Founders - #392 Michele Ferrero and His $40 Billion Privately Owned Chocolate Empire

Episode Date: June 23, 2025

You take over the family pastry shop and transform it into one of the most valuable privately held businesses in the world. Your father dies young. Your uncle does too. Everyone is relying on you and this keeps you up at night. You insist on differentiation and refuse to make me too products. You obsess over quality. You run tens of thousands of experiments. The products you invent will sell successfully for decades. You shroud your entire operation in secrecy. You study your competitors but never tell them what you’re doing. You go to great — almost absurd — lengths to control everything about your business. You have no outside shareholders and no debt. You commute by helicopter so you can perform quality control in person. You insist on constant customer contact and invent new ways to collect information from the customers you obsess over. You build your own machines, control all of your raw materials, and invest so heavily in distribution and logistics that you own the largest private fleet of vehicles in Italy, second only to the Italian army. You love your business and don’t want to spend time doing anything else. When you propose to your wife you tell her that she is marrying a man who will always talk to her about chocolate. You believe creating wealth is a moral duty.  You are Michele Ferrero.  This episode is what I learned from reading Michele Ferrero by Salvatore Giannella. ---- Ramp gives you everything you need to control spend, watch your costs, and optimize your financial operations —all on a single platform. Make history's greatest entrepreneurs proud by going to Ramp and learning how they can help your business control your costs and save time and money. ----- Join my free email newsletter to get my top 10 highlights from every book ---- Episode highlights: We create mythical products that create markets.  If a market is interesting, we must become the leader.  The product is put at the center of everything. All of the company's activities must revolve around it. He would repeat: If you want to go bankrupt just listen to everybody. He insisted that all shares remain in the family. He never wanted to have to justify his choices to anyone.  He insisted on continuous innovation, the refusal of repetition of the already known, the search for new paths, and the opening of new horizons by differentiating from others. One of his favorite metaphors: A good entrepreneur must be like a good skeet shooter: hitting the target by aiming not at the launch station, but further ahead—always with a long-term vision. Control everything you can – ingredients, process, technology – to safeguard quality and trade secrets. For me work is a spiritual necessity. I was accustomed to it from a young age and couldn't do without it. Focus on making well-crafted, high-quality products, and the rest will follow. I was able to do all this because of being a family business. This allowed us to grow calmly, to have long term plans, to know how to wait, and to not be caught up in the frenzy of the daily ups and downs. Mrs. Valeria (the name he gave to his customers) is the mistress of it all, the CEO, the one who can decide your success or your demise, the one you have to respect, never betray, and understand completely. He said that doing good for others is doing good for oneself. Michele Ferrero seemed to possess a genuine, childlike passion for bringing joy through his creations. He couldn’t resist spending time in the laboratory, dreaming up new delights. He was known to work through Sundays and even overnight, feverishly experimenting to perfect a flavor or texture. Our identity is based on our independence. If we had shareholders they would ask us to increase turnover. But it takes time to make a good product.  Many of the machines were invented and built in-house by Ferrero’s own engineering department. Ferrero pursued perfection with monastic devotion.

This will be one of the most incredible founder stories you're ever going to hear for his entire 70 year career. Michael Ferreira was solely focused on serving his customer. As you'll hear, he gives his customer a name and he focuses on inventing on her behalf. He invented products that no one else was able to create, was absolutely obsessed with crafting a high quality product, and he ran tens of thousands of experiments throughout his life. Every single experiment was aimed at making a better product for his customer. And as I was reading about Feroz's approach to building his business, I kept thinking of the similarities that he had with my friend Kareem, who is the co-founder and chief technology

officer of Ramp. Kareem is one of the greatest technical minds working in finance, and I spent a lot of time talking to him, and every single one of our conversations centers around his obsession with crafting a high quality product and using the latest technology to constantly create better experiences for his customers. You'll see a lot of similarities in this episode because Michael Ferraro was like this too. Careem was wanting one of the most talented technical teams in finance. They use rapid relentless iteration to make their product better every day, just like Furoa did. And so far this year,

Ramp has shipped over 300 new features. Ramp is completely committed to using AI to make a better experience for their customers and to automate as much of your business's finances as possible. In fact, Kareem just wrote this. He said, AI is all I think about these days. It is our duty to be first movers and push limits so we can make the greatest possible product experience for our customers. That sounds a lot like Michael Ferreros approach

to using a combination of craftsmanship and rapid iteration to invent new products for his customers. Many of the fastest growing and most innovative companies in the world are running their businesses on ramp. Not notion is a great example of this. In fact, the CFO of notion just said this, people ask how we're using AI and finance, and I have one simple answer for them. We use ramp, make sure you go to ramp.com to learn how they can help your business save time and money. Michael Ferro was in love with the technology.

