SDC Weekly 56; Kurt Klaus; Independent Journalism

Rolex Contracts Before Buying, Richemont reshuffles, LVMH expansion, Watches of Switzerland numbers, Vintage Watch Market Insights, Harry Potter Breaks Auction Records and much more.

🚨 Welcome to another edition of SDC Weekly. Estimated reading time: ~35 mins

This week, we explore everything from major leadership changes at Richemont to controversial new purchase contracts from Rolex. We’ll examine IWC’s record-breaking watch, the declining vintage watch market, get a peek into what drives collectors, dig into Watches of Switzerland’s recent results, and take a look at LVMH’s continued expansion.

If you’re new here, welcome! Feel free to catch up on the older editions of SDC Weekly here. As always, free subscribers receive the full newsletter (and other ad-hoc posts) via email - 3 weeks after publication - so if you’re have not subscribed already, that’s a good reason to do so.

Note: The following section, “Beyond the Wrist,” was compiled using input from a large group of people, and some are not paid subscribers to SDC Weekly. I therefore decided to place this section first within this edition of SDC, so it remains free for them to access (as part of the usual preview).

The remainder of the newsletter will follow the usual format.

🧠 Beyond the Wrist

Last week, I posed a question in a watch collectors’ WhatsApp group:

Is a watch collection worthless if not worn and appreciated?

This sparked a fascinating dialogue, which really shone a light on the multifaceted nature of watch collecting and the breadth of perspectives on what constitutes value in a watch or a collection of watches. I had not intended to write about this discussion - which took place in a private chat - but after some dialogue within the group, this seemed to be a topic which some in the chat wanted to read about, and the others didn’t explicitly object to when given the opportunity. So, here goes…

I’ll start with a quote:

“Vast question, very interesting and relevant and of course a vast subject for analysis... I remember discussing with [redacted] the subject of the ‘sociology of collectors’ and clearly there are sets, subsets and above all trends, depending on maturity, experience, the collector’s background, financial means, classes of belonging and social references.”

This reply did a stellar job of capturing the sheer diversity of factors which influence collecting habits, and the values we ascribe to our collections.

Many collectors challenged the notion that a watch must be worn to be appreciated. The concept of a ‘personal museum’ emerged as a sub theme of sorts. One collector said:

“Assuming unlimited financial means, I would like to own some watches even if I do not wear them. The appreciation comes from the access to a piece of a manufacturer’s history or watchmaking history in general.”

This neatly frames watch collecting as a form of historical preservation and connoisseurship, but correctly addresses the most common elephant in every watch collector’s room: not having enough money!

Others firmly believed in the importance of wearing their watches. One eloquently stated:

“To me, the appreciation comes almost exclusively with the wearing. My favorite watch is one of the least expensive I’ve owned, and there is nothing ‘special’ about it that the market would appreciate. I appreciate it because it has been a part of my life, goes with most everything I wear, and fits with my lifestyle as a physically active [removed for privacy].”

The emotional connection to watches was, unsurprisingly, also a recurring theme. Another collector wrote:

“At every stage of my appreciation for horology, watches have provided me a way to amplify life’s experiences. For me, it’s about stories and the feelings associated with them.”

This sentiment underscores something I have spoken about many times, and that is the personal or intimate nature of watch collecting, where each piece can represent a milestone or memory; Something that goes beyond the watch as an object.

One comment from a known hoarder:

“…the value for me is not in the enjoyment of wearing them, but in knowing that they’re there whenever I’m in the mood; even if that mood only comes about once every 1000 years.”

If that doesn’t sound like a hoarder, I don’t know what does. Still, this view challenges the ‘traditional notion’ of actually wearing our watches as the primary source of enjoyment from owning them.

The discussion also touched on the evolution of a collector’s journey, and how their method of appreciation may change over time:

“I was much happier when I had my first and only Rolex which I bought to celebrate a personal milestone in my life. I thought I never wanted or needed another watch ever again, then I was corrupted by the industry...”

This speaks to the pitfalls of buying for the sake of owning, and shows the importance of maintaining a more personal connection to each piece you decide to buy.

Another collector wrote:

“Been thinking about this a bit today and I think I’ve finally collected my thoughts enough to be able to write about it. Right now and at the moment, I have a collection (removing the g-shocks and swatch and all that) about 12 watches. 2 of these I do not wear, ever, but I won't sell them, the first one being my first ever mechanical watch and the other, a wedding gift from [removed for privacy] (and I wore it and loved it for a good 5 years before I grew out of it), these will eventually be handed down - will never be sold.”

This mainly highlights how sentimental value will cause watches to transcend their utility as watches, and simply remain in our lives as part of our story - they could be any objects, but in this case, they just happen to be a watch!

The same collector further elaborated on the evolution of his collection:

“Over the years, tastes and preferences do change, but love/crushes/desires don’t ... you all know I picked up [removed for privacy] - classic example, I lusted after this 15 years ago and the urge to own one and experience on always remained, apparently deep down.”

This really demonstrated how collections can embody long-held passions and desires, which we can never truly shake without ‘scratching the proverbial itch.’

Yet another collector offered a rather comprehensive view (as he usually does on anything he says!):

”My collection is simply a reflection of my personal style, preferences, collecting focus, lucky finds, fun pieces, rare things that have value to me and contribute to goals and focus I set myself in collecting. Exactly the same way as a painting, I can look at pieces every day and enjoy them, but also ignore them and not wear them for a long time or rediscover appreciation for them later. But the intrinsic value to me doesn’t really degrade at all, if anything it only increases with length of ownership.”

Finally, the collector who asked me to write this post, added exactly nothing to the conversation 😂:

“I had several long form replies in mind, but am travelling on work and just too exhausted at the end of the day to put down my thoughts. Regardless, the other answers all encompass many of my thoughts, put down far more eloquently and succinctly than I would have.”

