From a Hosiery Factory to a €1.2 Billion Sales Giant: The Story of BasicNet | BIG COMPANIES

Ricky, I am completely obsessed with this story. I went to visit them, I read everything there was to read, I listened to all the interviews, the articles, everything. It's truly an extraordinary story.

Because Marco Boglione, the CEO of BasicNet, is in my opinion one of the last great pirates left at the helm of major Italian groups. That creative spirit, in his own way punk, that led him to create something unimaginable.

You used the term pirates, which couldn't be more accurate, because inside their showroom where they gave us the interview with Marco, there was literally the inscription 'Why join the Navy when you can be a pirate?' which is a phrase obviously attributed to Steve Jobs, but which he brought back. Besides, he was obsessed with Steve Jobs in this story, which we'll tell later.

I would say then not to waste any more time because this story is long and very compelling. As always with us, we will have Marco Boglione, the CEO of BasicNet, and Beatrice Le Mucchi, managing director and partner at BCG. I would say at this point let's rewind the tape and start from 110 years ago.

This is Grandi Imprese, a podcast by Actually in collaboration with BCG where we tell the stories of Italian companies that made the industrial history of our country.

It all starts in 1916, when Abramo Vitale, a Turin entrepreneur, founds the anonymous company Calzificio Torinese, an industrial initiative oriented towards the production of quality hosiery destined for the Italian market.

The story here, in my opinion, is particular, already that of Abramo Vitale, because he was Jewish. We are in 1916. The year before, Italy had declared war on Austria, and Abramo decides to marry a Catholic woman, Antonia Cesarina Mariani, but her father Davide Vitale forces him to choose between the family business and his wife. Abramo chooses Antonia, so he accepts his portion of the liquidation, and together with two partners Guglielmo Marengo and Ettore Gaetano Don, on November 12, 1916, he establishes this company. The company is born, as we have understood, in a very particular period of our history. We are in an industrial context totally marked by the First World War, when the demand for textile products, both civilian and military, was growing very rapidly. From the beginning, the company is characterized by a modern industrial approach with a structured production organization and attention to the standardization of processes.

Oh my God, how I love this term. But anyway, we are talking about a company that mainly made socks and maybe some knitwear items with a very important brand, which was the Aquila brand. Well, there are two moments that define the history of the anonymous company Calzificio Torinese. The first turning point, if we can call it that, comes in '39, when with the start of the Second World War, the company, like many Italian textile companies, sees production destined for military supplies grow. This increase in orders allows an increase in production volumes, but also entails an industrial reorganization oriented naturally to war needs. In this period, product branding is introduced with greater systematicity, a relevant strategic choice because it strengthens the company's commercial identity and helps build brand recognition even in the civilian market, which naturally will become central again after the end of the conflict.

You're right, this is an extraordinary moment, but this same war that had allowed the company to grow actually has a negative effect because in 1943 the company's factory is destroyed by Allied bombings that hit Turin, one of the main Italian industrial hubs. This bombing, in quotes, is considered legitimate because the company was effectively a supplier of the Italian army. But this event actually then represented a further turning point because at the end of the war, in 1951, the plants are rebuilt and the company transforms into a more structured reality, oriented towards the development of its own brands, in short, laying the foundations for what will then become BasicNet.

Well, the second turning point comes precisely in the post-war period, 1955. What happens? The company, which until then had been completely focused on socks, joins, merges with the knitwear factory. They even killed the names these companies had. In short, the names were very clear, they defined exactly what they did. Thus the new company name is born, which is Maglificio Calzificio Torinese, in short, the sum of the two activities, no longer just socks, but also shirts, and it is naturally a choice, let's say, of integration. A textile company that wants to grow in those years must combine more skills and also expand its product range. So we have knitwear, hosiery, this was the technical term. Naturally, this change of name is also a way to tell the market we are no longer a single product, but an industrial system.

It is the prerequisite for what will come later, when the brands are born and there will already be a production body capable of supporting them. In short, Ricky, looking back, you can see how there is a very clear identity of BasicNet from the beginning. But be careful because after the integration, an unfortunate event occurs, that is, a manufacturing error leads some customers to return entire stocks of socks, and in a sector like the one they operated in, where the trust of the buyer, of the distributor was everything, a return of that type risked becoming a mark of infamy, that is, this company does not control the quality of its products. And the Vitale family's response is actually brilliant because they fix the manufacturing defect and communicate it to the market with a stamp. On every package of socks they invent a code, a monogram K Control, the K Control, which is a sort of quality guarantee applied to all the knitwear's products.

