, your interest, your own relationship with Breitling or purchase history or anything like that. So that's important to consider 100%.
- [12:42]
B
So that's the, that's the initial foundation. Right. So that's, that's the input to the dealer. So now this dealer that we're talking about, they had inbound phone call, phone calls. They had some guy like me that just walked in off the street that they've never met before asking. They certainly had existing clientele that they may have proactively received.
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A
That dealer, not that particular boutique.
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B
Yeah, I'd never bought a Breitling from them and you know, well, when I,
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what I, when I bought my watch next door, I'm not going to say which brand it was because you know how many of these two Pizza Hut, Taco, Pizza Bell, Taco Huts are there. But when I bought my watch next door from another brand branded boutique, they had my spend history from buying from one of their multi.
- [13:22]
B
I'm sure they, I'm sure if I, if they had had one and it was available and we could have gone down that road maybe. But the bottom line is we didn't get there because it's just not one available. So anyway, all of that to say that input happens. So then there is the question for the dealer which we take into effect take into account the available asset. Right. So how many of these pieces do I have, when am I getting them, et cetera, and all the other factors that we'll then go into about how people allocate. And again, I want to take a step back and think about what does it mean to be, you know, a client of a store? Because I, I remember thinking about this as a consumer and I think about this as a consumer too, you know, in other businesses that I am not associated with. These things are complex because it's not fair, I don't believe, to just say that how much somebody has spent is the pure defining factor as to whether someone is a good client. It is absolutely a factor. It's an input, it is a major factor. Because look, I mean, if you're an independently owned business, your money comes from your clients and if you have a consistent and regular client that is meaningful, it means something to the business owner, you know, but there's other things too, because how well somebody, how well somebody speaks of your business and brings in other clients. Do they bring you other assets? Do they trade things towards, you know, to help you grow your business? Are they kind and polite and understanding?
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A
Do they bring you referrals?
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Yes, all this stuff, you know, do they, you know, do they essentially, you know, are they, are they somebody who is a joy to work with? I think that is a key component. And that goes, by the way, for the dealer too. I mean, a dealer can't be a dick and then look around and say like, well, everybody should be nice to me. Why isn't everybody nice to me? These are two way streets.
- [15:13]
A
Absolutely.
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B
You know, as we think about this sort of thing, and I would say put yourself in your, you know, whatever industry dear listener, you are in, think about the people that you work with on a day to day basis, whether they're an internal client at your company or an external client. And think about what makes somebody a good partner. You know, it's not always the, the revenue that they bring you or the, you know, or the projects that they bring you. It's how they work with you when they work with you, how flexible they are, how kind they are, how understanding they are, how open to, you know, to different models and structures. Do they keep their word? You know, things like this are major elements of what goes into being a good client. And these are things that get factored in when, when allocations are considered is why there are so many different models. Because it can be very easy to say, well, of course, the Multimillionaire will always get the Le Mans. Now, I'm not a Rolex dealer, so I don't know, but I would have to imagine that Rolex dealers are a little bit more, you know, nuanced than that and are taking into account all of the things that I just mentioned when they consider, you know, what is someone, you know, what is a client. And we've had these questions too. Like when we have, you know, we, when we had two, I think we had like two Ming Starlights, I'm sorry, Starfields to deliver. And, you know, there we had to be really thoughtful about that because, of course, what was important to us was to make sure that we were taking into account everyone's interest and everyone's, you know, history. And how do we, you know, be respectful.
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A
Ming made how many of those? 20.
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B
20.
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A
And we got 10% of the seed. Now I'm getting better at math, so I mean, that's a signature for one dealer to get that. That to get to is significant. But that's still, It's a.
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B
But there were a lot more than two people who wanted them. And that's a, that was a decision that we had to go through and, and identify. So let's, so let's talk a little bit about that first model, which is the closed door allocation model.
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A
So we've got, we got these five models. There are closed door allocations, customer pre sales, first come, first serve lotteries and order windows. We'll go through these and we can talk about some of the trade offs in, in each. And I think mostly what we're talking about here, whether it's you going into the Breitling boutique or someone at wanting a Ming Star field. What we're talking about is what I'm calling sort of private or closed door allocation, where a decision is made about, you know, either on the brand side or in the retail.
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B
Sometimes it comes from the brand. This is another point to, to point out. Sometimes a brand will come and say, hey, collective, we think that you should allocate this to Gabe Riley or I
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A
have a watch I can, I can allocate to you, but it needs to go to this customer.
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B
Correct?
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A
That's happened.
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B
It does happen. Yeah.
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A
And so these are like, where there's a decision now there, there could be a bunch of fat cats smoking cigars, you know, looking at a wait list, making a decision about who gets what. But I, I don't know that, that, that certainly never happened on our side. Sometimes it's just a matter of policy and Usually, you know, before I would have to imagine anyone gets to looking at names on a sheet of paper, it's like, what are the criteria? Who's the kind of person we want to deliver this to? And it's not just spent.