And he talked about how incredible the robots were that helped him make his products. Wait till we get to that part of the episode, it's hilarious. But like many of history's greatest entrepreneurs, Ferraro was always investing in the latest technology. That is how I know if he was alive today, he'd run his business on ramp. Let the robots chase your receipts and close your books

so you can use your time and energy to build great things for your customers. Because at the end of the day, that is what this is all about, building a product or a service that makes someone else's life better. That is what I'm trying to do and that is what Ramp has done.

Get started today by going to ramp.com. A silver haired man in his 80s sits at a long table ready to begin an almost mythical daily ritual. From 8 a.m. until dusk, he and a trusted circle of confectioners methodically taste and tweak recipes for new treats. This man with the tireless sweet tooth is Michael Ferraro, the closest thing we have to a real-life Willy Wonka. Ferraro is the wealthiest

person in Italy and that is even that is an understatement. So, Ferraro is the wealthiest person in Italy and that is even that is an understatement. So Ferraro owned a hundred percent of his company. He had no outside shareholders. He had no debt. Today that company does 20 billion dollars a year in revenue with very high margins. When you look it up, it says that this is a 40 billion dollar company. It's likely worth multiples of that. Again, 100 percent owned by the family.

And the crazy thing about the story I'm about to tell you is Michael worked on this company for 70 years from 19 until he dies at 89. The story is unbelievable. I can't stop talking about it. So, Ferrero was a paradoxically private chocolate king who rarely appeared in public without his dark sunglasses and never granted a single interview in his lifetime. He actually granted a single interview, but when he was much older, and he only agreed to do the interview if the interview would not be published until after his death, he

had, he has a series of maxims that he repeats. In fact, some of the people that work for him said he would repeat the same thing 60 times a week. This is something you and I talked about over and over again. That repetition is persuasive. They're the very best founders. They identify a handful of principles and then they repeat them for decades. Michael Ferrer was no different. So he often had this maxim that he would repeat that he says, only on two occasions should the papers mention one's name, birth and death.

Yet behind the guarded doors of his empire, he was a relentless innovator, personally inventing globally beloved products like Nutella, Kinder, Tic Tacs and Ferrero Rocher. In his tasting room, Ferrero pursued perfection with monastic devotion. It was a seen equal parts, humble workshop and secret laboratory. Ferrero's weekly routine embodied the blend of tradition and modernity that defined his company. Each week he would commute by helicopter between Monte Carlo, where he lived, and his center of operations in Northwestern Italy. He kept a secret lab in Monte Carlo.

Actually, I have to tell you this part now too, because it's just too good to save for later. This is very much a family business and Michael wanted to make sure that his two sons could run the company after he was gone. So he technically retires when he's in his 70s so that his sons can take over as CEO. But he still shows up to the factories, still goes into the stores where he still shows up to the factories, still goes into the stores where his products are sold to interview customers, and he sets up a private laboratory at his house so he can still run experiments

and invent new products. That is a hilarious definition of retirement. At the factory, workers knew him as Mr. Michael. So his name obviously in Italian is Michele. I'm going to use the, so I don't butcher all these Italian, these Italian words. I'm going to translate it obviously to English. That's why I'm calling him Michael. So they would call him Mr.

Michael. They looked at him more of a father figure than a boss. In Monaco, high society barely saw him at all. The reclusive billionaire preferred tinkering with chocolates behind closed doors. This dual existence was emblematic of Ferrara's approach. Global vision rooted in local loyalty. Innovation cloaked in secrecy and immense success coupled with self-imposed seclusion." So there is going to be a lot, I'm going to tie in all these other entrepreneurs, past founders of you and I've studied that Michael reminded me of, there is

a bit of the founder of Red Bull. When it comes to this, he has this great line, if you if you haven't listened to the Red Bull episodes, one of the best episodes I've ever done in my life, it's episode 333. It was another book that had to be translated because there was no English biographies of Dietrich Maschists either. And so we actually my friend Crammond Priest who translated this book that I to be translated because there was no English biographies of Dietrich Maschists either. And so we actually, my friend Crammond Priest, who translated this book that I'm working from right now, he was the one that translated the Red Bull book for me, for, for me from German to English. And there's a line in there that Dietrich Maschists,

the founder of Red Bull says, that sounds exactly like it would come out of Fro's mouth. He says, I do not care about society events. It's the most senseless use of time. When I go out from time to time, it's just to convince myself that I'm not missing a lot. So there are no biographies in English of Michael Ferraro. I just said, my friend Cameron Priest translated one from Italian and he sent it to me. So what I'm going to do is I'm going to continue to give you the overview of his life.

And then I just want to rip through a bunch of interesting ideas that I found in the book. This guy is insanely great. His approach to his work. It's going to remind you a lot of like a Steve Jobs and Edwin Land, a James Dyson, an Yvonne Chouinard. There's a bunch of things that he does that are just like Sam Walton, that Sam Walton did when he built Walmart. So I'm gonna go through, like give you an overview of his life, and then I'm gonna go through specific ideas

on how he built his company, it's incredible. Michael's life began far from the wealth of Monte Carlo. He was born in 1925 in an Italian, a tiny Italian village nestled in the Lange Hills, I promise you. I went and looked up how to pronounce these words. I still can't get it.

