Known as the "lord of luxury" and "the Pope of fashion," Bernard Arnault is the world's richest man with a recent net worth of $199 billion.
As the billionaire CEO of LVMH (Louis Vuitton Moët Hennessy), Arnault sells items no one actually needs. But with a roster of more than 70 brands including Fendi, Bulgari, Dom Pérignon, and Givenchy, he's built the world’s largest and most successful purveyor of luxury goods.
If it hadn't been one fateful taxi ride in New York City, Arnault may have never entered the world of luxury. In 1971, he had graduated from a French engineering school and began working at the construction firm founded by his grandfather in France. One day that same year, he was visiting New York when he asked the cab driver if he knew the name of France's then-president, Georges Pompidou.
The driver replied, "No, but I know Christian Dior."
How was it that a fashion designer could be more well-known than the president of his country? This question planted the seed of what would one day become LVMH.
By the time he was 25, Arnault became the head of the family business, but he had bigger ambitions than construction. He moved to the U.S. to try to expand the company when he realized that he wanted to build a business with a powerful brand that could scale globally.
He heard that the French government was set to choose someone to acquire the Boussac Saint-Frères empire, a textile and retail conglomerate that owned Christian Dior.
Arnault's ears perked up when he heard that Dior was for sale — the French brand that the taxi driver knew in the United States. After a contentious acquisition process, Arnault bought Dior's near-bankrupt holding company and nursed it back to health by cutting costs and streamlining operations. The purchase would change Arnault's reputation from family businessman to the emperor of luxury brands.
In the spring of 1987, someone was mysteriously buying a lot of shares in the company Moet-Hennessy, causing its stock to rise. A group — with Arnault at the helm — had bought 24.5% of LVMH for $1.5 billion. He eventually bought enough stock to become LVMH's largest shareholder, ultimately taking over the company. This move earned him the nickname, "the Wolf in Cashmere."
Once he took over LVMH, Arnault went on an aggressive global buying spree, snapping up high-quality brands like Givenchy, Fendi, Bulgari, and Marc Jacobs. Although he's considered a hard-nosed dealmaker, Arnault takes a different approach internally.
His relationships with the CEOs of the fashion houses he owns are largely hands-off. He trusts the creatives because he understands that LVMH can't generate profits without craftsmanship.
Arnault says his goal in life is to turn creative visions into reality.
"The most successful creative people want to see their creations in the street. They don’t invent just to invent. Yes, they come up with many exciting ideas, and many of these ideas shock; they look crazy at first, completely crazy," he says. "But the true artists that make LVMH a success, they don’t want the process to end there. They want people to wear their dresses, or spray their perfume, or carry the luggage they have designed."
The success of LVMH, he emphasizes, is built on creativity, quality, entrepreneurship, and most importantly, a long-term vision.
Here's what we can learn from Arnault's massively successful creative empire.
On defining modern luxury: Arnault has built a fashion empire by defining (and re-defining) modern luxury. This profile explains how Arnault was able to take a brand and make it a worldwide obsession. It needs two contradictory aspects, he says: "They are timeless, [and] they are at the utmost level of modernity. . . . It’s like fire and water.” Here's how that paradox has translated into record sales and profits at LVMH.
On his leadership playbook: This Harvard Business Review interview delves into the LVMH "process," which has one goal: develop & promote star brands. According to Arnault, star brands are born only when a company manages to make products that “speak to the ages” but feel intensely modern. Such products sell fast and furiously, all while raking in profits. “Mastering the paradox of star brands is very difficult and rare,” Arnault notes dryly, “fortunately.” This is a really great read for entrepreneurs, managers, and leaders.
On building the LVMH portfolio: How did Arnault become the mastermind behind one of the world's largest luxury groups? His aggressive acquisition strategy had never been seen in the world of luxury fashion, and though it worked, it didn't come without backlash. "I was very much criticized for it," he says. "I remember people telling me, 'It does not make sense to put together so many brands.'" Here's how Arnault has stayed ahead of the game time and time again.
