The Best Idea Yet - ⌚ Swatch: The $40 Watch that Saved Switerzland | 12

Episode Date: December 31, 2024

When you hear the name Swatch, you may picture an affordable wristwatch with neon bands, a pop-art face, and an invite to the Middle School dance. But this humble plastic timepiece played a huge role in geopolitics: the Swatch saved the entire Swiss watch industry from something called the “Quartz Crisis.” Rolex is only thriving today as a luxury product because Swatch pulled off a James Bond-level rescue operation. Thanks to the big strategic bet of a consultant named Nicolas Hayek, Swatch became the best-selling new brand in the history of business, reaching $10B in revenue annually. But does the “S” in Swatch stand for “Swiss” or “Second”?” (We’ll save it for the pod). Find out why Swatch is the best idea yet.Be the first to know about Wondery’s newest podcasts, curated recommendations, and more! Sign up now at https://wondery.fm/wonderynewsletterFollow The Best Idea Yet on the Wondery App or wherever you get your podcasts. You can listen to new episodes early and ad-free on Wondery+. Join Wondery+ in the Wondery App, Apple Podcasts or Spotify. Start your free trial by visiting www.wondery.com/links/the-best-idea-yet/ now.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Wondery Plus subscribers can listen to the best idea yet early and ad free right now. Join Wondery Plus in the Wondery app or on Apple podcasts. Jack, you know what my therapist told me the other day? There's a fine line between collecting and hoarding. And I am not on the right side of that line right now, man. The weird thing is you're kind of ass at light. Like I went to your house once, you had a closet with nothing in it.

Unheard of. That's what you've seen. But Jack, you've seen my child at home. I've got enough hot wheels to run a store. I used to collect fortune cookie fortunes. True. I'm working through it. I'm working through it, Jack.

But you know, it's better when you collect things that you can actually wear. Yeah. I got a collection of sunglasses. Really? That's what you got. I got a pair for skiing. I got a pair for the beach. I got aviators in case I'm going for like a Top Gun look.

Jack, they all add up to little bits of flair that help us express ourselves. Yes. Oh, and by the way, we don't mean flair like Jennifer Aniston's mandatory flair, do we, man? Cause I'm counting and I only see 15 pieces. No besties. We mean the little accent notes that you swap in and you swap out

to make your day a little bit brighter. Because accessorizing is personalizing and it drives customer behavior. Nick, when a product is affordable and it comes in multiple colors and multiple styles, people tend to buy more than one of that item. It's true for silk ties, it's true for Lisa Frank stickers,

and it's even true for the right wristwatch. But besties, did you know that for most of history, watches were not actually in this category? Unless you were absolutely loaded, you probably just had one watch sitting on your bedside table. The wristwatch was a single purchase product. It might've even been a classic Rolex,

which didn't used to be a high-end luxury watch. Before the late 70s, Rolex was less like a Lamborghini, more like a Volvo. But starting in 1983, the world's relationship with wristwatches would change. And it was all because of a brand new Swiss watch that sold for just 40 bucks and was made mostly out of plastic. Yetis, are you ready for the swatch?

Swatch him! Hot, hot, hot, swatch him! Now the hands on the swatch are all persistent and the swatch is water and shock resistant. Now when swatch burst onto the scene, it helped define the look of the pop art 80s. It anticipated modern fast fashion trends without skimping on craftsmanship. And the Swatch helped people start seeing watches through the lens of fashion and culture. Those celebrity blogs about Kylie Jenner's love for Cartier timepieces?

You can thank Swatch for that. These simple, colorful, analog watches represented Swiss quality and precision, but at a cost so low people could afford to buy three, or four, or a dozen of them. And thanks to marketing moves that rival Apple's, sales for the Swatch shot up higher than Max from Stranger Things during that running up that hill scene. The Swatch hit so hard that in the 10 years following its debut, it would make the Swatch Group the largest watch company on the planet. Today, Swatch owns 16 different watch and jewelry brands, and their annual revenue is around $10 billion.

That is more than Harley Davidson. It's also more than Lululemon, more than Snapchat, and more than Domino's Pizza. But the journey of Swatch isn't just about the numbers, it's also about this unlikely hero who helped save Switzerland's historic watchmaking industry. Yeah, we said the entire industry. This was a James Bond level rescue operation.

More on 007 in a minute. But it is true, Rolex was actually saved by SWATCH, a watch that is one one hundred-hundredth of the price. And the key was to introduce the concept of the second watch, or Swatch for short. Or maybe the S stands for Swiss? We'll get into that too. Today's story is Swatch, the first watch ever to go viral, and the first watch to save an entire industry.