He then jokingly added:

“PS. Hugely inspired to cull many watches. If there’s a bloodbath, I’m blaming you guys.”

I didn’t add this quote simply to make fun of a fellow collector, but to highlight how such discussions are useful and impactful, and how they can actually prompt collectors to reassess their collections and potentially refine them - the influence we as collectors have on other collectors, should be treated as a responsibility when we’re dealing with collectors and friends we care about.

So, what’s the conclusion? As I am sure you have determined for yourself, there is no magic answer. Some find joy in regular wear, others appreciate the historical, aesthetic, or emotional aspects of ownership. One collector wrote:

“Value in ownership for me is: accomplishment and enjoyment of the collection as a whole, knowing each piece has a reason and a place. It’s also a solid physical store of value which I can enjoy ownership of even when not or rarely wearing them because they complete the colletion and are the result of significant investment of research time as well as monetary investment.”

It is not surprising that I am concluding with a quote from this collector - he is usually hyper-rational and says sensible things, more often than not. I guess that’s where I ended up too. The true worth of a collection lies in the satisfaction and meaning it brings to its owner, whether on the wrist or safely stored in a bank vault or safe. TO each, their own.

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Small stuff

Richemont Leadership Shuffle

Louis Ferla has been appointed as the new Chief Executive Officer of Cartier, effective September 1, 2024. This appointment comes as part of a series of senior management changes at Richemont.

On paper, Ferla brings a wealth of experience to his new role. He joined Richemont in 2001, starting at Alfred Dunhill before moving to Cartier in 2006. During his 11-year tenure at Cartier, Ferla held various senior executive positions, including CEO in China and International Director of Clients & Business. In 2017, he was appointed CEO of Vacheron Constantin (VC).

According to the last Morgan Stanley report, VC surpassed one billion francs in revenue last year, and this success has been attributed to a strategic repositioning of the brand, including a communication overhaul and portfolio restructuring that reduced the product range. I understand Laurent Perves will be made the interim CEO for VC, no word on whether this will be made permanent or not.

Ferla succeeds Cyrille Vigneron¹, who led Cartier for eight successful years. During Vigneron’s tenure, Cartier solidified its position as a top global jewellery house and the second-biggest luxury watchmaker by turnover. This transition at Cartier is part of a broader reshuffling within Richemont.

In May, Richemont named Nicolas Bos as the new group CEO. These changes are perceived by many as moves which ‘clarify succession questions.’ Given Cartier is Richemont's largest brand and a major contributor to the group’s sales and profits, Ferla’s leadership will be absolutely crucial in maintaining and potentially expanding Cartier’s dominant market position.

From what I can tell, analysts and industry observers seem to be viewing Ferla’s appointment positively, noting his strong track record and familiarity with Cartier. That said, I still maintain that Vacheron Constantin dropped the ball during the pandemic, when they had a chance to leverage the ongoing hype cycle and establish themselves more firmly as a mainstream watch brand.

Instead, they tried to pivot too quickly in mimicking the practices of established hype brands, and quickly dissolved customer goodwill; specifically with super-enthusiats and customers who would otherwise be repeat-customers spending 6-figures or more. I personally know dozens of collectors who have decided to boycott VC as a result of being poorly treated despite having long standing relationships with the brand. Whether this was a result of Ferla’s policies or his subordinates’ stupidity, I do not know; If we suddenly hear Cartier’s customers complaining about poor treatment, soon after he starts in September, then we’ll know who to blame!

Until then, good luck Louis²!

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Vintage Watch Market

Last week I wrote a section about Alex Ciani’s essay on the vintage watch market. This week, fellow Substacker

George H.

posted a thoughtful essay of his own, in response to Alex. George begins with a personal anecdote that establishes Ciani’s reputation as a respected and fair dealer in the industry, conveying a tone of respect and admiration even as he presented differing viewpoints.

You can read the full post here, but I will offer a summary in the meantime (my comments added in italics):

Shifting Trends: While overall prices have decreased, passion remains strong in the market. New trends are emerging for different, lower-supply volume watches like vintage Cartier and Patek Philippe Calatravas, as opposed to the previously popular large-supply models like Rolex Submariners and AP Royal Oaks. Fair overview, agreed.

Market Downturn:

George attributes the recent price decline in the vintage watch market to:

• Higher interest rates increasing the opportunity cost of watches bought as investments.

• Post pandemic behaviour shift, favouring smaller, dressier watches produced in smaller volumes.

• Large-volume luxury stainless steel sports models reaching the end of their trend cycle.

• A “lock-in effect” arising from the bid/ask spread on inventory purchased before 2022. Essentially dealers won’t sell at a loss, and buyers won’t buy, even close to dealers’ cost prices because they believe it is too high - hence, “locked in”.

Market Dynamics:

• Auction houses have proven to be agile players, utilising new online platforms with efficient processes and lower fees to adapt to fluctuating trends and reach global buyers. Loupe This and other online platforms, yes. Major auction houses, not so much.

• Unlike previous bear markets, today’s market has established platforms and better capitalisation, making extreme bargains less likely. Mostly agree, but buyers are more circumspect, making the capital ‘less available’ than before 2020.

Market Rejuvenation:

• Younger trendsetters, collectors, and dealers are entering the market, sparking demand in unconventional ways. George specifically mentions Mike Nouveau as an impressive example³. My commentary is in the footnote.

• He suggests that releasing “hidden gems” from older collectors’ and dealers’ safes could invigorate the market, indicating a supply-side problem rather than a demand-side one. I agree, and we’ve seen some of this with the Sotheby’s Cartier results recently.

Speculators vs. Collectors:

• George argues it is difficult to clearly distinguish between speculators and passionate collectors, as most people are influenced by market trends to some degree. Mostly agree with the reasoning.

