am mono Ortega is one of the wealthiest people in the world with a net worth around $120 billion and as I was reading this biography of Ortega the same idea just kept coming to my mind over and over again the fact that hga is the Henry Ford of fashion if you go back and you read Henry Ford's autography or really any biography written about him you'll realize that Henry Ford's philosophy was get rid of waste increase
efficiency through technology lower your prices to increase your volume and you'll make more money overall even though you're making less money or less profit per car in the case of Ford or piece of clothing in the case of Ortega watch your cost religiously and then bring that business process inhouse so vertically integrate as much as possible and then always focus on service Henry Ford was determined to concentrate on
the lower end of the market where he believed that high volume would drive his cost down and at the same time feed even more demand for his product it was a fundamentally different philosophy than the rest of his industry at the time and you could say the exact same about artega and his industry driving their cost down watching their cost religiously is something that Ford and Ortega had in common with each other and
in common with all of History's Greatest entrepreneurs not only did all of History's Greatest entrepreneurs study History's Greatest entrepreneurs but all of History's Greatest entrepreneurs also watched their cost like their businesses dependent on it that everpresent and reoccurring theme is why ramp is now a presenting sponsor of Founders I've gotten to know all the co-founders of ramp and have spent a ton of time with
them they all listen to the podcast and they've picked up on the the fact that the main theme from the podcast is on the importance of watching your costs and controlling your spend and how doing so gives you a massive competitive advantage and that is the reason that ramp exists ramp exists to give you everything you need to control your spend ramp exists to give you everything you need to make cost control an
obsession ramp helps you run an efficient organization in fact I read a ramp customer review that sums this up perfectly they said ramp is like having a teammate who you never have to check it on because they have it handled ramp's website is incredible make History's Greatest entrepreneur Proud by going to ramp.com to learn how they can help your business control costs that is ramp.com one afternoon after school I went with
my mother to a store to buy food I was the youngest of my siblings many times I accompanied her for a walk while she did her errands the store we walked into was one of those oldtime grocery stores with a high counter so high that I couldn't
see who my mother was talking to but I heard something that despite the time that has passed I have never forgotten I'm sorry ma'am I'm very sorry but I cannot lend you any more money that left me shattered I was
only 12 at that moment still holding his mother's hand Orga stopped being a child after reacting with shock to the words he just heard he made an irrevocable decision this will never happen to my mother again I saw it very clearly from that that day onwards I would start working to earn money and help at home I quit school left my books and got a job as an assistant in a shirt store that incident marked a before and
after in his life and this is what artega said about it the impact of that story cannot be overstated that gentleman will never know that he was the cause of what came after that was an excert from the book that I want to talk to you about today which is this is a mon Ortega the man who created Zara and it was written by kova donga O So for years and years listeners to Founders have been
requesting an episode about Ortega and I have to before this was suggested to me many many times I didn't even know who he was and I was shocked to find out that Ortega is one of the wealthiest people in the world his net worth today is around $120 billion do he owns 60% of a publicly traded fast fashion company called inditex with Zara being most well-known brand and then the majority of the revenue inside of the company and
so actually one of the most interesting things I learned this week was that he made billions of dollars manufacturing and selling clothing and then he invested a lot of that money into commercial real estate he's actually one of the largest tech company landlords in the world tech companies like Facebook Google Apple Spotify Amazon all lease property from Ortega in fact his commercial real estate portfolio alone
is worth around2 billion and the reason I brought that up now is because I thought being a landlord to tech companies is fitting because I don't think this is actually a story about fashion instead it's a story about applying technology to an ancient industry I think of Ortega as the Henry Ford of fashion and I'll explain why but before I do that I want to go back to his childhood and his decision to immediately start working to help save
his family so the author of this book tells a story inside of this book where she's actually interviewing this very famous bull fighter many years ago this bu fighter in Spain named Luis Miguel so Luis Miguel at the time that he's having the conversation with the author was at the peak of his career and they're at Luis Miguel's house and Luis Miguel and the author are watching luis's son play in The Garden of their home and this is
what Luis says he says this child will never be a bull fighter to face a bull you have to go hungry and I think the author included that story because the same applies to Ortega he says over and over again how hearing that exchange the fact that his family could go hungry made him determined to work and to be able to contribute to the family I would also say he never uses these words but I would have to imagine as a 12-year-old
boy that it also made him afraid and so the way I think about Ortega is he's a man on a mission in fact he says that over and over again in the book so I guess I got to back up the reason it's taking me so long to cover Ortega even though so many people have asked me to do so is because all the biographies on Ortega are in Spanish so actually my friend Cameron priest translated this book and he sent it to me and after I
finished reading it I organized all the highlights and notes by subject matter because he's Remar Ortega is remarkably consistent he knew the author for over two decades and he repeats what's important to him because what's important to him remains consistent so again the way you think about arga he's a man on the mission I just want to pull some of his quotes this is something that he repeats over and over again in
