Jan 04, 2022
18 mins read
Bring a Trailer has become one of the major destinations for car enthusiasts to find the next classic or cult machine to add to their garage. With this in mind, I wanted to talk about Doublewrist; a platform taking the same auction model and applying it to watches. The founder is a California-based lawyer who I met via Instagram, and we’ve grown to become friends over time. Since I think the concept is actually awesome, I thought it deserved some attention.
I’m hoping he will give me a cut if this leads to a sale 🙂
Bring a Trailer
The Bring a Trailer (BaT) concept started in 2007, when the CEO Randy Nonnenberg started a own blog which covered a curated selection of interesting cars for sale. As the years passed, he observed a huge increase in the number of people registering for his daily email newsletter. In a way, he was offering a service which people didn’t know they wanted, and of course, this unique offering was driven by his own ability to pick ‘the most interesting cars’ for a wide audience.
Incidentally, a similar ‘analogue’ to Randy’s blog already exists over at Hairspring.com. Even if you’re not buying a watch, all their write-ups on each curated piece is quite extraordinarily written, and following their blog will likely appeal to every genuine enthusiast. You can also follow them on Instagram here.
The Hairspring began in late 2016 with a simple goal: to sift through the very best of the entire watch market to attract and bring closer together a community of thoughtful collectors.
Back to BaT – After the rise in popularity of his newsletter, Nonnenberg decided to add his own fixed-price listings for members of the Bring a Trailer community to sell cars. In 2010, due to the rise in popularity of BaT, he quit his day job to enable him to work full-time on developing its online presence.
Between 2010 and 2012, the interest in each listing on BaT rose significantly, with Nonnenberg noting that each new listing was receiving “50-plus comments”. Engaging with the regular users who bid and comment on auctions has been key to the growth of BaT. Nonnenberg explains that it was the number of BaT Community members “asking to list their cars directly” with the website that created their current auction model. The volume of requests meant that the original classified-style listings on BaT essentially became unworkable. Nonnenberg realized that if “sellers underpriced their car, there would be an unmanageable feeding frenzy, and if they overpriced it, there would be no action at all.” This led to the development of the current auction system from scratch, which was launched in 2014.
One of the primary drivers of BaT’s success is the community built around its users. Watch enthusiasts will recognise this feeling from the constant praise of the ‘watchfam’. BaT community members are able to ask questions to the seller about the car listed, and everyone can see the answers. Not only does this allow more informed bidding, but it can also result in enthusiasts gaining new knowledge. In addition, as the platform’s audience grew, this knowledge sharing became more valuable to prospective buyers. Users often recount stories about when they have owned a car similar to the one listed, and frequently congratulate successful bidders on winning their new ride. As watch enthusiasts on Instagram, all this is highly relatable. One additional benefit is the ability to spot fakes too – think about how often people are caught wearing fake watches, often from low-res photos – image trying to dupe a platform full of watch enthusiasts, looking at high-res images?!
It should be no surprise that BaT was acquired by Hearst in 2020. Under the terms of the deal, BaT remained an independent business led by cofounder Randy Nonnenberg. Today, BaT averages over 450 lots a week and accepts an astonishing array of consignments, from seven figure La Ferraris and 300SL Gullwings, to a custom 1950 Westcraft Capistrano Park Trailer!
Chart credit: James Hewitt Get the data
According to Nonnenberg, one of the most frequently asked questions is what the team looks for when choosing which cars they allow to be listed. Their choices are made based on both quantitative and qualitative factors. Rarity, pricing, and specification play a part, but then so do considerations like “seller impression, photo quality, and the general desirability” of a particular car. Ultimately, they want to encourage an eclectic mixture of cars, as they like everything from “inexpensive enthusiast” models, through to the “blue-chip Shelbys and Testarossas.”
“We have more premium and restored cars now, for sure, but we also have more drivers and projects and race cars submitted,” … “There is just more of everything.”