I think it's Langhay Hills. The reason I'm talking about this though, it's very important that he happened to be born there because the region that he was born in, in these hills that I cannot pronounce, was famous for something that would shape Michael's destiny, and that is hazelnuts. Hazelnuts grew in abundance across these rolling hills. In the 19th century, confectioners had invented this paste called John Douya. So John Douya is a chocolate hazelnut paste that was born out of necessity because chocolate was expensive

and the the main ingredients for chocolate were scarce and nuts, hazelnuts, were plentiful. So when you hear John Dewey, just think Nutella. It is the precursor to one of Ferrero's most successful products. I looked it up. Ferrero's rumored to sell about three billion dollars a year of Nutella. So Michael's father is actually the one that gets him involved in the business because Michael's father's Pietro was a pastry maker. They lived in this tiny town in Italy called Alba. After World War II chocolate was rationed and a very expensive but hazelnuts were cheap. So Michael's father said if I use more nuts and less cocoa I could attain a product that was just as good and not as costly. So Michael's father Pietro and Michael's uncle Giovanni began selling a hazelnut spread.

They are going to call it super crema. And what they were trying to set out to do was offer cash strapped Italian families a taste of affordable indulgence. Since Italians are so poor after the war, this spread that they're making was one fifth the price of chocolate. And what they were setting out to do was making a sweet comfort food that everyday workers could also eat every day. And so at the time it was actually called the chocolate of the poor. And so when Michael was young, he literally grew up around vats of hazelnut paste and sacks of cocoa.

He starts working in the business when he's 19. When he is 24 years old, his dad dies suddenly. There's a lot of tragic heart attacks that happen in his family. So his dad's going to pass away at 51 years old. His uncle also has a heart attack in his 50s. And later on, Michael's son Pietro, who he named after his father has a heart attack and dies at 49. So at just 24 years old, Michael has to run the family firm. And when he takes over, he writes this letter to his employees with a bunch of promises

that he intends to keep, which he did keep. It says, he marked that moment with a remarkable letter to all employees, vowing, I pledge myself to devote all of my activities and all of my efforts to this company. I shall only feel satisfied when I've managed to guarantee you and your children a safe and tranquil future." He felt a responsibility to keep the company alive. He said that when he was 24. Decades later, he would still say stuff like this on why he pushed himself, why he would work seven days a week. He'd work overnight. He had no other life. He was completely obsessed with the products that he was making the company was building. And this is one of the reasons he felt it was an obligation to his community because he's building he's going to be the

largest employer in these, you know, very rural and small towns. He says that this company goes into a ditch. There are 1000s of families that go into the ditch as well. This thought keeps me awake at night. I must find new projects, new ideas, and new products." Michael was determined to prove that a business could grow vast and rich while still guaranteeing a safe and tranquil future for its workers. Deeply influencing Michael's outlook were the twin pillars of his upbringing. He was a devout Catholic and he kept the values of small town Italian life for the rest of his life. He talks over and over again about the importance of prayer, of meditation, of putting his faith at the center of everything he's doing. In fact, he had a shrine of Madonna placed in every single factory and office, no matter how big the company got. And even though he wound up one of the richest people on the planet,

he did not optimize, he was not solely after making money. He says his approach to business echoed the Catholic principle that wealth was justified only if used for the common good. In fact, the way he described running his business, he said, I am a socialist, but I do the socialism. So this says he arranged for buses to ferry workers from outlying villages to the factory and back every day. This is all free of charge. Employees and their families enjoyed free medical care and housing support. Ferraro built

a social contract in exchange for hard work and loyalty. The company would provide cradle to grave stability and remarkably in over 70 years of operations, for hours workforce never went on strike, which was unheard of at the time and in the location which he's building his company, a virtually unheard of record in their industry. And the way he funded all of this was by constantly and relentlessly and never deviating from his main goal, which is to invent new products. He was not interested in building me to commodity products. This is something he talks about over and over again. Michael channeled his obsessive energy

into venting entirely new confections. Farrar proved to be an imaginative product developer with an almost uncanny sense of what treats people craved and he's got a lot of interesting ideas to how to discover that which I'll go over. He had a rule-breaking streak, a willingness to always act differently to the other. So I kept telling all my friends and every single conversation I've had because I've been reading about this guy for like two weeks now. And it's just like, it's just it's the same personality type over and over again. This is Edwin

Land. Edwin Land was not making chocolate. He invented instant photography. But he said, my personal motto is don't do anything someone else can do. Ferrero says the exact same thing, but he uses different words. James Dyson, again, not making chocolate, making vacuum cleaners. And he says difference for the sake of it. They are the same person. And they give an example, take for example, the launch of Kinder chocolate, which is now one of the biggest brands by revenue.

