Surprising Similarities between Venture Capital and Watches

I have gone deep down the watch rabbit hole recently (Airtable database and all), and naturally I’ve started to ask: do watches and venture capital have more in common than is immediately obvious?

After listening to the entire Acquired podcast on Rolex, it really got me thinking…

Tech bros love both, they are way cooler to talk about than actually do/have, and people who are involved in them have way less money than people think, but is there more?

Perhaps unsurprisingly as an early-stage investor, I have been drawn towards the upstarts and microbrands ( Studio Underd0g Baltic Watches Christopher Ward MAEN Watches Fears Watch Company Limited Horologer MING and so many more). But there is a lot to learn from the big names (Rolex, Omega, Cartier, AP, Longines, Breitling, Tissot, Casio, TAG Heuer, Swatch, IWC, Patek Philippe, etc.). The question always remains - which is better value? Or is some mix the right answer?

Here are a handful of things that struck me as oddly similar:

• Actual vs. perceived utility:
• They are both solving smaller problems than people think
• Watches tell time worse than a variety of other devices at our disposal & Venture as an asset class has proven incredibly inefficient
• The signal they send is stronger than the tactical purpose they serve
• There is tremendous opportunity in either 1) being creative and innovative or 2) doing it: better and for longer than anyone else
• There is very little opportunity in between
• You can be meaningfully involved in both without really knowing what you’re talking about:
• Having a bunch of money gets you there fast, but it doesn’t create staying power
• It’s easy to look like you know what you’re doing, but there may be no rhyme or reason behind it… and it may never matter
• Owning a bunch of expensive stuff doesn’t mean you know anything about how they’re made or why it matters
• Knowing how to build great stuff doesn’t mean you know what they next wave of popularity will bring
• People make more money on momentum than on fundamentals:
• A big winner can become a big loser faster than anyone expects
• The media around the asset is often more valuable than the asset itself:
• Both industries have recently (last 10 years) attracted a type of deal-maker that has bombarded the industry and pushed away many of the OG aficionados
• People say it’s all about access, but access can be bought
• The best in the business just go for what they like instinctually and others follow on:
• Only years down the road do the masses see what the visionaries saw early (before it was popular or obvious)
• Real quality might be hard to describe concretely but you know it when you see it:
• This frustrates many who are momentum players
• Low interest rates blow out both markets
• Impressing other dudes is clearly the goal of both

There is a lot to learn from thinking about these similar dynamics and even drawing parallels between specific brands, i.e., Is Rolex more like Apple or Sequoia? Is Swatch Group more like Microsoft or Google?

And more importantly, is there space in the industry for another titan to be built? Or are all the major players in place, and any upstart that gains real momentum is either a competitive target or an acquisition target?

Does more value accrue with simplicity or novelty? Through longevity or growth? Does innovation really matter or does flash win the day?

One of the reasons I have gone down this rabbit hole (besides that it’s fun) is that there is a lot to learn from businesses outside the technology world. In the luxury business, micro economic principles break down and reveal some deep psychological realities. I also believe that ultimately every business is a consumer business - there is a human decision maker and there is a human user, directly or indirectly.

If you too are down the watch rabbit hole, feel free to reach out!

See original post here: https://alexoppenheimer.substack.com/p/surprising-similarities-between-venture