Whodinkee Now?

Tempus Fugit! (that's time flies for those of you just tuning in).

I woke up (or more aptly, was woken up) by the Executive Publisher hoping to get an early (3:30 AM) breakfast. After donning my butler's togs and serving her entree, I toddled back upstairs and attempted to get back to sleep. I did a perfunctory scan of various sites and there was Ben Clymer once again front and center with a big announcement. In all honesty, I found his post a wee bit defensive and definitely self-congratulatory. I wonder how the folks who were made redundant over the years read it?

https://www.hodinkee.com/articles/hodinkee-to-join-forces-with-watches-of-switzerland

The headline reads -

Hodinkee Joins Forces With Watches Of Switzerland

In other posts on the subject, it seems a slightly different read has been offered - 

https://www.watchpro.com/watches-of-switzerland-group-buys-hodinkee/

Watches of Switzerland Group buys Hodinkee

Troubled media business acquired for an undisclosed sum.

While I won't go into the heroes and zeroes here - because no information has been forthcoming on the subject, I would say that the whole Hodinkee saga of the past several years has been a mirror image of what is so wrong in Watch Town writ large. Celebrity "chums", limited editions marketed to appeal to the egos of those celebrity chums, and a basic lack of understanding as to the fundamental difference between an elastic and inelastic demand. 

Per Don Hofstrand of Iowa State University's Extension and Outreach program:

An elastic demand is one in which the change in quantity demanded due to a change in price is large. An inelastic demand is one in which the change in quantity demanded due to a change in price is small.

So the next big question for the brain trust at Watches of Switzerland - does Hodinkee's content and influence represent an elastic or inelastic demand sufficient to recoup the amount spent on this acquisition? Was there enough for Tom Brady and John Mayer to get some of their pocket money back? 

The simple truth is that Hodinkee in its previous form was an unrealistic and unsustainable model. And the market spoke. It sounds wonderful to refer to this as a strategic partnership, etc., but in point of fact, it is an acquisition.

When Reality Renders Unto Caesar What Is Caesar's...

More official word reached the North Shore offices of Henki Time recently that there was what could be referred to as a "downsizing" of staff at what is reputed to be the biggest, and best media outlet in Watch Town - Hodinkee. You can read a bit more about it here through Watch Pro's coverage -

https://usa.watchpro.com/rolex-price-slump-prompts-hodinkee-to-cut-headcount-across-media-and-pre-owned-watch-operations/

I say "more official", because in truth? People have either been departing to pursue other professional opportunities, or (to use the more sterile HR terminology) been informed that their position was no longer available for the past year and a half. Obviously some big name departures, and some lesser noticed. And while that had been happening in a slow drip, drip, drip manner, the intensity increased to the point where a fairly major round of redundancies (that's lay-offs to those of you reading in the lower 48) took place this past week. 

And as it is Hodinkee, and as this is (unfortunately) a bellwether for not only watch media, but watch and watch related retail as well, I have to ask an awkward question -

How is it that $40,000,000. US was not sufficient to sustain the pre-existing (reportedly fiscally successful) infrastructure?

One theory mooted via the reporting from Watch Pro is that the downturn in the pre-owned watch market not only created the hole in the bucket, in effect ripped the bottom off it. 

With respect? I call bullshit. 

Hodinkee started life as a media outlet, and in theory still operates as one. It has been the 800 pound gorilla that everyone in Watch Town has had to defer to pretty much since jump street. A glitzy event wouldn't pass by without at least three to four bearded fellows, festooned in heritage brand "bro" togs holding forth on the virtues of God knows what. 

But even prior to the purchase of Crown and Caliber, there were (at least for some of us) always questions as to just how profitable it could be given the sheer head count and fixed operating costs. Or put more plainly? You'd have to sell a lot of MIDOs and Certinas to cover that nut.

The insurance business was another anomaly in the portfolio. I do not have any experience in the ins and outs of insuring watches, but I would have to assume that it would require a fairly robust cash reserve to indemnify all potential claims. Again, just a theory.

So we shall wait, and we shall see. But I will leave George C. Scott as General Patton to provide the closing -

The conqueror rode in a triumphal chariot, the dazed prisoners walking in chains before him. Sometimes his children, robed in white, stood with him in the chariot, or rode the trace horses. A slave stood behind the conqueror, holding a golden crown, and whispering in his ear a warning: that all glory is fleeting.