Okay, David. So, the question, do you have a favorite Ferrari?
That's a tough one. I would never actually want to get behind the wheel of it, but I think I got to go with the F40.
I remember just being like a kid in elementary school and getting a model of one and thinking like, "Oh my god, this is the most incredible machine that mankind has ever created."
Yeah. It's the defining supercar.
I actually have two. One is the car from Charles Leclerc's wedding. It's the 1957 250 Testarossa. And the car from Ford versus Ferrari. That 1966 330 P3 is just beautiful. It's got these curves. It looks like a spaceship. It's gorgeous.
Beauty and power. Story of Ferrari.
Yes. All right. Should we do it?
Who got the truth? Is it you? Is it you? Is it you? Who got the truth now? Is it you? Is it you? Is it you? Sit me down. Say it straight. Another story on the way.
Welcome to the spring 2026 season of Acquired, the podcast about great companies and the stories and playbooks behind them. I'm Ben Gilbert.
And we are your hosts. Almost everyone needs transportation. It is a giant market serving a huge human need and it is one of the top three things that households spend money on along with their housing and their food. And the automobile has become the default way that humans move around the world.
And that is not what we're talking about today. And this episode has absolutely nothing to do with any of that. Today's episode, listeners, is about selling dreams. Oh yes, we are talking about Ferrari, one of the most paradoxical companies that we have ever studied here on Acquired. Ferrari ships very, very few cars, around 14,000 per year. That is approximately the number of Toyotas that are sold every 10 hours. But of course, we know Toyota and Ferrari are a silly comparison. So what about a company that we have covered in the past, Porsche? Yeah, even Porsche ships 22 times the number of cars that Ferrari does. And yet, even though almost nobody owns a Ferrari, only about 180,000 people globally, they have among the highest brand recognition. I would argue that over a billion people know what a Ferrari is easily.
Which means, David, that Ferrari has the highest ratio of people who know about their products to people who actually own their products of any company in human history.
I think we got to scope it to companies that make products that are nominally available for purchase by consumers. But yes, but yes. Yes. Like the space shuttle is a product, but you can't go buy a space shuttle. So, I would say Ferrari is the only ultra luxury brand that has reached mass cultural awareness.
Yeah, there's some fun numbers just to keep putting this in perspective. There are 10 times more Birkin and Kelly bags made each year over at Hermes than there are Ferraris. And there are 70 times more Rolexes made each year than there are Ferraris.
The paradoxes continue. People are dying for their SUVs and yet they limit them to just 20% of total volume.
Wait, what is this SUV of which you speak?
I'm sorry. Ferrari utility vehicle, because they would never... Yes, the FUV. The Ferrari utility vehicle.
Ford, here's another good one. Makes 160 times the number of cars that Ferrari does. Yet Ferrari has a higher market capitalization. They're worth more than the Ford Motor Company and Volkswagen and Honda and Stellantis and Mercedes-Benz. This company is worth so much more than most giant manufacturers.
Ferrari makes all of their cars mostly by hand, inefficiently, and one-off in a single town, Maranello, Italy, and they have the highest margins in the entire auto industry. Of the very few cars that they do make, this is my favorite one, David, about 80% of them are earmarked specifically for people who already own a Ferrari.
So that means there's less than 3,000 new customers buying Ferraris in any given year.
It's actually completely insane, right? When you think about it, this funnel narrows pretty tight. So, how on earth did Ferrari manage to build this incredibly valuable business while selling their cars to almost nobody? Well, the answer is bloody. It is half a century of death and speed and love and feeling alive. And of course, there are some of the most clever business model mechanics that we have ever studied here on Acquired.
It really is very Italian, you might say.
Yeah, it's beautiful. It's tragic. It's romantic.
There's death, sex, betrayal, and very, very fast cars. Well, listeners, if you are interested in the big takeaways from each episode in writing, you should join our email list at acquired.fm/e. You can also get past episode corrections, exclusive behind-the-scenes photos that we found during our research. We'll be sending some of those out for this episode. And you can vote on future episode topics. Plus, we will give away a little hint about the next episode each time. That's acquired.fm/e. Come talk about this episode with us in Slack at acquired.fm/slack or by clicking the link in the show notes. And before we dive in, we want to thank our presenting partner, JP Morgan Payments.
Yes, just like how we say every company has a story, every company's story is powered by payments. And JP Morgan Payments is a part of so many of their journeys from seed to IPO and beyond.
So with that, this show is not investment advice. David and I may have investments in the companies we discuss. And this show is for informational and entertainment purposes only. David Rosenthal, take us to Italy.
Ooh. All right. Well, we start in 1898 in the medieval Italian town of Modena with the birth of our hero Enzo Anselmo Giuseppe Maria Ferrari, better known of course either by the name of the company he would found that bears his last name, Ferrari, or to his hundreds of millions of fans around the world simply as Enzo. So Enzo is born here in 1898 in Modena, the second of two sons, and his mother Adalgisa is a beautiful young woman. His father, Alfredo, is 12 years older than his mother. And his father runs a successful metalworking shop and is kind of like a, you know, fairly well-to-do middle-class entrepreneur about town. And Enzo and his father are often at odds growing up. But part of his dad does rub off on him in this sort of entrepreneurial influence. His dad says something to him which sticks with Enzo for the rest of his life: a company is perfect when the number of partners in it is odd and less than three. I.e., don't take on partners. Always be self-sufficient.
It's a great quote. We should say that much of this history, this whole episode comes from the fantastic, really definitive biography of Enzo called Enzo Ferrari, written by Luca Dal Monte, who worked at Ferrari and Maserati for many years and then after he retired dedicated about a decade of his life to researching and writing this definitive biography. It's really excellent.
So anyway, his mother and his father are always fighting. They're always yelling, arguing, swearing. And this has a very different effect on each of their two children. For Enzo's older brother, who is named after his father, he's also named Alfredo, nicknamed Dino to tell them apart. He, Dino, becomes like the golden child. He's the peacemaker, the pleaser, the striver, the smart and successful one. He's going to make his parents proud, and he's going to take over the family business. Enzo, on the other hand, as the younger brother, he just takes right after all the sort of less savory parts of mom and dad. He's mischievous. He doesn't apply himself in school or pay any attention. And you know, why should he? His family's got money for the place in time. His older brother, Dino, the golden child, you know, is going to make them proud. He's going to take over the family business. Enzo can just kind of knock about town. He dreams of someday maybe becoming a journalist or an opera singer, mostly so that he can, you know, hang out with the showgirls.
Oh, what could have been a very different Enzo Ferrari?
Well, his life is an opera, as we shall see. So, there's one thing though that really captivates Enzo's spirit, which is the new modern sporting and leisure pursuit of automobile racing. And one blissful night when Enzo is a teenager, he declares to his best friend his true intention in life: I am going to be a racing driver. And that dream does indeed come true, but probably not in any way that Enzo expected that night, because very shortly thereafter, World War I breaks out and two tragedies happen to Enzo in quick succession. First, his father, Alfredo, contracts pneumonia and dies unrelated to the war. He just got pneumonia and suddenly died. Shortly thereafter, his older brother, Dino, the golden child, goes off, enlists in the Italian army where he also contracts pneumonia and dies. So Enzo is left alone with his mother that he needs to support. The family business is gone. And because Enzo has never applied himself, he has no discernible skills or ability to continue it or, you know, really do much else that would provide gainful employment for him here. That was supposed to be Dino's role in the family. Now, before Enzo can stop to really think, he too gets drafted into the army where he also comes down with pneumonia and nearly dies, but he survives. He's the one who survives. He has a quote later in life where he sort of acknowledged this emotional burden and his life's work that he would go on to create, where he said, "I feel alone after a life crowded by so many events and almost guilty of having survived."
Yeah. I mean, the title of his memoirs is My Terrible Joys. Tells you everything you need to know right there about Enzo's life.
Yep. So when he comes back home to Modena at the end of the war, he has no hope, but he does still have his dream of motor racing. And remember, he's still like a teenager basically at this point, a late teenager, early 20s. He starts making noise to his mom about selling the family house to finance buying a racing car and that he's going to go out and race this car and win prize money to support them.
It's an audacious plan. His mom is like, "Uh, no. How about instead, how about this? Why don't you go try to get a job at a car company and see where things go from there?" And so it's like, "Okay, okay, fair compromise." So his mom arranges for him to travel to Turin, big city in the northeast of Italy, where he interviews for a job at Fiat. And Fiat is the biggest Italian car company at the time and will come back up many, many times in this story. It is, as you all probably know, essentially the Ford Motor Company of Italy. And the family behind it, the Agnells, are the wealthiest and most important industrialists basically in the history of Italy. And today they own and control both Stellantis, which is the merged result of Fiat Chrysler and Peugeot. And they also own and control Ferrari. Don't worry, we'll get there.
We'll get there, but not for, I mean, the better part of a century here.
Yes. Yes. So back to Enzo here in 1918, Fiat of course rejects his job application because again he has no discernible skills. But Enzo is persistent and in 1919 he lands a job at a new startup automobile company called CMN. And there he pledges his future salary, like the next several months of his salary, to purchase for himself one of the company's sports cars that he then goes off and takes racing. So he didn't have to sell his house to finance this dream, but he did pledge his future salary. Now, this is an important point to land here. With very few exceptions, one of which we'll talk about in just a minute, motor racing at this point in time was a private individual sport. Drivers generally bought and raced their own cars either because they were independently wealthy and successful and could afford their own staffs and mechanics to maintain these cars. These were folks known as gentleman racers.
That's right. I've heard that term.
Yes. And this is the group of people that ultimately once Ferrari gets founded become Enzo's core client base. Or the other group of drivers at this time are like Enzo. They're these kind of like hustlers and dreamers who manage to glom on somewhere in the car industry and leverage that into entering races. But basically motorsport was this like passionate sort of privateer pursuit, not organized professional racers on highly paid teams.
Yes. So Enzo enters into this world and he does pretty well. Well enough not only to send some prize money back home to mom but also to attract the attention of Alfa Romeo, which is Italy's other large car company at the time, although much, much smaller than Fiat. And Alfa has one of Italy and Europe's few, if not only, in-house racing teams. So even though most racing that's happening is privateers, Alfa has their own racing team, which is pretty unique for Europe at the time. So they scoop up this young hotshot talented driver Enzo to come and race for them. And this is a huge coup for Enzo. Like basically his whole dream as a teenager is coming true. He's racing. He's making money from prizes. He's part of this Alfa Romeo team that's going to support him, provide him great vehicles to race and also mechanics and everything he needs. So he hatches a plan that he's going to cash in on this newfound fame and notoriety by starting his own business. He's going to be an entrepreneur just like his dad. So at age 22 in 1920, Enzo starts his first company, a coach building business in Modena called Carrozzeria Amelia. Now what is a coach building business? This is another really important point to understand about the car business at this point in time. For most companies and especially car companies that were making sports cars, the actual bodies or the coaches were built and designed by third-party coach builders. The cars were just an engine and a chassis that the car maker would deliver. And then the clients would go to a coach maker like this one that Enzo is starting up and have them build the body to their taste and specifications that would go on top of, you know, the mechanics of the car.
Yeah. It reminds me of our Rolex episode where the movement makers were totally different than the case makers which were totally different than the jewelry stores that sold them. Not the sort of integrated way that we know it today of the movement maker is often the same as the case maker and then you often just sell sort of pseudo directly.
Yes, totally. In this case, it's actually a holdover from the horse-drawn carriage days where the coach builders built carriages but they obviously didn't supply the horses. So the same thing starts to emerge here in the early automobile industry. So Enzo's admittedly pretty half-baked plan here is that thanks to his sure to come, you know, new fame and fortune as an Alfa Romeo race car driver, customers, Alfa Romeo customers and customers of other car companies are going to come banging down his door to build their car bodies, to build their coaches. What the connection is between being a good race car driver and being a great coach builder, I'm not sure. And neither is the market because the business does not go well. It's a failure and within two years Enzo is bankrupt. Now perhaps relatedly, Enzo's sort of mettle as a professional race car driver also proves to be good, but he's not great. He has all the talent, all the skill, but he comes to realize he doesn't have the one final thing that separates the true motorsport champions from everyone else. He's too afraid to die. He can't push himself and the car to the point that's really, really, really on the edge.
The limit. Yes. Part of this, of course, is his sort of haunted past. You know, the deaths of his brother and father. Death has had this huge presence in his life, but also it's very much his presence. So once he joins the Alfa Romeo team, there's two sort of senior drivers on the team who really take him under their wing as mentors and they become friends and Enzo watches them both die during races at the wheel. The first of which Enzo was the first person to find him and he actually literally died in Enzo's arms. And so after all these experiences, Enzo just, he can't push himself to do the same thing over and over like they did.
