Breitling SA CFO Lars Kaestle - smart watches, increasing production cost & aviation branding vs. Sustainability

[MUSIC] Leading Corporate Transformation. The podcast by VHAU AutoBysine School of Management, powered by PWC. On the transformation of companies and their culture, from decision makers for decision makers or from entrepreneurs for entrepreneurs. [MUSIC] Welcome to a new episode of the VHAU who podcasts Leading Corporate Transformation, powered by PWC. My name is Martin Lomb. I'm a professor at the VHAU AutoBysine School of Management and I'm one of the co-hosts of this podcast series. With me, as always, is Gory, Gory von Hirschhausen, Senior Partner at PWC. Gory is our partner in the Leading Corporate Transformation podcast. Gory, do you want to introduce yourself a little bit and then introduce our guest? Yes, thanks Martin. So first of all, the big hello to all our listeners. So it's so great, actually, to be back with our second season of Leading Corporate Transformation. We had some busy months, right, Martin? That's true. Absolutely. But it's good to be back and we have a very, very interesting lineup for the second season and look very much forward to our new discussions and all the insights that we forget from all the different talks we will have. So you can look already forward and maybe some words on myself. I'm Gory von Hirschhausen and as Martin was saying, I'm from PWC and within PWC, I'm leading our transformation consulting business in the commercial industrial products and services industries. And besides that, I also have another hobby which is the finance transformation practice lead within PWC Europe. And so as you all know, I'm always very interested in understanding how to run complex transformation as successful as possible. And so this will of course be the focus of our talk to really bring transformation from strategy to execution. What the critical success factors are. So all of these questions we will hope to get answered some of them today. And I think we have a very, very good start for our second season with our first session because we have a very prominent guest today. We have Lars Kessli with us. Lars is the CEO of the Luxury Watch Company Britling. Let's put it this way. It transforms itself very successful at the moment. You have new owners at Britling. You have a new management. You have new market approaches. And you grow very strong. So there's a lot on the move at Britling and Lars. Maybe it's a good moment for you to introduce yourself and give a little bit about Britling to learn from to our audience. Thank you very much, Gori and Martin. Also one welcome from my side. Very happy to be here with you today. Yeah, my name is Lars Kessli. I'm the Group CFO of Britling. I joined Britling three years ago. Fascinating journey. I can only say before that I was working for more than 20 years in the aerospace industry for our business basically. In various positions, be it from manufacturing, merchant integration, procurement and finance. Lars Britling. Gori already mentioned that it's a well-known brand. It has a long company history. It's associated with, in a way, your prior industry experience with aviation. What is the current strategic position of the company Britling within the market for premium watches? Yeah, thank you, Martin. I mean, Britling is one of the largest independent manufacturers of Swiss watches in the industry. Britling is a very strong global brand and is among the top five watch brands on the planet. The company used to be family owned until it was acquired by CBC back in 2017. Last year, Partners Group of Switzerland did also acquire a share into Britling. In recent years, Britling has changed its brand image away from this pure aviation and masculine image towards a more neoluxury concept, which means that Britling represents a casual, inclusive and sustainable interpretation of luxury, while obviously staying close to this watchmaking DNA. Our positioning in the current environment and times is what we believe more relevant than ever and is becoming increasingly rooted in the minds of our customers and consumers. We position ourselves in this, what we call luxury segment, which is ranging from a price level of 3000 to above 30,000 Swiss brands. We're uniquely a generous brand and one of the few luxury watchmakers that can offer attractive products to such a wide range of customers, be the sportive watch, be it an elegant watch, be it an explorer watch, what is also part of our product offering. This is also supported by clear positioning and related marketing activation. So for us, Britling is today the leader in what we call the neoluxury in the watch industry. We have introduced many innovations, such as blockchain-based, digital-volots, or the digital twin, an NFT, delivered with each watch you're buying from Britling. Sustainability for us is a key topic and we have introduced 100% up-cycle packaging made from PET. And we just recently launched the industry's first traceable watch where the entire supply chain is documented. So there's a whole range of stories here, a whole range of also transformation topics. Britling, you mentioned that in one of the talks we had prior to the interview, you characterize Britling as a disruptive competitor in the market for premium watches, disruptive competitor. What does it mean? What is the disruptive element in your strategy? We have a tradition of innovation in Britling. We have invented the