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Comment by FirmwareBurner | Hacker News Reader

>“We are not – we are not – a car company. We are a luxury company that is also doing cars.”

Replace Ferrari with Rolex and it's basically the same article. Veblen is such a good business model and place to work, if you can hack it that is.

Imagine you're a sales guy at Honda dealership, well you have to work hard to convince the middle aged dad why buy a CRV instead of a Toyota RAV4.

However, if you work at a Bugatti dealership, you don't need to convince the oil-rich Sheikh why he should buy the 2 million dollar car, he already wanted to buy it before he even stepped in. So not only is your job easier than the guy in the Honda dealership, it's also much better paid. The very definition of inequality. The same is true for other businesses. It's much easier and profitable selling Azure /Office 365 subscriptions to businesses, that some SW solution from a mom & pop shop.

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> "However, if you work at a Bugatti dealership, you don't need to convince the oil-rich Sheikh why he should buy the 2 million dollar car, he already wanted to buy it before he even stepped in."

Respectfully disagreed. The sales people for veblen goods work extremely hard because competition is intense even within that space. The Bugatti salesman is competing with Ferrari, McLaren, Lamborghini, etc.

The margins per-sale are great, but because of your low volumes you experience a lot more volatility. Minor fluctuations in sales have disproportionate impact on your bottom line.

I once worked for a luxury real estate brokerage and had opportunity to talk to real estate brokers who dealt in ultra-high-end real estate (the kind of properties that people make YouTube videos about). One conversation stood out to me that's relevant here:

I asked him about a listing for a Manhattan penthouse that had been making the news (mid-8-figure buy-in), and his response was that it was an incredibly risky property to represent, because the list of potential buyers is perhaps a dozen people long. If none of them move on the deal then you're holding an absolutely immense albatross.

Ultra-high-end goods are generally susceptible to this. Your market is small enough that it doesn't take a lot to existentially threaten you, and there is no shortage of people who want to eat your lunch (just like with any other market).

>I once worked for a luxury real estate brokerage and had opportunity to talk to real estate brokers who dealt in ultra-high-end real estate (the kind of properties that people make YouTube videos about). One conversation stood out to me that's relevant here

Do you happen to have more sharable anecdotes / thoughts around this? I realize its off topic, however I think it still has value to warrant that.

I'd be interested in anything you can share about it. I'm curious how the 'day to day' folks see things vs how its sold and told to the rest of us via news magazines or books.

It's a super interesting scene, and was a great eye-opener into how the mega-wealthy side of the world goes. A few things that pop into my brain in no particular order:

- At the high end, everyone's got a gimmick. You can't just be personable and charming, you have to be so memorable as to feel like some fictional character. Your clientele are expecting more than mere representation, but something/someone who makes their life actively more interesting.

- Part of this may have been the market (NYC), but I got the distinct feeling that a lot of this was that buyers wanted a NYC fairy tale. If you're wealthy enough, it's not enough to have an agent, your agent has to spring forth and become a side character in the adventure story of their life.

- There's a lot of spilled ink about the mega-wealthy buyers (Middle Eastern oil barons, Russian oligarchs, Chinese billionaires, etc.) but they are a vanishingly small portion of the population of very wealthy people. In general I think most people have a poor appreciation of how little of the ultra-high-end consists of foreigners and high-profile business people that they've heard of.

- Related, there are way more wealthy Americans than most people appreciate, and the sources of their wealth are way more mundane than most people suspect. There are more 8-figure luxury condos being sold to families that own car dealerships and trucking companies than tech wunderkinds or petro-oligarchs. By multiple orders of magnitude.

>Respectfully disagreed. The sales people for veblen goods work extremely hard because competition is intense even within that space. The Bugatti salesman is competing with Ferrari, McLaren, Lamborghini, etc.

Respectfully disagree. Which oil-rich Sheikh did you see who only has one supercar in their garage and not all of those you listed? These people aren't stock brokers or tech bros who need to work and save money for for years in order to be able to finally afford one dream car, but they own a multi generational empire that makes them enough money to afford all those cars.