Uh, conventional wisdom held that children's sweets should be simple. But Michael introduced a candy bar explicitly designed for kids. It was a milk chocolate bar with a creamy milk filling marketed as a treat that parents could feel good about giving their young ones. The Kinder line soon expanded into an entire range. Most famously the Kinder Surprise egg, which Michael introduced 10 years later. It hid a tiny toy inside a chocolate shell to capture the joy of Easter, but year around. Michael's inventions often blended playfulness and indulgence, acknowledging that candy was as much about emotion as flavor. In fact, he didn't call what he was making candy or confections. He called his inventions comforts. Now I knew all about Ferrero Rocher. It's probably my favorite chocolate. I knew all about Nutella. I

didn't know that the same guy invented tic tacs. So this says Ferrero launched the tic tac. These petite pill-shaped mints ingeniously packaged in a flip-top box that dispensed one min at a time were a world away from chocolate, yet they bore Michael's hallmark traits, an innovative form factor, obsessive quality control, and global appeal. Now, this may sound ridiculous, I don't even know, but I never thought of creating new chocolate products as inventions until I read and understood what went into his thinking behind every single one of his new products. And I didn't understand because many of these products

are still successful and they've been selling for 50 years that before he made them, no other brand had a product in that category. And as Michael will repeat over and over again, he did that intentionally. By diversifying beyond chocolate, Ferrell showed early on that his company could master multiple segments of the sweet business

and do so internationally. So this is another thing that he would repeat over and over again. Everybody tried to get him like just we're successful in Italy like just stay in Italy it's too big of a risk to expand and he's like no no people eat chocolate everywhere people like sweets everywhere. If we stay only in Italy we are a failure. He had this insistence on turning his company into a global phenomena. During the 1960s and 70s, he methodically expanded for his reach across Europe and beyond. The company opened its first foreign production plant in Germany in the mid 1950s, recognizing that post-war Germany was

a crucial marker for sweet snacks. Soon he had plants and offices sprouted up in France, Belgium, Switzerland, Australia, Ecuador, and Hong Kong. Michael's inventions, born in a provincial Italian pastry shop, were becoming global staples. Michael had one more golden idea up his sleeve, quite literally wrapped in gold. In 1982, he unveiled Ferrero Rocher, a spherical hazelnut cream bonbon, I love these things, encased in a wafer shell covered in milk chocolate and chopped nuts and wrapped in gold foil for an elegant hue. If Nutella was the everyman's spread, Ferrero Rocher was the aspirational treat, a candy that felt upscale yet affordably mass produced.

Ferrero Rocher became the world's best selling boxed chocolate. True to his form, Ferrerro kept the development process for Rocher strictly secret. Only a handful of trusted employees knew the recipe and production method. So again, he not only see he's an innovator, obsessed with keeping it, keeping control of everything, obsessed with complete vertical integration, obsessed with technology. One of the other main themes that runs throughout this entire book is the fact that he was one of the most secretive people. This is one example of the fact that only a

handful of trusted employees knew the recipe and production method. I'll give you a bunch of other examples. It was very important to him. I says the exact formula became a closely guarded secret as fiercely protected as the recipe for Coca Cola. For decades, Michael's product innovation strategy had a consistent pattern. He favored slow, steady growth powered by internal experimentation, rather than flashy marketing or big acquisitions. It takes time to make a good product, he said. And time was something that

Michael was willing to take. This is another thing that he's going to repeat over and over again, that he felt the fact that he owned all of his business, that he had no outside shareholders, that he wasn't listed on the stock market. It gave him the ability to experiment and be patient with his products. In some cases, he would work on a product that he truly believed should exist in the world.

And it would take 10 years for the market to catch up. And so the product would lose money for a long period of time. And then 10 years later winds up being a massive success. He would talk about, hey, this is just a massive advantage that I have over my publicly traded competitors. New confections were painstakingly developed in secret tasting rooms over months and years, then rolled out in select markets to prove themselves.

And this is another one of his interesting ideas. The fact that he loved doing these tiny little tests. So at the very beginning, he would test out a new product with a tiny number of existing customers. So let's say he, he invents like this new, you know, boxed hazelnut or something like that. He would just send it to like 30 customers and see their response. He has all these unique ideas on how to test the product out on a small scale and secretly, always secretly, which I'll talk more about later. The boy who started as an apprentice in the family in the family pastry shop had built

over half a century, an empire spanning 20 factories worldwide, selling products in over 160 countries, utterly dominating with over 70% of the world's market for chocolate hazelnut spreads. Ferrero was secrecy itself. Michael was notoriously tight lipped and protective, cultivating an aura of mystery around his company's operations. He never held a press conference in the first 65 years of existence of the company. He preferred to let his products speak for themselves. He avoided the limelight.