And that is the sick reality of racing, at least in this point in history, is it is the people who are absolutely willing to go right up to that line and maybe cross it, often cross it. I mean, it kind of depends where you put the line. Those who win are the ones who are absolutely willing to die. I mean, in our Formula 1 episode, we talked about through the 70s, right? There was an average of more than one death a year in Formula 1 out of a field of only like 20 drivers. So yeah, that's the reality for a very long time in this business. And paradoxically, that's also part of the appeal. So in 1924, Enzo makes the decision to quit racing, cast off the coach building business, and instead open an Alfa Romeo dealership in Modena.
Yeah. He's now married. He wants to have a family. His son, naturally named Dino, would be born a few years later. Dino after his father and brother. Basically, he's going down the time-honored path of retired ex-athlete with some degree of notoriety opens local car dealership.
Pioneering. Now, toward the end of his racing career, Enzo had also gotten more involved in the actual management of the team and gotten to know some of the managers of Alfa Romeo, the company itself. So, he still has these close connections to the company which are certainly going to help him in becoming a dealer. And then the very next year, the Alfa Romeo board of directors makes the inexplicable decision to drastically cut back on their racing activities, and they're going to keep the company team, but only going to enter a few races, and the budget is going to be cut. And so, Enzo's like, "Whoa, whoa, whoa, whoa, whoa, whoa, whoa. Hang on a sec here. I need the publicity from the Alfa Romeo racing team. That's my only like connection to fame here and why people would come to my dealership and buy my cars. I kind of need to have Alfas racing on a regular basis." So he goes to Alfa Romeo headquarters in Milan with a proposal. "I understand that you want to cut the expense, you know, sort of day-to-day of running your own racing team. What if I take it over and all the races that you don't want to run, you bless me, your dealer, Enzo Ferrari, as the official racing agent of Alfa Romeo, and I'll put together my own private team. I'll hire the drivers. I'll hire the mechanics. I'll cover the costs," right? It's like a fully outsourced racing team that's just kind of a contract relationship. You don't have to have this on your books. This is sort of loose affiliation. And for Enzo, what better marketing activity could you imagine than to become the quasi-official racing agent sort of second team of Alfa Romeo?
And thus the first iteration of the Ferrari business is born, the Scuderia Ferrari, which is the name that he gives to his new racing team. Scuderia being stables in Italy. It's a stable of drivers and cars for Alfa Romeo. And the Ferrari racing team to this very day in Formula 1 and elsewhere is the Scuderia Ferrari. That is the SF that you see on the Ferrari Shield everywhere.
Yep. And for a team that would go on to adopt the prancing horse, I am loving the thick metaphor here with the stable and the...
Oh, Enzo, as we shall see, is a natural-born marketer. So, important to note a couple things here. The Scuderia Ferrari is very much intended to be a junior partner to Alfa Romeo, or at least Alfa intends it that way, but Enzo does in the back of his mind have broader ambitions. As we alluded to with the whole coach building thing, unless you're one of the few, you know, new at this point really mass assembly line consumer car companies like Fiat or like the Ford Motor Company over in America, the line and the barrier to entry between being a like garage who develops and maintains racing cars and graduating to making your own cars that you sell to the privateers who go racing is pretty thin and Enzo's always got this in the back of his mind and he's got some examples out there. So, there are other garages, for lack of a better word, out there in Italy at the time that have made the jump from developing race car versions of other cars made by other manufacturers to selling their own cars. The prime example being Maserati right there in Modena, right across town, the Maserati brothers.
In the video game world, this is modding. You're sort of taking someone's kind of basic game and souping it up into something really special for you that you're customizing.
Yep. So for Enzo in the back of his mind, he's like, "Okay, this is my opportunity to build my own team, hire my own engineers and mechanics, use hopefully my team's success combined with the Scuderia Ferrari brand that I'm building, maybe someday I too can launch my full-on car company like the Maserati brothers across town."
So as he gets going with this grandmaster plan and, you know, developing the Scuderia, he knows that he needs to build up more than just his own operations. He also does need to build a brand if he's going to sell his own cars someday. And specifically, he needs a logo, and he's got the perfect one. But before we tell the story of the legend of the Ferrari prancing horse, now is a great time to thank our presenting partner, JP Morgan Payments.
Yes. And one thing that kept coming up, listeners, in our research for Ferrari is just how global they have been from their early days. Of course headquartered in Italy but selling cars to the US and around the world as we will soon get to from those early days. And behind any company operating at that scale, there is a massive engine orchestrating money movement behind the scenes.
That's right. It's an enormous amount of complexity. Paying suppliers in one currency, collecting receivables in another, managing exchange risk, adding vendors and suppliers, and of course, staying compliant in all these regions. When you're really early stage, moving money across two or three currencies, you can manage it yourself. But going from 3 to 20 is like a completely different situation.
Yes. And the companies that get this right, that make those strategic investments in payments infrastructure early, those are the ones that scale. That's what JP Morgan Payments cross-currency solutions are built for. They send payments in 120 currencies. They receive payments in 40 across more than 200 countries and territories. That means that you get seamless integration through their APIs that plug directly into your existing Treasury workflow. And that gives you real-time visibility and control over your transactions. The whole goal is to make global money movement invisible. And because there's so much complexity required behind the scenes to make it feel invisible, the stability and scale of JP Morgan's global payments network plus local market infrastructure is really what makes it possible. It is one of those things where the scale is the product. If you do the math, there are tens of thousands of combinations of currencies that you may need to switch in between, not something you want to take on yourselves. So listeners, if your business is moving money across borders and you need cross-currency payment solutions that do the hard work for you, check out jpmorgan.com/acquired and just tell them that Ben and David sent you.
Okay, David. So where does the famous, infamous prancing horse for Scuderia Ferrari come from?
Yeah. How did all those Ferraris come to have a black prancing horse on them? And I gotta say, it is the strangest thing looking at some of these old pictures because the first thing that the prancing horse went on was these Alfa Romeo cars. And so there's these old pictures of an Alfa Romeo badged car in the fender sort of in front of the door there's a Scuderia Ferrari prancing horse.
Yes. It's bizarre to look at today.
Yeah. Listeners, we'll send that out in the email. So, back when Enzo was a promising young racing driver, one of his early fans and supporters was a noble Italian count and countess whose son Francesco Baracca had been Italy's number one ace fighter pilot during World War I, like World War I fighting. And Baracca had won 34 aerial victories before he was tragically, you know, killed in combat right before the end of the war. And on his airplane, he had painted as his symbol and a good luck charm the black prancing horse. Now, he's like a national hero. And everybody in Italy knows about Count Baracca and his exploits during World War I. And his parents are fans of Enzo. And so one night after the war, the countess tells Enzo, "Why don't you paint the black horse on your car? It will bring you luck." And to symbolize this gift, she gives Enzo a photo of her son in front of his plane before he was killed with the horse and with an inscription from her below it that Enzo should use this symbol.
That's an official endorsement right there.
Yeah, absolutely. Oh, absolutely. So, here we are now. Enzo is launching his Scuderia, his stables, you know, his horses, and he knows that this is the moment to put the gift to use as the Scuderia's logo. It's perfect, stable, horses. But it's more than that. This man had been a national hero. Everybody in Italy knows him and knows the symbol. And Enzo has had it bestowed upon him, not just with, you know, his mother's blessing, but with the explicit direction to put it on his race car. So Enzo takes the prancing horse. He places it within a yellow shield. Yellow being the city color of Modena with the three colors of the Italian flag above. This is just a genius marketing move. The prancing horse reflects both the Scuderia and links Enzo and the team to this national hero. The shield reflects his intention to do battle on the racetrack. And the Italian colors reflect the ultimate ambition to establish this team, this company and its future cars as the Italian national team and sports car company.
So in our research, I spoke to Luca Cordero di Montezemolo, the legendary Ferrari chairman who would ultimately succeed Enzo and really in many ways be his heir as we will tell in this story. Important to note, different Luca than the Luca who wrote the book, David, that most of this narrative is based on.
Yes. And I asked Montezemolo, you know, you knew Enzo probably as deeply and as well as just about anybody who's still alive today. And there's this kind of popular legend that Enzo was just a racer. He only wanted to race. He didn't really care about business or road cars. And all the road cars only existed to fund his racing activities.
Oh, this is the biggest thing about people today. When I say, "Oh, we're doing an episode on Ferrari." They say, "Oh my gosh, yeah, it's such a crazy story because, you know, Enzo really just wanted to race cars and he built this car company, but really that was just sort of to finance the racing and he doesn't even care about those road cars. He's not really a business guy. He just wants to make great cars with great engines and send them racing."
Completely false. Montezemolo confirmed when I asked him, Enzo was a natural-born entrepreneur and marketer. He really was Italy's Steve Jobs in every aspect. I mean, think about it. What was Steve Jobs? Steve Jobs was not an engineer. He was a marketer. The same as Enzo. Enzo is not an engineer. He's not a car mechanic. He can't build the cars himself. But they both had a sort of understanding and deep appreciation for the technical things that enabled their visions to be possible.
Yes. Enzo would say about himself when asked that, you know, he's not an engineer, he's not a car designer, he's no longer a driver, even though he runs this team, he is quote an agitator of men. And that perfectly described Enzo and I think, you know, perfectly describes Steve Jobs, too.
Yep. So if you think about it, what is Enzo doing here with the brand that he's building? There's the prancing horse and then what's the other famous, you know, visual symbol associated with Ferrari? The red, Ferrari red, Rosso Corsa that he adopts here. And sure, you know, Ferraris are red because red was the assigned national racing color of Italy. But come on, Enzo is the one who embraced it and imbued this Rosso Corsa with so much more than just the national racing color of Italy. It's not Alfa Romeo's colors. It's Ferrari's colors.
Right. When you draw a picture of a race car today, let's say you're 10 years old, you're coloring it red. And you're coloring it red because that is Ferrari red.
Yes. And what does red represent? It's passion. It's blood. It's desire. It's all of this that is all deeply wrapped up into a Ferrari. I mean, just look at Italy's other luxury supercar company today, Lamborghini. You know what their colors are? Not red. In fact, their color is every color but red because Ferrari has co-opted it.
So, back to the Scuderia. After a couple years, in 1933, the golden opportunity arrives for Enzo. Alfa Romeo finally decides that it is going to disband its official racing team entirely and designate Scuderia Ferrari as its official racing operation in all races all across the globe. So Enzo acquires quote unquote the entire Alfa operation, engineers, mechanics, everything. And his dream has come true. He is not only Alfa Romeo's official racing team, but by this point in time, Alfa had been nationalized by the fascist Italian state by Mussolini.
So he is Italy's official national racing team. There's just one problem, though, which is that Alfa got out of the racing business for a reason because Hitler is coming to power in Germany and one of Hitler's most, you know, kind of important national agenda items is making sure that his German auto industry is the best and that he proves it on the racetrack just like, you know, the Olympics. So throughout the rest of the 1930s, the German state is supporting Mercedes and Auto Union, which would go on to become Audi today, and their cars are just dominating European Grand Prix racing. So Enzo and Ferrari are like sent out there, you know, by Alfa and the Italians to compete, but it's a fool's errand. And so in 1938, Alfa and Mussolini kind of, you know, fed up with losing, they actually acquire the Scuderia Ferrari and remake it, you know, as part of Alfa Romeo into this official sort of government entity.
Huh. So they decide actually we do want to put resources behind this and now you're kind of the only game left in town since we shut down the other operations.
Yeah. I mean, at the end of the day, this is just rearranging deck chairs because the war is coming. So the very next year, Hitler invades Poland and World War II begins. Needless to say, European automobile racing is on hold indefinitely.
Yes. During this period, Enzo gets into a fight with Alfa Romeo management and manages to get himself fired.
Yeah. This is 1939. He cares about one thing and that's auto racing. It's just not the strategic priority for Alfa Romeo as a company or for the country. And so I think this friction kind of leads to it. The crazy thing is his separation agreement, I think he got paid to leave, but yes, you know, it's a firing, forbids him for four years from a building cars to race them and b using the name Ferrari associated with a racing team or a car builder. Like he lost the rights to his own name for four years.
Well, I mean, you know, he gave them up to the Italian government essentially.
Yep. So, speaking of which, during the war, Enzo creates a new company to feed the Italian war effort that he names Auto Avio Costruzioni. Auto and Aviation Construction, which is, but he sneaks that auto in there because...
Not really supposed to be building cars and racing them, but like I'm doing other stuff, too. Yeah.
It's not called Ferrari. It's not called Ferrari, but this same company is better known today as Ferrari Società per Azioni or Ferrari S.p.A., the Ferrari joint stock company that is publicly traded on the New York Stock Exchange under the ticker RACE.
Yes. Best stock ticker ever.
Best stock ticker ever indeed. So, what is this company doing? They're not making cars even though auto is in the name. They're making machine tools in the workshops and the essentially factory that Enzo has created there in Modena. And on each tool throughout the war effort that they make, Enzo has them stamp the prancing horse and the word Scuderia Ferrari Modena. Clearly signaling his intentions after the war of, you know, what he's going to do.
I bet those are some very valuable collector's items if you can find them.