the book across many years and nearly all the chapters he says we are all born for something he often repeats with an absolute conviction that he has a mission to fulfill that mission started that day when he was 12 years old he says there is something deeper in me that drives me to work that has moved me since that day as a child this has led me to do things tyless another way he describes the
importance of having a mission the important thing is to set goals in life and put all of your soul into fulfilling them he is 72 when this book is published he's 88 now he's 72 years old when he says that the important thing in life is CES and put all of your soul into fulfilling them he says I have dreamed of growing this company since I was nobody a few chapters later says the same thing since I was nobody and had
hardly anything I dreamed of growing we have never been complacent nor have we accepted easy success optimism can be very negative you have to take risks this was something I repeated tirelessly to all those who have joined the company another example of this we gave it every day my priority has always been the company and I have committed myself to it with full dedication from day one and it's not just that he describes himself
as as a man on a mission other people literally say that Ortega is a man of mission he is so convinced of what he is and what he has to do and when Ortega asked like what is the why behind life he says I am absolutely convinced that we all come to this world to fulfill a mission none of us are here by chance so the first thing he does is get a job in a shirt store he's 12 or 13 and he's just a gopher an Aaron boy he also
is responsible to cleaning his store and when they're busy he also has to help serve the customers and there's two really important parts of this one he said from day one he took he took his work seriously and with a sense of responsibility he was like that at 13 at 72 when the book is written he's still like that and so even though his tasks were like minor some people might think they weren't important you know just
running errands you're sweeping the store you're helping like the customer overflow there is this maximum that tends to reappear in the history of Entrepreneurship and it's that opportunity handled well leads to more opportunity and you just see it over and over again the importance of doing the best you can with the opportunity in front of you because that's going to unlock an opportunity you couldn't possibly predict or even see at that
moment and then the second most important part about this experience is that he just realized that customers should never be lost sight of his main critique of the fashion industry is that they basically ignore the customer and so what he's going to realize is that total dedication to serving his customer in ways that other companies cannot or will not is going to be a massive Ed and something strangely that no one else in
his industry was doing before Ortega came along and so Ortega has that quote that the most important lesson he learned at the store was that customers should never be lost sight of this is this sounds a lot like Sam Walton who would preach inside of Walmart he would say there's only one boss the customer and he can fire everybody in the company from the chairman all down simply by spending his money somewhere else so
he's working in the apparel industry for about 14 years before he finally quits his job and sets up his own compy so he's around 27 years old he quits his job and starts his own company that's going to manufacture clothing this company is going to be called Goa which is just his initials in Reverse so he didn't have a lot of money but he did have some assets non-monetary assets as to say so he's got contacts with fabric
manufacturers as a result of working in the industry for 14 years he had relationships with customers and he's got the trust of his family and friends because they're going to leave with him and help him set up the the business so he actually gets a bank loan of $25 00 pada that is uh in 1963 this us this was the currency of Spain at the time and so with his soon Tobe wife his brother and Friends of the family they set up a
modest workshop and they start manufacturing bathrobes and these bath robes sell much better than expected he starts manufacturing more clothing and at this point he's just selling clothing to stores he does not to other stores he does not have his own stores but this I think is an Insight or I guess some kind of indication that he was a gifted entrepreneur even it takes him a long time to build up index but from reading
this biography it's clear that every step along the way he's just trying to do the best with the opportunity in front of him so he starts selling he's just just manufacturing clothing at this time but within 10 years so from 27 to around 37 years old okay 10 years later his company has more than 500 employees has absorbed the supply and distribution operations and has hired a team of designers but he has not satisfied with
the State of Affairs because something he observed in that shirt store you're ignoring the customer so in 1975 this is going to be about 12 years after he starts Goa he's going to open the very first Zara store he is Ortega is around 39 years old when he does this and it'll be obvious in the quote that I'm about to read to you from Ortega talking about why he did this he wanted the tradeit that he shares with most of the
entrepreneurs and almost all of his entrepreneurs they want control and if you want control you're going to naturally vertically integrate I loved on the James J Hill episode last week when he's building you know the most profitable the most successful Railroad in American history he understood the importance of controlling all aspects of his business so he starts vertically integrating but he didn't call it vertical integration
he called it rational integration and I think for entrepreneurs obsess control that's exactly what it is it is very rational to us rational integration so this is Ortega talking about the early years at Goa and why he wanted to eventually control every single aspect of his business so he says when I started manufacturing we sold to third parties I never really like this we couldn't sell a nice dress no matter how
nice it was if what that customer asked for at the moment was something else I was convinced that I had to dominate the customer and at the same time be by their side but I would only achieve it if I managed to sell to them directly the product has to be right that is the key that was the first hint of what I would argue is Ortega's most important Insight he realizes that it's better to start with the customer and work