- [18:19]
B
I'll give you a. I'll go further than that. It's also like, personal taste. I mean, this is a thing that, like, I think folks sometime overlook. Part of what, like, okay, part of the relationship thing, you know, and people like, oh, we need to have a relationship. I think it's really easy to look at that and be super cynical about it and be like, yeah, okay, Mr. Dealer Pay to play. Exactly. But there's another side to that which is, like, I think, way more critical, which is, well, having a relationship also means understanding what you like, you know, I mean, all of us have gotten phone calls in one way or another, whether it's from a watch dealer or from any other, you know, business, saying, I've got some great news for you, Asher. I've got that, you know, blank, and I think you'd really, really love it. And you listen, you're like that, huh? Like, what on earth would make you think that I want that, you know, or that I could afford that? Or like, any number of factors that go into it. Part of having a relationship is having a partner that understands what you want, like what you are comfortable with, the kind of art you want to invest in. And that factors, because a lot of the time, like, for example, when we buy watches, we were just thinking about this at Watches and Wonders. We're blessed to have a lot of clients, but we also spend a lot of time looking at watches and saying, this looks like a Gabe watch. This looks like a watch for X or for Y or for Z. I think this is their vibe. I think they.
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A
Part of our calculus in buying a watch has to be like, do we have an audience?
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B
Totally.
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A
Not just do we like it part
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B
of that closed door allocation process. While it does look at various other componentry, part of it is also based on, you know, how well somebody knows their clients and thinks, yeah, I think this would be something that this person would dig and we want to offer it to them. And that. And I think that's. That's part of that structure.
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A
Because if you.
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B
Now the problem with that, of course, is like, that does alien. And I mean, look, none of these are. Every one of these, these models comes with a downside, you know, for sure. And the problem there, of course, is like, there could be somebody for whom this is Perfect. Who we do not know or who the dealer doesn't know.
- [20:19]
A
And we maybe still know them well enough or you know, you, sometimes you can. There was a watch we sold the other day to someone and I couldn't believe this particular client bought this watch because I thought I had this person's taste pegged.
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B
Oh, is that the Toledano enchant?
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A
Yeah. I thought I could pick out this, this person's taste and be like, this is a so and so watch. And usually we were, we're pretty right about that. When we, we, we identify something that we think this would resonate with this client, we're right because over years we've gotten a sense of what, what, what his taste is. And I saw the order come through for the Toledano and Channel and I love those watches, they're really cool. I just didn't think it was this particular client's taste and I was shocked. So sometimes. Now you made a point to me. Oh, well, think about it this way. But sometimes you don't know someone's taste. So there's that trade off too.
- [21:08]
B
Yeah. So I think when we look at the closed door, the quote unquote closed door model, the reason a dealer may choose that is because they know they have a severe limitation of product relative to demand. So they think sometimes that doesn't happen. Sometimes the allocation process turns out to be a bust because people aren't as excited about the watch as you think they would be.
- [21:29]
A
This is an important point. This is a really, really, really, really important point you just made. I can't tell you how many times we have watches that we, we buy them, we order them because we love them, we're excited about them, we think we have the audience for them. We offer them to someone, you know, to not just like force something on them they don't want, but because we're like, I think this is a watch you'd be really excited about and I want to bring this to you first. And they're under no obligation to buy and we can't necessarily read their taste or maybe it is a watch they like, but they already have something like it in their collection or for other reasons they're not buying right now. And in that situation, who's left with the watch? We are. And I think more often than not, in offering watches to people at least selling independent brands where there's a lot of, you know, education and advocacy involved in the way we sell, most things that we offer to someone privately don't, don't end up Selling. And I don't know if that's true
- [22:32]
B
in terms of like, most, but it's not all. It's not a.
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A
We're not batting a thousand. Yeah, okay, so it does.
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B
And in fact, by the way, we know that that's not true with independence right now. Like, we know anecdotally, for example, that some major brands that are even quite popular are going deeper down their list than they used to for watches that are in the second or third tier of desirability from those brands. You know, I'm sure the first person to get a Daytona call still says yes, but is that true about, you know, oyster, you know, oyster bracelet datejust with non fluted bezels? I don't think so.