>If none of them move on the deal then you're holding an absolutely immense albatross.

Comparing real estate to exotic cars is apples to buffalos. Most exotics are already sold before they leave the factory floor.

> "Respectfully disagree. Which oil-rich Sheikh did you see who only has one supercar in their garage and not all of those you listed?"

Except this isn't the main market for Ferrari, McLaren, Lambo, et al. There are maybe a few dozen people on this planet who fit into that kind of stratospheric wealth.

The bulk of their sales are to the "merely multi-millionaire" rich - your business executive, late-career law partner, guy who owns a chain of dental practices, etc. These are people who are not exactly scrimping and saving for their Ferrari, but certainly don't have the infinite money cheat code.

If you think Ferrari's sales ledger is consisted mainly of oil barons and other billionaires, I dunno what to tell you.

The oil sheikh with dozens of supercars is what drives the mega rich to aspire to own two supercars and the deka rich to fret about maybe buying their first one.

It's not a good/bad business so much as a _different kind_ of business, with different engineering/sales requirements and different customers.

Neither is better, or more profitable over the long term than the other, but you really need to know which game you're playing.

> he already wanted to buy it before he even stepped in. So not only is your job easier than the guy in the Honda dealership, it's also much better paid.

Luxury brands spend millions on marketing and brand awareness. In some sense, all the "sales work" have already been done before a person sets foot into a Bugatti dealership. Reputation takes decades to build but just a few missteps to destroy. Brand is way more fragile than people think. As soon as Bugatti stops making great cars, they'll fall into a place where they can't compete in the luxury market, nor the mass market Japanese car brands like Honda or Toyota.

In that sense, luxury fashion seems to be a easier market than watches or cars. You don't need an innovative engineering team. Just spend millions on marketing to uphold the common narrative you are a luxury brand. And that shirts with your logo on it costing 10x more than a similar product at say H&M, is not only justifiable, but sensible.

>Luxury brands spend millions on marketing and brand awareness.

When was the last time you saw an ad to buy a Bugatti Chiron?

> When was the last time you saw an ad to buy a Bugatti Chiron?

Ads don't just have to be a photo on a billboard, though, or the entire thing of influencers wouldn't exist.

How many times has the Chiron been on Top Gear - I reckon at least three times (I can remember once in the Clarkson era and another time in the Harris/Le Blanc era; the magazine's had one at the Nürburgring at least once)? Sure Bugatti's letting them loose with a multi-million euro car out of the goodness of their hearts.

How come you know about the Bugatti Chiron? Did you even saw one for real in your life?

The simple fact that you (and me, and everyone else here) know about it show that people in marketing are doing their job.

I don't remember seeing an ad for a Bugatti Chiron, I am obviously not the target market, but I stumbled upon an ad for a private jet! Also other luxury cars and watches that make Rolex look like child toys. I was when I worked in a helicopter company and someone picked up a magazine from the showroom where customers get their helicopters delivered. The content was out of this world, I remember an article on the merits of private jets over travelling first class (I guess anything less is unthinkable), with purchase recommendations. So the ultra-rich get their ads too.

Ferrari makes money on F1, sells T-shirts and hats and whatnot, along with very expensive cars.

Does Rolex have other revenue streams aside from overpriced watches?

I would never own a rolex because where I live only ambulance chasers, businessmen who are definitely guilty of wage theft, morbidly obese elderly men in gold chains who reek of cigars, and street pimps wear them but from what I can gather they charge approximately $1,000 for a service and a mechanical watch needs servicing every 5-10 years depending on how complicated it is and how often it is worn.

So that's like a $100-200/yr. annual subscription to wear an already expensive watch.

Assuming I take your anecdote at face value, I'm quite impressed at how well you keep tabs on all of the Rolex owners you've met, identified their occupations as well as illegal or immoral activities.

I've seen people wearing watches, but hell I have hard time identifying the brand of watch, let alone where the person wearing it works.

It's pretty easy to spot a Rolex once you know a little bit about them. Get a closer look and it's even easy to spot fakes.

However, I agree with the first part of your comment in a way, but it's really not that hard to get a rough estimate of someone based on how they choose to present themselves. They didn't exactly get forced into that look.

