I've only been able to find one biography on Bernard Arno that's in English that biography is over 30 years old it is really difficult to find at any given time you'll see it for sale on Amazon anywhere from $1,500 to over $5,000 for a copy I covered that book last year on episode 296 and since I've read that book I've become fascinated by
Arno and so not only are there not many biographies on our know but he does not give interviews very frequently so I was excited when I saw that Bloomberg Business Week actually did this long for piece called the house of arnno and I wind up reading this three times I sent it to a bunch of friends and as I was
reading it so many of the lessons that you and I talk about on this podcast that appear over and over and over again came to mind so what I decided to do is like well if I'm super excited about this I'm reading it multiple times I'm sending it to friends I should obviously do an episode on it and so what I did is
I printed out the long form piece and I went through and highlighted and added notes just like I would for any other book so let's start at the very beginning the the title is the house of Arno the subtitle is his company lvmh bought up many the world's major luxury Brands and he's not finished shopping and it was written by Brad Stone and
Angelina rasu and so the piece starts with Orno visiting his stores every Saturday morning Bernard Orno spends a few hours checking in on his temples devoted to handbags cure jewelry and watches the 75-year-old chairman and chief executive officer is not there to shop with a strict sensibility refined over decades are no spots any in
congruities that might disrupt the Ora of opulence that he is carefully constructed then he reels off texts and emails to his senior Executives describing any perceived deficiencies in bullet points of obsessive detail so this idea of bullet points of obsessive detail anytime I do an episode on people that are still alive when the episode
comes out inevitably I will get all these stories back for people that either know the person I I covered or at worked with them for a long period of time this is I got a bunch of crazy just incredible or stories after I put that episode out last year and a lot of them centered on this his just the insane
level of attention to detail that he has that idea is going to be repeated throughout the story but it also comes up over and over again in these anecdotes of stories that I heard about him and as we're about to see with this story that his son his oldest son antoan Orno tells his dad has this extensive database in his head and so Bernard
sends his son a message says he recalls one such missive from his father critiquing a counter at a store in Tokyo he loved the first concept I did at beri with an architect 12 years ago he comes back to me with do you remember that bar that you had in that store put it here his son alexone is working at Tiffany
and Company and also has a story he says a similar story from his father's recent visit to Dubai he made a bunch of comments that were very very detail oriented from the chairs in the stores to the shoes that the salespeople were wearing things that you won't typically notice but once you've seen tens of thousands of stores over the years I
think it's what comes to your mind immediately so I want to pause there I think this idea of what he just said is extremely important once you've seen tens of thousands of stores over the years I think it's what comes to your mind immediately this is something that pops up over and over again in these biographies that you and I study
together the importance of quantity the importance of volume I think of these in two different domains one this excessive learning that you see that all of these top entrepreneurs do and two just the Decades of Decades of experience so I was thinking about when I got to this section is something that's comes up over and over and again it's not that
they're these top entrepreneurs and inventors and investors it's not like they find themselves interested in something and they'll read like one book on them they will devour whole shelves that line devouring whole shelves comes from this biography on a young Winston Churchill it said while other politicians were content to get their
information from a scattering of newspapers he devoured whole shelves it says Churchill began sleeping with incite edias this is something that pops up over and over again Edwin Lan founder of Polaroid when he was a young man he read every single book in the library at Harvard on light which was his field of
scientific expertise his interest when he was done with that he drops out of Harvard goes to moves to New York City goes to the New York City public library and does the exact same thing read every single book on his field of Interest Thomas Edison when he was a young boy working on the railroads they would stop over and I think Detroit he would
usually have several hours to kill he read the entire library in Detroit Jeff Bezos when he was a young man there's a story in his biography as well he would spend Summers with his grandfather on The Ranch in Texas him his grandfather and grandmother would take him into town he'd read the entire SC science fiction