THE “BRING A TRAILER PREMIUM”
The Hagerty Price Guide actively tracks market values so owners, as well as buyers and sellers, have an accurate picture of their car’s worth. Writer James Hewitt did an analysis on whether the BaT premium was a real thing, and I will summarise his full post.
The analysis looked at two stats: 1) vehicles that sold at a different venue then sold on BaT within a year, and 2) vehicles bought on BaT then sold at a different venue within a year.
No matter the case, we see evidence of the narrative that during COVID in 2020 and continuing into 2021, Bring a Trailer saw a large ramp-up in buyers who wanted a certain car—right now—and were willing to pay for it. Often above what outside viewers would see as the market value. If you think this is just evidence that prices overall are presently increasing fast, well, you’re correct, but nowhere else are we seeing such disparities: Other major online auction sites see a premium over HPG value, too, but it is on average just one-third as big as Bring a Trailer’s.
First let’s talk about a few of the platforms in this “BaT-style” watch auction space.
Loupe This (LT), was founded by Eric Ku and Justin Gruenberg… quintessential ‘watch guys’, as Revolution says:
Eric Ku is arguably one of the most well-known and respected watch dealers and experts in the world. The serial entrepreneur has been a fixture on the international watch scene for many years and his business interests encompass private client sales, retail businesses and watch repair operations. Justin Gruenberggrew up in the watch business, his father is one of the USA’s preeminent dealers.
The founders of LT have chosen to leverage watch enthusiasts’ favourite tag line: “buy the seller“. In order to sell something on the platform, you need to send it to them first. This means that their business case rests on their own ability to manage the flow of inventory other into, and then out of, their vaults. If you consider the current scale of BaT (450 lots per week), this seems rather onerous. The practicalities of holding up to 2000 (30-day turnaround according to their own FAQs) high-value watches which are often irreplaceable means that the operating costs (hiring ‘experts’, security, insurance, logistics) of this operation would probably be insane, and perhaps prohibitive (although they take a 10% buyers fee which would work for watches that sell, but not for those which don’tsell).
The other confusing thing about this platform is the listing fee. They ask for $500 upfront, and yet they show completed auctions for $1500. This makes no sense to me… why would anyone list a low-value watch and lose 33% when they could probably sell it to a grey-dealer for a bit more? Granted, these low-value sales had higher ‘estimates’ and so, maybe they expected a higher hammer price… but if that’s their track record on estimation, then LT are either clueless about pricing (unlikely) or they don’t have enough users on the site to achieve ‘true market price’ representation (more likely). Alternatively, LT founders are just using the site to sell their own slow-moving stock (they are also grey dealers), and so there was no listing fee to be paid (since its their own website). This is pretty smart of them, but if it is the case, then it feels slightly disingenuous/misleading for a casual browser of the site.
Overall, this is a pretty cool site run by industry veterans, so it is likely that the average user will probably have a great experience dealing with them. The thing that this site doesn’t appear to be, is highly scalable, due to the fact that they require watches to be sent to them.
DIAL AND BEZEL
Dial and Bezel (D&B) was founded by three friends; Parker Lieberman, Spencer Davidson, and Brian Bochner.
Parker is a Los Angeles native living in New York City who has spent his career with one foot in hospitality and real estate and one foot in entrepreneurship. He has been learning about and collecting watches for the past 12 years with a penchant for any watch with a great backstory.
Spencer has been a collector, wheeler and dealer of the obscure since he can remember. With an extensive background in finance, sales and hospitality, Spencer has quickly transformed his growing passion and enthusiasm for the world of horology into an obsession.
Brian is a Los Angeles native living in New York City. He has spent his career working in advertising and marketing for some of the biggest consumer brands as well as up-and-coming startups. He has been a student of the watch world for the past 10 years with an affinity for vintage Cartier and 1601 Rolex Datejusts.
Source: Dial and Bezel
D&B takes the BaT concept one step further than Loupe This. Worth adding that strictly speaking, D&B aren’t directly comparable to other watch auction platforms because they specialise only in “classic, collector, and vintage watches” and not ‘all‘ watches… but this can easily change so I figured it was still worth discussing.