first chronograph for airplanes many years ago. We've also invented this modern two-push piece wristwatch of the chronograph. And thanks to our history, which is more than 140 years, Britling has an incredible back catalogue of models and and servant inspiration of new models and define our very innovative style. I mean, if we go more into the disruptive element, we have our brand's first ever traceable watch transferently informs and engages owners about the origin of its precious materials. So you buy a watch, which is made of gold, where the gold is fully traceable. And you can see where the gold was mined. The precious materials such as diamonds are lap-grown diamonds. And you also can follow where those diamonds were produced. What was the footprint of those diamonds where they are from? And with this provenance records on the owner's blockchain, back to NFT, the details the responsible measures taking along the supply chain and a bit from the gold side or from the lap-grown diamond side. Maybe let me follow up on the disruptive element of your strategy. I was just walking past your new boutique in Munich the other day. And it looks like this is really a different language to the market that you use. It looks like a new brand, your reposition, Britling. So how important is the brand itself? How important is it to increase the focus on the brand itself? It's very important. And indeed, one of our strengths is the brand and the high brand awareness, not only in Germany, but also in markets like the US and the UK, and then also more and more in Asia. The strength for us from a brand perspective is that we are a very compact brand. What does it mean? I mean, you can basically summarize this in three core elements. One, it's the so-called true-generous brand, covering the variety of products, what we discussed before from, you can even say, from TXedo to Beach. Second, we have a very clear design language, which can be described as modern retro. This means modern products inspired by our rich heritage. And thirdly, Britling is today the leader, what we call this neoluxury in the watch industry, which means the brand embodies three fundamental values, what I'm convinced will shape the watch industry and luxury goods industry in the decades to come. It's casual luxury representing a shift to a more relaxed and informal interpretation of luxury, inclusive luxury, meaning that we are all in the same way. right-wing is approachable for our customers, for instance, in the way we communicate online and offline, or how we interact with our customers in our boutique. And lastly, it's sustainable luxury, embracing the fact that we all play a role in protecting our planet and need to do the best what we can within our sphere of influence. - I mean, all of us, the three of us have a finance background. So maybe last, you can tell us a little bit how this translates into revenues, how this translates in the number of employees we have at BriteLink. And of course, with the value that you were describing with the power of the brand, the question comes, how can you tell us a little bit about how you grow in the market? - Yeah, we are substantially growing in the market over the last five years. It's a double digit growth, what we achieving year and year. And we see that our strategy is paying off this modern retro, this inclusive luxury interpretation, also the loft style in the boutiques. The consumers are very, let's say, appreciating the way we are interacting with them. And just also the beautiful products we are selling that leads to that substantial growth over the last years. We almost doubled the revenues over the last five years. - Can you tell us a little bit about the revenues? Something that we at least have it. Certain understanding of the size. - Let's say we are on a good trend and exceeding 900 million of revenues. - Well, that's big. - Yes. - Interesting. How many people do work for BriteLink and use? - Yeah, it's around 1,500 people on a global basis where which are producing the beautiful products as well as working in our subsidiaries in the countries around this planet. - So when you say producing, that would interest me. What is it that you actually do? I mean, if I buy a BriteLink, what is produced actually at BriteLink of that watch? How is your depths of the production, so to speak, of the value added in that product? - So first of all, every Briteing watch is Swiss mate. And usually 90% of our watch is being produced in Switzerland either in house or together with our suppliers. So when you look into the manufacturing process, we have two facilities where we produce. One is in Lachotform and the other one is in Grandchen. In Lachotform is our manufacturing center and basically the manufacturing can be described into three major steps. One is the movement manufacturing, the second one is the manufacturing of components and the third one is the watch assembly process. On the manufacturing of the movement, I mean, this is arguably the most complex steps for mechanical movements. It includes the machining and assembly of a round, more than 100 pieces or components to create the engine of the watch. And BriteLink is one of the largest manufacturers of chronograph movements in the world and our in-house BZ1 movement is known for its robustness and beauty. The second step, the manufacturing of components, this step encompasses the manufacturing of all watch components outside the movement, including