Beatrice Le Mucchi of BCG told us how crises can become opportunities for brand building and consolidation. First of all, the strength of the group was precisely to immediately admit the problem, to take responsibility and to reproduce it and then return to the market, therefore to its own clients, relaunching a bigger challenge, namely that of saying 'No, but now we even put a certification on our products'. So a K, monogram which stood for K Control, which testifies to the quality that we represent with our products, something that for that historical period was extremely rare, in the sense that there were no other competitors doing something like this. And here it is interesting, let me say, also for the historical period, the choice to approach semantically and in sounding, we would say today, the German world. There is a very strong K, control and it is deliberately Germanic. In German, technically it would be kontrolle, but the effect they wanted to give was precisely that. At the time, in fact, I feel to say that then things haven't changed that much going forward. The German imaginary is synonymous with production rigor, precision and high standards.

And by now we understand where we are going. That K becomes known and increasingly desired. There are those who call them the socks with the K and so the trademark K is finally born in 1958. A company whose products, especially socks and knitwear, become enormously successful and it all starts from that manufacturing error.

The K is born which clearly was very different from the one we know today. It is born in a very particular moment because it is the 50s, what will then be defined as the economic boom opens up, clothing consumption changes skin and much more importance is given to style and less to the function, the functionality of the garments. Brands therefore begin to become in their own way a language, a communicative language.

It is substantially the birth of fashion understood also as fashion with a capital F and the birth of brands that become industrial assets and no longer just labels. And so yes, economic boom, but the 60s are socially very tense years. We are at the dawn, we are like that, of the Years of Lead, the great student protests and everything becomes political.

And '68 that you mentioned is actually a fundamental year for this story because in '68 Maurizio Vitale takes over at the helm of the company, who is one of the two protagonists of this story. Maurizio was the son of David Vitale, in turn son of Abramo, and enters the company at 23, inheriting, let's say, a somewhat ancient structure, a company that made socks, underwear. Nothing extraordinary. Maurizio Vitale will then become the great mentor of Marco Boglione who, when we went to visit him in his office, told us about his relationship with him.

And that's exactly right. There is a moment that marks Maurizio Vitale's entrepreneurial life. After seeing an interview on television with John Lennon wearing a military t-shirt of a soldier who died in Vietnam, he realizes that around him people are starting to talk about military look, of a military look that is not just an aesthetic whim, it is, let's say, the ability to take an object, therefore the military garment, and transform it into a sort of generational code. And here Maurizio Vitale does something very important. He takes the unsold t-shirts in the company's warehouses, dyes them green, has them decorated with some army patches and puts them back on the market. This thing, Ricky, has a tremendous success and that will be the germ of Robe di K, the things of K, an attempt to create clothes, a uniform for young people.

And here you see the theme of brands that are created. You build one, and then you build a sub-brand Robe di K, a different clothing brand, casual, in line naturally with the cultural revolution of that era which is precisely a revolution of customs that want freedom and so you move to polo shirts instead of wearing shirts with a tie, t-shirts instead of the jacket. And on this, evidently, BasicNet managed, had the foresight to convert a situation of difficulty into a great competitive advantage over the competitors of the time. It's a bit as if today a great brand that is recognizable for prints has a print that is somehow flawed that doesn't work or that is different and not aligned with what was the original request, then for some reason precisely that defect becomes a trend and becomes extremely requested and desirable and so a trademark is a distinctive element for that brand. And then Ricky, in this period the K logo is also born, those two models sitting back to back, an iconic logo. But do you know the story of the logo, Ricky?

I haven't the faintest idea, even though it's really one of those brands that I have photographed perfectly in my mind for many years. Well, the logo is born completely by chance during a photo shoot by Sergio Druetto. This is a backlit shot of a naked man and woman and it obviously becomes iconic, it then becomes the definitive symbol of the brand, but that shot had actually been made for another of the knitwear's brands, it was Beatrix, a swimwear brand, but as soon as Maurizio Vitale sees it, he is bewitched and decides that it would become the logo of Robe di K. It's incredible. It's incredible because it's one of those brands that have become totally iconic. They were very good at making it almost a patch to put on the chest. I remember as a kid the K jacket, that somewhat technical jacket that had these two figures that sort of disappear because if you don't look at them carefully immediately you don't recognize that they are two people sitting against each other. And well, in short, it's almost a social badge. It became so long before the era of sneakers as status. Robe di K in that phase intercepts a new demand. Casual is no longer leisure clothing, it becomes a lifestyle. The English would say lifestyle.

And to do it obviously there is advertising involved, because that logo and that obsession of Maurizio Vitale are actually not accidental. Starting from the 70s, Robe di K begins to do structured advertising campaigns and this is a phase that represents a very important passage, it means spending to create demand, not just to satisfy it. And for this reason Vitale begins to collaborate closely with two characters who will become iconic in the world of advertising in Italy, Oliviero Toscani and Armando Testa. Oliviero Toscani was 3 years older than Vitale, but at the time in the 70s he was already a recognizable name in the advertising sector. He had worked on a campaign for the Algida cornetto and this had consecrated him in the world of advertisers. And on the other hand there was Armando Testa who was already one of the most famous advertisers in the country, he was born in 1917 and was Turinese exactly like Vitale.