• He suggests speculators’ ability to influence prices in the vintage watch market is less significant than often believed, due to sourcing difficulties, market fickleness, and the presence of informed counterparties. I agree here.

Price Inflation Factors:

• The main cause of rising prices from 2021-2022 is attributed to mainstream collectors and consumers influenced by social media trends, rather than cold speculation. Tough one, but I personally know of too many market participants who were in it for the profit, so perhaps my view is just biased… but I think the hordes of opportunists made up a large chunk of the market in 2021-2022.

• Larger supply watches (like Submariners, Royal Oaks, and Nautilus models) experienced higher price multipliers, likely due to their ubiquity on social media. Yeah, this argument is valid - I would add, the multiplier was increased with lower supply, hence the huge multiples on independent watches too.

Market Cycle Benefits:

• While Ciani welcomes a plummeting market, George welcomes a rising market, not just for profit potential. A rising market attracts dedicated collectors and scholars who contribute to documenting and understanding horological history, and he cites examples like the current Cartier trend and the Longines chronograph trend of 2016-2022.

This final argument George makes, is fabulous, and I wholeheartedly agree with, and appreciate, the positive lens he views this issue through. Thanks for writing this, George. 🥂

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Rolex Purchase Contract

I finally got my hands on one of these fascinating documents. Having purchased a few watches from Watches of Switzerland myself, I have not signed one of these contracts, but then again, I have never bought really high end watches like a Rainbow Daytona or similar. That said, this particular contract was signed by a collector for a very affordable Rolex - one which resells for less than 50% above retail price.

Following the saga from a few years ago when authorised dealers (ADs) were retaining warranty cards, this leaves me wondering whether ADs are “going rogue” again. Back then, these were the sales guidelines from Rolex - no mention of witholding warranty cards; Yet they did it anyway:

Sure enough, Rolex eventually reprimanded ADs and they were forced to stop retaining warranty cards. Now ADs trying something new. To be clear, items 1, 4 and 5 are store policies which ADs entitled to have.

Item 2, asking people not to sell for two years, is nonsense. When people buy a watch, it becomes their property. The seller is free to blacklist them for doing so, but putting this into a contract like this makes no sense. Besides, would they go around enforcing these contracts, at significant cost, for all the people reselling Oyster Perpetuals and Datejusts? Item 3 seems to be a right of first refusal when the owner decides to sell, but it doesn’t communicate this clearly enough, and fails to create an obligation. The fact that the AD would consider the watch for buyback is good to know - but there is no mention of the owner being obliged to sell it to them. Item 6 is comical, in trying to classify intent contractually. A person could buy the watch with no intent to sell, and then suddenly need to sell it due to an emergency - anyone could claim this to be the case, even when it is not.

Overall, this practice exists in other countries, and seems to be rising in popularity in places it isn’t yet implemented. The whole thing feels like fearmongering, and no lawyer I’ve spoken with thinks this is enforceable (even if the AD wanted to take it to court). That said, this is not legal advice, so do your own research before signing one of these.

Afterthoughts: If ADs want to restrict re-sale, they should retain ownership. They can, for example, sell the watch on a lease like car dealers sell new cars - this concludes with an option to buy the car, or return it to the dealer. During this time, the car belongs to the car dealer, and you have the right to use it but not to sell it, because you don’t own it. This makes sense. For ADs to think they can dictate, contractually, what people can or cannot do with their property, is arrogant to say the least. This is unlikely to be implemented, because it will vastly reduce cash flow, but perhaps this model is worth considering given the growth of Rolex’s certified pre-owned programme? One to watch - don’t be surprised if this happens eventually.

Many might sign these contracts anyway, because they don’t intend to sell the watch. They may also resell the watch, and never get caught. Which leaves me wondering, why do ADs do this at all? Laings, who issued the document above, appointed Kat Barron as her new Operations Director on Monday; maybe she will reverse this soon.

Curious to hear your thoughts and better still, your experiences, if any, with any of these shenanigans.

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LVMH Update

In May I published this deep dive on Bernard Arnault and LVMH. Last week, Bloomberg published a deep dive into LVMH which I thought would be useful to include and reference here, as well update in my own essay.

• Brand Portfolio: LVMH now encompasses 75 distinct “maisons” or houses, spanning fashion, jewellery, watches, spirits, and high-end hotels. This diversification has helped LVMH become the 15th largest company in the world by market cap, and the only non-tech, non-oil company in the top 15 besides Berkshire Hathaway.

• Hands-On Management: Arnault, at 75, maintains a rigorous schedule of Saturday morning store visits. He meticulously inspects every detail, from product displays to staff attire, sending detailed feedback to executives. This attention to detail extends to all aspects of the business.

• Family Succession: Arnault has strategically positioned his five children in key roles within LVMH:

  • Delphine (49): CEO of Christian Dior Couture

  • Antoine (47): Head of communications and image at LVMH

  • Alexandre (32): Executive VP for product and communications at Tiffany & Co.

  • Frédéric (29): CEO of LVMH's watch brands

  • Jean (25): Director of watches at Louis Vuitton

This sets the stage for a potential family succession, though Arnault remains tight-lipped about his ultimate plans.

• Global Expansion: LVMH has aggressively expanded its presence in emerging markets, particularly China. The company now has 54 Louis Vuitton stores on the Chinese mainland alone, with 23 different LVMH brands opening 58 stores in 2023.

• Acquisition Strategy: The 2021 acquisition of Tiffany & Co. for $15.8 billion (slightly less than the initial $16.2 billion offer due to pandemic-related negotiations) demonstrates LVMH’s continued appetite for growth through strategic purchases. Under LVMH’s management, Tiffany's profits have roughly doubled since the acquisition!

