SDC Weekly 26; AP x Travis Scott; MAD1 Lucky Clover
The end of freebies, more auction drama, the Norwegian secret, self esteem, generational wealth transfer, recovering a Caravaggio and optical illusions.
“Perseverance is not a long race; it is many short races one after the other.” – Walter Elliot
Hello 👋 and welcome back to the SDC Weekly. As I write to you from Oslo which is currently 14 degrees below zero1, I reflect on the fact that this newsletter has been going out for half a year already - baffling, to say the least. On that note, you’ll find the older editions of SDC Weekly here.
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Thanks for reading!
It is customary for opinion writers to get ideas from Uber drivers2… and a random conversation got me thinking about how this newsletter works. But before I jump ahead, let me start by extending a heartfelt thank you to subscribers and in particular, paying subscribers. Honestly, were it not for the sense of duty I felt towards paying subscribers, I would never have managed to stay consistent.
Some weeks are easier than others to be sure; but when the watch world happens to produce hot topics like shady auctions or exciting collaborations with rappers, and they coincide with busy periods at work… those are the moments when the sense of duty to paying subscribers really shines.
The reason for such a dynamic, is because I am not the kind of person who enjoys half-arsing anything. If I am going to compile a newsletter, I want it to be something I would personally read, and indeed, I go to great lengths to read way more stuff than I share, and then bring the best of that to you. This requires working to a deadline set by myself, to attain a level of quality set by myself… and everyone is always harder on themselves than others would be!
So yes, I brought it all upon myself - but it remains completely worthwhile because it is an extremely rewarding and fun process to compile the SDC Weekly, and I remain grateful to you, who continues to read it. I suppose if I am being honest with myself, I have to acknowledge there is an extremely small audience who values what I have to say enough to warrant buying me a coffee every month via a paid subscription - small, but what I learned in the last 6 months is, it is definitely not zero - and so, in addition to myself, I write for them.
Now, back to the Uber driver - I was discussing this (see image) short exchange with a buddy on WhatsApp, with an Uber driver - on the topic of how much Uber drivers earn, and me talking about a hobby of mine, writing a blog (didn’t specify the subject was watches!):
To be clear, the person I am texting has previously bought me gifts worth a couple of years’ subscription - so this isn’t about being stingy - he just doesn’t value the writing enough to pay any amount of money for it. And that’s completely fair. I personally avoid subscriptions too, and only have a handful which I find genuinely value-additive. Besides, we all have limited time in our days to consume… YouTube, Instagram, Spotify, Netflix etc.; it all adds up in time, never mind the cash.
The alternative to this mindset is, not paying for the content at all… just supporting writers because you want to be ‘an encouraging friend or fan,’ or because you value independent thought in this space which is severely lacking - Again, the gesture is meaningful and appreciated, but certainly not necessary… and this brings me to my point and what the Uber driver asked me - “Who are you ultimately writing for?”
I concluded, I do the best I can for myself - it is a matter of pride. Next, it is for the paid subscribers! That is just a fact. As a result, this is the final free newsletter.
With that out of the way, let’s dig in.
ScrewDownCrown is a reader-supported guide to the world of watch collecting, behavioural psychology, & other first world problems.
As I said on Instagram when it was announced: this is a genius business move. The clever parts about this release, aside from the financial benefits, are psychological - and I wanted to discuss them further.
First, is Kantian Fairness and the Reciprocation Tendency - The world isn’t fair, and yet people usually want to return favours. In this market where inflation is up, spending is down, and secondary watch market prices are suppressed… it is more challenging to sell an expensive fidget spinner for over 3 grand3.
I had one of these watches for over a year, so this characterisation of it being an expensive fidget spinner is a conclusion I reached as an owner, not an observer. Let me be clear: it is undoubtedly an amusing object; Kids love it, and it absolutely serves as a perfect conversation starter at any watch gathering, and even when someone who is not a watch person spots it at McDonalds. The problem is, the watch is 18.8mm thick, and while it does rest comfortably on the wrist, it feels impractical to be used with any regularity. As a result, aside from resale premiums, this watch should be regarded as a watch nerd accessory rather than a part of any rotation4.
The hype around this watch was always largely about accessibility. From the beginning, Max put out something which people wanted, but could not have. The blue MAD1 was available to Max’s personal friends and members of the MB&F Tribe exclusively. This was Phase 1 - and these customers were charged about 1000CHF less than the ones who bought the red and green versions. I know this because that’s what I paid too.
