If there’s one thing you’re gonna find in every big city across the world, it’s
cars.
They’ve become so ingrained in modern society that it’s hard to think how we could live
without them, especially if your daily commute involves more than a short bike ride.
There are a lot of cars out there and they come in a stunning variety, but you can generally
divide them into two broad categories: You’ve got regular cars, like the one my
dad used to drive, and then you’ve got sportscars, which, well let’s be honest, they’re on
whole different level.
The world of sportscars can seem a bit distant to most people.
Setting aside the stereotype of the fanatical sportscar enthusiast who can recite model
specifications like Bible quotes, usually with sportscars, you’re either in love with
them or you really don’t care.
This week’s video is dedicated to the latter group for two reasons.
Firstly, you don’t have to be a sportscar maniac to appreciate their fascinating history,
and secondly, it would be pretty hard to impress the enthusiasts who’ve been following this
subject for three times longer than I’ve been alive.
Now, with that out of the way, we can move on to the subject of this week’s Behind
the Business video: Italy’s premiere sportscar manufacturer, Ferrari
During the early years of the 20th century
automobiles were still in many ways an emerging invention.
Urban areas were doing pretty well in terms of roads and infrastructure, but in the more
rural parts of the world, a car was still very much a rare sight.
Northern Italy was no exception to this.
In it’s earliest days the Italian automobile industry was made up almost entirely of small
local manufacturers.
Most automotive hubs in the country were in fact just the workshops of local engineers.
One such workshop was ran by Alfredo Ferrari in the outskirts of Modena, a city in the
Emilia-Romagna region of northern Italy.
Alfredo worked mainly as a metalworker, but he also repaired cars in his workshop, since
he owned one and knew how it worked.
Alfredo would often get his young son Enzo to help him out in the workshop, and in return
he would teach Enzo how to drive.
Enzo’s childhood ambition was to become a race car driver, but before he was old enough
to even try to pursue it Wolrd War 1 broke out, and his father and bigger brother were
drafted into the Italian army.
Both of them died in 1916 during an influenza epidemic, and the family business died along
with them.
Just one year later Enzo was also drafted as a military blacksmith, but due to his poor
health he was discharged in 1918 after barely a year of service.
Unemployed and desperate, Enzo took up a job to drive ex-military refurbished chassis between
Turin and Milan for an engineer that was rebodying them for the civilian market.
While working there Enzo met a lot of engineers and former race car drivers.
Eventually they gave him the opportunity to pursue his dream of becoming a race car driver
himself.
Enzo’s first race was the Parma Poggio di Berceto, a hillclimb race on October 5, 1919
where he managed to place fourth.
In 1920 he went to drive for Alfa Romeo, and in 1923 he managed to win the Circuito del
Savio in Ravenna.
The Savio track was one of the most competitive tracks in Italy at the time, and Enzo’s
victory was a huge surprise.
One of the patrons of the race, Count Enrico Baracca, was so impressed with Enzo’s performance
that he invited him over to his mansion.
There the Count’s wife recounted the tale of their deceased son, Italy’s top scoring
fighter ace from World War 1, Francesco Baracca.
Francesco was credited with 34 aerial victories, the highest among all Italian pilots from
the war.
His plane was decorated with the fearsome cavallino rampante, a black horse prancing
on a white background.
The Countess was so impressed with Enzo’s racing skills that she dedicated her son’s
emblem to him.
Enzo ended up winning about a dozen races during his career, and in 1929 he formed his
own team, Scuderia Ferrari, which served as Alfa Romeo’s racing team for ten years.
It is worth noting here that Ferrari actually means ‘blacksmith’ etymologically and
it’s one of the most common surnames in Italy, essentially the italian equivalent
of the surname Smith.
But back to Enzo: For the team’s emblem he chose the cavallino
rampante, changing the white background to yellow, the color of Modena.
Enzo had a nose for talent, and he attracted some of the best drivers of his day.
Legends like Tazio Nuvolari and Giuseppe Campari helped Enzo’s team win numerous races.
Among some of their victories were the Targa Florio, the Le Mans 24 Hours race, and over
a dozen Grands Prix.
In 1938 Alfa Romeo decided to disband Scuderia Ferrari in order to build a team with their
own name.
At first Enzo remained as a manager of the new team, but just one year later he left
Alfa Romeo in order to form his own company, Auto Avio Costruzioni.
Enzo’s departure came with a sizable severance package, but under the condition that he would
not compete with Alfa Romeo’s new racing team for a period of four years.
During that time his company manufactured machine tools and aircraft parts for Mussolini’s
fascist government, although in 1940 Enzo did try to design a race car of his own, the
AAC 815.
In just under four months Enzo designed and built two of those cars.
Only one of them still exists, and it’s now a part of the Righini Collection, one
of Italy’s finest private car collections housed in a 15th century castle outside Modena.
As World War 2 drew to a close the Allies ended up bombing Enzo’s factory, but he
had it back up and running by 1946.