• Financial Performance: LVMH’s market capitalisation has grown twentyfold in the past 20 years. Their success is particularly notable in the fashion and leather goods segment, which accounts for nearly 90% of its profits, with the Louis Vuitton brand alone contributing an estimated 50% of that total.

• Future Outlook: Despite his age, Arnault shows no signs of slowing down. He has raised the CEO retirement age at LVMH from 75 to 80 and continues to eye potential acquisitions, including possible interest in companies like Richemont, Armani, Prada, and high-end watchmakers Patek Philippe and Audemars Piguet.

This update simply reinforces LVMH’s position as a dominant force in the luxury market, with Arnault’s vision and hands-on approach continuing to drive the group’s success.

At the LVMH offices in Paris. PHOTOGRAPHER: RUVEN AFANADOR FOR BLOOMBERG BUSINESSWEEK

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IWC Bags a Guiness World Record

Schaffhausen/London, 26^th June 2024: The newly introduced Portugieser Eternal Calendar has been officially recognised by Guinness World Records as the “most precise lunar phase wristwatch”. With a theoretical deviation of just one day in 45,361,055 years, the Double Moon™ indication of the Portugieser Eternal Calendar beats the previous world record by more than 43 million years. This is made possible by a new reduction gear train with three intermediate wheels, which reduces the duration of one calendar month as precisely as possible to the duration of one complete lunar cycle.

This is what the love of watchmaking is about. It has little to do with status games, practicality, wearability or price; this is how ingenuity, artistry, craftsmanship and science come together to produce something extraordinary. You can read the full story here, but I thought this was worth discussing, and it inspired me to share something about Kurt Klaus below. IWC perhaps gets less recognition than they deserve from watch collectors nowadays, but they have, at the very least in terms of the contributions of Kurt Klaus, history worthy of respect.

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Watches of Switzerland Results

Watches of Switzerland Group recently published its financial results for the year ending April 28, 2024, and every outlet has been covering it in some shape or form - I figured I’d share the highlights here in case you missed it.

Financial Performance

• Revenue: £1.53 billion, remaining flat compared to last year

• Pre-tax Profit: Fell 40% to £92m from £154.8m

• UK and Europe Revenue: Decreased 5% to £846m

• US Revenue: Increased 6% to £692m (11% growth in constant FX rates)

• Adjusted EBITDA (A shite metric): Fell 11% to £179m, higher than analyst estimates of £175m

Challenges during FY2024

• Rising prices from manufacturers

• Strength of the Swiss franc

• Low consumer confidence

• Macroeconomic pressures in the UK

• Minimal return of tourist spending due to lack of VAT-free shopping

• Conflicts in Ukraine and the Middle East impacting consumer confidence

• High interest rates affecting discretionary spending

• Reduced allocation of gold and other precious metal watches from Rolex

Signs of Stabilization and Optimism

Despite challenges, Duffy sees cause for cautious optimism:

• The UK market is showing signs of stabilisation (according to him)

• Pressures on consumer confidence and discretionary spending are expected to ease in FY2025 (I disagree)

• The company maintains its full-year guidance for FY2025

• Pre-owned watch sales, particularly the Rolex certified pre-owned programme, are performing well (Really?!)

• The US business continues to show strength, growing 11% and soon to represent half of group sales

Strategic Initiatives and Growth Opportunities

WoS is pursuing several strategic initiatives to drive growth:

• Expansion into High-End Jewelry: Acquired Roberto Coin in the US for $130m

• Pre-Owned Watch Market:

  • Doubled sales year-on-year in Q4 FY2024

  • Now the second-biggest source of revenue for the company

  • Rolex certified pre-owned program performing ahead of expectations in both US and UK

  • Set for further roll-out in FY2025 with improved methods of supply in the UK

• Showroom Developments:

  • Flagship Rolex boutique on Old Bond Street, London

  • Audemars Piguet Townhouse in Manchester

  • Rolex boutique in Atlanta, Georgia

  • Multi-brand store anchored by Rolex in Plano, Texas

• Strategic Acquisitions: Purchased 15 Ernest Jones showrooms in November 2023 PS. Note: There’s another acquision in the works. Watch this space. 😉

Future Outlook

• FY2025 Revenue Guidance: £1.67 billion - £1.73 billion (9-12% growth in constant currency)

• Adjusted EBIT margins expected to grow by 0.2 to 0.6 percentage points

• Long-term goal to double sales and profit by 2028

• The industry is taking a more conservative approach to production, which WoS believes will contribute to long-term stability in the luxury watch market

Management Commentary

Brian Duffy (CEO) states: “I am proud of the performance that our team delivered this year in what was undoubtedly a more challenging market. We cemented our position as a leading international luxury watch and jewelry retailer and delivered further market share gains in both the UK and US, driven by our proven, differentiated business model.”

Market Reaction and Concerns

• WoS shares spiked following the announcement, probably because they beat estimates in a challenging year.

• That said, WoS shares have dropped more than 40% this year on concerns it could lose market share after Rolex bought Bucherer. I’d say WoS is probably still undervalued, because the Rolex threat isn’t going to materialise anytime soon - competition law will make it difficult for Rolex to hamstring WoS anytime soon. This is obviously not investment advice!

Enough small talk… Let’s dig in.

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Kurt Klaus: The Genius of Schaffhausen

In the picturesque town of Schaffhausen, nestled along the Rhine, a quiet revolution in horology has been unfolding for decades. At the heart of this revolution stands a man whose name ought to be synonymous with horological innovation: Kurt Klaus. For watch collectors and horological enthusiasts, Klaus’s journey through the world of horology is one worth remembering⁴.

Paired with a Master

Klaus’s story begins in the 1950s, perhaps the heydays of Swiss watchmaking? In 1957, a young Klaus joined the International Watch Company (IWC) at the tender age of 23, unaware he was about to embark on a career that would span over six decades and leave an indelible mark on the industry.

