The internet has made many people multibillionaires. The first five richest people in the world are all tech gurus who made their money from the technology sector, except one.
The fourth richest man in the world has no known successful investment in technology but somehow maintains a staggering net worth of $177.8bn. He started this week as the third richest person but a surge in Microsoft stocks saw Bill Gates displace him to the 4th position at the time of writing this report.
Our person of interest sits atop a 70 luxury brands empire which includes big names like LVMH, Sephora, and Hermes. He has stakes in virtually all the big luxury brands that have become household names.
Meet Bernard Arnault, the luxury brand king
Bernard Arnault started his adult life as an engineer but somewhere along the line, decided to delve into the world of luxury brands. At 22 he took over his father’s construction company where he rose to become president, succeeding his father.
His adventure into the world of luxury brands officially kicked off in the year 1984, with the help of Antoine Bernheim, a senior partner of financier Lazard Frères et Cie. Bernard acquired a dying textile company that owned a host of brand labels including the now-famous Christian Dior.
He surged on from there to buy and invest in virtually all the top luxury brands in the market.
According to Forbes Bernard Arnault, today owns and has huge stakes in over 70 different luxury brands in the market.
Key Strategy: Decentralization
Bernard Arnault while speaking to Harvard Business Magazine revealed what he believes is the key to his successful luxury brand empire – decentralization.
Bernard Arnault revealed to the Harvard Business Magazine that despite his company LVMH owning over 70 global brands and employing over 54,000 employees. The headquarters of the global company in Paris is made up of just 250 people.
A key secret of LVMH’s success is the decision to let each of its various brands run as a company of its own without much interference. Every brand runs like a different company and is headed by its own different creative director.
He strongly believes in the notion of creativity thriving in space and he explained to HBR that acting like a typical boss around creative people stifles their creativity.
In his words, “ I don’t have alarm bells when it comes to creativity. If you think and act like a typical manager around creative people — with rules, policies, data on customer preferences, and so forth — you will quickly kill their talent. Our whole business is based on giving our artists and designers complete freedom to invent without limits.
Our philosophy is quite simple, really. If you look over a creative person’s shoulder, he will stop doing great work. Wouldn’t you, if some manager were watching your every move, clutching a calculator in his hand? So that is why LVMH is, as a company, so decentralized. Each brand very much runs itself, headed by its own artistic director. Central headquarters in Paris is very small, especially for a company with 54,000 employees and 1,300 stores around the world. There are only 250 of us, and I assure you, we do not lurk around every corner, questioning every creative decision.”
Brands and numbers
The LVMH empire owns and has stakes in the following big-name brands: Christian Dior, Louis Vuitton, Givenchy, Guerlain, Moët & Chandon, Hennessy, Sephora, Berluti, Chaumet, Krug, Bulgari, Fendi, Céline, Emilio Pucci, Kenzo, Loewe, Loro Piana, Rimowa, Fred, Hublot, Zenith, TAG Heuer, etc.
According to Forbes, Bernard Arnault’s net worth is valued at $178.7b. He added a whopping $95bn to his net worth over the course of last year.
This massive surge was spearheaded by a 107% increase in LVMH share prices since March 18 last year.
According to Forbes, in the first quarter of 2021, LVMH recorded $16.7bn in sales revenue with analysts expecting the number to go up.
Bernard Arnault owns a 47% stake in LVMH the parent company which owns in whole and parts over 70 global luxury brands. This is his primary source of income and net worth.
What to know
- The luxury industry is divided into 5 major sectors: Fashion and Leather Goods, Perfumes and Cosmetics, Wines and Spirits, Watches and Jewellery and Selective Retailing.
- The LVMH house owns stakes in the biggest brands in the world across all 5 sectors.
- Bernard Arnault has successfully integrated his children into the family empire with each manning a select niche in the LVMH house.
- Bernard Arnault, speaking to Forbes, revealed that he sees himself as a custodian of the French heritage and culture.