Ferrari

Ferrari is the pinnacle of luxury scarcity — across its entire 79-year history, the company has sold just 330,000 cars at an average price today of $500,000. For context, Hermès sells that many Birkins and Kellys roughly every 2 years, and Rolex moves that many watches every 3 months. And yet this ultimate luxury product also lives under the same roof with a widely beloved professional sports team… one with 400 million rabid fans from all walks of life who live and die by the Scuderia’s performance every F1 race weekend! How is it possible that these two seemingly contradictory customer bases can coexist within the same company? And far from destroying each other’s value, only reinforce it? The answer, it turns out, is a beautiful, bloody, tragic and romantic opera that spans two families and three generations — and just might be one of the best tales we’ve ever told on Acquired. Buckle up for the story of Ferrari. Sponsors: Many thanks to our fantastic Spring '26 Season partners: J. P. Morgan Payments https://bit.ly/acquiredJPMPferraripodVercel https://bit.ly/acquiredvercel26ServiceNow https://bit.ly/acquiredservicenow26Statsig https://bit.ly/acquiredstatsig26Links: Sign up for email updates https://www.acquired.fm/email, get out takeaways and research photos from each episode, and vote on future topics! Our Ferrari "episode preview" in WSJ https://www.wsj.com/business/autos/ferrari-acquired-podcast-luca-di-montezemolo-6d2ee2cb?mod=hp_lead_pos10Enzo Ferrari by Luca Dal Monte https://www.amazon.com/Enzo-Ferrari-Definitive-Biography/dp/1788404718Seeing Red on IMDb https://www.imdb.com/title/tt33256963/Go Like Hell by A. J. Baime https://www.amazon.com/Go-Like-Hell-Ferrari-Battle/dp/0547336055Stephen Wilmot's great WSJ piece on Ferrari https://www.wsj.com/articles/the-wild-economics-behind-ferraris-domination-of-the-luxury-car-market-8427dff0Ferrari factory tour https://www.youtube.com/watch?v=OKiCbk_4qyIWorldly Partners' Multi-Decade Ferrari Study https://worldlypartners.com/businesshistoryAll episode sources https://www.acquired.fm/episodes/ferrari#sourcesCarve Outs: Ford v Ferrari https://www.imdb.com/title/tt1950186/Maison Wheat sweaters https://maisonwheat.com/collections/mens?gad_source=1&gad_campaignid=22696090715&gbraid=0AAAAAp9Ya75ijeZKDNsuwXGfYz1rqHTvQ&gclid=CjwKCAjw1tLOBhAMEiwAiPkRHpvxw79MOGInML2jOvTqpaB1QkPsGpsbgjFdcnbCLO1MIgjCo_65yhoCjV4QAvD_BwECraighill scissors https://craighill.co/products/chroma-scissors?tw_source=google&tw_adid=&tw_campaign=23202298246&tw_kwdid=&gad_source=1&gad_campaignid=23192830497&gbraid=0AAAAACwaZstAWFYio9lIB0Y2DzeAM6SYm&gclid=CjwKCAjw1tLOBhAMEiwAiPkRHofpCCxg2cWH9q3JjNIKjnWh0A8ydjVpHl5xXSGkgnZKdaBimSPkURoCIE8QAvD_BwEAmazon grocery service https://www.aboutamazon.com/news/retail/amazon-same-day-fresh-grocery-delivery-united-statesTravelpro Altitude backpack https://travelpro.com/products/altitude%E2%84%A2-medium-expandable-laptop-backpack-25-30lMore Acquired: Get email updates https://www.acquired.fm/email and vote on future episodes! Join the Slack http://acquired.fm/slackCheck out the latest swag in the ACQ Merch Store https://www.acquired.fm/store!00:00:00 Start 00:01:08 Intro 00:06:11 Enzo Ferrari's Early Life & Tragedies (1898-1919) 00:12:39 Scuderia Ferrari: Enzo's Racing Dream (1920-1933) 00:25:08 The Prancing Horse & Ferrari's Branding 00:35:41 First Ferrari Road Cars & Le Mans Victory (1947-1949) 00:51:31 F1 & The Tragedies of Enzo's Life (1950s) 01:14:03 Ford vs. Ferrari: The Le Mans Rivalry (1963-1966) 01:21:24 Enzo Sells 50% to Fiat (1969) 01:29:10 Luca di Montezemolo's Return to F1 Glory (1971-1976) 01:52:40 Ferrari's "Pepsi Challenge" and how Luca rescued the company (1991) 02:27:41 Post-IPO Ferrari: New Models & Growth (2015-Present) 02:48:24 The FUV Purosangue & Model Range 03:07:16 Ferrari Luce: The EV Future with Jony Ive 03:12:37 Ferrari Today by the Numbers 03:29:39 Analysis 03:50:04 Carve-Outs + Thank Yous ‍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.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Ben Gilbert?

  Okay, David, so the question, do you have a favorite Ferrari?

• 0:04David Rosenthal?

  Oh, that's a tough one. I would never actually want to get behind the wheel of it, but I think I gotta go with the F40.

• 0:13Ben Gilbert?

  Of course.

• 0:13David Rosenthal?

  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.

• 0:23Ben Gilbert?

  Yeah, it's the defining supercar.

• 0:25David Rosenthal?

  Yes, yes. How about you?

• 0:26Ben Gilbert?

  I actually have two. One is the car from Charles Leclerc's wedding.

• 0:31David Rosenthal?

  Oh.

• 0:31Ben Gilbert?

  It's the 1957 250 Testa Rosa. 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.

• 0:45David Rosenthal?

  Ah, beauty and power, the story of Ferrari.

• 0:48Ben Gilbert?

  Yes. All right, should we do it?

• 0:50David Rosenthal?

  Let's do it.

• 1:08Ben Gilbert?

  Welcome to the spring 2026 season of Acquired, the podcast about great companies and the stories and playbooks behind them. I'm Ben Gilbert.

• 1:16David Rosenthal?

  I'm David Rosenthal.

• 1:17Ben 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.

• 1:36David Rosenthal?

  And that is not what we're talking about today.

• 1:40Ben Gilbert?

  And this episode has absolutely nothing to do with any of that. Today's episode, listeners, is about selling dreams.

• 1:46David Rosenthal?

  Oh, yes.

• 1:48Ben Gilbert?

  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.

• 2:09Ben Gilbert?

  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.

• 2:15David Rosenthal?

  Yeah.

• 2:16Ben Gilbert?

  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.

• 2:37David Rosenthal?

  Easily.

• 2:37Ben Gilbert?

  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.

• 2:50David Rosenthal?

  I think we got to scope it to companies that make products that are nominally available for purchase by consumers, but.

• 2:57Ben Gilbert?

  Yes.

• 2:57David Rosenthal?

  But yes.

• 2:58Ben Gilbert?

  Yes, like the Space Shuttle is a product, but you can't go buy a Space Shuttle.

• 3:04David Rosenthal?

  Yeah.

• 3:04Ben Gilbert?

  So I would say Ferrari is the only ultra-luxury brand that has reached mass cultural awareness.

• 3:11David Rosenthal?

  Yeah.

• 3:11Ben Gilbert?

  There are 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.

• 3:24David Rosenthal?

  Yeah, it's wild.

• 3:25Ben Gilbert?

  The paradoxes continue. People are dying for their SUVs, and yet they limit them to just 20% of total volume.

• 3:33David Rosenthal?

  Wait, what is this SUV of which you speak?

• 3:35Ben Gilbert?

  I'm sorry, Ferrari utility vehicle, because they would never.

• 3:38David Rosenthal?

  Yes, the FUV.

• 3:40Ben Gilbert?

  Yes.

• 3:40David Rosenthal?

  The Ferrari utility vehicle.

• 3:42Ben Gilbert?

  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.

• 4:27David Rosenthal?

  Right, right.

• 4:29Ben Gilbert?

  So that means there's less than 3,000 new customers buying Ferraris in any given year.

• 4:34David Rosenthal?

  It's actually completely insane.

• 4:37Ben Gilbert?

  Right.

• 4:37David Rosenthal?

  When you think about it.

• 4:38Ben Gilbert?

  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.

• 5:01David Rosenthal?

  It really is very Italian, you might say.

• 5:03Ben Gilbert?

  Yeah.

• 5:04David Rosenthal?

  It's beautiful, it's tragic, it's romantic.

• 5:06Ben Gilbert?

  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/email. 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/email. Come talk about this episode with us in Slack at acquired.fm/slash/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.

• 5:49David Rosenthal?

  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.

• 5:59Ben Gilbert?

  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.

• 6:10David Rosenthal?

  Oh, all right. Well, we start in 1898 in the medieval Italian town of Modena.

• 6:19David Rosenthal?

  With the birth of our hero Enzo Ancelmo 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, Adaldisa, is a beautiful young woman. And his father, Alfredo, is 12 years older than his mother. And his father runs a successful metal working shop and is kind of like, you know, fairly well to do, middle class entrepreneur about town. And Enzo and his father are often at odds growing up.

• 7:04David Rosenthal?

  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 Del 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 reading this definitive biography. It's really excellent. So anyway, his mother and his father are always fighting.

• 7:49David Rosenthal?

  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 paying any attention. And, you know, why should he? His family's Got money for the place and time. His older brother Dino, the golden child, you know, is gonna make them proud. He's gonna take over the family business.

• 8:34David Rosenthal?

  Enzo can just kinda 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.

• 8:44Ben Gilbert?

  Oh, what could have been a very different Enzo Ferrari.

• 8:47David Rosenthal?

  Ah, 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.

• 9:32David Rosenthal?

  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.

• 10:17Ben Gilbert?

  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."

• 10:32David Rosenthal?

  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.

• 10:39Ben Gilbert?

  Yep.

• 10:39David Rosenthal?

  So when he comes back home to Monna 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 20 something. He starts making noise to his mom about selling the family house to finance buying a racing car and that he's gonna go out and race this car and win prize money to support them.

• 11:05Ben Gilbert?

  It's an audacious plan.

• 11:06David Rosenthal?

  It's an audacious plan. His mom is like, ah, no.

• 11:12David Rosenthal?

  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. Enzo'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 Anelis, 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,

• 11:55David Rosenthal?

  and they also own and control Ferrari. Don't worry, we'll get there.

• 12:00Ben Gilbert?

  We'll get there, but not for, I mean, the better part of a century here.

• 12:04David Rosenthal?

  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,

• 12:46David Rosenthal?

  motor racing at this point in time was a private, individual sport.

• 12:52David Rosenthal?

  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.

• 13:05Ben Gilbert?

  That's right. I've heard that term.

• 13:06David Rosenthal?

  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 managed 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.

• 13:27Ben Gilbert?

  Not organized professional racers on highly paid teams.

• 13:31David Rosenthal?

  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 now this is a huge coup for Enzo. Like basically his whole dream as a teenager

• 14:16David Rosenthal?

  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.

• 14:44David Rosenthal?

  A coach building business in Madna called Carrotzaria Emilia. 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 carmaker would deliver. And then the clients would go to a coachmaker, 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 the mechanics of the car.

• 15:26Ben Gilbert?

  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.

• 15:45David Rosenthal?

  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 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.

• 16:29David Rosenthal?

  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.

• 17:04Ben Gilbert?

  The limit, as they say.

• 17:06David Rosenthal?

  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 his 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.

• 17:41Ben Gilbert?

  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.

• 17:52David Rosenthal?

  Often cross it.

• 17:53Ben Gilbert?

  I mean, it kind of depends where you put the line. Those who win are the ones who are absolutely willing to die.

• 17:58David Rosenthal?

  I mean, on our Formula One episode, we talked about through the 70s, right? There was an average of more than one death a year in

• 18:06Ben Gilbert?

  Yep.

• 18:06David Rosenthal?

  Formula One, 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 a Alfa Romeo dealership in Modena.

• 18:30Ben Gilbert?

  Oh, I didn't know this.

• 18:31David Rosenthal?

  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.

• 18:48Ben Gilbert?

  Pioneering.

• 18:49David Rosenthal?

  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

• 19:33David Rosenthal?

  and buy my cars. I kind of need to have Alfa's 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.

• 20:04Ben Gilbert?

  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 a sort of loose affiliation.

• 20:14David Rosenthal?

  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?

• 20:24Ben Gilbert?

  Yep.

• 20:25David Rosenthal?

  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 One and elsewhere, is the Scuderia Ferrari. That is the SF that you see on the Ferrari shield everywhere.

• 20:52Ben Gilbert?

  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...

• 21:01David Rosenthal?

  Enzo, as we shall see, is a natural born marketer. So important to note a couple of 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 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 garage who

• 21:41David Rosenthal?

  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.

• 22:17Ben Gilbert?

  In the video game world, this is modding.

• 22:20David Rosenthal?

  Yes.

• 22:20Ben Gilbert?

  Sort of taking someone's kind of basic game and souping it up into something really special for you that you're customizing.

• 22:26David Rosenthal?

  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 his grand master plan and 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.

• 23:03David Rosenthal?

  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, JPMorgan Payments.

• 23:15Ben Gilbert?

  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.

• 23:39David Rosenthal?

  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 three to 20 is like a completely different situation.

• 23:59Ben Gilbert?

  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 JPMorgan 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.

• 24:31David Rosenthal?

  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 JPMorgan's global payments network, plus local market infrastructure, is really what makes it possible.

• 24:44Ben Gilbert?

  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.

• 25:08Ben Gilbert?

  Okay, David, so where does the famous infamous prancing horse for Scooterya Ferrari come from?

• 25:17David Rosenthal?

  Yeah, how did all those Ferraris come to have a black prancing horse on them?

• 25:21Ben Gilbert?

  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.

• 25:31David Rosenthal?

  Yes.

• 25:31Ben Gilbert?

  And so there's these old pictures of a Alfa Romeo badged car, and the fender, sort of in front of the door, there's a Scooterya Ferrari prancing horse.

• 25:40David Rosenthal?

  Yes, it's bizarre to look at today.

• 25:42Ben Gilbert?

  Yeah, listeners will send that out in the email.

• 25:44David Rosenthal?

  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 dogfighting, and Baracca had won 34 aerial victories before he was tragically 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

• 26:29David Rosenthal?

  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.

• 26:55Ben Gilbert?

  That's an official endorsement, right there.

• 26:57David Rosenthal?

  Absolutely, absolutely. So, here we are now, Enzo is launching his Scooterya, 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. Sable 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 cars. 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.

• 27:40David Rosenthal?

  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.

• 28:05Ben Gilbert?

  Yep.

• 28:06David Rosenthal?

  So in our research, I spoke to Luca 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.

• 28:18Ben Gilbert?

  Important to note, different Luca than the Luca who wrote the book, David, that most of this narrative is based on.

• 28:25David Rosenthal?

  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.

• 28:46Ben Gilbert?

  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.

• 29:08David Rosenthal?

  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, same as Enzo. Enzo is not an engineer. He's not a car mechanic. He can't build the cars himself.

• 29:34Ben Gilbert?

  But they both had a sort of understanding and deep appreciation for the technical things that enabled their visions to be possible.

• 29:42David Rosenthal?

  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.

• 30:00Ben Gilbert?

  Yep.

• 30:00David Rosenthal?

  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, 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.

• 30:33Ben Gilbert?

  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.

• 30:42David Rosenthal?

  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.

• 31:04David Rosenthal?

  Because Ferrari has co-opted it.

• 31:05Ben Gilbert?

  Yep.

• 31:05David Rosenthal?

  So back to the Scuderia here. After a couple of 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.

• 31:50David Rosenthal?

  So he is Italy's official national racing team. There's this 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.

• 32:33David Rosenthal?

  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 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.

• 32:55Ben Gilbert?

  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.

• 33:03David Rosenthal?

  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.

• 33:21Ben Gilbert?

  Yes.

• 33:21David Rosenthal?

  During this period, Enzo gets into a fight with Alfa Romeo management and manages to get himself fired.

• 33:29Ben Gilbert?

  Yeah, this is 1939.

• 33:32Ben Gilbert?

  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 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.

• 34:07David Rosenthal?

  Well, I mean, you know, he gave them up to the Italian government, essentially.

• 34:10Ben Gilbert?

  Yep.

• 34:11David Rosenthal?

  So, speaking of which, during the war, Enzo creates a new company to feed the Italian war effort that he names Auto Avio Construction. Auto and Aviation Construction, which is, he sneaks that auto in there, because...

• 34:28Ben Gilbert?

  Not really supposed to be building cars and racing them, but like, I'm doing other stuff, too.

• 34:33David Rosenthal?

  Yeah.

• 34:33Ben Gilbert?

  It's not called Ferrari.

• 34:34David Rosenthal?

  It's not called Ferrari. But this same company is better known today as Ferrari Società Per Azioni, or Ferrari SPA, the Ferrari joint stock company that is publicly traded on the New York Stock Exchange under the ticker RACE.

• 34:50Ben Gilbert?

  Yes, best stock ticker ever.

• 34:52David Rosenthal?

  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 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 gonna do.

• 35:20Ben Gilbert?

  I bet those are some very valuable collector's items, if you can find them.

• 35:23David Rosenthal?

  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 gonna 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 hamlet of Maranello, not in the bigger city of Modena. Yep.

• 36:04David Rosenthal?

  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 kinda at a crossroads. The factory's not quite in ruins, but it's in, 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.

• 36:49David Rosenthal?

  Luigi Canetti, 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. "Canetti described the miracle that was America, the aggressiveness of its people, their childlike acquisitiveness, and their bourgeois credulities.

• 37:32David Rosenthal?

  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 Canetti, meant to exploit that naive colonial lust."

• 38:00Ben Gilbert?

  What writing?

• 38:00David Rosenthal?

  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, there's no way that he really was going to go into machine tools.

• 38:26Ben Gilbert?

  I mean, by 1943, his non-compete is up.

• 38:29David Rosenthal?

  Yes.

• 38:30Ben Gilbert?

  And he's allowed to use the name again.

• 38:31David Rosenthal?

  Yes.

• 38:31Ben Gilbert?

  And so, you know, clock's ticking.

• 38:33David Rosenthal?

  The clock's ticking. But it is true. Luigi definitely convinced Enzo about America.

• 38:39Ben Gilbert?

  Yeah.

• 38:39David Rosenthal?

  And America was critical for Ferrari.

• 38:42Ben Gilbert?

  And you know what wealthy Americans are extremely interested in when they're considering if they're going to buy a extremely expensive, rare automobile? They love that cold shoulder of a 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.

• 39:10David Rosenthal?

  Oh, yeah. Oh, yeah.

• 39:11Ben Gilbert?

  That sells cars.

• 39:12David Rosenthal?

  And boy, does Enzo know it.

• 39:14Ben Gilbert?

  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.

• 39:21David Rosenthal?

  Yeah. I mean, oh, he, the, the whole persona of Enzo Ferrari, you know, the dark sunglasses.

• 39:28Ben Gilbert?

  Oh, yeah. What's the tidbit you got on the sunglasses?

• 39:30David Rosenthal?

  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, uh, yeah, he leaned into it.

• 39:48Ben Gilbert?

  Yep.

• 39:48David Rosenthal?

  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 Construzioni Ferrari, now that he can use the Ferrari name.

• 40:06Ben Gilbert?

  Hmm.

• 40:07David Rosenthal?

  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.

• 40:20David Rosenthal?

  Pretty good. 50% win rate for

• 40:22Ben Gilbert?

  Yeah.

• 40:22David Rosenthal?

  You know, they newly rebuilt Scuderia Ferrari. They didn't sell any of those cars.

• 40:28Ben Gilbert?

  Yes. Enzo Ferrari, to this point in history, has not sold a car yet.

• 40:33David Rosenthal?

  No.

• 40:33Ben Gilbert?

  I mean, how old is he, David?

• 40:35David Rosenthal?

  He is, in 1947, he's 49 years old.

• 40:38Ben Gilbert?

  I mean, this is like this great, classic sort of founder myth of the young hot shot 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.

• 40:53David Rosenthal?

  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 introduce the Ferrari 166 Barchetta at the Turin Motor Show. And Luca Del 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,

• 41:38David Rosenthal?

  and, at the same time, being the protagonist of the most prestigious concours d'élégance in the four corners of the earth." What a great description of what a Ferrari is.

• 41:50Ben Gilbert?

  Absolutely. Enzo is really figuring out how to create desire here.

• 41:54David Rosenthal?