Yes, and this is a bit of a golden phase for the Turinese in the world of communication, of branding and the story goes on. On, because these heads sitting, let's say, at the same table after the great success of Robe di K, in the casual clothing sector, launch in '71 a brand that for our generation perhaps has been a bit lost which is Jesus Jeans, a brand that was dedicated to jeans in those years, let's say, they were arriving, bringing to Italy first a trend that had been exploding for a few years in the United States. And here, however, I don't know if you know the story behind the launch of this brand.

Well, it could have been Boglione who told it to me, but I leave you the honor. Go ahead.

Well, there is again an intuition apparently of Oliviero Toscani who at the end of the 60s on a trip to New York with Vitale realizes that denim, that is the material used to make jeans, is everywhere. They decide then to create a new brand and in searching for the name they are inspired by the success of the musical that was booming in those years Jesus Christ Superstar, a universal symbol Jesus and a street object, jeans. Here I add a little piece, as you well know, jeans find their origins in the city of Genoa. Years, years and centuries and centuries ago, so much so that we have also launched the jeans museum and jeans comes precisely from there, the word jeans from Genoa.

And you're right because actually I never had any Jesus jeans, but studying this story I discovered that they were iconic for Italy, especially thanks to the communication campaigns that Vitale and Toscani together had begun to build around the brand. There is this 70s advertisement, for example, 'He who loves me follows me', which is represented in a giant poster in Boglione's office. And the result from these advertisements is that the brand becomes a recognizable brand and is no longer neutral. Either you love it or you hate it and as we know today after so many years in marketing indifference is the real defeat. But, as I was saying, Jesus is not understood by everyone. Boglione also told us about it.

Well, Ricky, the story is extraordinary. There is also an additional note of color. You who are listening cannot see it, but this campaign is characterized, let's say, by a female buttock on which, precisely, this writing stands out and, let's say, the owner of that buttock was Donna Jordan, who was naturally a model and girlfriend of Oliviero Toscani. In short, they provoke a lot from Turin, Vitale, Toscani and Boglione. Wearing that jeans in those years becomes provocation, becomes value positioning, we would say today.

Well, I found this newspaper extract from May 10, 1973, which says 'Seized the posters of Jesus Jeans'. Palermo, May 10. The magistrate Dr. Salmeri has ordered the elimination of the posters with which Jesus Jeans, a new brand of sports pants, are advertised. And then a little further down it says: 'You shall have no other jeans outside of me'. Says the slogan that accompanies the poster, in which is depicted the lower middle part of a human figure with a bare back and pants with the zipper lowered. And here comes the most interesting part, Ricky. Salmeri noted that such posters are manifestly contrary to good morals and constitute contempt for religion.

How wonderful! How wonderful! And think that then the attack also comes, let's say, from the other side, because in '74, we said years of student protests, but not only, the feminist movement explodes which looks at these so provocative posters as also objectification of the female body. And here the Jesus Jeans case becomes a socio-political case. Advertising is no longer mere decoration, but in more modern terms becomes symbology and therefore ground for conflict. And you who are the brand, if you are on the right side of the conflict, well, you can only benefit from all this talking.

And precisely in this almost pirate-like climate, as you defined it earlier, at the end of 1976 Marco Boglione enters the scene, the real protagonist of the BasicNet story. Marco Boglione was born on May 9, 1956, he is the third of three brothers, he is born in a fairly upper-middle-class Turin family and it was very nice to read his book because he recounts his childhood. He initially wanted to become the President of the United States, an ambition that however dies when he discovers that Kissinger could not become President of the United States because he was born in Germany. At that point he changes his mind and decides to become a Formula 1 driver. Even this ambition, however, dies when he discovers that usually you become one when there is someone who sponsors you or this is already a family passion. In the end he decides to land on photography.

This story is very fascinating and if you remember also when I interviewed Boglione in Turin at a big event at the OGR, when I asked him when did you understand that you wanted to be an entrepreneur he says 'Well look, I used to go to a small village in Liguria with my family to the sea and I looked at these beautiful boats and I asked my dad dad what does that guy who has that boat there do?' And little by little I started to understand that those who had boats all had this mysterious profession, the entrepreneur.

And indeed his first entrepreneurial activities begin when in his third year of high school he moves to the Istituto Filippin in Pederobba del Grappa in the province of Treviso and there he creates a photography course in the boarding school. But the most interesting thing is that he starts selling photos of his classmates to them. And here is the genius, because he was actually portraying them as good boys. It's a boarding school context, so these boys soon realized that in turn they could sell those photos to their parents or grandparents in exchange for a tip. Boglione therefore developed 13x18 photos that he sold for 1500 lire each. The boys then sold them at home for 5000 lire each and with 10 photos you made a net profit of 35,000 lire which was enough, in short, for a weekend.