On the key to branding success: A brand should aim to be timeless. It's the one quality, Arnault says, that distinguishes a fleeting brand from an enduring one. But it's a tricky business to pair modernity with timelessness because they seem to be paradoxical. "To be successful, you need a combination of timelessness and modernity," he says.
On executing a $16 billion takeover: Arnault built a luxury empire through an unflinching acquisition strategy that earned him the “wolf in cashmere” moniker. Tiffany, famous for its robin-egg blue boxes and diamond engagement rings, was meant to be the jewel atop his LVMH luxury group. The takeover would have been the largest-ever in the luxury sector, until the pandemic hit. This podcast episode unwinds the saga of how the $16.6 billion deal hit rocky ground.
TECHNIQUES TO TRY.
Long-term thinking plus deliberate execution can build an empire: The two business figures Arnault most admires are legendary investor Warren Buffett and tech visionary Steve Jobs. Buffett taught him patience and long-term thinking while Jobs taught him about the importance of innovation and execution. When Arnault acquires a brand, he doesn't set profitability metrics six months in advance; he sets lofty goals 10 years into the future. He hires people who are both visionaries and executioners. “What I have in mind every morning is that the desirability of a brand should be as strong in ten years,” he says. “It’s really the key to our success.” Patience, consistency, and execution have allowed Arnault and his team to build a portfolio of brands known all around the world.
Enable the creators: Many people see Arnault as a great financier, CEO, and strategic businessman, but few understand that his most important role is to be a creativity enabler. Throughout his career, Arnault says, he has always trusted the creatives at each fashion house. "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," he says. "When a creative team believes in a product, you have to trust the team’s gut instinct." You can have the best CEO, great marketing, and a brilliant business strategy, but without a driving creative force, you have nothing. When you're in the business of innovation and originality, Arnault says your first and foremost priority should always be the quality of the product. Know when to step aside and trust your team.
Building a star brand requires mastering a paradox: Genius is not enough to succeed. According to Arnault, even great talent will struggle to launch a brand from zero. "A brand must have a heritage," he says, adding, "There are no shortcuts." Arnault explains that a "star brand" has four characteristics: It is timeless, modern, fast-growing, and highly profitable. It's difficult to balance all four at once — fast growth is often at odds with high profitability and timelessness is quite the opposite of modernity. But, he says, "if you have a star brand, then basically you can be sure you have mastered a paradox." Remember, if you wish to build a star brand, you need to figure out the subtle balance of honoring your past and inventing your future at the same time. The best entrepreneurs allow themselves to hold two truths simultaneously.
Be an early adopter: When the internet first came about, it seemed inconceivable that customers would be willing to shop for luxury items without seeing them in person first. Reporters relentlessly asked Arnault what his plans were for "the rise of e-luxury." Unlike some of his peers, Arnault didn't fear the disruption and change that would come with online shopping. "We see it not as competition for our own businesses but as a convenience for our customers," he says. "E-Luxury allows our customers to feel confident that they are buying the real thing. E-Luxury guarantees original products. E-Luxury won’t change the way we do business, but it will help us serve customers that much better." Smart, constant re-invention keeps you current and prevents your business from becoming stagnant.
Ideas account for only 20% of the equation: Arnault has learned an important lesson over the years: Ideas are important, but execution is even more important to the success of a business. He's made many startup investments, and he's realized that the founder's vision can take the company only so far. "If you look at the startups that are most successful, like Facebook, for instance — the idea was great at the beginning. But there were others with that same idea. Why is Facebook the phenomenal success it is today? It’s because of the execution, and that’s the key," he says. "I would say to a young person trying to work in a startup: Have ideas, but be persistent and execute well."
QUOTES TO REMEMBER.
"If you control your distribution, you control your image."
"I am very competitive. I always want to win.”
"A good product can last forever."
“Money is just a consequence. I always say to my team, don’t worry too much about profitability. If you do your job well, the profitability will come.”