  Yes, yes. These machines are beautiful and they're 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.

• 42:18Ben Gilbert?

  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.

• 42:30David Rosenthal?

  I think you could also lump in the 70s and the 80s, large chunk of the 90s.

• 42:35Ben Gilbert?

  I mean, there is 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?

• 42:45David Rosenthal?

  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.

• 42:53Ben Gilbert?

  Yes.

• 42:53David Rosenthal?

  Boy, do Ferraris have a lot of flaws.

• 42:55Ben Gilbert?

  Yep.

• 42:56David Rosenthal?

  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 Canetti, 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. Get a sense of like, who are the customers in America?

• 43:31Ben Gilbert?

  Right, they're setting the precedent.

• 43:32David Rosenthal?

  Others are sold to various European racers and nobility, including Italy's own most celebrated industrialist Gianni Anielli, the patriarch of the Anielli family, which owns Fiat. Some might say the Henry Ford of Italy.

• 43:52Ben Gilbert?

  The founding family of Fiat.

• 43:53David Rosenthal?

  Yeah.

• 43:54Ben Gilbert?

  Not only the owners, but the founders. He was one of the first Ferrari customers?

• 43:58David Rosenthal?

  He was, indeed. He bought a 166 Barchetta.

• 44:01Ben Gilbert?

  That's an amazing full circle.

• 44:03David Rosenthal?

  Poetic.

• 44:03Ben Gilbert?

  We'll come back to that at the end of the story.

• 44:05David Rosenthal?

  Oh, yes, we will. So then, the next year, Luigi Canetti. 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 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 Kennedy says, no, no, I'm going to go do it. So he takes a privately owned car owned by the British nobleman and

• 44:49David Rosenthal?

  gentleman driver, Lord Selston, and they win. They win Le Mans.

• 44:54Ben Gilbert?

  Oh, wow.

• 44:55David Rosenthal?

  Like, the whole thing.

• 44:56Ben Gilbert?

  Not endorsed by Ferrari the company, just a sort of gentleman driver.

• 45:00David Rosenthal?

  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.

• 45:31Ben Gilbert?

  Right. Oh, that's interesting. It creates just as much consumer desire for those cars, whether it's him entering the competition or not.

• 45:37David Rosenthal?

  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.

• 45:45Ben Gilbert?

  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.

• 46:00David Rosenthal?

  Yes, such a great quote.

• 46:03Ben Gilbert?

  Another great one. Aerodynamics are for people who can't build engines.

• 46:08David Rosenthal?

  That's like that one, uh, the AMD guy, uh, real men build fabs.

• 46:12Ben Gilbert?

  Yes.

• 46:12David Rosenthal?

  Yeah.

• 46:13Ben Gilbert?

  Yes. Eventually Ferrari would become very much about aerodynamics in addition to engines.

• 46:18David Rosenthal?

  Yes, yes, but we know where Enzo's heart always was.

• 46:21Ben Gilbert?

  Yes. He also famously was a late adopter of new technology.

• 46:26David Rosenthal?

  Oh, yeah.

• 46:26Ben Gilbert?

  This is very, very different today, but in the early days, I mean, we're going to talk about Formula One 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, like, he's biding his time. He's like, well, wait and see. And he's got this idea that in a carriage, the, the horse pulls the carriage.

• 46:49David Rosenthal?

  Yeah. God put the horse in front of the carriage, so the engine's going in front of the car.

• 46:53Ben Gilbert?

  Surely the engines should be in the front. Yes. And it took years to, to adopt the sort of correct, most balanced way to do it. Cause 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.

• 47:16David Rosenthal?

  Yes, exactly.

• 47:17Ben Gilbert?

  To talk about the old ways of doing things.

• 47:20David Rosenthal?

  This is the point. It's all about the myth building. Enzo knew exactly what he was doing.

• 47:25Ben Gilbert?

  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.

• 47:43David Rosenthal?

  Yes, yes. Very Enzo. It's worth a moment here to talk about what actually is Ferrari at this point in time, after LeMans 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.

• 48:14David Rosenthal?

  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 Selsdon could just buy a 166 and drive it up to France and like, enter Le Mans. You gotta 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.

• 48:58Ben Gilbert?

  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.

• 49:07David Rosenthal?

  Yeah, separate locations.

• 49:08Ben Gilbert?

  Yes.

• 49:09David Rosenthal?

  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.

• 49:18Ben Gilbert?

  Whereas in Maranello, they're sitting there on the same plot of land.

• 49:22David Rosenthal?

  For many decades, the early history of Ferrari, it's the same people.

• 49:26Ben Gilbert?

  Yep.

• 49:26David Rosenthal?

  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 Ermaz and his sons making saddles for the nobility and the new op 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.

• 50:04Ben Gilbert?

  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 gonna 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.

• 50:27David Rosenthal?

  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.

• 50:37Ben Gilbert?

  Right.

• 50:37David Rosenthal?

  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.

• 50:49Ben Gilbert?

  That's a trade off clients were intentionally willing to make. This is not the most practical car. It's gonna 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.

• 51:03David Rosenthal?

  Yes, yes. So then in 1950, the pinnacle of motorsport arrives, the new Formula One World Championship Series, as we talked about at great length on our Formula One 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,

• 51:44David Rosenthal?

  what you are buying is a direct connection to that ongoing heritage in a way that you are not with any other auto manufacturer.

• 51:52Ben Gilbert?

  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.

• 52:08David Rosenthal?

  Yep. So as we continue the operatic life of Enzo Ferrari here, the reentry into the racing business and the new pinnacle of motorsport in Formula One unfortunately comes with renewed tragedy.

• 52:27David Rosenthal?

  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 reenter his life and his company.

• 53:06Ben Gilbert?

  And the next death is really the one that kind of defines the rest of his life going forward.

• 53:13David Rosenthal?

  Yes. But before we continue this beautiful tragedy of Enzo Ferrari and his company.

• 53:20Ben Gilbert?

  Now is a great time to tell you about one of our favorite companies, Versell. Versell 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.

• 53:52David Rosenthal?

  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.

• 54:19Ben Gilbert?

  Yes, which makes sense when you look at what's already running on Versell. OpenAI, Polymarket, Stripe. Versell built the modern platform for the web, which puts them in a really strong position for the agentic web.

• 54:32David Rosenthal?

  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.

• 55:02Ben Gilbert?

  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 V E R C E L dot com slash acquired. And just tell them that Ben and David sent you.

• 55:21David Rosenthal?

  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.

• 55:47David Rosenthal?

  Undeniably, one of the most beautiful automobiles ever manufactured.

• 55:55Ben Gilbert?

  But David, did you know, it is the Ferris Bueller car, but the car you see on screen is actually not a Ferrari?

• 56:03David Rosenthal?

  Yes, it's a replica. And Ferrari sued the replica maker after the movie, right?

• 56:08Ben Gilbert?

  That's right. Believe it or not, it is essentially a retrofitted Ford.

• 56:12David Rosenthal?

  Yes. Deeply ironic, given what we are going to talk about in a minute here.

• 56:17Ben Gilbert?

  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.

• 56:26David Rosenthal?

  Burst into flames.

• 56:27Ben Gilbert?

  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.

• 56:34David Rosenthal?

  Yes. You don't need to worry. No 250s were actually harmed in the making of Ferris Bueller's Day Off.

• 56:41Ben Gilbert?

  Yep.

• 56:42David Rosenthal?

  So. As we talked about, the first Ferrari that Enzo sold to clients was the 166, but less than 100 of them were ever made.

• 56:53Ben Gilbert?

  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.

• 57:08David Rosenthal?

  I think that actually might be the strategy today. Back then with the 166, there was demand for a lot more than 101.

• 57:17Ben Gilbert?

  That's true.

• 57:17David Rosenthal?

  But they could only make 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 still a very, very boutique, essentially handmade sports car manufacturer, but a lot more scale than the 100 or so.

• 57:45Ben Gilbert?

  Yeah, real production volumes.

• 57:46David Rosenthal?

  Yeah. And as we were alluding to earlier, this car is just stunning. No matter which variant of it, you're looking at it, 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 Batista Pinin, was his nickname, Farina, and his Pinin Farina coach builders. So remember earlier when we talked about Enzo's first business venture was he was going to be a coach builder?

• 58:26David Rosenthal?

  Turns out that was not his calling in life, but that was the calling in life for Pinin Farina. He was basically the Michelangelo of car body coach builders. And Enzo totally realized it, totally glommed onto it. And Built this beautiful partnership with Pininfarina, first Batista 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.

• 59:01Ben Gilbert?

  The LaFerrari?

• 59:03David Rosenthal?

  The LaFerrari halo car was the first fully in-house designed Ferrari. And during those 61 years, I believe every single road-going production Ferrari, except for one, I think, was designed by Pininfarina.

• 59:18Ben Gilbert?

  Wow, it's quite the run.

• 59:19David Rosenthal?

  It really is. So Luca Del 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 coach builder who worked at his side and conveyed in the shape of the body the power and philosophy of his cars. The coach builder, 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.

• 59:58Ben Gilbert?

  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. No, these things were thoughtfully designed and built hand in hand.

• 1:00:10David Rosenthal?

  Yeah, Pininfarina was like the Johnny Ive to the Enzo Steve Jobs.

• 1:00:14Ben Gilbert?

  That's a great analogy.

• 1:00:15David Rosenthal?

  That, in fact, Johnny Ive is going to come back into the story later, as we shall see.

• 1:00:19Ben Gilbert?

  Yep.

• 1:00:20David Rosenthal?

  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.

• 1:00:45David Rosenthal?

  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 and 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.

• 1:01:13Ben Gilbert?

  Of the nobility.

• 1:01:13David Rosenthal?

  Yeah.

• 1:01:14Ben Gilbert?

  Yes.

• 1:01:14David Rosenthal?

  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.

• 1:01:25Ben Gilbert?

  And quiet. It's not yelling at you.

• 1:01:27David Rosenthal?

  Yes.

• 1:01:27Ben Gilbert?

  There's no engines involved.

• 1:01:29David Rosenthal?

  No engines involved, that is for sure. There are French carmakers, 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.

• 1:02:12David Rosenthal?

  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.

• 1:02:22Ben Gilbert?

  Yep.

• 1:02:23David Rosenthal?

  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.

• 1:02:44Ben Gilbert?

  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.

• 1:02:57David Rosenthal?

  To live the good life.

• 1:02:57Ben Gilbert?

  To let loose.

• 1:02:58David Rosenthal?

  Yeah.

• 1:02:59Ben Gilbert?

  To, 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.

• 1:03:09David Rosenthal?

  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.

• 1:03:21Ben Gilbert?

  And these are death machines.

• 1:03:22David Rosenthal?

  Totally.

• 1:03:23Ben Gilbert?

  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.

• 1:03:35David Rosenthal?

  Yes, yes, they are beautiful death machines.

• 1:03:38Ben Gilbert?

  Beckoning to risk it all.

• 1:03:41David Rosenthal?

  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 Asgari, the sort of 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.

• 1:04:09Ben Gilbert?

  He's the heir.

• 1:04:10David Rosenthal?

  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.

• 1:04:21Ben Gilbert?

  I mean, and that's even more tragic.

• 1:04:22David Rosenthal?

  Yeah, it's more romantic if he had died in a race car.

• 1:04:25Ben Gilbert?

  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.

• 1:04:36David Rosenthal?

  Yes, yes, it's such a great point.

• 1:04:38Ben Gilbert?

  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 has still taken from him in this horrible illness that he cannot control and is pure randomness and awfulness.

• 1:04:54David Rosenthal?

  So that's 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's 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.

• 1:05:28Ben Gilbert?

  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.

• 1:05:44David Rosenthal?

  Yep.

• 1:05:44Ben Gilbert?

  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.

• 1:06:02David Rosenthal?

  Well, if you know anything about the shareholding structure of Ferrari today or its board of directors, you might say, wait a minute.

• 1:06:10Ben Gilbert?

  There sure is a Ferrari who owns it.

• 1:06:12David Rosenthal?

  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?

• 1:06:26Ben Gilbert?

  Yep.

• 1:06:27David Rosenthal?

  So Enzo had an affair. Enzo had many affairs, but one of his affairs with a woman named Lena Lardy 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.

• 1:06:56Ben Gilbert?

  And when you say invisible, he certainly isn't a Ferrari.

• 1:06:59David Rosenthal?

  No.

• 1:06:59Ben Gilbert?

  He's not taking that surname. Divorce was illegal at this point.

• 1:07:03David Rosenthal?

  Yes, divorce was not legal in Italy until the 1970s.

• 1:07:06Ben Gilbert?

  So in the eyes of the law, like, not an heir.

• 1:07:10David Rosenthal?

  Yeah.

• 1:07:10Ben Gilbert?

  Not capable of being an heir.

• 1:07:12David Rosenthal?

  A tragedy is the only word that I can think of to describe it. So that was 1956. And then in 1957, at the Mila Miglia race in Italy.

• 1:07:26Ben Gilbert?

  Which this race, this is this amazing legendary race through Italy that ran 1,000 miles.

• 1:07:33David Rosenthal?

  Yes.

• 1:07:33Ben Gilbert?

  And it runs from 1927 to 1957. It is beautiful and bloody.

• 1:07:42David Rosenthal?

  Yeah.

• 1:07:43Ben Gilbert?

  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.

• 1:08:03David Rosenthal?

  Yeah.

• 1:08:03Ben Gilbert?

  And Enzo has a quote on this. He loved the Mila 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 Mila Miglia Day. It is a day when I feel that my life is useful."

• 1:08:21David Rosenthal?

  Hmm, wow, I didn't realize that this 1957 race is the last one.

• 1:08:25Ben Gilbert?

  It is the last one.

• 1:08:26David Rosenthal?

  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.

• 1:08:54Ben Gilbert?

  Was he even at the race?

• 1:08:56David Rosenthal?

  I don't believe he was at the race, no.

• 1:08:57Ben Gilbert?

  But he's the owner of the company that made the car and there's a high death count.

• 1:09:00David Rosenthal?

  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

• 1:09:38David Rosenthal?

  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.

• 1:10:02Ben Gilbert?

  Oh, is this as long as they're not Italian drivers?

• 1:10:05David Rosenthal?

  Yes, as long as he agrees to never hire Italian drivers. Basically, like you can kill young men as long as you don't kill our young men.

• 1:10:13Ben Gilbert?

  Ooh, brutal.

• 1:10:16David Rosenthal?

  Oh, man. But all of this, this whole era, this just waves incredibly, incredibly heavily on Enzo.

• 1:10:25Ben Gilbert?

  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.

• 1:10:40David Rosenthal?

  Yeah.

• 1:10:41Ben Gilbert?

  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 gonna die, but I get to feel like I live the most life by putting my life at risk and living right on the limit.

• 1:11:06David Rosenthal?

  I mean, it's kind of actually like a way of fighting back against death.

• 1:11:11Ben Gilbert?

  Yes.

• 1:11:11David Rosenthal?

  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 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. But 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.

• 1:11:49Ben Gilbert?

  Yep.

• 1:11:50David Rosenthal?

  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?

• 1:12:03Ben Gilbert?

  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, as long as you don't have candy, we can do anything you want.

• 1:12:13David Rosenthal?

  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 1250 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.

• 1:12:55Ben Gilbert?

  Yep.

• 1:12:56David Rosenthal?

  By 1963, though, Enzo's 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 asked 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."

• 1:13:33David Rosenthal?

  Chaos, 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 it.

• 1:13:47Ben Gilbert?

  I didn't realize it was still a secret.

• 1:13:48David Rosenthal?

  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 gonna become of the company?

• 1:14:02Ben Gilbert?

  Right.

• 1:14:03David Rosenthal?

  Well, enter the Ford Motor Company and Ford versus Ferrari.

• 1:14:08Ben Gilbert?

  Yes. So listeners, most of this is from the book Go Like Hell, which is the book that Ford versus Ferrari is based on.

• 1:14:15David Rosenthal?

  The movie, yep.

• 1:14:16Ben Gilbert?

  So in 1963, Henry Ford the second, which notably, this is the grandson of Henry Ford the first. There was Henry Ford, then Edsel, then Henry Ford the second. And he's, 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.

• 1:15:01Ben Gilbert?

  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.

• 1:15:14David Rosenthal?

  Yeah.

• 1:15:15Ben Gilbert?

  So the deuce, as Henry Ford the second was known.

• 1:15:19David Rosenthal?

  What a great racing moniker, the deuce.

• 1:15:21Ben Gilbert?

  Right, right? Oh, and Enzo's got some great ones, too.

• 1:15:25David Rosenthal?

  Yeah, I mean, ultimately, in his older age, he becomes the grand old man. But what was he before that?

• 1:15:29Ben Gilbert?

  Il Comandatore. And the Drake?

• 1:15:33David Rosenthal?

  Yes.

• 1:15:33Ben Gilbert?

  He's, 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.

• 1:15:54David Rosenthal?

  Hmm.

• 1:15:54Ben Gilbert?

  So already, you should. Kind of

• 1:15:57David Rosenthal?

  There's something going on here.

• 1:15:58Ben Gilbert?

  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 them long to figure out that it is Ferrari.

• 1:16:10David Rosenthal?

  It's Enzo.

• 1:16:10Ben Gilbert?

  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, little mysterious, 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.

• 1:16:54Ben Gilbert?

  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.

• 1:17:05David Rosenthal?

  The racing team, yep.

• 1:17:06Ben Gilbert?

  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, we're buying your company. We have the final say.

• 1:17:24David Rosenthal?

  Ultimately, I control the budget.

• 1:17:26Ben Gilbert?

  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 Maire and beat his ass. We're gonna race him.

• 1:18:05David Rosenthal?

  And Enzo's probably like thinking dumb Americans the whole time.

• 1:18:09Ben Gilbert?

  Yes.

• 1:18:10David Rosenthal?

  There's this great quote in the Brock Yeats 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.

• 1:18:28Ben Gilbert?

  Oof, that hurts.

• 1:18:29David Rosenthal?

  Yeah.

• 1:18:30Ben Gilbert?

  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, enlists 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 Ford's in first, second, and third. It's this incredible story, but ultimately, this is a complete sideshow.

• 1:19:12David Rosenthal?

  Yeah. What's, what's really going on? What are Enzo's true intentions here?

• 1:19:16Ben Gilbert?

  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.

• 1:19:38David Rosenthal?

  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 it.

• 1:20:02Ben Gilbert?

  Exactly. And it is this Italian national treasure. I mean, that's real. That is the cultural export of Italy.

• 1:20:08David Rosenthal?

  Yep. And it was a way to signal to the market, like, hey, I might be open to a deal.

• 1:20:13Ben Gilbert?

  Yes. So any last little misconceptions you have about Enzo Ferrari not being an excellent businessperson and negotiator, that should be completely dispelled at this point. So David, what happens next?

• 1:20:26David Rosenthal?

  So all the Ford versus Ferrari drama was going down between the years of 1963 and call it 1966, 67.

• 1:20:36Ben Gilbert?

  Yep.

• 1:20:37David Rosenthal?

  Through all this, Enzo's 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.

• 1:21:05Ben Gilbert?

  And statistically, he was right.

• 1:21:07David Rosenthal?

  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, 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.

• 1:21:47David Rosenthal?

  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%.

• 1:22:14David Rosenthal?

  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.

• 1:22:57Ben Gilbert?

  The incredible irony was the end was nowhere near.

• 1:23:01David Rosenthal?

  Nowhere near.

• 1:23:02Ben Gilbert?

  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's son of Enzo.

• 1:23:13David Rosenthal?

  Yes, yes, yes.

• 1:23:14Ben Gilbert?

  So how many years was it between 1969 is when the 50% sale to Fiat? He doesn't pass away until?

• 1:23:22David Rosenthal?

  He lives another 20 years.

• 1:23:23Ben Gilbert?

  Yes.

• 1:23:23David Rosenthal?

  19 years.

• 1:23:24Ben Gilbert?

  1988, like he lives until I was born.

• 1:23:26David Rosenthal?

  Yes.

• 1:23:26Ben Gilbert?

  Is where's the sort of the end of his life.

• 1:23:29David Rosenthal?

  Well, he lives to launch the F40, which is the last car that Enzo launches.

• 1:23:33Ben Gilbert?

  So there are two really interesting things about this deal. One, Enzo started his career by applying for a job at Fiat.

• 1:23:41David Rosenthal?