backwards and he says over and over again I'm just going to manufacture what the customer wants so this is the beginning of why I think that I would call Orga the Henry Ford of fashion and what I would share what I think Henry Ford and ortea share is that they really built their career on one idea and so Ortega said since I started working I had an idea that obsessed me why can't I invent something different from
everything else on the market I clearly saw that I wanted to fill a gap that existed in the textile business and I decided to follow that impulse so Ortega's great idea was the ability to enable what he wanted to do he wanted to enable the entire world to dress well the problem that he's trying to solve is how do you make and distribute clothes that are fashionable and affordable the existing fashion industry when Orga
starts right the existing fashion industry already knew how to make clothes fashionable and expensive Ortega is going to invent the process to make them fashionable and affordable Henry Ford's one big idea was to mass-produce a simple affordable car that the average worker could buy that was impossible at the time when Henry Ford had that idea so he had to invent the company and the processes to make his dream a reality
the same is true for Ortega in 1975 when he opens his first store he's got to invent the company and the process where you can make and distribute clothes that are both fashionable and affordable and obviously do so at a profit and so to do this number one he needs to work backwards from the customer he's going to think about his very tight and close relationship with the customer as a form of a competitive intelligence and number
two he has to invent and working backwards from the customer in the fashion industry so think about all the episodes like I've read biographies of Christian Dior and Koko Chanel and Balenciaga and Ralph Lauren they are way more like Steve Jobs in their approach they have a perspective they have a point of view they have an idea in their Mind's Eye that they want to bring forth and make reality in many cases they are
creating the products that they want to see in the world and then they'll educate and sell to the customer and try to convince the customer to buy them Ortega is not interested in that at all he says over and over again it's better to start with the customer work backwards I'm going to manufacture what the customer wants so to do so he has to have a very tight relationship with the customer to be able to react fast
because when you're just a manufacturer when he was just a manufacturer say and he sold his his products to other stores what he realized like oh they're just guessing at what the customer wanted and Ortega notic this dislocation between well I go into these stores the buyer at the stores I'm selling to when I'm just a manufacturer right they're asking for products and then I leave the store and I go out on the street and none of the
customers are wearing that and that observation of the difference between what the buyers actually want in the stores and what the customers were actually wearing on the streets that gave him the the initial idea of hey maybe I need to have my own stores and so when he opens his first store this is not stated but reading through the line like understanding who he is as a person is as reading biography I don't think
this guy would ever I know for a fact he would he didn't his idea was like I'm just going to have one store he is relentlessly dissatisfied he is never complacent and one hint that he was not going to stop at one store is his decision to computerize that's the qu that's the quote computerize the company and he does this in 1974 be before he has the first Zara store this is this is one of the craziest things but I need to
go back to this idea before I get there that you know he States over and over again I'm going to make what I understand customers will demand just like Henry Ford said I am going to figure out a way to make a simple affordable car that the average worker could buy Henry Ford had to invent the way to mass-produce automobiles to get the the price down to an average worker could buy the same exact situation Happening Here with Ortega to do what he
what his stated goal is to un I'm going to make what customers will demand to do this he has to invent the logistics and distribution system that enables responding immediately to customers desires now the reason this is so important is because unlike a car in fashion the desires of the customer change all the time so the way I would think about this is he actually wants to build a company capable of responding to
customer desires and he knew those desires will absolutely change over time so he has to invent the logistics and distribution system that enables his company to respond immediately to changing customer desires and what he does next at the time he does it blows my mind so he says the next step is to computerize the company so this is 1974 I'm going to draw another parallel between or and one of hist entrepreneurs
this going be Sam Walton who I've already uh mentioned a few times Sam Walton does something very similar in 1979 okay the way I think about the reason this came to mind is because they're both Ortega and Walton were both applying the most sophisticated technology of their day to very ancient Industries humans have been wearing clothes forever humans have been buying things that other people produce or selling things that other people would
produce forever but one of the craziest ideas I heard when I just reread a biography of Sam Walton this isn't his autobiography this is another one called I think it's called Sam Walton the richest man in America by Vance Trimble but what's crazy is in that book in 1979 if I'm not mistaken I think Sam Walton's like 62 years old he's got all these Executives in this company saying you know Walmart's ripping it's they're
growing so fast they're having a hard time keeping up with everything and they're coming to him like hey we need to invest in technology we need computer a computerized inventory system we're doing too many things by hand and Sam for a few months or maybe like a year here resisted resisted resisted because he said something like he thought computers were just overhead eventually they were able to demonstrate to Sam
Walton that this is not overhead that this is going to vastly increase our productivity and our efficiency and even though it has a big price tag was $500 million it's going to be one of the best underpriced assets that we could ever apply to our company and so in 1979 Sam Walton gives the go ahead to invest $500 million in $ 1979 in the most advanced computer system of his day Ortega does the same thing in 1974 so
