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SDC Weekly; Make spending painful; George Daniels and Oppenheimer #6
Tying your shoelaces with mathematics, WhatsApp voice notes in Senegal and discovering old playing cards hidden in the base of an 18th century clock!
I was not sure I’d be physically able to complete a post this week… I’ve had a run of bad luck with my health recently; I had to cancel a trip to Hamburg last week and was just about recovering from a mild flu when I shared last week’s edition - and I found myself nursing what I can confirm was the worst ever sore throat in my entire life. Of course, me being me… I will try and link this to watches. *drumroll*
I was explaining it to a close friend… About 2 days in, I had to start taking antibiotics, and a day after I started the course, my pain seemed to subside significantly. What a gift! At this point, I had what would otherwise be regarded as a ‘pretty bad sore throat’ - but compared to the experience I had two days earlier, it was perhaps best described as enjoyable!
This is something which we see as watch collectors too… we evaluate our options using our known dataset, and fail to truly understand our options because we lack the required experience. What do I mean by that? Well, prior to this experience, if you had asked me to choose between a 9.5/10 pain level sore throat lasting 2 days, versus a 7/10 pain level sore throat lasting 5 days… I would have chosen the option lasting 2 days. Get it over with, right? Well, now, after feeling the sheer oppressiveness of the pain at 9.5, the inability to eat, sleep, swallow or speak… I can tell you my choice would be the opposite!
What changed? Experience! The same rings true for watches, and it turns out, I have written about this before:
Anyway, here’s hoping the wave of sickness is behind me… happy humpday :)
As always, a warm welcome to the new subscribers; it is a pleasure to have you here, and I hope you enjoy it. Check out the previous newsletters here.
Grail pursuit: Make spending painful
Opportunity cost in microeconomic theory might be one of the most important concepts after supply and demand - yet, many people ignore it! Basically, when you have several mutually exclusive alternatives, choosing one thing, might incur a ‘cost’ in the form of a ‘lost benefit’ from the choices you didn’t make.
Many might think of this in terms of investment… put £1000 into a savings account at 4% return and low risk - versus a crypto portfolio with potential upside of 100% and downside of -100%.. i.e. more risky. Some of you might even apply this in your watch buying: £10,000 on a Yacht-Master which you can wear more frequently, versus the same price on a JLC dress watch which you may not wear more than 6 times a year? As much as you like the JLC, the opportunity cost seems high?
Either way, we don’t always think in terms of opportunity cost. When you buy a Starbucks caramel latte for £7, you don’t think about how many grams of coffee beans you could have purchased for that money.
A 2009 study1 found most people do not consider opportunity cost when making purchases unless they are prompted to do so. The researchers asked people if they were willing to buy a movie they wanted to see for 15 bucks (pre Netflix, I am sure many of you will recall the days of buying DVDs!). Anyway, the researchers had two options for participants in the study.
“Do not buy.”
“Keep the 15 bucks for other purchases.”
The people given the framing “keep the money …” were less likely to buy the movie. Which means people don’t naturally consider opportunity cost when making purchase decisions, but people can be nudged into doing so!
So, people don’t think about opportunity cost naturally… and this makes it easy to overspend. Spending today, will give you that instant gratification - but it also means having less to spend in the future, and if you’re saving for another watch, this is the ‘opportunity cost’ and future pain you are ignorant to.
Another study2 found that increased awareness of the price when we buy anything, increases the pain we feel when we spend the money. The big issue nowadays is we are extremely disconnected from the price of everything. DO you know how much tax you pay out of your monthly paycheck, or is it just taken on a PAYE basis? Do you know the monthly cost of electricity and water in your home, or is it just taken via direct debit?
Even when it comes to watch purchases… everything is now framed as a privilege. You have been allocated a Daytona? Great, swipe the card. No clue how much it costs, maybe just a rough idea - for a 5-figure purchase! It gets worse - even when it comes to more expensive watches - I guarantee you many people don’t know the exact price because they are so disconnected from the actual price. If I recall correctly, research has shown that paying in cash causes more pain than using a credit card or buying online using a card3.
So I don’t expect people will simply cancel their direct debits and start paying in cash… but it is important to remind yourself how hard you worked for every cent you have.
I will close with one more study4 which used brain scans to work out whether the ‘pain’ of a high price would make someone less likely to buy something. Participants in the study were first shown a product, then they were shown the price, and then they decided whether to buy. Turns out… When shown a price they felt was too high, the area of the brain associated with experiencing pain was activated, and they did not buy.
So it is possible, that if you focus on the price of a watch you are buying, you might feel the pain and be less likely to spend. That is of course, unless the anticipated joy of buying is greater than the pain of paying for it. That’s where you might want to bear in mind that the goal isn’t to avoid spending money altogether, but to avoid mindless spending in favour of spending on what matters most.
George Daniels and Roger Smith
I was reading a 2010 piece by Kate Youde5 as she reflected on here time spent with George. He denied his daughter exists, thinks people who buy vintage Rolexes are fools, and didn’t make watches for people he didn’t like. When asked what he thought of the title “greatest living horologist” he replied [sic]:
“Well, I've thought about it very carefully and I came to the conclusion that it was true,” he says with a smile. “Most of the things I have done haven't been done by other people, on the whole, and the watches do set a new standard, so why shouldn't I accept the accolade? I am not a great believer in hiding your light behind a bushel. I accept that it's a compliment and I'm very pleased about it.”