Upon joining IWC, Klaus found himself under the tutelage of Albert Pellaton, the company’s legendary technical director. Pellaton, known for his innovative winding system, was a profound influence on Klaus.

“From him, I learned the engineering of watch movements. I never have been in engineer school. I came direct from watchmaking school. But Albert Pellaton transformed [me in] to an engineer.”

Kurt Klaus

The first automatic movement from Schaffhausen: IWC Caliber 85, designed by Albert Pellaton - Source

This philosophy, instilled early in his career, would become the guiding principle of Klaus’s approach to watchmaking.

The Quartz Crisis and a Mechanical Renaissance

As the 1970s dawned, the watch industry faced the quartz revolution. While many Swiss watchmakers struggled to adapt, Klaus and his colleagues at IWC were quietly working on projects that would later prove crucial.

IWC Ref. 5500. Image: Christie’s

In the mid-1970s, Klaus created his first calendar for a magnificent open-face pocket watch, Ref 5500, of which almost 100 were sold. This success spurred him on, often working during his own leisure time to create displays for the moon phase, signs of the zodiac, and even an unusual thermometer watch⁵.

The mechanism, sketched by Kurt Klaus, marked a reversal in IWC’s fortunes. (1983) Source

The Da Vinci Perpetual Calendar: A Horological Milestone

In the early 1980s, Klaus persuaded IWC’s executive management to green-light the development of a perpetual calendar for wristwatches. His goal was to design a separate module that could be integrated into different basic movements, setting new standards for simplicity and operation.

After years of intensive work, including countless calculations and revisions, Klaus completed three working prototypes just in time for the 1985 Watch Show in Basel. The result was the Da Vinci Chronograph Perpetual Calendar, a watch that would change the course of IWC’s history.

Klaus’s perpetual calendar was a marvel of ingenuity and simplicity. With just 81 parts, it could accurately display the date, day, month, year in four digits, and moon phase until the year 2499. All displays were perfectly synchronised and could be adjusted simply by turning the crown.

“Sometimes you’ve just got to bang your head against a brick wall,” Klaus would later say with a mischievous grin, reflecting on the challenging development process.

The month cam is at the heart of the mechanical programme and determines whether the additional interlocking click comes into play in months shorter than 31 days.

The mechanism’s heart was the month cam, which Klaus describes as functioning “in a way similar to the punch cards from the days when computer technology was in its infancy.” One of the most remarkable features was the moon phase display, which Klaus designed to be so precise that it would only need correction by one day after 122 years. The century slide, another innovative feature, moves just 1.2 millimetres every 100 years. The Da Vinci Perpetual Calendar was a resounding success, marking IWC’s ascent to the pinnacle of haute horlogerie. Its basic principles remain virtually unchanged to this day, and underpin the Guiness World Record mentioned above.

The Calibre 5000 - Tradition & Innovation

As IWC approached the new millennium, Klaus led the development of IWC’s Calibre 5000. This was a new in-house movement, which took almost four years to develop.

The Calibre 5000 is a pocket watch-sized movement made for a regular wristwatch, measuring an impressive 38.2 mm wide and 7.2 mm high⁶. It combines the escapement of the famous IWC Cal. 89 with the renowned winding system of the IWC Cal. 8541 in a totally new design.

This movement is IWC’s largest automatic, featuring a power reserve display, hour, minute and small seconds hands. Development of the Calibre 5000 by IWC took approximately four years.

True to Klaus’s philosophy of blending tradition with innovation, the Calibre 5000 features a (low) beat rate of 18,000 vibrations per hour, reminiscent of pocket watches. This slower beat rate contributes to less wear, though at the trade-off of slightly less resolution (Kari does the same nowadays).

The movement boasts a superb 7-day power reserve, achieved through an extra-large spring barrel. Being the genius he is, Klaus incorporated an automatic stop mechanism after 7 days to eliminate the risk of isochronism error⁷ from a fully unwound spring.

Kurt Klaus considers the Calibre 5000 as having the best of all worlds: a combination of new technology but using old techniques. He did not want to make something new just to make something new, and he wanted the movement to have practical utility. When the first prototype was made, he wound it slightly, enough to get the watch started without the tedious stem winding of most 7-day manual wind watches, and then wore the watch over a weekend. When the work-week started, he left the watch in a drawer. The next weekend, he took the watch out --its timekeeping was still perfect and he wore it again.

Source

The automatic winding system in the Calibre 5000 is based on the Pellaton system. This system, known for its efficiency and durability, uses a cam and ruby rollers instead of a traditional gear train to wind the mainspring.

“It is not just a construction, the movement reflects a philosophy of watchmaking.”

Kurt Klaus

Klaus’s attention to detail is evident throughout the Calibre 5000. The oversized barrel is made of a special hardened and anodised alloy, the seconds wheel is strategically placed for better viewing through the display back, and the entire power reserve mechanism involves 18 different gearings.

While he says that Lange makes a very beautiful watch, he wanted to make a technical watch. In IWC's tradition, he has produced an “Engineer’s watch.” But in all modesty, he says that the Calibre 5000 “is not my movement … it is from a group.”

Source

Legacy and Impact

Today, at over 80 years old, Kurt Klaus’s influence on the world of watchmaking remains profound. For horological nerds, a Klaus-designed watch is more than a watch; it is legitimately a piece of horological history. Whether it’s an early Da Vinci or a watch powered by the Calibre 5000, each bears the hallmark of Klaus’s philosophy: innovative yet respectful of tradition… complex yet practical.

A special edition of IWC Da Vinci Perpetual Calendar Chronograph to pay tribute to Klaus’s contributions to watchmaking and to the IWC brand.

