Rolex

Ask anyone to think of a luxury watch brand, and nearly all will say one word—Rolex. Founded in 1905, Rolex does 13 billion USD in revenue yearly. Their watches appeal to watch-lovers and everyday people alike.

Rolex dominates its competitors, including Breitling, Jaeger-LeCoultre, Patek Philipe, and Audemars Piguet, taking up 30% of the market share for luxury watches.

Rolex’s founder, Hans Wilsdorf, was an excellent mathematician and thinker with various interests—he wanted to know how things worked, and why.

In 1900, Wilsdorf began work as a clerk for a Swiss watchmaking company. His job involved winding over a hundred pocket watches daily, verifying each’s accuracy. He was fascinated by watchmaking mechanics and gained valuable insight into the production process.

Inspired by his work, Wilsdorf founded a London-based watch firm alongside Alfred Davis in 1905. He sought to sell high-quality watches at reasonable prices, but initially, the public was unconvinced.

At the time, wristwatches were relatively inefficient and inaccurate. Wilsdorf dreamed of an accurate, wearable watch for a more straightforward way to tell time.

Wilsdorf knew that the quality of his product didn’t matter without a strong company name. He needed a name that everyone could easily say and recognize. Reportedly, Wilsdorf “tried combining the letters of the alphabet in every possible way,” which “gave me some hundred names, but none of them felt quite right.”

Of the name Rolex, Wilsdorf said, “One morning, while riding on the upper deck of a horse-drawn omnibus along Cheapside in the City of London, a genie whispered ‘Rolex’ in my ear.” And in 1908, Rolex was born.

With WWI on the horizon, Britain raised taxes for exports. Ever quick to shift his strategy, Wilsdorf moved Rolex to Geneva, Switzerland, a city synonymous with watchmaking as Rolex is with quality watches today. Wilsdorf was right, and the move to Switzerland proved quite profitable.

The firm’s first major turning point occurred in 1926, with the creation of the first waterproof and dustproof wristwatch, The “Oyster” watch featured a sealed case around its face, providing wearers optimal protection.

One of Wilsdorf’s strongest beliefs was in honesty. Not only could he develop a strong product, but he was confident in his product’s capabilities. At the time, marketing tactics were conflated with gimmicks and bold claims. While Wilsdorf’s claims were undoubtedly bold, he, unlike other brands, could substantiate them. To prove that the watch was truly waterproof, he gave one to English swimmer Mercedes Gleitze in 1927 for her 10-hour swim across the English Channel. At the end of her swim, the watch worked perfectly.

Wilsdorf published a full-page advertisement about the achievement in London’s Daily Mail, plainly stating, “the debut of the Rolex Oyster and its triumphant march worldwide.”

His tradition of honest and straightforward marketing continued. Wilsdorf tested his product across aptitude, speed, and sport in living laboratories. In 1935, racecar driver Sir Malcolm Campbell wore a Rolex watch on his quest to set a land speed of over 300 miles per hour. Campbell said the following about the brand, “I have now been using my Rolex Watch for a while, and it is keeping perfect time under somewhat strenuous conditions.”

Rolex appealed to explorers and sportsmen, who admired its utility and strength. British RAF pilots began purchasing Rolex watches in the thousands during World War II. Unfortunately, many of these pilots found themselves prisoners of war in Germany, and their watches were stolen by German soldiers. Seeing an opportunity to give back, Wilsdorf said he would “personally oversee all POW orders.” Rolex offered to replace the stolen watches free of charge.

Rolex continued innovating over time. In 1960, Rolex designed and released the Deep Sea Special, which was created to withstand extreme conditions. Eager to prove their product’s function again, Rolex fixed the Deep Sea Special to the exterior of the Trieste, piloted by Jacques Piccard and Don Walsh. The vessel descended to a record depth of 10,916 meters (35,800 feet), and the watch withstood the pressure easily.

Today, the company’s slogan, “A Crown for Every Achievement,” exemplifies its long history of well-earned cultural significance. Wilsdorf’s famous quote rings true: “We want to be the first in the field, and Rolex should be seen as only the best.”

Rolex was started with a 200-pound investment (around $25,000 USD). Today, the company is reportedly valued at 8.4 billion dollars, with an annual revenue of $13 billion (2022/2021).

Though their financial data is private, it’s estimated Rolex enjoys a net profit margin of 16.8%.

Rolex sells 1 million watches yearly. But this number is a fraction of what the company could sell. Rolex deliberately constrains supply, boosting waitlists and prestige in the process.

Here’s what we can learn from Rolex about craftsmanship, branding, consistency, and quality.