there is a guy who's really important to the story this is Jose Maria castalano he's going to work with Ortega for 30 years he's actually going to be at one point the CEO for many decades the CEO and Deputy chairman of inex and Ortega initially tries to recruit Jose because of technology so this is what Jose says I joined in the year 1974 I met Ortega when Zara did not exist he only had the factories in those years when nobody
thought about technology within our sector in which there was almost no computer science or mobile phones he wanted to have a good team in technology he anticipated the future in this regard I had worked as an intern at IBM and at an insurance company aegon where I was the director of computing so we installed a system that at that time a system inside of Ortega company okay and we installed a system that at the time
despite being the best that existed was very primitive and then this next paragraph also speaks to Ortega's patience Ortega asked me to stay with him so to join his company not just consult but I was teaching economics at the University and I told him no Jose will continue advising the company parttime and then eventually 10 years later decides to join the company full-time and so let's go back to Jose
talking about the advantage of having technology that your competitors do not cuz remember or take his goals I'm going to be as close as possible to the customer all the infinite changes and fashion that can happen over a year I'm going to know before anybody else to do that I have to build an the world's most advanced Logistics manufacturing and distribution system in the entire fashion industry this is what Jose talks
about what he thinks is the core of the business and how this was enabled by technology being close to the customer was a great advantage over those who did not notice the changes at that time fashion focused on presenting two traditional collections per year it was very fixed they did not pay attention to the street the fashion designer was unaware of what the customer thought of his collection and this is how inditex
turned around this approach to Fashion this is why you need technology and this is why you need assistance say so doing this for a single store that can definitely be done the tough part comes when you want to grow and replicate that business model all over the world which is what inditex does today then that problem of organization appears and shifts from an ideology an idea and a dedication to a mission to technology
and later in the book they have an analyst that perfectly describes what Ortega actually built he said he built a ground breaking an avangard textile Distribution Company their business is centered around one simple premise to be quick at responding to the market it would take almost a year for traditional fashion companies to get it products out Zara's main advantage is an astonishing ability to detect fashion trends
assimilate them make them a reality on the hanger at a bargain price inside of a store that's conveniently located all in less than 15 days while other companies make their collection at once for the whole season Zara continuously
modifies its products according to what people are asking for their secret power is they can offer up toate clothing this is one of the craziest things I got to read these whole two paragraphs to you because it's one of my
favorite things it actually talks about the business model comes from the end of the book but I want to talk to you about it now so it says from the Inception Ortega had an obsession to give the customer what they wanted quickly enough to meet their demand and at a price attractive enough to increase the frequency of purchases until Ortega the textile process was on a different trajectory collections were thought out
and designed more than a year in advance they were met then manufactured with a 3-month lead time and finally they were delivered to Distributors who were responsible for sending them to stores once or twice per season or take a look at that and said that doesn't make any sense to me this posed three fundamental risks a significant buildup of stock a bet on collections that might not succeed in the market and uncompetitive
prices given the margins that had to be charged at each step of the chain Ortega saw from the beginning a clear distance between the production process which was too long and not Dynamic enough and the end consumer the founder wanted to integrate design in manufacturing first then complete the chain with distribution and sales in his own stores this was a holy moment for me when I read the following sentence turning
the customer into his source of privileged information and not just a receiver of a commodity Ortega was interested in what the customer asked for and was willing to adapt the entire production process to their demand he was convinced that if he managed to complete the cycle meaning completely be integrated he could reduce the margins by between 70 and 80% which would clearly affect the price the end consumer had to pay for each garment
this was always Ortega's obsession reworked reinvented clothes in direct connection with what the consumer expected clothes that appear very shortly after and so again people around him when he started had this idea and starts building this up and making these crazy Investments to technology when other people in this industry do just don't understand this then nobody else does it you know people like oh you can't do this nobody else does this
Ortega did not care for that argument he says even if no one else does it I'm going to do it this is another thing that he had in common with Henry Ford he's the Henry Ford of fashion I'm telling you it's very obvious to me Henry for says I refuse to recognize that there are impossibilities I cannot discover that anyone knows enough about anything on this Earth definitively to say what is and what is not possible
that line jumped out to me because it says this phenomenon this idea this entirely new model that AR take invented has broken it says they were talking about compar them to other people in the fashion industry right it has broken schemes and has shown that there are no mature sectors where everything is already discovered but rather companies are managers with closed minds who resist Innovation so to do all this they
need to do basically three things really well they need to find out what customers want they need to design and make the clothes quickly and then the third thing is they need to distribute the clothes to their stores very fast and so to find out what customers want they hire a ton of young people and then these young people go around and they actually look at what people are wearing so they have people dispersed in New