section of the local library I got to have a two-hour conversation with Sam Zelf before he passed away he was exactly like this he had an entire database in his head when I met with Charlie Monger same exact same thing he had entire databases both Sam zel and Charlie Munger had entire databases in their head we saw the same thing this
idea of the importance of quantity the importance of volume and what that allows you to do quickly after you've built up this compounded knowledge you think about Quinton Tarantino I just did an episode on him he has a famous line in that biography he says I didn't go to film school I went to films and it's
obvious when you read about him when you listen to his interviews he's got this comprehensive database of the history of movies in his head that he can call up and use any time that he wants and it comes from the fact that he's been watching obsessively and studying film for 50 years we just went over this you
and I just went over this last week with Sam Walton Sam Walton had visited more retail stores than anyone else on the planet the week before that J Paul Getty J Paul Getty in both of his autobiographies he talks about the fact that he owned over 200 businesses that he had 50 years of experience he shares stories in those books that he could
walk on a site at one of his plants and immediately see the flaws that were invisible to everyone else that is exactly what is happening in these stories with Bernard arnol the fact that when you've seen tens of thousands of stores over the years he's been at it for four decades you start to notice the flaws immediately that other people are
missing because they don't have again they don't have the volume they don't have the quantity that you've experienced this is a really really important point and this is the very first page let's let's let's go on so it says the past 40 years AR know has assembled the world's largest luxury conglomerate and globalized a sector
once constrained by the Limited Ambitions of familyowned European companies encrusted in Tradition now this is the fascinating part if you go back and listen to episode 296 there's multiple times where you just realize that he saw opportunity way before anybody else there's two quotes from that book that I want to
read real quick it says in the 1980s talk of luxury items was not welcome the term luxury still had connotations of the Craftsman and nothing to do with real industry obviously or n changes all that second highlight I want to read to you for arnol had understood before anyone else that it was a true industry he is keep in mind he's 75 right in the
in the piece that you and I are going right now in the book that I'm reading you from I'm reading from he's in his early 40s back to this piece thanks almost exclusively to him luxury is now a universal Obsession perhaps more than anyone else he's made the clothes and accessories that signify status among the global Elite and for that he's one
of the wealthiest people in the world with a net worth of around $200 billion or yolked together the newvo rich brands that symbolized Europe's post War influence and exported them all around the world so in addition to reading this piece rereading my highlights from the biography of arn which is called The
Taste of luxury I also watched an interview with one of the authors Angelina rasu and she said when they were when her and Brad were interviewing Arno the way he described this what they're talking about the fact that he's the one that yolked together all these newvo rich brands that symbolize Europe's post-war influence and explor
them all around the world that he the way he described this is he said that he saw all these independent and atomized European family-owned luxury Brands and figured putting them together would reinforce them and this interview that he granted them is taking place in Paris and it just talks about the influence that he has on that City visitors to
Paris will find that arnol and his 75 luxury houses spending fashion jewelry handbags champagne spirits and highend hotels are everywhere lvmh bill boards stores and arnol back museums dot the French Capital when they meet him they find him dressed head to toe in lvmh Brands he's 6'1 and slim impeccably
dressed in a Dior Navy Blazer bery loafers and he's wearing a Louis Vuitton watch and this part was inadvertently funny to me because it talks about the difference of like the European and American mindset so it says in luxury and fashion circles or know has a reputation as a bully an aggressive Warrior capitalist he's considered too
American in the gentlemanly world of of European European business and he was given the nickname the wolf in cashmir so there's this line in his his biography in the taste of luxury that arnull is an Iron Fist and an iron glove this is something that you and I see over and over again last week there's a line from Sam Walton's biography sounds
very similar to it's it's really interesting in that the the order in which you read something really affects your interpretation of what comes next from the outside you wouldn't think there's going to be many similarities between Bernard Orno and Sam Walton but the fact that I just spent a week in probably 30 or 40 hours reading and
