The video unfolds the captivating saga of Gucci, highlighting the dramatic and tumultuous story of the illustrious fashion brand. Starting with the ambition and vision of the founder, Guccio Gucci, it narrates how his descendants expanded and entangled in family feuds that almost destroyed the company. It delves into the conflicts between Aldo, Rodolfo, and their offspring as they battled for control over the prestigious company, eventually leading to public court struggles, scandalous arrests, and enduring animosity.

Central to the saga was Maurizio Gucci, Rodolfo's son, whose visionary yet financially disastrous strategies nearly bankrupted the brand. However, against the backdrop of his ambitions and subsequent ousting from power, emerges the era of Tom Ford's transformative leadership. Ford, alongside Domenico De Sole, reignited Gucci with bold and revolutionary designs, leading it through a remarkable resurgence. Their successful IPO and ensuing battles against LVMH portray a story of strategically masterminded resistance and newfound triumphs.

Main takeaways from the video:

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Key Vocabularies and Common Phrases:

1. feuding [ˈfjuːdɪŋ] - (verb) - Engaging in prolonged and bitter disputes or conflicts. - Synonyms: (bickering, quarreling, fighting)

There are a lot of rumors around. It has got passions, it's got family, it's got feuding, it's got loves and loathings and tragedy, even murder.

2. underpinned [ˌʌndərˈpɪnd] - (verb) - Supported or justified from beneath, typically in finance or arguments. - Synonyms: (supported, bolstered, reinforced)

Right now, we're looking at a brand value of something like $15 billion. And that's underpinned by an extraordinary social media following.

3. litigious [lɪˈtɪdʒəs] - (adjective) - Prone to engage in lawsuits or disputes. - Synonyms: (contentious, disputatious, argumentative)

The Gucci's story was really punctuated by the family conflicts and they were extremely litigious.

4. animosity [ˌænɪˈmɑːsəti] - (noun) - A strong feeling of hostility or opposition. - Synonyms: (hostility, antagonism, bitterness)

And Maurizio kept to 50%, and that was the situation. But that created a lot of animosity.

5. rejuvenate [rɪˈdʒuːvəˌneɪt] - (verb) - To make something strong, healthy, or energetic again. - Synonyms: (revitalize, refresh, renew)

Tom Ford's leadership rejuvenated Gucci, pairing innovative design with strategic business acumen to take advantage of emerging luxury markets.

6. resonated [ˈrɛzəˌneɪtɪd] - (verb) - To evoke a feeling of shared emotion or belief; to correspond closely or harmoniously. - Synonyms: (echoed, reverberated, connected)

A gender blending sex, a non binary type of sex that has really, really resonated with millennials and consumers under the age of 35.

7. acquisitions [ˌækwɪˈzɪʃənz] - (noun) - The act of obtaining or acquiring something, particularly businesses or companies. - Synonyms: (purchases, takeovers, procurements)

In this endeavor, there was the agreement that we would run the company independently for five years, create these multi brand companies.

8. synergy [ˈsɪnərdʒi] - (noun) - Collaborative interaction between two or more entities that produces an effect greater than the sum of their individual effects. - Synonyms: (collaboration, partnership, cooperation)

The partnership between Tom and Domenico really became foundational, not only for the Gucci business, but for other luxury houses that were starting to replicate this synergy.

9. hostile [ˈhɑːstəl] - (adjective) - Unfriendly; antagonistic, opposed to something or someone. - Synonyms: (unfriendly, adversarial, aggressive)

Through strategic acquisitions and collaboration, Gucci countered hostile takeovers and expanded its influence.

10. espoused [ɪˈspaʊzd] - (verb) - Adopted or supported (a cause, belief, or way of life). - Synonyms: (advocated, embraced, adopted)

They really espoused the luxury sector in the financial market and other brands.