In public, he always wore dark glasses and stood silently observing events from the sidelines. Ferrero declined all honorary degrees and official alkylates. He found any external recognition was unnecessary or distracting. So there's this idea that's been popping up that's been on my mind lately that I've shared on a few past episodes. And it's really the importance if you want to be truly, truly great at what you're doing, the importance of being prolific. So being prolific is highly correlated with greatness. Just because you're prolific doesn't mean that you're gonna be great. But if you're great, you've almost always been prolific. And so I've been thinking a lot about this a lot lately, like what these people have in common is a love and obsession for the activity

itself. And so when I got to this part about, hey, he's awarded all these honorary degrees, these official accolades, he found external recognition, recognition unnecessary and distracting, he wouldn't even show up, they give him awards, and he wouldn't even show up. I just finished watching the new The Bob Dylan movie, which is called A Complete Unknown, which is about the beginning of his career. And at the very end of the movie is this quote. It says, since 1965, Bob Dylan has released 55 albums and continues to tour the world. He is the only songwriter to be awarded

the Nobel Prize in literature. He did not attend the ceremony. That sounds like Michael Ferraro to me. Ferraro's focus was on products and people, not on personal fame. This obsession with secrecy was not merely a personal quirk. It was a calculated business strategy. Inside of his factories, outsiders were rarely allowed. The factory was compared to a high-security jail with 10-foot walls surrounding it and rigorous checkpoints.

Tours were banned outright to prevent industrial espionage. It wasn't until 2011 that he made the unprecedented decision to open the doors to one of his factories to a small pool of reporters. This was the first media visit in the company's modern history. So keep in mind, he's born in 1925. He starts in the business in 1940s. So 2011, when he lets anybody from the outside in, of course, the sacred tasting rooms remained off limits. Those who entered saw a spotless, highly automated operation. But they were kept under strict watch and not allowed to wander unescorted. Michael's need for control permeated every aspect of the production. Many of the machines were invented and built in-house by Michael's own engineering

department. So this idea of control over everything from the raw materials to the production to the distribution of logistics to the marketing to the relationship with the customer. It's just the entire book is about this. One of Michael's proudest technical achievements was a custom built roasting apparatus, a massive contraption that could toast hazelnuts perfectly without burning them. Such proprietary machinery was a tangible manifestation of the company's philosophy, control everything you can ingredients, process technology to safeguard quality and trade secrets. That

instinct for control extended far beyond the factory floor. In an industry often buffeted by commodity swings, Ferrero took dramatic steps to secure its key raw materials, especially hazelnuts. Over the years, the company quietly acquired hazelnut orchids and plantations in both the northern and southern hemispheres, ensuring a year-round supply of fresh nuts. By the mid-2010s, Ferrero was purchasing roughly one-third of the entire world's hazelnut crop and had even become the world's largest hazelnut supplier itself. This level of vertical integration, controlling the ingredient supply chain from farm to factory factory helped inoculate Ferrero against price shocks and shortages. It was also another layer of secrecy by owning the supply and making products in-house on custom machines.

Ferrero needed to rely less on external partners who might expose its methods. Nutella's recipe is famously not patented. Why? He didn't want to patent it because if you patent it, you have to avoid, excuse me, you have to reveal its proportions. The company's line on it is that everyone can find out the ingredients. We simply know how to combine them better than other people.

Michael Ferraro's fierce protectiveness proved enormously effective. By keeping Ferraro private and family owned. He avoided the disclosures that publicly traded companies must make and remain free from the pressure of outside shareholders. This is what he said. Our identity is based on our independence. If we had shareholders, they would ask us to increase turnover.

But it takes time to make a good product. Growth, he believed, should come from within or not at all. This discipline kept Ferrero healthy and debt free. And this is such an important point because of the podcast. I get to meet all these privately held businesses that you've never heard of. You don't know who the founder is. You might know their brand.

In many cases, you do know their brand. And this pattern that they have, this is their setup. No outside shareholders. In their setup, no outside shareholders, in many cases, no debt, just a very profitable business that just shoots off cash. And so you talk to them and we talk a lot about their business and like what their plans are and everything else. And obviously, I think there's an element of trust because they understand how obsessed I am about this. And they probably, you know, by the time I meet them, they probably listen to me speak for a hundred hours about the history of entrepreneurship. And it's

just so in many cases, I'll like find out how much these businesses make. And just like, Oh, like, yeah, just take personal dividends. You know, any cash that can't be reinvested in the business, we just take it as a family. And just like, yeah, my paycheck last year was, you know, $600 million, which sounds crazy. But I've talked to several people like that. It's like, Oh, yeah, I made like 300 million personally last year, 600 million, or in cases over a billion dollars, I find these like family held private businesses. They're just, they're beautiful and they're elegant and simplicity. And they are usually started by somebody like a Michael Ferraro where he's like, Hey, growth is going to come

from within or not at all. We're going to be financially healthy and debt free. We're going to have no outside shareholders, no debt, just straight cash. This tsunami of cash that's coming out of these businesses. Michael Ferraro built a business by the time of his death was among the world's top three confectionary companies by revenue, all achieved on his own terms of secrecy, quality, control, and long-term orientation. And before I move on, I guess the reason I bring that up is because because these, they don't need outside investment because these are not public companies, they shun publicity. So you don't even know they're kind of like invisible, but this, this is not like a one off occurrence.