researching Sam Walton to make last week's episode and then right after that read this the Striking similarities just jump out to you so it says in Taste of luxury that AR know is an Iron Fist and an iron glove in Sam Walton's biograph says the public conception of Sam as a good old country boy wearing a soft
velvet glove misses the fact that there's an iron fist within it this is something I found to be universally true when you read a ton of these biographies if you find somebody that gets to the top top of their entire industry you will find that the founder the leader of that company is an aggressive and competitive person another common trait
of somebody that's going to dominate an entire industry is the fact that they just have the longest view in the room and so he's asked about the recent pullback on luxury spending it says he also gives the impression that he's not even close to being done and he is untroubled by the recent decline in spending on luxury products maybe the
economy will not be as good in 2024 that as it was in 2023 he says what I have in mind is 2030 every one of our plans are aimed to this when I read that part I'm like oh that that sounds exactly like Jeff Bezos Jeff Bezos said this in 2017 when somebody congratulates Amazon on a good quarter I say thank you what I'm thinking to myself is those quarterly
results were actually pretty much baked in about 3 years ago today I'm working on a quarter that is going to happen 3 years from now not next quarter next quarter for all practical purposes is done already and it's probably been done for a couple of years and so a main thing that runs throughout this piece is the fact that you know he's 75 years old
who's going to take over is there going to be like succession drama between all the family members he's got five kids working in in LVH but if you look at how hard he's pushing himself and what his schedules like it doesn't seem like he's going to slow down at all his work days start at 8:00 a.m. and he ends them at
8:30 p.m. every morning I have fun when I arrive and so even though we're only four pages into this piece I believe all these things are actually related so if you think about how we've been introduced and how he's been described so far I believe all these things all these traits are related and they work well together so the fact that he's
ambitious he's driven he's got an iron will he's focused on long-term value creation he's got this encyclopedic knowledge of stores from 10,000 store visits he's clearly obsessed with what he's creating and so this idea that this guy's worth $200 billion he's 75 years old and he's still pushing himself seven
days a week he's paying attention to the the tiny details and he's saying every day why am I going to quit what are you talking about quit every day I'm having fun this is exactly what what Sam zel said in his autobiography he says people often ask me when are you going to retire and I answer retire from what
I've never worked a day in my life everything I've done has been because I've loved doing it because it was so enthralling this sounds exactly like or no's thinking in this piece now that's the way he looks at it now something that's obviously very very common is the fact that he's going to push his executive teams very hard we just went
over this with Sam Walton the fact that they com they compared Sam Walton the way he pushes executive teams they said it was like throwing wood into a fire in Jeff bezos's biography says he would jump on your back and if you're good he just going to drive you into the ground so it says fun is not a word many of or no's underlings use meetings begin
punctually deputies say they must prepare thoroughly he sends so many emails all day every day that his staff shares triage tips current employees former employees and Outsiders seem both simultaneously AED by him and afraid of him he upor complacency so much that somebody said the worst way to start a meeting is to
tell him that sales are robust I've already said this but it even shocked me how much reading about Arno reminding me of Sam Walton reminding me of Jeff Bezos there's a great line one of Jeff beas's biographies where one of his Executives says I brought Jeff very bad news about our business and for some reason he got
excited so this idea it's like or no horse complaints to see much the worst way to start a meeting is to tell him the sales are robust I need to explain why this thinking can be so powerful and I think the answer is found in Jeff bezos's shareholder letters in one of his sh shareholder letters he he wrote this this is very fascinating really
describes the mindset that a Bezos or Walton or no have the good news for shareholders is that we see much opportunity for improvement in that regard everywhere we look we find what experienced Japanese manufacturers would call muda or waste I find this incredibly energizing think about that he's analyzing his business he's like
look at all this waste everywhere and he's psyched he's hyped up why I see it as potential years and years of variable and fixed productivity gains and more efficient higher velocity and more flexible Capital expenditures a Walton a Bezos or or no are not going to rest on their Laurels they don't want to sit there and Pat