the case, dial, hands, as well as bracelets, straps and buckles. There's a highly or highly specialized network of expert suppliers, supplying most players in the Swiss watch industry. And we procure those parts. The watch assembly process, this is the final step of the manufacturing process where the movement is fitted into the case of the watch and all the external components are mounted together. This is also a critical step, obviously, for quality control. - Interesting. I mean, I told you I was getting working along the boutique in Munich and looking at the watches. It feels like, you know, when I was young, BriteLink was already, of course, being positioned as a luxury watch brand and you had beautiful watches, but it looks like they have changed recently in the design. They do look, they're interesting new colors you introduce. So how important is design in this whole play of watches? - It's very important. And also that's very clear design language. What we have, as I mentioned before, is very important. And we also have quite a number of novelties a year. What we tried to pick up, recent design trends, recent market trends, be it in capsules or be it in within the product line what we offer to our customers. - Looking at the luxury watch market itself, you have big competitors like Rolex or the swatch group or a few more, for example. What would you say? How are you positioned in this market? You were talking about the gross, you were talking about the size of revenue you have. How do you compare yourself and how important is size to this market? - Yes, scale is important, of course. I mean, whenever it comes to the cost of goods sold and better fixed cost absorption, it is obviously very important. However, in the luxury goods industry, next to scale, the brand is extremely important. And as I described before, we have a very strong brand with our clear design language with that neoluxury where we believe that we are really picking up the current moods of our customers and consumers with the strong products we are offering to them. And also from a distribution perspective, we follow a very strong, only channel strategy, which means that we are growing our direct to consumer business while also working in all other distribution channels. For us, it's an important avenue of growth and also compared to our competitors. For example, Rolex is a pure wholesaler and with our only channel approach and particularly, growing this direct to consumer and also e-commerce activities, which is a clear requirement and a key requirement to increase customer intimacy and drive both conversion rate and loyalty towards our customers. - So how does it function? I mean, the only channel I understand that e-commerce, and I obviously also understand the concept, but for luxury brand, online selling, isn't that a contradiction somehow? And then how does it work for you? - No, it's both. It's part of that only channel approach. Because today you see customers going into boutique, looking at the watches, trying them on their wrist. While at the same time, they have already engaged before via online, have checked the webpage, went through the product portfolio, trying to see what kind of products could fit to them. And it's both. You have people going into boutique first and maybe then buying the watch online or the other way around. Very interestingly, we've seen our e-commerce sales growing in those cities where we operate a boutique. - Oh, okay, that's interesting. I mean, looking at the watch market, it sometimes looks a little bit crazy at the moment because there are certain watches if you go to a story, you don't get them from some brands like Rolex. What does it tell us about the market and how can you make an advantage out of this shortage of watches of others? And can you go to a shop and just get a brithling and walk away with it? Or is it also that you have some watches where you need to wait? - I mean, we obviously try to serve our customers. You also have waiting lists in brithling. It depends on the models, but our waiting list is probably three to four months. - Okay. - And we really try, which is a big challenge for us to increase our production together with our supply chain and serve our customers and really bringing the watches into the trades as soon as possible. - So we talked a lot now about the mechanic watch market, so Rolex, glass, or omega, these are mechanic watches. But it's interesting to see Apple was one of the first to enter the watch market and there was a lot of interesting rumors around that time. I remember that this is going to replace the whole luxury watch market. So our mobile phone or let's say tech companies like Apple, is this your competitor, is this going to replace mechanic watches? - Smart watches and high end mechanical watches are in our view complimentary products and serve different needs. I mean, in these digital times, people are more and more looking for tangible, emotional objects and appreciate the nanologue watch because it's like a craftsmanship what they're looking for. I mean, if you look into this Swiss watch market, you basically have three categories. We have this so-called entry level with retail prices of around 500 Swiss francs. We have this mid-luxury segment with retail prices ranging between 500 to 3000 Swiss francs. And as we discussed earlier, we have that luxury segment with prices above 3000 Swiss francs. And the right-wing is positioned in this luxury