Gucci is one of the hottest fashion brands in the world
with an estimated value of $22.6 billion dollars.
But, what begins as a rags-to-riches story of a
small family business becomes a dark, shocking tale of betrayal.
Underneath the glamour of the fashion world, there were frequent family feuds, lawsuits,
an attempted corporate takeover, and even murder.
So sit back, relax, get comfortable - because in this video, we’re
going on a journey through Gucci’s insane and controversial history.
Guccio Gucci was born and raised in Florence, Italy, and worked in his parent’s straw
hat shop. However, the family business went bankrupt, leaving Gucci penniless.
So when he was 18 years old, Guccio moved to London to seek work,
and found a job at the Savoy Hotel. Here, he observed the rich and famous guests of
the hotel wearing leather goods and carrying around expensive luggage. It was more than
just functionality. Fashion was a status symbol that divided the “haves” from the “have-nots”.
He then went on to work for a train company called Wagon Lits, where he spent even more time helping
travelers with their luggage, taking notice of the quality of luxury suitcases and handbags.
Guccio realized that if he had his own leather shop that catered to high-end customers like
these, he could become extremely wealthy. However, he also knew it would take years of hard work
learning about the leather industry and saving up money before he could branch out on his own,
so after serving in world war 1, Guccio got a job in a shop making leather goods
to get as much experience as he could - but he never lost sight of his vision.
Finally, by 1921, when Guccio was 40 years old - he’d saved and learned
enough to open his own small shop in Florence. This store selling leather
goods would be the very humble beginnings of the company we know today as Gucci.
Guccio initially imported leather goods, but he received more requests for handmade pieces
of uniquely designed handbags and shoes. He began to learn exactly the type of designs his wealthy
customers wanted, and since he often couldn’t find them from his suppliers, he decided to
open up his own workshop to create them. And he hired several employees to help meet the demand.
However, he quickly got in over his head with the expansion, and racked up a lot of
debt. There were many times when he struggled to make ends meet, and told anyone who would listen
about his troubles. Eventually, he took a loan from his son-in-law to keep the business going.
As he got older, he counted on his three sons: Aldo, Rodolpho,
and Vasco to help him run the business, and fully expected them to take over someday. But
clearly at this point the Gucci business was nothing special - in fact it was just
one small store. However Guccio’s three sons had ambitious plans to change that.
While Guccio was content with his leather goods business, his sons were thinking much
bigger. They convinced their father to open up a second shop in Rome. He was initially
reluctant as he felt it was too risky. But they wore him down - and it was a good job they did,
because this second shop ended up becoming extremely popular during World War II,
because soldiers were looking to buy gifts for their wives and girlfriends
back home. By the 1950’s, Gucci made enough profit to open a third store in Milan.
In 1953, Aldo, Rodolpho, and Vasco flew to New York City
to find the location for their first American store. But. the pressure of
all this expansion might have been too much for their father to bear,
because just two weeks after opening the New York store, Guccio dropped dead from a heart attack.
Guccio left the company to his 3 sons, but kept his daughter Grimalda out of
his will. Grimalda tried to fight her brothers in court, but lost. The daughter was left with
nothing of the Gucci fortune despite the fact that her husband’s loan had
once kept the company afloat. This was just the beginning of the family’s legal drama.
It turns out that expanding to the United States was exactly what Gucci
needed. As the first luxury Italian brand in New York City, the company took off in a big way,
becoming increasingly popular among Hollywood celebrities. This of course only created
yet more demand for Gucci’s products as people wanted to dress like their favorite movie stars.
And thus for a while, the three brothers ran the company successfully without issue.
Vasco passed away in 1974 though, and his shares were left to his wife - so Aldo and Rodolpho
bought out her shares, meaning that the two remaining brothers each owned 50% of the company.
That same year, the brothers opened up the first Gucci flagship store in Hong Kong. Gucci was one
of the first brands to focus on expanding to the Asian market, and it paid off massively.