themselves on the back look at how great we are look at how high our sales are they want to know where they can improve uh they give us a little background on his uh early life says he trained as a classical pianist but but determined he wasn't good enough to make it as a career he got an engineering degree and
then joined the family business and persuaded his father to focus on real estate at first the company developed vacation homes in the south of France and Florida condos he credits a random conversation in the US with sparking his curiosity about France's historic luxury brands when Arno asked a New York cab driver in the early 70s if he knew the
current French president the driver said he only knew one French name Christian Dior and so Dior is going to be his first entry into the luxury goods Market by 1984 the consumer goods and manufacturing conglomerate that owned Dior was bankrupt so what they're talking about there this is Marcel busac Empire and so this is talked about in
the book Taste of luxury but originally Arno just wanted Dior so it says he put forward his proposal the Takeover of Dior out of the question they replied it must be All or Nothing listen to this next line no matter all it would be and so Arno with the backing of the Investment Bank Lazard persuaded France's government to sell it to him
this is bus's company then he paired away meaning got rid of almost everything and kept Dior France was not prepared for this bare knuckle American style capitalism The French Press called him the Terminator but look at the difference that Arnold did back then when he bought it Dior had three stores and the equivalent of €90 million a year
in sales now it has 439 stores and did 9.5 billion in sales last year now this is one of my favorite all-time stories and a very weird way to pitch an investor is the fact that Marcel busac was trying to recruit somebody to run one of his clothing factories this is many many years before or no buys the
company okay and one of those people that he approaches is Christian Dior and this is what Dior tells Marcel busack I am not interested in managing a clothing Factory what you need and what I would like to run is a Craftsman's Workshop in which we would recruit the very best people in the trade to reestablish in
Paris a salon for the greatest luxury and the highest standards of workmanship it will cost a great deal of money and entail much risk back to this piece a few years after the Dior acquisition arnol again exploited circumstance there was a struggle for control between factions in the newly formed suitcase and Spirits group lvmh using cash from
the dror operation and again with the support of Lazard as well as another French Bank arnol acquired a decisive block of shares then he ousted his ally in the struggle and eventually maneuvered to get himself elected chairman and CEO the world of old luxury had never seen anything quite like this or they had never seen anything quite
like him either or no believe that luxury Brands could be larger than anyone at the time imagined okay so I need to pause there again that is such an important sentence in this book or in this piece or null believe that luxury Brands could be larger than anyone else at the at that time imagined so that's
another trait that I would add to that list that you see great entrepreneurs people that dominate their industry they get to the top of profession they also have in common the fact that they see value in unexpected places they're ambitious they're driven they have this iron will they have this focus on long-term value creation they have
encyclopedic knowledge of their industry of the history of their industry they have an obsession with what they're creating but they're also seeing opportunity where others see nothing the parallel between Sam Walton is striking what did Sam say in that biography last week it turned out that the first big lesson we learned was that there was
much much more business out there in small town America than anybody had ever dreamed that sounds a hell of a lot like or believe that luxury Brands could be larger than anyone at the time imagined he also understood that this was a business of selling not just physical things so again something we know is like he has a very Advanced
understanding of human psychology as well and this will make sense as I read this to you he also understood that this was a business of not just selling physical things monogram trunks gold pendants alligator skin purses but names and logos with history as well as an implicit promise that the buyer is gaining access to an exclusive club
they're talking about the power of brand and the status that it conveys on the customer these handbags sell for about 10 times the cost of making it that's another thing that he understood from the very beginning go back to arnol in that biography Taste of luxury he's a young he's in his mid-30s through through through most of that book early
40s when the book ends and this is what he says my relationship to luxury goods is very rational it is the only area in which which it is possible to make luxury profit margins software margins on physical Goods is another another way to think about that if you put various luxury Brands together are all reasoned they
