The House of Gucci

by Sara G Forden

  “Hello, Maurizio,” Flanz said, with a soft smile. “There’s no sense in us acting like strangers.”

  Maurizio looked Flanz in the eye as they shook hands. “Now you will see what it is like to pedal the bicycle,” said Maurizio.

  “Would you like to have lunch sometime?” Flanz asked him.

  “First you pedal the bicycle for a while,” Maurizio said evenly. “Then if you still want to, we’ll have lunch.”

  Flanz never saw him again.

  THE BATTLE MAURIZIO LOST could be seen on several different levels. He had inherited a difficult, if not impossible, legacy. His vision of a new future for Gucci was clouded by his inability to set his plans on an even keel, to marshal his resources for the task. His pattern of relationships—molded on that first, intense relationship with his father—further kept him from finding and keeping a steady shoulder to help him with his mission, whether in his personal or his professional life.

  “Maurizio had this tremendous charisma and charm, the ability to sweep people away with him,” recalled Alberta Ballerini, Gucci’s longtime ready-to-wear coordinator. “But it was a shame because he lacked the base. He was like someone who built a house without making sure the foundation was there.”

  “Maurizio was a genius,” agreed another longtime employee, Rita Cimino, “he had excellent ideas, but he wasn’t able to carry them out. His big defect was that he couldn’t find the right people to help him. He surrounded himself with people who weren’t right. He would fall in love with them—because he was very sentimental—and then suddenly he would realize that they weren’t right, but by then it would be too late,” Cimino said. “I think he fell in love with them because he was attracted to their cynicism and because he realized that he could never be that tough—he looked to these kinds of people for support.”

  “It is very difficult to fall in love with the right person,” ventured Massetti. “It happens rarely in life, and Maurizio was particularly unlucky. The people who had some sense never got close to him and those that did only lasted a little while before they got burned.”

  “What destroyed Maurizio was money,” said Domenico De Sole. “Rodolfo had been thrifty and built a fortune—but he failed to teach thrift to his son. When Maurizio ran out of money, he became desperate.”

  Maurizio’s fight was also a symbolic game of chicken that hundreds of Italian family firms—both in and out of the fashion sector—were increasingly forced to play on the road to the global marketplace. They risked either being knocked off the road or overrun by giant multinationals. It is difficult for family-owned firms such as Gucci to attract and control the new capital and professional management resources they desperately need to stay in the race.

  “In this industry there are so many companies with potential that never take off because the founder is still in control,” said Mario Massetti, who continued to work for Gucci under Investcorp’s ownership. “These are people who often have been geniuses at launching an idea, but their very presence holds it back. Maurizio set everything into motion, but at the same time, he blocked so many things.”

  On the other hand, Concetta Lanciaux, the powerful director of human resources for Bernard Arnault’s luxury goods group LVMH, is sure that “Gucci would not be there today if it had not been for the vision of Maurizio Gucci.” Maurizio had tried to woo Lanciaux, who is credited with spotting new talent and bringing it into the LVMH group, away from Arnault in 1989 when he was launching his dream for the new Gucci. She found his vision compelling.

  “He had convinced Dawn Mello and he almost convinced me,” admitted Lanciaux. “Like Arnault, he was a true visionary and the vision is the fundamental thing that moves a company forward.”

  Unlike Arnault, who had a loyal and competent deputy at his side in the figure of Pierre Godé, Maurizio had never found the strong, trusted deputy who could have given a practical foundation to his dreams. A strong relationship between the creative figure and the business manager had proven a winning formula at other leading Italian fashion houses. Valentino and Giancarlo Giammetti, Gianfranco Ferré and Gianfranco Mattioli, Giorgio Armani and Sergio Galeotti, and Gianni Versace and his brother Santo were just a few examples. Over the years at Gucci, many moved in and out of that role, but there was no single person who was able to give overriding continuity to Maurizio’s grand plan. Andrea Morante paved Maurizio’s way for a time in his various roles. Nemir Kirdar and his team at Investcorp partnered Maurizio and his dream—until it became financially unsustainable. Domenico De Sole lasted the longest, proved the most devastating to Maurizio, and would emerge as Gucci’s true survivor.