segment. And for us, I mean, we are growing in that segment, which is not really accessed by these smart watches, which are more in this range of 500 to 2000 Swiss francs or more in this entry level segment. And also, we see currently that this luxury watch market has been extremely resilient to the introduction of smart watches, which has not interfered with the consumer appetite for how you have price point watches. Sometimes you see people who are in both. In addition, and that's probably even an advantage, I mean, younger generations are used to wear smart watches. So they have something on their wrist. And at the point in time, they add a luxury timepiece as an expression of the personality of the value system. So it could say for the luxury watch market industry, I believe that value and consumer behaviors have changed. So less than ever, people buy watches to read the time. I mean, this was much better with your iPhone. More than ever, luxury watches are an expression of a specific value system, art, craftsmanship, something emotional. I would like to come back to another aspect of this concept and of your strategic approach. You were mentioning that your strategic approach comprises three elements, the casual element, the inclusive element, and the sustainability element. Now I would like to talk a little bit about the sustainability element, which I think for consumers, especially for younger people now, becomes more and ever more important. So in your communication, you emphasize sustainability. At the same time, your brand is traditionally associated with aviation. It's the pilots watch. And especially in the climate debate, aviation is seen, at least more and more critically. So how does that fit your traditional association with aviation and your traditional image with the ESG or sustainability strategy? Yeah, it's a very good question indeed. First of all, Brightling cannot change the world. However, we try to make a difference in our sphere of influence. sustainability is extremely important to us. For us, sustainability is a transformative process. We have a very solid sustainability road map in place that builds upon efforts made over the last years. We introduced, as a set of my introduction, this upcycled, econial straps from ghost fishing nets. We are using 100% upcycled or recycled PT bottles to produce our packaging. And we are trying to make our products traceable with these recently launched concepts where precious materials, be it gold, be it's, lab-grown diamonds are totally traceable in the value chain. And as you are mentioning our link to aviation, we entered the first of its kind partnership with Swiss and will purchase sustainable aviation fuel, the so-called SUF. For all our business-related flights operated by Swiss, beginning retroactively for the entire calendar year 2022. With the purchase of the respective amount of SUF, we will introduce related to two emissions by 80% of. Bidling will achieve carbon neutrality on its air travel by offsetting the remaining SUF two emissions through investing in high quality carbon offsets. I mean, achieving this, SUF two neutrality on our work-related Swiss flights for us is an important step to reduce our emissions. And to do the purchase of SUF, we believe that we make a contribution at least to the sustainability transition in the aviation industry. And yes, you're right. I mean, we have been closely linked to this industry since the 1930s. Going a bit more deeper into this sustainability mission, we basically work around several pillars. We call it product, planets, people, and prosperity. And even more so, the intersectionality among these subjects. In our product pillar, we are improving the social and environmental impact of our products and services. We are sourcing artisanal and small-scale gold, lepron diamonds, upcycle packaging and straps. We are rolling out blockchain-backed provenments records for our entire product collection until 2025. So it's not just the one-off, it's part of our core strategy that every product is traceable in that way. And of course, engaging with our suppliers to increase the sustainability performance. On the planet's pillar, we are reducing our environmental footprint, transitioning to renewable energy, eliminating plastic waste in our production. We align our efforts with key international frameworks and offset all of our carbon emissions along the way. So given that, that seems to be a very broad and cross-cutting approach. How is that reflected in your organization? And specifically, what is your role in that as CFO? Yeah, from a governance perspective, I mean, the ESG agenda is regularly reported to the Brightling Board of Directors. There's even a subcommittee of the Board of Directors existing, dealing entirely with ESG. And is also supported by the audit committee. So as the joint efforts we are undertaking in the company with a dedicated organization within Brightling, dealing with sustainability matters be it on the product side, but also on the people and planet side every day. C, of course, is at the top of the agenda of many CFOs at the moment or let's put it right on every CFOs agenda. But at the same time, every CFO that we are currently working with is also challenged by the current environment. So rising commodity prices, exploding energy prices, the certain shortage of certain goods. So how does all of these circumstances do have an impact on US Brightling? Yeah, indeed. I