So anyway, Enzo and his factory are pretty good at making these machine tools and they become part of the war effort. So as the war wears on and the allies, you know, push into Europe, Enzo and the government start to worry about them bombing the factory in Modena. So in 1943, he decides that he's going to move all of his operations out to a small little town in the countryside to avoid the bombing. He's going to go about 15 kilometers south of Modena to Maranello. And that's why Ferrari to this very day is in the small little, you know, hamlet of Maranello, not in the bigger city of Modena.
So even despite the move to Maranello, the factory does get bombed twice during the last days of the war. After the war, that leaves Enzo kind of at a crossroads. The factory is not quite in ruins, but it's been bombed.
Disarray. Disarray. Significant disarray.
Disarray. And he's just spent the last four or five years building machine tools and gotten pretty good at it.
Yep. And then Enzo gets a visit from an old racing pal. An Italian, but one who spent the war not in Europe, but in exile in America, Luigi Chinetti, the man who brings Ferrari to America. So Luigi and Enzo met way back when Enzo joined the Alfa Romeo racing team as a driver. And Luigi was a mechanic on the team who also then became a driver and he ends up in New York. And when the war is over, Luigi goes back to Italy to visit Enzo and he tells him about America. So this is a quote here from Brock Yates's biography of Enzo. Brock Yates was the longtime editor of Car and Driver magazine. Chinetti described the miracle that was America, the aggressiveness of its people, their childlike inquisitiveness, and their bourgeois curiosities. Yet there was a rich upper class whose tastes were European. He had seen them, met them, gained their trust as he kept their aging European automobiles operating through the war years. He knew they would pay a king's ransom for Enzo's elite machines. And he, Luigi Chinetti, meant to exploit that naive colonial lust.
What writing? What writing? Enzo agrees. Now, legends would say later, and Luigi, I think, would probably perpetuate this himself, that Luigi is the one who convinced Enzo to abandon the machine tools business and focus only on cars again after World War II. That's false. Enzo was planning to anyway. There's no way that he really was going to go into machine tools.
I mean, by 1943, his non-compete is up and he's allowed to use the name again. And so, you know, clock's ticking.
The clock's ticking. But it is true. Luigi definitely convinced Enzo about America and America was critical for Ferrari. And you know what wealthy Americans are extremely interested in when they're considering if they're going to buy an extremely expensive rare automobile? They love that cold shoulder of an artist creating the car mysteriously in some small town in Italy who's just interested in racing. He's not interested in mass market cars. You're just lucky to get one of these racing cars and he couldn't even care less about you.
And boy does Enzo know it.
Yeah. He totally leans into this. This is like part of the perpetrating of the myth. This is why everybody believes, oh, he wasn't really a businessman. He just wanted to race cars.
Yeah. I mean, oh, the whole persona of Enzo Ferrari, you know, the dark sunglasses.
Oh, yeah. What's the tidbit you got on the sunglasses?
It was an act. You know, he would wear the sunglasses in public and it, you know, press interviews and in meetings with clients or whomever and then everybody else would leave the room and he'd just take them off and put them on the table. He didn't wear sunglasses all the time, only when crafting his image. But, yeah, he leaned into it.
Yep. So, one way or another, machine tool business is out the window and Enzo is back in cars. 1947 is the first year that they get going with the newly renamed Auto Avio Costruzioni Ferrari now that he can use the Ferrari name. In 1947 they build three cars just for team racing just for the Scuderia in which during the year they enter 14 races and win seven of them. Pretty good 50% win rate for, you know, the newly rebuilt Scuderia Ferrari. They didn't sell any of those cars.
Yes. Enzo Ferrari to this point in history has not sold a car yet. How old is he, David?
He is in 1947, he's 49 years old.
I mean, this is like this great classic sort of founder myth of the young hotshot who starts this thing. Ferrari, yes, it's a racing team, but it is a car company who sells cars to consumers and by age 49 Enzo had never done that.
Yes. Now he has established the brand and the myth and put all the pieces in place to create Ferrari, but yes, he did not sell a single car to a customer until 1948 when they introduced the Ferrari 166 Barchetta at the Turin Motor Show. And Luca Dal Monte in his biography writes, "For Enzo Ferrari, the 166 MM Barchetta was a declaration of intent, a sports car with a sensual shape, as fast and powerful as it was beautiful and elegant. It was the foundation on which from that moment on he would build every road model. Cars capable of winning races on circuits and roads all over the world and at the same time being the protagonist of the most prestigious concours d'elegance in the four corners of the earth." What a great description of what a Ferrari is.
Absolutely. Enzo is really figuring out how to create desire here.
Yes. Yes. These machines are beautiful and they are deadly. That is the point. You can enter them in a race. You can be competitive. You might even win as we see in a second. And you can drive them around town and look beautiful and elegant when they work.
Yeah. The Ferraris in this era in history that we're talking about here, you know, the late 40s, 50s, 60s, these were not the most reliable machines, especially the road cars. I think you could also lump in the 70s and the 80s, large chunk of the 90s.
I mean, there's this fascinating thing about luxury that reliability is not actually a relevant part of the equation of how desirable, how much do I lust after this machine.
I think it's from the Luxury Strategy book, anti-law of marketing number something or other is ensure that your product has enough flaws.
Yes, boy do Ferraris have a lot of flaws.
Yep. So this first Ferrari, the 166 Barchetta, they produce about a dozen of them that year in 1948, both to race themselves with their own team drivers and also sell them to wealthy private clients. Two of the very first models are sold to American clients through Luigi Chinetti.
One to Tommy Lee who is a wealthy Cadillac dealer in Los Angeles and one to Briggs Cunningham who is one of the Procter and Gamble heirs.
You get a sense of like who are the customers in America, right? They're setting the precedent. Others are sold to various European racers and nobility, including Italy's own most celebrated industrialist, Giovanni Agnelli, the patriarch of the Agnelli family, which owns Fiat. Some might say the Henry Ford of Italy.
The founding family of Fiat. Yeah.
Not only the owners, but the founders. He was one of the first Ferrari customers.
He was indeed. He bought a 166 Barchetta. That's an amazing full circle.
We'll come back to that at the end of the story.
Oh yes, we will. So then the next year, Luigi Chinetti, he's a real believer in the potential of these machines that Enzo is building to make a lot of money and generate a lot of desire. So he takes one of the 166s and he enters it in the first running of the 24 Hours of Le Mans to be run after World War II, the first, you know, post-war running of Le Mans. And the car that he takes, Enzo doesn't think the 166 is ready for Le Mans. He doesn't want to enter. But Chinetti says, "No, no, I'm going to go do it." So he takes a privately owned car owned by the British nobleman and gentleman driver Lord Selsdon and they win, they win Le Mans.
Not endorsed by Ferrari the company, just a sort of gentleman driver.
It is the first major international race victory for a Ferrari car but it's not run by the Ferrari team. So this is a big deal. This is the first time it's being run after the war. And here's this startup Italian, I mean startup. Everybody knows the heritage of Enzo Ferrari and who he is. But here's a Ferrari winning. And it's like the perfect illustration of the business model and Enzo's entrepreneurial genius. You know, he's got the brand. It's the Ferrari that won, but it doesn't even have to be his own racing team, right? Oh, that's interesting. It creates just as much consumer desire for those cars, whether it's him entering the competition or not. All anybody knows and all anybody in America definitely knows is a Ferrari just won Le Mans. And man, I got to get my hands on one of those things.
And it really validates the engine. I mean, this is famously Enzo Ferrari's reputation is he was an engine guy. He's got a few sort of great quotes on this. His comment is, I sell engines and the car I throw in for free.
Yes. Such a great quote. Another great one, aerodynamics are for people who can't build engines.
That's like that what the AMD guy, real men build fabs.
Yes. Eventually Ferrari would become very much about aerodynamics in addition to engines.
Yes. Yes. But we know where Enzo's heart always was.
Yes. He also famously was a late adopter of new technology. This is very, very different today, but in the early days, I mean, we're going to talk about Formula 1 here shortly, but in those early days of F1, other teams figured out, hey, you should probably move the engine to be a mid-engine, sort of above the rear axle, not in the front of the car. And Enzo is very, yeah, like he's biding his time. He's like, wait and see. And he's got this idea that in a carriage, the horse pulls the carriage.
Yeah. God put the horse in front of the carriage, so the engine's going in front of the car. Yeah.
Surely the engine should be in the front. Yes. And it took years to adopt the sort of correct most balanced way to do it because he not only wanted to be a late adopter of technology to sort of let other people prove it out but also because he was in a position to do so as a very early sort of luxury pioneer here. He realized that it only helped build the Ferrari myth.
To talk about the old ways of doing things.
This is the point. It's all about the myth building. Enzo knew exactly what he was doing.
He even, there's funny entries in the historical record here where in the same month that Enzo is out there talking about how the engine belongs in the front of the car in Maranello, there are teams who are constructing next year's mid-engine car. So, say one thing, do the other.
Yes. Yes. Very Enzo. It's worth a moment here to talk about what actually is Ferrari at this point in time after Le Mans and when they're selling the 166 because it's pretty pioneering. It's three separate things all under the same roof. It's its own professional racing team. It is a world-class racing car...
Constructor that builds cars both for its own team and for private clients. And it's also all of the support infrastructure that you need to do both of those things. So it's not like Canadian Lord Seldon could just buy a 166 and drive it up to France and like enter Le Mans. You got to tune these things for the race that you're driving. And Ferrari is providing that for his own team and for his clients. This is pretty revolutionary. Nobody else had really created something like this before. You know, other car manufacturers, as we talked about with Alfa or Mercedes or even for a point in time even Fiat had their own racing teams, but they were separate operations. Like think about the Mercedes racing team today. You know, it is a completely separate operation.
Yes. Or most of the F1 operations today that carry the name of a constructor of a car brand, they're actually separate companies that happen to be owned by...
Yeah. Separate locations.
Yes. The whole thing. Like yes, there is some tech transfer, I'm sure, from the Mercedes F1 team to AMG performance cars, but like it's a tenuous connection.
Whereas in Maranello, they're sitting there on the same plot of land.
For many decades, the early history of Ferrari, it's the same people. Yeah.
Same people making the same cars under the same roof. Pinnacle of motorsports, road cars that you can buy, built and maintained and serviced by the very same people. That is an incredible proposition as a client. I mean, and if you think about it, it's really not that different from any other luxury company heritage out there like Thierry Hermès and his sons making saddles for the nobility and the new bourgeoisie on the boulevards in Paris and also making saddles for the jockeys jumping and racing on the weekends. They're the same people making the same saddles. Enzo and his team are the same people making the same cars. But I think you nailed this point that I think is a little bit lost today, which is even then in 1950-ish, you're not just going to go buy a Ferrari and then race it. This is a highly maintained, serviced thing that is not just like a product that you own. It is a bundle of product and services that get it ready for any given situation.
Yeah, we joked earlier about the, you know, you could drive these things on the street when they worked. That was part of the point. Like they were built to be racing machines, right? And a lot of clients didn't race them or, you know, if they did race them, race them not very well. But the point was you could. This was a weapon. This is not a mode of transportation. That's a trade-off clients were intentionally willing to make. This is not the most practical car. It's going to have all sorts of issues if I want to use it as my daily driver, but it's an amazing race machine. And because I race, or maybe not because I race, I want to own a race machine. And so I'm buying it, trade-offs and all.
Yes. Yes. So then in 1950, the pinnacle of motorsport arrives, the new Formula 1 World Championship Series, as we talked about at great length on our Formula 1 episode. And Ferrari, of course, would become one of the founding teams and the only F1 team continuously operating from the beginning of the sport all the way through to today. But of course, they are participating in the pinnacle of motorsport, as we've just been talking about, is integral to what Ferrari is. And if you buy a Ferrari as a client, what you are buying is a direct connection to that ongoing heritage in a way that you are not with any other auto manufacturer, at least not at this point in history in 1950. There have been many others who have tried that strategy since, obviously less successfully than Ferrari, and we'll talk about why, but yes, this is the Ferrari formula that they uniquely execute well on. Yep. So, as we continue the operatic life of Enzo Ferrari here, the re-entry into the racing business and the new pinnacle of motorsport in Formula 1 unfortunately comes with renewed tragedy. Enzo would hire the young Alberto Ascari, who is the son of one of his two mentors who died when Enzo was racing for Alfa Romeo. And Enzo would take Alberto under his wing, treat him almost like a surrogate son until in 1955, Alberto is killed practicing in a Ferrari at Monza at exactly the same age that his father died. And Enzo vows that he will never become emotionally close to a driver again. He's witnessed too many deaths in his life. But unfortunately, for Enzo, death during this time was only just beginning to re-enter his life and his company.
And the next death is really the one that kind of defines the rest of his life going forward.
Yes. But before we continue this beautiful tragedy of Enzo Ferrari and his company, now is a great time to tell you about one of our favorite companies, Vercel. Vercel is building the defining developer infrastructure platform for the agentic era. And importantly, just like Ferrari, the crucial part is that every part of the system is engineered to work together at the highest possible level. It's all about performance. And they're not just a deployment platform or just a framework builder or just an AI cloud anymore. They've become the agentic infrastructure company.