can reinforce one another the stronger Brands compensate for the weaker ones and give them time to establish an identity and grow I'm going to interrupt myself and pause there again what's remarkable the reason I became obsessed with this guy and I wanted to read as much about him as possible is one obviously there's there's not a lot out
there and so my initial instinct is okay I'm going to read every single book on this person and you there's nothing to read but it's also because that biography ends in his in his early 40s and he calls his shot 30 years ago he said my 10-year objective is that lvmh's leading position in the world be further
strengthened in the luxury good sector I believe that there will be fewer and fewer brand names capable of retaining a worldwide presence and that those of our group will be among them as we will provide them with the means for growth we see close to 35 years later that thinking is very similar it may hasn't
doesn't appear to change at all the stronger Brands compensate for the weaker ones and give them time to establish an identity and grow while the entire Group shares back office functions and becomes a magnet for tracking and keep attracting and keeping talented Executives it was an idea I had after having brought Dior he says I saw how
the luxury Market was made up of many medium-sized companies that taken together could be much stronger in a group composed of several Brands combining these divisions would let them be be completely autonomous and independent when it came to crafting their image designing their products and having their own management but it would
provide them with the scale benefits such as when buying ad space and finding a good retail location his ambition was concentrating in his portfolio all the crown jewels of the luxury market and a variety of Industries one of my favorite descriptions of a young Bernard no from that book says that he liked direct
confrontations and Rapid campaigns here's an example of that from this piece at Dior arnol decided to go after Chanel with a new upscale handbag on a visit to Argentina in 1995 Princess Diana was photographed carrying a Dior black lamb skin purse Arno exploited the ensuing frenzy renaming it lady Dior and selling hundreds of thousands of of the
bags the geysers of cash put Dior on firmer Financial footing and allowed arnol to cancel its licenses with third parties that churned out products like Dior labeled person and dresses at discounted prices which was duding the brand this led him to control quality and raise prices making his products slightly less obtainable but more
desirable and claim more profit for himself and so when you read about or know I think it becomes obvious that he understands that a powerful brand is Magic and all this other stuff can be fixed and so they describe in the book Taste of luxury what he had fix with Dior it says Bernard arnol had understood that Dior was the Jewel and
the crown of the group Dior was was to be a starting point for his strategy a famous name but innumerable difficulties too many licenses not enough boutiques a ready to wear range that had been a failure and a troubled atmosphere all of those problems are just opportunities for AR know all of them have long been
solved and the end result goes from you know three stores 90 million EUR to 400 and something stores 9.5 billion EUR in sales another thing that he's really gifted at is getting attention some things that he changed at Louis as well this is going to blow your mind I think he also persuaded reluctant Executives
at Louis Vuitton which was then just a bag and Luggage brand to add a ready to wear line handpicking American designer Marc Jacobs to develop it ready to where generates 10% of sales at vhan so not a big number right but the perpetually debuting seasonal collections fashion shows and AD campaigns create a drum beat of attention for the entire brand
Louis Vuitton is responsible for a quarter of lvmh's overall revenue and half of its price profit they just mentioned the fact that he recruited Mark Jacobs he does this over and over again it says arnno is clever enough to realize when someone is an extremely creative personality that you need to give the the horse room to
run and then back up that Talent with strong lvmh management one of his Executives says that seems obvious but it's really not the reason it's seems obvious but it's really not is because you need a strong leader and founder that is can complete control of the company to let everybody else in the company know that we are putting up with
these you know non conformists dissenters and Rebels the these talented people are unbelievably hard to deal with so I want to quote David oovy because I think he just Nails this and I think Bernardo no understands this instinctively so David ogi said that Talent is most likely to be found among non-conformists denters and Rebels as a
leader this is what OG's uh advice to you and I would be as a leader you have to learn to tolerate genius what David's about to tell us is why the executive just said hey this seems obvious but it's really not this is what David ogy says my observation has been that mediocre men recognize genius resent it and feel compelled to destroy it there
