The Greatly Improbable, Highly Enjoyable, Increasingly Profitable Life of Michael Kobold

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It's incongruous to picture the maker of expensive watches commuting to work here, in a bland office that doesn't even have a receptionist, but it's core to Kobold's business philosophy. "I don't believe in hiring more, more, more people," he says. "That's the mistake a lot of companies make. They hire people and then lay them off. It's cyclical. I'm against that. Around Christmas, we just work harder."

Kobold pays himself a low-six-figure salary. Everything else goes back to the company. Because so much of the watch business is image and exposure, his ad budget is the largest line item after manufacturing costs. You can find Kobold watches in expensive titles like The Economist, Men's Vogue, and the Robb Report, magazines that get up to $50,000 per page. In 2007, Kobold will spend just over a half-million dollars on advertising.

Perhaps the smartest thing Kobold ever did was to ask his celebrity buyers for permission to list their names on the company website. His friendship with Sir Ranulph Fiennes expanded into business when the explorer agreed to leave Rolex, his longtime sponsor, and become the face of Kobold under its new slogan, "Embrace Adventure." (A roster of adventurers who wear Kobolds, including the likes of mountaineering legend Reinhold Messner, is prominently featured on the website.) Fiennes is not the company's most famous fan, however. Bill Clinton owns at least three Kobold watches and has chosen some very high-profile spots--Larry King Live, a Super Bowl halftime show, the cover of Ladies' Home Journal--in which to wear them. As an ex-President, Clinton cannot officially endorse anything, nor can his likeness be used in an ad, but you better believe it's a topic Michael Kobold loves to bring up.

But Kobold's biggest break of all circles back to Gandolfini. One day in late 2003, the actor was posing for the cover of GQ magazine in a Manhattan studio. Kobold was hanging around with his friend and started to snap a few photos with the idea that maybe one of them would work out as an ad. "Hey, Jim," he said, "look over here." Gandolfini looked over, smiled, and then, as actors often do, he improvised; he raised his middle finger to the camera. That shot would become an ad that has since run in dozens of magazines. The tag line: "James Gandolfini thinks Kobold is No. 1."

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.

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