June 4, 2024 • 57min
#351 The Founder of Rolex: Hans Wilsdorf
Founders
Key Takeaways
- Hans Wilsdorf founded Rolex and pioneered the wristwatch industry for men in the early 20th century
- Belief was Wilsdorf's "highest order bit" - he had unwavering belief in the potential of wristwatches when others were skeptical
- Wilsdorf focused relentlessly on three key principles for Rolex watches: precision, waterproofing, and self-winding (perpetual) movement
- Rolex was a pioneer in watch marketing and advertising, associating the brand with excellence and achievement
- Wilsdorf structured Rolex as a trust to maintain independence and focus on quality long-term
- The Rolex brand name was carefully chosen to be short, easy to pronounce, and memorable
- Wilsdorf leveraged social proof by obtaining certifications and associating Rolex with record-breakers and leaders
- Constant iteration and learning from experience was key to Rolex's development and success
Introduction
This episode explores the founding and development of Rolex by Hans Wilsdorf in the early 20th century. It examines how Wilsdorf pioneered the wristwatch industry for men, developed key innovations in watchmaking, and built one of the world's most valuable luxury brands through savvy marketing and an unwavering focus on quality.
Topics Discussed
Hans Wilsdorf's Early Life and Entry into Watchmaking (0:01)
- Hans Wilsdorf was born in 1881 and became an orphan at age 12
- His uncles sold the family business to send him to boarding school, which proved crucial for his future
- At boarding school, Wilsdorf learned multiple languages, which later enabled his career in watchmaking
- At age 19, Wilsdorf began working in the watch industry, where he would remain for 60 years
Wilsdorf credits his early self-reliance for much of his later success, stating: "My uncles made me become self-reliant very early in life. Looking back, I believe that it is to this, that much of my success is due."
The Birth of the Wristwatch Industry (9:00)
- When Wilsdorf entered the industry, wristwatches for men did not exist
- Wristwatches were seen as feminine and impractical
- World War I helped popularize wristwatches for men as "trench watches"
- Wilsdorf saw the potential for wristwatches early on when others were skeptical
Wilsdorf's belief in wristwatches was prescient. In 1914 he stated: "My personal opinion is that pocket watches will almost completely disappear and that wrist watches will replace them definitively! I am not mistaken in this opinion and you will see that I am right."
Founding of Wilsdorf & Davis (Later Rolex) (26:03)
- In 1905 at age 24, Wilsdorf founded Wilsdorf & Davis in London
- The company initially imported Swiss movements and assembled watches
- Wilsdorf experimented with many brand names before settling on Rolex
- The Rolex name was chosen to be short, easy to pronounce, and memorable
On choosing the Rolex name, Wilsdorf said: "I needed a short name. It had to be five letters or less because it has to be able to fit, it has to look good on the actual watch. It has to be easy to pronounce in every language, it has to have a good ring to it, and it has to be easy to remember."
Rolex's Marketing and Advertising Innovations (27:00)
- Rolex was one of the first watch brands to advertise directly to consumers
- Wilsdorf invested heavily in advertising, spending £12,000 annually for several years
- Rolex associated itself with excellence, achievement, and high-profile figures
- Rolex leveraged newsworthy events to gain publicity, like having a swimmer wear a Rolex while attempting to cross the English Channel
On his marketing strategy, Wilsdorf said: "I decided to launch the Rolex trademark by means of an intensive advertising campaign. This policy entailed an annual expenditure of more than 12,000 British pounds, not for one year alone, but for several in succession."
Rolex's Three Key Principles (34:03)
- Precision: Rolex obtained observatory certifications to prove accuracy
- Waterproofing: Development of the Oyster case in 1926
- Self-winding movement: Creation of the Perpetual rotor in 1931
Wilsdorf emphasized the importance of these principles: "In developing and extending my business, I have always had certain aims in mind, a course from which I never deviated."
Key Innovations: The Oyster Case and Perpetual Movement (36:04)
- The Oyster case made Rolex watches waterproof, solving a major problem for wristwatches
- Wilsdorf quickly acquired the patent for the waterproof seal in 1926
- The Perpetual self-winding movement was developed in 1931
- The Oyster case was crucial for enabling the Perpetual movement
On the importance of the Oyster case, Wilsdorf stated: "Without the waterproof watch, the perpetual could never have been discovered."
Rolex's Association with Achievement and Excellence (40:04)
- Rolex gifted watches to high-profile achievers and leaders
- The brand was associated with record-breaking feats and explorations
- Rolex ran ads with taglines like "Men who guide the destinies of the world wear Rolex watches"
This strategy positioned Rolex as the watch of choice for leaders and achievers, with ads proclaiming: "Rolex, the masterpiece of watch craftsmanship, sold exclusively by quality jewelers."
The Hans Wilsdorf Trust and Rolex's Long-Term Vision (48:05)
- In 1944, Wilsdorf established the Hans Wilsdorf Trust to own and control Rolex
- The trust structure ensures Rolex can never be sold or taken public
- This allows Rolex to maintain its focus on quality and long-term vision
The trust structure has enabled Rolex to maintain Wilsdorf's vision long after his death, as he explained: "I set up the Hans Wilsdorf Trust, which owns and controls Rolex. To this day, he brilliantly set up the bylaws of his trust so Rolex could never be sold or made public, so he would never have to worry about catering to anything but making timeless watches."
Lessons from Wilsdorf's Approach (50:05)
- Focus on a single, clear idea for each product
- Constant iteration and learning from experience is crucial
- Building relationships opens up future opportunities
- Studying history's great entrepreneurs provides valuable lessons
The podcast host emphasizes the importance of learning from history: "Charlie Munger said best. He said that learning from history is a form of leverage. And founders notes gives you the superpower to do this on demand."
Conclusion
Hans Wilsdorf's founding and development of Rolex provides numerous lessons for entrepreneurs and business leaders. His unwavering belief in the potential of wristwatches, focus on key principles, innovative marketing, and long-term vision enabled Rolex to become one of the world's most valuable and respected brands. By constantly iterating, learning from experience, and associating the brand with excellence, Wilsdorf built a company that has maintained its position at the top of the luxury watch market for nearly a century. The structure he put in place through the Hans Wilsdorf Trust ensures that Rolex can continue to focus on quality and innovation without the pressures of outside ownership or short-term thinking.