are very few Men of Genius but we need all that we can find almost without exception they are disagreeable do not destroy them they lay golden eggs and then the piece gets into some waves that or no successfully surfed this comes from Charlie Munger and poor Charlie Almanac that I I haven't stopped thinking about since I read it when when
Charlie is analyzing all these the success all these different businesses and Founders have he constantly references his surfing model and so he says there's huge advantages for the early birds when you're an early bird there's a model that I call surfing when a surfer gets up and catches the wave and just stays there he can go for a
long long time but if he gets off the wave he becomes mired in the shallows but people get long runs when they get right at the edge of the wave and he so he talks about Microsoft or Intel or even going way deep into business history with this company called National Cash Register surfing is a very powerful model and so one of the things
it's obvious if you study Charlie Monger is the importance of getting into a great business and staying in it this is definitely what arnol has done but he also talks about these trends that you can you can Rite as well when he's analyzing like Le Schwab he's like how this uneducated guy never changed a tire
in his life starts a tire company at 35 and just runs up the score and dominates everybody he's like oh he was riding the wave of this Japan this this new Japanese Tire import Trend and so one of the trends that arnno successfully uh surfed was the fact that he got into China really really early and China's going to have this massive economic
explosion arnno visited China for the first time in 1992 for the opening of a Louis Vuitton store in the basement of the Beijing Palace Hotel when I arrived there were no cars there wasn't even hot water in the hotel he said and he observed that most people on the Treet were dressed on the street were dressed
identically in Mal suits I remember calling the co vhan and saying are you sure we're going to sell something the answer was a resounding yes he harnessed the world's biggest economic success of success story of the past 100 years lvmh was early among its peers to obtain a retail license to own its stores in China and it rode the country's historic
economic growth China is now lvmh's second largest country by sales behind the United States 23 different lvmh brands open 58 stores in 2023 alone and so then they talk about what I think is the largest acquisition position that Arno has ever made which is the Tiffany so he took over the oldest and largest luxury brand in the
United States this surpris surprised me Tiffany company was founded in 1837 as a stationary maker it has counted nearly every US president since Abraham Lincoln as a customer and it redesigned the Great Seal of the United States which is on the country's dollar bill that was fascinating and so it goes into why or
no wanted it he long wanted to bolster his jewelry division which he felt was one of the few weaknesses in his portfolio absorb in Tiffany a public company would help close this Gap so he presented a surprise takeover offer in 2019 and then tried to back out of the deal Tiffany sued accusing LVH of trying to run out the clock on their merger
agreement and then arnol counter sued they wind up finally coming to terms after Elvie Mage negotiate a roughly $425 million discount on the original price so the sale was completed and then arnol went to work and I have a ton of highlights on this page because it talks about like what does he do like when he goes to work on Tiffany what did he do
number one he had Talent at the executive level number two he did a bunch of influencer celebrity ad deals number three he's going to invest in physical real estate and number four gossip is just free advertising so that's going to be from Christian Dior which we'll get to in one second so number one he moved an executive from
Louis Vuitton to take over a CO and installed his son alongside him his son alexone hired Beyonce and Jay-Z for a splashing marketing campaign more celebrity ads followed with galad do Zoe Kravitz and Elaine zong I don't know a bunch of these people before the acquisition Tiffany couldn't have afforded these deals now its social
media mentions sworded number three investing in physical real estate lvmh also invested $350 million to revamp Tiffany's New York flagship store on Fifth Avenue in 57th Street they secured a painting by bosot in a color that resembles Tiffany blue and hung it on the ground floor the company suggested that the late street artist intended a
deliberate reference to the jeweler this is what I meant about gossip free advertising which I'll explain in one second so the company suggests hey boscat boscat painted this and you know their referencing Tiffany blue the company suggested the Le intended a deliberate reference to the jeweler which many in the art world found both
implausible and distasteful the resulting controversy was covered in newspapers all over the world so if you go back and you actually read uh Christian dior's autobiography it's very fascinating that he realizes that gossip is just free advertising and so there's a huge budget that obviously lvmh can
