#392 Michele Ferrero and His $40 Billion Privately Owned Chocolate Empire

**David Senra** (0:00)
This will be one of the most incredible Founder stories you're ever going to hear. For his entire 70 year career, Michele Ferrero was solely focused on serving his customer. As you'll hear, he gives his customer a name, and he focuses on inventing on her behalf. He invented products that no one else was able to create, was absolutely obsessed with crafting a high quality product, and he ran tens of thousands of experiments throughout his life. Every single experiment was aimed at making a better product for his customer. And as I was reading about Ferrero's approach to building his business, I kept thinking of the similarities that he had with my friend Karim, who is the co-founder and chief technology officer of Ramp. Karim was one of the greatest technical minds working in finance, and I spent a lot of time talking to him, and every single one of our conversations centers around his obsession with crafting a high quality product and using the latest technology to constantly create better experiences for his customers. You'll see a lot of similarities in this episode because Michele Ferrero was like this too. Karim was wanting one of the most talented technical teams in finance. They use rapid, relentless iteration to make their product better every day, just like Ferrero did. And so far this year, Ramp has shipped over 300 new features. Ramp is completely committed to using AI to make a better experience for their customers and to automate as much of your business' finances as possible. In fact, Karim just wrote this. He said, AI is all I think about these days. It is our duty to be first movers and push limits so we can make the greatest possible product experience for our customers. That sounds a lot like Michele Ferrero's approach to using a combination of craftsmanship and rapid iteration to invent new products for his customers. Many of the fastest growing and most innovative companies in the world are running their businesses on Ramp. Notion is a great example of this. In fact, the CFO of Notion just said this. People ask how we're using AI and finance. And I have one simple answer for them. We use Ramp. Make sure you go to ramp.com to learn how to help your business save time and money. Michele Ferrero was in love with the technology. And he talked about how incredible the robots were that helped him make his products. Wait till we get to that part of the episode. It's hilarious. But like many of history's greatest entrepreneurs, Ferrero was always investing in the latest technology. That is how I know if he was alive today, he'd run his business on Ramp. Let the robots chase your receipts and close your books so you can use your time and energy to build great things for your customers. Because at the end of the day, that is what this is all about. Building a product or a service that makes someone else's life better. That is what I'm trying to do. And that is what Ramp has done. Get started today by going to ramp.com. A silver haired man in his 80s sits at a long table, ready to begin an almost mythical daily ritual. From 8am until dusk, he and a trusted circle of confectioners methodically taste and tweak recipes for new treats.
This man with the tireless sweet tooth is Michele Ferrero, the closest thing we have to a real life Willy Wonka. Ferrero is the wealthiest person in Italy. And that is even that is an understatement. So Ferrero owned 100% of his company. He had no outside shareholders. He had no debt. Today, that company does $20 billion a year in revenue with very high margins.
When you look it up, it says that this is a $40 billion company. It's likely worth multiples of that. Again, 100% owned by the family. And the crazy thing about the story I'm about to tell you is, Michele worked on this company for 70 years. From 19 until he dies at 89 This story is unbelievable. I can't stop talking about it. So Ferrero was a paradoxically private chocolate king who rarely appeared in public without his dark sunglasses and never granted a single interview in his lifetime. He actually granted a single interview, but when he was much older and he only agreed to do the interview, if the interview would not be published until after his death, he had, he has a series of maxims that he repeats. In fact, some of the people that work for him said he would repeat the same thing 60 times a week. And it's something you and I talk about over and over again, that repetition is persuasive, that the very best founders, they identify a handful of principles and then they repeat them for decades. Michele Ferrero is no different. So, he often had this maxim that he would repeat that he says, only on two occasions should the papers mention one's name, birth and death. Yet, behind the guarded doors of his empire, he was a relentless innovator, personally inventing globally beloved products like Nutella, Kinder, Tic Tacs and Ferrero Rocher. In his tasting room, Ferrero pursued perfection with monastic devotion. It was a seen equal parts humble workshop and secret laboratory. Ferrero's weekly routine embodied the blend of tradition and modernity that defined his company. Each week, he would commute by helicopter between Monte Carlo, where he lived, and his center of operations in northwestern Italy. He kept a secret lab in Monte Carlo. Actually, I have to tell you this part now too, because it's just too good to save for later. This is very much a family business, and Michele wanted to make sure that his two sons could run the company after he was gone. So he technically retires when he's in his 70s, so that his sons can take over as CEO. But he still shows up to the factories, still goes into the stores where his products are sold to interview customers, and he sets up a private laboratory at his house, so he can still run experiments and invent new products. That is a hilarious definition of retirement. At the factory, workers knew him as Mr. Michael. So his name