The Journey Ahead — Part 4: The Business Nobody Talks About

There is a peculiar moment when a hobby becomes a business, except I am not sure such instant in time (no pun intended) can be accurately pinpointed.

There is no ribbon cutting, no champagne, and certainly nobody appears at the door to inform you that you are now officially in the watch business. One day you are buying watches because you enjoy them, occasionally selling one because something else has caught your attention, and then, almost imperceptibly, the questions begin to change.

How much did I actually pay for this watch? What did shipping cost? What did the platform charge me? Where is the receipt? Did I save the authentication report? How long have I owned it? What did comparable examples actually sell for?

And eventually, perhaps inevitably: where exactly am I supposed to keep track of all this?

At some point I realized that I hadn't simply started a watch business. Apparently, I had started a record-keeping business that occasionally involves watches.

This is not, of course, the part of the watch business that anyone photographs. Look at social media and you might reasonably conclude that selling watches consists primarily of arranging beautiful objects next to steering wheels, espresso cups and expensive shoes. There are considerably fewer photographs of spreadsheets. Nobody posts a dramatic wrist shot of an insurance policy, and I have yet to see anyone produce a cinematic video of reconciling platform fees.

Yet once I decided that NEXO Timepieces was going to become something more than an extension of my collecting habit, I discovered an entire invisible business underneath the visible one.

There was banking and accounting, taxes and insurance, inventory records, purchase documentation, sales records, shipping records, authentication, photography archives, customer correspondence and, increasingly, data. None of those things are particularly glamorous, but all of them matter because the watch is only the visible end of a much longer process.

One of the first things I began to understand was how easy it is to confuse looking like a business with building one.

There is an entire industry ready to sell you entrepreneurship before you have actually sold anything. Form a company. Subscribe to software. Automate everything. Order packaging. Print business cards. Open accounts. Buy services intended to solve problems you may not even have yet.

Some of those things eventually become necessary, and others become genuinely useful. But I found myself returning to a much simpler question, probably because I have spent most of my professional life as an engineer:

What problem am I trying to solve?

That question has influenced more of NEXO than I initially expected.

I decided, for example, not to create an LLC simply because that seemed to be what a new business was supposed to do. At this stage, a sole proprietorship is simpler and does what I need it to do. If the business develops to the point where a different structure makes sense, then the structure can change with it. I would rather build infrastructure in response to real needs than create complexity in anticipation of hypothetical ones.

In other words, the structure should follow the business. The business should not exist to justify the structure.

The same thinking gradually changed the way I looked at documentation.

As a collector, documentation meant the things that came with the watch: warranty card, manual, receipt, service papers, authentication records. We collectors like complete sets, and completeness can certainly affect desirability and value.

As a seller, however, I began to see those same documents differently. They were no longer simply accessories to the watch. They were evidence.

Where did this watch come from? When was it acquired? What was included? What condition was it in? Was it authenticated? Was it serviced? What did the previous owner represent, and perhaps more importantly, what can I independently verify?

That change in perspective altered my habits. I photograph things I once might not have photographed. I save correspondence I once might have deleted. I keep receipts that previously would have disappeared into a drawer. I record small details because I have discovered that seemingly insignificant details have an uncanny ability to become important six months later.

It is easy to call this bureaucracy. I don't think it is. I think it is traceability.

And then, inevitably, came the spreadsheets.

At first, they answered simple questions. What did I pay? What could I reasonably expect to sell for? What are comparable watches actually selling for? How long are they taking to sell?1 But simple questions have an annoying habit of producing more interesting ones.

Does a full set actually affect the result? How much does the year matter? How much does condition matter? What happens when a watch is sold at reserve compared with no reserve? How much of the apparent market price is real, and how much is simply an asking price repeated from one seller to another? What is the realistic downside if my assumptions are wrong?

Eventually something changed.

I stopped using data simply to record what had happened and started using it to decide what to do next. That distinction has become increasingly important to me. A record tells you where you have been. A useful system should help you decide where you are going. This also exposed a weakness I had not initially considered: memory. I have always had a good memory, but it turns out that memory is a terrible database architecture.