can do for ads now when they take over Tiffany but when Christian Dior was starting his business he didn't have any of that so this is the way he got attention it was very fascinating and so he says it is widely and quite erroneously believe that when the house of Christian Dior was launched enormous sums were spent on publicity on the
contrary in our first modest budget not a single penny was allotted to it I trusted to the quality of my dresses to get Christian Dior talked about moreover the relative secrecy in which I chose to work aroused a positive Whispering Campaign which was excellent free propaganda gossip malicious rumors even are worth more than the most expensive
publicity campaign in the world undoubtedly they spent a lot of money Al May spent a lot of money on you know Beyonce Jay-Z and galot and Zoe Kravitz and social media but in turn they also got tons and tons of free advertising because this gossip went around this this idea that a lot of people maybe inside the art world found objectionable
but it wound up spreading throughout the entire world for free through all these newspapers gossip is just free advertising Christian Dior understood Christian Dior Christian Dior understood and lvmh benefited for the fact that gossip is just free advertising so then what else does Arnold do when he takes
over Tiffany he raises prices the comp raised prices as usual so this is what I mean goes back to what he understood in Dior the power of a great brand is Magic the power of a great brand means that you can raise prices so Tiffany's us customers now spend $2,000 on average versus around $500 on average before the
acquisition this is something Munger and Buffett talk about over and over again they talk about the value of a brand that a great brand acts as a moe so I'm going to quote from one of uh the biography one of the biographies I read on Munger and this is what Monger says there are actual businesses that you'll find a few times in a lifetime where any
manager could raise the returns enormously just by raising prices and yet they haven't done it so they have huge untapped pricing power that they're not using this is the ultimate no-brainer and so he's going to talk about all the growth that dis that the Disney company had under Michael Eisner and Wells and he says Disney found that
it could raise the prices a lot and the attendance at their their theme parks stayed right up there so a lot of the great record of Eisner and Wells came from Raising prices at Disneyland in Disney World at birkshire hathway Warren and I raised the prices of seas candy a little faster than others might have and
of course we invested in Coca-Cola which had some untapped pricing power the power of a great brand means that you can raise prices and we're seeing this play out with Tiffany now this is very fascinating the fact that they're raising prices and they're trying to go higher end because Tiffany I guess targets more they says Tiffany's more
exposed to middle class discretionary spending and so it's growing slower than its Rivals that are higher that are considered higher end and have more expensive products like cardier and so this is what AR no says about this what what's key is that we attract high-end consumers and sell a lot of high-end
jewelry which was not the case before we bought the company I'm very confident about Tiffany but it takes time you cannot do things instantly this is just again the realization of this idea that he had 30 40 years ago the fact if you combine all these Brands together the strong balance sheet and will make them stronger he can
be a lot more patient because of the success of all the other brands and he doesn't stop looking for ways to press disadvantage the advantage that scale and size gives him arnol exploits this imbalance through real estate his private Equity arm El catterton owns properties worth billions of dollars including Premier retail locations and
Office Buildings in most major citings most major cities I know a few Founders that actually took Investments and work with elcon they all love them the basic read on that is that they leave you alone but if you ask them for help they're extremely helpful they know everybody as you could imagine last year elv Mage spent 2.4 billion on real
estate Acquisitions and this is a description of this phenomenal position that arnol has maneuvered himself into he makes money from his own stores from leasing space to Rivals and from the appreciation of Premium real estate when lvmh buys a building it takes the best storefronts for its own Brands and often asks Rivals to move out when their
leases expire this is very similar what happened with Sam Walton we covered this last week the fact that he was extremely patient the early beginning of his career he ran one store for 5 and a half years the landlord he made the mistake of not having control over where the store was he didn't have a renewal option in the
lease and so the landlord sees the success that Sam had said great Sam great job on that store I'm not renewing to you and I'm just going to open the same store in that location and so here's a description of what this does in the luxury industry it is a clever way to distract competitors and make them sweat more in Miami El catterton