mean, like everybody on this planet, Brightling is also exposed to inflation and shortages. However, in terms of magnitude of it, it's rather limited. And to produce a watch is from an energy perspective, a rather small footprint compared to other industries, like the chemical industry, metal industry, car industry, for example. And also from a sourcing perspective, a lot of it is sourced in Switzerland as we were just discussing. While in Switzerland, the inflation is at lower levels, it's around 3% these days. On the other hand side, I mean, we are running a value creation program trying to improve our operational excellence through dedicated measures which helps to also fight inflation, fight our cost increase on the production or shop floor or on the source materials. On the other hand, I mean, we are operating in an industry where also you have the possibility in line with your peers to increase prices. I mean, looking at the current challenges, the biggest challenge for many companies at the moment, of course, is also the impacts of the Russian invasion into the Ukraine. So maybe looking at the Russian and the Ukraine war, how important are these markets for you? Is there a direct impact of this conflict on your business? I mean, there are several macro developments that have an impact on our business. Of course, the tragic war in Ukraine was a key global event that impacted our business. If only in a very minor way from an economic perspective, certainly in terms of the responsibility for employees and partners in the market, it was very interesting. Sure. Yeah. And maybe another market that is very interesting and important to the luxury brand market from what I would expect is beside the Russian market, of course, the China market. How important is China to you and how is business doing at the moment in China with all the restrictions when it comes to the shopping and people not being able to really go out and do their luxury, let's say, shopping to it? Yeah, indeed. China is really a big challenge. For us, we are pretty much flat year on year in China from our business evolution. However, for the industry, sales have fallen quite significantly in the last months driven predominantly by this very strict zero-COVID policy in many Chinese provinces. Really interesting to observe now post lockdown given the latest news from China, how the consumer behavior will develop going forward. Maybe it will not return as quickly as we have seen in other countries and from previous lockdowns. I mean, for brightening, China remains a double-edged sword. On the one hand, for us, it's one of our major wide spaces and a such a market with tremendous growth potential. On the other hand, I mean, the drastic measures of this China's zero-COVID policy have created significant headwinds for local businesses, but even more so for our competitors who have much larger exposure to Chinese sales. We are preparing, basically, ourselves to come back stronger from this crisis in China, similar to what we have done in situations in Europe and the US after COVID. So the regular listeners to our podcast know that our podcast always follows certain, you know, sequence of big topics. We first talk about the company and its strategy and then we move on to the finance area. Now I want to touch now on a topic that is actually at the intersection of company strategy and finance, which is your ownership structure. So you are owned by private equity. And my first question in that regard would be, you know, how does that impact and maybe also co-determine the company's strategy and what's the impact on your day-to-day running of the firm? Yeah, it's a very good question. I mean, we have a very entrepreneurial company and as for every entrepreneur, I mean, it's very important to have a clear communication towards your shareholders to be close to them, to have a clear view on value creation and obviously a clear cut strategy in place. Transparency is key in such a context and in that terms, the CEO role, of course, is very prominent and to present an objective viewer of the organization's finances, performances, how do we compare to market trends to our competitors that trends from previous quarters forward-looking statements are key. And in that entrepreneurial spirit, we have a very constructive dialogue between the board and the management team with intention of searing the company into an even more successful future. This does not mean that we have no discussions. It's pretty much just the opposite. Okay. Usually, there are lots of questions, further ideas to improve a proposal or increase the ambition. However, and this, I think, is very important, always empowering the management team and holding them fully accountable. So in summary, I mean, there is an excellent cooperation because also it's very solution-oriented but the advantage of private equity is that you can act and decide extremely quickly. I mean, just take what we have achieved over the last four to five years in a larger group, we might have only achieved this over 10 years or more. A somewhat more specific question. You were explaining that you are very successful with your growth strategy that over recent years, you actually doubled revenue. How do you finance this kind of acceleration, this kind of growth? What's the financing behind this? And maybe as an added-on question, does the recent increase in interest rates pose some challenge for you in this regard? I think