In the world of haute horlogerie, where micromechanical wizardry can sometimes stir the soul, Kurt Klaus deserves celebration. His career serves as a kind of bridge between the past and the future, especially when you look at his old creation forming the foundations of a Guiness World Record in 2024! For any passionate horological enthusiast, the story of Kurt Klaus should be a reminder of why we fell in love with mechanical watches in the first place. They are not mere instruments of time, but works of art, ingenuity, perseverence and passion.

Note: This video is only part one, but part 2 and 3 are linked in the video description too⁸.

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💡 The Case for Independent Watch Journalism

Orwell: “The Prevention of Literature”

In 1946, George Orwell penned “The Prevention of Literature,” a somewhat prophetic essay that continues to resonate, despite how much the world has changed since then. Writing in the aftermath of World War II and at the dawn of the Cold War, Orwell grappled with the threats facing intellectual freedom and honest writing in an age of rising totalitarianism and pervasive propaganda.

Orwell’s essay is something of a clarion call for the preservation of intellectual liberty. He argues the greatest danger to literature comes not from overt censorship, but from the subtle, insidious pressures that lead writers to self-censor or conform to prevailing orthodoxies. “The journalist is unfree,” Orwell writes, “when he is forced to write lies or suppress what seems to him important news; the imaginative writer is unfree when he has to falsify his subjective feelings, which from his point of view are facts.”

Orwell’s concerns extended beyond the realm of explicitly political writing. He saw the potential for intellectual corruption in all forms of creative expression, warning that “the destruction of intellectual liberty cripples the journalist, the sociological writer, the historian, the novelist, the critic, and the poet, in that order.” On this list, I would add watch journalist, so we can come back to it later. This ‘hierarchy of vulnerability’ underscores the interconnectedness of different forms of writing and thought, implying a threat to one, is ultimately a threat to all.

Perhaps most presciently, Orwell identified the danger of what he called “smelly little orthodoxies” - unquestioned assumptions and biases that can permeate a society or profession. He was particularly concerned about the role of intellectuals in propagating these orthodoxies, noting “the direct, conscious attack on intellectual decency comes from the intellectuals themselves.”

Sure, Orwell was primarily focused on the threat of totalitarian ideologies⁹, but I think his insights apply equally to other forms of pressure that can compromise intellectual integrity. He understood the desire for comfort, prestige, or financial security could lead writers and thinkers to compromise their principles, often in ways so subtle they might not even be fully aware of it. Sound familiar?

On Modern Journalism

Orwell’s warnings about the fragility of intellectual freedom and the importance of maintaining integrity in the face of various pressures are as relevant today as they were in 1946. In the current media landscape, these pressures often take the form of commercial interests rather than explicit political coercion. Nowhere is this more evident than in specialised fields of journalism, wherein the lines between reporting, criticism, and marketing or promotion can become blurred.

No doubt, you already guessed where I am going with this 😂! One such field where Orwell’s insights might prove precient, is watch journalism. While the world of horology may seem far removed from the ‘more worthy’ political concerns that Orwell was concerned with, the watch world serves as a microcosm for the broader challenges facing independent journalism in an broader age of commercialisation and native advertising¹⁰.

The Current Landscape of Watch Journalism

Today’s watch media landscape is dominated by publications and websites that rely heavily on advertising revenue from watch brands. This model creates an inherent conflict of interest: How can journalists provide honest, critical reviews when their paychecks depend on maintaining positive relationships with the brands they’re meant to scrutinise?

Recent data underscores the extent of this issue:

1. According to a 2022 report by the Pew Research Center, while not specific to watch journalism, 71% of journalists believe that the influence of public relations and marketing on news coverage is growing, potentially compromising editorial independence.

2. A 2021 study published in the Journal of Marketing Communications highlights the complex relationship between luxury brands (including watch brands) and media. The study discusses how luxury brands often use various forms of marketing communication, including collaborations with media outlets, which blur the lines between editorial content and advertorials or outright advertising.

3. The 2023 Digital News Report by the Reuters Institute for the Study of Journalism highlighted that only 32% of readers trust news organisations, with concerns about commercial influence being a significant factor.

The Case for Independence

Independent watch journalism, free from the constraints of advertising relationships, could offer some benefits:

• Increased reader trust: A 2018 study by the American Press Institute and The Associated Press-NORC Center for Public Affairs Research found 78% of subscribers cite a publication’s accuracy as very or extremely important and 68% value a publication dealing fairly with all sides. On the latter point, how fair is a story from a platform which is incentivised to be biased? The 2024 Cision State of the Media Report states only 32% of readers trust news organisations, with concerns about commercial influence being a significant factor.

• More diverse coverage: While specific data on watch journalism is limited, we can draw insights from broader trends in media. The Reuters Institute Digital News Report 2022 found 53% of news consumers prefer to access news from sources without a particular point of view. This suggests a potential market for independent journalism offering diverse perspectives, including coverage of smaller, independent brands that may be overlooked by ad-supported publications focused on major brands’ advertising money.

• Critical analysis: The 2021 Digital News Report by the Reuters Institute found that 74% of their survey respondents believe that news media should reflect a range of different views and leave it up to readers to decide. This suggests a desire for more diverse analysis in journalism. In the context of watch journalism, this could mean readers value publications offering balanced reviews, including critiques, rather than purely positive coverage that may result from revenue pressures.

• Investigative reporting: Again, specific data on investigative journalism in the watch industry is scarce, so perhaps this is reaching a little. The 2021 Reuters Institute Digital News Report does find that 59% of news consumers believe that investigative journalism is “very important” for society. At the same time, the report notes that only 25% of respondents think the news media does a good job in its role as a watchdog. In the context of watch journalism, this suggests there might be an unmet demand for more in-depth, investigative coverage of the industry, including topics such as manufacturing practices, environmental impact, or market trends - Perezcope’s popularity speaks to this being true, but of course I have no hard data to back up this claim.

