Hermès

Acquired

Ben Gilbert and David Rosenthal

Venturecapital, Ma, Investing, Acquisitions, Startups, Vc, Investment, Business, Technology

4.8 • 2.9K Ratings

🗓️ 20 February 2024

⏱️ 251 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

In luxury, there’s Hermès… and there’s everyone else. Stewarded by one French family over six generations, Hermès sells the absolute pinnacle of the French luxury dream. Loyal clients will wait years simply for the opportunity to buy one of the company’s flagship Birkin or Kelly bags. Unlike every other luxury brand, Hermès:

Doesn’t increase supply to meet demand (hence the waitlists)
Doesn’t loudly brand their products (IYKYK)
Doesn’t do celebrity endorsements (stars buy their bags just like everyone else)
Doesn’t even have a marketing department! (they barely advertise at all)

And yet everyone knows who they are and what they represent. But, despite all their iconoclasm, this is not a company that’s stood still for six generations. Unbeknownst to most, Hermès has completely reinvented itself at least three times in its 187-year history. Including most recently (and most dramatically) by the family’s current leaders, who responded to LVMH and Bernard Arnault’s 2010 takeover attempt by pursuing a radical strategy — scaling hand craftsmanship. And in the process they turned the company from a sleepy, ~$10B family enterprise into a $200B market cap European giant. Tune in for one incredible story!

Sponsors:

Many thanks to our fantastic Season 14 partners:

Links:

Visuals for:
- 00:23: Haut a Courroies, the “high-belted bag” to carry saddles and boots
- 00:45: Chaine d'ancre, “Chain of anchors”
- 00:49: Jeu des Omnibus et Dames blanches, “White ladies at play”
- 00:53: Screen printing each color on a scarf individually
- 00:57: The Hermès oranges
- 01:06: Sac à Dépêches (today: the Kelly Bag)
- 01:07: Grace Kelly photo in LIFE Magaine
- 01:26: Steps to sew a saddle stitch
- 01:48: The Birkin Bag
- 03:17: Petit h
The saddle stitch (video)
Inside the Saddlery at the Faubourg
Hermès 2022 Annual Report
Axel Dumas Interview
All episode sources

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‍Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions.

Transcript

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0:00.0	So I don't know if you realize this.
0:02.0	Ermez is reporting earnings in like two days.
0:05.0	Yes.
0:06.0	And at first I was like, we should probably not do this episode because their annual report comes out in two days.
0:11.0	What if we're not current?
0:12.0	And then I realized this is Ermez.
0:14.4	The short term is of no consequence.
0:17.1	Yeah.
0:18.1	Also, the Ermez annual reports are the most beautiful annual reports ever created in the history of the
0:26.4	financialization of mankind. You might think you can't do all of your charts in
0:30.5	orange you need different colors but you would be wrong. The illustrations the
0:35.1	themes you can tell they care. You can tell. All right let's do it. Let's do it.
0:40.4	Let's do it. Who got the truth?
0:42.8	Is it you, is it you, is it you, who got the truth now?
0:48.9	Is it you, is it you, is it you, is it you?
0:51.2	Sit me down, Say it straight.
0:54.0	Another story on the way.
0:56.0	Who got the truth?
0:58.0	Welcome to season 14 episode 2 of acquired, the podcast about great companies and the stories and
1:03.4	playbooks behind them. I'm Ben Gilbert. I'm David Rezenthall and we are your
1:07.9	hosts. Today we tell the story of a handbag company that won't sell you a handbag.
1:13.0	A traditional saddlemaker that makes very little of their revenue from saddles.
	...

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