One of the first magazines to run the ad was the trade publication International Watch. Editor in chief Gary George Girdvainis was hesitant to take it at first. This is a staid old business; your typical watch ad is just a beauty shot of a timepiece on seamless. You might get a shiny luxury car in the background or maybe Pete Sampras in a blazer. To Girdvainis's surprise, he got no complaints. "People were offended, affronted, amused, whatever," he says. "They paid attention."
Another brand ambassador who turns up in ads is Prince Mongo, a wealthy real estate investor from Memphis who insists he is a 333-year-old envoy from the planet Zambonia. He dresses like a homeless person and never wears shoes. But he does wear a multithousand-dollar watch.
Once, Kobold was in the office alone when the king of a Middle Eastern country that cannot be named rang up. His Eminence had seen an ad for the Phantom--a matte black chronograph created for special ops soldiers--in the back of the DuPont Registry and sought to understand why, exactly, one would need a bezel that turned.
"Do you cook?" Kobold recalls asking the king, who lives in a gilded palace and controls oil reserves that yield tens of thousands of barrels a day. "Okay, ridiculous question." He tried again. "Say you're putting money in a parking meter…Oh, right. Never mind."
The king paid $22,500 for a custom gold version of the Phantom--a good deal, at the end of the day.
"It's customer service," Kobold says. "We have a margin. I'm not going to argue with the king over $1,000."
In the hierarchy of watches, the ultra high end is made up of your Pateks and your Audemars Piguets. Chronoswiss, Jaeger-LeCoultre, IWC, and some others would fall just under the top end. Below that would be the likes of Panerai, Rolex, Omega, and little old Kobold. "Compare us to Rolex," Kobold himself says. "Don't compare us to Patek."
Michael Kobold, though, has very distinct ideas about luxury. He believes in scarcity and in micromanaged quality control. His company does very limited productions. Kobold, he says, will never produce more than 2,500 watches in a year. Rolex, by comparison, makes upward of 600,000, which isn't to say it's not a brand that commands respect. If you were to check the wrists of 100 Wall Street traders, it's a virtual certainty that Rolex would predominate. It is the only watch brand to appear on the Interbrand (NYSE:OMC) "100 Best Global Brands" list.
Kobold admires the company and its watches; he just takes issue with the numbers. That level of production "runs counter to the idea of luxury," Kobold says. "It becomes a commodity. Bigger companies overproduce and discount. We do the opposite." He will build only 250 of a new watch he's developing with British racing car legend Stirling Moss. Another new model will bear the name of Philippe Cousteau, and again, only 250 will be made. With a few exceptions, Kobold retires a watch after a limited production, which not only creates demand but protects the value of his customers' investments.
Virtually every piece of a Kobold watch is made in Europe, but Kobold is proud to base his operations, and most of his assembly, in the U.S. (He's a bit of a patriot--he's stingy about discounts except to law enforcement and military personnel, and nothing makes him happier than selling a watch to a Navy Seal or a Secret Service agent.) The few other notable American watch companies are either much smaller--the tiny Montana Watch Co. and RGM Watch are developing names--or much larger and not purely makers of mechanicals, Fossil (NASDAQ:FOSL) being the most prominent example. "There's really nothing on our level in America," Kobold says. "But my theory is that when a guy collects watches, eventually he's going to end up with one of each. So in a sense there is no competition."
That may be partly true, but it's mostly just indicative of Kobold's optimism. Certainly it's expensive to start a high-end watch company, but in crucial respects the barriers to entry are low. Most important, the movement, the beating heart of a mechanical watch, is available off the shelf. (See "Very Tightly Wound,") "Anyone with a design can make a watch," says Girdvainis, of International Watch. "You can start the project on a napkin and bring it to fruition. It's basically marketing.
"There are 200-plus watch brands at Basel alone," he says, speaking of the annual Basel watch show, the industry's preeminent showcase. "And every year they pop onto the scene and then disappear as though they never existed."
And when Kobold popped onto the scene?
"I was surprised he was still here a few years later."
Just about the only thing Michael Kobold is circumspect about is money. There seems to be a watch-business code of omerta regarding sales figures--extending even to a company that sells direct to the public, publishes its prices online, and rarely discounts. But the math is simple. If you assume (conservatively) that the average sale of a Kobold watch is worth about $2,500, and if the company sold (conservatively) about 1,500 watches in 2006, then Kobold is coming off something like a $3.75 million year.
David Bowling, the associate publisher of WatchTime magazine, likes to call Mike Kobold "Big Fish," after the Tim Burton movie in which a dying father tells his son a string of exaggerated tales. As the father spins outlandish stories, they play out onscreen in wild Technicolor fancy, so that it is never clear where reality ends and fantasy begins. Bowling, who has been observing the watch industry for nearly a decade, says he has never met anyone like Kobold. They first met, he recalls, when Gerd Lang introduced him to the then 19-year-old German at the Basel watch show. Kobold had yet to produce a watch but was not shy about announcing his intentions to do so.