York nightclubs and shopping areas of Paris and trendy bars and hotpots in Spain and what they are doing is they're tracking the trend they don't want to know what you're going to wear 2 years from now they want to know what you wear right now so you have people all over the world that work for indexs they're actually on the street seeing what people wear right they also the the author is given this tour at the
headquarters in Spain and they show this huge room with these drafting tables and tons of designers and they're surrounded by thousands of international magazines mostly fashion and lifestyle magazines and everybody working in that department what their job is they have to spot the the dominant Trends so once they identify what the customers want they design them and then they start manufacturing and making them and when
the book starts describing not only the manufacturing process but also also the logistics process what you realize is that Zara or inditex is a manufacturing logistics company that uses technology as an advantage and so here's one description as they're they're touring the plants We Tour the different warehouses where the complex task of preparing the garments before they left for different destinations was carried
out large rails crisscrossed the ceiling and the factory made clothes rotating unceasingly in an L and repeated manner went to the labeling ironing bagging areas and finally to the point where the rails forked according to the store that would be their final destination in this last section sophisticated and effective machines folded the jackets blouses or pants and plac them in huge cardboard bins if the Garment wasn't folded
because it had to travel upright it slid onto hangers that were automatically inserted into special containers the address of the store was printed on each of the boxes this is going to blow your mind modern machines with hardly any trace of humans operating them our mouths literally opened in front of the futuristic Panorama that we had before us I didn't completely understand the complexity of what they were showing us
but I did sense that a significant portion of the secrets of a company destined to be at the head of the global textile industry were being kept and designed there and so then it gets even crazier here so they're at the ultramodern plants so I guess I should point out to you the fact that Zara are inditex it's not headquartered in a big city instead it's headquartered in a rural corner of Northern Spain and I've
seen this reoccur as a benefit in not only the books but some of the world- class entrepreneurs I get to meet as a result of the podcast is they set their company up away from everything and so for inditex this ultramodern Logistics facility that the author is taking a tour of she says it's an ultramodern plant in galaa Spain is connected by more than two this doesn't this is this is crazy is connected by more than 200
kilm of underground access to a fully automated Logistics center located in Ario another town in rural Spain from where trucks loaded with products depart for European stores or for planes in the case of the rest of the world this
process combines realtime information and in-house production with an efficient distribution system now do you see why I keep saying that inditex is just a manufacturing logistics company that uses technology as an advantage
that continues what has helped us succeed in sales the most is that we receive daily information about what's happening in all of our stores worldwide and they're able to do that today because Ortega invested heavily in technology from the beginning and they know that's a massive Advantage Logistics is a fundamental part of the circle that completes IND Texas vertical integration process inventory control in
all locations around the world is as important as getting the design right and producing it quickly that is why inditex has invested time effort and a lot of money in establishing Logistics centers with the latest technology and you go back to this idea of Orga saying hey I don't care for the argument that nobody else in our industry does it I don't care I'm going to do it and so what happens is most Appo companies have
become overly reliant on factories in in Vietnam China Bangladesh right so Zara also produces in those countries but more than half of Zara's production comes from what they call proximity and so what they mean by proximity is literally manufacturing facilities closer to headquarters so in in places like Spain Portugal turkey and Morocco and the reason they do that is because the closer they manufacture the more
rapid the distribution in the stores the more rapid distribution of the stores the more they can turn over their inventory the more they turn over their inventory the more money they make and this is why it was so important over 50 years ago he's like I want I need to be close to the I I'm not just going to sell the stores I'm going to control everything because if you control everything you control the speed your company moves at or TGA
came to administer a holding company of 99 companies it's it's got to be bigger than this now of 99 companies that guarantee complete vertical integration covering not only the textile and clothing sections but also Logistics marketing construction real estate finance and energy generation okay so I think you got the idea of how it's structured and and why he did something I need to bring out something else so I think Zara's
understanding of human psychology is extremely Advanced and I don't know if Ortega knew this from the very beginning or this was just a positive byproduct of this rapid distribution system you know from idea this is CRA think about how crazy it is the system that he built from idea to on the hanger in a major city in the world in 15 days but one of the things that Zara Taps into that is very deep in human psychology is this
human desire for novelty Ortega is the inventor of fast fashion so fast fashion it's buying the latest clothes to use and discard without guilt the following year in some cases you might wear something you buy from Zara once twice five times this idea entailed something very serious it was a real revolution in fashion and it wasn't something that people in fashion before didn't understand they were just incapable of
doing and so there's a fashion designer named Paul porier most likely mispronouncing his French last name and he says he has this quote in 18 9 where he's like clothing is an industry whose main purpose is novelty Orga spotted that exact same idea more than a century after more than a century later and what he did is he actually dedicated his company to making novelty to have the his company have the ability to