The Real Story Behind the House of Gucci

The story at the heart of Gucci is extraordinary. There are a lot of rumors around. It has got passions, it's got family, it's got feuding, it's got loves and loathings and tragedy, even murder. It's better to cry in Rolls Royce than to be happy on a bicycle. That story is really the appeal and the excitement and, yes, the sex factor of a brand like Gucci. Sometimes things happen in life that change your life. This was really success beyond my wildest imagination. I didn't believe it possible. Tom did not believe it was possible. The success was unbelievable.

It's difficult to understate just how successful the Gucci brand has been in history, but also really is. Right now, we're looking at a brand value of something like $15 billion. And that's underpinned by an extraordinary social media following. So you've both got this business value, and also you've got this dynamism in the digital world. That combination has really been the key to Gucci's success.

There's been an unfairness to give a lot of credit to people who really didn't deserve all that credit, and instead, people who had deserved credit were totally forgotten. Nobody has focused on the real story. Everybody has focused on the fairy tale. That's very good news for the viewers and maybe also for the media, but it's not the reality. There is an epic saying in Italy when it comes to family generations, that the first generation creates, the second generation expands and the third generation destroys. And that's almost what happened in the Gucci story.

You've got the founder who was Gucci, Gucci who had the vision for making quality leather goods and selling them initially to american tourists and other european travelers. And then you have his two sons, Rodolfo and Aldo, who ended up having each 50% of the company. And especially Aldo was really the marketer and the expander. And he had a vision to take Gucci outside of Italy. And then you have the third generation, which is also where a lot of the conflict started, because you had Aldo's three sons, Roberto, Giorgio, and Paolo, and they had 50% together with their father. And then you have Maurizio on the other side, a single child who inherited 50% from his father, Rodolfo.

The Gucci's story was really punctuated by the family conflicts of, and they were extremely litigious. So all of these fights spilled out into open court and became extremely public. One of the characters that really had the longest arc and almost the most knowledge about the story was Domenico. De Sole, who started as a lawyer to Rodolfo in the early eighties. So. Hi, Domenico. Hi, how are you? So what was it like working for Rodolfo and then dealing with Aldo? It was very complicated because at that point, what was happening, there was a big conflict in the family, because Aldous children probably felt that their dad had done such a phenomenal job, which is true. Aldo was a pretty formidable person, but they felt that they deserved more than the one fourth of 50%.

So we had a lot of battle that went on and on for a long time. But then the situation was basically confirmed and there was no change in the shareholders ownership. And Maurizio kept to 50%, and that was the situation. But that created a lot of animosity. There were a lot of battle. He dreams every five minutes. He doesn't think, he dreams. And his whole life, it still run as a child. Today we do $138 million business with $18 million profit. This is the answer to a dream I accept.

So a major turning point in this family story was 1983. Rodolfo is very ill and he dies and he leaves his 50% stake in the company to his only son, Maurizio. Maurizio is starting to get his ideas, even back then, about how he wants to clean up the Gucci brand and take it up market. But he can't get his uncle and his cousins on board. They're very happy with all of the lucrative licensing deals that are very profitable for them. So as Maurizio is becoming more and more convinced of his vision for Gucci, and that he's the one who needs to take it forward on the home front, he's also falling out with his wife, Patrizia, who had been pushing him to be the kind of Mister Gucci and one of the leading luxury CEO's in Milan. But he's starting to feel a little bit proud, and in 1985, he decides to leave her.

We have this transformation. Mister Jackie became doctor haidt the same time you had Paolo ratting on his father Aldo to the us tax authorities because he suspected his father of siphoning off profits, putting them into offshore accounts. So there was a case then started by the IR's, an investigation that ended up sending Aldo to jail. I never forget. I remember we had a board meeting of Gucci America, and Maurizio asked me and said, you have to explain what this means. And yes, I tried to explain to the members of the family, this is the United States. It's very serious. And tax fraud is very serious. It's not Italy. One member of the board said to me, you are pessimistic. I said, well, maybe. What do you want me to say? Unfortunately, I did go to jail at that point.