  Yes.

• 1:23:41Ben Gilbert?

  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.

• 1:23:51David Rosenthal?

  Yes.

• 1:23:52Ben Gilbert?

  Of their road cars. It's amazing. And when you look at the actual deal, this, 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.

• 1:24:12David Rosenthal?

  Wow. Oh, my goodness.

• 1:24:15Ben Gilbert?

  Enzo really wanted to do this deal. And I think he determined at this point in history, I'm, I've not seen this written in 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.

• 1:24:47David Rosenthal?

  Car company and family and Yelly's.

• 1:24:49Ben Gilbert?

  Yes.

• 1:24:49David Rosenthal?

  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.

• 1:25:11Ben Gilbert?

  Yeah.

• 1:25:11David Rosenthal?

  The only reason this happened is because he truly thought he was about to die.

• 1:25:16Ben Gilbert?

  Yep.

• 1:25:16David Rosenthal?

  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.

• 1:25:29Ben Gilbert?

  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.

• 1:26:02David Rosenthal?

  Yes, I'm glad you brought up Lamborghini. Lamborghini had just launched the Mira, the Lamborghini Mira at this point in time, which was a truly excellent car.

• 1:26:11Ben Gilbert?

  Yep.

• 1:26:11David Rosenthal?

  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 and Yelly had to be the buyer to store at 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.

• 1:26:54David Rosenthal?

  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.

• 1:27:32Ben Gilbert?

  With a break in between.

• 1:27:33David Rosenthal?

  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.

• 1:27:45Ben Gilbert?

  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.

• 1:27:57David Rosenthal?

  Which sounds great until you realize none of it is really connected.

• 1:28:02Ben Gilbert?

  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.

• 1:28:21David Rosenthal?

  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.

• 1:28:32Ben Gilbert?

  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.

• 1:28:47David Rosenthal?

  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.

• 1:28:54Ben Gilbert?

  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 de Montezemolo, at least the first act of Luca, anyway.

• 1:29:16David Rosenthal?

  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 Montezemolo, to many of you listening, is already a living legend. I mean, as much as anyone in Ferrari history besides Enzo, Luca de 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.

• 1:29:59David Rosenthal?

  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.

• 1:30:08Ben Gilbert?

  Yeah, how did you get that? Because that's not out yet.

• 1:30:11David Rosenthal?

  Yeah, it's not distributed outside of Italy yet, but I got a link to watch it. It's directed and produced by Manish Pandy, 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.

• 1:30:36Ben Gilbert?

  Very poetic.

• 1:30:37David Rosenthal?

  In Bologna in Italy. But he moved to Rome as a child, where his best friend, growing up, is Cristiano Ratazzio, 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 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.

• 1:31:23David Rosenthal?

  Has a rally car driver.

• 1:31:26Ben Gilbert?

  Really?

• 1:31:27David Rosenthal?

  Like a rally car driver. Right. Yes. Yes. I don't think I've ever seen a Ferrari rally car.

• 1:31:32Ben Gilbert?

  I don't think these two things have ever intersected. These universes are about as far apart as you could possibly get.

• 1:31:40David Rosenthal?

  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, impassioned, rises to the occasion.

• 1:32:23David Rosenthal?

  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?

• 1:32:40Ben Gilbert?

  Unbelievable.

• 1:32:41David Rosenthal?

  You just can't make this stuff up. You really cannot make this up.

• 1:32:44Ben Gilbert?

  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 Anelli family. It's kind of this perfect candidate pool of one.

• 1:32:57David Rosenthal?

  Yes. So Enzo calls up the radio station. And he's like, I gotta 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.

• 1:33:16Ben Gilbert?

  Wow.

• 1:33:18David Rosenthal?

  So Luca and Enzo meet. And Enzo says to him, I like you. You know, you've got big balls.

• 1:33:27David Rosenthal?

  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 Anelli family, which only makes him even more attractive. He's like, oh, now I can have a spy at Fiat and the Anelli family too. So, great. Right. So, the first thing that Enzo assigns him to do is go figure out what's going on

• 1:34:11David Rosenthal?

  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 two liters 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

• 1:34:53David Rosenthal?

  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 One 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 driver's 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. Oof.

• 1:35:35David Rosenthal?

  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

• 1:35:54Ben Gilbert?

  Aerodynamics.

• 1:35:55David Rosenthal?

  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, OK, here's what I'm going to do. I'm going to make you, Luca, the team manager of the Ferrari Formula One team. And your mandate is to fix this. I can't fix it. I'm Enzo. I'm like the engine guy. You go in, you can be the new blood. You can fix this.

• 1:36:23Ben Gilbert?

  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.

• 1:36:35David Rosenthal?

  Yeah, he's not even 30 years old yet.

• 1:36:36Ben Gilbert?

  And suddenly you're managing the Formula One team, which historically is the driver that creates all the lust that sells the cars. Like, this needs to start working.

• 1:36:47David Rosenthal?

  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.

• 1:37:23Ben Gilbert?

  It is perfect.

• 1:37:24David Rosenthal?

  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.

• 1:37:42David Rosenthal?

  As their number one driver and in 1975, with the new team, the new approach, Luca's manager, Niki Lauda wins the driver's championship for Ferrari and Ferrari wins the constructor's 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.

• 1:38:04Ben Gilbert?

  Wow.

• 1:38:04David Rosenthal?

  As this young hero who has come in and saved essentially the national team of Italy from this despairing period.

• 1:38:13Ben Gilbert?

  It's amazing. And the funniest thing is imagining, as you describe these conversations, that Luca's off doing stuff and 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 of 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,

• 1:38:55Ben Gilbert?

  I mean, truly unbelievable custom racetrack only for Ferrari's research and development.

• 1:39:01David Rosenthal?

  Yes, that'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.

• 1:39:11Ben Gilbert?

  Yep.

• 1:39:11David Rosenthal?

  Ah, 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 of things happen. The next year in F1, there's the truly crazy tragedy of Niki Lauda catching on fire.

• 1:39:40Ben Gilbert?

  Horrific.

• 1:39:40David Rosenthal?

  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.

• 1:39:56Ben Gilbert?

  But almost does remarkably. If you're interested in this, go watch the movie Rush. It's awesome.

• 1:40:01David Rosenthal?

  So good. Enzo, though, remember, he's very experienced with these race car drivers and they're brushes with death.

• 1:40:10David Rosenthal?

  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 some conflict there. 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 Anielli 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.

• 1:40:55David Rosenthal?

  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.

• 1:41:21Ben Gilbert?

  Much later. And there's this glorious, amazing return of Luca, and there's this unbelievable run in Formula One, 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.

• 1:41:45David Rosenthal?

  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.

• 1:41:55Ben Gilbert?

  There absolutely is.

• 1:41:57David Rosenthal?

  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 Forty, fifty million or more.

• 1:42:13Ben Gilbert?

  One of them sold for seventy million.

• 1:42:15David Rosenthal?

  Yeah. So those cars existed in Enzo's past, but there was never a model that was made just to be a 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 nineteen eighty-eight.

• 1:42:37Ben Gilbert?

  All right. So tell us about that forty.

• 1:42:39David Rosenthal?

  Oh, man. Talk about a death machine.

• 1:42:45David Rosenthal?

  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.

• 1:43:06Ben Gilbert?

  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.

• 1:43:22David Rosenthal?

  No, like raw carbon fiber.

• 1:43:24Ben Gilbert?

  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.

• 1:43:40David Rosenthal?

  No.

• 1:43:40Ben Gilbert?

  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.

• 1:43:45David Rosenthal?

  This thing is trying to kill me at every angle.

• 1:43:47Ben Gilbert?

  I'm in some sort of test harness.

• 1:43:49David Rosenthal?

  Yeah.

• 1:43:49Ben Gilbert?

  Yes.

• 1:43:50David Rosenthal?

  Oh, 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 gonna crash.

• 1:44:06Ben Gilbert?

  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.

• 1:44:33David Rosenthal?

  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 One Grand Prix that is run after Enzo's death, finishes 1-2, wins at Monza.

• 1:45:17Ben Gilbert?

  Oh, my god.

• 1:45:17David Rosenthal?

  The Italian Grand Prix. And that is the only race that Ferrari won that season.

• 1:45:26David Rosenthal?

  Either the gods were smiling upon Enzo in death.

• 1:45:31Ben Gilbert?

  Or Bernie Ecclestone's fix was in.

• 1:45:32David Rosenthal?

  Yes, the fix was in. Either way, it was poetic. For the next couple of years, though, oh, ma'am, the sort of slow-motion disaster at Ferrari continues unabated on both sides of the business.

• 1:45:45Ben Gilbert?

  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.

• 1:45:58David Rosenthal?

  Yeah, you found detail on this. I couldn't find it.

• 1:46:01Ben Gilbert?

  So a good friend of the show, Arvind Navarathnam, 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 lira to acquire the remaining 40% of Ferrari.

• 1:46:18David Rosenthal?

  Oh, I'm so curious. What was it?

• 1:46:20Ben Gilbert?

  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?

• 1:46:32David Rosenthal?

  Six, seven 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 Anielli family acquired 40% of Ferrari for a valuation of 192 million. Unbelievable.

• 1:46:54Ben Gilbert?

  Or that they acquired 90% of it for, what, 72 million dollars?

• 1:46:59David Rosenthal?

  Yeah, in aggregate.

• 1:47:00Ben Gilbert?

  Yeah.

• 1:47:00David Rosenthal?

  Wow, wow, wow.

• 1:47:01Ben Gilbert?

  Or that as recently as 1988, it was worth only 192 million dollars. I mean, this is a company today that's worth recently over 90 billion dollars, but today 55 billion dollars.

• 1:47:14David Rosenthal?

  Yes.

• 1:47:14Ben Gilbert?

  In 1988, 192 million.

• 1:47:17David Rosenthal?

  Well, this really just highlights how different a company Ferrari was when Enzo died.

• 1:47:25Ben Gilbert?

  Yes.

• 1:47:25David Rosenthal?

  And how much Luca di Mattezzemolo 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 Testerosas over the seven years that the Testerosa was in production.

• 1:48:09David Rosenthal?

  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.

• 1:48:41Ben Gilbert?

  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.

• 1:48:54Ben Gilbert?

  If you look in 1991, that grew all the way up to 4,500. They just kept ramping, ramping, ramping and making more cars.

• 1:49:07David Rosenthal?

  Yeah, not the right fix.

• 1:49:09Ben Gilbert?

  Not the right fix.

• 1:49:10David Rosenthal?

  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 Anielli 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.

• 1:49:51David Rosenthal?

  And Luca de 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 Anielli empire. He became CEO of the beverage company Shinzano, which is another Anielli family company. And so he gained CEO experience.

• 1:50:32David Rosenthal?

  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, he didn't want to join, was he gave him an F40.

• 1:51:15David Rosenthal?

  And thus, the three tenors were born.

• 1:51:17Ben Gilbert?

  That is awesome.

• 1:51:18David Rosenthal?

  So, once the World Cup is over, Gianni's like, okay, enough messing around, you gotta come back, fix this. So, the first thing Montezemolo does when he knows he's gonna 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 gonna go buy my own 348 and test it out. And Luca's actual quote on this is, "The Ferrari 348 was a shit 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.

• 1:52:03David Rosenthal?

  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 performed, you know, kind of drag race at stoplights. He was like, "I was getting beaten off the line by Volkswagen Golfs in a Ferrari."

• 1:52:21Ben Gilbert?

  Brutal.

• 1:52:23Ben Gilbert?

  What do you attribute this to? What, like, 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 over making them, and no one wants them. What's wrong? Like, why have the wheels come off the bus here?

• 1:52:39David Rosenthal?

  It was Fiat. It was all they knew how to do. They came in of like, "Oh, the way we can fix this is we'll increase production, we'll cut costs, 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 Fiat's, but they had lost that true connection to race machines. And so Luca comes back and says, we gotta fix this.

• 1:53:21David Rosenthal?

  So at the time, the Japanese sports car industry was on the rise. And all the car enthusiasts were saying Ferrari is dead. The Italian carmakers 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.

• 1:53:57Ben Gilbert?

  Wow.

• 1:53:58David Rosenthal?

  But how sad is that? It's a Honda, a Honda.

• 1:54:02Ben Gilbert?

  That's completely lost to history today. You don't hear anyone talking about Ferrari is this sort of like untouchable apex brand that it's hard to imagine that happening just, you know, as recently as the early 90s.

• 1:54:14David Rosenthal?

  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.

• 1:54:25Ben Gilbert?

  Yep.

• 1:54:25David Rosenthal?

  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 One team. We have to fix the Formula One team. Going back to his great quote, 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.

• 1:55:01Ben Gilbert?

  Yep.

• 1:55:02David Rosenthal?

  So the team hadn't won a championship since 1979. Luca goes out and recruits.

• 1:55:09David Rosenthal?

  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 of years for Luca and the team to turn this around, but this is just absolute domination that they unleash on the field.

• 1:55:39Ben Gilbert?

  By the end of the decade, there would be five straight years, 2000 to 2004, where Michael Schumacher won every single driver's championship five years in a row, and Ferrari won every single constructor's championship five years in a row.

• 1:55:54David Rosenthal?

  As we talked about on the F1 episode, it was a problem for Formula One. The sport became too boring because Ferrari always won.

• 1:56:00Ben Gilbert?

  Yep.

• 1:56:01David Rosenthal?

  In total, under Montezemolo's tenure, Ferrari wins 19 drivers and constructors championships, which is more than Enzo.

• 1:56:13Ben Gilbert?

  That's amazing.

• 1:56:14David Rosenthal?

  It's incredible how he turned the team around, just like he did back as Enzo's assistant back in the day.

• 1:56:20Ben Gilbert?

  All right, then the technology.

• 1:56:21David Rosenthal?

  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.

• 1:56:37Ben Gilbert?

  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 and D as a percentage of their revenue than most other car companies. It's become sort of a signature of the company.

• 1:56:59David Rosenthal?

  Yep, and this absolutely was a hallmark of Montezemolo's turnaround. Enzo didn't really care that much about technology.

• 1:57:06Ben Gilbert?

  That's interesting, yeah.

• 1:57:08David Rosenthal?

  Yep, so first thing they do. We gotta fix the 348, the flagship sports car. So they revise it, they do some stop gaps. But ultimately, as soon as possible, they kill it and replace it with the 355, which was just a glorious car.

• 1:57:25Ben Gilbert?

  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.

• 1:57:51David Rosenthal?

  Wow, wow.

• 1:57:52Ben Gilbert?

  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.

• 1:58:07David Rosenthal?

  Yep.

• 1:58:08Ben Gilbert?

  The other thing to note, before they launched the 355, is Lucca 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, Lucca 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 backorder list again. But interestingly, it would not eclipse that 1991 peak of 4,500 cars again until 2006, a full 15 years later.

• 1:58:47David Rosenthal?

  Yeah. We need to not just fix the myth of Ferrari, but we need to protect it. And this was Lucca's third and most important priority, the myth. Lucca came from a very different background and life experience than Enzo.

• 1:59:06David Rosenthal?

  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 weightless. Luca is the one who institutes presentation ceremonies when your car is delivered.

• 1:59:50David Rosenthal?

  Luca is the one who institutes custom luxury leather luggage that comes perfectly fitted to your Ferrari. Luca institutes the luxury strategy at Ferrari.

• 2:00:03Ben Gilbert?

  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?

• 2:00:10David Rosenthal?

  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.

• 2:00:18Ben Gilbert?

  Right, he grew up in Modena.

• 2:00:20David Rosenthal?

  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.

• 2:00:41Ben Gilbert?

  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.

• 2:01:03David Rosenthal?

  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.

• 2:01:28Ben Gilbert?

  Yep. He does a handful of other tactics that I would say-

• 2:01:34Ben Gilbert?

  Set the company up for success in the short term, but add risk in the long term. And there's a big need to. 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.

• 2:02:10David Rosenthal?

  Yes. Now, there's a pro and a con here, but yes, I thought that's where you were going to go with this.

• 2:02:15Ben Gilbert?

  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 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.

• 2:02:49David Rosenthal?

  Yes, yes.

• 2:02:50Ben Gilbert?

  Remember netbooks, David?

• 2:02:52David Rosenthal?

  Oh, yeah. I was wondering if you were going to find this.

• 2:02:56Ben Gilbert?

  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.

• 2:03:08David Rosenthal?

  Yes.

• 2:03:08Ben Gilbert?

  That is like the microcosm of brand destruction, like the reason to resist the heroin of brand licensing.

• 2:03:16David Rosenthal?

  Yes. The Acer laptop was a real low point.

• 2:03:22Ben Gilbert?

  But there's a lot of crap that it's on.

• 2:03:23David Rosenthal?

  There's a lot of crap that there's on. Now, there is some nuance here. If we were talking about Louis Vuitton or Hermes 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.

• 2:03:47Ben Gilbert?

  Yes.

• 2:03:47David Rosenthal?

  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 attention 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.

• 2:04:19Ben Gilbert?

  Right. Ferrari is both a luxury brand and a giant international sports team.

• 2:04:24David Rosenthal?

  Yes, yes, exactly.

• 2:04:26Ben Gilbert?

  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.

• 2:04:32David Rosenthal?

  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.

• 2:04:40Ben Gilbert?

  Right. Ferrari is Hermès and Manchester United smashed together.

• 2:04:45David Rosenthal?

  Yes, yes.

• 2:04:45Ben Gilbert?

  Yeah. And that makes it super different. So I guess to your point, that does validate the licensing their brand for merchandise strategy.

• 2:04:52David Rosenthal?

  Yeah.

• 2:04:53Ben Gilbert?

  Much more.

• 2:04:53David Rosenthal?

  I mean, hey, look, it doesn't validate the Acer netbook, but there is like some actual justification to the activity.

• 2:05:02Ben Gilbert?

  Yeah.

• 2:05:03David Rosenthal?

  So manufacturing. Should we talk about how that changes under Luca's tenure?

• 2:05:09Ben Gilbert?

  Yeah. So I know a lot about manufacturing today. Did Luca really bring Ferrari's current manufacturing to life?

• 2:05:18David Rosenthal?

  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.

• 2:05:35Ben Gilbert?

  Hmm. 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.

• 2:06:15Ben Gilbert?

  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 lineup 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.

• 2:06:33David Rosenthal?

  Yep.

• 2:06:33Ben Gilbert?

  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 timeframe, five 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.

• 2:07:18Ben Gilbert?

  They have 700 degree Celsius 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.

• 2:07:29David Rosenthal?

  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.

• 2:08:10Ben Gilbert?

  Or an Audi Q8?

• 2:08:12David Rosenthal?

  Yeah.

• 2:08:12Ben Gilbert?

  Is that right?

• 2:08:12David Rosenthal?

  One of the Qs, yeah. No Ferrari shares a platform with any other car.

• 2:08:17Ben Gilbert?

  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.

• 2:08:28David Rosenthal?

  And some of this was starting to creep in in the last years of Enzo and the interregnum period when Fiat was taking control. There were some Fiat parts and switches that were making their way into Ferraris. And Luca stops all of this. It's like, no, no, no. The only things that go into Ferraris are Ferraris.

• 2:08:47Ben Gilbert?

  It's what makes us different.

• 2:08:49David Rosenthal?

  Yes.

• 2:08:49Ben Gilbert?

  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 a automated production line that can easily make lots of cars.

• 2:09:29David Rosenthal?

  Efficiency is not the point for Ferrari.

• 2:09:32Ben Gilbert?

  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, it's a double edged sword. You would never want to do 100,000 cars a year with the Ferrari model. In fact, you, 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 can 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.

• 2:10:12David Rosenthal?

  Yep.

• 2:10:12Ben Gilbert?

  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.

• 2:10:38David Rosenthal?

  Well, really, this is how bespoke handmade craftsmanship applies to a modern automobile company. It's the same dynamic as the other luxury companies as Hermes. You think Hermes is investing in efficiencies in their factories? Like, hell, no.

• 2:10:55Ben Gilbert?

  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.

• 2:11:18David Rosenthal?

  There is a team of artisans and experts aided by technology that is making my Ferrari.

• 2:11:24Ben Gilbert?

  Yes, that's exactly right.

• 2:11:25David Rosenthal?

  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.

• 2:11:35Ben Gilbert?

  Yes.

• 2:11:36David Rosenthal?

  And international.

• 2:11:37Ben Gilbert?