Stick around to hear why Swatch is the best idea yet. From Wondery and T-Boy, I'm Nick Martel. And I'm Jack Kraviche Kramer. And this is the best idea yet. The untold origin stories of the products you're obsessed with and the bolderist takers who brought them to life. -♪ I got that feeling again Something familiar but new

We got it coming to you I got that feeling again They changed the game in one move Here's how they hook up the robot -♪ Yetis, we're in a chilly conference room in Zurich, Switzerland. A pitcher of ice water sits untouched on the polished oak table. The mood is quiet and it's tense. Every creak of every chair echoes uncomfortably in the space.

Around the table sit conservative men in conservative suits. They're repping several Swiss banks and across from them, a confident man in tweed with bushy eyebrows and a wry expression sits down. The room is not silent for long. It's the spring of 1982. The man is a business consultant named Nicholas Hayek Sr. It goes by Nick, but since that's also the name of my co-host, we'll be using Hayek's last name for this episode. Good call, like we did there, Jack. Well, Hayek was born in 1928 in Beirut

to a Lebanese mother and an American father, but he's been in Switzerland for decades now. He's earned his Swiss bonafide, too. He has impeccable taste in chocolate and cheeses. But Hayek is also a larger-than-life guy with a healthy ego and a brash sense of humor. In fact, he says things like, I am the creator of products, kingdoms, and empires, and I want to look in the mirror every morning and say, you're great. Can you imagine looking in the mirror and saying that every day to yourself, Jack?

He's giving Napoleon a neck. But he has earned that confidence yetis, because this man, Hayek, he's built his consulting firm, Hayek Engineering, from a one-man shop into a billion-dollar business. And now, Hayek is acting as chief advisor to the biggest players in the Swiss watch industry, which is why we're here in this conference room in 1982. Sitting in this room are representatives from two of Switzerland's top industries.

Switzerland has been a clockmaking hub since the early Renaissance and it's been a hub for global finance since the invention of the anonymous Swiss bank account. But right now we've got a problem because these two epic industries are in conflict because the bankers are major shareholders in the watch companies and they want Hayek to help them liquidate. And these aren't just any failing watchmakers by the way are they Jack? Like who are we talking about here? We're talking about the two largest watchmaking companies in Switzerland. You got Aswag, a Swiss-German manufacturing conglomerate, and you got SSIH, which is a Swiss-French manufacturer. Don't worry, Eddie, that's the last time you'll hear

those acronyms. Bottom line though, the entire Swiss watch industry is in trouble because of something they're calling the quartz crisis. The quartz crisis also sounds like a James Bond movie, but Jack, let's wind up a little context here for the besties out there. You ready for a little geography lesson? Switzerland is an insular country. They're bordered by mountains on all sides of the country. 60% of Switzerland is the Alps. Picture the Elvish kingdom, Rivendale and Lord of the Rings. 60% of Switzerland is the Alps. Picture the Elvish kingdom, Rivendell,

and Lord of the Rings. It's beautiful, it is isolated, and you get around mostly by hiking. Switzerland's isolation is how they stayed neutral during World War II. While the rest of Europe was cranking out bombs and aircraft, the Swiss focused their resources on their specialty industries like making watches and banking. But by World War II's end, this little country with a population of less than five million people claimed nearly half of all watch sales worldwide. 50% market share! Holy Swiss miss! Now the words Swiss made, they actually came to stand for the peak of precision and of quality, kind of like Italian leather or French champagne or Turkish delights. And at the time of this Swiss dominance, all watches were mechanical.

That means the movements or the gears inside don't run on electricity. They run on mechanical power. Back then you had to wind your watch. I don't even know what that means really. But when you did wind your watch, you were essentially charging its battery because a super tiny spring inside turns a balance wheel that moves the watch gears at regular timed intervals. Hence, a watch that keeps time. But in 1969, something happens that changes everything. Japan decides to stick its wrist in the ring. The Japanese brand Seiko figures out a new cheaper and arguably cooler way to turn that balance wheel that Jack just described. They use a tiny vibrating

quartz crystal powered by a battery and these crystals they are cheap to grow. And yes you manufacture crystals by growing them. Shout out to my 9th grade science teacher, Dr. Church. Well despite being cheaper, here's the other problem. Quartz crystals are more accurate at keeping time than the mechanical movements that the Swiss love. So when Japan's Seiko releases the world's first battery powered quartz watch, the Asteron, it sends a massive shockwave

through the entire watch industry. Just like the Japanese will disrupt America's car industry with Toyota, Honda, Mazda, and Nissan, Seiko watches disrupt Switzerland's most iconic product. And things just take off from there. Because soon, dozens of companies are following suit. And almost none of them are Swiss. All of them are basically Japanese brands like Citizen and Casio, plus a few American brands like Timex. And when one of them figures out how to give their quartz watches a digital

display, I mean, forget about it. James Bond had been seen in Swiss Rolexes through Sean Connery's entire career. But in 1972's Live and Let Die, Roger Moore's Super Spy wears a Pulsar, the world's first digital watch, and he'll don a Seiko in 1977. This is the time the Swiss stopped being fans of 007. Soon digital watches, they are everywhere, and they're available for a fraction of the price of a good Swiss mechanical