distribute novelty at the speed of sound so this is really important because they can ship so fast because they turn over their inventory so long let's say you you you want to you know get uh Coco Chanel like a little black dress you could have bought a black a little black dress 50 years ago you can buy it today it will probably be there 50 years from now that is not the case at Zara they have trained their customers that if you
see something and you even you have the the inkling that you might like it you if you don't buy it now it will not be here 7 days from now let me read this this is fascinating traditionally the seller insurers High margins at the beginning of each season but endures several months of discounts to get rid of their stock the customer knows therefore then in the long run they will get the same items at lower prices
Ortega's company renews its clothes in stores around the world every week and twice weekly in Europe the buyer knows that they will always find new items but probably won't be able to get what they tried on 7 days ago in this way customers understand that if they see something they like they have to buy it immediately because in a few days it will no longer be in the store they have created an atmosphere of scarcity and opportunity
okay one more thing about his unique approach to the way he built his company um and how he runs his company compared to everybody else in industry and then I want to get into like who he is as a person kind of did this in Reverse than I normally do but I found this very very fascinating I'm so glad I read this book um so he he viewed real estate as a form of marketing and advertising so they spend like less than 1% of it's estimate
less less than 1% of their revenue on marketing and advertising and instead they spend their money on prime prime retail location very very very expensive and this is also interesting so you know I mentioned earlier he's got you know this massive commercial real estate portfolio and at the beginning he was like buying it says over time with the growth of inditex he actually changed his formula instead of
buying the locations for Zara he now rents them and that surprised me for a second till I thought more about it I like well yeah cuz he wants the very best store locations and what if he doesn't own that store location he doesn't want to sacrifice on not having the best just because he owns the source so he rents them and then now because they've become such a large tenant developers will now tell him in advance
or give him advanced notice when they're you know opening what they think is going to be a prime retail location and so the way I thought about this is okay well you're spending money on Prime retail locations instead of advertising Prime R retail location is advertising because if you are just again just where the people are where they're walking by your stores become a demo and as you and I know because we've talked about and
done episodes and read books about the the the greatest Advertiser agency Founders and greatest copyrght St history a demo is always better than an ad and so I would argue it's just a matter of accounting they're spending a lot more on advertising and marketing but they're doing so in the form of prime retail locations so I want to talk about how he learned to do this and he talks about the fact that you know I did not have
time to study I had to work 20 he says 24 hours a day when he was younger there was just no possible chance for him to attend college we didn't attend high school for God's sake so he's not going to go to college and he said two very fascinating things that he makes up for his his lack of formal education by listening a lot to those around me and learning from them and by treating his profession as his university he says my
profession had to be my University and he was so successful this is one of my favorite lines of the entire book it says Ortega has created a business model that is studied in universities to which he could not access he says a few times that he thinks people over complicate things and so for his life he just wanted to focus on work in fact he was very extreme about privacy some people call him a recluse I don't I don't I
don't think he's a reclus but he does want to protect his privacy so Ortega was never photographed only his friends families and co-workers knew what he look like this is before index goes public the author of the book has known Ortega for over 20 years she had been trying to write a book about him over and over again and he kept Orga kept saying I don't want a book written about me he resisted for many years this is
very similar to if you listen to my episode on the founder of Ikea a few weeks ago for a few decades people kept trying to approach him to write books and he said no over and over again eventually he was uh he agreed just like Orga does and in fact there's a conversation in the book about the book so it's a conversation between the author and Ortega and he is worried the one of the main objections he has to to
having a book written about him was that he values his privacy and he wanted to keep his life simple he literally just says I just want to work and here's what he said to her you don't realize something very important I am nobody I consider myself a worker who is immensely fortunate to have done what he wanted in life and to continue doing it and when he finally agrees to have the book written he just asks for two things
number one do not only tell good things about me something he repeats over and over again is that all humans all of us have good and bad parts to us so don't just say the good things about me and number two do not say that I created this company there have been more than 880,000 people that have helped me build it he says inditex is the story of many thousands of people who have given their lives to the company and the impending
IPO is the first time he actually consented and allowed himself to be photographed but he would explain why this is important to him why privacy was so important to him he says I only want my family and my friends and the people who work with me to recognize me on the street I aim to live quietly to be one among the many to be able to go anywhere to have a coffee to take a walk with my wife without anyone knowing who I am and
so then finally I organized my notes and this section I think is might be the most fascinating it's because it's how Ortega manages spends his time and thinks about his company and a lot of this is in his own words so he says I spend my days moving from one part of the factory to another to see how everything is going if I'm not in the warehouse I'm in design I'm interested in the entire process he insists another