  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.

• 2:11:51David Rosenthal?

  Correct.

• 2:11:52Ben Gilbert?

  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 acceptable.

• 2:12:19David Rosenthal?

  Very fashionable.

• 2:12:20Ben Gilbert?

  Yes.

• 2:12:21David Rosenthal?

  Extremely fashionable.

• 2:12:22Ben Gilbert?

  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.

• 2:12:39David Rosenthal?

  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.

• 2:13:00Ben Gilbert?

  Yep.

• 2:13:01David Rosenthal?

  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.

• 2:13:16Ben Gilbert?

  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.

• 2:13:29David Rosenthal?

  Yes.

• 2:13:29Ben Gilbert?

  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.

• 2:13:45David Rosenthal?

  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.

• 2:14:14Ben Gilbert?

  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.

• 2:14:37David Rosenthal?

  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.

• 2:14:48Ben Gilbert?

  Oh, David, stop.

• 2:14:50David Rosenthal?

  I know, I know.

• 2:14:50Ben Gilbert?

  Disgusting.

• 2:14:51David Rosenthal?

  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

• 2:15:31David Rosenthal?

  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 Gran Turismo if you want it. And that's what they do. And so this is when the Quattroporte, the Maserati Quattroporte launches in America. And to great demand. Unfortunately, in the beginning, it was not a very good car. It took them 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.

• 2:16:11Ben Gilbert?

  I was gonna make that connection. I was thinking about it. But I don't think, I mean, Maseratis are not made in Maranello, right?

• 2:16:17David Rosenthal?

  No, they're not.

• 2:16:18Ben Gilbert?

  So Ferrari gets this 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 and D.

• 2:16:39David Rosenthal?

  Yes.

• 2:16:40Ben Gilbert?

  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.

• 2:16:59David Rosenthal?

  Yep. And Luca is a huge part of that, as is Piero, too.

• 2:17:03Ben Gilbert?

  Yep.

• 2:17:03David Rosenthal?

  Him having the 10% ownership stake and place on the board keeps that continuity to Enzo and the Ferrari family, even in a 10% minority ownership way in the company.

• 2:17:13Ben Gilbert?

  Yep.

• 2:17:14David Rosenthal?

  Well, speaking of Ferrari also being part of the Fiat and Anielli empire, something pretty big is about to change here as we enter the early 2000s, which is Gianni Anielli 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.

• 2:17:57Ben Gilbert?

  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.

• 2:18:14David Rosenthal?

  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.

• 2:18:35Ben Gilbert?

  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.

• 2:18:57David Rosenthal?

  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.

• 2:19:15Ben Gilbert?

  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.

• 2:19:31David Rosenthal?

  So in 2003, Gianni Anelli dies. Tragically, the logical heirs to the Anelli empire in the next generation had also already died young. Hmm. 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. Hmm.

• 2:20:13David Rosenthal?

  So the last surviving Anelli 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 Anelli's as sort of a stored 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.

• 2:20:53David Rosenthal?

  And at the same time, the chosen next heir in the generation below in the Anelli family is a man named John Elcan, who you might have heard of. Today is a celebrated investor and head of Exor, the publicly traded holding company, which is the Anelli 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 Elcan have to work together to try to save Fiat. So the first thing they do is they turn to Sergio Marchionne,

• 2:21:35David Rosenthal?

  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 Anielli 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 Elkin as the Anielli family representative.

• 2:22:08Ben Gilbert?

  Which it's interesting to note here, the Anielli family empire is larger than just Fiat.

• 2:22:13David Rosenthal?

  Yes, and this is how they really differ from Ford and the Ford family. The Ford family was always focused on the Ford Motor Company. The Anielli family Fiat was the crown jewel, but they invested in and built many businesses over the years, throughout the generations.

• 2:22:27Ben Gilbert?

  They really diversified out of just one company.

• 2:22:29David Rosenthal?

  Yep, so the three of them together miraculously turn around Fiat and save it from the abyss through the combination of a couple of 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.

• 2:23:02Ben Gilbert?

  Yep, you've seen this car many, many times.

• 2:23:05David Rosenthal?

  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.

• 2:23:23Ben Gilbert?

  I gotta 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 happened to Ferrari.

• 2:23:39David Rosenthal?

  And it was designed by a man named Frank Stevenson, 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.

• 2:23:53Ben Gilbert?

  I see.

• 2:23:53David Rosenthal?

  That gets pushed up to the Fiat 500. Now, the other thing that happens, and this is all Sergio's 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 a 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.

• 2:24:30Ben Gilbert?

  Wow, he is a magician.

• 2:24:31David Rosenthal?

  He really is a magician. So Sergio, Luca, and John Elkin 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.

• 2:25:00Ben Gilbert?

  Man, it's crazy that Fiat just barely got their house in order in time.

• 2:25:05David Rosenthal?

  Just barely.

• 2:25:06Ben Gilbert?

  Otherwise, they could have been down with the rest of the global economy.

• 2:25:09David Rosenthal?

  Well, Sergio says, we can play offense here.

• 2:25:12Ben Gilbert?

  Hmm.

• 2:25:13David Rosenthal?

  So he engineers a partnership with Chrysler, which had been quasi-nationalized, taken over by the US government at this point in time.

• 2:25:25Ben Gilbert?

  Right, they were in the worst of the positions of Ford, GM, and Chrysler.

• 2:25:29David Rosenthal?

  The big three automakers in the US, yes. So they engineer a partnership in 2008, Sergio does with Chrysler, and then fully acquires the company in 2014.

• 2:25:40Ben Gilbert?

  And that creates FCA, Fiat Chrysler Automobiles?

• 2:25:43David Rosenthal?

  FCA, and basically for free. Fiat paid either zero or almost zero in sort of equity value for Chrysler.

• 2:25:53Ben Gilbert?

  Wow.

• 2:25:54David Rosenthal?

  Yeah, it truly is amazing what they did and saved the company, too. I mean Chrysler and Dodge and Jeep and all of its brands are a thing today and part of Stellantis today because of what Fiat and Sergio did during the financial crisis.

• 2:26:08Ben Gilbert?

  And Stellantis is the name for the merger between Fiat Chrysler Automobiles and?

• 2:26:14David Rosenthal?

  Peugeot.

• 2:26:15Ben Gilbert?

  Peugeot, okay.

• 2:26:16David Rosenthal?

  The French company.

• 2:26:16Ben Gilbert?

  Okay.

• 2:26:18David Rosenthal?

  Yeah, one of those French car companies that, you know, we're not going to make an episode about.

• 2:26:23David Rosenthal?

  So as everything is stabilizing at Fiat and returning to success, in 2010, Luca steps down from the Fiat chairmanship and returns solely full-time to Ferrari. John Elkin assumes the Fiat chairmanship then. He's now ready to, you know, be the steward and heir of the Anelli family and work with Sergio and running the Fiat empire. But there is one cost to taking over Chrysler, which was that in doing so Fiat had to assume Chrysler's debt.

• 2:27:01David Rosenthal?

  Including about $5.5 billion that it owed the US and Canadian governments for the bailout. So when this happens, the combined debt load for FCA, Fiat Chrysler Automobiles, balloons up to over $11 billion. Fiat announces to Wall Street as part of the merger, though, Sergio does, hey, we've got a plan and we are going to reduce that from over $11 billion to $1 billion or less over the next four years by 2018.

• 2:27:32Ben Gilbert?

  So they are forecasting a lot of cash flow, that, hey, this business is going to be great, super profitable, we're going to eliminate $10 billion of debt.

• 2:27:41David Rosenthal?

  They are forecasting a lot of debt reduction. Some of that will come from cash flow.

• 2:27:46Ben Gilbert?

  Okay.

• 2:27:47David Rosenthal?

  And some of that might come from other places. So Sergio needs, you know, a lot of cash to meet his promise to Wall Street and pay down the debt, where is an easy place to find it? He's gonna IPO Ferrari and use the proceeds to help pay down the Fiat Chrysler debt. Now, we should note, through all of this, if you couldn't already foresee it, there was a huge conflict and power struggle brewing between Luca and Sergio. These two guys were both incredible auto company operators, but like, cut from totally different cloths.

• 2:28:28Ben Gilbert?

  Yeah.

• 2:28:29David Rosenthal?

  Luca is the ultimate car guy. He's a great businessman and he's a great executor of the luxury strategy for Ferrari. But in his mind and his heart, the cars always have to come first. The great business decisions come out of the great car decisions. Sergio, on the other hand, is not a car guy. He came from a consumer products testing company. He is a financial engineer and an empire builder. And actually, the great tragedy to this act of Ferrari is it could have been a beautiful partnership.

• 2:29:03Ben Gilbert?

  And was for a while.

• 2:29:04David Rosenthal?

  Between the two of them, and was, truly was. They saved Fiat together. But ultimately, Luca and Sergio are not going to be able to coexist and share power within the same structure. And for a while, Luca going back to just Ferrari.

• 2:29:21Ben Gilbert?

  Makes it work.

• 2:29:21David Rosenthal?

  Felt like it was, it was the solution that made sense. His passion was Ferrari, his history was there, he could go back to running it and be very happy, and Sergio could leave it alone and continue running the Fiat empire. But once Sergio needs the cash to pay down the Chrysler debt and turns to Ferrari, they're on a collision course. Because IPO-ing Ferrari is like, completely anathema to Luca's way of being. Becoming a public company means you gotta deliver consistent, predictable growth, which means hitting a drumbeat of shipping more cars, making more models, adding more clients, raising prices.

• 2:30:03David Rosenthal?

  It's not like Luca doesn't wanna do these things in a vacuum, but he wants to do these things very thoughtfully and over an extended period of time, not on a Wall Street calendar.

• 2:30:14Ben Gilbert?

  And to have flexibility.

• 2:30:16David Rosenthal?

  Yes.

• 2:30:17Ben Gilbert?

  Not opposed to any of those things, just the way that you and I aren't opposed to doing things with acquired, but we don't wanna be. Locked in and committed, you want some organicness to how you run the business. You want the products to be these living, breathing things. You want to be able to rapidly change your mind in the face of new market conditions.

• 2:30:35David Rosenthal?

  Yep. I mean, hell, one of Luca's very first actions when he came back to Ferrari after Enzo's death was to cut production by half.

• 2:30:44Ben Gilbert?

  Right, right. Can you imagine doing that as a publicly traded company?

• 2:30:47David Rosenthal?

  Yeah, making it announce to Wall Street like, oh, hey, we think the right thing to do next year is to cut our production by half. Hope you're with us.

• 2:30:53Ben Gilbert?

  Now, interestingly, at first, yes, they're publicly traded, but don't they only float 10% of Fiat's 90%?

• 2:31:03David Rosenthal?

  Yeah. Well, so here's what happens. Thanks to the Chrysler acquisition, it's not an option not to pay down the debt. The company Fiat, the empire, has to get the money. So the choice is kind of made for them. They have to side with Sergio.

• 2:31:17Ben Gilbert?

  Because they have to go public and he's kind of the guy to run it as a public company.

• 2:31:21David Rosenthal?

  I mean, taking Ferrari public is part of the plan of how this whole thing is going to work.

• 2:31:26Ben Gilbert?

  Yeah. Do you think Luca was not a public company CEO?

• 2:31:30David Rosenthal?

  I think Luca probably had zero interest in taking Ferrari public. And I think he had even less than zero interest in using proceeds from the Ferrari IPO and the other financial engineering that we're about to talk about to save Chrysler and Fiat. Luca did not care about any of that.

• 2:31:51Ben Gilbert?

  Whereas on the other side, Sergio is kind of exactly the guy you would want to manage the street, to look for all the ways that the Ferrari business is quote unquote, unoptimized, to realize the full value of the asset. He's like the sort of leader that investors salivate over.

• 2:32:07David Rosenthal?

  Yes, yes. So in September 2014, Sergio unceremoniously fires Luca as chairman of Ferrari. The pretext is that the Ferrari F1 team has performed poorly in recent years, but

• 2:32:24Ben Gilbert?

  Which was true.

• 2:32:25David Rosenthal?

  I mean, was true, but like. For God's sakes, just a few years earlier, Luca had engineered the greatest dynasty in Formula One history with Schumacher and Brawn and Todd and like, you know, everybody knows what's really going on here. Also, part of the reason that the Ferrari Formula One team wasn't performing well at this point in time was that Formula One had switched to hybrid power trains and Fiat never developed hybrid technology. So Ferrari didn't have anywhere to turn to to get a head start like some of the other manufacturers that could turn to hybrid technology. So it was gonna take a while for Ferrari, no matter what. At the end of the day, though, it's sad. Like, this is not how Luca's time at Ferrari should have

• 2:33:09David Rosenthal?

  ended. So Bernie Ecclestone, you know, the F1 impresario, who Luca did very much not always see eye to eye with, gives a quote to the press when Luca is fired that sums it up better than I can. Bernie says, "Luca leaving is for me the same as Mr. Enzo dying. He has become Ferrari. You see him, Luca, you see Ferrari. You don't see anything else. You don't see Luca."

• 2:33:38Ben Gilbert?

  Hmm.

• 2:33:39David Rosenthal?

  The context that you need to know for this quote that makes it even more impactful is if you listen to our F1 episode, you know that there was the Foda breakaway attempt of the group of teams that just a few years before this had tried to bust Bernie's hold on F1 and break away and start a rival Formula Racing league. That was led by Luca.

• 2:34:03Ben Gilbert?

  Oh, wow.

• 2:34:04David Rosenthal?

  Luca was like Bernie's arch adversary just a few years earlier.

• 2:34:09Ben Gilbert?

  And so for Bernie to be this cordial.

• 2:34:11David Rosenthal?

  And here's Bernie paying tribute to him like this.

• 2:34:13Ben Gilbert?

  Yeah, huh.

• 2:34:14David Rosenthal?

  Yeah. So with Luca gone.

• 2:34:18David Rosenthal?

  The path is cleared to IPO Ferrari. And in 2015, Fiat and Sergio float, as you said, Ben, 10% of their 90% ownership stake in Ferrari on the New York Stock Exchange for an initial total market cap of Ferrari of 9.8 billion, which raises just under $1 billion in cash that Fiat uses to pay down the debt.

• 2:34:45Ben Gilbert?

  So 2015 Ferrari publicly traded worth $10 billion. That is up from the 192 million figure that we had talked about back in 1988.

• 2:34:56David Rosenthal?

  Right.

• 2:34:59David Rosenthal?

  But still nowhere near the heights that it would reach in the years to come.

• 2:35:02Ben Gilbert?

  But that is Luca's legacy, that delta.

• 2:35:04David Rosenthal?

  That totally, that is turning Ferrari into a real business there.

• 2:35:07Ben Gilbert?

  Yep.

• 2:35:07David Rosenthal?

  So $1 billion in cash proceeds from the equity sale in the IPO.

• 2:35:14Ben Gilbert?

  That that helps, that contributes to the total 10 billion that you need to reduce your debt by.

• 2:35:19David Rosenthal?

  Yeah, to go from 11 down to one.

• 2:35:21Ben Gilbert?

  Yeah.

• 2:35:22David Rosenthal?

  You know, it helps, but it's not a lot. Well, Sergio had another.

• 2:35:29Ben Gilbert?

  This one is ridiculous.

• 2:35:31David Rosenthal?

  Financial engineering coup up his sleeve. As part of the spin off of Ferrari and the whole transaction, they effectively transfer another $3.2 billion in Fiat Chrysler debt to Ferrari. So in total Fiat Chrysler out of this transaction gets almost $4 billion in debt reduction. That'll make a dent.

• 2:35:56Ben Gilbert?

  That'll make a dent.

• 2:35:57David Rosenthal?

  That'll make a real dent.

• 2:35:58Ben Gilbert?

  The interesting thing is it was perfectly fine to do this because Ferrari turns into a great, great business that is perfectly capable of paying down all that debt that was just transferred to them.

• 2:36:10David Rosenthal?

  Yes, yes, absolutely. You know, we're sort of telling the story from Luca's side here. From Sergio's side, this all makes total sense.

• 2:36:19Ben Gilbert?

  Right.

• 2:36:19David Rosenthal?

  There was very little risk involved in this transaction.

• 2:36:22Ben Gilbert?

  Right.

• 2:36:23David Rosenthal?

  It's actually quite genius.

• 2:36:24Ben Gilbert?

  Right. It helped Fiat Chrysler become a real going concern, successful company, one that exists today. And Ferrari is a great little engine to pay down debt.

• 2:36:33David Rosenthal?

  Yeah, and not just a little engine, like the value unlock that happens at Ferrari here, to use investor speak, is unprecedented. The company IPOs at a $9.8 billion market cap in 2015. Within a few years, it's trading at, you know, what, 90 billion, flirting with 100 billion market cap?

• 2:36:55Ben Gilbert?

  Yeah, as of a few years ago, they hit 90 billion.

• 2:36:58David Rosenthal?

  Yeah, way, way, way higher than Stellantis market cap.

• 2:37:02Ben Gilbert?

  Yes.

• 2:37:03David Rosenthal?

  If you're the Anielli family, this was a great financial transaction for you.

• 2:37:08Ben Gilbert?

  It is interesting, when you often hear investors talk about unlocking value by spinning something off and getting rid of the conglomerate discount and isolating centers of value. That totally happened here. Ferrari was not appreciated by investors when it was nestled inside of Fiat for the real gem that it was. And as a publicly traded company on its own, reporting its own financials, people piled in.

• 2:37:32David Rosenthal?

  Sure attracted a lot of investor demand.

• 2:37:34Ben Gilbert?

  Yeah.

• 2:37:34David Rosenthal?

  And still does.

• 2:37:35Ben Gilbert?

  Yep.

• 2:37:35David Rosenthal?

  So, man, like so much about this story, you can't script what happens next. All is going according to plan. The Fiat empire has never been better. Fiat is saved, Chrysler is saved, value is unlocked at Ferrari. And then, in 2018-

• 2:37:56Ben Gilbert?

  Just three years later.

• 2:37:57David Rosenthal?

  Just three years later, the same year that Sergio had promised to Wall Street that he would pay down all of the debt at Fiat Chrysler. He dies, suddenly and unexpectedly.

• 2:38:09Ben Gilbert?

  This story, oh my god, again and again and again, those closest to Enzo himself, Ferrari the company, tragedy.

• 2:38:17David Rosenthal?

  Tragedy. Sergio unexpectedly dies of cardiac arrest following complications from shoulder surgery. Nobody expected that- He was gonna die.

• 2:38:26Ben Gilbert?

  No.

• 2:38:27David Rosenthal?

  So, once again, the whole empire is thrown into chaos. It's in a much better and more stable place than when Gianni died. But still, within Ferrari, there ends up being kind of a parade of CEOs over the next couple of years.

• 2:38:45Ben Gilbert?

  Caretaker CEOs.

• 2:38:46David Rosenthal?

  Yes, culminating in 2021, when the current CEO of Ferrari, Benedetto Vigna, is hired. And he's a new choice for the company.

• 2:38:58Ben Gilbert?

  Complete outsider.

• 2:38:59David Rosenthal?

  A tech guy.

• 2:39:00Ben Gilbert?

  A former, I believe, physicist, or at least physics undergrad, who ended up going into semiconductors. And if my memory serves, he holds the patent for the accelerometer.

• 2:39:13David Rosenthal?

  Yes.

• 2:39:14Ben Gilbert?

  Or at least one of the patents for the accelerometer in the original iPhone.

• 2:39:17David Rosenthal?

  Yes, in the iPhone and, you know, basically all mobile phones today, the accelerometers that are used there. That's Benedetto.

• 2:39:24Ben Gilbert?

  A semiconductor guy.

• 2:39:25David Rosenthal?

  Which actually makes a lot of sense for the direction that Ferrari and technology is heading.

• 2:39:32Ben Gilbert?

  Yep.

• 2:39:32David Rosenthal?

  So the question is, what happens at the company after the IPO? Well, on the one hand, a lot of the things that you would expect. Ferrari does increase production. They go even further into the luxury retail goods market.

• 2:39:51Ben Gilbert?

  And in particular, on this luxury retail goods market, it's interesting. They sort of bifurcate the strategy. The first thing they do is they clean up all the old crappy merchandising. And they kind of narrow it to this brand licensing in very specific categories with very specific partners. So Luxottica for glasses, Mont Blanc for pens, Richard Mille for watches, and Puma for shoes. So there's this like, sort of cohesive, yeah, we're gonna make stuff for the Tifosi, but like, there's a luxury associated with our brand that, you know, we have to stay true to. Then they go into a lifestyle category of their own of first-party products.

