After seven years in the watch industry, having joined A Lange & Söhne in 2011, Wilhelm Schmid has steered the brand through the greater part of a decade defined by increased market sophistication, the recalibration of the luxury industry in the face of a new generation of buyers and the rise of digital lifestyles. In a sense, the role of a watch company CEO has only become more challenging in scope — imbuing a finely crafted mechanical watch with renewed relevance at a time when our smart devices and screens have become the primary frames through which life is viewed.
They say that this unprecedented dependence on digital interactions has lessened the value we place on objects and strengthened our desire for experiences, but it’s not as simple as that. The kind of experiences that remain with us as milestones in life — could they take place without the array of finely crafted objects that enable our most refined levels of appreciation?
Nowhere is this more apparent than on the shores of Lake Como, where the Concorso d’Eleganza Villa d’Este hosts a veritable fleet of cars from the previous century, where visitors mingle and indulge their passion for cars and craftsmanship in a sun-drenched setting that is as close to paradise on earth as it gets.
This year marks the seventh time that A Lange & Söhne has supported the Concorso d’Eleganza Villa d’Este, bringing guests to the event and contributing a special Lange 1 Timezone created to honour the winner of the Best in Show category. According to Wilhelm Schmid, this year is also the best he has ever come across in the span of their seven-year collaboration in terms of participating cars — a parallel echo of the stellar year that A Lange & Söhne has had so far in 2018, starting with their groundbreaking new Triple Split Chronograph that was introduced in January.
Revolution sits down with Wilhelm Schmid to talk about car collecting, watch culture and his plans to safeguard the future of A Lange & Söhne.
There’s an incredible atmosphere here at Villa d’Este, where people come from all over the world to pursue their interest in cars. In a sense, these visitors, lovers of vintage cars, have much more in common with watch aficionados than with admirers of modern supercars.
Vintage cars have more collector appeal whereas modern supercars are more like status symbols. Of course there is a grey area where there is a significant overlap, but I believe that’s the general difference in outlook you will find when speaking to someone who goes for vintage cars as compared to someone who favours modern supercars.
In the latter case, they don’t even look at the engine, to be honest. When it comes to a modern supercar, they are interested in the specs and the design, but there’s no point in looking at the engine, because you can’t tell what you’re looking at anyway. In vintage cars, you have three considerations that are of value. You have the importance of the brand — how significant were they historically, are they still around today. The specific car’s provenance is important — where is it from, is it well known and documented.
The third element is something we saw recently in the watch industry, which is whether there is a strong story or personality attached to it, like in the example of the “Paul Newman” Rolex Daytona that belonged to Paul Newman himself. If any of Paul Newman’s cars came up at auction, I’m pretty sure the price would go through the roof as well. So you have these three factors that come together to determine the value of a vintage car, but modern cars don’t have that. That explains the different motivations to go either way.
That’s always interesting to observe, but does that help us understand why certain products are considered successful and how we should learn from these incredible headline results?
Yes and no — that’s for sure, because you take an Omega that would usually go for a few thousand dollars and sell it for almost 2 million simply because it belonged to Elvis Presley? That’s the factor we’re talking about. I’m not sure if these watches are actually being bought by watch collectors or if they are bought by people who simply dream of having a part of that legacy. That’s the big question, and it changes the significance that these results should have on our industry, because fundamentally there is no logic in it. You have only the intangible quality around the famous name, which doesn’t help us figure out the multiplying effect on sale value.
In a way that’s something that A Lange & Söhne has always tried to maintain — an objective value to their watches that can be directly explained in terms of technical skill, finish and attention to detail.
Happily, there are always many approaches to the same object, and it’s good like this. When it comes to this, there are two figures that are not publicly known, but that I believe can tell us a lot — the percentage of turnover that a brand invests in research and development, and the percentage of turnover that a brand invests in marketing and communications. Of course this is not open information, but just by observing what’s already out there you can probably guess what the emphasis is on at different brands.
And the fact is that some people are just not interested in what we do at A Lange & Söhne. Many people will never understand why we polish components that nobody apart from the watchmakers is ever going to see. They will not understand why a perpetual calendar indication should jump instantaneously at midnight when they’re not awake to see it. They may never understand why a chronograph should have a jumping minute counter. And that’s a good thing, otherwise every brand would be making the same kind of watches and it would be a very boring market.