The amount of people that I know that have met because of the podcast that have businesses like this. I just had a few days ago, I had lunch with a guy, him and his partner own a hundred percent of the company. He's the majority shareholder and he personally made $300 million last year. And when I speak to him about his approach to his life and work, it is the same, the reason I bring this up, it's the same personality type over and over and over again. So I, somebody just bought the domain, the domain church for founders, church for founders.com.

If you go to it, it forwards to founders podcasts. It's exactly what it is. We're just talking about the same people over and over and over again. They're all obsessed with what they're building. And if you're obsessed with your building, you'll see these little details, how much they care, as we'll go through with Michael Ferrer today. Those who work with Ferrer noted that the intense secrecy hit a rather straightforward ethic. Again, they talk about their business in simple terms, very clear thinking, an assistance on excellence and a focus on making excellent products.

No one can see him at work without being impressed by his dedication to the production of goods that can be sold on quality rather than price. So that's again, Nutella starts out as the chocolate for the poor. Over time, he's more interested in making the best product, a product that would be sold on quality rather than price. So his products average, they cost about 50% more than their competitors. And consumers like myself, willingly pay it. This is again, this is just like James Dyson.

Let me read from James Dyson's first autobiography. The best kind of business is one where you can sell a product at a high price with a good margin and in enormous volumes. For that, you have to develop a product that works better and looks better than existing ones. That type of investment is long-term and high risk, or at least it looks like a high risk policy.

In the longer view, in the longer view, it is not half so likely to prove hazardous to one's financial health as simply following the herd. I think if Michael was alive and you could read that statement to him, I think he would agree with that statement. He had a lifelong dedication to doing things differently than what was already on the market, just like Dyson does. And again, you can go on Amazon and buy a vacuum cleaner for $40 or you can buy Dyson's for 600. And people choose to buy Dyson's because it's the best in the world.

I have his back. Obviously I'm obsessed with the guy. It's my favorite, you know, my private favorite founder. So obviously, and then you know, everything that goes in to the work he does, how he thinks about it and actually makes the his products more valuable. And so again, Ferrero's products on average cost about 50% more than their competitors. Michael often said that his greatest success was born from thinking differently, but in at least one respect, he was proudly traditional. He saw Ferrero as a family company above all. In an era where many storied Italian brands sold out to international conglomerates or

were taken over by banks, Ferrero remained absolutely family run. Ferrero's wife and him, they had two sons, Pietro and Giovanni, named after his father and uncle. And from the very beginning, they start training them from a young age in the ethos of the company. By the 1990s, as Michael approached his seventies, he began entrusting more responsibilities to his heirs. In 97, he made the bold move of stepping back from day-to-day management and

appointed Pietro and Giovanni as co-CEOs of the company. Michael remained as chairman and he was the final arbiter of major decisions. He officially retired, but he was far from idle. This is what I mentioned earlier. It's just funny. He couldn't resist time, spending time in his laboratory, dreaming up new delights. He was known to work through Sundays and even overnight, feverishly experimenting to perfect a flavor or texture. Remember how this started? He's in his eighties and he's mid eighties and he's still, can't help himself. He just he loved what he did. He never really took his foot off the gas, even as his sons were nominally in

charge, Michael ensured that the standards he set never slipped. Tragically, he was dealt. The family was dealt a blow in 2011 when his son, I was wrong. I thought he died when he was 49. He was actually only 47. He had a heart attack while bicycling. He was a, like a cyclist. And so he had a heart attack and unfortunately died at 47, leaving Michael's sole son, who now becomes a sole CEO and sole owner of the company.

And his name was Giovanni. Michael then in his mid 80s responded he's always had in crisis by focusing on work and the future. Observers noted that Michael seemed to pour even more of himself into guiding Giovanni as if determined to impart all his remaining wisdom. One of Michael's often bits of advice to his son was simply, always act differently from the others, have faith, stay strong, and put the customer at the center each day. Michael often repeated this maxim only on two occasions should the newspapers mention one's name birth and death in February 2015 one of those two occasions came from Michael Ferrero fittingly and poignantly he died on Valentine's Day a day dedicated to chocolate and love at age

89 the company's website went dark except for a simple tribute. We are proud of you. Thank you, Michael. Okay, so that is the end of the overview. So what I did is I rewrote all my notes and highlights. And really, they're grouped into like, there's like nine traits of Michael that I would basically describe. So I'm just gonna tell you the nine traits. And I'll just go through these ideas. So number one, he's just obsessed with product quality. The product is at the center of every activity of the company. That is why it exists. Number two, he loved his business. He didn't want to do anything else.