- [23:05]
A
Let me ask you this question. I think a lot of people might be thinking like, all right, you said that spend is a factor, like being a previous customer. And look, it's like in anything, you got to go with who got you to the dance. I think a big part of the reason why retailers and brands offer things to existing customers who have a significant spend history in a lot of cases, because these are the people who have put food on the table over the years. And whether you agree with that, that or not, I think you can certainly understand, like, I'll give the analogy. I used to be a bartender. I was a bartender. And when I was a bartender, you would take care of your regulars. Now, that was usually because they bought beer, they tipped well, they put money in your pocket, and you need to take care of the people who take care of you. And our regulars. Now, there were some regulars, especially at bars, who were annoying and I didn't want to deal with. So being a regular and just spending a lot of money, you're right, doesn't qualify you for better service or whatever. But I could see how someone who came into the bar and wanted to order a drink, and maybe there's a line, and I offer a drink to a regular first because I know them would be annoyed, like, hey, what the heck? Like, why is. Why is this person effectively allowed to cut the line or get the attention of the bartender first? So I get this. I think the question would be here, if spend isn't the only thing that, that, you know, a dealer would consider. A dealer writ large, not just us, but a dealer writ large would consider what are the things that are maybe more within someone's.
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B
That's what so being. That's what we went through, being a
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A
pleasant person, being nice, being someone who's
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B
somebody who has consistently Followed through on the obligations that they've made. That if they made pre orders that they, that they followed through on them. For example, did they refer people in? You know, are they, you know, are. How excited are they? That's a part of it too.
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A
So, so, you know the old chestnut of like, have a relationship with your deal dealer. Get to know them, talk to. I mean, I think a lot of people.
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B
There are a lot of memes out there of like, you know, the guy who brings the scotch.
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A
Yeah.
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B
And I'm like, all right, okay, I get it.
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A
Don't do that. It's not necessary.
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B
Or maybe that works for, for other dealers. I don't know. But my point is like, I get that. And, and, and I, I truly understand the cynicism. I really do.
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A
So no quid pro quo. Just being a good and honorable person is more than enough.
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B
Think about it like this.
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A
I go to.
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B
There's a sushi restaurant that I love in, In Calabasas that I go to.
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A
Don't tell anyone because the line's already long.
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B
But my point is, I go there, what, twice a month?
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A
Maybe more than that. They know you by name.
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B
They know me by name. They know my order.
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A
Yeah.
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B
And I, and, and it's because, and I honestly. And I. Every time I'm there, I'm excited to be there because I love the food.
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A
That other guy, that other regular, though, that they can't stand.
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B
Well, this is my point. Yeah, is my point. I go there probably about as often as this other client. I am excited to be there because I love the food, the service is wonderful. I tip, you know, well, I appreciate the experience of being there. I'm patient when I need to be patient, on the line, et cetera. And as a result, they always are cool. They seat me immediately when they can. Everyone's polite. It's great. There's another guy who shows up who comes probably more than I do, and he is a jerk.
- [26:22]
A
And he's an open mouth masticator.
- [26:24]
B
Oh, I hate that. But, but aside from mouth sounds, he. Which is my own problem.
- [26:29]
A
I don't think you're alone on that one.
- [26:30]
B
Regardless, he treats them very poorly and I have no reason why. I mean, he spends probably the same as I do, if not more, probably more. He's there all the time. He's there all the time. But he's a jerk. And I think that's a part of it, that, that does come into play. And again, I can totally hear someone saying, like, dude, you sell luxury goods. However someone wants to act to you is how they're going to act to you. And that's probably, you know, yeah, we're entitled to no one's business 100%, and that is fair feedback. But we're all humans, and at a certain point in time, you know, if somebody says to me, I'd really like this watch, and I say, I can get that to you in a year and a half. I really appreciate your patience. And they go, oh, man, year and a half. Okay, well, hey, let's do it. You know, I am way more inclined and I think a lot of dealers are to really do their best for that person rather than the person who's like, hey, you said we were going to deliver it on the 15th. It's the 16th. Give me a refund.
- [27:26]
A
Hey, it's Gabe. Now, if for some reason you find yourself wondering what you can do to support openwork and the good folks at Collective Horology, you can of course pick up an independent watch or maybe submerged checkcollectiverology.com but really the number one thing you can do to support us if you're enjoying the podcast, is give us a rate and review on your podcast player of choice. That just goes a long way to helping the right audience find this show. And while you're at it, you can check out and please subscribe to our YouTube channel, where we've got hundreds of videos on independent watches and of course, on the business of. Of watches. Thanks so much, of course, for listening and for your support. We hugely appreciate it. We never take it for granted. Let's get back to the show. All right, those door allocations, which I
- [28:17]
B
think leads to this next one, which is this idea of customer pre sales. Right.
- [28:20]
A
This is a close relative, but we're starting to open up the aperture more here.
- [28:25]
B
And this is, this is basically saying, you know, Ming does this. You know, we do this for certain lines. Lots of brands do this. Which says if you're an existing client of this brand, you're going to get the first shot at our next watch. Otsuka Low Tech does this.
- [28:37]
A
Lots of brands, almost all brands, certainly within the indie space.
- [28:41]
B
Perfect sense, right? Obviously, if you're already invested, then you should have first shot.
- [28:48]
A
Yeah. And this and the brands that do this, if I, you know, like, obviously like.