One year later Enzo unveiled the Ferrari 125 S, the first car to race under the Ferrari
name.
Unlike the 815, which used an 8-cylinder engine designed by Fiat, Enzo had his engineers develop
their own V-shaped engine with 6 cylinders on either side.
The V12, as it is called, has remained Ferrari’s go-to engine for most of the models built
since the Second World War.
In 1948 Enzo released the Ferrari 166, the successor of the 125 S, and it became the
company’s first big international hit.
Ferrari’s first big racing victory came in 1952 when Alberto Ascari claimed the Formula
One World Drivers’ Championship title driving a Ferrari Tipo 500.
Ascari would claim the title for Ferrari a second time the very next year, becoming the
first driver to win multiple titles in a row.
It’s worth noting here that Formula One is actually comprised of two Championships,
one for the drivers and one for the constructors.
Although the rules have changed considerably since the 1950s, the modern iteration requires
teams to field two cars at every Grand Prix.
The teams can have up to four drivers per season, and these drivers win points both
for themselves and their team after every race.
Only the first ten drivers to finish a race are awarded any points at all, and at the
end of the season the driver with the most points wins the Drivers’ Championship.
The same method is used to determine which team wins the Constructors’ Championship,
but because teams can have multiple drivers sometimes the two titles don’t go to the
same team.
Anyway, back to Ferrari.
In 1957 they released the Ferrari 250 Testa Rossa, which continued the company’s victory
spree as it secured three World Sportscar Championship titles in 1958, 1960 and 1961.
The beginning of the 1960s, however, was actually a very turbulent time for Ferrari.
Several senior employees had opposed Enzo’s decision to involve his wife Laura as a manager
of the company.
Laura was apparently very mouthy and had an opinion on everything, which, well, it didn’t
really win her any sympathy points, that’s for sure.
Eventually Ferrari’s Sales Manager Girolamo Gardini confronted Enzo and presented him
with a letter signed by 8 of his colleagues demanding Laura’s resignation.
Girolamo’s direct approach didn’t really work though, since instead Enzo fired all
nine employees who had signed the letter.
This was a huge loss of talent for Ferrari, and the event came to be known as the Great
Walkout.
The timing of the scandal couldn’t have been worse, since Ferrari had suffered the
death of four of its drivers over the past two years.
All of Ferrari’s developing models were put on halt, and it took Enzo a year before
he could finally resume production.
Although the Great Walkout was the most disastrous scandal in Ferrari’s history, it can be
argued that it was in fact a blessing in disguise.
Enzo hired a lot of young engineers to fill the gap left by his former employees, and
these newcomers designed one of Ferrari’s most iconic grand tourers, the Ferrari 250
GTO.
Only 39 of these beauties were ever produced, which is actually pretty surprising, since
the International Automobile Federation required at least a hundred cars to be built before
approving the model for racing.
Enzo managed to cheat his way to approval by numbering the chassis out of sequence and,
when the inspectors came to visit, he shuffled the cars around in different locations.
Enzo got the 250 GTO approved, and it ended up winning the World Sportscar Championship
for three years in a row.
The few 250 GTOs left in the world have become extremely valuable.
In fact, in 2014 one car sold for over 38 million dollars at the Bonhams Quail Lodge
in California.
The 1960s ended up being one of Ferrari’s best decades.
They also saw the release of Ferrari’s first grand tourer equipped with a transaxle, the
Ferrari 275, and it’s successor, the Ferrari Daytona.
Towards the end of the 60s demand for Ferrari cars was becoming so large that Enzo couldn’t
build them fast enough.
In order to secure investment for the company’s expansion, Enzo sold 50% of the company to
Fiat, which back then and to this day remains the largest car manufacturer in Italy.
With this newfound capital Enzo expanded Ferrari’s operations, and he even had enough money left
over to finance one of his lesser known ideas.
He wanted to see whether he could start making cheaper sportscars that he could sell to a
wider audience.
He didn’t want to compromise the luxurious exclusivity of the Ferrari brand though, so
he created a new car brand, which he called Dino, in honor of his firstborn son, Alfredo.
Alfredo had died ten years earlier from Duchenne muscular dystrophy, a rare degenerative disease
that progressively destroys the muscles of the legs, arms, and eventually the heart.
Alfredo was only 25 when he died, and at the time he was developing a V6 engine.
Enzo was shattered by his son's death, and in his honor he created the Dino brand, which
featured three main models up until its discontinuation in 1976.
The 206 GT and the 246 GT used the V6 engine Alfredo had developed, though the 308 GT4
had a more powerful V8 engine.
During the 1970s Ferrari won three Drivers’ Championships thanks to the performance of
Niki Lauda and Jody Scheckter, but Ferrari didn’t manage to win that title again for
20 years.
The situation further worsened in 1982 with the death of Gilles Villeneuve in the Belgian
Grand Prix.
The tragedy shook the racing world, since Gilles was one of the most popular drivers
at the time.