Again, it's a big change in my life because I went from being the lawyer for the company and the family. He asked me to run Gucci America with a specific goal of settling with the IR's. The reputation was still a very good reputation. Most importantly, worldwide name recognition, because Eldredoff were really geniuses. They opened stores in places like Japan, in Hong Kong, in Asia. They were really amazing. Early on they were in all these markets, but there was a problem. I think the product was really getting to be less attractive. They also expanded distribution dramatically. So there were a lot of events that occurred that really the brand was deteriorating.

There are many lessons from luxury brand history about the balance between brand value and revenue growth, because frankly, it can be easy to get over excited about the possibility of revenue growth, increased distribution. And of course, Gucci have had their own issues and challenges on losing control of the brand experience. In and out of their history. There have been times when they have overexpanded. They lost control of product quality in their drive for international success.

What is it that makes the brand valuable? It will often be exclusivity. It'll be the control of the customer experience that people can feel confident about what they're going to get in product terms, what they're going to get in service terms, and also the authenticity that they're going to get is part of what they're buying. And so therefore, you need to make sure you are feeding that brand value or what it is that makes the brand valuable in the first place.

So Maurizio had a problem because he had a clear vision for Gucci, but he didn't have the money to buy out his relatives. The answer to his problem was an investment banker who worked for Morgan Stanley at the time named Andrea Moranti. I can remember very vividly, as if it were yesterday, that when I explained to the other partners in the room, the Morgan Stanley room, that I had met with Maurizioguchi and that he wanted to do some form of shareholding restructuring, I'll never forget that for the first time when I was describing a transaction, everybody was interested. And that's, if you will, the first time that I understood the power of a brand.

So he launches this plan, a stealth campaign with Morgan Stanley to buy up the shares of Aldo and his cousins and bring in an investment bank, Invescor, as his financial partner because he didn't have enough money to just buy it all himself. As far as the complexity of purchasing the cousins and also the uncle, well, that complexity had one solution, which you could call today, inside information. Because I spent a lot of time with Maurizio. He gave me all the inside information of what everybody within the family, really what the agenda was. And in particular, he also explained to me how Paolo Gucci had been ill treated by his father and given a significant reduced number of shares vis a vis his brothers, because Paolo had literally took his father to jail.

So what I did is I proposed to him to be paid a very similar amount of money, as if he had not been penalized by his father. I'll pay you the same price that your brothers are going to be receiving. He accepted. So I actually went there with a suitcase of cash and purchased this initial 3% from Paulo Gucci, which actually changed the life of Gucci. One person who worked for the company said, paolo has been a traitor to everyone. Yes, maybe, yes. You know, against bandits. I mean, if you live there, you're a traitor, right? Once they saw that the game was over and there was somebody else coming to actually run the business, then gradually, one by one, they all sold their shares.

So what initially was almost a mission impossible turned into a reality. 50% of all the available shares were ultimately purchased by Inviscorp. And at that stage, Invescorp and Maurizio had the company. So Maurizio emerges as the CEO. He had control, because even though he was in a 50 50 agreement with Inviscorp, they gave him, you know, management control. His vision was to take Gucci back up market. And that meant, you know, quality products, beautiful workmanship. And he had a very classic idea of what he wanted Gucci to be. He used to say he wanted to be round and brown and soft to a woman's hand. He opened this fabulous headquarters in Milan, no expense spared. Priceless antiques, workmanship.

So the debt started racking up really, really fast. And at the same time, he had cut out the most lucrative parts of the business. So the Gucci accessories collection, which was the cash cow for the company, things were done in a somewhat irrational way, I think that incurred massive costs in Italy, which the company could not afford at the time, for Edes Ivy to clean an old new product. Okay, well, that's a great idea, but, you know, what's the cost of it? So overnight he said, no more GG. So I said, well, Maurice, GG is like 70% of the sales, but he wanted to do at all costs. So the company really went to tailspin and started losing money. And it was very, very difficult, became very painful.