• 2:40:30David Rosenthal?

  Yes.

• 2:40:30Ben Gilbert?

  David, what is this?

• 2:40:32David Rosenthal?

  This is essentially Ferrari runway fashion.

• 2:40:35Ben Gilbert?

  That's one pillar of it anyway. But yeah, it's this acknowledgement of, hey, there's a lot of people that want to participate in the Ferrari brand who are very affluent and they don't want to go buy any of these things from our partners. They want products from us that aren't cars. And traditionally, most of our customers, I don't know, 90% are men and men in their 50s. I think the average age is 52 of a Ferrari buyer. I believe 35% of people who are buying the lifestyle merchandise they're creating are women. They're really opening up the aperture of Ferrari represents something and can we give people more tokens to sort of adorn themselves in Ferrari and not just cars?

• 2:41:18David Rosenthal?

  Yep.

• 2:41:18Ben Gilbert?

  It's an interesting strategy. I'm not sure I would do it. I get why they're doing it. I'm not sure I would do it.

• 2:41:24David Rosenthal?

  Yes. All that to say, certainly there are initiatives that come about as a result of Ferrari now being a public company and needing to show predictable growth and new avenues of growth to Wall Street.

• 2:41:38Ben Gilbert?

  Including theme parks.

• 2:41:39David Rosenthal?

  Including theme parks. Yes.

• 2:41:41Ben Gilbert?

  They've opened two very different style theme parks, one in Spain and one in Abu Dhabi, right next to the F1 racetrack there. From what I can tell, it's going well. I think they're totally outsourced to third-party partners, the same way that you would treat a licensing deal. But I'd like to go to one at some point.

• 2:42:00David Rosenthal?

  Yeah.

• 2:42:00Ben Gilbert?

  When I first read that this is what they had done in the last 10 years, I was a little bit of a head scratcher. But I get it. People want to experience the brand in a more visceral way. These products are so full of emotion and passion that merely seeing one drive by you once every few months on the street is not exactly the way to cultivate fandom.

• 2:42:17David Rosenthal?

  Yep. So that's sort of one side of the ledger. On the other hand, a lot less than you'd expect actually changes. In fact, Ferrari becomes even more independent. You know, if you take as an axiom that the most important part of the soul of Ferrari is a Ferrari being a Ferrari and not being a rebadged Fiat 500 or Volkswagen Touareg.

• 2:42:45David Rosenthal?

  Ferrari today is even farther away from Fiat than it was before the IPO. It really kind of reestablished Ferrari as its own separate entity.

• 2:42:54Ben Gilbert?

  Yeah, so today it's still 10% owned by Piero Ferrari. A little over 20% is owned by the Anielli family with their holding company Exor. But that 20% was 90%

• 2:43:06David Rosenthal?

  Right, right.

• 2:43:06Ben Gilbert?

  Before the IPO and what 81% right after the IPO. So they have really sold down that stake over time. 68% of it is now owned by public shareholders. I mean, that is an independent company. However, the voting shares are a different story. So together, Exor and Piero have the right to vote about 49% of the voting shares. So it doesn't take much for them to control the vote on any given decision as long as they vote together. They just need to go sway 1 or 2% of the public float to vote with them as a block.

• 2:43:44David Rosenthal?

  Yes, that's true. I think the really interesting thing to look at is how the Ferrari model range has evolved

• 2:43:54Ben Gilbert?

  Yes.

• 2:43:55David Rosenthal?

  in the years since the IPO.

• 2:43:56Ben Gilbert?

  Yes, I'm so glad you took it here. So Ferrari effectively makes four types of cars that consumers can buy. 85% of units shipped fall into what they call the range. These cars are a few hundred thousand dollars each, of course, before any personalization or customization.

• 2:44:17David Rosenthal?

  So this is the collection of sports cars and GT grand touring cars that have always been the core of Ferrari.

• 2:44:27Ben Gilbert?

  Yep.

• 2:44:27David Rosenthal?

  You've got your mid-engine V8s and V6s. You've got your front-engine V12s and you've got your hybrids that have been a relatively new addition.

• 2:44:36Ben Gilbert?

  Yep, this is your Amalfi, your Roma, your Tessa Rosa, your 12-cylinder, these sorts of models. So that's 85%. And actually, sometimes it flexes up even higher if they are not shipping a supercar at the moment. Because the supercar that we had talked about, the F40, the F50, the Enzo, the LaFerrari, and now the F80, these are not being made all the time. They just make them for, I don't know, 24 months, once a decade.

• 2:45:02David Rosenthal?

  Special occasions.

• 2:45:03Ben Gilbert?

  Yeah.

• 2:45:03David Rosenthal?

  Shall we say? So at the end of the Luca era, that was the product lineup. It was the core range and the occasional Halo supercar. That was it.

• 2:45:14Ben Gilbert?

  Now, 10% are what they call the special series. These'll run you between 500,000 and a million, again, before customization. David, what are these?

• 2:45:25David Rosenthal?

  These are like the special versions of the Range cars. The high performance, you know, if you take like BMW, you know, you've got your regular BMWs and then you've got your M series or Mercedes, you've got the regular Mercedes, then you've got the AMG series.

• 2:45:39Ben Gilbert?

  Oh, Ferrari people would scoff at you for making that comparison.

• 2:45:42David Rosenthal?

  Part of me is dying by making this analogy for Ferrari, but it's telling, right? That this was added. This never existed before. And now there's, you know, essentially the M series or the AMG series of the Ferrari range.

• 2:45:55Ben Gilbert?

  Yeah, and they're a little more racy than the typical models. They're not track only. I mean, this isn't like the XX program or the Ferrari Challenge or any of these like cars that they make for racing in very specific competitions. But these are racier versions, higher end versions in more limited production of the Range cars, more or less.

• 2:46:15David Rosenthal?

  Yep, and there's a lot of demand for them.

• 2:46:16Ben Gilbert?

  Yes, and the way I just described that, someone at Ferrari is very mad. Fans of the brand are gonna jump all over me for all the nuance that I missed there. But anyway, that's the special series. Then the remainder are the Icona series.

• 2:46:31David Rosenthal?

  Yep.

• 2:46:31Ben Gilbert?

  That'll run you about $2.3 million for the current one, this V12 Daytona SP3. And of course, the supercar, which depending on the year, is only 1% to 5% of the units that they ship, but it's extremely important to their profits, given those supercars run $3.5 to $5 million. And we'll come back to just how important it is to their profits.

• 2:46:55David Rosenthal?

  Yes, yes. So basically, what they've done is they've added a second series to each aspect of the core lineup before the IPO. They've kind of doubled the model range.

• 2:47:07Ben Gilbert?

  The Icona exists for a very particular reason, and I will explain that in a minute when we get to financials.

• 2:47:12David Rosenthal?

  Oh, okay.

• 2:47:12Ben Gilbert?

  I think they kind of backed into it. The stated reason is that they pay homage to Ferraris from history, you know, the Daytona was this very famous one.

• 2:47:20David Rosenthal?

  Or the Monza, et cetera.

• 2:47:21Ben Gilbert?

  But I'll hold my tongue for now on exactly how they they backed into it.

• 2:47:25David Rosenthal?

  Great. I think I know where you're going, but we'll save it.

• 2:47:27Ben Gilbert?

  It is also worth noting, clients who were invited to the supercar or the Icona class, these people own at least 10 new Ferraris, maybe 20 plus Ferraris in a garage. These people are tens of millions of dollars deep into buying Ferraris.

• 2:47:45David Rosenthal?

  Yes, these are the Birkins and the Kellys. You don't just walk in off the street and buy one. You need to buy a lot of scarves, et cetera, before you get invited to buy an Icona or a supercar.

• 2:47:56Ben Gilbert?

  Yes. I mentioned earlier that every car that they make is unique as a part of their manufacturing process. They do take that to the most extreme. There are models that are literally called one-off.

• 2:48:09David Rosenthal?

  Yes.

• 2:48:09Ben Gilbert?

  So they will make you, and not just like you can change the seat color. They will make you a custom car with a custom body style for very, very, very special VIP customers. And they never disclose them.

• 2:48:22David Rosenthal?

  Yep. Okay, Ben, one model that you didn't talk about is the FUV.

• 2:48:32Ben Gilbert?

  Yes, and you are not speaking with a lisp there. That is, it is the Ferrari utility vehicle.

• 2:48:37David Rosenthal?

  The puro sanguine, the pure blooded.

• 2:48:39Ben Gilbert?

  Yes. So this is a delicious tidbit of Ferrari-ism. The market really wants an SUV. 60% of Porsches sold at this point are SUVs. They're expensive and beautiful soccer mom and soccer dad cars.

• 2:48:53David Rosenthal?

  Yep.

• 2:48:54Ben Gilbert?

  And when you go up market from Porsche, even to Lamborghini, which looks a lot like Ferrari from a production volume standpoint, they only make 11,000 cars a year also.

• 2:49:03David Rosenthal?

  And importantly, is part of the VW Volkswagen group.

• 2:49:08Ben Gilbert?

  Yes.

• 2:49:08David Rosenthal?

  Along with Audi.

• 2:49:09Ben Gilbert?

  Yes. Astonishingly, over 60% of Lamborghinis now sold are their SUV.

• 2:49:16David Rosenthal?

  Yes.

• 2:49:16Ben Gilbert?

  I mean, the classic idea of like guy driving a Lambo around the street. 60% of that brand's cars are soccer mom and soccer dad mobiles.

• 2:49:26David Rosenthal?

  It's the exact same thing that happened with Porsche. Porsche was the 9/11 company and now they're the Cayenne and Macan company.

• 2:49:33Ben Gilbert?

  If I ever get a distastefully large amount of crypto winnings, I'm going to go buy a Lambo, but it's going to be an Urus, just to.

• 2:49:41Ben Gilbert?

  Just for the irony.

• 2:49:44David Rosenthal?

  I hope in bright green.

• 2:49:45Ben Gilbert?

  Yes, yes. Okay, so people really want one from Ferrari. So what does Ferrari do? They don't call it an SUV. They call it an FUV. They debut a low top, four door, almost SUV called the Puro Sangue. And as you mentioned, it translates to pure blood or thoroughbred. And it's almost as if they're saying, yes, this is still a Ferrari. In fact, we're almost even overcompensating with the name and saying, we really insist it is as thoroughbred of a Ferrari as you could possibly own by naming it that.

• 2:50:14David Rosenthal?

  And it has a naturally aspirated V12 as its engine.

• 2:50:19Ben Gilbert?

  Yep. I mean, it is, it's a, it's a real Ferrari under the hood.

• 2:50:21David Rosenthal?

  Yes.

• 2:50:21Ben Gilbert?

  The really disciplined thing that they did, though, they capped total production at 20%. This ensures that when you see a Ferrari on the road, it will stay your classic idea of what a Ferrari is. It really protects the brand and it sacrifices a lot of short term profits. And I gotta say, I have immense reverence for the company for this sort of discipline.

• 2:50:42David Rosenthal?

  And it keeps this core pillar of Ferrari that just seeing one should be a special event. They are not going to go sell 60,000 Puro Sangues. They're selling about 2,500 to 3,000 of them per year globally. You are not going to see one on the streets tomorrow, or the day after that, or the day after that.

• 2:51:03Ben Gilbert?

  Yes, I saw one this week, David, at an event that we were at valet parked outside. And I thought, oh, I've actually never seen one of those before.

• 2:51:11David Rosenthal?

  Yeah.

• 2:51:11Ben Gilbert?

  Which is exactly how it should be every time you see a Ferrari.

• 2:51:14David Rosenthal?

  Yes.

• 2:51:15Ben Gilbert?

  So the other thing about their model range is they have become very diligent about their waitlist, too. They're essentially sold out these days for the next two years. Most car companies could not tell you what their sales will look like next quarter. But as of today, Ferrari knows exactly what their sales will be and to who through the end of 2027, at least, maybe into early 28. And if you want one sooner, you're going to have to buy a used one.

• 2:51:40David Rosenthal?

  Yep. All right, Ben, so how much do these models cost? And what were you teasing earlier with the

• 2:51:48Ben Gilbert?

  The Ikonah?

• 2:51:49David Rosenthal?

  Thoughts on the Ikonah series?

• 2:51:50Ben Gilbert?

  Okay, so the average selling price of a Ferrari is about $500,000, up from $350,000 in 2022.

• 2:51:59David Rosenthal?

  Wow.

• 2:51:59Ben Gilbert?

  So they have taken price a lot in the last few years. Now, the models technically start at $280,000, such as the Roma Spider, but A, that's on a two-year waitlist, and B, that's before you do any customization. And customization adds anywhere from 20% to 100% of the price of the car. Even more importantly, in explaining that $500,000 number, that is an average, and averages hide the most interesting data. You know, you have to pull it apart and look at the distribution. So as we consider the Range, the Special Series, the Ikonah, and then finally, the supercar, let's look at the distribution. Ferrari is incredibly top-heavy as a business, and I mean this in two ways.

• 2:52:43Ben Gilbert?

  One is the obvious way, the most engaged customers obviously contribute an outsized amount to Ferrari's revenues. If you're a guy buying 20, you're a hugely, hugely important part of Ferrari's business. But two, more interestingly, the most expensive models provide a huge amount of the profits for the entire company. So let's look at just the F80, their current supercar. And by the way, all of these were sold out before the car was even announced to the public.

• 2:53:11David Rosenthal?

  Yes.

• 2:53:11Ben Gilbert?

  That is how sold out it is. There are reasonable estimates that the F80 average selling price is about $4 million. They're making 799. So that is $3.2 billion of Ferraris just in that car.

• 2:53:26David Rosenthal?

  Wow. $3.2 billion of Ferraris in 799 examples?

• 2:53:34Ben Gilbert?

  Yes. Now, that's retail, so let's assume a 10% retail margin that goes to the dealership. So $2.9 billion of F80 revenue to Ferrari. Let's assume those deliveries happen about over the course of two and a half years, which means that, give or take, $1.25 billion of revenue in the first 12 months is going to Ferrari from that supercar. That's 15% of revenues for the year, just from that one car model. But that is not the whole story. Ferrari has disclosed that the Ikonos and the supercar models have higher margins than the rest of the line.

• 2:54:12David Rosenthal?

  Of course they do.

• 2:54:13Ben Gilbert?

  And I've seen lots of very credible estimates. They're way higher. Like, I've seen 80%, I've seen 90% gross margins for the supercar.

• 2:54:21David Rosenthal?

  Wow.

• 2:54:22Ben Gilbert?

  And this is intuitive. You can imagine when Ferrari throws an extra $10,000 of something nice in the supercar, they market up a lot more since the buyers are wildly price insensitive. So I think that it's not crazy to assume that while that car will contribute 15% to revenues in the first 12 months, it's more like 30% of Ferrari's annual

• 2:54:44David Rosenthal?

  Profits.

• 2:54:44Ben Gilbert?

  profits just from that one supercar in its first year. It could be even higher than 30%.

• 2:54:51David Rosenthal?

  Wow, yeah. So it's critically important to the business.

• 2:54:54Ben Gilbert?

  The business is in the supercars.

• 2:54:57David Rosenthal?

  Yeah.

• 2:54:57Ben Gilbert?

  I mean, this isn't quite true, but it is funny to think about this framing. The Ferraris you see driving around occasionally, those are just peanuts for their business. And it's really all about the ones that are locked away in the garages that you don't see that actually make the money.

• 2:55:12David Rosenthal?

  Right.

• 2:55:12Ben Gilbert?

  If you think about the F40 and where Enzo was in his life and where the company was when they released that, I think they had no idea the business model they unlocked with this limited-run supercar.

• 2:55:23David Rosenthal?

  Yeah, that's totally true. And where I imagine you were going with the Ikonos series is like, boy, wouldn't it be nice if we had a whole nother series with maybe not quite as good dynamics as that, but like, pretty good dynamics.

• 2:55:37Ben Gilbert?

  And gosh, it's a real shame we only have supercars once a decade.

• 2:55:41David Rosenthal?

  Yep.

• 2:55:41Ben Gilbert?

  Wish we had something that was still pretty expensive and still pretty desirable and still close to as good of margins to smooth out that pesky seasonality.

• 2:55:51David Rosenthal?

  Those down years when we don't have the supercars.

• 2:55:53Ben Gilbert?

  Yeah, that's exactly right. So that is what you were looking at with the Ikonos.

• 2:55:57David Rosenthal?

  Yeah, yeah, that makes sense to me.

• 2:55:58Ben Gilbert?

  The other thing that you should know, listeners, when you're sort of thinking about Ferrari, because we've said a lot of model names here, and that is odd, right? Most car companies have, over the course of 30 years, very few car models. They run them for a long time. When we did our Rolex episode, you heard us talk about the Submariner from, I don't know, 1965 and the Submariner from today. It's one sort of continuous evolving line that maybe your grandpa had and your dad had one and you have one. Ferrari is the exact opposite. Over the next five years, they intend to launch four new models per year on average. That's 20 new model names in the next four years, and they discontinue models very quickly

• 2:56:43Ben Gilbert?

  after launching them. So every four to five years or so, to really enforce each one of these things is very unique, very exclusive. Now, why doesn't everyone do that? Well, most people have to invest a huge amount upfront in tooling, but Ferrari doesn't. They can bespokely spin up a brand new car that never existed because they can do their own really nimble manufacturing process.

• 2:57:08David Rosenthal?

  Right. They have such a different manufacturing process than any other major or boutique auto manufacturer. And this is the thing that the super boutique hypercar companies like the Pagani's or the Koenigsegg's, et cetera.

• 2:57:22Ben Gilbert?

  But those are like way, way, I don't know, Pagani's probably 150th the manufacturer of Ferrari or something like that.

• 2:57:28David Rosenthal?

  Well, right. And those companies don't have all the tooling and manufacturing prowess that Ferrari does, so they can only make their models once a decade or maybe not quite that long, but they can't turn around and make new models and keep the momentum going year after year in the same way that Ferrari can.

• 2:57:48Ben Gilbert?

  Four new models every year. And the really impressive thing about Ferrari is The cars are just different enough where they deserve different names, but a lot of the R and D and the components are carried over. When you look at the internals from some of these cars to the next generation that carry a different name, that have a different body style, they are different, but you can see the manufacturing learnings. I don't want to say they reuse components, but they're heavily inspired by a lot of the fixed cost work that was done before.

• 2:58:20David Rosenthal?

  Yep, very interesting. Okay, so you mentioned dealerships a minute ago and their margin. How did dealerships work in Ferrari?

• 2:58:27Ben Gilbert?

  Yeah, so in the past, dealerships worked a lot more like the traditional model, where dealers would have clients and they would get to allocate cars. Now, the allocation is done centrally by Ferrari, and the dealerships really serve more as distribution, operations and service. And I've been thinking about it less as a dealer network and more as a franchised service and delivery infrastructure with Ferrari owning the actual customer relationship.

• 2:58:57David Rosenthal?

  Yeah.

• 2:58:57Ben Gilbert?

  It's like you get to own the local franchise in your city that takes care of this stuff, but they're Ferrari customers and not really your customers.

• 2:59:04David Rosenthal?

  And Ferrari now centrally controls the waitlist.

• 2:59:07Ben Gilbert?

  Yes. Dealers do, however, play a huge role in the secondary market. And Ferrari knows it's in their interest to have a thriving secondary market since, given how few new cars there are, the entry level Ferrari is really a used Ferrari.

• 2:59:22David Rosenthal?

  Yes.

• 2:59:22Ben Gilbert?

  And so it's the way to sort of cultivate the next generation of owners. So they incentivize dealers to buy and sell by giving them 100% of the economics on a secondary market transaction, rather than being involved in that in any way. So dealers often exist as a way to source used Ferraris for buyers.

• 2:59:43David Rosenthal?

  And the secondary market for Ferraris is enormous. There's a crazy stat out there. Over 90% of all Ferraris ever made, going all the way back to 1947 and the 166 Barchetta, are still on the road.

• 3:00:01Ben Gilbert?

  That's right.

• 3:00:01David Rosenthal?

  Nobody scraps a Ferrari. Like, an ordinary car, it depreciates down to zero because it will eventually be scrapped. Ferraris only go off the road if they're involved in a terrible crash and can't be restored.