- [28:52]
B
But I will say you got mad at me when I pointed out that, like, you recall this playing the game with Jorn. Isn't that what Jordan does?
- [28:58]
A
No, I think it's. Jorn is more of the closed door smoke and mirror allocation thing.
- [29:04]
B
But also with a focus on the core clientele that's existing.
- [29:08]
A
But that's, that's what we just talked about. This is more equitable in that every. So the way, the way this would be different from the closed door smoke and mirrors allocation process or like the Pope being elected and sending up the smoke. The way that this would be the conclave, the way that this would be
- [29:25]
B
a new who and Ricks.
- [29:27]
A
The. The watch is made available to all existing clients at the same time. So you know, usually this works as like the drop.
- [29:36]
B
It's a drop to existing clients.
- [29:37]
A
Your watch is publicly available. It's made available to all clients at the same time. No one is given access prematurely or individually or privately or whatever. So it's a bit more egalitarian in that. But it's not truly first come, first serve. It's first come, first serve to clients or first right of refusal to existing clients. And the. Obviously this isn't something done by major brands for all sorts of reasons. This is typically done by indies and micro brands or challenger brands as it's were. And I think the reason why more than anything else is most of the businesses that do this, heck, we used to do this with collective, with our collaborative watches. They were offered to our existing customers, our members, before the public. The reason why is it's truly this idea of you gotta go with who got you to the dance. All of these businesses that do this struggled, fought and clawed to get where they are sacrificed and want to recognize the people who were there early on and supported them before anyone else cared. And I think it really does come from a place of good intention.
- [30:46]
B
Before we go on to the next one, I want to touch on another point which is okay, hey, that's all well and good. These folks got you to the dance, they got their first shot, etc. Now half of those watches are up on eBay or Chrono 24 for 25 to 50% more.
- [31:01]
A
Sometimes they are most of the.
- [31:03]
B
I'm playing, I'm playing the role of the cynic here.
- [31:04]
A
Sure.
- [31:05]
B
Okay. You know, who looks at that and says, you know, cool, that'd be great if everybody like was altruistic and you know, blah, blah, blah, blah, blah. And I'll be honest with you, like, I don't know how much of a solution there is for that. You know, you've got. We've, we've talked to brands who have sleuthed out people, you know, who have resold. Max Booster on our podcast talked about a guy who insisted he was a mad edition for his wedding and immediately resold it. You can listen to that one. And listen. Listen to how. Listen to how much that hurt Max's feelings because he felt like someone lied to him. Why someone did lie to him. Yeah. And, I mean, look, I think this is part of it, you know, and I get it. Like, there recently, we just saw, you know, some of the new. Some fancy new paddock that was released. Everybody wanted, got, you know, immediately listed on risk check for half a million dollars. The reason we're sharing all these different models is because none of them is perfect. And inevitably, something like this is going to happen. And it is what it is. But I would also argue that when we go back to that initial point of, like, what makes a client, part of that is integrity. I remember being offered a watch that was very valuable, that I only sort of wanted and really could only barely afford. This was like a 5711R, I think, about four years ago, five years ago. It's an unbelievably beautiful watch. But the bottom line is, I didn't have the money for that. I know it was worth a lot more than I was going to pay for it. Could I get the cash together to buy it? Probably. Would it have been a rational purchase for me? Absolutely not. Could I have taken the $70,000 or whatever it cost and turned that into 140 at the time? Yeah, without a doubt. But I would have been screwing my friend who offered me that watch.
- [32:54]
A
Yeah.
- [32:56]
B
So I declined it. And I think that is also part of what makes somebody a good partner and good client. There are a lot of people that we work with. You say, I love that watch. I can't swing it. Or I love that watch. You know, but it's not for me right now or whatever. And that's okay. It's so okay. You know, this is. I think this is a critical part about building trust, too do. And it's part of what goes into this larger. This larger question. People sit down and say, who do I want to call for this? Because it's also a factor of, like, who do I trust? And to be very clear, I am not, as I have been the king of saying, this is your own property and you can sell it. And I still maintain that. I'm just using that as an example because it does come up when someone's like, this is bullhooey.
- [33:38]
A
Yeah.
- [33:38]
B
But, you know, the difference there is.
- [33:39]
A
It's all about intentions.
- [33:41]
B
Yes. 100%.
- [33:42]
A
Yeah. If you're buying something, knowing you'd have to sell it. That's not the right intention. So look on this one and certainly the nec, which is first come, first serve, you have to be able to make enough watches that you can confidently say I'm going to have enough watches to be able to offer to my clients. Yeah, you know, first come, first serve. And then I need to have some leftover. There's no brand who wants to. Trust me, I know people are going to think that, that this is not the case or and maybe sometimes it is, but I've never met a brand who is like, I would love to sell out all of my watches to my existing customers before they go on sale publicly. Everyone brand wants to sell as many watches as they they can and they try to.