Lessons

Quality and brand beat short-term sales & marketing gimmicks. Rolex has a longstanding tradition of standing by and proving the quality of its products. Their marketing strategy is gimmick-free. The firm places stock in opportunities, seen first with Mercedes Gleitze’s swim across the English Channel, and recently, James Cameron’s solo dive into the Mariana Trench. The brand’s tradition of putting their money where their mouth is, proving that their product is the best, is among the reasons Brigadier Sir John Hunt said, “We have indeed come to look upon Rolex Oysters as an important part of high climbing equipment.” Rolex uses a ‘simpler is better’ philosophy for timeless products, and for their marketing. This strategy protects them from missteps and preserves their product’s perpetuity. I admire the company’s approach because of its simplicity and elegance. They don’t complicate success. Of simplistic quality, Wilsdorf said: “It is not with low prices—but on the contrary—it is with improved quality we cannot hold the market, but improve it.”

Vertically integrated businesses—with no outsourcing—have the highest level of quality control. Rolex controls nearly every aspect of their watchmaking process. The platinum used in their watches is refined in-house, and most of their materials are proprietary. Rolex commands the entire process from design, production, manufacturing, and testing, ensuring consistency. Rolex even controls its distribution process, limiting the number of watches it produces. Controlling distribution channels ensures the brand’s integrity and creates scarcity. Like their watches, their process is exclusive.

Innovate constantly and patent innovations. From the Oyster to the Deep Sea Special, Rolex never stops innovating. The firm invests heavily in R&D, spending less than its competitors on marketing. The platinum used in their watches is refined at Rolex’s in-house foundry, and their pink gold, used for their rose-gold watches, is a proprietary alloy called Everose. Over the years, they’ve pioneered watchmaking technology with the waterproof Oyster case, the Parachom hairspring, and the Perpetual rotor self-winding mechanism. Much of their process is proprietary. Their innovation has secured the company over 500+ patents they use to maintain their strong position

A carefully crafted brand relies on highly selective associations. Rolex’s simple marketing strategy focuses on prestige, work-of-mouth, and heritage. They selectively advertise in high-end publications and events, like Wimbledon. Partnering with only the best, like tennis star Roger Federer, the brand understands how to create meaningful associations. Rolex Executives rarely make large announcements, and their CEO, Jean-Frederic Dufour, famously doesn’t allow interviews. Instead of overwrought advertising, Rolex chooses to do what it does best—create a high-quality, functional product. Their strong brand perception associates them with excellence and success, allowing the firm to command high prices. Rolex knows its customer base, who appreciate a refined approach. Former Commander in Chief of the Swiss Army, General Henri Guisan, said this of Rolex’s quality and prestige: “Allow me to tell you of the great delight I am having with this remarkable Rolex timepiece of such high precision and outstanding features.”

Build lasting relationships with customers. General Chuck Yeager said this of his Rolex, “I wore a Rolex 40 years ago when I broke the sound barrier and I still do today. A pilot has to believe in his equipment. That’s why I wear a Rolex.” The firm builds life-long relationships with its customers, creating brand loyalty. Customers understand that when they purchase a Rolex, they’re investing in quality. Rolex’s employees are trained at a special center in Geneva. Over 18 months, they’re taught how to carefully create the brand’s offerings, and how to provide and maintain excellent customer service. The firm offers a two-year guarantee on its products to cover necessary parts and labor, though most owners never need it. The firm invests in loyalty, keeping its customers coming back for a lifetime. It’s for these reasons tennis player Arthur Ashe said, “I only wear Rolex.”

Videos

• Rolex: Timeless Excellence from Invest Like the Best with Patrick O'Shaughnessy—Comprehensive Rolex company overview
• Hans Wilsdorf, Founder Of Rolex Interview 1959—The only known interview with the Founder of Rolex, Hans Wilsdorf.
• History of Rolex with James Dowling—Author of The Best of Time, Rolex Wristwatches discusses Rolex’s history.

Suggested Readings

• Inside Rolex: Understanding The World's Most Impressive Watch Maker—An overview of Rolex’s manufacturing and business strategies.
• What Makes Rolex Tik—NYU Stern’s take on Rolex’s key competencies.
• Rolex—Company overview in Forbes.
• How Rolex Became So Successful—A discussion of key factors contributing to Rolex’s success.
• Rolex earns billions every year. Where does the money go?—A look behind the curtain at the Hans Wilsdorf Foundation.
• The World’s Most Valuable Watch Brand—A Company Overview in Bloomberg.
• The Story Behind The Success Of Rolex Brand–An in-depth look at the brand’s history and innovations.
• The Complete In-Depth History of Rolex–Key points in Rolex’s brand journey.
• Short history of Rolex—Redditors discuss Rolex’s significance.
• How Rolex Became King: A Brief History of the World’s Best-Known Watch Brand—Rolex’s history and founding information.
• What Makes Rolex so Successful? Here Are Nine Reasons—Key factors contributing to Rolex’s success.

Book Recommendations

• The Book of Rolex–For an appraisal of the Rolex watch, including studies of vintage models, current designs, and special editions.
• Invest in Watches: The Art of Watch Collecting–The indispensable guide for investing in luxury watches.
• Selling the Crown: The Secret History of Marketing Rolex–For an in-depth look at Rolex’s marketing technique.
• Rolex Wristwatches: An Unauthorized History—A look at the history of Rolex’s offerings.