• 3:00:14Ben Gilbert?

  There have been 330,000 Ferraris ever made and almost 300,000 of them are drivable.

• 3:00:20David Rosenthal?

  Yes, still on the road, still owned, still operated. It's truly incredible.

• 3:00:24Ben Gilbert?

  It is incredible. Now, if you're Ferrari, it would be nice to participate in this whole secondary market somehow, in sort of a tertiary way.

• 3:00:32David Rosenthal?

  Yeah, tell us about Ferrari Classique.

• 3:00:35Ben Gilbert?

  So let's say you buy a used Ferrari, or you're getting yours ready for sale. It sure would be nice if there was a certificate from Ferrari saying that they looked it over, and they looked at every part, and it's genuine. Well, good news, there's a program for you called Ferrari Classique, and for just $6,000 to $10,000, you can get it looked over and get just such a certificate.

• 3:00:56David Rosenthal?

  Now, it's interesting here. Ferrari is militant about what meets the bar for Ferrari Classique certification.

• 3:01:05Ben Gilbert?

  Yep.

• 3:01:06David Rosenthal?

  It has to all truly be original with official Ferrari parts and specifications. Which also means, you know, a lot of these cars have been out there for a long time. Things happen, right? It means if you want to get it certified and you want to have it be officially blessed by Ferrari, you're going to have to pay Ferrari or your local dealer to restore it and return all the parts to official Ferrari parts.

• 3:01:34Ben Gilbert?

  And you really only ever get it serviced at a Ferrari authorized service center. I mean, you're not getting your oil changes at your local oil change place. If you're a Ferrari owner, you definitely intend to sell it at some point. Like, either you're going to trade it for another Ferrari, you're going to sell it so you can buy another one, you can add to your collection, even if you're going to die with it and pass it on, you still want it to be this appreciating asset or asset that holds its value. So you are going to get it maintained with meticulous records from Ferrari and from Ferrari service centers. So it's a nice little closed ecosystem that they have created.

• 3:02:10David Rosenthal?

  Yes, indeed.

• 3:02:11Ben Gilbert?

  Okay, so why do they do all of this? And why do they launch four new models every year? And rapidly discontinue models? And have all these clubs and events and track days? And Classique? And a robustly tracked secondary market? And there's all this infrastructure. Well, friend of the show, Brian Lum from Bailey Gifford, had a great insight on this. This is a great mental model. If you're going to create a brand that the whole world lusts after durably, you need to create a lot of infrastructure for fans to engage with, to sort of hang their Ferrari fandom on. And so you need to have ever more rare models so that every member of the Ferrari owners and future owners has a place to go.

• 3:02:55Ben Gilbert?

  In luxury, you never want a customer to feel like they've done it all. You want a place for them to graduate to. Maybe that second Ferrari, or going from your first used Ferrari to your first new Ferrari, or getting invited to buy an Icona, or participate in a race, or buy the car that just came out with that brand new name that honors the model from 30 years ago. A lot of brands who want to be like Ferrari don't make the investments to have that amount of infrastructure and models and programs. The illusion is, oh, well, we'll just ship very few units and we'll have simplicity. But in fact, the opposite is true. You need to have all this uniqueness and mobility for every client to build a brand like this.

• 3:03:36David Rosenthal?

  Yes, and this ultimately creates the Ferrari pyramid.

• 3:03:40Ben Gilbert?

  Yes, there always needs to be a place for you to sort of graduate up to in your Ferrari fandom. And there's all this stuff around it, too. There's like a whole forest around the pyramid of different events that you interact with and community elements. And it is just very, very impressive and very high cost to just operate Ferrari day to day. Whereas I think a lot of product companies, they make a product, they ship it. And then, yeah, there's some servicing, but then there's maybe a lightweight customer touch point. But operating the forest and pyramid and ecosystem that is the Ferrari universe is like a high cost everyday thing.

• 3:04:19David Rosenthal?

  Yep. And pyramid is such a great analogy, right? Because if you want to grow the pyramid, grow the business and you want to do so sustainably or as sustainably as possible as it is to grow a luxury brand, you need to grow in all dimensions. You need to grow the base, you need to widen out the base and you need to grow the height, the vertical. So you need to be adding the Icona series and the special series, et cetera, et cetera. If you also want to be expanding out the base, everybody needs to have their place in the pyramid.

• 3:04:53Ben Gilbert?

  That's right. And adding layers beneath. I mean, you could argue the entire Tifosi, all 400 million Ferrari sports fans are sort of the base that you sort of enter and then graduate up from. I mean, here's an example of the most absolutely insane top of pyramid experience. The most extreme clients can buy a former F1 car.

• 3:05:14David Rosenthal?

  Yes.

• 3:05:15Ben Gilbert?

  Like an actual F1 car that was raced in prior seasons.

• 3:05:18David Rosenthal?

  I was wondering if you were going to break this up.

• 3:05:19Ben Gilbert?

  But of course, you can't just go drive an F1 car. And let's say you even store it in your garage. How are you going to drive it out of your garage? So what they do is they store it for you in Maranello.

• 3:05:32David Rosenthal?

  It's like a library wine.

• 3:05:33Ben Gilbert?

  And they staff it with an engineering team and a set of mechanics and a whole events team. And then they build programs and say, hey, do you want to come race at our private racetrack on this day? Do you want to come race your car? We'll get your team ready to drive it around. And maybe if you want to race it somewhere else, we'll fly the whole team and the car there. So you just roll up and then you can drive your F1 car around that special track. I mean, the cost, the investment that I think most people don't realize to staff the full infrastructure is crazy.

• 3:06:07David Rosenthal?

  It's astounding. And that has always been the core of what Ferrari is and why it is unique. Going all the way back to 1947 and Enzo, like we've been talking about all episode. It is the combination of three things under one roof.

• 3:06:27David Rosenthal?

  A world-class racing team, a world-class racing car and racing car heritage construction company, and the suite of services and people needed to operate that, available for hire to private clients. No other car company has that.

• 3:06:44Ben Gilbert?

  Yep, that's exactly right. And most traditional car companies actually can't do stuff like this. Their scale prevents them. So they can't have only limited edition cars and they can't have a super wide range that gets completely rebooted every couple of years. So they're missing an important piece of the pyramid. It's very easy to own all of the cars from a big company because most big companies make very few cars. The thing that makes you successful at scale prevents you from being able to execute Ferrari's strategy. Okay, so there is one car we have not talked about yet before we catch up to present day.

• 3:07:20David Rosenthal?

  Well, it doesn't exist yet as of recording.

• 3:07:22Ben Gilbert?

  It's true. It's true. We are six weeks away from the unveil of the Ferrari Luce.

• 3:07:28David Rosenthal?

  Yes.

• 3:07:28Ben Gilbert?

  What is the Luce, David?

• 3:07:29David Rosenthal?

  Ferrari's first electric vehicle designed in collaboration with love from Johnny Ive and Mark Newsom in San Francisco.

• 3:07:42Ben Gilbert?

  And they unveiled this thing in a very unique way for Ferrari, clearly targeting a different demographic. They unveiled just the internals, like just the buttons and dials and tactile feel of everything and the steering wheel at the top of the Transamerica Pyramid in San Francisco. They have not revealed the outside of the car yet.

• 3:08:05David Rosenthal?

  Nope.

• 3:08:05Ben Gilbert?

  They wanted the tip of the spear of excitement to be, look at what Sir Johnny Ive would make with his hands in a workshop 20 years after he designed the iPhone. What would he do today with all that learning? And what would he do if it were a Ferrari? And it's the exact opposite of the previous universe that they lived in, which is, let's show the body. Let's show the shape of the car. Let's appeal to the motorheads. Let's talk about the internal, the, I mean, the engine. What we are talking about here is the buttons and the clickiness of the buttons. I am so fascinated to watch what the rest of this car will look like in six weeks when they unveil it.

• 3:08:47David Rosenthal?

  Yeah. This is incredibly daring.

• 3:08:51David Rosenthal?

  Because so many of the longtime Ferrari clients, the hardcore collectors, the petrol heads, the people who love the old school small displacement V12s and worship at the altar of Enzo, this is anathema to them.

• 3:09:12Ben Gilbert?

  Okay, so let's do a Bull Bear analysis just on what the Luce could be. And I want to start with, is the job to be done by an electric vehicle compatible in any way with why people buy Ferraris? So there's essentially zero interest in electric supercars. I mean, truly, you look around the industry. When Ferrari and others started preparing for it 10 years ago, everyone sort of thought that new internal combustion cars would be banned soon, at least in Europe.

• 3:09:44David Rosenthal?

  There were EU regulations saying that ICE cars would have to be phased out by 2030, 2035, you know, at some point in time.

• 3:09:52Ben Gilbert?

  But Ferrari has put all this work into building this car.

• 3:09:56David Rosenthal?

  They built a whole new factory, the e-building.

• 3:09:58Ben Gilbert?

  That's right, and they're going to go ahead with the launch. Lamborghini actually canceled theirs and has switched it to a plug-in hybrid electric vehicle instead. And I think the point I keep kicking around is much like the quartz crisis in the world of watches, speed is no longer relevant.

• 3:10:16David Rosenthal?

  Yep.

• 3:10:16Ben Gilbert?

  I mean, the F80 goes 0 to 60 in 2.2 seconds. This is the supercar. This is the three to $5 million car. The Tesla Model S Plaid does it in 1.99 seconds. So the reason that people buy Ferraris, just like watches, has shifted to be about expressing yourself and having a unique driving experience. In a sense, electric cars are incongruent with the reason that you buy a Ferrari, unless Ferrari can do something really cool and unique.

• 3:10:45David Rosenthal?

  Yep. Yep. And that is clearly what they're trying to do.

• 3:10:48Ben Gilbert?

  Yes. So the, the bull case is, we haven't seen this outside yet, but I mean, the internal components have been absolutely awesome. I looked over at my wife and, you know, I thought I just want to touch every one of those tactile buttons and dials and, and play with it. Ferrari could be expanding their audience here. I don't think it's a layer in the pyramid. I think it's a new pyramid. It's like a whole different, they're going to appeal to a set of people that would have no interest in owning a traditional Ferrari. I mean, like me, I, I have no interest in owning a traditional Ferrari, but gosh, I was like, oh, could I ever, well, would they ever take me as a client? Depending what this car looks like, I could be very interested.

• 3:11:23David Rosenthal?

  Yes. And I think that is the daring element of it. They're creating something that kind of by nature has to exist in a parallel universe to their core client base.

• 3:11:35Ben Gilbert?

  Yeah. They have always appealed to the gearheads. I mean, the engineering innovations have always appealed to a set of people, but this is a whole different universe of engineering. Here's one that I think is really cool. It's quad motor, one on each wheel, plus additional motors on each wheel that independently do steering and suspension. And the effect that it has, apparently, I haven't driven one, is that it takes a super heavy battery powered car and it makes it feel really lightweight and balanced. And so there's all these almost like illusions that they can do with technology to make the car just different than every other electric car that you've driven. And for Ferrari being a company that stimulates emotion, that stimulates passion, that provides a unique experience, they may have figured

• 3:12:20Ben Gilbert?

  out how to do that in an electric car. And we may look at all the other electric cars and say, yeah, they're fast, but gosh, they just don't, they just don't feel the way that this car feels. And we'll have to see.

• 3:12:30David Rosenthal?

  Yep. Yep. All right. Well, while we wait here for the Luce to come out in six weeks or so, give us Ferrari by the numbers today.

• 3:12:39Ben Gilbert?

  All right. So last year, they delivered 13,640 cars. As we mentioned, 330,000 cars have ever been produced. Here's another way to frame that stat that is my favorite. This has been true all the way up until this year. This quote, Porsche delivers more cars each year than Ferrari has ever.

• 3:13:02David Rosenthal?

  So for all the hand wringing out there about increased production, et cetera, et cetera, Ferrari still is in a class of its own.

• 3:13:09Ben Gilbert?

  Small batch. Last year, approximately 81% of new Ferraris were sold to existing clients and 48% were purchased by customers who already owned multiple Ferraris.

• 3:13:20David Rosenthal?

  Adding to the collections.

• 3:13:21Ben Gilbert?

  Yes. You should have the picture by now. Most Ferraris sit in garages because they sit among many other Ferraris and occasionally some are driven on racetracks. So largely, this is going to sound hilarious, but for a company that is all about the driving experience, Ferraris mostly are not driven.

• 3:13:38David Rosenthal?

  Yes, yes, there's a deep irony here.

• 3:13:40Ben Gilbert?

  I would bet they have the lowest hours of use per car of any manufacturer in the world who produces at least, I don't know, draw a hard cutoff, 5,000 cars a year.

• 3:13:51David Rosenthal?

  Yep.

• 3:13:51Ben Gilbert?

  Which makes for an interesting luxury good because there is zero way to subtly show off that you have a Ferrari. It's either silent because you have one in your garage and you're sitting there thinking, how can I bring up that I have a Ferrari? Or if you show up in it, it is really loud. It is, I have a Ferrari. There is no quiet luxury in the universe of Ferrari.

• 3:14:11David Rosenthal?

  I actually think there's more nuance to that than it would appear on the surface.

• 3:14:16Ben Gilbert?

  Okay.

• 3:14:17David Rosenthal?

  And this is a good time to bring up a couple of points. The first is car collector and Ferrari collector culture. By and large, at least with the current slash older generation, car guys are very different than like, you know, Hermes collectors or, you know, LV fans or something.

• 3:14:40Ben Gilbert?

  There was a nerdiness.

• 3:14:41David Rosenthal?

  There's a real nerdiness and there's a real like, community to it. Cars and coffee meetups are like a real thing and you just go to them and you connect with other people there and they accept anybody.

• 3:14:54Ben Gilbert?

  It's a way for adult males to make friends.

• 3:14:57David Rosenthal?

  Yes, yes, yes. So there sort of is this other way to show off your Ferraris as part of a community where you can celebrate and appreciate them together with the community. And it's very like opening and welcoming this, this culture. If you're interested, even if you don't own any of these cars or have the means to like, it's okay. You're still welcome in this community.

• 3:15:22Ben Gilbert?

  It is different. Like the watch world, when someone says like, oh, what watch are you wearing? There's a little bit more ick to it.

• 3:15:28David Rosenthal?

  Yeah.

• 3:15:29Ben Gilbert?

  Like I ask people all the time because after the Rolex episode, I'm just infinitely fascinated by what's on your wrist. And I like hearing the stories and, but if you're not careful, it can sound like how expensive is your watch?

• 3:15:38David Rosenthal?

  Yes.

• 3:15:38Ben Gilbert?

  And I, car culture doesn't feel like that in the way that watch culture does, or luxury handbags.

• 3:15:45David Rosenthal?

  It's paradoxical in that these are the most expensive luxury objects out there, like way, way, way more expensive than a watch.

• 3:15:54Ben Gilbert?

  And way rarer.

• 3:15:54David Rosenthal?

  And way rarer. And yet it's somehow sort of less exclusive, at least in the community aspect of it. So that's sort of one point. The other point is that yes, Ferraris are loud and yes, Ferraris are designed to convey passion and an experience of being maximally alive and, you know, battling against death if you so choose. But they're not flashy, or at least traditionally, they weren't flashy in the same way as say, a Lamborghini. If you want to be a crypto bro, you buy a Lamborghini.

• 3:16:31Ben Gilbert?

  Yeah, well, Lamborghinis are the most garish side of Ferrari minus the racing heritage.

• 3:16:35David Rosenthal?

  Yes, yes. That's a good way to put it. Yeah, it's not like, certainly plenty of Ferraris can be garish, but there is like both a legitimate history and culture that you're buying into.

• 3:16:48Ben Gilbert?

  Right.

• 3:16:48David Rosenthal?

  And many of the models are actually quite restrained, at least in styling.

• 3:16:52Ben Gilbert?

  Okay, relatively, yes. The last point on this is Ferrari has taken price up a lot in recent years. And so if you were, you know, let's say you're a 70-year-old dude and you have a couple of old Ferraris that you collect and you like bringing to shows, they weren't that expensive until recently. I mean, they were always more expensive than other luxury cars. They were definitely ultra-luxury cars. But if you just look at how much the price has gone up in recent years, and it stimulated the second market, too. So I was talking to someone who bought a car in the mid 90s, just from the sort of bottom of the range, and he was lamenting the fact that he sold it three years ago, four years ago, and it's doubled in price since then. That sort of phenomena has happened all over the Ferrari

• 3:17:37Ben Gilbert?

  universe, which adds to the mild ick of seeing one that I don't think you used to experience as much.

• 3:17:43David Rosenthal?

  Yep, that's a great point.

• 3:17:45Ben Gilbert?

  Okay, so back to the numbers. They did $8.2 billion in revenue in 2025. In terms of profits, they did $3.2 billion in EBITDA. So they've got a 38.8% EBITDA margin. Pretty good business.

• 3:18:02David Rosenthal?

  Pretty good for a car company.

• 3:18:04Ben Gilbert?

  It's not a car company. That is the answer here.

• 3:18:07David Rosenthal?

  Of course.

• 3:18:08Ben Gilbert?

  So how are they so profitable? This is the exact comparison I was going to. Well, let's look at their cost to make each car versus how much they can sell each car for. And we'll start by looking at other car companies to kind of get a sense of what their gross margins are. Ford, 7%. That is 7% gross margin, not EBITDA, not net income, not cash flow margin. That is their gross margin when they create one unit of a car.

• 3:18:39David Rosenthal?

  A new F-150, you know, et cetera, et cetera.

• 3:18:42Ben Gilbert?

  Yeah. They make 7% before having to pay their overhead and their R&D and their GNA and...

• 3:18:47David Rosenthal?

  Any of their fixed costs.

• 3:18:49Ben Gilbert?

  Yeah. GM, 10%.

• 3:18:52Ben Gilbert?

  BMW, 14%.

• 3:18:55David Rosenthal?

  Wow.

• 3:18:56Ben Gilbert?

  Volkswagen, 14%. Mercedes-Benz, 16 to 22%. Porsche, frickin' Porsche, 15 to 25%. Toyota, that same kind of range, 18 to 21%. Toyota is exceptionally well-run. Isn't that amazing that Toyota generates on the order of three times as much gross margin per car that rolls off the line compared to Ford?

• 3:19:21David Rosenthal?

  Yeah, that is incredible.

• 3:19:23Ben Gilbert?

  Ferrari is 50% gross margins. That is a luxury brand.

• 3:19:29David Rosenthal?

  And as you were pointing out earlier, that's average.

• 3:19:33Ben Gilbert?

  Yes.

• 3:19:35David Rosenthal?

  The supercars and the Ikonos cars are way above 50% gross margins.

• 3:19:39Ben Gilbert?

  I get the sense the range is like 30-ish percent, maybe 35%. And then the supercars are in the 80 to 90% gross margin range.

• 3:19:47David Rosenthal?

  Yeah.

• 3:19:48Ben Gilbert?

  So it is worth pointing out here, this average 50% gross margin. You might say, oh, it's a luxury brand, which is the assertion I'm making. They do have to make a bunch of complex, expensive, giant hunks of metal and safety and engineer the absolute crap out of them and truly innovate. So when you look at companies that don't have to do that, LVMH is 66% and Hermes is 71%. So I mean, there exists a category when you don't have to do all of that hard engineering work where, you know, it's a good business just selling handbags.

• 3:20:25David Rosenthal?

  Yep, yep. And this is where the technology element of Ferrari comes in. That doesn't apply to many of the other luxury companies.

• 3:20:32Ben Gilbert?

  Yep. But still Ferrari is able to sell their cars for twice what it costs them to make. Whereas if BMW spent 100 bucks to make a car, they only get to sell it for $115. So perhaps more interesting though than all of this, than the gross profit percent, is the gross profit absolute dollars. The profit per car average exceeded $170,000. That is more than the entire retail price of your average luxury sedan. And even Porsche would need to sell six cars to equal the profit dollars that come from a single average Ferrari.

• 3:21:14David Rosenthal?

  Wow, that is truly astonishing.

• 3:21:17Ben Gilbert?

  There's so many different ways to slice this. It's fun.

• 3:21:19David Rosenthal?

  God, I mean, what other company or products can you think of that has a per unit gross margin contribution of $170,000?

• 3:21:29Ben Gilbert?