The two brothers continued to re-invest these profits into more growth, and in 1975,
they expanded to a fragrance line, and continued to grow the number of products
offered under the Gucci name. It had become so much more than leather luggage. Gucci
was now a global luxury brand that sold purses, shoes, belts, wallets,
and so much more. But at this point, Gucci was still very much a private family business.
And, there is an old Italian saying that when it comes to family businesses: the
first generation builds, the second expands, and the third destroys.
Aldo Gucci had three sons: Georgio, Roberto,
and Paolo - and he gave each of them a small percentage of the company out of his shares.
Meanwhile Rodolpho Gucci still had his full 50% of the company,
as he refused to give any shares to his only son, Maurizio.
Life for the Gucci family was anything but peaceful. The cousins were constantly fighting
over who would get to control the Gucci brand. The two brothers from the second generation,
Aldo and Rodolopho had done a great job of transforming the company into
a huge global success, but they were getting older now, and there were a
lot of arguments over who should lead Gucci forward when they were both gone.
And then things got much more intense, when in 1972, Maurizio married a woman
named Patrizia Reggiani, who was known for being a gold digger. She once said,
“It’s better to cry in a Rolls Royce than be happy on a bicycle, that’s for sure.”
Patrizia loved wearing the Gucci brand to parties,
and living as a socialite. Behind the scenes, she was pressuring Maurizio to one day become
the new CEO of Gucci. She also gave herself a lot of credit for the brand’s popularity.
Patrizia was also incredibly controlling, and only stirred the pot when it came to
the Gucci family drama, deliberately playing family members off one another.
Rodolpho completely disapproved of his son’s marriage, calling Patrizia a “social
climber” who had nothing in mind but money. However Maurizio had fallen in love with her,
and ignored his father’s warnings - he and Patrizia would go on to have two daughters
together. It was only later Maurizio would look back and wish he’d listened to his father.
Maurizio’s marriage to Patrizia against his fathers wishes only strained their relationship.
Rodolpho refused to give his son any shares of Gucci whilst he was alive - but when he died, his
full 50% of the company transferred to Maurizio, since he had no spouse or other children.
Suddenly, Maurizio had gone from not owning any of Gucci to owning 50%. But that didn’t
mean him and his cousins weren’t still constantly arguing over how to run the
business. This third generation all had different plans and visions for the company.
For example, at this point, Gucci was licensing their brand out to department
stores, which brought in a lot of money, but Maurizio felt it cheapened the brand name,
as it was no longer exclusive to the rich and famous. To make matters worse,
fake versions of Gucci classics were being sold on street corners in cities around the world.
Maurizio wanted the brand to go back to being a luxury that only the rich and famous could
afford. So he pulled back the licensing… and Gucci almost immediately lost over $100 million
dollars in revenue because of this. Clearly, it seemed like a terrible idea at first, but
many think this actually saved the company in the long-run. Gucci was no longer accessible to just
anyone. It had gone back to being exclusive to the wealthy, which helped it become a legacy brand.
Meanwhile, Maurizio’s cousin Paolo felt that he was mistreated by his father, Aldo,
for being given such a small stake in the company with very little responsibility. He
wanted to be a fashion designer and felt he should be the one designing Gucci’s
products - however no one in the family trusted his taste at all. It seemed like
the one thing the Gucci family could agree on was that Paolo’s designs weren’t good enough.
Paolo was so angry at all this, that he ratted out his own 81-year old father
Aldo for tax evasion. Aldo was sentenced to 366 days in prison.
In his attempts to build a name for himself, Paolo then came out with his own Paolo Gucci
brand. The family tried to stop him, worrying he’d tarnish the Gucci brand image, but Paolo spent $8
million dollars taking Gucci to court to have the right to use his own name on the fashion line.