classic. But most Swiss companies do what incumbents tend to do when faced with disruption. They ignore the signs of trouble. They think Quartz's are beneath them and best left unmentioned. Uber? Yeah, it's just a cab app. It's a fad. It'll be over in a few years. Jack, can I actually call this phenomenon business blinders. It's one thing to not get distracted by the competition. It's another thing to completely ignore a brand new innovation. And that's what the Swiss were doing. Switzerland's watch crafting artisans were putting on blinders to the quartz revolution that was cooking up in Japan. That is Jack until the Swiss start bleeding sales and those executive C-suite cuckoo clocks all start yelling at them.

Like we say, money doesn't talk, it screams. By the time the Swiss creditor banks seek out Nick Hayek's help to turn around their top export, Switzerland's share of the global watch market has shrunk by about two thirds. That is such a painful decline. This would be like if Hollywood suddenly lost two-thirds of their share of the global movie business. Or if Iowa suddenly lost their corn industry.

For Switzerland, this isn't just an industry threat. It's a cultural threat. And thousands of watchmaking jobs in Switzerland are suddenly at risk. The banks, they want to cut bait on the entire industry. So they propose shutting down the two biggest watchmaking entities and just selling the brand names they represent to the Japanese. Essentially, they'd be passing the whole watchmaking torch from Switzerland to Japan. It'll be a fire sale on legacy watch brands like Omega and Longines. And while Rolex wouldn't be a

part of that sale, they'd be left to operate in an industry so diminished, it might only be a matter of time before they leave too. And so the bankers, they're putting pressure on Hayek in that boardroom. They're telling him to draw up a roadmap for this entire liquidation. But that very idea, it offends his national pride. Because this is about Switzerland standing in the world.

Hayek thinks we can't just give up. He writes his report all right, but it's not about how to sell. It's about how to adapt. Hayek has got an idea to turn everything around and to make Swiss watches number one once again. The first thing that Hayek does is spearhead a blockbuster study on the state of the Swiss watch industry. It's known as the Hayek Report and it outlines the current size and the current shape of the global wristwatch market. Hayek describes the entire Swiss watch industry as a three-layer wedding cake. The bottom layer is the lower end of watches selling for up to $75 retail. the middle layer is for mid-range watches, which is $75 to a few hundred dollars. And the top tier is for watches $400 and up, with price tags that can extend into the millions of dollars for a single watch.

We should point out this three-tiered market structure is not unique to the watch industry. It looks like any market that has both budget and luxury options. In fashion, you would call this like the Timu layer, the Neiman Marcus layer, and the Christian Dior Couture layer. But Hayek notes that his bottom cake tier represents nine tenths of the global watch market, and the Swiss share of that bottom layer is zero. 90% of watches sold in the world were under $75. And the Swiss have 0% of that market. They're not even touching the overwhelming majority of watches sold in the world.

And get this, they only control 3% of the mid-range tier. So their entire business depends on the teeny tiny layer at the top of the watches that pair with like a tuxedo and a glass of Dom. Switzerland's watch industry, it's like Italy's car industry. They dominate the top like Ferrari and Maserati, but Switzerland can't support an entire country's economy with just the top 1% of watches. Switzerland needs their fiat too.

So Hayek, he sets in motion a sweeping merger that will take several years to complete. Those two big Swiss watchmaking entities with the long acronyms we mentioned five minutes ago, the ones that the banks wanted to sell, they'll be reorganized into a single group called the Swiss Society of Microelectronics and Watchmaking. Its initials are SMH, thanks shaking my head, but all for I'll say. And this new entity, SMH, thanks shaking my head, but en français. And this new entity, SMH, will now be Switzerland's largest watchmaking group, which Nick Hayek will personally oversee. Like Jack and I like to say, when the going gets tough, the tough

get merging. And this is a major consolidation. It's not quite a monopoly that he's creating, but it's close. Hayek brings in a new group of investors who won't demand that he liquidate. They're going to bet their money on the belief that the Swiss watch industry isn't done yet. And they bet on Hayek to fix it. First thing he does, Hayek doubles the prices on the high end brands he now controls. Doubles the prices. Pause the pot. We need to underscore underscore this He doubles the retail price of all of the high-end watch brands owned by SMH And he does this to define the top tier as an aspirational luxury good that mid-range

Omega you got on your wrist. It's now three grand the 5k l'hommage with the hourglass logo Yeah, it's now a ten thousand dollar000 watch. If you're wondering why watches are so freaking expensive, it's this decision that he made right here in the 80s. This is how Rolex's image transforms from a workman's watch to the luxury brand we now know today. It's because Hayek's luxury brands go up in price and Rolex follows suit, also doubling in price. Rolex doesn't want to get left in the dust, or worse, seem like a mid-tier option. And that is how Rolex goes from the Volvo watches to the Lamborghini.