teamed up with a developer to transform an area of empty warehouses into a new luxury shopping neighborhood called The Design District I used to live very close to the spot the the story behind this is very fascinating actually arnal waited into the details including decisions about architecture landscaping and which tenets could move in so go
back to what I said it's like when I put that episode out last year every all these stories come back and it's like he is so obsessed now he does he understand that a level the the the the big picture how his entire everything going on in in his conglomerate right but it's it's simultaneously you don't normally find
somebody that understands the big picture still understands the capital allocation decisions and then also pays attention to the the most minute details think about this he's got 200,000 employees and he's paying attention to details about Landscaping in the Design District which he created right which him and Craig Robbins a developer that
Arn all teamed up with but this idea he like paying attention to every single detail it reminded me of the quote that Walt Disney said when he was building Disneyland he says if if we lose the details we lose everything and Disney and arnno share that trait the fact that there's just countless stories of their
extreme attention to detail now I happen to know because I used to live over here there's a there's a there's a backstory here that's not mentioned in the story that's fascinating before this happened for decades all there was one spot where you had high luxury like the wealthy tourists and the wealthy people in Miami
went to buy you know their their Gucci and their cardier the Dior Chanel Louis Vuitton and it was at Bell Harbor shops and or no showed the power that he had because he didn't own Bell Harbor shops and so he pulled Louis Vuitton out of B Harbor and move the the the Design District if you go to Miami Design District looks nice now the architecture
is interesting it was dilapidated before that that was not a good neighborhood they changed everything it is an unabashed success now but that neighborhood like if you would go back 15 years ago like I'm going to one day there's going to be a super high-end luxury Enclave with all these Brands these amazing luxury Brands here like
what are you crazy that was a huge risk that he took and by him pulling out of of a a shop like a mall essentially that he doesn't own and then says hey I'm going to own the real estate over here that had a huge impact I don't know anybody that goes to Bell Harbor now they go to the Design District and Bell Harbor dominated for decades so for
rival all this creates an intolerable imbalance of power they are at the whim of property owners desperate to score a Dior or vuon store or lvmh itself is their landlord either way they're likely to get bumped from the best locations and even this this extension into real estate this goes back to Arn know's original thesis one that he's
been executing on for four decades the fact that he saw all these independent atomized European family-owned luxury Brands and figured hey putting them together will reinforce them it makes them stronger and so all these rival luxury brand Co complain about the power they have this is AR's response he does not have a lot of Sympathy For That
sentiment we have good and efficient competitors and we have competitors who are not as good usually the ones who complain are the ones who are not the best they need excuses he says and if you think about what he's saying he's like it's not like he we know the history he he started out with I think he was 35 when he took over Dior you
know he starts off with one brand 35 years old he he's not he worked himself into this position this for this formid position when I got to this section it reminded me of what Jeff Bezos thought exactly the same way it's like you don't want to just be one of the best you want to be the best and he talks about this
why and he he says why when it comes this is Jeff basis when it comes to competition being one of the best is not good enough do you really want to plan for a future in which you might have to fight with somebody who is just as good as you are I wouldn't and then the piece ends with arnol saying he's got no plans to retire
one of his sons says that his father calls him all at all hours to discuss is this that he doesn't think he'll ever stop and then this hilarious story with Bernard arnol and Warren Buffett arnol himself notes that he recently raised the co retirement age at LVH from 75 to 80 afterward he got a letter from Warren
Buffett telling him he made the mistake by setting the new age limit so low after everything I read about him I would not be surprised that as arnno gets closer to 80 he doesn't raise that again i' would be very surprised if he didn't so I hope you enjoyed that I absolutely loved reading this piece highly highly highly recommend I will
leave the link down below highly recommend reading the entire thing and if you haven't done so already I'd go back and listen to episode 296 which is about the book which is the biography of Bernard no it's called The Taste of luxury very proud of that episode that is 355 books down 1,000 too and I'll talk to you again soon