Can I say that this thing of photos inside a boarding school among boys reminds me a bit of Mark Zuckerberg, at Harvard who plays with the Harvard yearbooks and builds a platform on top of it, but let's say that this is another story in a slightly different way. But the interesting thing here is that he immediately understands that he is not really selling photographs, but he is selling the possibility of making money to those who buy those photographs, that is, he is selling them a business opportunity and this he will repeat for the rest of his life. He himself tells us that with BasicNet he doesn't sell t-shirts, but the possibility of doing business with those t-shirts for entrepreneurs around the world.

And so Marco Boglione's period at the infamous Istituto Filippin ends, to follow his father's ambitions who pushes him to enroll at the Polytechnic to become a naval engineer. Boglione father's dream. This is actually a somewhat sad period in Marco Boglione's story who will suddenly find the so-called Turning Point in December 1976.

Here Ricky I have to tell you properly. We are in Sestriere, a ski resort very popular among the Turinese and on that occasion Marco Boglione's brother had invited a friend of his who was 10 years older than Marco Boglione, who was precisely Maurizio Vitale and at the time Maurizio Vitale was already a bit of a celebrity because he had made Robe di K which among young people was very widespread. The two find themselves in the same room which had a bunk bed. They start talking in the dark and Vitale at a certain point asks Boglione: 'But what do you want to do when you grow up?' And he says: 'I would like to be a photographer, but right now I am enrolled at university, I am studying to become an engineer.' At that point Maurizio Vitale stops, turns on the light, looks him in the face and says to him 'Are you crazy?' So what happens? And then the next day they go skiing together on the slopes, they meet some friends of Vitale and Vitale introduces them to Marco Boglione as the new commercial director of Jesus Jeans. Obviously they had absolutely not talked about this the night before. Then however Vitale actually has Boglione called back a few days later. Boglione comes down from the mountain, goes to Turin and in Turin he meets Vitale who proposes to him to enter the company. Actually, first passing through a job at the agency that was managing the campaigns for the knitwear at the time and this agency was called Viva.

And here we recall a turning point because Boglione leaves the agency to officially enter the company and discovers the facts of the whole company doing many different jobs. First he starts with the night shift in the weaving department. They seem like those somewhat foundational stories, right? The man who enters directly into the factory where things are made, then the office for yarn allocation for weaving and then in the commercial office. In the meantime the relationship with Vitale intensifies and in 1977 he takes him for the first time overseas, to the United States. And here there is a funny anecdote because Vitale takes him to eat at the first restaurant where you eat with your hands.

I know where you're going.

Well. It was the big M of McDonald's. In short, these are also the first experiences, let's remember, we are talking about '77, of a Boglione who enters the world of business and, moreover, also towards that of branding in the United States which will then also become an important and interesting market for the company. It is precisely in one of these trips to the United States overseas that the K we know today is born. What do I mean? The evolution and entry into sportswear. Before we were on Lifestyle, do you remember? And instead we enter with Robe di K into the world of sport. Vitale and Boglione pass in front of the first Athlet's Foot store which is the Foot Locker antelitteram and they have a revelation. What happens? Well, a bit the same scene repeats itself from 10 years before with Vitale and Oliviero Toscani when they discover jeans as young people's clothing. Now instead Vitale and Boglione discover that sportswear actually becomes not only a functional garment, but instead a casual garment to wear every day. How do I discover it? Well, naturally with a walk in Central Park, where they see everyone jogging, but then actually live inside this clothing.

But actually it is not so simple to bring sportswear to Italy. The moment this happened was during the World Cup in Argentina, when Vitale watching an Italy match sees Antonio Cabrini debut who at the time was a boy who played for Juventus. At that point he has an idea, goes to Boniperti who at the time was the president of Juventus and convinces him to do something never done before, to put the Robe di K logo on the football team's jersey. And this is the first time that this actually happens. Juventus is the first team to have a sports sponsor's logo on its jersey. Here there is a further funny anecdote that Boglione told me when I met him in Turin and which says that when they entered the Juve offices in those years then imagine this very Turinese context, salespeople looking at each other, proposing this collaboration and Marco tells me 'You know, in that moment when we entered that room, everyone looked at us a bit askance because they didn't understand who would pay whom. Are you the ones giving me the kits. I who am selling them to you, I who am buying a space on your jersey, it was all a completely unexplored field. But naturally what Boglione and Vitale had seen was the possibility of doing a gigantic permanent advertising campaign, that is every match played by Juventus equaled millions of free advertising contacts on that logo and therefore on the Robe di K brand. Sure, however, that at that moment they were not exactly the only ones with that positioning and there were many competitors. In Italy, for example, there was Legea, in Germany there was Adidas, there was Nike in the United States, in Italy there were also in some way the Benetton, with whom Boglione's paths will cross again a few years later. And Boglione told us about the relationship with these other brands. We never saw them as enemies. The competitor is not an enemy, as it were, on the contrary we were all a bit allies, there was a new spirit because the terrain to conquer was new. I believe that the cowboys who conquered America, the enemies were others, not them. One took a price, the other went to the other, planted his flag, we were all happy and in the evening we partied, so also the Benetton, all those and those much better than us at the time and we were all very close, we still are. And instead our real enemy that our competitors didn't have, they had other problems, but we were the only old, very old company from 1916 that had completely changed its skin.