It’s really wonderful to interact with the visitors at Villa d’Este because their passion really shines through, a passion that can be completely separate from the ability to purchase or acquire such cars. In watches, the ability to buy is much more strongly linked to the level of interest and enthusiasm. In terms of watch culture, how do you think we might be able to get closer to the breadth of audience interest that we see here?
We don’t have anything like this in the watch world. For one thing, the Concorso d’Eleganza Villa d’Este got started in 1929, and that’s probably the secret — it’s been around for a long time. And that goes for the whole car world. How many important car exhibitions do we have worldwide in a year, 25 or 30? And how many watch fairs do we really have? Perhaps if someone organised an event that showcased the most famous watches in history, with the biggest collectors, in an exclusive environment with highly selective entry, it could be something special. No one’s tried it so far.
Maybe as a collectors’ society we — not just A Lange & Söhne, but the watch world in general — are still at the very beginning of what’s possible. What goes on is still very much happening in small settings, closed rooms in luxury hotels. Nothing that comes close to something like the Concorso, with its community aspect and high-society factor. We might get there eventually, but there are still a lot of things to work out. For example, you can organise something around 60 cars with 650 visitors, but how would that work with 60 watches?
Here in Como we can do things in a limited way, with our watchmakers on hand to explain our watches in detail to customers who are interested. We try and welcome new guests every year, so we are able to repeat a lot of our activities from year to year, and that’s good. Routine is always good when you have recurring events, because we can keep things under control — we change some small things here and there to see what works best, but we have an established way of bringing A Lange & Söhne to an audience here in Como.
One thing that’s highly relevant to the kind of longevity and relevance we’re talking about is how a brand and its watches perform in the secondary market, since it impacts long-term value and brand perception. Is this something that A Lange & Söhne prioritises?
The performance of our watches in the secondary market is something that we monitor very tightly. We also liaise with all the major auction houses, we provide them with factory certification as long as they can give us the case and movement numbers of any A Lange & Söhne pieces that they have. Anything beyond that and we would need to have the watch physically with us so that we can do proper authentication. Honestly though, just with the case and movement number, it’s already very safe, because the likelihood that someone has replaced a dial or something like that on one of our watches is pretty unheard of. And what we do on our end is to take the original retail price of a watch and compare it with the auction results.
I’ll give you an example — if you bought one of the first Lange 1 timepieces back in 1995 or ’96, that would have set you back around DM 21,600, which is about EUR 10,500. If you put it on auction today, you will probably get back EUR 16,000 or EUR 17,000, which is a good return. Of course, what you can’t do is to compare the price of a Lange 1 from the boutique today with one that you bought 25 years ago. The main challenge for us in this area is that very few of our watches really come to auction, but when they do we are very happy with how they perform.
Another issue we have to deal with sometimes is something that’s quite common on the internet, which is perception versus reality. For some reason, it’s common to believe that there are certain brands that you can buy one day and sell the next day to make a profit, but we all know that’s complete nonsense. There are a million examples to prove that you can lose up to 50 percent of your purchase value, but people still believe otherwise.
And here’s an example of how some things can get distorted online — it’s a funny story about our Zeitwerk Minute Repeater that we launched in 2015. About five months after we presented it, I was in New York having dinner with some customers, and one of them said to me, “I’m very unhappy with you guys. I’ve ordered the Zeitwerk Minute Repeater, and I’m waiting for it, but I’ve just seen it available online on a reseller’s website with a discounted price.” I told him that was literally impossible, because at that point we hadn’t distributed any minute repeaters yet. And I was absolutely sure of what I was saying, so he took out his phone and showed me the website — and believe it or not, I recognised the photo he pointed out to me. It was my own hand, which I knew immediately because of my wedding ring! Someone took a photo of my wrist during the Salon International de la Haute Horlogerie (SIHH) while I was wearing the Zeitwerk Minute Repeater, and used that photo to pretend that they had an actual watch for sale!
This is what I mean, that we have to work against such false perceptions all the time, false in all kinds of ways, but I’m not too worried that it will be too big of a problem for us. Our best time is still to come.