  Maurizio’s lawyer, Fabio Franchini, still one of Maurizio’s most passionate defenders, believes Investcorp cut Maurizio out too soon.

  “They didn’t even give him three years to put his dream in place,” said Franchini, bitterly. “Maurizio’s first results were approved in January 1991, and by September 1993, they had forced him to sell,” he said, shaking his head. Franchini, who advised Maurizio step-by-step throughout the battle with Investcorp, grew close to him, although they always addressed each other with the formal Lei. Franchini still refers to Maurizio formally as Dottore, but his eyes light up and the wide mouth opens into a face-splitting smile at the mention of his name. Franchini now manages Maurizio’s estate for his two daughters, Alessandra and Allegra.

  “I want to save what’s left of Maurizio Gucci for them,” Franchini said. “He was an extraordinary man, but he was not prepared for the hard business world. He could never have been trained for it either, because he was a great gentleman—he wasn’t thick-skinned. Maurizio Gucci was a correct person through and through.”

  “I tried to explain to him that it was better to have his cousins on the other side of the table, rather than a powerful financial institution. Maurizio Gucci was finished from the beginning because he was alone, completely and entirely alone with fifty percent—or the equivalent of zero.” Franchini said.

  Maurizio’s inability to find a strong business partner may have cost him his dream, but it was also understandable given his past relationships and his position. So often, the people whom Maurizio Gucci grew close to wanted something from him. Rodolfo wanted utter obedience, Aldo wanted a successor, Patrizia wanted fame and fortune, and Investcorp wanted a calling card with Europe’s business elite. As Maurizio fought to secure his hold over his family company, many of those who came forward to help him really sought their own place in the Gucci spotlight.

  “When you are healthy, handsome, and have a highly visible last name and the most beautiful boat in the world, it is difficult to make real friends,” said Morante. “You find yourself surrounded by people who are in desperate search for the indirect limelight, for easy money, and for the glamour of being associated with a well-known name.”

  Meanwhile, Flanz pedaled the Gucci bicycle. He hired a new human resources director, Renato Ricci, to help him repair the workers’ broken trust in management, thin out excess personnel, streamline operations, and cut costs. In opening the San Fedele office, Maurizio had duplicated many jobs already done in Florence. Flanz asked fifteen out of twenty-two top managers in Milan to leave. He and Ricci tried to be open and fair with the unions in an effort to avoid antagonism. If angered, the unions could have exploded the entire situation onto the front pages of the newspapers—which could have been damaging for the restructuring. In Italy, which was grappling with unemployment and labor issues, the labor unions were powerful enough to topple the government and extract steep compromises from private industry.

  “At that point, the one strength of Gucci was still its image,” said Ricci. “The unions could have fought us tooth and nail and if we started getting a lot of bad press about firing people, it would really have been a disaster.”

  In the fall of 1993, to the astonishment of Gucci’s management team—which had been focusing primarily on cutting costs—Flanz decided to double Gucci’s advertising budget. At the time, Gucci’s sales hadn
’t grown at all for some three years and the company was still losing money.

  “We had good products and a good campaign and we had to get it out there and let people see what we had to sell,” said Flanz.

  In January 1994, Flanz announced Gucci would close the glamorous San Fedele headquarters by March—nearly four years after Maurizio had opened it full of excitement and hope—and move the company headquarters back to Florence.

  The women’s fashion show in March 1994 marked the end of Gucci’s presence in San Fedele. Before the show, Tom Ford and one of the few remaining design assistants, a young Japanese man named Junichi Hakamaki, found themselves hanging the entire collection by themselves.

  “No one wanted to help us because they all knew they were being fired,” Junichi recalled. “We worked until two A.M. and then we had to be back in the office by five A.M. to bring all the clothes over to the Fiera,” he said. The show, which featured a strong, masculine modster jacket and suit look, was well reviewed, though not overwhelmingly so. About a week later, Gucci closed its doors on San Fedele. Only a handful of people moved down to Florence.