But Jack, here's the wild thing. Step number two is to attack the low end and create a Swiss quartz watch to compete with the Japanese brand Seiko, Citizen, and all the rest. And luckily, Hayek doesn't have to start from scratch. It just has to start biting into that big juicy bottom tier of that watch wedding cake. Now, Bessie's mergers are about way more than acquiring assets.

They also include acquiring teams of people. And Nick Hayek, he just acquired an engineering team of brain cells that has spent the past couple of years working on the one thing he needs most, a viable quartz watch competitor. The team is led by a scientist turned watch executive, Dr. Ernst Tomka. Now we should point out Jack, this Tomka, he is like a very serious guy. Before he got into watches, he was actually in cancer research. And just like Hayek, Tomka, he is like a very serious guy. Before he got into watches, he was actually in cancer research. And just like Hayek, Tomka is passionate about competing with the Japanese.

In fact, one of his biggest triumphs in the Swiss watch world was leading a team that invented the world's thinnest watch. It was as thin as a nickel and it functioned as a watch. Nick, it was less than two millimeters deep. But as it turns out this super thin watch it holds the key to the quartz problem. The way they got it so thin was to figure out how to make it with fewer component parts and the fewer parts you need the lower the

manufacturing costs and the better your competitive edge. For the first time since the quartz crisis began, Tomka can now see a path to a viable, inexpensive Swiss quartz watch to finally compete with the Japanese. So here's what Tomka does. He engages his lead engineers, a duo named Elmer Mach and Jacques Mueller, to work on a design. And finally, after a whole year of twisting and screwing and tinkering, they come up with an analog quartz watch that will need just 51 separate components. And that's huge. For comparison, other quartz watches need 91 components, almost twice as many as this one they just whipped up.

So they call this brand new innovation the Volgaris, which is Latin for common, as in a watch for commoners. And if that seems judgy, you are right. These Swiss are being really judgy with this new watch. The engineers, they're annoyed that they've been reduced to creating plastic products. They feel like Francis Ford Coppola being asked to direct a YouTube short. But still, the Volgaris might just be

their ticket to survival. So short. But still, the Volgaris might just be their ticket to survival. So they swallow their pride, and the first prototypes emerge in 1981. And they look a bit of a letdown. They're black and white, they're black and white. With plain black bands. This feels like the kind of watch you would wear to a silent movie.

They're well-made, and they're not ugly or anything, but they're not gonna drive a new cycle. So how is this thing supposed to save the Swiss watch industry? Yetis, you're behind the wheel of your trusty used Pontiac Firebird, and you're pulling into the shady refuge of the mall, park, and garage. The cool cement structure is sweet relief

after driving around in the baking Texas sun. But there's delicious AC where you're going. The sprawling palace of commerce known as the American Shopping Mall. The Texas mall you're walking into in the fall of 1982 has everything the teenage heart desires. Orange Julius down in the food courts, scrunchies over at the Claire's boutiques,

even an ice skating rink to slide around on between shopping sprees. Jack, I can even smell the Auntie Anne's pretzels from here, but today there is a newcomer to this gleaming capitalist temple. It's an affordable Swiss-made quartz watch that's starting a test run a few months before its release. And this test watch is a direct descendant

of the boring black and white vulgaris, but this one's available in 25 different colors and styles, from brick red to olive green to mustard yellow to straight up black. And on the back of the packaging is this message. Here's your new Swiss watch or swatch for short. Wow. There it is. This thing promises quartz accuracy, shock resistance, and waterproofing up to a hundred feet. Jack, you can swim with this watch or you could downhill ski with this watch. You can even jump into a Jacuzzi, naked or un-naked with this watch.

Shout out to our Jacuzzi episode. And the battery, it lasts three years. No repairs needed. Oh, and do we mention that this thing is Swiss? You know, like Rolex Swiss. The package also suggests, and this is a quote, you should choose more than one. This is big.

And here's how we got here. It's been a busy couple of years since those very first black and white boring prototypes rolled off the assembly line. Nikkei commissioned that report and led that big merger of the biggest watchmakers in Switzerland. So now Hayek, he's in charge of this huge organization

and he's sitting there asking anyone here working on some kind of quartz watch to compete with Japan? Anyone? And it turns out, yeah, there is a guy. Ernst Tomka has a quartz watch, but they're a little boring, so they needed a little judging. Enter the perfectly fabulous marketing and design consultant by the name of Franz Sprecher. Jack, tell us about Franz. Sprecher is brand new to the watch sector, but he is a seasoned pro when it comes to marketing and design. It's actually Sprecher who gives swatch its iconic name.