And so having thrown the bait or rather created the case we would say today with Juve, Boglione starts traveling Europe and also the United States between '79 and '82 traveling he closes several commercial agreements with sports teams and federations, including crazy clubs like Ajax, Milan and Roma, not to mention the Olympic teams, therefore the Olympic disciplines that are covered by the K brand. Here let's say Ricky that Boglione and their company enjoy the first mover advantage, that is no one had yet thought about that thing. So sports merchandising, as we know it today, an extremely competitive sector covered by the giants, was not perceived as an industry and he manages to move without real competitors on geographies and on sports brands understood as teams that today probably for a company of those dimensions would be absolutely unthinkable and unassailable. Ricky cited the commercial agreement with the Olympic Team and here there is an incredible story which is the sponsorship in 1981 of the United States Track and Field Federation. This agreement happens in '81 because in '84 the Los Angeles Olympics would have been held. And what happens? Vitale meets Holland Cassell who is an American, Olympic gold medal in Tokyo in '64 and is precisely the president of the United States Federation. In short, they meet and Cassell asks Vitale for his offer to sponsor the federation. Vitale declares himself willing to formulate it, provided that if it had been accepted Cassell would reveal to him how much Adidas paid whose contract was about to expire. The American accepts and Vitale shoots his number. 1 million dollars a year for 4 years. The American takes a napkin from the table, writes on it 1 million dollars, gives it to Vitale and says sign. Obviously Vitale proceeds to sign and they shake hands. Do you know how much Adidas paid for the sponsorship?

Don't tell me.

$40,000 a year.

This burns. But obviously athletics in those years is a global showcase. The United States federation included Carl Lewis and Edwin Moses, two gigantic names, so a winning athlete carries the logo on television, in newspapers, in sports photography and also for this reason then in 1982 at 25 Marco Boglione is promoted commercial director marketing of the Maglificio Calzificio Torinese. It's funny because this news does not go unnoticed and Il Mondo which was a famous economic weekly on December 6, '82 celebrates this promotion with an article and says 'K man for Jesus' the title. He doesn't even have 27 years yet, but he has already become the number one of the commercial organization of marketing of MCT, Maglificio Calzificio Torinese, the group that is headed by Maurizio Vitale and which in '82 with the various brands Jeans Jesus, Robe di K, K Sport will bill over 100 billion. In short, this news does not go unnoticed, it also shows the relevance that that brand was building at this moment in the Italian panorama.

Absolutely. From that moment, however, a brief descent begins. In the early 80s the company goes through a complicated phase, it grows, but has liquidity problems, provisional warehouses, suppliers who need to be constantly reassured and in the end something happens that perhaps gives the spark for the definitive descent which is the loss by Vitale of his second wife in a road accident. From that moment Vitale is no longer the same. He then gets sick and knowing that he won't have much time he distances Boglione from the company telling him substantially that the knitwear without him will not survive and that it is better if Boglione starts doing what he has always been, namely the entrepreneur. Boglione therefore resigns in December 1984 and will create with his first wife Daniela Ovazza, who by the way I met right inside the knitwear, two businesses. One is Mototaxi, a company that did delivery between offices and the other is Football Sport Merchandise, another fundamental piece in the BasicNet story.

Exactly. FSM is born precisely as the true pillar of the group's sports merchandising. What do they do? Well, they start technically transforming fandom into a potential marketing phenomenon, a clear consumption identity and therefore selling jerseys, official products, collections linked to individual clubs. The organizational model changes completely, moving to the licensing model, of networks, of external supply chains. I focus in particular on licensing and it is thus that it becomes the first company in Europe to produce and market sports merchandising.

Let's hear from Beatrice Le Mucchi of BCG. Here we see certainly one of the other areas where BasicNet has demonstrated to be absolutely a pioneer of something that then became extremely common. So the intuition to go and collaborate with sports teams, with sports brands, with athletes started much earlier than we began to see it with the frequency with which we see it today. So much so that today this type of collaboration or anyway exchange happens in many different forms. The first is certainly that which sees products that typically historically were part of the sports world. I'm thinking of sneakers, I'm thinking of gym clothing, rather than yoga, Pilates, etcetera, which absolutely become part of what is the wardrobe that people wear daily and not necessarily in contexts related to sports. And on this obviously sneakers are the most significant example. The second theme where fashion and sport collaborate, work and have very interesting intersections is that linked to luxury fashion brands which in many cases have pushed, push themselves even to have their own line for a specific sport. So I'm thinking of Luna Rossa by Prada rather than Emporio Armani. So this is also a phenomenon that we see in an increasingly recurring way. The other aspect that often sees fashion companies or the luxury world collaborate with sport is certainly that linked to communication and marketing, therefore sponsorship of various types of events that can be tennis tournaments, football, but up to reaching global events like the Olympics, if we think of recent history. United to this also the increasingly frequent use, collaboration with athletes as brand ambassadors and brand ambassadors not so much for their assortment offer linked to the sports world, but precisely for the main collection. We also see more and more examples of this in substantially all categories, all price points.

