The start-up breaking the codes of Swiss watchmaking

With its luxury watchmaking project called X41, the Lausanne-based start-up Code41 raised CHF2 million in 72 hours this spring via a crowd-funding platform. Code41

Nearly every week, a new watch brand is launched on a crowdfunding platform. Most fail but some succeed like Lausanne-based company Code41, which is attracting loyal enthusiasts thanks to its focus on transparency and dialogue with customers.

On the cover of the December issue of PME MagazineExternal link, a Swiss business monthly focused on small and medium-sized enterprises, Claudio D’Amore, the director of Code41, poses alongside Jean-Claude Biver, head of the watches division of LVMH and an emblematic figure in Swiss watchmaking. “1989-2019: The Clash of Generations”, the headline reads.

When shown the magazine and the impressive pile of articles about his company in the French-speaking press, D’Amore, who is in his early forties, smiles timidly. His expression reveals an unexpected shyness, which belies the prevalent image of a voluble and extrovert start-up founder.

“When we embarked on this adventure in 2016, we hoped that people would follow us in our project. Today, there is real enthusiasm for Code41, and obviously we’re really happy about that,” D’Amore tells swissinfo.ch without bravado, as we chat in his stylishly designed new offices not far from Lausanne train station.

Transparency and dialogue

To give a sense of the enthusiasm for the brand: last April, for the launch of its first project of the “home-made” movement X41, the start-up raised CHF1.7 million ($1.73 million) in pre-orders in 36 hours (and CHF2.8 million over the 30 days of the campaign).

In the past three years, Code41 has doubled its revenue every year, and in 2019 its turnover surpassed the CHF8 million mark. This is no small feat in a sector as saturated as traditional mechanical watchmaking, which is also facing competition from the growth in connected watches.

The success of Code41 revolves around two simple ideas that reflect the spirit of the times, but still far from self-evident in the watchmaking industry, known for tradition and discretion.

The first is full transparency as to the origins and costs of the components of its products. The second is a constant dialogue with the brand’s customers or what Code41 refers to as the community, which is involved in each stage of a watch’s development.

The deception of “Swiss Made”

A former freelancer who designed watches for TAG Heuer, Parmigiani and Oris, among others, D’Amore says he often felt frustrated trying to understand the origins of the hundreds of components to make mechanical watches.

“Brands are generally completely opaque. They hide behind the ‘Swiss Made’ label, which is actually misleading for the consumer,” he asserts.

In order to be stamped “Swiss Made”, at least 60% of the value of the watch as a whole (components and labour) must come from Switzerland. However, very often only the movement, the heart of the mechanical watch, is manufactured on Swiss territory, while most of the components (armband, case, hands, dial, etc.) are purchased from Asian subcontractors.

Claudio D’Amore in his office in Lausanne, where he employs about 15 people. swissinfo.ch

Breaking taboos

D’Amore designs his watches with a sole objective: to offer his community of enthusiasts watches that have the best possible “quality-price-magic” ratio, while revealing the origins as well as the exact cost of each element necessary to produce the meticulously designed timepieces.

In the process, the graduate of the Lausanne University of Art and Design (ECAL) is breaking other taboos. The first series of watches developed by Code41, baptized Anomaly-01, has a Japanese automatic mechanical movement, a heresy in the eyes of staunch defenders of “Swiss Made”.

As for the X41, the movement was developed in-house and manufactured in Geneva, meaning it could easily obtain the coveted label. However, D’Amore adamantly refuses to take this step, preferring to stamp the visible skeleton of the watch with a sober “Swiss mechanism”.

The “enfant terrible” of watchmaking

Transparency, combined with direct sales on the internet, has an additional benefit: substantially reducing the bill for the end customer. The X41 is sold at CHF5,500, that is “three to four times less” than a Swiss mechanical watch of comparable quality marketed by a big brand in the sector, according to D’Amore.

This has led to some in the industry dubbing the entrepreneur-designer as the “troublemaker” and even the “enfant terrible” of Swiss watchmaking. It was a skilfully orchestrated provocation: the name Code41 is both a nod to the “Swiss Made” label, the number 41 being the country’s international dialling code, and a reference to the announcement of a computer system error.

The start-up also doesn’t hesitate to pursue aggressive marketing on social networks. “It is not enough to have a good idea and a good product, you also have to know how to talk about it,” says D’Amore. He affirms, however, that the company invests no more than CHF100 in advertising per watch sold.

By relying on crowdfunding, D’Amore can reduce business risks and raise money without having to turn to banks or outside investors. If a project doesn’t work, it is simply dropped. This has not happened so far though.

Building the female community

At each stage in the design, the community of over 200,000 members is consulted, allow them to play an active role in the excitement of creating a watch. This also provides Code41 with direct feedback, which enables it to avoid costly – and sometimes unnecessary – market research. “It is often much more rewarding, and it helps dispel the many doubts I confront when I design a new watch,” says D’Amore.

For its next project, the Vaud start-up plans to build a watch for women by women. Women from the community have been consulted on every detail of the Day41 collection, which starts its pre-sale in January.

Consultations online brought their share of surprises. “Our community has endorsed a fairly technical collection, preferring a visible mechanical movement to the quartz generally used in women’s watches. Without this direct contact, we might simply have added mother-of-pearl, pink and some butterflies to our existing collections, as many watch designers do,” explains D’Amore.

You can contact the author of this article on Twitter: @samueljabergExternal link