He comes up with it as a way to showcase both the Swiss-ness of the product and the idea that it can be your second watch. So Jack, I'd like to buy a consonant here, but just to make sure I'm right. The S in swatch stands for Swiss or second? I would say it stands for Swiss and second. There we go. But naming it the swatch is probably Sprecher's least impressive contribution, believe it or not. He also declares that this watch should be marketed not as a watch, but like a fashion accessory. You should buy more than one.

It's a huge unlock because Sprecher wants customers to look at these watches like they look at earrings or like they look at neckties. You wouldn't wear the same necktie every day, right? They'd think you're like a waiter at the Olive Garden or something. Well, this watch at around 40 bucks, it's pretty close in price to a really solid nice tie.

So you can buy a bunch of them to round out your wardrobe. What Sprecker is suggesting here is a strategy known as wardrobeing. And honestly, we have seen wardrobeing applied to a bunch of other sectors, haven't we, Jack? Like when Warby Parker came on the scene in 2010. They turned something that people usually have just one of, eyeglasses, into a fashion accessory that you can have multiple pairs of, eyeglasses, into a fashion accessory that you can have multiple pairs of to pair with different outfits.

Didn't you reveal at the top of the pod you have 40 pairs of sunglasses? It may be rounding up, but yeah, that's pretty much correct. Warby got you buying glasses like you'd buy handbags. And that fashion angle can really pay off if you commit to it. And that brings us back to this sunny mall down in Texas, where Swatch's lone star debut

is just a test run of 10,000 watches. It's a prequel to their official European launch coming up next spring. So here's what Swatch is thinking. If these Texans really hate these $40 watches, the company could just make some tweaks or they can just cancel the entire launch altogether. Jack, what was the result? It didn't go well. Sales at the Texas mall are flatter than expected, leading swatches makers to declare that middle America isn't feeling these euro chic watches. That small test, even if it's not a blow-up success, it's not a total bust because despite the low sales

numbers, the early adopter customers they do see are latching on to this wardrobe-ing idea. And after buying their first swatch, these folks are coming back to the mall for a second, a third, a fourth swatch. So even within this bad news, something is working. There are people who want swatches as accessories. Now all swatch needs to do is go and find them.

As Tim Gunn would say, make it work. Swatch. It officially launches on March 1, 1983 in Switzerland, Germany, and the UK. Swatch starts with just 12 styles, each retailing for between 30 and 40 bucks. And unlike their Texas test run, Swatch launches colors and styles that have gotten a lot more vivid. Gone are those drab olive greens and the muted bricks. These aren't Swiss Army Camo watches anymore, are they, Jack? Instead, Swatch gives us bright reds with black detail, a bold canary yellow. Even the slate gray model looks crisp,

like they're cut from a fashion magazine. They're going full Skittles on this. Can you taste the rainbow Jack? And thanks to the new color palette and the more cosmopolitan market, the European rollout goes much better. Swatch is an instant hit, but get this, Swatch does not pull out of the US market

where they were struggling. Instead, they adjust their design approach thanks to feedback from a key distributor, the CEO of Bloomingdale's. He hadn't been very impressed so far with the Swatch test run. So he gave the Swatch makers some very specific notes. He wanted to see at least 20 different models and this is key. Jack, are you taking notes over there? You better be taking notes on this. You ready? He said he wants a new watch collection every six months.

We're talking designer editions of watches. 20 different models and a new design collection every six months, that sounds like a lot of work. And it's a quid pro quo. Like, you want us to showcase you like a fashion brand? Well, then you gotta act like a fashion brand, man. Well, Swatch's marketing consultant, Franz Sprecher, he hears this and he says,

Jack, how would you say this, by the way? He says, ach so. Yeah, he takes this assignment and he sprints with it. And he starts laying out his vision of this new concept called the perpetual event. In the summer of 1983, Swatch launches its first limited edition special called the Jellyfish,

designed by a woman named Marlisa Schmidt. The Jellyfish is transparent like a jellyfish. So you can see the inner movements of this wristwatch. The eighties, they were big on bendy see-through plastic. Jelly bracelets, jelly shoes. So this jellyfish swatch that lands square in the zeitgeist. Nothing pairs better with the side ponytail and leg warmers quite like a jelly wristwatch. The first limited run of just 200 units sells out almost immediately.

So Nick Hayek, the big boss back in Switzerland, he is so dazzled by the sellout that he pushes for a jellyfish reissue right away. Let's make more of these things. They're selling like hotcakes. Okay, but then funny thing, Jack, his design team is like, um, we're not gonna do that. Swatch will not be repeating themselves.

It's kind of like the Bear Jack when Karmie insists on like a new menu every single night. You don't get a Michelin star by repeating the same old menu items, Nick. And you don't win in the fashion world by repeating yourself either. Keeping certain designs rare and limited run creates exclusivity, which elevates those designs to cult status. Now Swatch does briefly cave and reissue a slightly updated jellyfish in the fall. After all, this whole fashion thing, it's new to them.