The best part about this was the timing - they dropped the blue one during a period where watches were all trading at wild premiums, and people with stim money and cheap capital were flexing heavily. Being seen to have one, was to be part of a seemingly ‘elite’ crowd. This psychological dynamic was a perfect storm: people could, intheory, purchase “an MB&F watch” for Tudor money - and this notion was unsurprisingly cause for extreme excitement.
The next phase, was to build on this extreme excitement and whip up another frenzy - but democratically! So they launched 2 democratic raffles of the red version, and a subsequent raffle of the green version - a total of 4500 pieces for 1000 CHF more than the blue one.
On the basis that I take Max at his word, that he sold the blue ones at cost (because it was marketed as a ‘show of appreciation’ not a profit-making product) - lets assume he made 4.5M CHF profit on the red and green5. Apparently, 22,000 people entered at least one of the previous raffles… but it is unclear how many entered all three raffles. This was probably an easy way to limit the production, given MB&F’s capacity to make these is not infinite - they still have to make the others ones, and these purportedly have some ‘input’ from MB&F watchmakers.
Given that a decent chunk of people will previously have been driven to buy the watch in the first raffle because of the guaranteed profit to be made from a flip, those people will not have bid on the green one (as prices had dropped by then). So on that basis, I will take off roughly a third, and say these people might be eligible, but will not buy the clover one.
This means MB&F might end up making between 7,500 and 10,000 of these watches, and at 1000CHF each, that’s 10 million bucks! Maybe the labour costs will spike due to the volume, so still, worst case, with low volume and even lower profit, they stand to make between 2-4 million CHF in the worst scenario. Not bad for a fidget spinner!
I mentioned psychology at the start of this section because many of these buyers will feel like this is an opportunity - this announcement may feel like Max himself is extending them a favour in the form of gratitude for playing his raffles and frankly, maybe he is, but he isn’t Santa… he is running a business! The convenient moment for this launch is to use this 'gratitude psychology at a moment in time when the MAD1 is now much less desirable, and they hype is all but dead. What Max is doing, aside from making a handful of raffle-losers happy, is squeezing the MAD1 one final time before retiring it - and not only does he have people thanking him for the privilege, some are feeling like it might be an opportunity they will never get again.
The other feeling which is true for many people, is owning a watch which comes from the house of MB&F - many will never have a chance to own one of their 5 or 6-figure watches; so in some ways, despite this being a cheap fidget spinner, it is slightly democratising access to this tribe of MB&F people, but only as far as the peanut gallery and no further. Many people have realised this, and I know of at least 6 people who have debated the purchase of one, asking in public WhatsApp groups: “I am not sure about this, but I am curious, so would anyone be willing to buy it at cost if I do not like it?” - Fair enough!
Saying all that, my prediction is there will be countless people who will be 3 grand poorer, experiencing post-purchase dissonance, and who will also never admit this publicly. Buying this watch is like farting… brief relief, and then intense embarrassment about the decision to do so. Don’t say I didn’t warn you!
💰 AP’s RO Perpetual Calendar ‘Cactus Jack’ LE
Those who know me will know I have no interest in Audemars Piguet (AP). I didn’t even want to cover this, but the conversations and polarising nature of this release made it too big to ignore. That alone says something about this release… it has people talking. As Oscar Wilde put it “There’s only one thing in the world worse than being talked about, and that is not being talked about.”
First, what is this watch? A collaboration between rapper, singer, songwriter, and record producer Travis Scott, his record label Cactus Jack, and Audemars Piguet. This “Cactus Jack” LE watch is limited to 200 pieces, and will cost 178K CHF. It was supposedly co-designed by Travis Scott, and contains design motifs from his Cactus Jack record label - it also happens to be the first AP ever made in brown ceramic. The day, date, month and week indications are all in what appears to be some sort of handwriting font, the moonphase contains the Cactus Jack smiley face with sewn shut mouth, and the hand pointing to the day of the week is shaped like the Cactus Jack logotype. The lume is liberally applied, and funky if nothing else.
‘Utopia State of Mind’ on the case back is a nod to Travis Scott’s fourth studio album Utopia, and the gold rotor with a central spindle also has the CJ logotype.