And that title actually carries real meaning. It's infrastructure built for agents where they are first-class users of the platform alongside human developers. It's also optimized for human developers who integrate agents into their workflows. And most importantly, it's infrastructure that acts with agency. So zero-config deploys, automatic scaling, self-optimizing performance. The platform handles itself. Self-driving infrastructure, as they like to call it.
Yes. Which makes sense when you look at what's already running on Vercel. OpenAI, Polymarket, Stripe. Vercel built the modern platform for the web, which puts them in a really strong position for the agentic web.
Yep. Their AI gateway, sandbox, and AI SDK are trusted by everyone from solo founders to the largest global enterprises. And they just shipped something really exciting, Chat SDK, which lets you build agents across Slack, Teams, Google Chat, Discord, and more. All from a single codebase. The AI SDK alone gets downloaded 10 million times a week, which is up from 7 million times a week when we recorded our last episode on F1 last month. Vercel really is the one-stop shop for everything you need to build in the agentic era. Tools, frameworks, infrastructure, the whole system engineered to work together. You can learn more at vercel.com/acquired. That's vercel.com/acquired. And just tell them that Ben and David sent you.
All right. So, here in the 1950s, the truly, truly beautiful and truly, truly tragic opera of Enzo and Ferrari continues. First, let's talk about the beauty. The Ferrari 250 series, which for some of you means a lot. For the rest of you, we're talking about the Ferris Bueller car. Undeniably one of the most beautiful automobiles ever manufactured. But David, did you know it is the Ferris Bueller car, but the car you see on screen is actually not a Ferrari?
Yes, it's a replica. And Ferrari sued the replica maker after the movie. Right.
That's right. Believe it or not, it is essentially a retrofitted Ford.
Yes. Deeply ironic given what we are going to talk about in a minute here.
And then there's a second version of it that I think is even a less real drivable car that they used when it slid out the glass and fell down and smashed on the ground. So, they did not wreck a real Ferrari. In fact, there is not even a real Ferrari in camera in that entire movie. Or at least in that shot.
Yes, you don't need to worry. No 250s were actually harmed in the making of Ferris Bueller's Day Off.
Yep. So, as we talked about, the first Ferrari that Enzo sold to clients was the 166, but less than a hundred of them were ever made, which must mean that there was demand for 101 because there's the famous Enzo Ferrari quote that is the business strategy today. Ferrari will always deliver one car less than the market demand.
I think that actually might be the strategy today. Back then with the 166 there was demand for a lot more than 101. That's true. But they could only make a 100.
So in 1952, Ferrari comes out with the 250 series and this is the first real production Ferrari and over the next set of years throughout the 50s Ferrari manufactures a few thousand of them. So, you know, still a very, very boutique, you know, essentially handmade sports car manufacturer, but a lot more scale than the hundred or so.
Yeah. Real production volumes.
Yeah. And as we were alluding to earlier, this car is just stunning. No matter which variant of it you're looking at, the one in Ferris Bueller's Day Off is a 250 GT California. It is truly, truly beautiful. And it was designed not by Enzo Ferrari or even anybody who worked at Ferrari. It was designed by Battista Pinin Farina, his nickname, Farina, and his Pininfarina coachbuilders. So remember earlier when we talked about Enzo's first business venture was he was going to be a coachbuilder. Turns out that was not his calling in life, but that was the calling in life for Pininfarina. He was basically the Michelangelo of car body coachbuilders and Enzo totally realized it, totally glommed onto it and built this beautiful partnership with Pininfarina. First Battista himself and then his son Sergio and then multiple generations that lasted 61 years. This was a multi-generational partnership that lasts all the way up until 2013.
The LaFerrari, the LaFerrari halo car was the first fully in-house designed Ferrari. And during those 61 years, I believe every single roadgoing production Ferrari except for one, I think, was designed by Pininfarina.
It really is. So, Luca Dal Monte in his book writes, 'Enzo was looking for someone who could complement the mechanics of his cars with their body designs. Body and engine, elegance and power had to go hand in hand and had to be born and grow together.' He said that he was not looking for a tailor, but for a coachbuilder who worked at his side and conveyed in the shape of the body the power and philosophy of his cars. The coachbuilder, he said, must be involved from the beginning of the project, not merely called upon to dress a finished project. It really was a partnership between Enzo and Pininfarina.
As much as Enzo would kind of make noise about, oh, I just make engines and then, you know, we slap some aluminum on. I don't really care what the aluminum is. Uh, no. These things were thoughtfully designed and built hand in hand.
Yeah. Pininfarina was like the Jony Ive to the Enzo Steve Jobs.
That's a great analogy. That in fact Jony Ive is going to come back into the story later as we shall see.
It's probably also worth a quick moment here to talk about the sort of Italian nature of beauty and luxury versus the French nature of beauty and luxury that we've covered on Hermès or LVMH. In both cases, French luxury and Italian luxury, what you are buying when you are buying one of these products is a mixture of craftsmanship and a dream that it represents. But the sort of nature of those two ingredients are different between French and Italian luxury. The primary ingredient in French luxury is the dream and specifically the dreamlike connection to French royalty in this like mostly imagined past that you know if you buy a Birkin bag or if you buy a Louis Vuitton trunk you too can be like the bygone French royalty of the nobility. Yeah. Exactly. Exactly. You can live that dream. You can live that life. And the beauty that's associated with that is, you know, very regal, very soft, very refined, very elegant and quiet. It's not yelling at you. There's no engines involved. There are no engines involved. That is for sure. There are French car makers, but we're not going to make any episodes about them, shall we say. Italy, though, doesn't have the same kind of history as France. I mean, it's got like the Roman history and all that ancient history, but it doesn't have the same royal lineage and history. So, with Italian luxury, the primary ingredient is the craftsmanship, and that's embodied in the design and the passion. The myth, the dream that you're buying is about reinforcing that passion, that emotion that went into the product. And the best way I can think of to illustrate this is just the centrality of the designers. Like, who are the designers at Hermès? If you really know the house, if you really know Hermès, you probably know who the designers are. But for most Hermès clients, it's just like, oh, this is Hermès. Yeah. In Italy, it's totally different. You could have Gucci, but it's like, well, which Gucci is that? Is that Tom Ford Gucci or is that Gucci in the wilderness Gucci or name your other designer like Giorgio Armani or Donatella Versace or Valentino or Brunello Cucinelli today? Like the actual people and the designers and their passion and their personality is much more central than in French luxury.
That's interesting. I'm not sure I totally agree with the distinction, but a thing that I will say is you go to Paris to absorb the history and look at the fine museums and you go to Italy to feel something, to let loose, to live your life in the fullest, to let your hair down. I mean, it's a whole different side of life they are asking you to embrace when you are doing something distinctively Italian.
Yes, it is a very different kind of thing. And in this era, right after World War II, the greatest designers and the greatest innovators in Italy were the car designers. And these are death machines. Totally. You're on the edge. You're living every ounce of life that you possibly could to the fullest. These are death machines and they are being designed by the era and the country's most esteemed designers.
Yes. Yes. They are beautiful death machines, beckoning to risk it all.
That is exactly on point. And thus comes the yang to the yin of beauty, which is this tragedy and death that is such a part of Ferrari and motorsport. So we talked about in 1955, Alberto Ascari, the sort of, you know, surrogate son if you will to Enzo, is killed at Monza. The very next year in 1956, Enzo's own son, Dino, who he's been grooming to take over the business, continue the family lineage, his heir, his actual heir, dies at age 24 of muscular dystrophy. So, not in a race car, but a horrible tragic disease.
I mean, and that's even more tragic.
Yeah, it's more romantic if he had died in a race car. And Enzo has spent 24 years since Dino's birth keeping him safe. I mean, doing everything that he can control in his worldly power to not be around race cars.
Yes. Yes. It's such a great point.
I mean, he's not racing them. He's trying not to have Dino race them. He's not meeting the drivers anymore. He's trying not to get too wrapped up in the lives of the drivers. And yet, his son is still taken from him in this horrible illness that he cannot control and is pure randomness and awfulness.
Such a great point and it is truly shattering for Enzo. This is the shattering event among many shattering events in his life because it's of course the grief for his lost son, but it's also the grief for his empire. Like it is gone. He has no heir anymore. The line won't continue. So after Dino's death, Enzo stops going to races. It's sort of like a self-inflicted punishment that you know if Dino can't be here with me to go to the races then I will no longer travel to and go to the races to my great terrible joys and it is both the end of his family line or so he believes at this point in history but also it's the end of sort of the inherited company that this is an old school era of capitalism where the company would be passed down through the male heir in the family. I mean, today Ferrari is a publicly traded company with multiple families and owners and parent companies and holding companies involved. Enzo's assumption here is that none of that is going to happen in the far future. It is that Dino, my son, will own it and his descendants will own it. Well, if you know anything about the shareholding structure of Ferrari today or its board of directors, you might say, 'Wait a minute. There sure is a Ferrari who owns it.'
Yeah. Isn't there a current member of the Ferrari board of directors named Piero Ferrari who owns 10% of the company and is also the biological son of Enzo who very much would have been alive at this time.
So Enzo had an affair. Enzo had many affairs, but one of his affairs with a woman named Lina Lardi produced a son, Piero. And the just devastatingly cruel reality of Italy in that time and place is that illegitimate children by law did not exist. They were invisible. Piero was invisible at this point in time. So Enzo knows he has this other son who he loves but who will never inherit his empire.
And when you say invisible, he certainly isn't a Ferrari. He's not taking that surname. Divorce was illegal at this point.
Yes. Divorce was not legal in Italy until the 1970s.
So in the eyes of the law, like not an heir.
Not capable of being an heir.
A tragedy is the only word that I can think of to describe it. So that was 1956. And then in 1957 at the Mille Miglia race in Italy, which this race, this is this amazing, legendary race through Italy that ran a thousand miles and it runs from 1927 to 1957. It is beautiful and bloody. There is at least one death in every single year except 1927 and a small span 1931 to 1934 and another two-year span of 36 to 37. But basically, this was this race that everyone came out for and watched death.
Yeah. And Enzo has a quote on this. He loved the Mille Miglia. He said, 'It is the race of the people. One may say that the whole of Italy leans forward with her eyes on the tarred strip of roads somewhere along the course on Mille Miglia Day. It is a day when I feel that my life is useful.'
Wow. I didn't realize that this 1957 race is the last one.
It ends with this. Wow. So at this race in 1957, again two years after the F1 crash that killed his driver protege, one year after the death of Dino, a Ferrari flies off the road and into the crowd, killing the driver and nine spectators, including five children. And after the race, Enzo is charged by the Italian authorities with manslaughter.
I don't believe he was at the race. No, but he's the owner of the company that made the car and there's a high death count, right?
Well, it's not just that he's the owner, it's that he is the architect of this slaughter basically, which is exactly what the Catholic Church charges him with. So, not only is the Italian state, the police, you know, charging him with manslaughter, the church, the pope comes after him. So, the Vatican's official newspaper runs a story after the race with the headline of Industrial Saturn. Saturn, of course, being the Roman god who devoured his own children. And it calls Enzo, quote, a modern Saturn become industrial tycoon. He continues to devour his sons as in the myth. So unfortunately in reality ultimately Enzo is acquitted after long process in the legal case and he reaches a compromise with the Vatican that he can continue racing and Ferrari can continue to sort of exist as this sort of national champion within Italy.
Oh is this as long as they're not Italian drivers?
As long as he agrees to never hire Italian drivers? You know, basically like you can kill young men as long as you don't kill our young men.
Oh man. But all of this, this whole era, this just weighs incredibly, incredibly heavily on Enzo. And you might be wondering like why do the drivers, why are they okay with the death? Why is Enzo okay with the death? Enzo viewed this as a fundamental human expression of striving. His comment is that one drives at high speeds in order to transcend oneself.
And many of the drivers would sort of echo this same thing. Ken Miles, who is a very famous race car driver, actually on the Ford and Shelby, the US side that we'll talk about here shortly, his quote on this is, 'I'd rather die in a racing car than get eaten up by cancer.' And it's this idea that look, we're going to die, but I get to feel like I live the most life by putting my life at risk and living right on the limit.
I mean, it's kind of actually like a way of fighting back against death. Yes, these cars are weapons to fight against death. You can come right up and you can like stare death in the face and you can hopefully say not today or not. So again, paradoxically, all of this tragedy is just great for business. This is part of the attraction. It only makes Enzo and his Ferraris more globally known, more romantic, more coveted. It's like for Porsche, when James Dean died in the Porsche 550 Spider, or in the modern era when Paul Walker died in the Carrera GT, that made those cars legendary. That made people want them. Yep.
And here is Ferrari. It's even more. His cars are being labeled by the Pope as forbidden fruit. If you're a young man or if you're a more accurately a middle-aged man having a crisis, like you know what more could you desire?