  There, the remaining managers sat in dingy offices that had never been updated or refurbished, firing angry memos at each other to defend their own positions—but doing little to help move the company forward.

  “The workers were depressed,” said Ricci. “They had lived for months with the fear of not being paid and that the company was going to go bankrupt. Then they were afraid of Investcorp and of being fired.”

  “The company was paralyzed,” added De Sole, who had been shuttling back and forth between Florence and New York. “Management was completely balkanized, nobody was making decisions, and everybody was terrified of getting blamed. There was no merchandise, no pricing, no word processors, no bamboo handles. It was crazy! Dawn Mello had turned out some nice handbags, but the company couldn’t produce them or deliver them.”

  In the fall of 1994, Flanz appointed Domenico De Sole as chief operating officer and asked him to stay in Florence full time.

  De Sole was demoralized and depressed. He had been working for Gucci for ten years as CEO of Gucci America and for several years before that as a lawyer. Not even a year earlier, he had voted with Investcorp against the very man who had brought him into the company—a key move that had permitted the investment bank to take control. He hadn’t asked Investcorp for anything in return. Furthermore, Maurizio, still hurt by De Sole’s betrayal, balked at paying De Sole the money he owed him and Investcorp settled the deal anyway, without helping De Sole recover the loan.

  “We had a responsibility to our investors,” explained Elias Hallak later. “That was a personal matter between Maurizio and Domenico.”

  When Investcorp didn’t name De Sole CEO and instead put Bill Flanz in charge of its so-called management committee for Gucci, De Sole called up Investcorp’s Bob Glaser and threatened to quit.

  “I should be running this company! I am resigning tomorrow!” blustered De Sole. “Everybody else on that committee is either incompetent or corrupt!”

  Glaser, who admired and respected De Sole and what he had done, calmed him down—and then gave him some golden advice. “Domenico, I know you are frustrated and you should have that job—I recommended you for it. But let me tell you something as a friend. If it is true that everyone else on the committee is either incompetent or corrupt, stick with it. Eventually you will rise to the top, and others will see your value.”

  De Sole took Glaser’s advice and moved himself and a close group of staff—people he trusted and knew how to work well with—from Gucci America to Florence. In Florence, De Sole and his team found themselves up against a group of angry, surly Florentine workers. Between his early, disparaging attitude toward De Sole and his later disillusionment, Maurizio had poisoned everybody’s mind against De Sole—from Kirdar and the senior management at Investcorp down to the Florentine laborers.

  “It looked as though we had brought in the American SWAT team and that was destabilizing to the Florentine staff,” recalled Rick Swanson, “but it was the only way to fill the management hole.”

  More layoffs in Florence, and the Americans’ new procedures, embittered Claudio Degl’Innocenti and the Florentine workers. They balked at De Sole’s directives, earning the sobriquet the “mafia fiorentina.”

  “Maurizio had turned everybody against De Sole, they all hated him,” said Ricci. But De Sole persevered. After coming close to a fistfight with Claudio Degl’Innocenti in the factory parking lot, De Sole came to terms with his opponent.

  “I finally sat down with Claudio and asked him to explain to me: ‘Why doesn’t it work?’” De Sole said. “And I found out that it was mainly lack of projections and decision making. Do we need to buy black leather? OK, let’s order it!” De Sole came to trust Degl’Innocenti and promoted him to director of production.

  “First you were my enemy, now you are my friend,” he would say later to Degl’Innocenti, who hid a sharp intelligence behind his bearlike exterior.

  “De Sole was the company’s biggest asset,” said Severin Wunderman years later, even though he had not been De Sole’s biggest fan. “He was like a willow tree in the wind—which bends but never breaks.” De Sole took what Gucci dished out, first under the family—Rodolfo, Aldo and Maurizio—and later under Investcorp. He had been pushed, insulted, and gone unrecognized, but he didn’t give up or go away.