Ok, but still… why Travis Scott? Before we get to that, bear in mind he has collaborated with A Bathing Ape (BAPE), The Houston Rockets, Evisu, Helmut Lang, Dior, Saint Laurent, Fortnite (the game), Sony Playstation, McDonalds, and most famously… Nike.
Clearly, Travis is a cultural icon, and savvy businessman. From AP’s perspective, this seems like a neat way to keep watches relevant to a younger audience who might not otherwise be inclined to shell out money on AP’s watches. As Brendan Cunningham notes:
Working with Travis Scott and Cactus Jack is likely a very valid method for connecting with younger generations.
Similarweb indicates that 68% of visitors to Scott's website are aged 18-34. What's unique about Scott, though, is that he can create a permission structure for younger generations to adopt mechanical watches.
We shouldn't lose sight of the fact that many watch brands are more than a century old and they all must determine how they will bridge a long divide between their origin and the present.
Time series of Google searches for Audemars Piguet.
Finally, it is irrefutable that the AP X Cactus Jack release was highly effective. I came to this conclusion after reviewing Google Trends data on searches for Audemars Piguet before and just following the watch release. Searches quadrupled on the day of the release and stayed above pre-release levels for at least three days after.
Now, there are so-called ‘purist’ collectors who lament this collaboration as ‘prostitution’ of the AP brand, via ‘new age’ culture which is supposedly doing a disservice to the hallowed history of a great brand and is a betrayal of long-term collectors of the brand - i.e. AP should remain ‘more traditional.’ One mate, Arj, said the vitriol is just plain racism … and I’d like to quote another friend, Rich:
People have this insane idea in their head that AP should be more traditional like Patek. AP was a Blancpain-level dead brand after the quartz crisis and nobody bought ROs. It wasn’t until Francois, who was head of US at the time, started making the Offshore hot, collaborating with Jay-Z, Shaq, F1 drivers, etc in the 2000’s that the brand was revived. Francois has always been into hip hop and celebrities. This has always been his thing. New collectors are so ignorant that they think the RO has always been an icon or AP should make dress watches again. Those Jules Audemars pieces were dogs that sat on shelves. And why should AP be more like Patek? Their whole slogan is “to break the rules, you must first master them.” AP mastered horology in the past so they’re doing their own thing now. They’re literally telling everyone they’re gonna break rules and do crazy shit … but no one listens.
I would say many collectors want to believe they have refined taste, and are above hip hop or pop culture. If Ed Sheeran’s white RO QP was a limited edition like this brown RO QP, I don’t think we would see as many negative comments. Maybe people think Ed Sheeran is a better ambassador for the brand since people have heard him talk about watches, but the Travis Scott watch is better executed and has so many more thoughtful design details compared to just changing colors like Ed Sheeran’s watch.
I think he makes some strong points, and indeed, I heard several Patek fans talking trash about the about the font choice - boy, do they have short/selective memories - how is this 5212a any different? I actually like this font!
Now, some collectors disagree with the perspective that François-Henry Bennahmias (FHB) has any clue what he is doing, further arguing that AP’s performance has nothing to do with FHB, but instead is a function of a rising tide raising all boats, so to speak - a combination of the COVID watch boom, and steel-sports watch hype - which served AP quite well. Let’s just look at the facts for now. According to this post (emphasis mine):
…as he reviewed the 2012 performance of the Le Brassus-based manufacture “Audemars Piguet did a little more than 600 million Swiss francs in revenue and sold between 31 and 32,000 watches.”
And then, according to this post:
Audemars Piguet once again had a record-breaking year selling watches for over 2 billion CHF in 2022 for the first time in history and improving from 2021 by 27%. And the brand from La Brassus achieved all of this by selling “only” about 50,000 watches. A little head-scratching though is that about 90% of their 2022 revenue came from the (in)famous Royal Oak.
So under FHB, AP increased revenue by over 3x, and improved their margins too. I fail to see how people can argue with this performance, or how this is solely attributable to ‘the market’ - VC by comparison didn’t perform nearly as well as AP. What is of course fair to say, is that AP is currently relying on Royal Oaks (RO). On this point, my buddy Rich has more perspective to add:
I’m gonna mildly disagree with AP relying on Royal Oaks. Because Offshore was the hot line up until just a few years ago. And back then people would say: “Oh AP is just relying on LE Offshores, the brand will fizzle out when tastes and trends change.”
Well when tastes and trends did change, AP successfully adapted. In recent years the RO has been in the spotlight, they increased production of the RO relative to the Offshore in order to capitalize on current trends, so we should give Francois some credit as being able to adapt, and not be left behind, like say Panerai or other brands that were hot back then.