I mean, fair play to the man… he doesn’t sound too dissimilar from F.P. Journe - and people often go on about what a pr*ick Journe is! I think most elite geniuses have a certain percentage of insufferable personality traits; seems to be par for the genius course.
Nevertheless, after the Dufour post (see below) there was an aftershock regarding Roger W. Smith (RWS) and his new pricing strategy … which is to simply raise prices as he goes along, prior to delivery; this is for customers who have already paid deposits, and whose orders are actively on track to be made and delivered. I’ve heard several accounts on this front, even some who claim to have cancelled their orders in protest. While I think that any cancellation will probably prove to be a financial mistake, you know me by now… I set up my peasant tent in the peanut gallery.
I have set up an appointment with an expert to talk about Roger Smith in more detail, and decide whether he even deserves to be mentioned in the same sentence as Dufour, just by virtue of working for, and then with, the “greatest horologist” of the last century. Maybe he does, and of course, he is free to charge whatever he wants. This is about opinions after all - we all have one.
I’d welcome some feedback on one something: Some say the value of RWS’s work is that he follows the Daniels Method. Now, according to this page, that means:
All Daniels watches were made by hand entirely under one roof and without assistance. George Daniels was the first watchmaker to achieve sufficient mastery of 32 of the 34 skills and techniques requisite in creating a watch entirely alone and by hand. This is now recognised as ‘The Daniels Method’.
Don’t get me wrong, I don’t see the use of CNC as a ‘bad’ thing. Roger himself says:
“We’ve always used CNC machines,” explains Smith. “I’ve never shied away from showing that. If you want to make more than one watch a year you need to use CNC, there’s no question. Making pocket watches by hand is one thing but the reduced tolerances required for wristwatches is something else entirely. You make a change to one component and it affects five others. I’ve done it before but I don’t want to make watches that way.”
This just means he doesn’t follow the Daniels Method, right? So what is so special about Roger Smith, other than his teacher, and his extraordinarily obnoxious pricing strategy? I am being intentionally inflammatory, so please humour me. I intent to write about this in more detail at some point, not just a random newsletter rant!
Links of interest
🤩 This article covers the highlights from a BoF case study entitled “Inside Hermès’ Best-in-Class Leather Goods Strategy.” Basically the opposite of what we see happening everywhere else. Others just cut costs, increase production, and still increase prices. Hilarious.
😇 I made a fun discovery on Instagram » Tobias Birch shared an image (among others) from his visit to the British Museum where he was helping out with what he describes as “one of the most important clocks of the 18th century” - and he found these playing cards hidden in the base! How cool is that?!
🤳🌾 WhatsApp voice notes are helping transform how Senegalese farmers collaborate and share knowledge.
🕵️ Is Antiquorum Sufficiently Anticrime? Brendan Cunningham reflects on his conversation with Chris Marinello about watch theft - the sophistication of watch thieves is certainly not to be underestimated!
🧠 Use it or lose it. Brains get smaller without regular and frequent social contact with others.
👟 Have you ever wondered what the mathematically correct way to tie your shoes is? Me neither, but check this out if you’re curious!
If you haven’t already seen it, I shared a post a few days ago which was related to the Instagram post I referenced in a previous newsletter - if you aren’t a paid subscriber you will need to pay up to access it. Muahaha! I am kidding, as I explained in this update - the post will be emailed to free subscribers for full access in due course.
To whet your appetite, here’s a chart from which you can draw whatever conclusions you want:
Of course, more will be discussed when you read the full post - just a huge thank you to my dear friend who neatly collected the data and shared with me. Appreciate you ;)
Until next time!
Bonus link: Oppenheimer
After a screening of Oppenheimer at The Whitby Hotel on Monday, Christopher Nolan joined a panel of scientists and Kai Bird, one of the authors of American Prometheus, the book Oppenheimer is based on, to talk about the film. The audience was filled mostly with scientists, who chuckled at jokes about the egos of physicists in the film, but there were a few reporters, including the guy who wrote this article as well.
Frederick, S., Novemsky, N., Wang, J., Dhar, R., Nowlis, S., & John Deighton served as editor and Ann McGill served as associate editor for this article. (2009). Opportunity Cost Neglect. Journal of Consumer Research, 36(4), 553–561. https://doi.org/10.1086/599764
Loewenstein, George & Prelec, Drazen. (1998). The Red and the Black: Mental Accounting of Savings and Debt. Marketing Science. 17. 4-28. 10.1287/mksc.17.1.4. https://www.cmu.edu/dietrich/sds/docs/loewenstein/redblack.pdf
Knutson B, Rick S, Wimmer GE, Prelec D, Loewenstein G. Neural predictors of purchases. Neuron. 2007 Jan 4;53(1):147-56. doi: 10.1016/j.neuron.2006.11.010. PMID: 17196537; PMCID: PMC1876732. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1876732/