And yeah, if the Pope says you just can't do this one thing, what's the one thing you're going to be interested in doing? It's like it's like a toddler. No, you as long as you don't have candy, we can do anything you want.
Exactly. So throughout the late 50s, sales of Ferrari 250s are just ramping. You know, they are flying out of showrooms across the world and particularly in America. By 1960, production reaches 300 cars a year. You know, they're making more or less 250 every working day. And by 1962, it's 500 cars a year. And I believe at this point distribution is sort of roughly divided a third, a third, a third between local Italian clients, American clients and then the rest of Europe and production just keeps growing by call it 50 to 100 cars a year throughout the early 60s and there is plenty of demand. By 1963 though Enzo is now getting older. He turns 65. He's had all this death. He publishes his memoirs, which you know, as we said before, are aptly titled My Terrible Joys. His plan by this point is that he'd be getting ready to hand the company to Dino, but Dino is dead. At a press conference that's held, one of the journalists asks Enzo, you know, you're older now. What will happen to Ferrari when you're gone? And he replies with the famous quote from King Louis XV in France. 'Après moi, le déluge.' You know, the French Revolution, it's all coming after me. It's all gonna end with me. And of course, Piero at this point is already working in Ferrari. He's an employee at Ferrari, but it's a secret that he's Enzo's son, and he knows he can never inherit.
I didn't realize it was still a secret.
Yeah. I mean, people within the company know, but it's like you don't talk about, hey, Piero is actually Enzo's son. So the question that the journalist asked remains though, what's going to become of the company, right? Well, enter the Ford Motor Company and Ford versus Ferrari.
Yes. So listeners, most of this is from the book Go Like Hell, which is the book that Ford versus Ferrari is based on, the movie. Yep. So in 1963, Henry Ford II, which notably this is the grandson of Henry Ford I, there was Henry Ford, then Edsel, then Henry Ford II, and he's looking to make his mark. I mean, he at this point it's third generation ownership. Ford is this great American company. There's a lot of people that are sort of throwing barbs saying, well, I mean, this is your grandfather and then that was your father, but like how much of this is really you? That's starting to kind of weigh on him. He decides that Ford needs to be in the racing business to change their image and stimulate sales for the new generation. Now, over in the racing land of Ferrari, they're on a hot streak. We've been talking about their production at this point in time, but they had just won Le Mans in 1958 and then all in a row 1960, 61, 62, 63, 64, 65. So if you are interested in entering racing, either you gotta beat Ferrari or you gotta own Ferrari.
So the Deuce, as Henry Ford II was known,
What a great racing moniker. The Deuce.
Right. Right. Oh, and Enzo's got some great ones, too.
Yeah. I mean, ultimately in his older age, he becomes the grand old man. But what was he before that?
Il Commendatore and the Drake.
He's got some great ones. So, the Deuce over in America gets word, weirdly through their German subsidiary that a mysterious letter has arrived from the German consulate in Milan that an internationally known Italian automobile factory was interested in selling.
So, already you should kind of all right, there's something going on here.
Be a little suspicious of how this information comes to Ford. But Ford is not. Ford just goes, 'Oh, this is interesting. Let's try and figure out who's thinking about selling.' Well, it doesn't take him long to figure out that it is Ferrari.
Yes. They begin sort of a process to try to buy it. And Ford at this point has basically no racing capability of its own. This is an entirely new muscle for them. So, they make an offer to buy Ferrari. The asking price was originally $18 million, but somehow Ford manages to easily negotiate it down to 10 million. So again, a little mysterious, a little suspicious. Like maybe that was a little bit too easy. The agreement that is drafted and hits Enzo's desk, I mean, think about what could have been. This is the craziest pitch. There are two companies that are formed. One is called Ford Ferrari. It is 90% owned by Ford and it would make road cars. There's a second called Ferrari Ford that's 90% owned by Ferrari. That's the racing team.
So, this document is on Enzo's desk. He digs into it and he's looking through the fine print and he kind of realizes if I want to go racing and Ford does not want to go racing, who decides? And of course, Ford says, 'Well, we're buying your company. We have the final say.'
Ultimately, I control the budget, right?
So, Enzo, of course, hates this. And in dramatic fashion, he blows up the deal right at the finish line. All while the papers had been reporting, you know, the information leaked that the Americans were about to buy this Italian national treasure. Makes big headlines. When the deal blows up, you can imagine why this is in Ferrari's public relations interest based on everything that we've been describing about their business strategy. Of course, then Henry Ford II is absolutely incensed and he has this great quote. In May of 1963, he goes to his lieutenants and he says, 'We will go to Le Mans and beat his ass. We're going to race him.'
And Enzo's probably like picking dumb Americans the whole time.
Yes. There's this great quote in the Brock Yates book about Enzo and his opinion of the Americans which is something like he realized the fundamental truth to selling European luxury goods to Americans. Treat an American like a hick and you'll own him for life.
Yeah, that hurts. So the whole Ford versus Ferrari movie is what happens next. And it's a great movie with Christian Bale and Matt Damon. And while it's of course dramatized, the bones of the story are actually pretty factually correct. So I highly recommend it. So what happens is Ford, who at this point says, 'We got unlimited budget. We just got to go beat these guys.' Enlist the help of Carroll Shelby and the driver Ken Miles and sort of a real crack team of American mechanics and racers. They actually do after a few years beat the Ferraris in the 1966 Le Mans race finishing with Fords in first, second, and third. It's this incredible story, but ultimately this is a complete sideshow.
Yeah. What's really going on? What are Enzo's true intentions here? So, this is done, of course, to market the exclusivity of Ferrari and how they're the mark to beat and it's a great tactic to sell cars, but it's also to signal that Enzo is willing to do a deal.
He is willing to sell the company. That's why he wanted all the papers writing about the fact that he was, but it had to be on his terms with the right partner and he had to be able to go racing.
Yep. It's kind of like Enzo and Ferrari got a dual benefit out of this whole saga. One, as you said, like this is only great for the myth and the legend of Ferrari of like, oh, we were going to sell to these big ugly Americans but they wanted to take our racing from it and we said no, you'll have to kill us in order to take him.
Exactly. And it is this Italian national treasure. I mean, that's real. That is the cultural export of Italy.
Yep. And it was a way to signal to the market like, hey, I might be open to a deal.
Yes. So any last little misconceptions you have about Enzo Ferrari not being an excellent business person and negotiator that should be completely dispelled at this point. So David, what happens next? So all the Ford versus Ferrari drama was going down between the years of 1963 and call it 1966-67.
Yep. Through all this, Enzo is doing great. He's in his late 60s at this point, but he's loving life. As much as Enzo is capable of loving life, he's healthy. He's reinvigorated by this battle. Everything's going great. And then after all the Ford drama in 1968, Enzo contracts kidney disease and it's pretty bad. Like he thinks this is probably actually going to be the end.
And statistically, he was right.
Yeah. And it gets so bad, as we'll see in a moment, that shortly after this in 1970, he goes into organ failure and has to be hospitalized for months. Like he really should have died at this point in time. But as always, for Enzo, fate has other plans. So once he comes down with the disease, he gets serious about actually selling the company. And he sniffs around. He talks to his old buddies at Alfa Romeo. And they sort of work on a deal, not to Enzo's liking. Really, at the end of the day though, there's only one correct buyer for Ferrari, and it's Gianni Agnelli and the Fiat Empire. So in 1969, Enzo strikes a deal with Gianni to sell 50% of Ferrari to Fiat immediately there in 1969 with a secret agreement that triggered upon Enzo's death, which again he thinks is imminent, Fiat will acquire another 40%, taking their stake to 90%, and 10% of the company will transfer to Piero. Once Enzo dies, his plan is to as much as he can legitimize Piero, give him the Ferrari name and give him a 10% stake in the company so that the bloodline to some extent as much as it possibly can in that time and place will continue. And part of the deal with Fiat, just like he wanted with Ford, is that Fiat, you can take control of the road car business, but I'm going to retain final authority over racing. You know, I know that my end is near and I want to spend my last days on this earth doing what I love, which is running the racing team. The incredible irony was the end was nowhere near.
Nowhere near. And actually the world would change enough between this moment and when he would eventually pass that Piero is able to take over as Piero Ferrari, son of Enzo.
So how many years was it between 1969 is when the 50% sale to Fiat. He doesn't pass away until he lives another 20 years. Yeah. 19 years.
1988. Like he lives until I was born. Yes. Is where's the sort of the end of his life. Well, he lives to launch the F40, which is the last car that Enzo launches.
So, there are two really interesting things about this deal. One, Enzo started his career by applying for a job at Fiat and was turned down.
So, that's a total full circle moment there. The other full circle moment is that Gianni Agnelli was one of the very first Ferrari customers of their road cars. It's amazing. And when you look at the actual deal, this blew my mind, David, if you do the Lira to US dollar exchange rate in 1969, they ended up selling half the company for a little under $3.5 million, valuing all of Ferrari at 6.8 million.
Enzo really wanted to do this deal. I think he determined at this point in history. I've not seen this written anywhere, but I'm reading into this, you know, even Ford thought it was worth somewhere between 10 and 18 million earlier in the decade. Enzo basically had one bidder and he thought, I have no exit path other than this. This needs to land with Fiat and whatever the price is, it is. And so I think Fiat basically got a steal on this because it needed to stay in Italy and it needed to go to a strong thriving car company and family in the Agnellis. Yes.
Interesting. Well, all of this just underscores the most critical point here. I think this is probably the moment in history where the false legend that Enzo only cared about racing and wasn't a real entrepreneur emerges from. Because if you look at the fact pattern, it makes sense here. Like he wanted to spend his last days racing. He did this not great deal with Fiat. The only reason this happened is because he truly thought he was about to die. Yeah.
And he really did just want to spend his last days on Earth running the racing team and he wanted to ensure continuity for the company and a role for his son Piero going forward. That's what happened here. The state of Ferrari is kind of grim at this point too. The factory needed investment. The racing program was unbelievably expensive. They're starting to face very real competition from Lamborghini. They were founded in 1963 specifically to challenge Ferrari, at least Lamborghini Motors, which we'll come back to. And there was manufacturing headaches happening because of Italian labor unrest. And so asking someone to take on Ferrari's operations was a tall order in addition to needing to sell.
Yes. I'm glad you brought up Lamborghini. Lamborghini had just launched the Miura, the Lamborghini Miura at this point in time, which was a truly excellent car. Yeah, like a better Ferrari than a Ferrari at the time. So there was real headwinds in the business. And this is really why Fiat and Gianni Agnelli had to be the buyer to store Ferrari through this period. Now, as we said earlier, fate had plans other than death for Enzo. Right after the sale in 1970, Enzo does go into organ failure and is hospitalized. He's away from the business for many months, which really makes it incredibly fortuitous that he had already done the deal with Fiat. So, there was management to keep the company running while Enzo is away. Miraculously though, he recovers. And in the spring of 1971, Enzo, the grand old man, is back in Maranello at the head of Ferrari, but it's a Ferrari that he barely recognizes from when he left. Fiat has come in. And this is where he intersects with another young man who would go on to carry the legacy and the spirit of Ferrari for really the next 40 years and into the next generation and build Ferrari what it is today.
With a little break in between. Luca di Montezemolo. But before we tell Luca's story, now is a great time to thank our longtime friend of the show, ServiceNow.
Yes, a year ago, nobody was talking about AI agents. And now, if you are a large enterprise, you probably have AI everywhere. Co-pilots and models and agents all spread across every team, which sounds great until you realize none of it is really connected.
Exactly. This actually reminds me of Ferrari on race day. It's not just about having the fastest car. It's about coordinating thousands of signals across tires and fuel and brakes and more, all in real time to make the right decision. That is where companies are with AI right now. Tons of intelligence, but not a lot of control. And that's the shift. Intelligence is becoming a commodity. The hard part now is making all of that AI actually work together inside a real organization securely, reliably, and in sync. That's what ServiceNow has been building for over 20 years. Today, they run the workflows behind more than 85% of the Fortune 500, which amounts to over 80 billion workflows a year. So, in a very real way, a big part of the world already works with ServiceNow. And with their AI control tower, they're giving companies a single place to manage all of it. Not just agents, but every AI system across the business.
Yes. So, listeners, it's not just about AI that thinks. It's about AI that actually works. If you're thinking about how AI really operates at scale, go check out servicenow.com/acquired and just tell them that Ben and David sent you. Okay. So, David, Luca di Montezemolo, at least the first act of Luca. Anyway,
Of Luca's story. Yes. So in 1971 when Enzo gets back to the office in Maranello after his hospitalization, he tunes in to a fateful talk radio show where he discovers a young man who will bring a breath of fresh air into his life. Luca. So di Montezemolo to many of you listening is already a living legend. I mean, as much as anyone in Ferrari history besides Enzo, Luca di Montezemolo is Ferrari. And as I mentioned, I was very lucky to get to speak with him for a few hours in research for this episode. And I also got to watch this great movie about him that has just been made. It's called Seeing Red. It's with Chris Harris, the Top Gear presenter.