But after that, they promise they won't make another one for nearly two years. That is discipline, Nick. Today, a first edition jellyfish in good condition, it's actually worth about six grand. By December 1983, nine months after the Swatch watches launch, the parent company SMH hits their 12-month sales target of 1 million swatches sold. They hit that goal a full quarter ahead of their projections. Wall Street would be drooling on sales like that. But Swatch's legend status is still a long way off, because there's a thin line between

fashion and fads. Fads fade, but fashion works in cycles. So now swatch is in the game, but how can swatch make sure they stay in the rotation? The music's loud, the crowd is raucous, and you can bet those drinks are weak. It is September 20th, 1984, and we are on the west edge of Chelsea in New York City at the famous nightclub known as The Roxy. By day, it's a roller skating rink. By night, it's a discount. And The Roxy is one of the city's first true multiracial hip hop clubs. It's a proving ground for young DJs and MCs, B-boys and B-girls, and it's where artists like the Beastie Boys and Madonna go to work out their new

material. But today's event isn't something free for all. Grab your Adidas and limber up because it's the first ever World Breakdancing Championships at the Roxy. Shaq, let's welcome them to the stage. We got Brooklyn's own larger than life rap trio known as the Fat Boys. They're going to perform. And with prizes worth 25 grand each, these dancers are bringing their A-game. So under the neon pink lights of the Roxy, the judges watch dancers do their pop and locks, their turtle spins, and even the classic worm. And one of those judges is a curly haired painter

with wire frame glasses and a cheerful expression. It's pop artist Keith Herron. You know the guy who paints all those cartoon dancing people with round heads and oak faces? Absolutely! He's the guy who designed the event's poster, their logo, and their stage art. And each massive on-stage canvas features a breakdancer, drawn-in herring signature style, but with a big goofy watch for a head. Because Yetis, this entire break dancing event,

it's sponsored by Swatch. If this mashup between East Coast hip hop, b-boy culture, street art, and Swiss watchmaking seems wild to you, it doesn't scan that way to the crowd, it works. Because Swatch has brought watches a long way from the stuffy clockworks of your grandpa's nightstand. There's no more conservative men wearing conservative suits. They're now at the bleeding edge of American youth culture. This is Franz Sprecher's

perpetual event strategy in action. Yeah, Swatch is creating events out of their design releases and using live events to inspire new designs. Swatch will later pair with Herring himself to create four limited edition watches. We can't do them justice on this audio show. You gotta Google them. These look like a birthday party if it were a watch. But Herring, legend as he was, wasn't even the first artist Swatch actually collaborated

with. That title? It goes to the French artist Kiki Picasso, no relation to Pablo, and they hire Kiki to create a limited run Swatch for a new collection called Swatch and Art. And only 140 timepieces are ever created, each with slightly different colors. Today, the Kiki is the single most valuable Swatch in the world,

with a market price of around $22,000. One of them even went for $45,000 at Sotheby's. But artsy kids, they aren't the only target demo at the lunch table. What about the jocks and the skate punks? Swatch goes after them by sponsoring a freestyle Ski World Cup, and later a BMX and a skateboarding tour. Swatch does have one sponsorship rule. They don't sponsor the big American sports. They're not going to do football. They're not going to do baseball because that's done by so many brands already. Swatch wants to break the mold and they choose the endorsement road less traveled.

But the end results of Swatch's design collapse and these perpetual events, it is pure hockey stick growth. They start going Gretzky in the 80s with sales soaring from 1 million watches in 1983 to 3.5 million watches in 1984. In 1986, they more than triple sales again. Besties, they have gone exponential. And keep in mind, it's only been three years since Nick Hayek sat in that conference room with those conservative suits and told them, hey, we're not going to surrender the Swiss watch industry. Switzerland is not just back in the watch race. Switzerland is speeding toward the front of the pack. They are growing sales at both the low end and the high end in the same industry. They're growing sales at both the bottom of the cake and the top of the cake.

Sprinkle on the sprinkles, Jack. Now over in Japan, Seiko and Casio aren't gone, but they're not driving the cultural conversation the way they used to pre-Swatch. And with every single year, SMH is clawing back more and more of that watch market share. Besties weren't going gonna go through every one of the iconic styles that defined Swatch Mania, because they were releasing 22 to 24 watch designs twice a year.

Jack, this is like Shein Speed right there. With more colors than a stable full of My Little Ponies. Some of these watches, they even have scented straps. That's right, Swatch started appealing to your other senses. Swatch had watch straps that were shaped like chili peppers, cucumbers, and even bacon. Exactly. As the limited editions rack up, so does the collector culture. And swatch aficionados, or swatch dogs as they're known, real name, actual people, they start attending conventions and reseller auctions of these

swatches. Swatch vendors often set a one watch per customer limit which buyers tried to get around by wearing wigs and other disguises into the stores. I'm sorry sir can you come over here and empty out your pockets we gotta go TSA on you. And yetis here's how much swagger Swatch has at this time. In 1991, Swatch decides to release a low-priced but mechanical self-winding model. Remember, that's the kind of watch that isn't powered by a battery, it's just powered by old-fashioned physics. A low-end mechanical watch sounds like a step backward, but it actually becomes a gateway product for the timepiece curious.

