#394 An Orphan Who Built An Empire: Leonardo Del Vecchio and The Founding of Luxottica

**David Senra** (0:00)
It's amazing to me how across the last three episodes, you had world-class founders, founders that build the leading companies in their industries, and they all share the same obsession, and that is investing heavily in technology. It didn't matter if they were making eyeglasses, like Del Vecchio, or tires, or some of the best chocolate in the world. They all had the same obsession that founders like Andrew Carnegie had, that John D. Rockefeller had as well. If you read Andrew Carnegie's autobiography, you'll see one of the main ideas in that book is invest in technology, because the savings compound, it gives you an advantage over your slower moving competitors and can be the difference between a profit and a loss. Leonardo Del Vecchio builds the most dominant business in his industry by far, one that is still thriving today. And in his biography, it says, his profits must first be reinvested in the heart of his own company. In research and development, in automation and technology, never skimp when it comes to spending to be at the cutting edge. It has always been like this. If there's a new machine to buy, he wants it immediately. This heavy investment in research and development and the latest technology is exactly what using RAMP for your business is like. RAMP is the presenting sponsor of this podcast, and RAMP is a guaranteed time and money saver. RAMP gives your business easy to use corporate cars for your entire team, automated expense reporting and cost control. Many of the fastest growing and most innovative companies in the world today are running their business on RAMP. Notion is an example of that. And the CFO of Notion said this, people ask how we're using AI and finance, and I have a simple answer for them. We use RAMP. When you use RAMP, you now have top tier technical talent and some of the best AI engineers working on your behalf 24-7 to automate and improve all of your business' financial operations. Let the robots chase your receipts and close your books so you can use your time and energy building great things for your customers. Because at the end of the day, that is what it is all about, building a product or service that makes somebody 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. There is another tool in technology that I want to tell you about and RAMP actually uses this tool. It is Vanta. I've told you how RAMP has the best technical talent in their industry and knowing that the team at RAMP trusts Vanta was a huge positive signal. And when I talked to Vanta's founder Christina, it became obvious why RAMP uses Vanta. Vanta helps your company prove that you are secure, so more customers will use your product or service. You can think of Vanta like an intelligent security assistant that helps your company pass audits without tons of manual work. This is important because number one, customers need to trust you. If your company is handling sensitive data, customers want to know that it's safe. The certifications that Vanta helps you get are proof that you take security seriously. Number two, Vanta helps you win deals and close contracts. You will lose deals without it. Many big companies will not sign contracts unless you're certified. No certification equals lost sales. This is why the average Vanta customer reports a 526% return on investment after becoming a Vanta customer. Number three, manual compliance is slow and painful. Doing everything by hand takes months. History's greatest founders invest heavily in technology and will not tolerate wasting valuable company time doing something with labor when technology can automate it and number four, you stay secure over time. Vanta helps keep checking your system constantly so you don't fall behind or forget anything important. Your intelligent security assistant works around the clock. Vanta will help you win trust, close deals, stay secure much faster and with less effort. Go to vanta.com to learn more and if you tell them that David from Founders sent you, they will give you $1,000 off. That is vanta.com. Leonardo Del Vecchio is the patron, legend and haunting spirit of the global eyewear business. He is its citizen Kane and its captain Ahab. His father died before he was born, his mother was poor and he was raised in an orphanage. He went to work as a metal engraver at the age of 14 At 25, Del Vecchio opened a workshop in a tiny village in the Dolomite Mountains that was giving away free land to companies that were willing to move there. Del Vecchio built a factory to make parts for eyeglasses. He had a young family. He built a house next door to the factory so he could start his day at 3 a.m. Over the next half century, Del Vecchio grew his company, Luxottica, into the world's greatest maker of glasses. In an industry that was traditionally fragmented and small scale, the totality of Del Vecchio's ambition took his rivals by surprise. This will remind you of another great European founder, Bernard Arnault. There's a lot of things that Del Vecchio is going to do throughout his career, which I'll talk about later, that are very Arnault-like. He sought to control every element of the business, from the metal alloys of the hinges to the stores where eyewear is sold. In a series of audacious takeovers, Del Vecchio acquired brands such as Ray Band and Oakley and Persol, and signed contracts with fashion houses such as Armani, Ralph Lauren and Chanel. He built factories in China, acquired vision insurers in the US and retail chains on four continents. Del Vecchio was Italy's highest individual taxpayer and the country's second richest man. A few years ago, people thought his career had run its course, but at the age of 81, Del Vecchio announced the greatest deal of his life, in which he also secured the final missing part of his frames, the lenses, when Lexotica agreed to merge with Escelor. Del Vecchio is referred to as simply El Presidente. In the optical world, conversations turned to the personal charisma and menace of Del Vecchio. He's the godfather, said Dean Butler, who founded Lenscrafters in 1983 Del Vecchio bought Lenscrafters in 1995 The story there is crazy. And again, very Bernard O'Neill-like. I'll get to that in a little bit. The godfather is the guy. He runs it. He runs this industry. Del Vecchio built the empire of Luxottica on two ideas. The first was to do everything itself. After the company's initial progression from parts to complete frames in the early 1970s, it set out step by step to control the entire process of making and selling glasses, from acquiring the raw materials to selling its own products in its own stores. No one had done this before Del Vecchio. There is a simplicity to him. To him, it is a very simple equation. I make the best stuff. Why doesn't everybody buy it? For the first 25 years, Luxottica stayed on the wholesale side of the industry. Behind the curtain, as it was called. Selling its glasses through opticians to the public. In the 1990s, however, Del Vecchio decided he wanted a retail network too. First, he got Luxottica listed on the New York Stock Exchange. An almost unheard of move for a mid-sized Italian business. A move a lot of experts said was impossible. Luxottica later estimated that that listing was worth about 100 million in free advertising in the United States. And it laid the groundwork for Del Vecchio's hostile takeover of US shoe. A conglomerate that owned Lenscrafters, the country's largest optical chain. On paper, the deal seemed outlandish. US shoe was five times larger than Luxottica, and its board did not want to sell. Having its own shops would also put Luxottica in direct competition with the thousands of optometrists it had been supplying for decades. A colleague of Del Vecchio described the deal this way. You have to not only be courageous, but a bit crazy. Luxottica completed the hostile takeover of US shoe for $1.4 billion. Once the deal was done, Del Vecchio promptly broke up US shoe until all that was left were the Lendcrafter stores which he wanted in the first place, which he then proceeded to fill with Luxottica frames. That is exactly the formula they have used ever since, said Jeff Cole, the former chief executive officer of Cole National Corporation, an even larger optical retailer that sold to Luxottica in 2004 When they buy a company, they spend a little time figuring it out and then kick out all the other suppliers. This formula means that when you and I walk into a Lendcrafters or a Sunglass Hut or David Cluloh or an Octocost Carol which has 950 branches in Brazil or a Zhu Lang Glasses in Shanghai or a Ming Long Store in Hong Kong, around 80% of the frames on display will be made by Luxottica. Having its own designers, engineers, factories, supply depots and retail outlets and contracts with 100,000 opticians around the world means it can also bring products to market faster and in greater quantities than any of its rivals. It also keeps a larger proportion of its profits as a result.