Counterarguments and Challenges

Proponents of the current model have decent arguments too - using the same report(s) as above:

• Financial viability: The 2022 Reuters Report finds only 21% of digital news outlets in a sample of 33 countries reported making a profit. Clearly, the financial challenges faced by digital news companies are no joke.

• Access to information: While specific data on watch journalism is lacking, a 2021 Cision State of the Media Report found 19% of journalists cited lack of access to sources or experts as a significant challenge, and this is likely more pronounced for independent journalists in the world of watches. I imagine it is easy for Hodinkee to get an interview with the CEO of Tudor; Do you think he would even respond to me¹¹?

• Quality and production value: The 2022 Reuters Report covers perception, noting that 42% of respondents trust “most news most of the time,” which could influence perceptions of quality across different types of media outlets; particularly skewing negative with unknown or smaller sources.

• Reach and influence: Again, the Reuters Institute Digital News Report 2022 shows that traditional and larger news brands still maintain a reach advantage in digital spaces, with 42% of respondents accessing top news brands online weekly, compared to 29% for digital-born brands.

Assessing New Models for Watch Journalism

The realisty is a question of viability. New, independent models for watch journalism remain an uncertain prospect.

• Subscription models: Back to the AP study from above, below is a table of findings. While some general interest publications have found success with subscriptions (Ahem, OnlyFans!), niche areas like watch journalism definitely face challenges 😂 Even on SDC, 15% of total subscribers actually have a paid subscription; Which feels like a ‘decent’ proportion, until you factor in that SDC is priced rather low (on the basis of an hourly rate equivalent). Sustaining a full team who do this for a living, would cost a lot more, and thus require higher revenues; A level which, to me, feels too high for any single publication to pursue without other additional income sources.

  

• Diversified revenue: Some publications have attempted to diversify through e-commerce or events. Bark and Jack sells straps and other random merch, Andrew Morgan Watches is doing collaborations with the brand Christopher Ward and supposedly advises brands on various topics. Hodinkee tried to become an authorised retailer, and this backfired spectacularly.

  I still maintain this diversification is possible, if media companies look beyond the watch industry. If I ever were to seek advertisers on SDC, it would be with tangential luxury brands instead of watch brands. Readers who buy luxury watches also waste money on other things; Luxury pens, other designer goods from luxury brands, cars and associated merch, high-end art, and so on. Why do we not see more of these ‘rich people’ adverts? What is the logic of sticking to watch-related ads? I don’t mean Google-Adsense curation - I mean media partnerships which call for curated advertising tailored to the audience. Why is this not a thing? Honestly, if a media company is somehow reading this, pay me to advise you on this - better yet, let me advise you, and my compensation will be a % of the upside I bring. This is truly low-hanging fruit.

• Collaborative networks: While journalist-owned platforms have seen some success in general news, there is limited data on their viability in specialised fields like watch journalism. Could we see a feature on Substack allowing ‘pooling’ of newsletters like this one? So, I team up with other watch writers and people pay a single subscription, to read everything. This is like ‘Spotify’ in a music world, but for writers and their work. If you’re familiar with Spotify, you will already know they pay artists peanuts. That model will not last, and it definitely makes no sense for writers.

• Non-profit models: I mean, I added this here for completeness, but reporting on a luxury industry seems like an unlikely candidate for an NPO! If you see it differently, I would love to know why.

Conclusion

The examination of independent watch journalism through an Orwellian lens is not something I woke up expecting to attempt… yet here we are. It reveals what is clearly a complex playing field with no easy moves to make. The potential benefits of independent journalism are clear, but the challenges indies will face, are not insignificant.

The current ad-supported model, despite its flaws, will probably remain dominant due to (relative) financial stability and established infrastructure these institutions posess (I appreciate the irony of this, knowing where Hodinkee is headed, but others seem to be doing okay!).

As Orwell reminded us, the right to tell people what they do not want to hear is fundamental to intellectual freedom. Unfortunately, the practical realities of modern media economics make it difficult to see how we will fully realise this ideal in the near term.

Moving forward, the most realistic path may be a hybrid approach: maintaining ad-supported models while implementing stricter ethical guidelines, increased transparency about brand relationships, and carving out spaces for more independent voices within established platforms.

So for starters, media houses could try to wean themselves off watch brand advertising money and more towards other indistries who would pay to reach the watch-focused audience. In addition, these large media companies could seek a larger number of independent voices, to write on their platform; Keeping these ‘critics’ at ‘arms length’ might help the media companies defend themselves when angry brands (clients) complain about what these independent writers share on the platform. While not perfect, such moves could help balance the need for revenue with the imperative for journalistic integrity.

Ultimately, the future of watch journalism will depend on the collective efforts of journalists, publications, and readers to demand and support more transparent, ethical, and diverse coverage, even within the constraints of the current media landscape.

In the meantime, you have SDC. Lucky you. 😂

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📌 Links of interest

Thomas Taylor's illustration for Harry Potter and the Philosopher's Stone, 1997.

🖼 Original ‘Harry Potter’ Cover Smashes Auction Records, Selling for $1.9 M.

😎 Jay-Z Backs Watch Trading Platform Wristcheck, via

Andy Hoffman

🤓 Tudor is looking for a regional manager in the southern half of England from Derby downwards, but excluding London.

🧐 Hirota Masayuki on the current status of the Japanese watchmaking industry as a whole, as well as predictions for the domestic market.

😇 Ponti Gennari & Co: A vintage jeweler, bracelet and case maker via

Aircooltime

.

💲 Top 5 Most Valuable Watches Sold By Loupe This. Found it odd to see this covered in Forbes. Is that normal?