I don't think he was capable of doing anything else. He just couldn't help himself. Number three, he was not interested in making me two products. He insisted on differentiation. Number four, he believed in keeping secrets. Number five, he believed creating wealth was a moral duty and that you must take care of your people. Number six, he loved technology and he invested heavily in it.

Number seven, he paid attention to every little detail. He believed if you do everything, you will win. Number eight, he was obsessed with control. He went to great, almost absurd lengths to control everything about his business. And number nine, he had an extreme focus on the customer. He actually named his customer, called her Mrs. Valeria. He considered Mrs. Valeria, the real CEO of the company and is obsessed with pleasing her. And so you can kind of think about it as like, oh, you know,

we have millions and millions, I don't know, tens of millions of customers. He didn't think that was helpful. He's like, no, you have one and it's you put a name on her. You think about your customers are serving an individual person. You do everything you possibly can to act in service of the customer. He's going to talk a lot about that. So he's going to run through some of these, these traits and ideas that he had. So it says he possessed a genuine childlike passion for bringing joy through his creations. He said that doing good for others is doing good for oneself.

And that is how you create wealth. It's a very interesting idea because that sounds almost exactly what Henry Ford said, which is one of my favorite maxims from the history of entrepreneurship, that money comes naturally as a result of service. Michael had a life characterized by monastic habits, discretion, no visibility, no interviews, religious faith, and a love of quality. Michael saw the poverty of his childhood and he never forgot it. He came of age in post-World War II. And in Italy at the time, there was a lack of supplies. You didn't even electricity was even scarce to come by.

Chocolate was considered a luxury. So for his entire life, he never forgot how bad things could get. And when he found other people struggling in poverty, he would always give money to people in need. And he always did this discreetly and never he never published it. The growth of the business is hard to imagine. Because at the very beginning, they only had two machines that operated on electrical power, everything else was done by hand. And another obsessive in Italy, in a very different industry was also starting out and starting his company under these very same conditions where you very hard to find any kind of machines.

Even if you did have machines, you couldn't find electricity. And his name was Enzo Ferrari. Michael had a lifelong habit of going on long walks to think. His mind was perpetually turned towards the future. He did this his entire life. But at the very beginning, he was walking through all these hills where the hazelnuts grew. So this is what I mean.

And he goes to just absurd lengths. He does stuff that you would never even consider. He felt that the air that he was breathing was so conducive to thinking that he hired architects to recreate the characteristics of those walking paths in his office. They exactly replicated the characteristics of the air in the hills at about 600 meters in altitude. This is a level obsession that's very rare to come across. He would take existing and oftentimes more expensive products and see if he could approve them. Some of what

he learned by doing this, he would use 20 years later when he launched Nutella. So last week, I did this Jimmy Iovine episode and Jimmy Iovine is a record producer, right? He's a music producer and Jimmy did almost this exact same thing. Jimmy would take old songs and say, hey, this is an old successful song. Can I improve it? And he was doing this as a form of practice to get better at his craft of music producing. I really liked this idea of both Michael and Jimmy. It's like, Hey, there's an existing product out in the market.

Let me just grab it and see if I can actually improve upon it. Uh, before going into the family business, Michael's actually studying accounting and he's studying it. He going into the family business, Michael's actually studying accounting and he's studying it, he never went to college. So this is like, this would be our equivalent of high school, but he's not really studying accounting. He's studying chocolate and hazelnuts. So as a student in class, he would be mixing hazelnuts and chestnuts together to figure out the right mixture. So during class, he would crush hazelnuts, then use a pencil sharpener to reduce them to tiny pieces. Then he would peel chestnuts, chop them up, and then combine them with hazelnuts.

And he was very much a, you would consider him a scientist, because he would take note of how much each ingredient he was using. Then he would combine them. And while he's in class, he would ask his classmates to taste his concoction. And if they said, oh, this tastes terrible, he said that his classmates said that he refused to give up. They would say, okay, I must have got the proportions wrong. I will try two thirds hazelnuts and one third chestnuts. You will see it will definitely get better.

This obsession was present at a very young age. He brings a friend down to the basement and shows his friend this machine that he's building. Now keep in mind, this is during World War II. His friend thought it was a machine gun and Michael's like no it's not a machine gun it's machine for making chocolate. When the war is over I will finally be able to devote myself to this full time. One thing he was adamant about is that he wanted low employee turnover. He wanted you to have a lifelong job at Ferrero. Many people worked with him for more than three or four decades. Their kids would be born, they would grow up,

and then they would come to work at Ferrero as well. When they let in the reporters for the first time, 60 years into the history of the company, they remarked that how many of the relatives were related to each other. And they would talk about what Michael would do for them. So he would show up and he'd make coffee for the factory workers before they arrived. He would bring hot chocolate to the people working on the night shift.