In the meantime the story goes on. In 1987 Maurizio Vitale dies and at the helm of the company Edoardo Vitale, his brother, takes over. Things, however, continue to go badly and 7 years after Vitale's death, on January 14, 1994, the Maglificio Torinese is forced to declare bankruptcy.

And here we arrive at the turning point. Marco Boglione discovers the news of the bankruptcy while he is in the car, he is driving, he tells us this story, he tells us how this news arrives on him and he actually had already thought in the past of taking over the company. Naturally it had never been possible, given the volumes and prices. He said, 'The only way to buy it', he claims to have said it in '93 at Christmas, would have been when? Well, if it ever goes bankrupt, he says to a lawyer friend at a Christmas party, well, we'll think about it. And so the bankruptcy.

A month later the bankruptcy arrived. Obviously you will have understood, Marco Boglione is a person who immediately gets to work and so as the first thing after receiving the news, he calls the Japanese distributor of the Maglificio Torinese with whom he also collaborated directly for his football merchandise. The Japanese company, to give an idea, billed 200 billion selling K branded products in the country, while the knitwear alone before going bankrupt in all of Europe billed about 80 billion. So this gives an idea of the gigantic scales moving in Japan. And here is the masterstroke because Boglione writes a letter to the head of the Japanese company with a fantastic subject, Zero Risk opportunity, an opportunity without risks. In the letter he tells them that if they had helped him take over the knitwear, Boglione would have given them at a fixed price the license of the K brand forever. And obviously the Japanese, fearing losing their business, fearing that another company could take over the knitwear and cut ties with them, answer that they are very very very interested.

Here Ricky, however, there is a clarification to make because the story is complicated naturally. What is the point? Well, that when the knitwear goes bankrupt, Boglione's FSM is also in very bad condition. Market conditions, in fact, had changed with new giants entering. Nike which invests a lot and with much wider and deeper pockets for sports sponsorships and demands absolute exclusives.

We arrive thus at '93 in which Boglione closes the year with heavy losses and debts, but as usual he doesn't lose heart. In the space of 15 days, in fact, he would have had to recapitalize his company, the FSM, negotiate the agreement with the Japanese and put together a credible business plan to take over the knitwear.

Precisely in those days, actually the appraisal arrives. To acquire the brands, the building and the warehouse of the knitwear, 21 billion lire would have been needed. But the bankruptcy trustee also decides that to safeguard that value he would look for an entrepreneur able to rent the bankrupt company giving continuity to commercial activities, to marketing investments. Then only in a second moment would an auction be held with the assets of the bankruptcy and whoever had rented the company would also have had to irrevocably commit to participate in the auction with a minimum offer agreed in advance. And for Boglione it is not at all simple as he told us.

Now try to imagine these months, these weeks, actually there is crazy tension. They are two companies that are essentially about to blow up. And Boglione, the pirate, what does he do? He creates a task force of his most loyal people that he calls Operation Takeover K. The team starts working incessantly day and night to get the knitwear back on its feet, operating as if the acquisition had already been completed.

It's really his style this. But there is another thing that will be fundamental to lay the foundations for BasicNet, which is that Boglione discovers the internet.

These are the months in which Boglione imagines, focuses, and crystallizes in his head the organizational, industrial, and business model of a group that would move forward exactly with this image in mind for years, indeed for decades. Now I'll try to explain it to you. His company would design and create the collections, taking care of their industrialization, and would then entrust production to sourcing centers around the world. Essentially factories, naturally very well selected, that would become their partners. Attention, not suppliers, but clients with a license to produce the collections under the Basicnet brand. The licensees would purchase the finished products directly from the factories, which would recognize a commission on the turnover to Basicnet. Then, when the product was sold to a retailer in the territory covered by the licensee, a royalty, that is a percentage on sales, would be recognized to Basicnet. All of this, Ricky, is extraordinary because Marco Boglione tells us about it. In those first months, it was essentially schematized on little drawings.