So the situation became dire with Gucci's finances. They were not able to pay salaries, they were not able to pay suppliers. They were on the verge of having to take the company's books into court to say they couldn't settle the accounts. And at that point, that means that the company's declared bankruptcy. So Gucci is really teetering on the brink at this stage. He had to write these things. I think that the problem, he couldn't make it happen. There's some people have great vision, but he had the greatest vision, the great strategy. But if you execute, he was beyond incapable of executing. That really was the bottom line.

So invest Corp. After giving Maurizio free reign to put his vision into place, they're becoming very, very worried about the situation. And they are millions of dollars in the hole and they're deciding they don't want to put any more money in because they think it's just going down the drain. I told him that it was in his best interest in order to keep and preserve the good relationship he had had with Invescorp, to go to Inbescorp and say, let's choose a common new chief executive officer, somebody who's really going to operate business. And so when I told him that, unfortunately, the reaction was extremely negative because for him, I was telling him, which is the truth, that he was not capable to run the company. And I felt the responsibility of telling him that in his own interest. But sometimes, you know, your own interest is perceived in a different way. He is begging them for time.

His assessment is that the turnaround needs a little more time for the customers to really get the feeling for how Gucci has changed. And at one point he's begging them, if you just give me six months, he says, the japanese market is going to realize that there's a new Gucci and the wind will be back in our sails. Well, he never got that chance. Inviscor created a war room. They went after him with everything they could. And finally they were successful in kicking him out. And they bought his 50% in the company for $150 million and then took it over entirely. The irony of this story was that actually Maurizio was right. Six months after he was forced out by Inviscorp, the Japanese woke up to the new Gucci and started buying Gucci bags. And the company started making money hand over fist in a very quick time in March of 1995.

One morning, broad daylight, Mauritsu is walking into the front door of his new offices. A gunman comes into the doorway behind him and shoots him dead in cold blood. The murder of Maurizio Gucci was a shocking event for the city. And in addition to being shocking, it was very sinister, because there was no clear culprit. The prosecutor who was investigating the case, Washington, looking into his business deals, he was looking into the family conflicts. He interviewed the cousins, he interviewed Patrizia, but he didn't really see a clear family connection. And the case was just cold after two years until. Because of a tipster. One day, one morning at 530 in the morning, the police raid Patrizia's apartment on Corso Venezia and arrest her for Maurizio's murder. She had an obsession.

She wanted her husband dead, and she spoke about it to everyone. Often people are remembered for the wrong reasons and the glamour. And maybe the interest has more to do with the homicide. A wife appoints a killer, you know, a hitman, and perhaps there is a risk that Maurizio will indeed be remembered as somebody who was killed by his wife for no reason at all, or for very good reasons, depending on where I. On where you sit. But I think that Maurizio's real legacy is that the Gucci brand has really been created by three generations. As often is the case in some family businesses, after the third generation, the family is not able to keep control of the company. In this case, Maurizio not only lost control of the company, but he also lost his life in the early stages of many luxury brands.

The founder, the visionary, the original creative director, they came almost to the end of their tenure, and they needed somebody else to take the brand on in a different direction, or a fresh direction. I think you could also say with the Gucci brand 100 years old, over time, a brand like that needs to have fresh input and fresh eyes. So even though Maurizio wasn't ultimately successful in putting his vision in place, he had actually done a lot of the work to set Gucci up for its next phase. He hired an american retail executive, Don Mello, who was the president of Bergdorf Goodman at the time. And one of her main contributions was to hire Tom Ford. After Mauricio left, they started giving me more and more responsibility, and I became the chief operating officer of the company very quickly. And at that point, I really the factor. I was running a company.

They basically asked me who I thought to be the creative director, and I felt very strongly to be Tom. I remember very vividly, I drove up to Milan, and Tom was very very young. We had a meeting and I said, tom, I think we can really fix this company. So I said, look, I'm not interested in interfering. I'm a businessman. I don't pretend to be a creative person by any means. So you're in charge. You know, you do it. And let's see where we go here. He accepted, and that's really the beginning of the story.