- [34:22]
B
Well, it's funny that you say that because that's exactly what F.P. journe did at Watches and Wonders. They made everybody sign non disclosure agreements and showed them unreleased watches exclusively to existing clientele.
- [34:31]
A
Well, sure, but they're, they're, my point is like they're, they're production constrained. Like most of the brands who do this, who are like I'm going to make, make the watches available first to all of my customers. At the same time. They do want to have things left over for, for the, the public as well. Like I don't think.
- [34:49]
B
Well, they want to grow, they want to grow their business.
- [34:51]
A
They want new, everyone wants new clients. We discussed. The next one is first come, first serve. Make it available to everyone at the same time. And this sounds good.
- [35:03]
B
Well this one, this one backfires for the opposite reason which is if you make it available to everyone and you sell out and then a good client calls you up and says why didn't you call me?
- [35:12]
A
Or here's a classic one. It's like you. This partly assumes for an in demand watch. Yes. This assumes that everyone is paying. There's kind of this level of entitlement with this where it's like you assume that everyone is paying attention to everything you do all the time.
- [35:28]
B
You mean entitlement from the perspective of
- [35:30]
A
the dealer or the, or the brand?
- [35:32]
B
Yes, 100%.
- [35:33]
A
Well I, you know this released at Tuesday at 9:00am you had your chance. It's like a Tuesday at 9:00am I might have been having surgery performed on me. You know, like just been at work and I might have been dealing with my children. Like.
- [35:48]
B
Or you could have been dealing with your children while at work and having surgery. I mean all of these things.
- [35:52]
A
Yes, exactly. A child was performing surgery on me at work.
- [35:57]
B
So I was unavailable. But I think, you know, you're right, you're right. There is like a level of that and, and I mean I went through this too. Like I remember there was a watch that I really wanted. This was back during the craziness of COVID and the person was insist on dropping it at like nine in the morning, Swiss time.
- [36:12]
A
Oh yeah.
- [36:12]
B
So I like set my clock for 1am and I woke up and I still didn't get it. Even though arguably that is the most egalitarian way of releasing.
- [36:20]
A
Yeah. And it's like concert tickets. It benefits the person who's got like four computer monitors open and you know what I mean, like there's a game to that too. You know, it benefits the person who's, you know, built the, the macro to refresh the web page or, or at
- [36:36]
B
this point the agent or whatever.
- [36:37]
A
Yeah, I mean, so it's.
- [36:39]
B
Oh man, that's a good idea.
- [36:40]
A
Yeah, there you go. Someone. No, don't do that. Don't give anyone ideas. So first come, first serve. Sounds good and it's fair in a sense, but it does benefit certain people and you will inevitably get the call of like, oh man, had I only known.
- [36:55]
B
Which leads us to the next one, which is lotteries.
- [36:58]
A
It's an interesting one.
- [36:59]
B
It is an interesting one. And like recently, like MAD Editions is a really good example of the lottery, especially what they're doing now with these live event editions, which is kind of interesting and kind of cool. But you know, there's two challenges there, right? I mean, one, well, many challenges there. One, it removes immediate gratification. Right. You don't know if you're going to get it. You know, it's arguably the most fair system. If you want to be purely defining. If you want to say, I'm going to remove every single factor from this
- [37:25]
A
if production is truly limited.
- [37:27]
B
Correct. I'm going to remove every single factor other than someone attempting to game the system. So if we see, you know, we'll dedupe your entries and remove you if you had nine entries or whatever. But like assuming you are playing favor fair. It's extremely fair. But it doesn't build any relationship with. Between the brand and that person. Now what's interesting about the way MAD Editions did it though is that they did find a way to build relationships through lotteries and that was through the. I forget what they call. But basically their bad luck lottery where it's like if you.
- [37:58]
A
If I love this.
- [37:59]
B
I love this idea too, where it's like if you cat if you consistently have lost the lottery, then we're going to offer you a watch at some point, you know, and it's going to be a special.
- [38:07]
A
It was like if you'd entered a lottery four times and lost four times or something, Something like that.
- [38:12]
B
But I would also argue in the same way that I think case studies about the ipod are preposterous. Case studies about, you know, mad, bnf, mbnf, and MAD Editions and Max Booster are also sort of like in a, you know, a use case unto themselves. But my point was, at least there was thoughtfulness there, saying, like, we recognize disappointment and we want to make sure that we. That we want to do that. And if you think about it, like, if I had entered, you know, Gabe and I love fish, right? If we had entered lotteries for fish tickets, we consistently lost, and then we got an email from Fish that was like, hey, you guys are gonna get first shot at the sphere, because, you know, we didn't win any of our other fall tickets or something. Imagine how that would make you feel. Even if you didn't buy the tickets, you'd still feel like someone cared. So I think there are ways to do it. But lotteries do have some downsides, too, you know, so.
- [38:55]
A
Yeah. What about a lottery is unfair?