  Well, this gets into how we opened the episode that in terms of how people spend money in life, it's housing, food and transportation. And if you are selling them something in the transportation category, like one of their largest possible spends and you're selling them the most expensive version of it, you've sort of spiked. Like you, you kind of have to, it's like real estate is the only other thing you could really meaningfully start to compare this to.

• 3:21:51David Rosenthal?

  Yep.

• 3:21:52Ben Gilbert?

  All right, a little segment breakdown time. They've got three segments that they report. There's cars and spare parts. That's 84% of their revenue. 11 and a half percent, though, is sponsorship, commercial and brand.

• 3:22:04David Rosenthal?

  The Formula One team.

• 3:22:05Ben Gilbert?

  Yeah, I was going to say that the commercial and brand, this is sort of where their, their lifestyle stuff is, the, the fashion. But really, the interesting bit here is sponsorship. Formula One for them is a profit generating center that is also the single best marketing dollars they could ever spend.

• 3:22:21David Rosenthal?

  Yes. Thank you Liberty Media and their stewardship of Formula One. Like overnight in the last 10 years, Formula One went from just a marketing spend for Ferrari to the best marketing activity they do and a real meaningful profit center.

• 3:22:39Ben Gilbert?

  Yep. I mean, the HP deal alone, the title sponsor of the team is rumored to be $100 million a year.

• 3:22:45David Rosenthal?

  And the latest Forbes valuations of F1 teams, I think Ferrari, they have the value of the team at six and a half billion. Is that right?

• 3:22:54Ben Gilbert?

  Sounds right.

• 3:22:55David Rosenthal?

  Yeah.

• 3:22:55Ben Gilbert?

  Sounds right. Yeah, they don't produce the most profit, but they are the most valuable team because they're Ferrari and everyone pays a little extra premium for Ferrari and everything.

• 3:23:02David Rosenthal?

  Right. So, you know, of the current market cap, that's what, probably close to 10% of the current market cap is just the value of the team.

• 3:23:08Ben Gilbert?

  Oh, that's crazy. You're right.

• 3:23:10David Rosenthal?

  Yep. And again, you can't really extricate one from the other.

• 3:23:14Ben Gilbert?

  No, these are one thing.

• 3:23:14David Rosenthal?

  Ferrari is Formula One. Formula One is Ferrari, but it's now a meaningful value and profit driver.

• 3:23:21Ben Gilbert?

  Yep. Then lastly, 4 and a half percent of their revenue is financial services and some other random stuff, including selling engines to other Formula One teams.

• 3:23:30David Rosenthal?

  Right.

• 3:23:30Ben Gilbert?

  So this is the money that the Cadillac team is paying to Ferrari to put an engine in their car.

• 3:23:35David Rosenthal?

  Yep.

• 3:23:36Ben Gilbert?

  All right, multiples. For anyone who is not an investor, this is, when you look at the current business, How many years of the current business would you have to pay them to buy the whole company from them? And there's a bunch of different ways to slice it. We're going to look at the price to earnings ratio, or PE. Ferrari trades at about 35x their earnings. And until the luxury slump, where LVMH and Hermès and all these other companies got hit too in the last couple of years, it was trading around 50x for their last few years. Now, for reference, most automakers trade at 8 to 10x, and Hermès trades at 35 to 60x. Again, big swing the last few years.

• 3:24:21Ben Gilbert?

  And LVMH, sort of around 25x. So essentially, the market agrees with management that this is a luxury company, not a car company.

• 3:24:29David Rosenthal?

  And one of the very, very best luxury companies. Not just a luxury company, but an apex luxury company, valued on a multiple on par with the two very best luxury brands in the entire world.

• 3:24:42Ben Gilbert?

  Yes. The implication here, with a very high price to earnings multiple, is that investors believe that the profit streams are a lot more durable and certain compared to traditional automakers. Effectively, there's a high degree of certainty that all these profits will continue. The only other option, when you're looking at why is a PE ratio so high, is...

• 3:25:05David Rosenthal?

  If you expect it's going to grow.

• 3:25:06Ben Gilbert?

  Right. But that is super duper not what is happening here. I mean, that's like when you would have a high PE multiple for a startup that's growing 300% year over year. Revenue growth is actually experiencing a massive slowdown at Ferrari. If there's a bear case at all for Ferrari investors, which, you know, we've painted quite the bull case this whole episode, it's that Ferrari has reached the edge of their extreme pricing power and their ability to sort of keep ratcheting that up at the number of units that they're selling. Management said in their October 2025 Investor Day that the era of double-digit revenue growth is over, and over the next five years, they expect revenue to grow just 5% each year.

• 3:25:48David Rosenthal?

  Yep. Which actually, for the long term, is probably healthy for the company and the brand. Like, they've expanded the pyramid so much in recent years that a period of slower growth... Probably is the right thing to do in terms of luxury strategy management here. But yeah, the stock really took a hit after that Investor Day last fall.

• 3:26:07Ben Gilbert?

  It's funny, it took a hit and people still think Ferrari's current revenue streams are so durable that they're willing to pay the next 35 years' worth of profits to buy the business today.

• 3:26:20David Rosenthal?

  Yep.

• 3:26:20Ben Gilbert?

  And that is after getting crushed. I mean, the market cap went from 90 billion to 55 billion, and investors probably got a little bit excited about that 11% and 17% growth rates. And now that they're hearing 5%, that's sort of why you're seeing this contraction. But a contraction to 35x price to earnings.

• 3:26:38David Rosenthal?

  Yep. Well, one more thing before we get to analysis, powers and quintessence.

• 3:26:46David Rosenthal?

  China.

• 3:26:46Ben Gilbert?

  Yes.

• 3:26:47David Rosenthal?

  You mentioned it earlier, but what's going on for Ferrari in China?

• 3:26:51Ben Gilbert?

  So what's going on in the auto industry in China is probably the place to start. China's car market is being completely upended by inexpensive, high-quality electric cars.

• 3:27:00David Rosenthal?

  Domestic EVs.

• 3:27:01Ben Gilbert?

  Yes, domestically, from BYD, Xiaomi and others. This is having a huge impact on brands that expanded into China in the last decade, like we talked a lot about on our Porsche episode. But China is only 7% of Ferrari's sales, down from 10% at its peak. Now Porsche, on the other hand, China was 33% of their deliveries a few years ago, which has collapsed all the way to 15% and continues to fall. So the question then is, is Ferrari any less desirable today in China than it was five years ago? And does it fill a different enough job to be done than the domestic supercars

• 3:27:45Ben Gilbert?

  for them to sort of weather that storm?

• 3:27:48David Rosenthal?

  Interesting. I don't know enough to say, but I would suspect it's probably about as healthy as you can be.

• 3:27:58Ben Gilbert?

  Yeah, I think my answers on this are there are domestic supercars in China. They're still not Ferrari level in terms of desirability, certainly not brand heritage.

• 3:28:07David Rosenthal?

  Yeah, they don't have the myth.

• 3:28:09Ben Gilbert?

  Unless there's a sentiment change where people in China only want to buy domestic supercars. I mean, that's sort of a risk to them. But I think the thing that you're buying, the signal you're trying to send when you buy a Ferrari is not really at risk. The job to be done by an EV, I kind of keep coming back to this, is completely different than the job to be done by owning a Ferrari.

• 3:28:30David Rosenthal?

  Yep. That's it. I'm glad we brought this up again here because I think this also is an important point of perspective to add to the Luce. And why I really think it is kind of bold and daring and important that they're doing it. It's easy for us sitting here in the US to have a perspective of like, ah, why are they continuing this EV thing? Clearly, they should just stay with combustion engines.

• 3:28:54Ben Gilbert?

  I'm not. It's the only one I want to buy.

• 3:28:56David Rosenthal?

  Well, yes, a good point. Okay, easy for US-based collectors to, petrol heads to, maybe be upset about this and not understand it. If you look, certainly in China, but also in Europe, where Chinese EVs are invading everywhere. In America, EVs are in a bit of a slump, but in much of the rest of the world, Chinese EVs are dominating.

• 3:29:18Ben Gilbert?

  Yep.

• 3:29:18David Rosenthal?

  And like clearly showing what the future should be. So is Ferrari gonna say, yeah, we're just gonna abdicate all of that and let the next supercar brands be built around EVs and probably be built in China? Or are they gonna step up and take their own swing?

• 3:29:36Ben Gilbert?

  Yeah, it's a swing. All right, should we move into analysis?

• 3:29:40David Rosenthal?

  Yes, and let's start with our traditional segment, seven powers.

• 3:29:44Ben Gilbert?

  Yes.

• 3:29:44David Rosenthal?

  Borrowed from Hamilton Helmer's great book and framework. Of what power does a company have? What are the things that give it a durable, sustainable, comparative profit advantage over its nearest competitors? And the seven powers are scale economies, network economies, counter positioning, switching costs, branding, cornered resource, and process power.

• 3:30:06Ben Gilbert?

  Yes.

• 3:30:07David Rosenthal?

  What you got for Ferrari?

• 3:30:08Ben Gilbert?

  All right. Well, should we just start with brand?

• 3:30:13David Rosenthal?

  It's funny. Okay, I'm glad you started there because I think it's actually an interesting discussion. Go for it.

• 3:30:19Ben Gilbert?

  How much would you pay for a Ferrari that was badged as a Ford?

• 3:30:27David Rosenthal?

  Well, there's probably a pretty good data point on this, which is the Ford GT.

• 3:30:31Ben Gilbert?

  Yes.

• 3:30:32David Rosenthal?

  And I don't know what they sold it for MSRP, but I suspect it was less than a Ferrari.

• 3:30:38Ben Gilbert?

  Yeah. I mean, this is so hard because a Roma is not that much more expensive as the highest end Corvette.

• 3:30:45David Rosenthal?

  Yep.

• 3:30:46Ben Gilbert?

  That you could buy. But an F80 is $5 million and there are not cars from normal car companies that anywhere near approach that. So the question is kind of who is their direct competitor? Their direct competitor is probably Lamborghini.

• 3:31:05David Rosenthal?

  Yeah, that's the closest. Yeah.

• 3:31:06Ben Gilbert?

  If you really want to go as apples to apples as possible.

• 3:31:09David Rosenthal?

  Yep.

• 3:31:09Ben Gilbert?

  So Lamborghini, as we mentioned, makes about 11,000 cars a year compared to Ferrari's 14,000. Lamborghini has meaningfully increased volume. If you look back at the Ferrari IPO year, back then, the average selling price was about even. It was about $300,000, whether you're buying a Lamborghini or a Ferrari. Today, Ferrari's average selling price, as we mentioned, is 500,000, whereas Lamborghini is about 340,000. So Ferrari has really flexed their sort of pricing power over Lamborghini, especially as Lamborghini has made more and more and more to kind of catch up to their volume.

• 3:31:52David Rosenthal?

  And 60% of Lamborghinis are Urises, SUVs.

• 3:31:56Ben Gilbert?

  There's that, too. But the point that is useful for our powers exercise here is how much more would you pay for a Ferrari than a Lamborghini?

• 3:32:04David Rosenthal?

  Well, it's right there in the data.

• 3:32:05Ben Gilbert?

  Right. It's about a third more.

• 3:32:07David Rosenthal?

  Yep. I was going to take the counterpoint. On the one hand, yeah, brand is of course the strongest power that Ferrari has, as with any luxury company. On the other hand... I think it's not quite as powerful in terms of driving profit margins for Ferrari as it is for, say, a LVMH or an Hermes.

• 3:32:30Ben Gilbert?

  Yeah.

• 3:32:30David Rosenthal?

  Because a Ferrari product, a Ferrari car-

• 3:32:34Ben Gilbert?

  Is really differentiated.

• 3:32:35David Rosenthal?

  Still has to be a Ferrari.

• 3:32:37Ben Gilbert?

  Yes.

• 3:32:37David Rosenthal?

  Ferrari can't just stamp the prancing horse on a car and call it a Ferrari. A Ferrari has to elicit emotion from you.

• 3:32:45Ben Gilbert?

  Yes.

• 3:32:45David Rosenthal?

  And it has to be cutting edge and it has to be incredibly powerful. So it's sort of like, there's more cost that has to go into it.

• 3:32:54Ben Gilbert?

  Yes, there's a phrase they use called racing thrills. And it's engineered over decades to provide a very specific racing thrill when you drive it, which is not something that you can throw another badge on. So I think if you were asking management, they would insist, this is a fruitless discussion because there is no way to rebadge something and call it a Ferrari. That's not, it's intellectually impossible.

• 3:33:17David Rosenthal?

  It's tautological, a Ferrari is a Ferrari.

• 3:33:19Ben Gilbert?

  Yes, yes. But in reality, when they raise prices, people are willing to pay those higher prices because there is a shared myth that we all have a belief in what the brand represents and means to us and the emotions that it gives us by owning and driving it that are quantifiable and worth something.

• 3:33:35David Rosenthal?

  Yep, yep. How does this compare to how you felt about watches at the end of the Rolex episode?

• 3:33:42Ben Gilbert?

  Watches don't provide racing emotions. So what matters, because all the performance is effectively identical at the high end, what matters is who you are saying that you are to the world when you look down at your wrist.

• 3:33:56David Rosenthal?

  Yes.

• 3:33:56Ben Gilbert?

  And when someone else sees your wrist.

• 3:33:58David Rosenthal?

  A watch says something about you, but it doesn't provide an experience for you.

• 3:34:02Ben Gilbert?

  That's correct. And there's this like interesting, perfect comparison here. Porsche is Rolex. I mean, they make an absolute crap ton of them. Rolex is a million a year and Porsche, I don't have the numbers in front of me, but it's 300-

• 3:34:16David Rosenthal?

  320,000 or so a year.

• 3:34:18Ben Gilbert?

  Exactly.

• 3:34:19David Rosenthal?

  And is an incredible brand.

• 3:34:21Ben Gilbert?

  Yes.

• 3:34:21David Rosenthal?

  Just like Rolex is an incredible brand.

• 3:34:23Ben Gilbert?

  And I see them driving around my neighborhood all the time and I think they're amazing, polished pieces of engineering and I respect them for the engineering. And the same way that I'm wearing a Rolex Explorer on my wrist, I could easily see buying a Porsche. It feels reasonably me. Could I see going out and buying a Patek Philippe? Not really. The same way that I say not really about Ferrari. If you're going to make the analogy, the crude one, that Porsche is Rolex, I think you can make the analogy that Ferrari is Patek Philippe.

• 3:34:56David Rosenthal?

  Yep.

• 3:34:56Ben Gilbert?

  It's much smaller production, it's an order of magnitude more expensive. The big difference here being that Ferrari is much sort of flashier than Patek is as a brand, and they also have the Tifosi, which adds this whole different element to it. So to directly answer your question, I think branding shows up more in luxury watches than it does in luxury cars.

• 3:35:16David Rosenthal?

  Yep.

• 3:35:16Ben Gilbert?

  For the, almost like the lack of experienceable intrinsic product characteristics, that it's just hard to experience the product in a watch, but it's easy to experience the product differences in a car.

• 3:35:29David Rosenthal?

  Yep, totally agree.

• 3:35:30Ben Gilbert?

  So you rely more on brand in watches.

• 3:35:32David Rosenthal?

  Yep. Okay, let's step through some of these others, because I think some of them are quite interesting. Keeping with the Patek Ferrari comparison, I do think Ferrari has this really interesting sweet spot of scale economies that I don't think we've ever seen before, where like, they-

• 3:35:49Ben Gilbert?

  They can do things Pagani can't, but they can also do things that Toyota can't.

• 3:35:53David Rosenthal?

  Yes, exactly, exactly. They have power because of their scale economies and because they're like Goldilocks. They're like, just right. They're big enough, but not too big, and they're small enough, but not too small.

• 3:36:05Ben Gilbert?

  Yes. If they were any bigger, they would be sort of handcuffed by their overhead, and if they were any smaller, then they couldn't do some of the innovations that they do and design all the programs they designed and all that sort of thing.

• 3:36:14David Rosenthal?

  Exactly.

• 3:36:15Ben Gilbert?

  There's absolutely a scale economy to the community. I mean, the fact that they have all these racing programs and car meetups and factory tours, you need to be a certain scale to support all of those operations.

• 3:36:30David Rosenthal?

  Yep. I totally agree with that. And that's part of being the minimum. So I thought you were going to go to network economies. Ferrari absolutely has network economies.

• 3:36:37Ben Gilbert?

  For sure.

• 3:36:37David Rosenthal?

  100% with the Tifosi and the community and the nature of the community and being so open and, as you perfectly put it, it's a way for older men to make friends.

• 3:36:48Ben Gilbert?

  Yes.

• 3:36:49David Rosenthal?

  Whether you're a member of the Tifosi or a Ferrarista, a big part of what you were doing is making friends.

• 3:36:53Ben Gilbert?

  Yes, it's a network economies by having a like robust, rich community around your product are almost this free defensibility because there's just so much more predisposition to want to buy something with a Ferrari logo on it because of the network economy you were just describing, David.

• 3:37:09David Rosenthal?

  Yeah, I mean, it's astonishing. Calling back to our F1 episode, Ferrari is the most popular F1 team in the world by a large margin.

• 3:37:19Ben Gilbert?

  And hasn't really won much since Michael Schumacher.

• 3:37:21David Rosenthal?

  Yeah, and sells the most expensive cars that the vast, vast, vast majority of their fans will never be able to buy.

• 3:37:28Ben Gilbert?

  Absolutely exclusionary.

• 3:37:29David Rosenthal?

  I bet a lot of fans of the Mercedes racing team, one way or another, can find a way to buy a Mercedes. Almost none of the fans of Ferrari can find a way to buy a Ferrari.

• 3:37:39Ben Gilbert?

  All right, you just pulled forward my quintessence, so I'm just gonna do it now.

• 3:37:42David Rosenthal?

  Great.

• 3:37:42Ben Gilbert?

  Ferrari is both inclusive and exclusive. It has the exclusivity of a luxury brand, but the inclusivity of a sports team.

• 3:37:52David Rosenthal?

  Yeah, that's it.

• 3:37:53Ben Gilbert?

  I mean, it's this amazing marriage that this is gonna sound so self-serving, but I was just sitting there nodding, reading their financials, because this is exactly acquired strategy. We are unbelievably exclusive about the companies that we are willing to do these editorial deep dives on. We're unbelievably exclusive about our sponsors, and yet we're as inclusive as possible for the

• 3:38:16David Rosenthal?

  Community.

• 3:38:16Ben Gilbert?

  It should be the best deal on the internet. We want to make tickets cheap whenever we have big live events. You and I have always talked about it as Costco in the front and Hermes in the back.

• 3:38:25David Rosenthal?

  But really, we're just Ferrari.

• 3:38:26Ben Gilbert?

  Ferrari figured this out first. Yes, it's so smart.

• 3:38:29David Rosenthal?

  All right, well, we're gonna have to change how we talk about acquired.

• 3:38:31Ben Gilbert?

  If you can marry a luxury brand with a sports team, it is a business cheat code.

• 3:38:35David Rosenthal?

  Yes, yes, I love it. Oh, that's such a great quintessence.

• 3:38:40Ben Gilbert?

  All right, back to powers.

• 3:38:42David Rosenthal?

  It feels anticlimactic to come back to powers. Well, let's, let's, let's run through it quickly. All right, so we did scale economies, network economies, branding. Counter positioning.

• 3:38:51Ben Gilbert?

  Did this even ever exist in the first place? Cause this almost never exists when you're an incumbent, but trying to think if they didn't, if they use counter positioning in the takeoff phase.

• 3:38:59David Rosenthal?

  Yeah, I don't really think so. I think they were just doing something different as we talked about by having the team, the constructor and the services all in one house.

• 3:39:08Ben Gilbert?

  Oh, they're counter positioned against the houses of brands today. They can do stuff that Lamborghini can't do because of the.

• 3:39:15David Rosenthal?

  The platform sharing.

• 3:39:16Ben Gilbert?

  Yeah.

• 3:39:17David Rosenthal?

  Uh, switching costs, there's, there's no switching costs.

• 3:39:20Ben Gilbert?

  In fact, I think most people who own Ferraris own other cars and want to keep adding other cars.

• 3:39:26David Rosenthal?

  Yep. Cornered resource, absolutely. They have Enzo and the history and the myth and the legend of Ferrari and that is not going anywhere, obviously.

• 3:39:34Ben Gilbert?