It is easy to remember why you bought a particular watch when you bought it yesterday. Three or six months later, you probably remember the conclusion, but perhaps not all the assumptions that produced it. Maybe I believed the reference was unusually liquid. Maybe condition justified paying slightly more. Maybe recent transactions suggested a particular price floor. Maybe I expected one sales channel to perform better than another. If all I preserve is the purchase price and the eventual sale price, almost everything interesting about that decision disappears. And without the reasoning, the outcome teaches surprisingly little. That realization has probably been one of the most important lessons of this stage of the journey:

If I want to learn from a decision, I have to preserve the decision, not merely the result.

That thought has taken me somewhere I did not expect when I started NEXO.

The spreadsheets have gradually become something larger. I have begun building a framework that attempts to preserve not simply what I bought and sold, but why a decision was made, what evidence supported it, what assumptions were involved, what actually happened afterward, and what can legitimately be learned from the difference. It is still evolving, and I suspect it always will. But I am beginning to think that one day this system may become one of the most valuable things NEXO owns. And it isn't a watch.

There is a common thread running through all of this that I didn't recognize at first. Accounting reduces uncertainty. Inventory records reduce uncertainty. Authentication reduces uncertainty. Good photography reduces uncertainty. Documentation reduces uncertainty. Market data reduces uncertainty. Even a carefully written description reduces uncertainty.

For a buyer, uncertainty takes one form. Is the watch authentic? Is the condition really as described? Does this person actually possess it? Will it arrive? What happens if something goes wrong? For a seller, it takes another. Am I buying correctly? Is there really demand at this price? How much capital am I committing? How long might it remain unsold? Is the evidence supporting my decision actually comparable?

Seen from that perspective, much of what initially looked like administration begins to serve a larger purpose. A functioning business has to reduce uncertainty on both sides of the transaction, and perhaps that is what all this invisible infrastructure is really for. What initially looks like bureaucracy is, ultimately, a way of creating confidence. And, somewhat embarrassingly, I have discovered that I enjoy building it.

Give me a messy process, inconsistent information and a problem nobody has properly defined yet, and the engineer in me becomes considerably more interested than he probably should. There is something satisfying about taking a process that initially depends almost entirely on instinct and slowly making it understandable and repeatable. Mind you, that does not mean eliminating instinct. Experience often recognizes patterns long before there is enough data to explain them. The interesting part is what happens when intuition can be recorded, challenged and tested. This is increasingly how I have come to think about NEXO.

It is certainly a business, and it remains very much about watches. I still get excited when an interesting piece arrives, still spend far too long examining details most people would never notice, and still occasionally find myself wearing something I supposedly purchased as inventory. But NEXO has also become a laboratory. Every transaction produces information. Every conversation teaches something. Every unexpected outcome challenges an assumption. Every process that works becomes a candidate for repetition, and every process that does not becomes an opportunity to understand why. Slowly, almost without noticing it, the business begins accumulating something beyond watches, photographs and spreadsheets.

It begins accumulating institutional memory even if, for the moment, the institution consists largely of me.

Looking Ahead

There is one part of this invisible infrastructure I have deliberately avoided discussing so far.

Getting paid.

That sounds almost comically simple. Someone wants a watch. I want to sell the watch. They give me money. I give them the watch. Except the watch may cost five, ten or twenty thousand dollars. The buyer may be hundreds or thousands of miles away. Neither of us may have ever met the other. Fraud exists. Chargebacks exist. Payment processors have their own ideas about risk, and both people involved in the transaction would quite reasonably prefer not to become the subject of somebody else's cautionary story.

When I started building the NEXO website, I thought accepting credit cards would be a technical problem. Add a button, connect a payment processor, and you're done. As it turns out, I was asking the wrong question again. Accepting the payment is easy; accepting the risk is something else entirely.

And that, apparently, is the next part of the journey.