there are two elements to it. We do finance our activities from our own cash flow. We call it the "virtuous cycle", which is a concept known, which means that scaling the business allows to further improve. In other words, the more revenues you're generating, the more profitability you are able to achieve, which is ending into better cash flows, that in return can be reinvested, or at least a significant portion of those into your business, which again further improve your revenues, and then further increase your everyday generation and your cash flows in consequence, which is this virtuous cycle. And this is what we're currently seeing also in brightening. We're growing substantially. We are even growing faster on our profitability. And we're generating more cash flows, which we are reinvesting, and also using to pay interest. And as usual, and a private equity setup, you have a leverage. So you have a depth structure. Yeah. Yeah. OK. I mean, maybe that's a good segue to our next section, which is around your all as a CFO, but maybe let's finalize this question with your ownership structure. What does it mean for you as a CFO acting in this private equity environment? I mean, are you the one who often needs to say no to Georges Kahn and his great ideas about investments? You know, for me, the role of finance is always a role to find solutions. I mean, saying no is a very simple and makes me too simple. And as entrepreneurs, we always try to find the best solutions, the best ideas, and try to improve decisions for the benefit of the company to create value. So what we are doing is we are assessing, I mean, for many activities, be it, for example, if we try to, if we are finding a new location for a boutique, we have an investment committee, we look into the location, we have a business case for each and every boutique, and then trying to optimize it, be it from a location perspective, be it from a cost structure perspective, for example, on the rent side, is it the right location or not? And how can we drive performance into this one? Also on our marketing expenditures, we always try to see how do we spend each Swiss rank in the best and most effective way. Digital marketing is crucial from that, we transformed our marketing expenditures to more digital marketing spending, almost two thirds of it is for digital marketing. So it's less saying no is more to have a view on how to spend the money in a smart way and be very cost conscious. This sounds like your finance function, so it's not yourself, it's the whole function of finance within Breitling. It's too act smart, right? And so you are saying the business cases need to be managed, we need to be there to find solutions. All of this of course brings effort to the organization. So what can you say about how is finance organized within Breitling? So are you having many people on your finance team? Do you have a lot of controlling or is there more controlling than accounting? You can tell us a little bit about how your finance organization looks like. Now we have a classical structure in our finance organization. We have a controlling team, we have an accounting team, we have treasury, we have tax, I mean given the fact that we are operating on a global basis, we have also finance directors in each of our subsidiaries or in the countries. And we have rather, let's say, normal finance set up from a capacity perspective is always constrained. I mean, like every other function, of course, people are asking for more capacity since we are growing. But also as finance, you should be the role model in terms of efficiency and how to move forward trying to be as efficient as possible with digitalization in place and it can always be more. So we're just at the beginning to further automate our activities, our processes. But yes, it's a pretty substantial workload. So of course, what we do see in the marketplace is a lot of digitization in the finance function and of course also the introduction of advanced analytics to learn more about all the data that are available to better understand. and your environment to take better management decisions. So how's the role of this, let's say, digitization for your finance function? How digital would you say is finance within Britling? And how do you look at topics like advanced analytics? - It's probably similar to a lot of other companies. You can always digitalize further. You need to see what makes sense. Is there a good cost-benefit ratio into that? And it's a journey. And we have embarked on that journey. Of course, we can digitalize further. We are comprehensively rolling out the SAP as for Hanath template in all the countries, beat for finance, beat also on the sales side, beat further modules for budget forecasting and allocation, sales operation planning. We're doing it on the EIP side of it. And at the same time, of course, advanced analytics are also very important for us. We do it for geolocalization. Whenever we look into a boutique location, trying to calculate potential footfall, cannibalization with other point of sales, we do it on the demand planning sites. Whenever we launch a new product and also what is the right pricing of that new product, we use advanced analytics. And of course, whenever it comes to that only channel approach, when we talk about our customers, is the understanding of our existing and future clients, collecting the data, activating the data to better engage with our clients and prospects