The first months are incredible, there is no real organized system, yet they manage to restart K and sell the brand all over the world. The secret lay in a simple intuition: finding partners and not clients in the traditional sense. In a short time, he identified about thirty industrial groups willing to believe in this model. Each produced their part, some t-shirts, some caps, some swimwear, some t-shirts. And everything followed this light approach. There was no central warehouse and no capital immobilizations. Production was almost entirely in Asia, Taiwan, China, the first steps in Vietnam. And this system was also tried to be commented on by Beatrice Lemucchi, partner at BCG. In reality, the business model where you have production done by others is very common in the sector, in the sense that on luxury and ultra-luxury brands, there are some that certainly have a good share of production that is internalized. I'm thinking of Hermes, I think of Chanel, I think of Loro Piana, so there are certainly some that have a good degree of internalized production, but there are many, and as you get closer to the premium segment, this is increasingly the norm, that actually have all production outsourced. Then production is done with a series of suppliers.

And here, attention, because there is a very important asset that Boglione takes home. A very heavy and precious inheritance. Indeed, from the bankruptcy, some sponsorships of enormous appeal and visibility remained intact. Vasco da Gama, Barcelona, Juventus. Those three jerseys were enough to open any door, naturally in different geographies. In those years, in fact, no sports store in the world would have refused a meeting with a salesman who introduced himself saying, 'Look, I have the Juve jersey, the Barcelona jersey, do you want to see it?' And if someone had said no, they would have thought it was just a sign of poor foresight. And so this system is put together, which would then be managed through information systems that allowed Basicnet to maintain great control immediately over the entire supply chain. I can't help but think of my right-hand man, a friend and colleague already from the Turin knitwear and footwear factory, who one day walked into my office and told me, 'I'm leaving.' Obviously, because many had told him that, because he thought I was a bit crazy to try at all costs to manage a company that at the time had more than 100 billion old lire in revenue with toys. He came from IBM, he was a very serious man, very capable, who from a computer vision perspective also gave me a lot, but he didn't believe in microcomputing in terms of reliability. They really considered them toys, junk. They were always stopping, you had to restart everything 100 times a day, while the IBM machines of those times, like those of today, but it was another thing, they were not comparable, they never stopped, never, you understand? And these stopped all the time and he said it's impossible to think of growing with the ambitions you have based on this. You'll hurt yourself, it won't stand.

At the end of 1994, the accounts close positively. The company is cleaned up from the disaster of the bankruptcy. Boglione and his team also managed to save the first sales season and the year-end revenue is about 46 billion with 8 billion in net profit. I think about what had been done with K and therefore the way in which a brand, which was in fact a sports brand, already had a completely lifestyle positioning, which is a word that today we obviously use a lot in this sector, but when the brand was launched it already had a very strong cultural connotation that went far beyond being a sports brand. The same with all the sponsorships of sports events, football teams, this in Italy, but also abroad. So another aspect that has become absolutely common, a huge business opportunity for many different brands. Basicnet with its portfolio of brands of the time certainly did it before many others. But attention Ricky, because here we are talking about the rental of the knitwear and footwear factory in Turin. The auction was to be on October 28th of that year and that is a crucial day. In the courtroom, everyone is there, Boglione is there, the Japanese partner is there, many colleagues are there, and the union representatives are also there. The auction begins and Boglione, who having taken the rental of the business unit had the right to make the first offer, confirms his 21 billion. No one else bids and so from January 1, 1995, Boglione, through Football Sport Merchandise, becomes the owner of the assets of the Turin knitwear and footwear factory. The K, Robe di K, Jesus Jeans brands, the warehouse, the Turin building, today the group's headquarters, and from there the Basicnet project takes shape.

Basicnet is certainly an incredible reality and anyone who works in this market, who operates in the market, either as a direct player or as an analyst, as we do, is essentially one of those realities that intrigues you, that you want to understand better, because obviously they have a decades-long history and have managed to create a portfolio of extremely successful brands, going through particularly complex market periods. Attention Ricky to the names, to the words, because here there is obviously a name change. It goes from Maglificio Calzificio Torinese to Basicnet. And have you ever asked yourself why it's called Basicnet? Go. So, the name is clearly composed of two words, basic and net. Basic is an acronym that you wouldn't immediately guess, right? What does it stand for? Well, for Beginners All-purpose Symbolic Instruction Code. It's a programming language born in the 60s to make computing accessible to non-specialists, but basic naturally also refers to a basic style, essential, without frills, very much loved by Boglione himself. Then there's net which primarily connects to the word network, the network of entrepreneurs, licensees, distributors, but then, well, there's also the net of digital, of the internet that you were talking about before, which offers a future business opportunity for brand development, the internet network. And so the Basicnet ride begins. The company grows and does so thanks to an extraordinary group of people. Besides, Boglione had committed to hiring 37 of the 213 employees who after the bankruptcy had remained on redundancy payments, and in the initial phase he was able to hire as many as 45. Then one by one they all came back. At the end of the fourth year, a year earlier than agreed, Basicnet had hired 212 of the 213 who had been left without a job. Only one person did not return to the knitwear factory, he really didn't want to know and changed profession entirely.