In 1984 Ferrari produced the iconic Testarossa, which shares the name of Testa Rossa from
the 1950s, although this model’s name is spelled as a single word.
Surprisingly enough, the Testarossa from the 80s didn’t appear in any official race.
Even so it’s still one of the most widely recognizable Ferraris, since it was featured
in the final three seasons of Miami Vice.
In 1987 Enzo celebrated the 40th anniversary of his company by releasing the Ferrari F40,
but just one year Enzo’s death cast a bad light on the model.
Speculators quadrupled the price of the F40 in the hopes of profiting from the car’s
reputation as the last model personally approved by Enzo.
In fact, estimates from 1990 state that barely 10% of all F40s sold were actually used for
driving.
Enzo’s death caused a dramatic shift in the company’s ownership.
His only living heir was his second son Piero, who inherited his father’s 50% stake in
Ferrari and promptly sold most of it to Fiat for an undisclosed sum in exchange for becoming
Vice Chairman.
In the end, Fiat ended up owning 90% of the company, with the remaining 10% in the hands
of Piero.
Despite the death of Enzo, however, the 1990s turned out to be a revival period for Ferrari’s
racing team.
In 1993 Ferrari hired a new General Manager, Jean Todt, who would eventually become the
CEO of Ferrari and the President of the International Automobile Federation.
Under his guidance Ferrari acquired Michael Schumacher in 1996.
Now at the time Ferrari’s Formula One team was in horrible shape:
they hadn’t won a single Drivers’ Championship since 1979, their pitstop crew was a running
joke, and their V12 engine couldn’t match the lighter, more fuel efficient V10s of their
competitors.
Michael Schumacher’s decision to join Ferrari was surprising to say the least, although
to be fair they did offer him 60 million dollars for a two year contract.
Even today, Ferrari consistently outbids their competitors to get the best drivers:
in the 2016 season, for example, the most well-paid driver is Ferrari’s Sebastian
Vettel, who earns a cozy 50 million dollars per year.
But back to Schumacher.
In the 1996 Drivers’ Championship he placed third by winning three races for Ferrari,
which was more than they had won in the previous five years.
Schumacher stellar performance didn’t really start until the year 2000, when he defeated
McLaren’s Mika Häkkinen to win Ferrari their first Drivers’ Championship in 20
years.
He then went on to win the Drivers’ Championship four more times in a row, becoming the most
decorated F1 driver in history.
His reign during these five years was unprecedented: In 2001 he won the Drivers’ Championship
with a 58 point lead, and for the next season his lead was even larger at 67 points.
It wouldn’t be until 2005 that Schumacher was finally dethroned by the up-and-coming
Fernando Alonso, who would eventually secure two titles for Renault.
The early 2000s were the time when Ferrari truly re-emerged on the global racing scene.
Schumacher’s performance helped Ferrari become the team with the most victories in
both the Drivers’ and Constructors’ Championships, an achievement they hold to this day.
Ferrari’s highlight car from the period was the Ferrari Enzo.
It was released in 2002 and it became the first Ferrari to use the new generation of
V12 engines, the F140, which is still used in contemporary models.
Ferrari’s latest model is from 2013 and it is aptly named LaFerrari, with the idea
that it is the definitive Ferrari sportscar.
With the stunning price tag of 1.4 million dollars, only 499 LaFerraris have been built
so far.
Recently Ferrari announced they’d be building a 500th one to the benefit of those affected
by the deadly earthquake that struck Central Italy in August.
Interestingly enough Fiat decided to get rid of their involvement in Ferrari, and so on
January 3, 2016 they took the company public.
Although that came as a surprise to Ferrari enthusiasts, the move was actually pretty
calculated.
Ferrari had always enjoyed full autonomy from Fiat’s management team, so the transition
wouldn’t be anywhere near as difficult for them as it would be for a regular company.
Fiat also benefits from the split because they’re short on capital for their expensive
plans to reinvigorate their Jeep and Alfa Romeo brands by 2018.
Of course, if you look at Fiat’s share price it’s easy to see that investors weren’t
too happy with the Ferrari spinoff, but it’s still too early to tell whether the move was
actually successful.
Ferrari, on the other hand, seem to be doing great, and they’re currently preparing to
release 350 special-edition cars for their upcoming 70th anniversary.
So far they’re planning on making special editions of their five current models, except
the LaFerrari, whose production ends later this year.
There’s not a lot of info out just yet, but knowing Ferrari’s production team it’s
safe to say their anniversary will probably be a success.
Hey everyone, thanks for watching!
This is our first video in over a month, so it’s clear that we had some scheduling issues.
I know this is like the third time I’m promising this, but I think those issues are resolved,
so we’ll be going back to our regular release schedule of one video every two weeks.
If you’d like to watch our previous video you can click over here.
It’s about the history of Monsanto: how they started as a chemical producer and eventually
became the largest seed manufacturer in the world.
If you want to watch the full Behind the Business series, you can click over there, and you
can subscribe to our channel by clicking here in the middle.
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