way another managerial technique he will not he does not allow people to call him Mr Ortega he insists that everybody just call him Ortega he has something in common with Rockefeller is he talks about the fact that he never raises his voice uh he says I never raise my voice because I don't like others to suffer so's he's not one of these bosses that yell and scream and part part of the way he explains that he says he's always
ever since he was a kid he was just very sensitive to scorn there there's other I guess I should probably tell you some of these stories because it would it makes sense like why he has this complete and total dedication to work obviously we know the story when he's 12 years old and the fact that they were buying groceries on credit and the credit was turned off but he was there's a lot of these examples where you know because of
his low class the fact that he was poor he was just constantly felt that he wasn't good enough he was embarrassed at the thought that he was not good enough so one day a mom comes in to the store he's working in you know when he's a kid and he wanted to date this the daughter of this mother and she finds out that this little kid working in the store is not the son of the store owner it's just
some poor kid and she wouldn't let him date her daughter because he was just a simple sales assistant and he wasn't good enough and so by now it's probably obvious you he starts working at 13 still working at 88 look at what he accomplished over those multiple decades like his dedication to work is complete in total so here's an example the author is asking Ortega hey what are you doing to celebrate New Year's Day and he says
he just went to work and she's having another conversation with him a few years later what are you doing at inditex today instead of quietly celebrating your birthday at home and she says I receive the same answer that
I've heard on other occasions why should I stop coming in today I do what I want to do I do what I always do work Ortega believes in management by walking around I don't have an office I've never had one my work is not among the papers but
in the whole Factory and as you walk around with him you notice he knows the name of each worker that he sees he had a kind word for everyone goes back to not raising his voice wanting every single person in the company to feel that they are a valuable part of the team another trait of his is he always wants to know what he could be doing better I used the opportunity to make a series of comments about what I admired
about his company and he interrupted me and said I'm going to ask you for a favor why don't you explain to me the things about Zara that you don't like I highly value your opinion and I would like you to critique what could be done better that reminds me of one of my favorite quotes from Nick Sabin I've mentioned a bunch of times Nick Sabin says average players want to be left alone good players want to be coached
and great players want to be told the truth Ortega understood that people admire him now especially that now he's you know one of the wealthiest people in the world they're only going to say nice things to him but that is not the truth and great players want to be told the truth Ortega knows it's his responsib to mean the essence of the company he remains a man who knows every detail Ortega says the store is the heart of
the company that it's the protagonist in this company in fact ortea has a great quote on this and this quote I really it's what Ortega really thinks this company is he says we are a chain of stores with a company attached we live so that the store is focused on selling all the rest of us are at your service when he hired a new Director of Human Resources this is what Ortega said he only gave him one piece of advice and it
was in one sentence love the people Orga says the inditex is the most beautiful company in the world he said he wanted a company with a soul about 15 years after opening his first Zora store he opens the first zor store in New York there were so many people waiting outside that had made him cry he literally went inside the store locked himself in the bathroom and cried his eyes out and thought about his parents he thought
about how proud they would be of their son and then the next year he opens his first store in Paris and again there were people waiting in line to get in and this time he cried in the front door like a child he says said I couldn't even hide it I couldn't even make it in the story I just start crying he was so happy he insisted that the author asked people that working for him what his faults were these are some of the faults
they attribute to him they say he has an excessive amount of ambition that he insists on placing his company at all costs on the highest step of the podium they say he's very stubborn and that he has a habit of fostering competitiveness among his teams he believes that there should always be a desire for improvement and a consistent capacity for criticism he says I've always thought that to succeed
we had to turn the organization upside down every day he has an aversion to the term exclusivity in fact there's a bunch of other fashion brands throughout the book that approach him to buy their company and he always declines because he doesn't like luxury or the exclusivity that it implies this isn't a fault this is a huge asset is the fact that he stayed focused on his one great objective which was to enable the entire
world to dress well this is a little bit about how stubborn and headstrong as you could imagine you don't accidentally build $160 billion company I think without those those traits says Ortega always likes to have his own way if xert devise against the opening of Zara in Venezuela for example and he is convinced that they need to be there he will purchase the most expensive building in the company's history up
until that time Ortega really aims not to settle halfway to Excellence and he loves the s isfaction of a job well done I really think about that as Excellence for excellence sake if you think about James Shay Hill ingbar camrad Orga the last few weeks they all all of them what they share in common they wanted to build and design the best business in their category not just make the most money and I think all three of those
cases they might have made the most money but their main goal is like they want to build and design the best business in their industry let's go back to this idea that Ortega is never complacent he believes that complacency
is the worst if you want to achiev something significant he said in this company we have never been complacent not in those years when we were taking our first steps and not nor now that we have stores all over the world he says