  “Domenico De Sole was really the only person who really understood the company, how it worked, and what it would take to get it up and running,” Ricci said. “That was the turning point. De Sole was very effective in motivating people.”

  “He made things happen,” agreed Massetti. “He worked from morning to night; he was a pain in the ass because he called everybody in the early mornings, at night, on Sundays—no time was sacred—that was all he did. He would hold two or three meetings simultaneously and run back and forth between all of them—there were never enough conference rooms for his liking!”

  In the meantime, Flanz had ordered the renovation and enlargement of Gucci’s Scandicci offices, which had grown shabby during years of neglect. He furnished new, more elegant executive offices. Support and secretarial staff were upgraded and retrained—many employees didn’t have good administrative or language skills.

  Flanz made a point of walking down from his executive office into the factory every day to talk to the workers and watch them work.

  “I had spent so much of my career with intangible financial services,” Flanz said, “that I loved watching a craftsman put a handbag together, the way he would roll the different layers of leather over a wooden form and place a few sheets of newspaper between the layers of leather to pad it slightly—nowadays there are synthetic materials that are probably far better—but the workers explained to me that they still used the newspaper because of tradition and nostalgia. They still had all these old stacks of Italian newspapers from which they would carefully cut out a few sheets to slip in the bags.

  “Once I replaced Maurizio, I ceased being a member of Investcorp’s management committee and I viewed my job as doing my best to make Gucci as successful as possible,” Flanz recalled. “I became a great believer.”

  It didn’t take Nemir Kirdar long to realize Investcorp had lost another man to Gucci—the following year he transferred Flanz to the Far East to explore new investment opportunities.

  “Three casualties,” Kirdar wryly said later, referring to Paul Dimitruk, Andrea Morante, and Bill Flanz. “I fell in love with Gucci,” he admitted, “but I didn’t want my people to. At Investcorp, we were doing dozens of transactions and if I lost a man to every deal, I’d be out of business!” Kirdar said.

  After Gucci’s human resources director Ricci finished handling all the layoffs—some 150 people—without a major uproar from the unions, he told Flanz he wanted to throw a party.

  “A party?” Flanz gasped.

  “Everybody made fun of me for this, but after we finish
ed we threw a big party in Casellina and it was a frivolous thing, but it was a signal for everybody,” Ricci said. He hired a caterer and ordered tables set up on the lawn behind the factory offices for the evening of June 28, 1994, invited some 1,750 people, including Gucci employees and suppliers, to a sumptuous buffet on the very lawns where once handbags had flown during the Gucci family wars.

  “That party was tremendously important,” said Alberta Ballerini. “It sent a signal; the signal that Gucci was coming back to Florence, that it was a Florentine company with Florentine roots.”

  In May 1994, Dawn Mello resigned as creative director of Gucci to return to Bergdorf Goodman as president, and Investcorp had to figure out how to replace her. Nemir Kirdar briefly caressed the notion of bringing in a big-name designer—he thought of someone like Gianfranco Ferré—but Investcorp’s advisor and Gucci board member Sencar Toker quickly dashed his hopes.

  “I explained that not only Gucci couldn’t afford someone like Ferré, but that no designer of any fame would even contemplate going to Gucci in the state it was,” Toker said. “No one would have risked ruining their reputation!”

  Mello had recommended Tom Ford. Even though he was a young designer nobody had ever heard of, he had impressed Toker and the others as being bright, sensible, articulate, reliable, and capable—after all, he was already designing all of Gucci’s eleven collections single-handedly!

  “Tom Ford was there!” recalled Sencar Toker, who continued to help Investcorp through the transition. “Gucci was not a fashion house until Tom made it into a fashion house, and nobody realized he would do that,” Toker said.

  At the time, Tom, exhausted and demoralized, thought about resigning too. He felt frustrated and stifled—for four years he had designed collections for Gucci according to what Maurizio and Dawn told him. A heated debate exploded within the company: should Gucci maintain the “classic” style direction advocated by Maurizio, or should it try to pep up its look with more fashion-oriented design?