Yeah. How did you get that? Because that's not out yet.
Yeah, it's not distributed outside of Italy yet, but I got a link to watch it. It's directed and produced by Manish Pandey who wrote and produced Senna, the Senna movie. It's really, really excellent when it's available in whatever geography you live in. Very, very, very much worth watching. So Luca was born in 1947, the same year that the modern Ferrari commenced operations. Very poetic in Bologna in Italy. But he moved to Rome as a child where his best friend growing up is Cristiano Ratti who is the son of Susanna Agnelli, Gianni Agnelli's sister. So Luca grows up almost like a member of the Agnelli family. His best friend is, you know, one of the Agnelli heirs and Luca comes to develop a close relationship with Gianni and he would say Gianni was like a combination of an older brother and a father for me. So in 1970, young Luca moves to New York City to go off to study international law at Columbia Law School. Around the same time though, he's also pursuing another career as a rally car driver.
Really? Like a rally car driver? Right. Yes. Yes. I don't think I've ever seen a Ferrari rally car.
I don't think these two things have ever intersected. These universes are about as far apart as you could possibly get.
But this is how Luca starts in motorsport. And so that one fateful day in 1971, Luca, the rally car driver, is a guest on this popular call-in talk radio show and an audience member calls in to basically accost Luca and chastise and criticize the entire motorsport industry. Kind of much like the Pope in 1957 starts just laying into Luca this caller talking about how motor racing is evil, it's dangerous, it's bad for the environment, like this is a sport just for rich people. It has no value in society. And Luca in passion rises to the occasion and he gives this passionate defense of motor racing. He speaks eloquently, poetically. He shuts down this caller and really gives this incredible response. And who happens to be listening to the program but Enzo Ferrari.
You just can't make this stuff up. You really cannot make this up.
And he's kind of this perfect person because if Enzo is going to take a liking to him here, I don't know what you're about to say, but if he's kind of Enzo's guy, but he's also a pseudo family member of the Agnelli family. It's kind of this perfect candidate pool of one.
Yes. So Enzo calls up the radio station and he's like, I got to know who this kid is. I want to get in touch with him. Who is this rally car driver? And literally the quote, Luca told me that this is what Enzo told the radio station. Enzo said, 'This boy has big balls. I want to talk to him.' Wow. So Luca and Enzo meet and Enzo says to him, 'I like you. You know, you've got big balls. I've been away from my business for too long and I need some help. What I really need, I need an assistant, but I need a spy who can go throughout the organization and report back to me what is actually going on in my company.'
You don't have to ask Luca twice here. He takes the opportunity and goes to work for Enzo as his assistant here in the early '70s. Now, of course, at some point along the way here, Enzo also learns of Luca's connection to the Agnelli family, which only makes him even more attractive. He's like, 'Oh, now I can have a spy at Fiat in the Agnelli family, too.' So, great.
Right. So, the first thing that Enzo assigns him to do is go figure out what's going on with sales of the road car business. Like, go spend some time with the distribution network. Understand who the clients are. Understand who the collectors are, who are the dealers. So, Luca does. He comes back, he reports, it's not good. As you were alluding to, Ben, this is a pretty tough time for Ferrari here in the 70s. The oil crisis is underway. Any car with an engine size over 2 L was taxed at an incremental 40% in Italy and throughout much of Europe. The whole sports car industry is basically in the dumps. So Luca reports all this back to Enzo and Enzo's like, 'Okay, great. You passed your first test. Things aren't good on the road car side of the business, but like at the end of the day, that's Fiat's problem now.' Okay, my real assignment for you. I want you to go to the next Formula 1 race. Just go just observe. Just tell me what you think is going on with the team. Yep. Now, at this point here in like 1973-74, things are really bad for the Ferrari F1 team. They haven't won a drivers or constructor's championship for 10 years. A historic drought for Ferrari. So, Luca goes, he observes a race and he calls Enzo up and he says, 'Hey, look, I advise that we just take the cars home and we don't race them. We have no chance of winning.' And Enzo's like, 'Okay, okay. Well, we're not going to take them home, but we need to get competitive again. What are we going to do?' And Luca's like, the issue is that the sport has changed. This isn't just an engine sport anymore or power.
We're now in the era of Colin Chapman and Lotus and aerodynamics.
Aerodynamics and the chassis is way more important. And the Ferrari team is stuck focused 100% on the engine. Like, we have no chance of winning. So Enzo says, 'Okay, here's what I'm going to do. I'm going to make you, Luca, the team manager of the Ferrari Formula 1 team, and your mandate is to fix this. I can't fix. I'm Enzo. I'm like the engine guy. You go in, you can be the new blood. You can fix this.'
And this is amazing because this is quite the quick promotion for Luca. I mean, it's like a guy he found that he brought in to be his assistant. I mean, he was much more than an assistant, but that was his title.
Yeah. He's not even 30 years old yet.
Then suddenly, you're managing the Formula 1 team, which historically is the driver that creates all the lust that sells the cars. Like, this needs to start working.
Yes. Oh, Luca has this great, great quote on the nature of the connection between Ferrari's performance on the track and the business selling road cars. He says there is not a direct correlation between Ferrari victories on the track and the number of cars that you can sell. But if for many years you do not win, it means that you do not add wood to the fire of the myth. The myth of Ferrari is based on competition on cars. In the competition, you can win or you can lose, but you cannot only lose. It's so perfect.
It is perfect. So Luca comes in as team manager and he revamps the team. He brings in great chassis folks. He brings in great aerodynamic folks. And the most important thing, he goes out and recruits Niki Lauda to come in as their driver.
Number one driver. And in 1975, with the new team, the new approach, Luca's manager, Niki Lauda, wins the drivers' championship for Ferrari. And Ferrari wins the constructors' championship, ending the 10-year drought. And there is great rejoicing. Luca is now revered across Italy. He's not even 30 years old yet.
As this young hero who has come in and saved essentially the national team of Italy from this despairing period.
It's amazing. And the funniest thing is imagining, as you describe these conversations, that Luca is off doing stuff. He comes back and reports to Enzo. Where is Enzo's house in all this when he's sort of like recovering from the illness and
It is around the corner from the Ferrari factory in Maranello. It's this farmhouse, and in this exact period, actually a couple years before, in 1972, so after the illness but before the Niki Lauda F1 victory, they actually build a full racetrack adjacent to Ferrari's headquarters that goes around Enzo's house. So Enzo can walk out of his farmhouse and watch them testing the cars on this, I mean, truly unbelievable custom racetrack only for Ferrari's research and development.
Yes. It's incredible. But he needs Luca, the young guy, to come in and change the culture. Enzo can't do it. He's too bound. He's a prisoner of his own myth and his own legend.
So, all of this is great. Truly, truly great. There is rejoicing throughout the country. But there's just one problem, which is Enzo's pretty used to Enzo being the guy, so he starts to get a little jealous of young Luca. Now, they always have a great relationship. There's not like personal animosity here, but a couple things happen. The next year in F1, there's the truly crazy tragedy of Niki Lauda catching on fire.
Actually catching on fire at the Nürburgring. He's severely burned. He should have died. He does not die, and he wants to come back and race. He's in contention for the championship. He ends up not winning the championship that year, even through this great act of bravery to try to come back, but almost does, remarkably. If you're interested in this, go watch the movie Rush. It's awesome.
So good. Enzo, though, remember, he's very experienced with these race car drivers and their brushes with death. Enzo, I think, kind of loses faith in Lauda as a driver after that. He's like, 'Oh, no. He fears death now.'
Luca still believes in him, though. So, there's, you know, some conflict there. Again, it never gets personal. I think they truly do always kind of love and respect each other, but all of this combines. Luca can't stay at Ferrari. So, they ultimately decide it's better if Luca leaves the F1 team, leaves day-to-day at Ferrari, and goes to work for Fiat in Turin. He remains on the board of Ferrari, Luca does, but he goes day-to-day to Turin and kind of closer to the Agnelli Empire. And I think Enzo thinks that he's going to still have a spy now in Fiat with Luca, which maybe he does, maybe he doesn't. But sadly, this is another tragedy. This is kind of the end of the glory for Ferrari in racing during Enzo's life. They had this great moment together, and for the rest of Enzo's life there's some ups and downs, but mostly the Ferrari glory on the racetrack is gone and doesn't return until Luca returns after Enzo's death, much later, and there's this glorious, amazing return of Luca, and there's this unbelievable run in Formula 1, and the Ferrari road car business becomes stronger than ever. But basically none of it in Enzo's lifetime. In fact, the last 10-plus years of his life is a real whimper in the history of Ferrari. The road car business falls on some real ugly times.
Yeah, it's funny. I had written in my script here about the last days of Enzo Ferrari. They do mostly end with a whimper, not a bang, but there is one little bang.
His last car, Ferrari's first official supercar, halo car. There were unofficial GTO homologation versions of race cars, and now those things sell at auction for like 40, 50 million or more.
One of them sold for 70 million.
Yeah. So, those cars existed in Enzo's past, but there was never a model that was made just to be available for purchase by our best clients, but a true, true supercar until the F40, which fittingly is the last car that Enzo makes before he dies in 1988. All right, so tell us about the F40.
Oh, man. Talk about a death machine. The F40 was just this incredible raw beast. If you look at pictures or video of the interior of the F40, this is not a luxurious vehicle. There's no leather. The door handle is a piece of string. This is the rawest racing machine in its purest form.
It is. Can we throw out everything that is not absolutely required so we can have the lightest weight vehicle possible? And it's crazy. We'll put a photo of the interior of this cabin in the email. It is a lot of carbon fiber, but not like cool-looking carbon fiber.
No, like raw carbon fiber.
This is the absolute minimum that we could ship. And David, to your point, this thing, while it is a supercar, the same way that the F50 and the LaFerrari and the Enzo and the F80 are supercars, this is not a luxury supercar. No. When you're sitting in this car, you're not sitting in here thinking like, 'I'm a rich person.' You're sitting in here thinking like, this thing is trying to kill me at every angle.
I'm in some sort of test harness.
Yeah. I mean, the videos online of people crashing Ferrari F40s are tragic, of course, because they're amazing machines. But if you get in this car and you do not know exactly what you're doing, you're going to crash.
It's interesting. The F40 sort of punctuated the end of Enzo's life or the end of the Enzo era in this really interesting way because it is a supercar the same way that the modern cars are about supercars. They're these high-performance machines, but it had every flaw of the Enzo era of Ferrari. It wasn't practical. It was purely about being a race car and made every compromise possible to get there.
Yep. Ferrari will never make another one like it again. We should say also what F40 means. It was the 40th anniversary of the commencing of operations of the modern Ferrari. So from 1947 to 1987 when the F40 came out. So then the next year, at age 90, the grand old man does finally pass away. Enzo Ferrari dies in the summer of 1988. Poetically, just after his death, Ferrari in the next Formula 1 Grand Prix that is run after Enzo's death finishes one-two, wins at Monza.
The Italian Grand Prix. And that is the only race that Ferrari won that season.
Either the gods were smiling upon Enzo in death, or Bernie Ecclestone's fix was in.
Yes, the fix was in. Either way, it was poetic. For the next couple years, though, oh man, the sort of slow-motion disaster at Ferrari continues unabated on both sides of the business.
Real quick before that, though, it's worth highlighting. So the Agnelli family ends up getting the 40%. Piero ends up getting the 10%. But an interesting thing to note, the valuation is extremely different this time around.
Yeah, you found detail on this. I couldn't find it. So, a good friend of the show, Arvin Navaratnam from Worldly Partners, scoured all of the old annual reports that he could find. And in the 1988 annual report, it reports the amount of lire to acquire the remaining 40% of Ferrari.
Oh, I'm so curious. What was it?
If you do the exchange rate at that time, it is 77 million, which valued the company at $192 million in 1988. Much different than the, what was it, 67 million in 1969.
Yeah. I mean, two things are simultaneously crazy right here. One, how much the valuation increased from the first time. Second, that Fiat and the Agnelli family acquired 40% of Ferrari for a valuation of 192 million. Unbelievable.
Or that they acquired 90% of it for what, $72 million.
Yeah, in aggregate. Yeah. Wow. Wow. Wow.
Or that as recently as 1988, it was worth only $192 million. I mean, this is a company today that's worth recently over $90 billion, but today $55 billion. Yes. In 1988, $192 million. Well, this really just highlights how different a company Ferrari was when Enzo died.
Yes, and how much Luca di Montezemolo transformed it when he came back and became the chairman. But for the moment when Enzo dies, the sort of slow-motion disaster just continues unabated. Fiat's attempt, their best solution to fixing the problem of the road car business, is to produce more road cars, which is the cardinal sin of luxury strategy management. Just as one example, Ferrari during these years before Luca comes back, Ferrari produced 7,000 Testarossas over the seven years that the Testarossa was in production. Compare that to Lamborghini. Lamborghini only produced 2,000 Countaches during a period twice as long. They made Countaches for 16 years.