- [38:57]
B
Well, there's two fun, fundamental factors. One, you got to assume both sides are reasonable, Right? Which is to say, like, is it really a lottery, or are we just going through the names and picking things out?
- [39:06]
A
There's that old conspiracy theory. Sure.
- [39:09]
B
Who knows? I suspect most people who do this are doing it with honest intent. And then there's the other side of it, too, which is like, you may have really great clients that you end up not being able to deliver to because you were being so, so fair about the whole thing. And then that person, again, as with the previous versions, may say, I have been here for you since day one, and you didn't even hold one for me.
- [39:29]
A
Yeah.
- [39:29]
B
And the answer to that is like, I get why you're mad about that. That'd be frustrating.
- [39:34]
A
Yeah. Be like, you know, you're a regular at a restaurant and the restaurant's overbooked, and you walk up to the host and they're like, I'm so, sir, but we overbooked tonight. You're going to have to wait an hour for a table. You'd be like, but I'm the only one here who supported this restaurant through thick and thin. What the heck? It doesn't. It doesn't.
- [39:53]
B
But if you flip that around, and that guy walks in and cuts ahead of the line. Somebody said, I made a reservation. Yeah, what the heck.
- [39:59]
A
Yeah. No, this is, this is the thing. Like, I think we can all relate. We're all guilty of both things 100%, which is we can all relate to being a good customer and a supporter of a given business, whatever it is, and feeling like we're entitled to special treatment. We can also all relate to the feeling of seeing someone else who's a good customer of a business.
- [40:21]
B
Getting this is human nature and not
- [40:24]
A
feeling good about that. It cuts both ways. And the same person can feel the opposite way in one set of shoes versus the other. It's fascinating.
- [40:34]
B
Yeah. I remember thinking, like when I was in my 20s and I saw one of my colleagues who was a really good friend of mine get promoted, who had the same job and worked on the same stuff, get promoted. But he did. But we both got good reviews. What gives? And part of that was.
- [40:47]
A
Do you really want to have this discussion now?
- [40:48]
B
No, no, no.
- [40:49]
A
But my point is, are you open to some feedback?
- [40:52]
B
No, not from you.
- [40:53]
A
That's all you need to know.
- [40:55]
B
But I guess my point is like, it is human nature to look at somebody, you know, when all things are equal and to feel one way or the other. And I get it. Hence, these are imperfect. Which leads us to the next one, which is a fascinating one because it has an unusual Achilles heal.
- [41:09]
A
Well, I have a. Before the last one, there's a. There's another one that came up to me, came to mind for me because of. Of MAD editions. Another thing they've done, which is there are these now like location or event specific releases where. So like MAD editions, like if you go to an event. Yeah, I mentioned that there's watches for an event, but then there's also like British Watchmakers Day or Wind up where there are like Fears and Studio Underdog. You can only get the watch if you go to watch.
- [41:34]
B
But I would argue that that's still relatively egalitarian because if you're willing to wait for it, you have a good shot at getting. Getting it.
- [41:38]
A
Yeah, but the argument would be like, well, I can't get on a plane and go to London and I really want the watch. That's not fair. I mean, how many people when these watch. The fierce watches are a great example.
- [41:49]
B
When I actually do that one's. That one's a simpler scenario because it's just for years there have been region specific editions and the only way to get them is to be in the region Now Granted, you know, the time window for British Watchmakers Day is much narrower. You gotta be there that day.
- [42:04]
A
No, but you're, you're right. You line up and we've talked to Nicholas about it. He's like, if someone wants the watch watch, the policy is the same for everyone. They show up.
- [42:14]
B
We've called Nicholas and asked him for those.
- [42:16]
A
Yeah. And he's like, whether they walk across the street to get to British Watchmakers Day or they take an airplane to London to get here, they need to get in line. And it will be first come, first serve.
- [42:27]
B
There you go.
- [42:27]
A
But I think people do feel like, oh man, it's a bummer. I can't go to New York for windup, therefore I don't get a Manhattan watch. What the heck, I get it. But I think you're right. It's not perfect, but it's maybe as fair as it can be. So order windows. This one I think is interesting. This like the lottery thing is kind of an innovation we've seen the last few years. One of the brands we carry does this atelier when, yeah. So for on some watches, on some watches like the Ancestral was a good, good example of this. And, and the idea here is we will produce as we will have an, an open window to take orders. Maybe it's about a week long and as many orders as come in during that wind produce watches I know notice does this as well. A bunch of, bunch of brands do this. I, I, I think, I think this one is great. I don't see a ton of downsides here. There are a couple of trade offs. One is it generally means there's going to be a longer lead time to get the watch because before the, the,
- [43:27]
B
it's essentially a version of a subscription
- [43:29]
A
model because before the parts are even ordered and in production they're taking, they're taking your orders. You got to wait, you got to be patient. That's a trade off. I think the other is that not every brand can do this, you know, atelier when with the Ancestra or notice with like the trail trek or things like this. Their businesses are at a scale where they can do that like FP Journe can't open their, their books for a week and make as many watches as people want.
