Hermès (Audio)

1. BGBen Gilbert0:00

   So I don't know if you realize this, Hermès is reporting earnings in, like, two days.

2. DRDavid Rosenthal0:05

   Yes!

3. BGBen Gilbert0:05

   And at first I was like, "We should probably not do this episode, because their annual report comes out in two days. What if we're not current?" And then I realized, this is Hermès. The short term is of no consequence [laughing] .

4. DRDavid Rosenthal0:16

   Yeah. [laughing] Also, the Hermès annual reports are the most beautiful annual reports ever created in the history of the financialization of mankind.

5. BGBen Gilbert0:28

   You might think you can't do all of your charts in orange, you need different colors, but you would be wrong.

6. DRDavid Rosenthal0:33

   The illustrations, the themes, you can tell they care.

7. BGBen Gilbert0:37

   You can tell. All right, let's do it.

8. DRDavid Rosenthal0:40

   Let's do it.

9. SPSpeaker0:41

   Who got the truth? Is it you? Is it you? Is it you? Who got the truth now? Hm. Is it you? Is it you? Is it you? Sit me down, say it straight. Another story on the way. Who got the truth?

10. BGBen Gilbert0:57

    Welcome to season 14, episode two of Acquired, the podcast about great companies and the stories and playbooks behind them. I'm Ben Gilbert.

11. DRDavid Rosenthal1:05

    I'm David Rosenthal.

12. BGBen Gilbert1:07

    And we are your hosts. Today, we tell the story of a handbag company that won't sell you a handbag, a traditional saddle maker that makes very little of their revenue from saddles. A company that somehow has grown to be worth over $200 billion, despite rejecting manufacturing efficiencies and economies of scale. A company so obsessed with craft and a reputation for quality, that they have stayed independent, while every other luxury brand has merged into conglomerates. That's right, listeners, today, we tell the oldest story we have ever told here on Acquired, older than Standard Oil or The New York Times. This company dates back to 1837 in Paris, France, the crown jewel of the luxury industry, Hermès.

13. DRDavid Rosenthal1:54

    Ben, do you know what company was also founded in 1837, that we have discussed quite a bit on Acquired?

14. BGBen Gilbert2:02

    Hmm. No, I do not, David.

15. DRDavid Rosenthal2:05

    That would be the other iconic color luxury company, Tiffany.

16. BGBen Gilbert2:10

    Oh, really?

17. DRDavid Rosenthal2:11

    Also founded in 1837.

18. BGBen Gilbert2:13

    Ah, Chuck T. Well, this episode, listeners, has been probably just under 12 months in the making. LVMH was just after one year ago, and it was in that episode that I feel like I got a real penchant for everything that Hermès stood for. You know, after 187 years, still under family control, they're on their sixth generation of family leadership at the helm. I don't know, David, everything Hermès does is just so focused, and intentional, and pure. As much as they sort of get lumped together with brands owned by LVMH, they are in many ways the anti-LVMH.

19. DRDavid Rosenthal2:49

    Ooh! Oh, we've got a great discussion of that later in the episode. I used to think that, and I no longer think that. But after our LVMH episode, I mean, you were so inspired by learning about Hermès, you went out and you bought your first luxury object, right? And it was not a LVMH brand.

20. BGBen Gilbert3:05

    Yes, that is true. My wife and I were on our honeymoon, listeners, after LVMH, so last summer, and we were in Aix-en-Provence, and we walked by an Hermès store, and I thought, "Well, this would be a great time to go in and get each other something as a honeymoon gift." So my wife got a little, uh, twilly scarf, and I got an Hermès belt, and, uh, it's the only luxury item I own of any luxury brand, traditional luxury brand.

21. DRDavid Rosenthal3:28

    Yeah. As foreshadowed on our holiday special episode a couple months ago.

22. BGBen Gilbert3:32

    Yep. Well, listeners, if you wanna know every time an episode drops, you can sign up at acquired.fm/email. You'll get hints at what the next episode will be, and follow-up facts from previous episodes when we learn new information. Come discuss this episode with us at acquired.fm/slack. Come check out our second show, ACQ2, where we interview founders, investors, and experts, often as follow-ups to these episodes. And before we dive in, we want to briefly share that our presenting sponsor this season is J.P. Morgan, specifically their incredible payments business.

23. DRDavid Rosenthal4:04

    Yeah, we really uncovered the breadth of J.P. Morgan Payments as we went deep into industry research for our Visa episode last year. And just like how we say every company has a story, every company's story is powered by payments, and J.P. Morgan Payments turns out to be a part of so many of our Acquired companies' journeys.

24. BGBen Gilbert4:20

    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, I feel like we're starting before 1837.

25. DRDavid Rosenthal4:32

    Yes, but not too much before 1837.

26. BGBen Gilbert4:35

    All right, we're not going to, like, the sort of Egyptian invention of the handbag or anything like that?

27. DRDavid Rosenthal4:41

    Boy, let me tell you, I was tempted. [laughing]

28. BGBen Gilbert4:42

    I was tempted. [laughing]

29. DRDavid Rosenthal4:44

    Well, if you read The Luxury Strategy, which is a great book that we've referenced many times on Acquired, they start back 50,000 years ago. We start in 1801, not in Paris, not even in France. You know, as we've been talking about, the land of beauty, luxury, enlightenment, where Hermès, of course, was founded and is still based today. And uniquely, Hermès still does 85% of their production by hand by master craftspeople in France, as we will talk a lot about. But instead, we start in the land of hardness and precision, of engineering, of exactitude, the future land of the Porsches of the world. That is right, Germany.

30. BGBen Gilbert5:27

    A century before the Porsches and Volkswagens of the world.

Episode duration: 4:11:09