Ricky, here is another crossroads, a sliding door. Because when the project is still in the consolidation phase, much earlier than expected, an acquisition proposal arrives from an English group that offers Boglione a gigantic sum, 60 billion lire. So, after this operation, we received a crazy offer and the system didn't care at all. They wanted the K brand cleaned up from the bankruptcy and they didn't even care that I had done all these things in 6 months, only that there was a clean K after a bankruptcy with 37 employees and so they made me a crazy offer. And I had done the operation with the Japanese because I didn't have the money to do the acquisition of the bankruptcy and there was also my cousin, just to be clear, family and friends, who acted a bit as the financier for all this, so he had a bit of shares of a Chinese partner who is still our partner today, who had helped us, but 5% just to not abandon me. And here the story, Ricky, is entirely Italian, because Boglione, well, naturally we know, refuses to sell the company, while the cousin who is a banker naturally wanted to monetize his investment in the company and exit, because it was what today we would call a huge exit. And it is here that the story of Basicnet crosses that of another great Italian company in the fashion sector, Benetton.

Exactly. And here I would like to delve a bit into the history of Benetton because this name becomes famous in 1955 when Luciano Benetton has a simple intuition and starts selling the sweaters made by his sister after they have been sewn. The brand then explodes. In '66 they open the first store in Belluno, then in '69 the first store abroad arrives in Paris and in the 80s the brand becomes a global icon also thanks to the collaboration with photographer Oliviero Toscani. It's always him who has another intuition, that is, he stops advertising the product to advertise the company's values with shock campaigns that talk about various themes like racism, war, religion, all under the slogan United Colors of Benetton. And here it is precisely the Benettons who will solve Marco Boglione's problem with his cousin. Marco Boglione, in fact, already knew Luciano well, who introduced him to his son Alessandro Benetton, today very well known. He was still very young in those years, had finished studying abroad, had worked in the company and had recently launched 21 Investimenti, one of the very first private equity funds in Italy. 21 Investimenti thus enters the company's share capital with a stake equal to 42%. Boglione controlled another 42% and the remaining part was in the hands of a Chinese partner and another company.

Besides, there is an article from the press of May 10, '96, which talking about the operation headlines 'Watch out for the new 2'. It made me laugh a lot. And here Ricky, well, the novel is extraordinary because another great character of Italian capitalism from the 90s onwards enters, who is Corrado Passera. Why? Because Alessandro Benetton introduces Boglione to Passera, who at the time was leading Poste, which he was privatizing, transforming it into a spa before then taking the helm of the Intesa Sanpaolo group and also becoming a minister. And so what does Boglione do? Well, precisely in 2001, he sells the Moto Taxi that he had founded with his wife to Passera himself. The fund that really made the difference was 21 Investimenti because they wanted to have a percentage equal to mine from the start. They said, 'No, we want to be partners in the project and so let's do 40% each.' After a few years things had gone very well, but a debt had been incurred that for me was monstrous, for them it was too small because things were going well. So they said, 'This doesn't work anymore because the debt, obviously no one guaranteed it for me, but because they were in it.' So, there we said let's try to bring in a third party who puts us back on the same level from a financial point of view because he removes all the company's debts with a capital increase. And we had identified some interested parties, many were interested in entering, we then chose UBS, we are also happy to have done it with the goal then of going public, of going public and let's say we had a goal for 2002, and then for some strange reason it went very well. That, however, we must remember, is the time of the internet and in particular the time of the dotcoms, of this bubble that was growing more and more and this hype around the internet.

And here we are Ricky, this moment had to arrive in this story naturally. Managerialization, new partners, and the big bank arrives, the big investment bank, UBS in July 1998. This entry means for Basicnet an inflow of over 50 billion lire for a stake just over 10% of the company. What is the entry aimed at? Well, naturally the IPO. The exit is a behavior, we know, typical in this sense of private equity. And this, naturally, Ricky, is the closing of the circle for Alessandro Benetton's fund, 21 Investimenti, private equity that buys, helps the company develop its business, agrees with a large investment bank and then at that point aims for an exit, an exit on the public market. The debut officially takes place on November 17, 1999 at Piazza Affari. Before listing, however, companies usually organize a roadshow, that is a promotional tour that has precisely the objective of convincing large institutional investors to invest in the IPO. On that occasion, companies present their business model, financial data and obviously future growth prospects. In Basic's case, however, the banks and funds are not exactly convinced. The collection of these institutional funds is zero, but there is the retail market, that of individual investors and savers, which rewards Basicnet, believing in the company and sending requests six times higher than the shares available on the market. Why is this? Because Basicnet with its brands was obviously very linked to the world of sport and in particular to Juventus. And so then when we talked about the listing with Boglione he told me, 'You know, the listing freed me.' And this is obviously a counterintuitive phrase, given that the stock market exposes you to investor pressures, quarterly plans, well, we talk about it a lot here on Actually. And so obviously I had to ask him what he meant by freedom and he replied: 'You are free if you don't care that your share goes from €3 a share to 30 a share.'