growth is a mechanism of survival another insight into Ortega from a person that works for him that knows him well he says he's a man with a lot of personal charm because he's not false he does not have ulterior motives he can be very tough impulsive very sure of himself but he's very truthful he is open to suggestions from those who know more than him and he listens to everyone and absorbs everything like a sponge in fact there's
a great example of this where the founder of the company and the CEO of the company so Jose and Ortega okay they almost bought Sephora before lvmh buys it this is this is very fascinating so the way I would describe this he's he's he's stubborn but he's willing to listen and be persuaded to go in another Direction so the CEO of indotex Jose the time is describing you know him and Ortega wanting to buy Sephora I recall a
moment when the owner of the company Sephora wanted to sell it to us this was before El it winds up with lvmh or T and I were in total agreement that it was important to buy it but the rest of the company did not see it that way we thought it could be effective to buy clothing and something else but most people believed that it was a distraction and that we should continue to invest in Zara that cosmetics and
perfume were a business that we didn't know and we didn't control and the final result was that we didn't buy it this is what I call a form of intelligent flexibility in leading a major growing business and so I think the fact that he's stubborn but he's willing to listen and be persued to go in another Direction and combine that with also the fact that he is listening is absorbing everything with a sponge I think it
fuels one of his superpowers which people believe that one of his superpowers is that he has the ability to synthesize the most complex ideas as if they were simple and that he has used that ability throughout his entire life another example of him allowing himself to be persuaded he was not very fond of going public uh it made him doubtful he did not like the dependence of this external opinion but he was finally
persuaded because he decided that going public was a way to impose a certain discipline on the company they had to run it tighter and he thought it safeguarded the company the company's future for when he's no longer around and so is during the section of the book where they're talking about the IPO talking about should we do it should we not do it how they got ready for it I got I found one of the most interesting
ideas this is the most unique interesting idea that I've learned in the past week from anything and it's the idea that commissioning case studies in Business Schools before going public as a way to make your brand or company more familiar so the author is interviewing Jose again the CEO and she says I was intrigued to know how the situations that have come because case studies in Business Schools came about let keep in
mind it's translated from Spanish so it kind of reads a little funny but Jose says the explanation is evident I thought because of the policy that had been followed up until that point that they were very secretive they kind of kept to themselves okay that's what you talk about that when we were in public we would be great unknowns case studies were the way for potential investors to know who we were and so there was a
Harvard case study written about inditex before they went public that 2 million people read and so he says this helped us make ourselves known in the business world so then back to Ortega he it's in the same cafeteria as his employees he continues to walk through the halls of the headquarters to lend a hand he does not like to lead sitting in a chair he doesn't raise his voice he says you always have to speak in plural when
referring to our work never say I did this he has never liked praise more than once I've told him what a beautiful collection how happy the customers are and he always interrupts me and asks me now tell me what's wrong when he was asked for advice for future generations of entrepreneurs he said the first thing is that you like what you are doing that you are passionate about your work I insist on this idea because it is very important
it has to be something that you would almost pay to do you get the sense that he would pay to do what he's doing that's why that's why he's working for decades after he needed the money that's why he's working on birthdays and that's why he's working on holidays he just loves it he says more advice for future Generations entrepreneurs you also have to aim to achieve something different something creative it is a satisfaction
to dedicate yourself to what you really believe you should do so keep in mind you know people might read that like oh yeah but he copies his product he sees what high-end fashion does and then creates a version like a cheaper less expensive version the product may be copied but his company is not he definitely achieved something creative something different something nobody else could do he has a love of
Simplicity he says there's a lack of common sense in managing life he says multiple times that he thinks people over complicate things that the simple things in life are the great things in life in fact there's a line in the book that says Simplicity is the heritage of geniuses this part is excellent I ask him if he's bothered by other people's opinions this is what he says I don't think it's important to know how other
people see me I never cared also there are thousands of entrepreneurs who have done the same as me if I am somewhat different since I don't go to parties or I don't accept Awards it's because all of my life I've tried to do what I liked the most I would almost say I've been selfish in that sense because I didn't just do what I had to do but what I wanted to do I turned 72 last March and I feel that my growth can't stop what
keeps me going after all these years is to learn and to grow I continue observing what happens in the world and I listen work is what I enjoy most and then the author gives us a great summary of Ortega's career he is a person who will die with his boots on his life is the company and that is where I'll leave it for the full story highly recommend reading the book I guess the only way you could read the book this book is if
you read Spanish so if you buy the book using the link in your podcast player or available at Founders podcast.com you'll be supporting the podcast at the same time make sure you join my personal email list and if you do that I email you the top my top 10 highlights for every book that I read you can get that link down below and also available at David center.com that is 372 books down 1,000 to go and I'll talk to you again soon