🔥 War in the time of Neanderthals: how our species battled for supremacy for over 100,000 years.

🧊 The Enduring Mystery of How Water Freezes.

🍎 Apple Watch Is Becoming Doctors’ Favorite Medical Device.

🤥 New research questions the methodology of a McKinsey study that helped create widespread belief that diversity is good for profits.

💇🏻 How North Korea’s trade in human hair is helping it skirt the impact of sanctions. 

👹 How the 18th-Century French Media Stoked a Werewolf Panic 😂

👀 Researchers craft a creepy smiling robot face from living human skin cells.

⏳ This is what they thought 2024 would be like in 1987! Wild.

💌 Slut-onomics: Promiscuous women have always been in great demand. Slutshaming was a way for men to handle their limited supply.

🔫 ‘The Sopranos’ cast talks show's success 25 years after premiere. (6 mins)

☠ 84 Rules For How to Behave Online. Amusing list, some good ones. YMMV.

🤯 A Genealogy of Technology and Power Since 1500. This is absolutely incredible. You could spend hours on this website. Wow!

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End note

In case you missed it… here’s a long post from last week - this took a while, and it may also take you a while to read it; but if you do, be sure to leave a comment and let me know what you think - Even if it is to say you don’t like the long form content! 😂

The Hermès Empire: A 187-Year Journey from Harness Shop to Luxury Icon

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If you’ve made it this far, bravo. I had every intention of trimming down SDC Weekly, but failed spectacularly. I won’t bore you with the reasons, but I will say I experienced a little stress with this edition due to many other commitments arising at the same time I had planned to work on this. Which left me thinking about ‘stress’ and how I deal with it. That’s the context for the remainder of this post.

When it comes to literature, few figures embody the relationship between creativity and mental health quite like Virginia Woolf. Have you ever heard the term “stream of consciousness?” She’s one of the first writers to use this approach to narration! Whilst known for her novels and essays, what isn’t widely known is Woolf struggled with what we now recognise as bipolar disorder - which might explain how she approached writing. The point is - in her diaries and letters - there’s a recurring theme; The solace and purpose she found in her writing.

“I feel this afternoon as if I were reading myself, reading in a novel, a very exciting novel,” Woolf once wrote in her diary. Her words resonate across time, illustrating the profound impact creativity can have on our perception of self and well-being.

This is not just about feeling good - The point I’d like to make here, is this: Creativity is a powerful antidote to negative emotions.

The benefits of creative pursuits aren’t reserved exclusively for ‘professional’ creative-types like musicians or authors. In fact, neuroscientific research suggests that novices might reap even greater rewards than professionals. A 2020 study found inexperienced jazz musicians relied more heavily on the brain’s right hemisphere – often associated with creativity – when grappling with novel music.

Another study observed people as they wrote poetry, and during the phase of writing where they generated ideas, the medial prefrontal cortex was especially active. That’s the same area in our brains which is activated when we meditate! In other words, creative pursuits may be as useful as ‘traditional’ contemplative exercises if you’re seeking mental clarity and peace of mind.

So, dear reader, I challenge you: carve out a small space in your day for some creative activity. Whether it’s jotting down thoughts over lunch, writing a short story to tell your kid at bedtime, or improvising on a tune while stuck in traffic; Purposely grant your mind some freedom to wander and create.

Make it a habit, start small, but above all, focus on doing it daily.

Remember, you’re not aiming for perfection or praise. Nobody needs to know. This is all for yourself. It is about giving yourself the space to express, explore, and simply… be. In doing this, you might discover the weight on your shoulders lightens, that the world appears a bit brighter, and that you’ve unlocked a new way to nurture your mental well-being.

After all, isn’t life itself a creative act? Each day, we paint our experiences on the canvas of time. Why not make it a masterpiece of our own design?

Until next time,

F

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😊 Bonus link: Golf Tech is Hidden in Plain Sight!

The incredible technology hidden all around a golf tournament is actually mind blowing!

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Believe it or not, that “❤️ Like” button is a big deal – it serves as a proxy to new visitors of this publication’s value. If you enjoyed this post, please let others know. Thanks for reading!

1. Vigneron has decided to retire, and will assume the position of Chairman of Cartier Culture & Philanthropy effective 1 September 2024.

2. No, I do not think he will ever read this 😂

3. I vehemently disagree with this, and while Mike is no doubt a hustler who has enjoyed huge success, he is in the business of making money, and this inherently leads to miscategorisation and misrepresentation of information - in terms of rarity, availability, and relevance. People are too susceptible to misinformation, and his influence being abused is a red flag to be wary of.

4. I looked up whether to use Klaus’ or Klaus’s - landed on Klaus’s.

5. According to the IWC website - but I couldn’t find images of this watch.

6. By contrast, the ETA Calibre 2892 is 25.6 millimeters in diameter and 3.6 millimeters thick, and the Valjoux Calibre 7750 chronograph movement is 30 millimeters in diameter and 7.9 millimeters thick.

7. Isochronism is fundamental in a watch for two key reasons. First, the mainspring cannot provide a constant driving force over its entire working range. Certainly, the modern mainsprings provide very constant force, but not perfectly stable. Second, there will always be variations due to friction in the drive train. Read more here.

8. Also worth a read: A similar historical piece over at Fratello Watches, which I only found when I was nearly done 🙄

9. In short, totalitarianism is the ideology of absolute power. State socialism, Communism, Nazism, fascism, and Muslim fundamentalism have been some of its recent raiments. Totalitarian governments have been its agency. The state, with its international legal sovereignty and independence, has been its base. Source

10. I said all along, SDC covers ‘first world problems’ in a miniscule niche… so this creative license is more than acceptable in my not-so-humble opinion! Roll your eyes. Go on. 😂

11. Perhaps I should ask!