However, his big dreams were a flop. Sales were not able to make up for the amount of
debt he was in. According to his daughter, “His line was not successful because immediately,
Gucci bought the rights of Paolo Gucci and made his objects disappear.” Although,
even his daughter admitted that the first pieces Paolo produced were “ugly”.
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Then once you’ve done that, let’s get back to the story.
With so much fighting going on, the Gucci family was always making headlines in the
press about lawsuits and family drama. Maurizio had had enough. He wanted to
find investors so he could cut out the rest of the family and gain more control.
A company called Investcorp agreed to put up the money. Investcorp had
already invested in Tiffany’s, and helped make the jewelry company a
success. But this was their first time diving into a luxury fashion brand.
By this time, Paolo had become the black sheep of the family, and he owned just a
3.3% stake in Gucci. In 1988 Paolo sold his Gucci shares to Investcorp for $40 million. However,
he did not use this money wisely. He squandered his earnings, and by 1993,
Paolo declared bankruptcy, with debts of more than $90 million.
Over time, Maurizio convinced the rest of the Gucci family to sell their shares to Investcorp
as well, and this company now owned 50% of the Gucci brand. They still allowed
Maurizio to be the head of the company though, making all of the big decisions.
In 1989, he hired Dawn Mello as the Executive Vice President and Chief Designer of Gucci.
Just like Maurizio, she wanted to help with the brand’s exclusivity. It was her idea
to reduce the number of stores from 1,000 to just 180 of their most profitable locations.
They also reduced the number of items sold by Gucci from 22,000 to just 7,000. Mello also
brought back some of the classic bestsellers, like their Bamboo Bag and the Gucci Loafers.
Maurizio had a grand vision for Gucci. Now that the rest of the family was out of the picture,
one of the first things he did was open an extravagant new store in Milan. He also wanted all
new products to replace their current inventory, which put the company in massive amounts of debt.
Not just that, Maurizio wanted to get rid of Gucci’s accessories line. This was very
controversial because it was literally one of their most profitable streams of
income. The average person may not be able to afford Gucci clothing, shoes,
and purses, but maybe they could buy a wallet, sunglasses, or belt. Now, without accessories,
the brand was truly only accessible for the wealthy. Which is what Maurizio wanted,
but from a business perspective looked risky to say the least.
Maurizio also wanted to get rid of the classic “GG logo”,
which turned out to be a massive mistake. This was their iconic branding that
everyone had come to recognize, and it accounted for 70% of their sales.
All of Maurizio’s changes to bring in a new era of Gucci,
meant that the company began bleeding money. They were losing $30 million a year. Gucci
could no longer afford to pay salaries or suppliers. The company was on the verge of
declaring bankruptcy - all for the risk of this grand vision in Maurizio’s mind.
Understandably, Investcorp was getting nervous. They were losing millions of dollars in their
investment, so they approached Maurizio with the idea of appointing a new CEO for Gucci.
That didn’t go over well. Maurizio refused to let go of the seat of power. He pleaded with them,
saying that it would take at least 6 months for
customers to get used to his new vision for the company and start buying again.
Investcorp refused to back down though. In 1993,
they bought out Maurizio’s 50% of the company for $150 million.
Ironically, 6 months later, the luck of the brand turned around just like Maurizio said
it would. Japanese customers began buying Gucci bags, and the profits for the company
finally returned. Some of Maurizio’s decisions had definitely been mistakes,
but some of them had actually worked really well for helping Gucci become a truly luxury
brand again that could command high prices. But it was too late - Maurizio had been bought out.
And for the first time in history, there was no one from the Gucci family in the House of Gucci.
And just two years later, Maurizio Gucci would be dead.
After years of fighting, Maurizo separated from his wife Patrizia. And in 1994,
they finalized their divorce. According to her own friend Pina, Patrizia was "more sad
and sorry about losing the Gucci name than losing her husband.” However, Patrizia was
angry about the divorce, and continued to stalk Maurizio, and left him threatening voicemails.