And the 1990s shockingly see mechanical watch sales spike on both the low and the high end, even though they're an outdated technology. Oh, and Jack, we can see and track this trend of the swatch dynamics like through pop culture, can't we? Swatches reintroduction of mechanical watches times up perfectly with James Bond giving up on digital watches. When Pierce Brosnan handsomely stars in 1995's GoldenEye, he kicks off his reign as 007 with an Omega Seamaster on his wrist.

And Omega is a Swiss watch brand that happens to be owned by Swatch. And in 1992, the company produces its 100 millionth Swatch and Nick Hayek autographs it. By 93, SMH has sales of $2 billion and profits of $286 million. Yetis, this makes Swatch the best-selling new brand in the history of business.

The next time Swatch sponsors a big sporting event, it's 1996, and what event is that, Jack? It's the Olympics. And Nikki Hayek literally carries the torch in Atlanta. The American press, they call him Mr. Swatch. It's a literal gold medal event. But unbeknownst to Mr. Swatch and company, a new competitor is on the way.

Not from Japan, but from Silicon Valley. It's 2002, and Nick Hayek is making a heavy decision. It's been 20 years since he first wrote that Hayek report that saved the Swiss watch industry with his wedding cake analogy. And now he might need to step back. The company he helped create, SMH, is now officially known as The Swatch Group. And Hayek has been CEO for 16 years. In that time, he's seen the entire Swiss watchmaking industry bounce back. Led by Swatch's record sales numbers. In 1997, they topped the equivalent of $4 billion in today's dollars.

His wild strategy of cheap Swatch watches simultaneously managed to turn Rolex into the ultimate luxury watch brand. What Hayek has done for the Swiss watch industry may even be the greatest turnaround in business history. But Hayek, he's in his seventies now, and it's time to pass the second hand. His son, Nick Hayek Jr. becomes chief executive and his daughter, Naila, she's the board chair. Nick Sr. he remains involved with the company and in 2010, he passes away at

work at the age of 82. What an amazing run for Nick Hayek. But now it's up to Nick Jr. and Nyla to weather the coming storm because no product goes unchallenged forever, does it Jack? No, it doesn't. And in the 20 teens, decades after the quartz watch revolution, swatch and Swiss watchmakers generally, they see their industry dominance getting challenged again by a new kind of tech upgrade. Jack, I think you know where I'm going with this, because I think you may be wearing it right now. I think I do.

I think it has to do with step counting. 10,033, 10,034. Yetis, it is the Fitbit. It launches in 2009, and it uses swatch swatching principles in its design and its marketing with cute rubbery wristbands in bright colors that you can match to each of your outfits. Wardrobing with the Fitbit is easy because when you want a new look, you can just swap out the strap. And by 2015, Fitbit IPOs at a $4.1 billion valuation and four years later, Fitbit is acquired by Google.

But if Fitbit's the appetizer than Jack, the Apple Watch, that is the main course. And the first generation Apple Watch debuts in 2014, taking the watch industry to an entirely new level. In 2020 alone, Apple sells around 34 million Apple watches. That is two and a half times as many watches as the entire nation of Switzerland exports that year. So Yetis, you hear an insane statistic like that and you're thinking, man, there is no way Swatch could survive. But Swatch has survived. In a total shock, Swatch pulls off an upswing turnaround, thanks in part to a trend that Jack and I can't wait to tell you about.

We said earlier that fashion moves in cycles. Well, you know what? So does nostalgia. In fact, Jack and I did a deep dive and we found that nostalgia actually moves in 20 year life cycles. That is just enough time for everything old to feel new again without being so far back that people can't remember it. 20 years is the perfect balance of the opposing forces of novelty

and sentimentality. It's the reason why you started seeing Uggs everywhere in 2024, 20 years after they ruled all those suburban sidewalks. Exactly, Jack. That's why 80s throwback shows like Stranger Things are dominating TV right now. That's 40 years back, which by my calculation, Jack, that is two nostalgia cycles. In fact, Stranger Things had a major swatch moment. We mentioned it at the top of the show. It was an episode that went mega viral in 2022. The character Max is trapped in the upside down. And when her friends come to the rescue,

we see she's wearing a bright yellow, period accurate swatch watch. And that episode of Stranger Things sends internet swatch dogs into a tizzy. In 2023, swatch turns 40 years old. Again, that is two nostalgia cycles. And the Swatch Group came ready for it. Around this time, Swatch launched retro posthumous collabs with artists like Keith Haring and Jean-Michel Basquiat. Swatch even brought