By any normal car company, we're talking tiny numbers no matter what. But when you're talking about something rare and exclusive and so special as what a Ferrari should be, and then you have a company that you don't even really consider your competitor over there making a more exclusive product and managing it better, that's not a good situation.
No, it is not. And another crazy frame on that. If you look at the production of total Ferrari cars, not just one model, but total cars, in 1982, it was 2,200. If you look in 1991, that grew all the way up to 4,500.
They just kept ramping, ramping, ramping, and making more cars.
Not the right fix. So you mentioned 1991, that was the last year of this interregnum period before Luca comes back. It's so bad. Demand has evaporated so much for Ferraris that for the first time in history, cars are going unsold. They have to furlough the factory workers and shut down the factory. And so when it comes to this, Gianni Agnelli finally calls up Luca and says, 'It's time for you to return. We need you to come back. We are, quote, putting Ferrari in your hands.' And Luca di Montezemolo returns to become chairman of Ferrari. We should note, it's going to be important here in a minute, in Italy, chairman of the company is actually the most important and powerful title, and the CEO reports to the chairman. So, at this point, when Gianni calls Luca back, he's been gone from the day-to-day at Ferrari for almost 15 years. After Ferrari, he did a short stint at Fiat and then he stayed in the Agnelli Empire. He became CEO of the beverage company Cinzano, which is another Agnelli family company. And so he had gained CEO experience. And then the reason that Luca couldn't come back to take over Ferrari as soon as Enzo died was he had become the organizer and president of the Italia '90 World Cup. So the World Cup in 1990 was in Italy and Luca organized the whole thing, and there's great stories associated with that. My favorite is that he convened for the sort of final evening ceremony of the World Cup for the first time the Three Tenors. The Three Tenors didn't exist until the World Cup. And the way he convinced Pavarotti to join, because he was the big star and he didn't want to join, was he gave him an F40, and thus the Three Tenors were born.
So once the World Cup is over, Gianni's like, 'Okay, enough messing around. You got to come back fix this.'
So, the first thing Montezemolo does when he knows he's going to return to take over Ferrari after Enzo, he goes and he buys a 348, the flagship Ferrari sports car at the time, just to sort of see the state of things. Like, how bad was it really? I'm going to go buy my own 348 and test it out. And Luca's actual quote on this is: 'The Ferrari 348 was a car. It was the worst car we ever made. Everything was missing. It had no personality. It had no technology. It wasn't state-of-the-art in anything. It had no power. It was all missing.' He talks about when he was driving it, he would pull up to stoplights and try and race the other cars off the line and see how it would perform. You know, kind of drag race at stoplights. He was like, 'I was getting beaten off the line by Volkswagen Golfs in a Ferrari.' Oh, brutal.
What do you attribute this to? What? Like, the Ferrari has deteriorated. It's fallen apart in this era. The cars have no personality, but they also have no performance, and they're impractical, and they're overmaking them, and no one wants them. What's wrong? Like, why have the wheels come off the bus here?
It was Fiat. It was all they knew how to do. They came in like, 'Oh, the way we can fix this is we increase production. We'll cut cost. So, let's share some parts with Fiat cars.' You know, Ferrari road cars went from being the same thing built by the same people as the racing cars, as the F1 cars and the Le Mans cars in the same factory, to in this period with Fiat control, they're really not the same thing. You know, these are... it would be too far of a stretch to say they were repurposed Fiats, but they had lost that true connection to race machines.
And so Luca comes back and says, 'We got to fix this.' So at the time, the Japanese sports car industry was on the rise. And all the car enthusiasts were saying, 'Ferrari's dead. The Italian car makers are dead. The Japanese have taken over.' Luca has the test drivers at Ferrari go out and buy a Honda NSX and do like his own version of the Pepsi Challenge. Like, go out there, drive the NSX as hard as you can around the test track, drive our cars, drive the 348 as hard as you can around the test track, and they come back and they're like, 'Yeah, I mean, there's no competition. The NSX just blows us away.' Wow. I mean, how sad is that? It's a Honda. A Honda. That's completely lost to history today. You don't hear anyone talking about Ferrari as this sort of like untouchable apex brand. It's hard to imagine that happening just, you know, as recently as the early '90s.
Right. I mean, it's one thing if Lamborghini is beating them. I mean, that's bad, that's really bad. But if Honda is making a better sports car than Ferrari, there's a real, real problem. Yeah. So how's Luca going to turn this around? He comes up with three priorities: the team, the technology, and the myth.
So, number one, the team. The Formula 1 team. We have to fix the Formula 1 team. Going back to his great quote, you know, there's not a direct correlation between victories on the track and cars that you can sell. But the team feeds the myth. If you don't add wood to the fire of victories on the track, the flame of the myth will die. You cannot only lose.
Yep. So, the team hadn't won a championship since 1979. Luca goes out and recruits the dream team. I think the greatest set of F1 team members that had ever existed in history. Jean Todt, team principal. Ross Brawn, race engineer. Michael Schumacher, Ferrari number one driver. And it takes a couple years for Luca and the team to turn this around, but this is just absolute domination that they unleash on the field. By the end of the decade, there would be five straight years, 2000 to 2004, where Michael Schumacher won every single drivers' championship five years in a row, and Ferrari won every single constructors' championship five years in a row.
As we talked about on the F1 episode, it was a problem for Formula 1. The sport became too boring because Ferrari always won. Yeah.
In total, under Montezemolo's tenure, Ferrari wins 19 drivers' and constructors' championships, which is more than Enzo.
It's incredible how he turned the team around just like he did back as Enzo's assistant back in the day.
All right, then the technology.
The technology. The cars. We can't have a Honda NSX outclassing a Ferrari. Ferraris are about our heritage and our myth, but they are also about looking ahead. We can't be selling 250s repainted for the modern era.
Yeah. And this is really where the feelings about technology change, where Ferrari went from a late adopter of technology when it's sort of proven to really pushing the bleeding edge. And today, Ferrari spends a good amount more on R&D as a percentage of their revenue than most other car companies. It's become sort of a signature of the company.
Yep. And this absolutely was a hallmark of Montezemolo's turnaround. Enzo didn't really care that much about technology.
That's interesting. Yeah.
Yeah. So, first thing they do, we got to fix the 348, the flagship sports car. So, they revise it. They do some stopgaps, but ultimately as soon as possible, they kill it and replace it with the 355, which was just a glorious car. And this just checked every box. Amazingly, it was modestly priced. So, it was $127,000. So, modest by Ferrari's standards. Anyway, it was much more sort of user-friendly to drive. It actually made sense if you weren't a track car driver to drive this car. It was really the workhorse of the turnaround, and by 1997 it accounted for 70% of sales. Wow. Wow. The 355, I would put it in the category of like a Rolex Submariner, of this thing that is a signature of the brand, is perfect product-market fit, is priced perfectly, and just deeply understands why the customer is buying it.
Yep. The other thing to note before they launched the 355 is Luca massively cut production. So I mentioned that in 1991 Ferrari had made 4,500 cars, which is just this giant inflation. By 1993, just two years later, Luca brought this down to 2,300. So cut it almost in half in those two years. And production would start climbing again. You know, as I mentioned, the 355 was really well-received and they started really building up their back order list again. But interestingly, it would not eclipse that 1991 peak of 4,500 cars again until 2006, a full 15 years later.
Yeah, we need to not just fix the myth of Ferrari, but we need to protect it. And this was Luca's third and most important priority, the myth. Luca came from a very different background and life experience than Enzo. Luca is the one who realized that Ferrari is a luxury company. To Enzo, Ferrari was a racing company that sold a connection to that to its clients. And Enzo was a marketing genius, and he came up with the prancing horse and the red and the myth of Enzo. But you couldn't talk to Enzo about how Hermès was managing its business. You know, Enzo had no idea what Jean-Louis Dumas was doing over in Paris. Luca knew exactly what Jean-Louis Dumas was doing over in Paris. Luca is the one who institutes waitlists. Luca is the one who institutes presentation ceremonies when your car is delivered. Luca is the one who institutes custom luxury leather luggage that comes perfectly fitted to your Ferrari. Luca institutes the luxury strategy at Ferrari.
Where did Luca come up with this strategy? Like, did he adopt the luxury strategy from somewhere else? Did he invent it from whole cloth?
I think it's just he comes from such a different background and world experience than Enzo. Enzo didn't know a Birkin from a Coach bag, right? He grew up in Modena. And then after Dino's death, he never gets on an airplane again. He doesn't leave this one region of Italy. Whereas Luca has lived all over the world. He's run the Italian Cup. He's been CEO of an alcoholic beverages company. He knows all the luxury families. He knows all the luxury companies, and he studies what they do.
Yeah, it's interesting. That makes total sense. The other big piece of his strategy is anytime you see a Ferrari, it needs to scream Ferrari at you. And in a way that was really exemplified by the 355. It looked like all the cool classic Ferraris and the race cars, but it was much easier to drive. So there should be sort of a unification between the stuff we're selling to people and the race cars.
Yes, this was another key understanding of Luca's. These cars needed to be drivable. In Enzo's day, you could get away with the excuse of, 'Yeah, these cars aren't really going to function on the road because they truly are intended to be race cars.' By the 1990s into the 2000s, that's not going to fly anymore. The people who are the clients who are buying these cars, they want to be able to drive them on the streets. Yep. He does a handful of other tactics that I would say set the company up for success in the short term, but add risk in the long term. And there's a big need to... I mean, Ferrari was operating in the red when he came in. They generated losses, like real income statement losses, from 1992 to 1994. And by '96 they were back to break even, and by '97 they were profitable. But I would say all the ways to generate profits were not the best long-term solution, and it took them time and a lot of effort to dig out of that hole. One of which was licensing the brand for merchandise.
Yes. Now, there's a pro and a con here, but yes, I thought that's where you were going to go with this.
Yeah. So, there were some smart things. Licensing the brand to put on luxury goods and some sportswear. They even started licensing it for toys. And when you're licensing the brand, that's basically 100% margin. I mean, it drops straight to the bottom line. So, when you're in dire straits, it's really good. And so it has obvious allure, but they put the prancing horse on some real garbage over time. My favorite is by 2009, so you know, this is a full 15 years later, they put the prancing horse on an Acer netbook.
Remember netbooks, David?
Oh, yeah. I was wondering if you were going to find this.
Just so destructive to their brand. It's the apex luxury brand of cars, like one of the greatest brands in the entire world, and they have licensed it to this like underclocked plastic little piece of crap computer that is like the microcosm of brand destruction, like the reason to resist the heroin of brand licensing.
Yes, the Acer laptop was a real low point, but there's a lot of crap that it's on.
There's a lot of crap that it's on. Now, there is some nuance here. If we were talking about Louis Vuitton or Hermès or Patek Philippe or Rolex, this would be all bad. There would be no good reason besides easy profit dollars to do this. Ferrari is a different thing.
Yes, it is an apex luxury brand unquestionably in the same way as all of those companies. But unlike those companies, it also has a couple hundred million rabid fans that it needs to serve. And also unlike those other companies, there's not actually a tension there. Ferrari clients and Ferrari collectors aren't upset by the fact that Ferrari has a couple hundred million, you know, commoner fans out there. In fact, they're happy about it, right? Ferrari is both a luxury brand and a giant international sports team.
Yes. Yes. Exactly. They always talk about the tifosi, you know, the hundreds of millions of people who are just fans of the brand and the spirit and the team.
Yep. Yeah. Hermès doesn't have a couple hundred million teenage girls around the globe that have posters of Birkins on their walls that they have to please, right? Ferrari is Hermès and Manchester United smashed together.
Yes. Yes. Yeah. And that makes it super different. So I guess to your point, that does validate the licensing their brand for merchandise strategy much more. Hey, look, it doesn't validate the, you know, Acer netbook, but there is like some actual justification to the activity.
So manufacturing, should we talk about how that changes under Luca's tenure?
Yeah. So I know a lot about manufacturing today. Did Luca really bring Ferrari's current manufacturing to life?
I think so. Or at least he started it. It was really important to him that the factories be first rate. So he brought in great architects to redesign the factories. And this is when, if you look at video or photos of Ferrari factories today, they have trees in them. He brought in the trees.
Yeah, they're absolutely beautiful. We'll link to some factory tours in the show notes. I think my favorite thing about Ferrari is the manufacturing process. And it's both because of how cool it is from a nerdy perspective, but also the business model that enables for them. So after 1994, Ferrari does not have a stock of cars. They're not just sitting there at dealerships. They're not just sitting there at the factory. They don't manufacture them and then find buyers. It's the other way around. So for every single car, they only start manufacturing it after you order and you customize it. And it's important to know that by this point in history, every Ferrari is unique. There's so much customization that starts happening that every one that rolls off the line is actually its own custom car. I mean, maybe just a little detail here or there is different, but you will not find two that are identical. Yep.