You’ve been in the watch industry almost as long as you were in the car industry now — I remember when you first joined A Lange & Söhne, there was the hope and expectation that you could incorporate some of the more successful aspects and practices from the car industry. At this point, what lessons do you think we can still learn from that side of things?
First of all I can only speak about the German car industry as that’s my experience. The German car industry is phenomenal in how it operates a German brand internationally. If you buy a BMW in Singapore you can be sure there is no difference from buying a BMW in South Africa, in Shanghai or in Munich. You’ll see this in the way they deal with you, in the perception of the brand image and so on and so forth. The key word here is “consistency”, from A to Z. You can say the same for Audi and Mercedes. On the whole, the watch industry doesn’t really have that level of brand consistency yet. You see some brands that are very fancy in certain markets and almost unknown in other markets.
At A Lange & Söhne, this is something that we try to implement wherever we are. Wherever you are encountering A Lange & Söhne in the world, you should perceive the same love of detail that you’re seeing right here at our Como event. It’s like the approach we take towards our movements — you will never find a component in any of our movements that is not totally focused on quality and maintaining that quality with a high level of control. And that’s something that we can continue to learn from successful industries such as the car industry.
Could that be partly because the watch industry has only recently entered retail for themselves? In the past, international watch distribution and retail was conducted primarily through local partners.
That may be true to an extent, but I still think it’s something that can be worked on, even if your international business is conducted through partners. And the car industry has always done business via local partners. It’s not really a reason or an excuse to be inconsistent in your market approach.
While we’re still on the subject of partnerships, how was the decision taken to work with the Concorso d’Eleganza Villa d’Este? It’s been seven years that A Lange & Söhne has been involved with the event — what are your thoughts on this?
The decision to partner with the Concorso d’Eleganza was pretty straightforward for us. When I arrived at A Lange & Söhne, we did some cultural event partnerships, music festivals in Salzburg and so on. That was nice, but we found that people weren’t really interested in it. So we worked on identifying a platform which would be good for us to bring customers to, that would allow us to display the brand in a different environment, and that would be a strong partner to create something which was more than the sum of its ingredients. There aren’t many events like the Concorso d’Eleganza Villa d’Este on the planet; that was pretty clear to us immediately. In addition, we are a German brand, the other event partner, BMW, are German too, they do a fantastic job of supporting the event without overshadowing it, and it made total sense for us to come on board in this way as well. And ever since we did, it’s worked out very well for us, and we’ve never had problems getting our customers to come here with us — quite the opposite, in fact.
It’s a beautiful event, that’s for certain, and a big part of it is also the massive amount of organisation that went into making it run so perfectly — like a watch movement from A Lange & Söhne, in fact!
That’s the German part of us; we are also engineers, so we like things to work. Many things that we still do today at A Lange & Söhne can be boiled down to Mr Günter Blümlein. Our bridge to history and heritage was through Mr Walter Lange. In terms of how we produce watches, so many aspects what we do are the brainchild of Mr Blümlein. For example, our watches are all a bit heavy. They are robust, because Mr Blümlein always said, that you should have the same sense of luxury from touching our watches as with closing the door of your Mercedes. So that’s why our watches are always a bit heavy, and that’s why they are always waterproof — with the exception of the grand complications, of course.
Most importantly, they have to be legible. Why make a watch that you cant read the time off? Even in our complicated watches, with lots of information on the dial, the time is always readable. It changes the way we display things, like the tourbillon or our perpetual calendar, and that changes the way we build our movements. You look at our watches, even without glasses on, and you can immediately tell the time and date. We prioritise the hierarchy of information, which is intact in all our watches.
Why do something if it doesn’t work? Not “work” in the sense of being a watch that runs, but being a watch that works for our customer, with his lifestyle, with how he chooses to wear it and use it. There are brands that focus so strongly on the point of convincing someone to buy their products, but for us that’s where the story starts, not where it ends. I don’t want to put everything into making a sale, because I want to concentrate on our relationship with the customer after the sale. We don’t have millions of customers, and we don’t need millions of customers, happily. We emphasise things like after-sales service; the way we treat people is important to us. We make and sell expensive products, it’s true. But we also go the extra mile. We go beyond the watch.