D&B don’t offer any form of authenticity guarantee, but instead act as escrow agents for the transaction, including the ‘facilitation’ of after-sales problems which arise. This works in the same way as Chrono24 Buyer Protection but feels less secure when to comes to the authenticity guarantee, mainly because a guarantee is only as solid as the guarantor after all. Of course this is not a criticism of D&B, and perhaps they have insurance to cover it, however this wasn’t covered in their FAQs. The other thing to note is they don’t do business outside of the USA.
D&B is probably best categorised as a US-based mini-Chrono24 for vintage watches. At the time of writing this, D&B had only 1 watch selling in an auction, along with a large selection of ‘buy now’ watches in the ‘auctions‘ section. Not sure how this works, since the ‘how it works‘ page doesn’t mention anything about non-auction sales.
Overall, this is a neat site for vintage enthusiasts. There isn’t much in terms of live auctions, but they have a long list of completed auctions with bid history, so I imagine that access to new inventory is a problem for them – this is not usual in this space. Even normal grey-dealers are struggling to get hold of good stock!
Doublewrist (DW) was founded by Christian Kim, a California-based lawyer who runs his own law firm. He is a regular watch collector that got bored during the COVID-19 lockdown in 2020. Turns out, Christian went to college with a few coder geeks who went on to work in silicon valley and silicon beach for some well-known tech companies. He got them to develop the site on a shoestring budget, more as a favour to him than a real piece of contract work. As a result, he tells me their automated platform is built to scale using industry-leading technology, and can handle over a million auctions per month with no human intervention required.
DW differs from the other sites mentioned above in two key ways. First, there is a cap on the 5% buyers’ fee of $10,000. This would appeal to people buying and selling extremely valuable pieces, and is exactly how BaT works as well (although the BaT cap is even lower at $5000). Second, DW do not act as intermediaries between buyers and sellers after the auction us completed. Essentially, DW facilitates an agreement in principle, and take their fees upfront (through the flat $50 upfront sellers’ fee, and the credit card hold placed on all buyers’ cards when bidding).
After an auction is successfully completed, DW releases contact details between buyers and sellers, who can then arrange payment and shipping between themselves. Now, at first, this might seem like a preposterous idea, but the more you analyse it, the more it becomes clear that this is the best way forward for all parties concerned (except current grey-market dealers!).
Overall, this is the most accurate replication of the BaT model for car-enthusiasts, and that makes sense because that’s exactly what Christian told me he set out to replicate for the watch market. Granted, the site is still in ‘BETA’ as it needs an aesthetic overhaul, but the back-end, I’m told, is ready to go. There is a lot more I would add to the site, including an overhaul of the user profile system, and the user-engagement experience, but all of this can be fixed quite quickly with a UI/UX expert.
As we already know, through the success of BaT, this auction model works well for cars. Could it work for watches? The first thing required for it to work, is a significantly large user-base to be able to reach true market prices, and prevent auctions ending without the reserve being met. The second thing would be the engaged user base. I’m sure we can all agree that the engaged user base exists already, and this pool is growing astronomically and becoming more mainstream with each passing day. The missing link, is to get these engaged users to join a specific platform, and show their engagement there. NONE of the aforementioned sites have these ingredients.
Many will argue that ‘peace of mind’ is lacking with the BaT model, however, I disagree. You only need to look at the success of Chrono24 to realise this argument is nonsense, in the grand scheme of things. There is no such thing as a ‘bulletproof’ seller. Just a quick browse on Perezcope and you’ll see all the big name sellers who have been caught selling fake or misrepresented watches, including Christies, Antiquorumand Sothebys. So given that Chrono24 fees are high, and there is no curation taking place at all, they still managed to grow to a point where they were able to secure $118m in Series C investment from global growth equity firm General Atlantic and Aglaé Ventures… turns out, that is the technology arm of LVMH founder Bernard Arnault’s family investment company, and the Co-CEO of Chrono24 (Tim Stracke) reckons “this is a 50-billion-euro industry.“
So hopefully it is clear that the big prize in this game is not the odd uber-vintage piece which can be faked in numerous ways, and requires extreme scrutiny to verify its authenticity. No, the vision here is to grow a platform which facilitates extreme volume in terms of completed auctions, and in doing so, puts value back in the pockets of consumers. It does this through low fees, and data transparency.