  And actually for a while their F1 team had an advantage because they have their own racetrack that no one else has.

• 3:39:41David Rosenthal?

  Right.

• 3:39:41Ben Gilbert?

  I mean, they have their own wind tunnel and everything, but like they also own a.

• 3:39:44David Rosenthal?

  A racetrack.

• 3:39:45Ben Gilbert?

  Yes.

• 3:39:45David Rosenthal?

  Yes, yes.

• 3:39:46Ben Gilbert?

  Do they have process power?

• 3:39:49David Rosenthal?

  Process power? I don't think they have any obvious or specific process power. Sure, there's institutional knowledge in the factories and they have their very unique way of building cars that is different than in the other auto manufacturer, but I don't think that's quite process power. I think their power lies mostly in the other categories.

• 3:40:08Ben Gilbert?

  Yeah, I agree. So the question kind of becomes, what is the primary reason why imitators have failed to execute Ferrari's strategy as well as Ferrari? And the most obvious is McLaren. They're trying to basically do the same thing. There's Lamborghini that we've talked about. There's Aston Martin. It's a much smaller production, but there's Bugatti. I mean, why are there no other Ferraris?

• 3:40:34David Rosenthal?

  I think I would posit that there are no other Ferraris because of the continuity. Even through all the crazy ups and downs and the wild story and the journey that we told on this episode, Ferrari has always been Ferrari. The core myth has always remained intact and the products, as up and down as they have been over the years. More or less have always delivered on what it is that you are buying when you buy a Ferrari, and that has been unbroken all the way back to 1947. I mean, for God's sakes, they're the only F1 team that has been continuously operating for all of F1.

• 3:41:17Ben Gilbert?

  Yeah.

• 3:41:17David Rosenthal?

  That's my answer.

• 3:41:19Ben Gilbert?

  I think that is largely correct. It is interesting for all the people who complain, oh, you know, that model was crappy, or this strategy was crappy. It's actually a pretty narrow window where more or less they were still being Ferrari, even if you have a particular gripe.

• 3:41:33David Rosenthal?

  Yep. And certainly if you compare it to the ups and downs of any other car company, it's quite continuous.

• 3:41:39Ben Gilbert?

  And my answer is different for each one of these. I mean, for example, Lamborghini, how do you build a company like this without racing heritage to tie it to? If you're going to build a luxury brand, you need time and you need heritage where you tie it to an important emotional thing that people lust for connection over. And in cars, it's racing. I'm sorry. It's just, it's the obvious thing to tie the emotion of your brand to. Aston Martin has fallen down because they've been terrible at running a business. McLaren, various changes in ownership and leadership and strategy, so different for different reasons, but no one has, over, what is it, 80 years, been able to run the Ferrari playbook.

• 3:42:23David Rosenthal?

  Yep. All right. Quintessence, you already gave yours, which I love. The marriage of a luxury brand and a sports team. What could be more quintessentially acquired than the marriage of a luxury brand and a sports team? I think for me, as I was thinking about quintessence, I sort of took the question that you and I posed to each other at the start of our research journey here on Ferrari, which is, what are you buying when you buy a Ferrari? And for me, it's two things that you're buying. You're buying one, passion.

• 3:42:56David Rosenthal?

  There's undeniable, purely quintessentially Italian and Enzo and Ferrari passion that goes into every one of these cars, from the Range, the Icona Series, certainly to the supercars, and I think probably even the Pura Sangue, even the FUVs.

• 3:43:15Ben Gilbert?

  Certainly.

• 3:43:16David Rosenthal?

  Certainly.

• 3:43:17Ben Gilbert?

  It's funny, David, you know this, but I talked with the CEO Benedetto Vigna yesterday, and he told me, "We don't sell a car, we sell a dream."

• 3:43:24David Rosenthal?

  Yeah.

• 3:43:25Ben Gilbert?

  And I think that

• 3:43:26David Rosenthal?

  That's an old Nico line, but yes.

• 3:43:27Ben Gilbert?

  Yes.

• 3:43:28David Rosenthal?

  It's true, it's true. You know, and compare that to other cars, and it's just, you know, most cars, there's, there's zero passion in them. So one, I think it's passion. And two, I really do think there's something to the ability to feel maximally alive in a Ferrari. And that comes right back to Enzo and his story and all the great tragedy and death that was part of it. Like, buying a Ferrari, you're buying a weapon that you can use to, you know, fight against death and scream into the void, should you so choose.

• 3:44:04Ben Gilbert?

  And the one thing I will add to that, back on our Rolex episode, we threw out the idea of a functional alibi, a reason you could claim that you need such a watch. For Ferrari, they have lots of incredible alibis. Most people do not experience the thing that you just described, feeling maximally alive and going right up to the edge. But that is one of several plausible alibis for why you can convince yourself that you are buying this thing. For, for me, it's, it's the incredible engineering. I think for some people, it's the racing heritage. I also think their cool manufacturing and their craftsmanship, these are all tremendous assets that the brand has that are extremely plausible alibis that you can tell yourself why you are buying this.

• 3:44:49David Rosenthal?

  Yep, that's a great point.

• 3:44:50Ben Gilbert?

  Even if what you're really, really doing is social signaling.

• 3:44:55Ben Gilbert?

  Or you have too much money and you truly don't know what to do with it and this seems fun. I mean, I think that's-

• 3:44:58David Rosenthal?

  Or you view it as an investment.

• 3:44:59Ben Gilbert?

  That's right.

• 3:45:00David Rosenthal?

  Well, that is a great place to leave our story for today. We have a few fun things here before we wrap up the episode.

• 3:45:08Ben Gilbert?

  I've got a couple bits of trivia for you, David. I don't know if you know them.

• 3:45:12David Rosenthal?

  All right, I've got a couple.

• 3:45:13Ben Gilbert?

  Is one of yours the Lamborghini story?

• 3:45:15David Rosenthal?

  Yes, yes. All right.

• 3:45:17David Rosenthal?

  We gotta tell the actual Lamborghini story here.

• 3:45:19Ben Gilbert?

  Did you know, so the way that this story is out in the world, there is an issue of thoroughbred and classic cars from January of 1991. And it is a quote from Ferrucio Lamborghini that is in this print-only magazine.

• 3:45:34David Rosenthal?

  So this is the origin of the myth of the founding of Lamborghini is in this magazine? I did not find that. That's incredible. All right. Well, do you want to tell it?

• 3:45:41Ben Gilbert?

  You give your side of the story and then I'll give the quote.

• 3:45:43David Rosenthal?

  Okay. So the legend out there about the founding of Lamborghini is that Ferrucio Lamborghini was a wealthy Italian tractor magnet manufacturer-

• 3:45:55Ben Gilbert?

  Yeah.

• 3:45:55David Rosenthal?

  -who was dissatisfied with the clutch in his Ferrari that he owned. And he went to Enzo to complain about it and-

• 3:46:04Ben Gilbert?

  And here's the quote.

• 3:46:05David Rosenthal?

  Great.

• 3:46:06Ben Gilbert?

  "The problem with the clutch was never cured, so I decided to talk to Enzo Ferrari. I had to wait for him for a very long time. Ferrari, your cars are rubbish, I complained." Il Commendatore was furious. "Lamborghini, you may be able to drive a tractor, but you will never be able to handle a Ferrari properly." This was the point where I finally decided to make a perfect car.

• 3:46:28David Rosenthal?

  Now, the reality is that was some, an intentional attempt at myth building on the part of Ferrucio. That never happened. The real story is that one of his tractor mechanics was repairing one of Ferrucio's Ferraris and found that some of the parts that were used in the Ferraris were quite similar to the parts that they used in the tractors and said to Ferrucio like, "Hey." We could try making cars, too. We bet we can be at least as good as this Enzo guy.

• 3:46:56Ben Gilbert?

  I don't know. Everyone involved in these stories is long dead. It could be some a column A and some a column B.

• 3:47:01David Rosenthal?

  That's true. That is the legend of the founding of Lamborghini.

• 3:47:04Ben Gilbert?

  Yes.

• 3:47:05David Rosenthal?

  I love it.

• 3:47:06Ben Gilbert?

  All right. My second bit of trivia is not a confirmed fact, but it's something that I've been kind of thinking through. I had seen numbers floating around out there of the number of clients that Ferrari knows the name of. They say in their public reporting that they have 90,000 active owners and another 90,000 who currently own Ferraris but haven't bought in the last five years. I don't think these are estimates. If there's only 180,000 rows that they need in a CRM.

• 3:47:37David Rosenthal?

  Yeah, it's completely reasonable that they know every owner of every Ferrari.

• 3:47:41Ben Gilbert?

  I think they have a giant spreadsheet with names mapped to serial numbers and who owns every single car.

• 3:47:50David Rosenthal?

  Yeah, that's crazy to think about, but completely reasonable.

• 3:47:52Ben Gilbert?

  Because think about it. What are the ways in which they would not have your information? If you bought it new, they've got your information. If you bought it used from a dealer, they've got your information. If you bought it in a private sale at auction, pretty sure they can get your information. But if not, you probably want to get one of those $6,000 to $10,000 certificates here pretty soon.

• 3:48:11David Rosenthal?

  Right, the Classic A, yep, exactly.

• 3:48:13Ben Gilbert?

  Which is going to involve contacting the factory.

• 3:48:16David Rosenthal?

  Getting your information.

• 3:48:17Ben Gilbert?

  You know, track days. There's like all these community programs. I think they know every single owner who owns every single car.

• 3:48:27David Rosenthal?

  I bet they do. I bet you're right.

• 3:48:29Ben Gilbert?

  Isn't that awesome?

• 3:48:30David Rosenthal?

  We'll have to ask them next time we chat with them.

• 3:48:31Ben Gilbert?

  That's right.

• 3:48:32David Rosenthal?

  All right. My second and last one. I am so sure I'm going to get you with this one. The 1949 LeMans that Luigi Canetti won, started a first major victory for Ferrari. Example of the business model, you know, private client car, winning LeMans, et cetera, et cetera. There was another privately owned Ferrari 166 that was entered by another Ferrari client in that very same race, the 1949 LeMans. Do you know who that other client was?

• 3:49:11Ben Gilbert?

  European or American?

• 3:49:13David Rosenthal?

  European, French.

• 3:49:15Ben Gilbert?

  Is it a member of the Hermes family?

• 3:49:18David Rosenthal?

  Good guess, but no. You're not gonna get it.

• 3:49:21Ben Gilbert?

  I don't know.

• 3:49:22David Rosenthal?

  Pierre Louis Dreyfus of the-

• 3:49:25Ben Gilbert?

  Oh, Julia Louis-Dreyfus?

• 3:49:26David Rosenthal?

  Yes, yes, of the famous Dreyfus family and Julia Louis-Dreyfus's grandfather, Elaine from Seinfeld, her grandfather, was one of the first Ferrari clients and raced in Le Mans.

• 3:49:40Ben Gilbert?

  Oh, my God. That is awesome.

• 3:49:42David Rosenthal?

  So awesome.

• 3:49:43Ben Gilbert?

  Side note, I think that is so crazy that she's like of the Louis Dreyfus family and went on to be a incredibly successful self-made actress coming from a multi-billion dollar European generational wealth. I mean, it's just a-

• 3:49:59David Rosenthal?

  It's an incredible story.

• 3:50:00Ben Gilbert?

  It's just a crazy smash together of two worlds.

• 3:50:02David Rosenthal?

  Totally.

• 3:50:03Ben Gilbert?

  All right, carve-outs?

• 3:50:04David Rosenthal?

  All right, carve-outs. Let's do it.

• 3:50:06Ben Gilbert?

  Go watch the movie Ford vs Ferrari. It's enormously fun. I have a few random shout-outs. Maison Wheat sweaters. I'm wearing one right now. I have a whole closet full and they have been the most pleasant. I can wear them to bed or to dinner. I'm wearing them to recording. They feel like the most flexible item that I own and they're unbelievably comfortable. So I can't recommend Maison Wheat sweaters enough.

• 3:50:32David Rosenthal?

  Ooh, nice. I'm in the market for some new sweaters. I'll have to go check them out.

• 3:50:35Ben Gilbert?

  Yeah, they're great. Craig Hill scissors.

• 3:50:38David Rosenthal?

  Okay, wow, this is a deep cut, scissors.

• 3:50:41Ben Gilbert?

  Sometimes I get tricked by Instagram, as my wife says, where I'm scrolling through and then I find like the perfect ad hitting me at the perfect moment for some product I didn't even know I needed. This pair of scissors, the ad is great because it says, "How come your scissors are like some flimsy sheet metal and when you cut something that's hard, sometimes the scissors split sideways? And don't you hate that when it doesn't actually cut and the little screw is actually not positioned in the place to give you maximum leverage? We've just gotten so cheap in how we make scissors." Don't you miss the scissors from your grandma's house when you were growing up from the 50s that were like metal and like really solid? Well, we have brought those back, but with the highest manufacturing quality,

• 3:51:24Ben Gilbert?

  the best metals, this amazing grip. And I'll tell you, oh, and the way it slides when you squeeze them together to cut something is so unbelievably- Crisp, satisfying, smooth. And I bought them thinking like, we'll see. And they're expensive scissors. It's like $50 scissors or something. And they show up and it is everything I could have hoped for. It is the

• 3:51:46David Rosenthal?

  The Ferrari.

• 3:51:47Ben Gilbert?

  I'm throwing away all my other scissors. I'm only using Craig Hill scissors forever. It's a fantastic product. And after I bought it, I actually found out the founders are acquired listeners. So thank you so much for making a delightful product.

• 3:52:01David Rosenthal?

  Amazing, amazing. Wow. Okay. I don't think I could top that. That's, that's great. That's an all time carve out right there. All right. Mine, Amazon grocery service has completely transformed groceries in my family. It launched in San Francisco a couple of months ago.

• 3:52:18Ben Gilbert?

  Oh, like at the end of your shopping journey, you just randomly start clicking and adding things to your cart?

• 3:52:24David Rosenthal?

  Yes. People have been trying to crack online grocery forever, including Amazon, you know, a variety of different ways. And I've tried them all.

• 3:52:31Ben Gilbert?

  We get Amazon Fresh every week.

• 3:52:33David Rosenthal?

  Yeah. You know, Amazon Fresh or Instacart, or there's Good Eggs here in San Francisco. And like, they all have their pros and cons, but you know, at the end of the day, like, I mostly still went to the grocery store. Amazon has cracked it with Amazon grocery. You just click and add stuff on whenever you're ordering Amazon. I mean, as a parent of two small children, I'm ordering from Amazon multiple times a week. And I'm just clicking and adding on stuff for my daughter's lunches, whatever we need. Milk, you just add it on. There's no extra fees. There's no nothing. It just comes within a couple of hours with your Amazon order. It's amazing. It is, I go to the grocery so much less now over the last couple of months. Now that I can just click and add stuff. It's life changing. It's awesome.

• 3:53:17Ben Gilbert?

  All right. I have, I have a funny story about this. It just provides you like a little grid of pictures, right? It's like a little interstitial inserted before you finally get to the checkout page. You start tapping on the things that you want to show up at your doorstep. I tapped the picture of a banana five times because I was like, oh, I need like five bananas. And I got five bushels of bananas.

• 3:53:36David Rosenthal?

  Bunches of bananas.

• 3:53:39David Rosenthal?

  Good thing you have a toddler who, if he's like any other toddlers, you know, I assume eats a lot of bananas.

• 3:53:43Ben Gilbert?

  A banana a day.

• 3:53:44David Rosenthal?

  Yeah, yeah. My second carve out is one that you mentioned a couple of episodes ago. Travel Pro had reached out and sent you a bunch of great Travel Pro luggage.

• 3:53:57Ben Gilbert?

  I bought the luggage first, long before they sent it. And they sent it because I got a lot more luggage because we used it as a carve out.

• 3:54:04David Rosenthal?

  Right. Well, they also asked if I wanted some and I said, sure. They said, hey, we want to also send you this backpack. I'm like, okay, I love travel backpacks, but I don't know that I need another one. I love this backpack, the Travel Pro Altitude Backpack. I've been using it a ton. I did a solo trip with my two girls while Jenny was away on a work trip for a weekend at Legoland and I packed for all of us in my backpack. It was incredible. I love this thing. The Travel Pro Altitude Backpack. I consider myself a connoisseur of travel backpacks. I've been through many in my life and I've never found one so perfect as this. So thank you, Travel Pro.

• 3:54:44Ben Gilbert?

  There you have it. Well, a huge list of thank yous that we want to give to all the great folks who helped with this episode. First to our partners this season. JP Morgan Payments, trusted, reliable payments infrastructure for your business, no matter the scale. To Versal, the developer tools and cloud infrastructure to build and scale fast, secure applications on the web, versal.com/acquired. To ServiceNow, the platform that puts AI to work for people, servicenow.com/acquired. To Statsig, bringing experimentation, feature flags and product analytics into one unified system for product teams, statsig.com/acquired. You can click the link in the show notes to learn more. And as always, the sources, books and everything that we did for research are linked in the show notes.

• 3:55:29David Rosenthal?

  Yes. And speaking of, I owe just a huge, huge thank you to Luca Del Monte, who authored the definitive biography of Enzo Ferrari and was super generous, spent many hours on Zoom with me, talking through the nuances of all this history. We are incredibly appreciative of his help. Second, most importantly, to the other Luca, Luca de Montezemolo, truly a living legend who embodies Ferrari as much as anybody alive today. Thank you for taking time with us. To the also legendary Domenico De Sole, the former CEO of Gucci and business partner of Tom Ford's, who spent another good chunk of time with me, helping me really understand the difference

• 3:56:13David Rosenthal?

  between French and Italian luxury. To Stephen Wilmot, who covers European autos at The Wall Street Journal and wrote a great piece, breaking down how the waitlists work at Ferrari. That we'll link to in the show notes. To our friend Doug Demiro and to Chip Connor, who is one of the foremost Ferrari collectors in the world and gave us great perspective on the Ferrari collector community.

• 3:56:37Ben Gilbert?

  For me, to Arvind Navarutnam at Worldly Partners for his great, great write-up on Ferrari, linked in the show notes. Worldly Partners, for those who don't know, is a highly concentrated, long-term investment firm focused on multi-decade compounding businesses, very in line with Acquired's ethos. You can learn more at worldlypartners.com and he's got the Ferrari write-up there. To my good friend, Matt Schob, Ferrari enthusiast and former Ferrari owner. To Brian Lum at Bailey Gifford, really, really thoughtful investor who helped me think through all of Ferrari and really woke me up to the idea of the pyramid of infrastructure. So, thank you, Brian. To Neil Konzen, one of the OG folks at Microsoft here in Seattle,

• 3:57:20Ben Gilbert?

  who then would have a second career actually working for Ferrari.

• 3:57:23David Rosenthal?

  That's right.

• 3:57:24Ben Gilbert?

  Moving to Maranello, experiencing it from the inside, working on the F1 side of the house on their technology, which was really fun to get his perspective on how the company evolved over the decades. To Mike Miller, good friend of the show, former editor at The Wall Street Journal, who really helped us research and construct this episode. And to Benedetto Vigna, the CEO of Ferrari Today. Thanks to Benedetto for taking some last-minute time yesterday to run through some final questions I had before recording. To Eddie Q, who is actually a Ferrari board member and a good friend of the show. Thank you for helping us contextualize.

• 3:57:59David Rosenthal?

  In addition to all of his work at, you know, Apple.

• 3:58:02Ben Gilbert?

  The fruit company, yes. And lastly, to DeLupa for their models, much, much easier than digging through SEC filings. So thanks to DeLupa. If you liked this episode, go check out our episodes on Porsche, Rolex, Hermes, and LVMH. You can join the email list at acquired.fm/email. That's where we will send our big takeaways from each episode, past episode corrections, exclusive behind the scenes photos we found in the research, and it's where you can vote on future episode topics. Plus, we will give a little hint each time about what the next episode will be. David, I thought your little Ferris Bueller nod last time was quite clever, so nice work with that.

• 3:58:40David Rosenthal?

  A lot of people got it. I thought, man, this is going to be really obscure, but.

• 3:58:44Ben Gilbert?

  You're going to have to get more obscure in your hints going forward. Acquired.fm/email. And after you finish this episode, come talk about it with the other smart members of the acquired community at acquired.fm/slash/Slack. With that, listeners, we'll see you next time.

• 3:58:59David Rosenthal?

  We'll see you next time.