at the right time, right content, with a pertinent call to action. That's also what we're looking at. So it goes much beyond finance. - I would like to talk about a topic that is also besides digitization that is also very trendy and has been so for some time, and that is blockchain. If I understood you correctly, at the beginning of the interview, you alluded to the fact that you seem to use blockchain technology in some of your activities. I also read in press reports that you can actually buy pridling watches with crypto currencies. Is this correct? I also read that it's only possible in the US, and if so, why only over there? So how does it work? - Yes, that's correct. I mean, there's a pilot running in the US. However, we do not have receivables in crypto. We have them only in fiat currencies. So the payment, it's like you pay with a credit card. So it's a payment provider, who's converting on the fly, our receivables from crypto into US dollar. - So you actually don't hold the cryptocurrency yourself, because I was wondering about that, with the enormous volatility, how you would manage that, that would be. - Now we looked into this very carefully for quite a long period of time, and then decided to use this, I think, very smart setup in a way that the receivables are in US dollar, because we serve the US market there, why we use a service provider in the middle, at pretty attractive fees, is comparable to a credit card fee, and receiving fiat currencies. - Interesting. - Another thing that I think you also mentioned before is that you issue non-fungible tokens, NFTs for your watches. That's at least what I understood, and if you could elaborate on that also, because that's also very unique, it seems to me. - But very important. - We're doing this for more than, almost three years now, and the biggest benefits of watches having a digital passport is, I mean, you can coming back to this customer experience, watch owners can experience an improved connection with bridging and enjoy that enriched watch ownership with such an NFT in place. So we also have the full visibility, whenever a watch is being sold globally, because then the guarantee is activated with that NFT token, and you see immediately the sellouts every day, in whatever point of sales we have on a global basis. And also, I mean, going forward, we're able to offer further services for after sales. Just take the example, a mechanical watch, after a number of years needs to be maintained, the movements and the like. So today you're handing your watch for maintenance service, it takes four to six weeks, sometimes even longer, and you don't know where the watch is. What is going to happen with the watch? So it's a black box. But this NFT also allows you to have a customer experience, to really, it's like following your parcel when it's being delivered. So what happens to your watch? Where is it? Well, it's currently been done with the watch, when it does come back. So you have the full customer experience on that one. Another use case is what we discussed before, the traceability of your watch. So you just see from a blockchain perspective, what are the materials being used to produce your watch? Where's the precious material coming from? Where are the, where's the movement? What has happened to each of those elements, components that are being used for your watch? Looking at the time, maybe last, it's now the moment to switch gears and to talk a little bit about yourself and your career. So before you were joining, Brighetling, you were working in the aerospace business at Airbus Premium Aerotech. So you were working there. You also have an engineering background, if I remember this correctly. So my question is, coming from this industry, working in such a, let's say, large scale group, what was it that you learned there the most? And why did you get out of the comfort zone and jumping into become a more entrepreneurial CFO with Brighetling? First of all, I'm very grateful to my 20 years in Airbus. It's a fabulous company offering a lot of opportunities. I imagine I was starting there as an engineer, working in program management in operations, doing merger integration, working in procurement, entering the finance field via investor relations. I think they have very rare companies offering you the opportunity to develop yourself in a very interesting, very international environment. So it was an amazing journey. It was a great opportunity to learn and working also for very exciting products. But after several years, I always wanted to become a bit more entrepreneurial. And I got to know private equity many years ago. And there was an immediate connection to that industry and in particular to CBC. And at the point in time, they were coming back to me and were offering to work as a portfolio CFO in Brighetling. And I thought it's a great opportunity becoming a shelter of the company, working in that entrepreneurial environment. In new industry, I was always motivated by learning things, getting into a new environment. So I took the challenge and I do not regret one day of that. So here was, you know, is a very, very large, very international company. And given its history and its peculiar structure, it has the reputation of being very political as well. And now you work for a private equity-owned company and you already mentioned it's very fast. What is it that you can take with you from this very long experience that you had gathered at Airbus