But now some people will say the Offshore is not truly another line since it’s still an octagon or is derived from the RO. But people who say this usually think a Submariner and GMT Master are two separate lines, so you can’t take them too seriously. If we go by this argument, then 99% of Rolex is Oyster cases and Rolex is in deep trouble cause they don’t have diversification.
I think he makes a good point about AP being nimble and adapting to the changing landscape. When I saw this launch, my one-word reaction was: “Bizarre.” On reflection, that was primarily a result of my own ignorance about AP in general, and my further ignorance about Travis Scott’s relevance and role in popular culture.
All the reading and discourse which led to this post, has led me to conclude this collaboration is actually not bizarre, but in fact: unsurprising. If any luxury Swiss watchmaker was going to do a collaboration with Travis, it was AP. In fact, they did one with Jay-Z as well:
Audemars Piguet Royal Oak Offshore Jay-Z 10th Anniversary Platinum.
I have one more word to describe this release to regular folks like you and I: irrelevant. Most of these Travis Scott pieces will be sold to celebrities and the remaining few will be sold to AP’s VIP clients. You will probably never see one in your life. So why do you even care? It is just another data point in the evolution of AP as a brand, and my favourite takeaway from this release was the history lesson I received from fellow collectors and friends, as well as my new found appreciation for what FHB has achieved during his time in charge of AP.
That said, take a look at the comments on this post - A user jokes about Swatch being next, and AP asking Swatch “When do we launch!” I took it as banter, but who knows.
FHB is still an inappropriate git, and the Black Panther watch is complete sh*t to me6... Sources say FHB was ultimately fired as a result of the Marvel garbage, which apparently was the word on the street before he announced he was stepping down. Unclear if there is any truth to this, but the story goes along the lines of the ‘traditionalists’ mentioned above - the family saw the Marvel garbage as being too tacky for a storied brand like AP to be associated with. Now, whether this is true or not, is anyone’s guess - personally find it difficult to believe nobody in the family of owners or any senior figures would have even allowed it to be released without their knowledge, if that was indeed their perspective.
All that aside, based on his financial performance to date, FHB he seems to know a thing or two about how to run a luxury Swiss watch brand - and therefore, in terms of financial performance, AP’s new CEO has some big shoes to fill7. The obvious unknown is whether FHB has completely f*cked up the image of AP in the pursuit of financial gain - this is what many of the barbarians at the gate are alluding to… Only time will tell.
📈 The great generational wealth transfer is upon us; new billionaires now inherit more money than they make. According to a UBS report on some of the Swiss bank’s wealthiest clients, 53 heirs inherited $150.8 billion from deceased relatives in the year leading up to April 2023, eclipsing the $140.7 billion brought in by 84 new self-made billionaires over the same period.
🗺️ A new podcast explores a notorious alleged art smuggler’s efforts to help recover a Caravaggio stolen by the Mafia decades ago.
End note
Berkshire Hathaway’s longtime vice chairman, Charles Munger, passed away last week. I shared this post, inspired by him and in case you missed it, here it is:
This Forbes cover story from early 1996, reveals just how transformational Munger was for Warren Buffett. Fascinating guy, and although many misunderstood the intent of his demeanour - he was, by his own admission, not a humble guy!
Returning to the Bloomberg article above, and following the debacle which unfolded recently, it seems the owner of many watches in that auction (Omani guy named Mohammed Zaman) filed a civil complaint, causing Christie’s to hold all the watches in storage pending resolution of the case. They also asked buyers to withhold payment for any lots won in the auction until further notice.
By all accounts, Mr. Zaman seems to have done well with the prices fetched at Christie’s - some suggest this objection may have arisen because the guarantor tried to renegotiate after the auction, or perhaps because Mr. Zaman felt this auction shafted him as he believed his watches might have sold even higher (e.g., if had Christies not screwed around with the reserves mid auction, and got a guarantor involved). Rob Corder has some intel to corroborate this, as his sources claim Mr. Zaman was “heavily influenced by rival auction houses in Geneva who aimed to convince the collector that they would have done a better job and sold the watches for more.”
At this stage, who the heck knows! We’re here for the drama, so drama we shall enjoy.
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Great read. Agree about AP
I don’t know but I think it will morph somehow 🤔😐🤓🤓