back their transparent jellyfish, although these days they call it the clear. It's this nostalgia strategy, bringing back the greatest hits from 20 and 40 years ago that allow Swatch to be in vogue again. This is how they survived the Fitbit and Apple Watch threat from Silicon Valley. Four decades after their launch, Swatch's range of colors, its designs, its limited edition drops,

they fit perfectly into the social media era. And Swatch's official Instagram account has got 2 million followers, which Jack, could you sprinkle on some chronological context for us, please? That's more than Casio US, Seiko US, and Belova combined. You heard that yeti, Swatch. It was the original wrist influencer. We're officially on Firewatch till Charlie XCX gets a swatch line. It's only a matter of time, Jack. Literally.

So Jack, now that you've heard the story of swatch, what's your takeaway? You can have your wedding cake and eat your cupcake too. Sounds delicious. I gotta hear more. The existence of a low budget item in your product lineup, like a cupcake, doesn't mean that the luxury wedding cake version

can't thrive too. In fact, the low end product acts as a gateway product to the higher end version. All right, Jack, so in picturing like Diane von Furstenberg for Target or Brandon Maxwell for Walmart. Yep, they are all luxury brands with budget versions to help stoke a broader brand affinity and demand. Right. And it's proven by people's

ongoing obsession with Rolex, Omega, Cartier, and other luxury watches. Swatch didn't kill Rolex, it made Rolex stronger. You can have your wedding cake and eat your cupcake too. Nick, what's your takeaway? Jack, my takeaway is that to conduct a successful turnaround, you got to attack the three P's, people, product, and plan. So first, you need to make bold changes to the executives who make your decisions, the people. And then you got to change up what you're selling, the product. And finally, you got to work on the strategy, the plan.

But you know what? You need all three. All three P's. Or else, your turnaround, it ain't gonna turn. And Jack and I have seen organizations that try to change just one or two of these P's, and honestly, it just doesn't work out. And Swatch hit all the three P's really hard. First, they changed the people by putting Hayek in charge of the company with Tomka and Sprecher working below him. And then they invented the Swatch, which of course was a change to the product. And finally, they executed the fashion-based wardrobeing strategy as their plan. You change your three P's and your turnaround is more likely to succeed. All right, before we go, Nicholas, it is time for our favorite part of the show,

the best facts yet. The hero stats, the facts, the surprises that we discovered in our research, but we couldn't fit into this story. Jack, hit me. What do you got? We know about Swatch's work with Pop Artists, but did you know there was an almost collab with Andy Warhol? The company first approached him in 1984. Andy declined but instead recommended one of his protochés, Keith Herring. It was a safety school but it worked out really well. And Nicholas Hayek Sr., the longtime CEO of Swatch Group, the absolute legend of the wrist, he brought us another surprising product too, the Smart Car.

That's right, the Micro Car was designed to have colorful personalized paneling and carry two people in a case of beer. Its original name was the Swatchmobile. And that is why Swatch is the best idea yet. Coming up on the next episode of the Best Idea yet is the pioneering and harrowing story of the Oregon Trail. Check yourself for dysentery yetis. Does one check oneself for dysentery? I wouldn't know and I don't want to know, Jack.

Follow the best idea yet on the Wondry app, Amazon Music, or wherever you get your podcasts. You can listen to every episode of The Best Idea Yet early and ad free right now by joining Wondery Plus in the Wondery app or on Apple podcasts. Before you go, tell us about yourself by filling out a short survey at Wondery.com slash survey. The Best Idea Yet is a production of Wondery hosted by me, Nick Martel and me, Jack Kraviche Kramer. Hey, if you have a product you're obsessed with but you wish you knew the backstory, drop us a comment. We'll look into it for you. Oh, and don't forget to rate and review the podcast. Our senior producers are Matt

Beagle and Chris Gaultier. Peter Arcuni is our producer. Our senior managing producer is Nick Ryan and Taylor Sniffin is our managing producer. Our associate producer and researcher is H. Conley. This episode was written and produced by Katie Clark Gray. We use many sources in our research, including The Innovation Factory, Taken the Plunge by Gilles Garell and Swatch co-designer Elmer Mock and Mr. Swatch, Nicholas Hayek and The Secret of His Success by Yura Gwagelin. Sound design and mixing by CJ Drummler.

Fact checking by Molly Artwick. Music supervision by Scott Velazquez and Jolina Garcia for Freesan Sync. Our theme song is Got That Feeling Again by Blackilac. Executive producers for Nick and Jack Studios are me, Nick Martel. And me, Jack Ravici Kramer. Executive producers for Wondery are Dave Easton,

Jenny Lauer Beckman, Erin O'Flaherty, and Marshall Lewis.