to make use of here at your new room? I mean, you know, in Abbas, you were learning to deal with crisis. Crisis management is key. I mean, the civil aviation industry is a very cyclical industry. You had 9/11, some are a credit crunch, lots of further challenges, be it on the FX side and others. The luxury goods industry usually is more resilient. However, I think it's also a good benefit to deep dive into the cost base to optimize structures becoming more efficient. So in other words, take the best of both worlds. And particularly when starting and COVID emerged, it was very helpful to be crisis-proof and to manage brightening through the crisis and emerging stronger out of the crisis with a better cash management and even with a higher profitability. Looking at the time, we need to come to an end. Maybe a final question on your Vita last or some advice you might want to give to young professionals in finance. So if you dream about becoming a CFO of a portfolio company in a private equity environment, what would you say? what should people try to do to qualify themselves to maybe become CFO of such a company? What are the important steps you should take that qualifies you to get there? - I mean for me, like in every other function, I think the ability to learn is very important that always you listen, you try to understand any challenge or any problem in trying to find solutions. I mean particularly in finance, it's not about saying no. Goury, as you mentioned earlier. It's, I always define finance and coming from the aerospace industry as co-pilot in the business. It's really trying to anticipate issues, trying to find solutions, and like a co-pilot saying left or right, and of course the pilots needs to trust you. So there needs to be a very good team in place that is able to steer the company, to listen to the co-pilot, and then to become even more successful. - So take it, take a way is to have this kind of make it happen attitude with a finance competence that helps you to drive and of course also challenge the business. - Indeed, and understanding the business. - So I mean, that's why it's really important that of course coming with an analytical view with a finance background, but also trying to understand the technical problem, the commercial problem, but also from a marketing perspective, challenges in order to jointly develop a solution for the benefit of the company to become more efficient and even more effective. - We have made a tradition in this podcast to ask our guests at the end of the interview or whether you have a recommendation for reading a book recommendation or maybe also for another podcast if you like. Anything that comes to your mind that will you would recommend to our listeners? - Yes, actually I have two book recommendations. - Okay. - One more on the scientific side, the other one more on the bellatristic side. So on the scientific side, it's after Zuchenacht der Wahrheit, the book is written by the well-known Professor Hans Wernerzin, who is an Emeritus of the LMU Munich and the former president of the Eastful Institute of Economic Research. It's a very interesting book dealing with Hans Wernerzin's impressive career and the development of the economy during the recent decades. I mean, he's intellectually precisely and very sharply analyzes the root causes of main economic challenges like Brexit, malnutri policy and others. In the same spirit, he gave also recently an interview to the pioneer about the energy transition stating that Germany is a wrong way driver on the highway. It's this is always very sharp and easy to understand but highly pointedly. And provocative as per usual. - Very provocative. - Absolutely. - And also at that time, I mean, he even mentioned in that article that he was already talking about the risk of inflation back in December 2020. For him, identifying the malnutri policy of the ECB is one of the major inflation drivers. In other words, well before the energy price hikes and these things. On the bellatristic side, it's a book written by Mark Elzbach and it's titled Blackout. Morgh is the Suspit. A very current issue, however, the book was already written around 10 years ago. It deals with the breakdown of all European electricity networks. In December 2012, Blackout was awarded as the most exciting scientific book of the year. Although the book is rather a thriller, I mean, it is written in a totally realistic way and really well researched. I mean, they also even once sat in an interview that he was pretty much surprised that his first invitation after releasing the book did not come as usual from the book trade association but it came from an institute that focused on securing critical infrastructures. Again, we're talking about what happened 10 years ago. Lars, Corey, this brings us indeed to the end of this episode and Lars, in particular to you, many, many things for sharing your time with us, for being on this podcast with us. This has been very, very interesting. And we thank you, dear listeners, for your interest in our podcast and please do not forget, Corey mentioned it at the beginning. Stay tuned. We have several more episodes in the pipeline which will be also very, very super interesting. Thank you very much. Goodbye. Thanks, everybody. We're listening. Thank you. Bye-bye. That was leading corporate transformation. The podcast by V.H.U. Autobysign School of Management, powered by PWC. Editorial team, Maravanschuna and Zimangirlach.