Book review: “Mister Swatch -Nicolas Hayek and the secret of his success”
This is basically part 4 and a half of my “watch series”. The founder of Swatch Group, Nicolas Hayek who died in 2010 was such an interesting character so I thought it made sense to read this biography.
The biography is unauthorized, Hayek was against it. The author is one of the most well-known Swiss Journalists. I actually read the German version because it was 10 EUR cheaper as hardcover than the English version.
Hayek was born in Lebanon into the “affluent middle class”. He went to Switzerland because he fell in love with a Swiss Aupair girl. His parents would not let marry him because of”low status” of the girl, so he left and went to Switzerland.
As his father in law became ill, he kind of took over the management of his company (machinery). He turned around the company but then fell out with the father in law when he came back. Afterwards he worked for an US consulting company.
He then started his own consulting company Hayek Engineering with a focus on machinery companies which still seems to exist. His first successes were mostly in Germany, but then he became also well-known but controversial during a military deal which he reviewed very critically. He made a surprising amount of money in consulting,the author assumes that Hayek had a net worth of 200 mn Swiss franks fortune before he came in contact with the watch industry.
Despite being an industry outsider, he was called in to help bankrupt Swiss watch companies by the banks which already them had taken over. Hayek merged two bankrupt companies (SSIH and ASUAG) realizing synergies and made a lot of changes, especially with regard to automated production and optimized marketing.
He had to think twice before he bought in personally together with other Swiss investors. He paid around 40 mn Swiss francs for 17%, then bought more later from Co-investors. He only became CEO of Swatch at the age of 60, before was still technically at his consulting company.
Although he claimed to have invented it, the famous “Swatch” was already existing and sold quite successfully before he came. However was a marketing genius, organised great events which brought him into the news and in contact with many rich and important people. He also recognized early on the potential of the Omega brand and had the clear vision to build that brand into a direct competitor for Rolex. The banks initially wanted to sell Omega for 300 mn Swiss francs to the Japanese.
Nevertheless for him the Swatch was always very imortant. He always argued that if the Swiss watch industry would lose the low-end of the market and only produce luxury watches, they would be in danger to meet the same fate as the British car makers Rolls Royce and Bentley.
He also had some failures: He tried to produce and sell phones (“Twin Phone” without success, the Smart Car (Smart failed and he got out, Swatch accessories did not work out.
However he was very shrewd in acquiring true luxury brands cheaply, did never overpay. He knew he needed those top brands in the long run. Acquired Breguet in the nineties and managed to increase sales 10 fold within a couple of years. The book says that back in 2010 or so, they sold 30.000 Breguet Watches for total sales of around 1 bn Swiss francs.
He always meant to bring in his heirs into the company. Son Nick tried t become a film maker first but then entered the company as marketing manager. Daughter Nayla was breeding horses but eventually also joined the company and is now president (Nick is CEO). Nayla’s son Marc is already now running some of the luxury brands.
So the question now is clearly: What was the secret of Hayek’s success ? The author doesn’t really live up to the title of the book but one can draw one’s own conclusion. Hayek had a lot of characteristics which can be seen in many succesful entrepreneurs:
- was a tough boss but fair to workers like a classical “Patron”
- Very independent thinker.Had his own ideas and stuck to them no matter what
- he hated banks and never took on debt after he repaid it in the beginning. Debt was something which he didn’t like because you became dependent. In contrast, he always kept a significant cash balance in order to be prepared if opportunities came up
- He was quite modest, had a rather old and shabby office, always lived in the same nice but not extravagant house
- Most importantly: He really had a long-term focus, reinvested continuously into the business
- finally he was a marketing genie, both for his products and for his own person. Hayek was Swatch and Swatch was Hayek
When looking at Swatch, the question is how much of the founder spirit is still in the company ? Can his children fill out his rle to some extent ? More on that in a later post.
Overall, the book is clearly one of the better biographies available and also offering some interesting insights into the history of the Swiss watch industry. For anyone interested in that area a definitive “must read”.
A a final bonus an interview with Hayek from the late 80ies aboutthe importance of manufacturing.