He bought back the logo and made it chic. He makes clothes that rock the world, and he puts sex back where it belongs. Here's Tom Ford for Gucci. Thank you. I'd like to thank Vogue. Thank you. Thank you. It's difficult to understate the impact of Tom Ford on Gucci. No, it's not just about fashion. It's also about real life.

With his extraordinary style, his innovation, and actually his sense of control, this is one of the really, really key success criteria. There has to be a vision, and it has to be a very direct vision. Tom Ford had a very, very clear and strong idea about what Gucci could be in terms of global ambition. He made sure that his vision was totally control right across the customer experience, from the advertising, every point of communication, product detail and so on. Ford's design power hit the fashion world like a tidal wave. The winner is. And the winner is Tom Ford. Thank you.

So the Tom Dom era of Gucci really was extraordinarily exciting. And it was clear from the very first menswear show, actually, that Tom designed in Florence that something had changed at Gucci. And there was a new Gucci in the air, and the sales took off immediately. And even though they were showing kind of more sexy styles on the Runway, they were still selling primarily black and brown handbags. But they really had lit a fire under this brand. And the sales are doubling. So the sales went through the roof. In 1995, our sale doubled. The success was just unbelievable. Suddenly, really, things looked up, and that at that point, investor wanted to go public as fast as possible.

So the Gucci Ipo was very anticipated. But what they realized was that there was no fashion sector in the financial market, so they actually had to train analysts in how the luxury market worked. And so Domenico is being given presentation workshops and skills. They're bringing analysts into the room and talking about how the industry works. They really pioneered the luxury sector in the financial market and other brands, you know, subsequently followed. But it was really the Gucci IPO that set the stage. The old Gucci name sure is attracting a lot of customers these days on Main street and Wall street.

The IPO of Gucci was even more successful than their wildest dreams. They debuted at $22 and shot immediately up to $26. The offering was 14 times oversubscribed and ended up making more than $2 billion. For Inviscor, sales were up under 13%. So we were delighted. It was a fifth quarter in a row with which we double our sales. It proved to be a success story, certainly from a financial perspective for Inverscorp, but also a huge success story within the industry.

Once it was clear that the luxury markets was there to be developed and was there to be taken advantage of, all the players who were already in that market had the competitive advantage of having seen it from within. The risk was that somebody could take it over. Given this massive success, and it doesn't matter how successful you are with a public company, there are always moments in which the stock may go down. In 1997, Gucci was a high performance machine. But a financial crisis, crisis hit Asia, putting Gucci and the rest of the luxury goods market in peril.

Japan was the dominant force in the luxury market at the time. So when there was this crisis in Asia, the stock went down. And I think at that point was LVMH started purchasing shares of the company. That really was my concern about the possibly open to a takeover. So the real sort of rival on the market for Gucci was LVMH. And Bernard Arnaud, who was kind of known as a corporate raider in the european luxury scene, he had taken over Louis Vuitton, went NSE and had other fashion brands. He had Dior. We tried to build a large business with our partners with one criteria, the best quality and the most elitist product in every line that we are selling throughout the world.

I got a call from Yves Carcel, who was the CEO of Louis Vuitton, and he called me, told me that LVMH has purchased 5% of the company. And at that time, if you went about 5% threshold under the rule of the New York Stock Exchange, you had to go public with it. So that was really the beginning of the battle with LVMH. And did he say something about how it was a friendly acquisition? Yeah, he said it was very, very friendly. Mister Hanoi has a hell of a reputation, so I'm not sure how friendly this is going to be. Now. We're going to mix a little money with a lot of style.

From January through June 2, retail titans battled for control of fashion's biggest prize, the house of Gucci. So once Arnaud had thrown down the gauntlet for Gucci, Domenico de Sole realized that he was in for a big fight, and he pulled in bankers and advisors and decided to stage a resistance. And his main concern was that he didn't want Arno to be able to take over control of the company without offering a full and fair offer to all shareholders. They are our number one competitor. We compete against them for customers. We compete for talented people. This is a case of creeping control. They would like to control the company without paying the full price.