He tried to move on with his new girlfriend Paola,
but Patrizia refused to let that happen. She feared that if he married Paola and started
a new family, she and her daughters would lose the money they were being given from Maurizio,
which was the only thing funding their lavish lifestyle which she craved so much.
Then in 1995, Maurizio was walking to his office when a gunman appeared. He
was shot 3 times in the head in broad daylight.
The police investigated all of the potential suspects. After all, with so much family fighting,
Maurizio had a lot of enemies. But for two years the case went cold,
and then finally, the police got an anonymous tip to look into Patrizia.
It turns out that Patrizia went around town asking nearly everyone she knew how she could
kill her ex-husband and get away with it. She even asked her lawyer how this could be done
without any jail time. With the help of her friend Pina, she’d then hired a hitman to do the job.
During the murder trial, she insisted on only wearing the
finest Gucci outfits in front of the flashing cameras. Patrizia
Reggiani got 29 years in prison. and the hitman himself got life in prison.
Patrizia served just 18 of those years though, and she actually could have been released even sooner,
if she simply agreed to a work-release program. But she refused, saying,
“I never worked a day in my life, and I don’t intend to start now.”
After the murder of Maurizio Gucci, the Gucci brand began a new era, and found a resurgence
of popularity after hiring the designer Tom Ford as creative director - he brought back the classic
Gucci logo, and began designing collections that spoke to a younger generation. Tom Ford,
together with CEO Domenico De Sole, were a dynamic duo - this would later be known
as the “Tom-Dom Bomb” era, and help turned Gucci’s fortunes back around.
Just from 1995 to 1996, sales nearly doubled from $263 million to $500 million!
Now that the Gucci family weren’t involved anymore and thus the brand wasn’t in a
constant power struggle, things were finally looking up again. Investcorp
quickly wanted to take advantage of this, and thus Gucci became a publicly traded company,
and the IPO was massively successful. Investcorp went on to sell their shares of the company,
making a $2 billion profit on their investment.
They got out at just the right time though - as in 1997, there was a crash in Gucci’s
stock price due to an economic crisis in the Japanese luxury market. This dip in
the price was enough for fashion conglomerate LVMH to begin buying up shares of Gucci at a
discount. Bernard Arnault was CEO of LVMH at the time, and he told the media that this was
his attempt at a “friendly takeover”. Bernard had a reputation as the wolf in cashmere, and had been
involved in taking over several other big luxury fashion brands, so the Gucci CEO was concerned.
He turned to an investor to help raise more money,
so that Gucci could begin acquiring as many up-and-coming fashion brands as possible,
so that they could be true rivals of LVMH, instead of getting taken over by them.
Today, the Gucci Group, also known as Kering, owns several well-known fashion brands,
including Balenciaga, Stella McCartney, and Alexander McQueen.
Eventually, the iconic Tom-Dom duo both decided to resign from the company in 2004.
As for Gucci, it’s clearly continued to be an incredibly popular brand,
and it continues to evolve with each generation. Gucci has about 50 million followers on Instagram,
and there are currently over 500 stores around the world. Now that the accessories line has returned,
Gucci has reached this sweet spot where it is accessible to almost anyone,
and yet it’s still expensive enough to still make it exclusive and luxurious.
The big budget House of Gucci movie also put the brand even more into the spotlight
in recent years. The Gucci family were not at all happy with how they were portrayed in it,
and to be fair it definitely wasn’t fully accurate, but since the Gucci family don’t
even run the business any more, it’s estimated the movie actually increased sales for Gucci.
But hold on a second - remember that guy I mentioned before, Bernard Arnault,
well he’s a really fascinating guy - and his story ties in with the story
of Louis Vuitton. You see even though Bernard didn’t end up owning Gucci,
he did manage to takeover Louis Vuitton in a controversial way. So click the
thumbnail on screen now and we’ll get into that part of the story. Cheers.