obviously in Italian is Michele. I'm going to use the, so I don't butcher all these Italian words. I'm going to translate it obviously to English. That's why I'm calling him Michael. So they would call him Mr. Michael. They looked at him more of a father figure than a boss. In Monaco, high society barely saw him at all. The reclusive billionaire preferred tinkering with chocolates behind closed doors. This dual existence was emblematic of Ferrero's approach. Global vision rooted in local loyalty. Innovation cloaked in secrecy. And immense success coupled with self-imposed seclusion. So there is going to be a lot. I'm going to tie in all these other entrepreneurs, past founders of the union I've studied that Michael reminded me of. There is a bit of the founder of Red Bull when it comes to this. He has this great line. And if you haven't listened to the Red Bull episodes, one of the best episodes I've ever done in my life, it's episode 333 It was another book that had to be translated because there were no English biographies of Dietrich Maschists either. And so we actually, my friend Craneman Priest, who translated this book that I'm working from right now, he was the one that translated the Red Bull book for me from German to English. And there's a line in there that Dietrich Maschists, the founder of Red Bull says, that sounds exactly like it would come out of Ferrero's mouth. He says, I do not care about society events. It's the most senseless use of time. When I go out from time to time, it's just to convince myself that I'm not missing a lot. So there are no biographies in English of Michele Ferrero. I just said, my friend Craneman Priest translated one from Italian and he sent it to me. So what I'm gonna do is I'm gonna continue to give you the overview of his life. And then I just wanna rip through a bunch of interesting ideas that I found in the book. This guy is insanely great. His approach to his work, it's gonna remind you a lot of like a Steve Jobs, an Edwin Land, a James Dyson, an Yvonne Chouinard. There's a bunch of things that he does that are just like Sam Walton, that Sam Walton did when he built Walmart. So I'm gonna go through like giving an overview of his life and then I'm gonna go through specific ideas on how he built his company. It's incredible. Michele's life began far from the wealth of Monte Carlo. He was born in 1925 in an Italian, a tiny Italian village nestled in the Lange Hills. I promise you, I went and looked up how to pronounce these words. I still can't get it. I think it's Lange Hills. The reason I'm talking about this though, it's very important that he happened to be born there because the region that he was born in, in these hills that I cannot pronounce, was famous for something that would shape Michele's destiny. And that is hazelnuts, okay? Hazelnuts grew in abundance across these rolling hills. In the 19th century, confectioners had invented this paste called John Douya. So John Douya is a chocolate hazelnut paste that was born out of necessity because chocolate was expensive and the main ingredients for chocolate were scarce and nuts, hazelnuts, were plentiful. So when you hear John Douya, just think Nutella. It is the precursor to one of Ferrero's most successful products. I looked it up. Ferrero is rumored to sell about $3 billion a year of Nutella. So Michael's father is actually the one that gets him involved in the business because Michael's father, Pietro, was a pastry maker. They lived in this tiny town in Italy called Alba. After World War II, chocolate was rationed and very expensive, but hazelnuts were cheap. So Michael's father said, if I use more nuts and less cocoa, I could attain a product that was just as good and not as costly. So Michael's father, Pietro, and Michael's uncle Giovanni began selling a hazelnut spread. They are going to call it super crema. And what they were trying to set out to do was offer cash strapped Italian families a taste of affordable indulgence. Since Italians are so poor after the war, this spread that they're making was one fifth the price of chocolate. And what they were setting out to do was making a sweet comfort food that everyday workers could also eat every day. And so at the time it was actually called the chocolate of the poor. And so when Michael was young, he literally grew up around vats of hazelnut paste and sacks of cocoa. He starts working in the business when he's 19 When he is 24 years old, his dad dies suddenly. There's a lot of tragic heart attacks that happen in his family. So his dad's going to pass away at 51 years old. His uncle also has a heart attack in his 50s. And later on, Michael's son Pietro, who he named after his father, has a heart attack and dies at 49 So at just 24 years old, Michael has to run the family firm. And when he takes over, he writes this letter to his employees with a bunch of promises that he intends to keep, which he did keep. Says he marked that moment with a remarkable letter to all employees, vowing, I pledge myself to devote all of my activities and all of my efforts to this company. I shall only feel satisfied when I've managed to guarantee you and your children a safe and tranquil future. He felt a responsibility to keep the company alive. He said that when he was 24 Decades later, he would still say stuff like this on why he pushed himself, why he would work seven days a week. He'd work overnight. He had no other life. He was completely obsessed with the products that he was making, the company he was building. And this is one of the reasons he felt it was an obligation to his community because he's building, he's going to be the largest employer in these very rural and small towns. He says that this company goes into a ditch. There are thousands of families that go into the ditch as well. This thought keeps me awake at night. I must find new projects, new ideas and new products. Michael was determined to prove that a business could grow vast and rich while still guaranteeing a safe and tranquil future for its workers.