So, Ferrari factories are vertically integrated to the nth degree. Most car manufacturers these days are systems integrators. Kind of lame. They're just buying from a network of thousands of companies that make common parts that basically go in all of our cars as contracts to the big brands. And yes, the brands do some specification, and then they take whatever it is, some long time frame, 5 to 10 years, to actually build out the full supply chain, source the thousands of parts from all the suppliers, and then integrate them into a car. Not Ferrari. They have trucks that roll up to the factory with raw ingots of aluminum, and they are casting entire engines themselves right there in Maranello. Everything happens on one plot of land. They build engine molds out of sand. They have 700-degree C furnaces, and they operate an entire foundry right there on site. They do the same thing for body panel work and stitching the seats and more.
Yes, it really reminds me of Rolex in this regard. And there's another dimension that it's different from just about every other car manufacturer out there. Most other car companies, even the Porsches and the Audis and the Lamborghinis, a lot of the models that they're making are based on shared platforms. So, like, we'll get into this more toward the end of the episode here, but the Lamborghini Urus, the Lamborghini SUV, that is the same platform as the Porsche Cayenne, which is the same platform as the Volkswagen Touareg. When you buy a Lamborghini Urus, you are buying a car that is essentially a Volkswagen Touareg or an Audi Q8. Is that right?
One of the Q's. Yeah. No Ferrari shares a platform with any other car.
But you're right. When you're a big family of brands like this, you are looking for economies of scale and ways to share more across your line. And you're right, not Ferrari, it's the complete opposite.
And some of this was starting to creep in in the last years of Enzo and the interregnum period when Fiat was taking control. Like there were some Fiat parts and switches that were making their way into Ferraris. And Luca stops all of this. He's like, 'No, no, no. The only things that go into Ferraris are Ferraris. It's what makes us different.' Yes. And because everything is so customizable, like we were talking about, every single one that rolls off the line is unique. They have left their manufacturing process to be very flexible and manual. They can make any car on any line. There's humans doing manual work at every station except for one, and that one is where they affix the windshield, because you for safety reasons don't want to have people doing that. But it is crazy and unheard of across the car industry to be able to make any car on any manufacturing line. Now you might say, well, that's really inefficient, and it is. I mean, they don't invest in making an automated production line that can easily make lots of cars.
Efficiency is not the point for Ferrari, right? They would make for a terrible scaled car company. Ferrari can operate on a much shorter time scale between design and actually getting a car out to customers since there's less overhead in getting started. And it is, it's a double-edged sword. You would never want to do 100,000 cars a year with the Ferrari model. In fact, you barely want to be doing 14,000. But the pro is that they can be really iterative and really responsive to new ideas. They could change their engine casting spec without involving a supplier and asking them to do a rebuild of something. And they can also get learnings from their F1 team quickly into cars since it's right across the street. Yep. I think this is like one of the interesting nerdy business model characteristics of the pros that come from a manufacturing process that sort of doesn't invest in overhead and doesn't allow for the cheapest incremental marginal car to roll off the line. It's more about how do we maintain sort of the most flexibility at any given point because we're selling expensive cars and we've got the margin to absorb it. Well, really this is how bespoke handmade craftsmanship applies to a modern automobile company. You know, it's the same dynamic as the other luxury companies as Hermès, or you know, you think Hermès is investing in efficiencies in their factories? Like, hell no.
Right? And part of what you are buying, if you are interested in buying a Ferrari, especially let's say you came into this, you didn't want a Ferrari, you leave this episode, you're like, actually I do kind of want a Ferrari. Part of what you are buying is the lore that I just shared. You kind of like the fact that this is a, yeah, there's robots, but like a pseudo-handmade bespoke inefficient manufacturing process to make it. It's wrapped up in the value proposition.
There is a team of artisans and experts aided by technology that is making my Ferrari.
Yes, that's exactly right.
Yeah, it's super cool. So that's manufacturing. We've talked about Luca's embracing of the luxury strategy for Ferrari. Let's talk about markets and growth. Yes.
Yes. So, when we're talking about caps on the number of cars they create, it's not that you can't produce any more units without diluting your brand. It's that you can't sell any more units into your current market, correct?
Without diluting your brand. New markets are perfectly allowed as long as it doesn't change the perception in the current markets that, oh no, there's suddenly lots of Ferraris zooming around the streets. And geographic segmentation can be a great luxury strategy. So he goes to start selling in China meaningfully for the first time, and the timing couldn't have been better since in Europe it was becoming less fashionable to display your wealth. China, it was perfectly very fashionable, extremely fashionable.
And this is a strategy that they then continued to run. Anytime a new geography sort of came up in global wealth or disposable income or was okay with becoming flashier, then suddenly there's a whole new area where you can sell your Ferraris without changing perception in existing markets.
Yes. And there's another subtle point here that applies very specifically to Ferrari. They make so few cars and sell so few cars to a given geography that it really is a special experience every time you even see one on the road.
And it's really important not to dilute that. Owning a Ferrari is a truly rare and special experience. But even just seeing one, even just being next to one, should be a rare experience. The minute that that stops being rare, part of the myth dies.
The funniest thing is since a large number of Ferraris are owned by people with 10, 20, 30 Ferraris, they actually can soak up a lot of the units into garages that you never see anyway.
Yes. Yeah. So if you're Ferrari and you're trying to manage scarcity, you sort of have an incentive to continue selling to the same person over and over and over because it is a way to generate a sale without having the problem of a Ferrari out on the streets feeling commonplace.
Yes. Now there is one other related thing that Ferrari takes on during this time, which is a lot of Ferrari clients, particularly American clients, really want a family Ferrari. They've got more use cases in their life for automobiles than Ferraris give them opportunity to use it for. You mean to tell me that a 45-year-old man who really, really wants to be out on the track or sort of envisions himself out on the track actually has most of his time where he can't be on the track, but he wants to feel awesome and fast and risking his life and associate with a brand kind of like Ferrari, but gosh, that's actually just not the reality of his life these days.
Right. Right. He might need to drive his kids to school, or he might need to be driven by your chauffeur to an important business meeting. Really, you would like a four-door Ferrari for that.
I know. I know. Disgusting. I know. Well, it is disgusting. And that is why during this era, Ferrari takes on the Maserati brand under its wing. So, the Maserati brothers that we referenced earlier in the episode, that company after their ownership had gone through a whole series of ownership changes, and the brand had had its ups and downs over the years. It ends up in the hands of Fiat. And in the late '90s, Fiat says, 'Why don't we give Maserati management over to Ferrari?' And then we can, you know, have this connection between the Ferraris and the Maseratis. And we can have models that are Maseratis that are not Ferraris. These are not Ferraris, but there is a connection. And you know, we're happy to sell you a Quattroporte if you want it or a GranTurismo if you want it. And that's what they do. And so this is when the Quattroporte, the Maserati Quattroporte, launches in America and great demand. Unfortunately, in the beginning, it was not a very good car. It took him a few years to iron the kinks out, at least on the reliability front. But it's a brilliant brand strategy. It's almost like Rolex and Tudor. A Tudor is never going to be a Rolex, but you can have a great use case for a Tudor.
I was going to make that connection. I was thinking about it, but I don't think... I mean, Maseratis are not made in Maranello, right?
No, they're not. So Ferrari gets the sort of market intelligence of what happens when we launch a Maserati in a market and kind of learnings from customers, but it's not like there's manufacturing synergies or on-campus learnings from prototyping new things. I think they're pretty separate in their sort of R&D. Yes. So they showed great restraint in never launching a Fiat Ferrari car or standardizing on platforms the way that the Volkswagen Group does. Yeah. I think remarkably Ferrari has had the soul of a standalone company even though it was for a very long period of time 90% owned by Fiat.
Yep. And Luca is a huge part of that, as is Piero too. Him having the 10% ownership stake and a place on the board keeps that continuity to Enzo and the Ferrari family even in a 10% minority ownership way in the company.
Yep. Well, speaking of Ferrari also being part of the Fiat and Agnelli empire, something pretty big is about to change here as we enter the early 2000s, which is Gianni Agnelli passes away. And all of a sudden, the Fiat Empire is now in crisis. But before we tell the story of what happens next there and how it incredibly ends up with the IPO of Ferrari, now is a great time to tell you about one of our favorite companies, Statsig.
Yes. So listeners, as we've been talking about all episode, Ferrari builds cars designed for speed and precision. These are incredibly powerful machines, but every component is also engineered so the car performs predictably even when you're pushing it to the limit. And you know what? That is a great metaphor for modern software development. Teams today can ship faster than ever, especially teams building with AI coding tools. But when you're moving so quickly, the challenge becomes knowing which changes actually improved the product. Because when you go faster, you also increase the risk of unintended consequences. And that is especially true when AI is involved. LLMs, of course, introduce non-determinism into the product experience. So the same input doesn't always produce the same output. Small changes to prompts or models or user experience can actually have surprisingly large downstream effects. You can learn a bit from offline evals, but the real signal comes from real users. Yep. And that is where Statsig comes in. Statsig gives product teams the control systems for fast product development: experimentation, feature flags, and product analytics all in one place. Teams can ship quickly, roll out changes safely, and measure how those changes actually impact users with a much tighter learning loop. Statsig lets you keep moving Ferrari-level fast while making sure that what you're doing actually does make the product better. So, if you want to ship fast and know what's actually working, go to statsig.com/acquired to get started. So, in 2003, Gianni Agnelli dies. Tragically, the logical heirs to the Agnelli Empire in the next generation had also already died young.
So, when Gianni dies in 2003, his brother Umberto takes over, but he only lives for another year, and then he passes away in 2004. When this happens, the empire is in chaos. Meanwhile, the Fiat business is really struggling. Sales have been falling off a cliff. The company has a mountain of debt, and the share price is like trending towards scraping the bottom here.
So the last surviving Agnelli of Gianni and Umberto's generation is Susanna, mother of Luca's best friend growing up. She calls Luca after Umberto dies and asks him to take over as Fiat chairman and replace Gianni and Umberto in addition to Ferrari. So Luca will stay at Ferrari, but he will now come and serve the Agnellis as sort of a steward and a bridge to the next generation while they get the house in order and hopefully try to save Fiat along the way.
So, he's chairman of the parent company.
He's now chairman of Fiat and Ferrari, which they own 90% of.
Yes. And at the same time, the chosen next heir in the generation below in the Agnelli family is a man named John Elkann, who you might have heard of today. He's a celebrated investor and head of Exor, the publicly traded holding company, which is the Agnelli family holding company. He's 27 years old at this point in time, though. He's a kid. He's like Luca back in the day when Enzo tapped him to take over Ferrari. Yep. So Luca and John Elkann have to work together to try to save Fiat. So the first thing they do is they turn to Sergio Marchionne, who is a turnaround expert and financial engineer extraordinaire who has been CEO of SGS, which is a Swiss consumer products testing company that is also part of the Agnelli family investment empire, and he's completely turned around SGS and saved the company there, and they tap him to come in and help them do the same thing with Fiat. So he joins as CEO in 2004 with Luca as chairman and John Elkann as the Agnelli family representative, which it's interesting to note here, the Agnelli family empire is larger than just Fiat.
Yes. And this is how they really differ from like Ford and the Ford family. The Ford family was always focused on the Ford Motor Company. The Agnelli family, Fiat was the crown jewel, but they invested in and built many businesses over the years throughout the generations, since they really diversified out of just one company.
Yep. So, the three of them together miraculously turn around Fiat and save it from the abyss through the combination of a couple things. First, they launch the smash-hit new Fiat 500, the mass-market platform, the city car for Europe. There was some precedent for this earlier. Volkswagen had relaunched the Beetle in 1997, and so that was some of the inspiration. But the Fiat 500 truly was an amazing success.
Yeah. You've seen this car many times.
Yes. And especially in Europe. Like, it was popular in the US, but if you live in Europe, you saw the Fiat 500 all over cities throughout Europe. It sells a million units in five years. It wins the 2008 European Car of the Year award. It's truly, truly a special car that saves the company.
I got to say, it's so funny that we feel the need here on the Ferrari episode to extol the virtues of the Fiat 500. But it ends up becoming actually very important and path-dependent to Ferrari's trajectory from here and why a few things happen to Ferrari. And it was designed by a man named Frank Stephenson, who had been Luca's in-house design guy at Ferrari when Luca was just at Ferrari. So there's a Ferrari connection and lineage there that gets pushed up to the Fiat 500.
Now the other thing that happens, and this is all Sergio is doing. He totally restructured the operations at Fiat. He was like an efficiency and cost-cutting specialist. And at a company like Fiat, that actually is like really, really important.
The other thing he did is Fiat had an ill-fated partnership with GM, with General Motors. Sergio gets them out of the partnership and engineers GM paying $2 billion to Fiat in order to end the partnership. And I think without that $2 billion, the company almost certainly would have died.
He really is a magician. So Sergio, Luca, and John Elkann come into Fiat in 2004. Within two years, they have returned the company to profitability. They've got a handle on the debt. 2007, the Fiat 500 comes out. It's a massive success. 2008 hits, the financial crisis. All of the US car companies are in really bad shape. Man, it's crazy that Fiat just barely got their house in order in time.
Otherwise, they could have been down with the rest of the global economy.
