And I say this as a huge NFT fan
This is what a $50,000 watch looks like. It is outrageous even to type its price, which is on a lower scale for a Rolex watch. Some go for millions! The number doesn’t intrigue me too much. I am more interested in knowing why people are willing to pay that much for a watch and how did Rolex convince them to spend so much. How does a brand become a luxury brand? Does just saying that we are a luxury brand makes you so?
To understand where we are, we always need to know how we got there. That’s what I did today. I researched how Rolex became the Rolex. Spoiler alert: they weren’t a luxury brand for most of their existence.
Hans Wilsdorf started Rolex in 1905 with a simple thesis — he wanted to make wristwatches cool for men. Yes, there was a time in history when wristwatches were mainly worn by women as jewelry and were considered unfit for men. Men preferred pocket watches which were bigger as they appeared more masculine. (We have been overcompensating for size for centuries.) Another major reason for this preference was that pocket watches were more accurate and reliable. Everyone believed that it was impossible to create an accurate wristwatch due to its small size.
Our guy Hans said, “Hold my Beer”. He didn’t really say this but I’m guessing he drank plenty of beer being German.
He had a clear vision and worked tirelessly until he turned it into reality. He did the impossible. He created a wristwatch which was accurate, reliable and convenient. As the saying goes, ‘fortune favorites the brave.’ Fortune dealt him a great hand with the first World War. Suddenly, all the soldiers needed a watch which was accurate, reliable and convenient. Jackpot!
While all other watch companies struggled, Rolex soared and took market share from major watch manufacturers in Europe. Hans didn’t stop there. He was, at heart, an innovator more than a businessman. He proceeded to create the world’s first waterproof wristwatch, the first waterproof self-winding wristwatch, the first waterproof self-winding wristwatch which also indicated the day of the month. (Yes, Rolex did that too!)
Add genius marketing to these innovations and you have a mammoth brand. He was way ahead of his time and used ‘influencer marketing’ in 1927. When he heard that a woman named Mercedes Gleitze was attempting to swim across the English Channel, he immediately contacted her and convinced her to wear a Rolex watch on her swim. She was unsuccessful in her attempt and had to be rescued after 10 hours of intensely swimming in freezing water. Her failure turned into a major success for Rolex as the world was left amazed by the fact that the watch was unscathed even after being under freezing water for 10 hours.
So, this is how Rolex became The Rolex. Through constant innovation and genius marketing. (Reminds me of Apple and Steve Jobs) Rolex stood for something. It became a household name for quality and innovation. This is what gave it its brand value, which in turn allowed it to become a luxury brand. Desired by all but only available to a few.
This is what NFTs are missing. They are not desired by all. They are scarce in number but that scarcity is meaningless if there isn’t enough sustained demand for them. Things don’t just become a flex because they are expensive. Their ‘expensiveness’ has to be justified in order for them to retain value. There hasn’t been any groundbreaking innovation from any project, nor has any project solved a major problem. I read this all the time:
People pay $50k for a Rolex just to flex. Why won’t they pay $100k for an animal picture as a flex?
They will if the said animal picture company does something remarkable as Rolex did. Otherwise, the Ponzi will continue to collapse slowly. A flex for its own sake without any underlying value continues to erode over time as the ones flexing keep on losing money. I hope NFT projects don’t look at where Rolex is today and try to emulate it but rather dig deeper into its history and take inspiration from how it got here!
New to trading? Try crypto trading bots or copy trading
Why any comparison between Rolex and NFTs is rubbish was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.