If a seller was able to shift a limited McLaren Senna GTR for over $1.3m and pay only $349 for the privilege, and the buyer of this car paid only $10,000 for the access to this car on the platform, then that’s about the closest you can get to a ‘true market price’, I am sure you’ll agree. Right now on Chrono24, which many people use as a ‘benchmark’, there is a lot of nonsense baked into the prices. Dealers often collude on setting market prices, not to mention the additional 20%+ added on to the cost of the watches to cover the Chrono24 fees, the dealers’ margins, and their own expenses and taxes. We as watch buyers are paying for all of this ‘fat’ in the system, and the BaT model cuts it all out.
The economics of the BaT model for watches make perfect sense to me, and the sheer volume of savings for watch buyers is too big to ignore. As I said in the first paragraph of this section – in order to be successful, a platform like this needs a critical mass of user-adoption to make it successful – and these users also need to keep coming back each day, in the same way that we visit Chrono24 every day to check on our ‘saved searches’. This requires significant investment in growth/marketing to make it a reality… and in my opinion this is where an existing grey market dealer with a large enough footprint can completely annihilate the industry as we know it. The ideal candidate is, ironically, Chrono24, but they are also the ones with enough capital to potentially build such a platform themselves, so probably wouldn’t be interested in deal.
Most grey market dealers would view this as a massive threat, and rightly so – however, in my view, this is not a question of “if”, but rather a question of “when”. In the same way that several successful auction houses exist, I can also see a world where perhaps a handful of these platforms can co-exist in harmony too – potentially with some specialised in vintage like D&B, and others specialising in modern etc. There might also be a regional divide, with a dominant platform in global region such as APAC, EUROPE and US… but one thing is certain, a single global platform will be the most efficient for watch buyers.
This doesn’t really spell ‘the end’ for grey market dealers… all this would mean is that data transparency would prevent them from ripping people off. Even with BaT, dealers are known to use BaT to buy and sell inventory for their car dealerships – all this means is that dealers need to work hard for their cut, and add some value – not just slap on a massive premium and keep raising prices by colluding with their dealer friends to lead the market to believe something is apparently worth more than the true market price (remember the recent craze with the Rolex Oyster Perpetual with a Tiffany dial!?).
Gary Shilling is reported to have said: “the stock market can remain irrational a lot longer than you can remain solvent”, and I use this quote here because the watch market has been irrational for a really long time, but only recently has it become irrational on a gargantuan, global scale. With this level of scrutiny on the watch market, with the likes of Bloomberg discussing how watches have “exploded” in recent years, and with the sheer quantity of money involved, you can be sure that reallysmart people are going to find a way to cash in on getting a piece of this pie. That’s where I see the DW model shining… it is a truly mass-market, volume-driven prize, and hopefully someone with the relevant reach and capital can see it too.
The bottom line is that for this sort of peer-to-peer auction site to work, it needs the watch community to make it work – and because this would save money for the watch community by cutting out the extortionate dealer premiums and the massive buyers’ premiums from ‘traditional’ auction houses, I am saying it is in our own interests to make this happen. Essentially, it would be a grassroots movement to take down an insider-run industry with opaque pricing practices. I can’t wait till someone makes this happen, and hope it happens sooner rather than later.
For any questions or queries about investing in or working with DW, contact [email protected]. For the avoidance of doubt, I was not paid to write this, nor do I have any ownership or other interest in DW. I look forward to hearing your contrarian views!
Originally published at http://screwdowncrown.com on January 4, 2022.