- [43:58]
B
No. Well, there's another side of it too, which is sort of this little intellectual like gotcha. Right. Part of the appeal, appeal and I think we have, you know, people can debate this, but, but part of the appeal of some of these watches is that there are only so Many?
- [44:14]
A
Oh, yeah.
- [44:15]
B
And if there are as many as somebody wants, there is a little bit of a, well, it's not as special angle to it anymore. Now, whether that's true or not is a purely personal day decision, you know, but it factors in. So when you make that choice, not only are you asking people to wait a little bit longer, you're also reducing your personal risk. That's a thing with a watchmaker because they're only going to make the watches that were sold. So there's really very low relative risk compared to producing all the watches and selling them.
- [44:50]
A
Yep.
- [44:51]
B
But it does remove some degree of, you know, the, the, the limitations.
- [44:56]
A
Scarcity. Scarcity. All that thing. Yeah, all that stuff.
- [45:00]
B
People talk about this a lot in forums, you know, or bring up, for example, the idea of, like, well, if people know these watches are so in demand, why don't they make more of them? Of course, the challenge there is what some, what a person says they want sometimes versus when they actually lay their card down. There is a delta between that. Yeah, and I get that. How many times, Gabe, have I said, oh, I'm going to buy that watch that just came into the store in inventory that I really like, and then what percent of the time do I actually do it? Like 5%, 10% maybe?
- [45:31]
A
Well, you know, Asher, let me tell you something. You actually do already own about half the watches in the store.
- [45:40]
B
Well, no, I mean, I mean, technically I don't have the watch in the
- [45:42]
A
store anyway, in a manner of speaking,
- [45:43]
B
I just can't wear them.
- [45:44]
A
You already do own it. Sure.
- [45:46]
B
I mean, okay, fine. I own this chair I'm in, and you own that chair too.
- [45:49]
A
Actually, these are my chairs. I stole these chairs from my house and my wife is very upset.
- [45:54]
B
All right, fine, so you own this.
- [45:55]
A
She wants them back, whatever.
- [45:57]
B
But you get the point I'm making. So when we zoom out here and we look at these different models, right? Whether it's closed door allocations, customer pre sale, first come, first serve lotteries, or order windows. I think what is true about all of these is none of them are perfect, but all of them are in service of trying to do really one or two things, which is how do we make sure that these watches go to good homes? And two, how do we make sure that we take care of the most people? And when I say we again, I'm talking about this business. How do we make sure that we take care of the most people in the best way possible and balance that with brand integrity, you know, client trust and Trying to approach a business in the most, you know, rational, egalitarian and also, you know, open eyed way as possible. And I think there are no solutions here that I think every single listener is going to say that's the one. We're all going to have different feelings about it. And I totally get it. But I would just say when you look at the way a dealer or a brand is allocating, I find it really useful to reverse engineer that in my head and say, well, why is that the case? Why would they have made that choice? And sometimes it can be really helpful to me, sometimes it can be really frustrating to me. But very rarely is it arbitrary. And I think that's the key component of it.
- [47:23]
A
So look, I also think just another point on this is it's the whole thing with the scarcity of watches and the allocations, whatever. I think it's easy to imagine this mental image of the brands and the dealers as these fat cats smoking cigars, throwing darts at names on a list, deciding who gets what and laughing and you know, all this sort of stuff, not, not what happens. These things are as much of a headache in some ways for now. Look, everyone would love to be in a position where everything they made sold. But you know, one that certainly doesn't
- [47:56]
B
always, now that I call it a headache. I mean, I think it is, I think it is a very, very challenging, you know, reality. And I mean look, if you have the headache, you're privileged enough to have it.
- [48:05]
A
Let me give you the counterfactual though. Yeah, sometimes it really is a pain. I was in a few years ago, I was in, in a Tudor boutique and I was buying a watch that was in stock. I like buying watches that are in stock. I love the thrill of walking into the dealer and trying something on, you know, falling in love. And I'll take this, it's here now. Great. I love it. I don't really care about scarcity of watches. I'm not someone who was ever into limited editions or anything. A lot of times I think like the, you know, the, the object as it was initially designed is like the most pure expression of it. That's, that's what I want. But I was in this.
- [48:41]
B
And then he went out and started a company that makes LIM editions.
- [48:43]
A
Well but now we're retailer. It was a long game man. It's all like I just used the limited, did all of that just to
- [48:50]
B
get access to stock watch to lay the foundation.