That's a valid argument, that some stereotypical appearances are relatively consistently accurate.

Though I'm wondering what, exactly, defines the appearance of a specific lawyer who pushes for accident victims to sue, or businessmen that participate in wage theft. How do you tell them apart from... other lawyers or random people wearing suits?

I'll say this though, when it comes to corpo execs, at least in the USA, if they think they can get away with some illegal and/or unethical activity and they believe that it won't impact any potential profits (either greater than the punishment or benefits to themselves, because we rarely if ever jail executives in this country or hold them accountable without immense public scrutiny), they'll do that thing 9.9 out of 10 times.

Wage theft is rampant here, especially for lower wage workers. The government simply doesn't exist in a capacity to actually prevent these things, and people in general are too apathetic to other peoples well being, let alone engaging in appropriate political discourse, that the needle rarely moves forward for your average citizen.

I don't think you can. I agree mostly on that point, I just think it's worthwhile to recognize that stereotypes aren't just completely random, is all.

I taught myself how to service Swiss watches this month. It’s a very difficult skill (I failed).

The people who did the training and have the surgical ability to fix a Rolex deserve $1000.

An elaborate precision machine that is 35mm across and hand-built over a year (so they say), it makes sense that “cheap” Swiss watches are $9000. Rolex retails for 2-4x of that due to brand cachet and artificial scarcity, even though they are by far the highest volume manufacturer.

2nm chips are more impressive if we're talking about precision. And I have one in my pocket for less than the repair cost of a Rolex.

The nm of chips doesn't mean anything anymore, and it's really not more impressive anyways - that's built by a machine, which is the epitome of precision. A hand-built 2nm chip might be more impressive, but also impossible anyways.

try replacing an individual resistor if it fails...

You can get a really nice Omega/Breitling/Tag for much less than 9k, no? Rolex just seems to be the luxury watch among high end watches.

I don’t think an equivalent Omega or Breitling is that much cheaper?

Rolexes also keep their value incredibly well. I bought a nice Tag many years ago (I knew nothing about watches) and it’s now worth about $1000 on the used market at best. Had I bought a similar priced Rolex instead, it would have kept its value, if not even appreciated.

It's beyond what is the watch. Rolex is good, but omega speedy starts (started before inflation/tariffs?) at $5k. And is certified for Space(tm)! Some good smaller brands (nomos) at around $2k.

Watch market above that starts getting weird. You have some special models, technically equivalent w/ cosmetic bling hitting $80-100k

Sadly, $1,000 is not even that much. Last time I serviced my Zeitwerk they charged nearly $6,000 for it.

how...much does your watch cost?

I looked into this, for a Speedy, Omega charges $900. What a steal!

> ambulance chasers

TIL

Does Ferrari turn a profit on the F1? I support them and it’s been a while since they’ve had any big wins?

Sadly, on my last trip over there, the average Italian Ferrari fan has been suffering akin to a Detroit Lions fan

Replace cars with motorcycles,and luxury with t-shirts, and you have Harley-Davidson.

No, you can go buy any Harley you want. You can't just buy any Ferrari or Rolex, you have to be invited, usually by buying lower level stuff they want to get rid of.

Porsche (and I assume others) does this as well. You need something like $1.5M in Porsche inventory before they'll invite you to purchase a GT3 RS.

I guess they probably don't want the dirty uneducated "new money" crypto bros, TikTok influencers and OnlyFans hoes spoiling their brand image, they want the well connected Epstein Island elites who come from royalty and old money.

I know someone with a GT3 RS who owns no other porches. Is this just for new models? (Theirs was a few years old when purchased)

Of course Ferrari and Porsche don't control the secondary market, although I understand they might put restrictions on how soon you can sell one of their high end cars.

If you cared that much though why not simply get a job selling Bugattis?

They're not hiring. Unless you're the Bugatti dealership's son, or sleeping with him, you're not getting the job.

...For the same reason anyone can't simply get a job making $250,000/yr? It's not like jobs are something you choose - you request it.

Exactly.

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