The contest between these two companies was getting more and more acrimonious. And with the help of his advisors, Deso le put protection mechanism into place through the issuing of employee shares. And that kept on diluting Arno's stake as he's building up his stake in the company. But at a certain point, Dessouli realizes that they aren't going to be able to fend off Arnaud forever. So kind of in the 9th hour, Francois Pinault, who runs PPR, which was a french retail group, comes in and offers to buy a stake in Gucci and becomes the white knight to help them fight off Arnaud.

Francois was the most decisive man in the history of the universe. I talked to him for half an hour. I told my story, and I explained why we want to defend against Desole drove a hard bargain. Securing $3 billion for Gucci's immediate growth was the very deal Bernard Arnaud rejected. So Francois Pinault does not only want to be the white knight, but he has an even bigger idea. And so he turns Yves Saint Laurent $3 billion over to Tom and Dom, and he says, I want you kind of the dream team of fashion, to buy up other brands and turn Gucci into a multi brand group that can rival Arno and LVMH.

That was pretty brutal because we were under pressure to do it. Okay. So there just was a lot of work. You know, there were a lot of potential targets. And every time we tried to buy something, obviously VMH would show up. It was not an easy thing to do. So everything had to be done in great secrecy. It was a huge amount of pressure because it was, on one end, running the company and on the other hand, acquiring all these companies.

And we acquired a lot of companies very fast to not only turn around Gucci or keep the Gucci turnaround going, but to also then identify other talent, other brands, make them successful. I mean, it became a huge endeavor. They were both working 24/7 Tom was designing both Gucci and Yves Saint Laurent, and at the same time, they were trying to identify and then nurture these other designers, I was looking for major investment. And then Gucci got in touch and molested history.

They bought Alexander McQueen, they bought Stella McCartney, they bought Balenciaga. Each brand was slightly different. You know, some were young designers that needed sort of help to grow and to mature. Others were faded names that needed to be turned around. So they had a lot of children that they were trying to raise in this endeavor.

There was the agreement that we would run the company independently for five years, create these multi brand companies, large group of companies, and then he would buy 100% of the share at the price that had been set forth at the time of the battle with LVMH. So five years after the initial white knight, Pinot buys the full 100% of Gucci. And, you know, Tom and Dom are in a situation where they are essentially running this publicly traded company as though it were their own.

Until a time comes where Pinot is taking control and it's time to renegotiate the contracts for Tom and Domenico, and they realize that they aren't going to have the freedom to run Gucci the way they had been. And Tom and Dom announced that they're resigning from Gucci, which is kind of a shock to the industry at that time. So at the end, Tom was clear was not going to stay. And I worked with him so closely, you know, just like my, my younger brother. So at the end, we felt, and I felt it, we had done our part, and it was time to move on with life. The partnership between Tom and Domenico really became foundational, not only for the Gucci business, but for other luxury houses that were starting to replicate this synergy between the creative and the management. It became seen as kind of the essential component that you needed in that period to run a successful luxury brand.

Gucci is my legacy. So I love the company, and I'm super happy about Gucci, because some people ask me this question a lot. No, I always want Gucci to do well. I think it would have been catastrophic. Gucci didn't do well after Tom and I left. The genius, in many ways of Gucci is how it's been able to reinvent itself and also, frankly, reinvent the sex of its times. If we think about how Gucci was rescued in the 1990s, sex sells, and that contemporary view on sex was a fundamentally important part of that.

Now we've seen Gucci really go ahead again. The last few years have been phenomenally successful. Now, why is that? Well, actually, they've expressed sex in a rather different way. A gender blending sex, a non binary type of sex that has really, really resonated with millennials and consumers under the age of 35. And that has been both very unusual. It's been very challenging for luxury brands, but of course, Gucci have made it a truly runaway and Runway success.

Gucci, Entrepreneurship, Luxury Brands, Fashion Industry, Innovation, Leadership, Bloomberg Originals