- [48:53]
A
So I was in this tutor retailer buying a watch. I think it was a, it Was. Oh, it was the, it was the Black Bay 58 GMT. And I'm in there buying this watch. It was in, in stock there, walked in and bought it. And I was in the store probably for about 20 minutes. Minutes through like looking at the watch, buying it. They had to size it, all this stuff. In the 20 minutes I was in there, every person who came in the door asked for the Black Bay chrono with like the pink dial, like, you know, the Miami Inter, Miami FC watch. And I, when they like one of them left, I was like, how many times a day does that happen? And they're like, like, oh, I don't know, 30, 40 times a day. You know, and it's like they're constantly in this position of saying no to people.
- [49:43]
B
Yeah.
- [49:44]
A
Or being hassled about it or. And they're like, and like those, they're like, those are the good interactions. Someone comes in and asks, we tell them we just don't have it and they leave. But like, sometimes people demand answers or you know, they carry on about how many tutors they own or whatever, you know, like whatever it is. And like, it's just, they're like, yeah, just tell it like, I'm a salesperson. I don't want to be telling people no all day. Like that's just not fun. And also it's not great for the salesperson. There are all these people coming through the door. You think it's, you're up.
- [50:15]
B
Yeah.
- [50:15]
A
And you're just telling, telling them no. And then the ones that you do get, you know, you have to think through like, if I don't sell to this person, I'm going to piss this person off. How am I going to explain to this client that they didn't get one? It's a headache. It's not fun for them either. So I'm not asking for anyone.
- [50:30]
B
Well, but Gabe, then tutors should just make lots of pink dialed chronographs. Right?
- [50:35]
A
Maybe they should. I don't know.
- [50:37]
B
And then you end up in the situation with Vacheron where they made 150 or something of the Everest now they made these and 150 guys and gals who bought the Everest are pissed. Potentially.
- [50:46]
A
Yeah.
- [50:46]
B
You can't win.
- [50:47]
A
You can't win. No one can win. It's frustrating all, all around.
- [50:52]
B
So all of this is, is not to make, not make you say like, oh, feel bad for your poor neighborhood.
- [50:57]
A
No, no, no.
- [50:57]
B
It's more to just say these are com. These are comp.
- [51:00]
A
It's frustrating. It's complicated and frustrating for everyone involved.
- [51:04]
B
Yeah. And it's. And it's interest. Look at all of this, you know, when you're not emotionally invested in the particular watch you want, but just looking at it as a system, as a systemic thing.
- [51:13]
A
Yeah.
- [51:14]
B
And then make. And then look. And then thinking about that just in terms of what the expectations are, you know, for you, for your. The people you choose to do business with, whether it's us or whether it's somebody else or what have you, and then thinking about it against what are their intentions and how are they working towards it. So I hope this is helpful to just give some idea of, like, how people think about this and what goes into it. And you know, look, if you guys have an incredible idea for allocations, tell us, we'd love to hear it. I mean, there could be something that all of us have missed. And I say that with, with sincerity. Good ideas come from everywhere. But, you know, bearing in mind the factors of what. And I would encourage whoever does that, if you do, to think about it in the context of your own bit business and the way that you conduct business with people and interact with people, how would you do it?
- [52:07]
A
And as a customer, how you want to be treated when you're a good customer. We know what, what do you, what do you expect? Because these are the considerations do you expect from the coffee shop you go to every morning?
- [52:16]
B
Because these are the questions that dealers ask themselves all the time, which is, you know, what is. What would I expect? What do I need? What would be fair? Shall we leave it there?
- [52:27]
A
Yeah. Should we do some more limited edition watches? Should we get back to the grind?
- [52:35]
B
I don't know. We got some ideas.
- [52:36]
A
I mean, truthfully, this is part of the reason. I mean, people ask all the time, like, why we. Why we've slowed down on doing collaborations. And a big part of the reason is because this sort of thing is difficult. It's hard, you know, and not only do we have to deal with the complexity of like, allocating watches and things like that, but we also have to, like, estimate the demand for these things. And sometimes, you know, because, by the way, when we did those projects, we were putting up cash, we were the ones buying those watches, whether or not they sold. And so we had to make an informed decision about how many watches we could order. Usually we probably didn't order enough. We probably could have ordered more. Sometimes we ordered too many and guess who was left with the bill? We were. So we had to be delayed, deliberate about that, which created some some scarcity. And part of the reason we do fewer of those is because that's a really tough business model, and we'd just much rather focus on selling independent brands that we believe in and doing a collaboration when it feels right, not because we need to keep to a schedule of doing a certain number a year. So the only thing we're going to stick to doing a certain number of times is the podcast. Every week. Every week, Every casher. Every week you agreed to every week. Should we leave it there? Let's do it. All right. Well, thanks for listening. Openwork is, of course, a production of Collective Horology. You can find us online@collectiefherology.com and please get in touch with us. Questions, feedback, suggestions, your own allocation models. We want to hear all about it. And to do that, you can email Podcast at Collective Horology.
- [54:31]
B
There's a new host and Ricks.