He would ask them questions about what they're seeing on the factory floor, what was going on in their personal lives. He traveled with some of his employees to see machines that they could use production. They went and traveled to Germany. One of his employees wasn't feeling well and decided to go back to his hotel room. Michael shows up a short time later with herbal tea and wanted to see if there's anything else that his employee needed. He believed that creating wealth was a moral duty and it was imperative to treat your employees well. There was so much demand for the products that they're making that he has to operate

his factory seven days a week. The local priest did not approve. Michael convinces the priest of the necessity of working on Sunday and to compromise, he actually has them move the mass and hold it in the courtyard of the factory. He built up an advantage over his competitors by using this rural workforce model. This is what I mentioned earlier. So instead of centri-centrizing operations inside a big city, he actually employed people from nearby rural towns. This allowed them to stay in their homes because at the time so many people were having to move

from their own communities, go into the city to where other jobs were. And so he builds a network of free buses that pick them up in the countryside and bring them back home so they don't have to spend part of their salary on renting an apartment in a bigger town. They could also spend more time with their families. He also insisted on building and controlling his own distribution system into the store. So most of the people in his position would sell to wholesalers like no, I'm gonna skip right that I'm going to sell directly to the retailer selling my products. So he built up this huge network of delivery trucks that are simultaneously delivering and

advertising his products. So they would paint the outside of these trucks and sometimes they're they're like little small fiats all the way up to like big buses. They'd paint them with all the Ferrero signature branding. They'd have all of these advertisements for the different products, all of their taglines. And at the very beginning, you know, the 1940s he has 41 vans. You fast forward 20 years later, he's got thousands of them. And by this time, Ferrraro had the largest private

fleet in Italy, second only to the Italian army, all completely controlled by the company. And there's an interesting line about that that said Michael was interested in building infrastructure that supported both scale and identity. And so this is another thing that Michael would repeat the importance of paying attention to the entire process, he wants to control everything. These are his words, we are particularly interested in following the product to all of its phases. When it's broken down in the crumbs, when it takes shape, and when it leaves the factories, when it enters the homes where the judgment will be pronounced a judgment that can make our fortune or our ruin. That is why we want to know immediately. This is an easy thing to say, but a difficult thing to realize.

That is why he hangs out in the aisles where his product is sold. And there's other ideas on how he gets information from customers later. I'll tell you about. He also had a passion for machines. He would buy a machine that was meant to be used in this factory. He did not use it as designed. He would immediately take it apart, add other parts, and customize it to his exact specifications. And then he had like this love affair with this technology because he viewed the technology,

right, as a way to scale up and deliver his product to more people. And you see the passion that's evident in his own words when he talks about this. I've always been particularly fascinated by machinery. When I see it moving, it seems to me that has a soul, like a person. If you've been to the plant, you will have noticed that kind of automatic milking machine that fills these little plastic boxes with spreadable chocolate. It closes them, seals them, and then packs them to be shipped. Well that machine turns out 22,000 boxes like that every hour.

Isn't that a wonder? Michael understood that investing in new technology was not optional. It was mandatory. He said, we need technology and innovation to grow in production and employment. He would travel the world looking for the absolute best machines. One time he bought one. He brought one that was so big and so foreign that when it arrived to the factory, employees were scared. It looked like alien technology to them. It was so big and so foreign that when it arrived to the factory, employees were scared.

It looked like alien technology to them. It was so successful at increasing production that Michael soon ordered two more. Michael like James Dyson, and I would say like Steve Jobs, he believed in the Edisonian principle of design is these constant small iterations over time. Michael finds himself spending hours needing, discarding, tasting, creating, retrying, testing, bringing to customers, hearing their feedback, reciprocating and retesting. He said even a mistake can be an indication for something different and new. He would take a helicopter to all of his factories, land there, and he insisted on personally

inspecting the quality of the work. He said you have to verify the quality of the product in person. He also said you have to control your raw inputs. This is nuts. Michael's intense interest in raw materials is very evident. For example, he was not satisfied with knowing that the lemon was brought from Calabria or the Amalfi Coast. He wanted to know at what altitude it was

grown, whether it was exposed to the sun or not. Then he wanted to know if 200 meters higher, there were other lemons, perhaps with a different flavor, a better flavor. He had extraordinary knowledge of the raw materials. If you wanted to know all the details of an Indian Mandarin, he could tell you in detail. He defined, oh, this is such a great idea. He defined the product as an orchestra, and each raw material had to be tuned according to the score of that orchestra. But he said,

be careful, your product can be a catchy tune, but it risks only lasting one summer. Or it can be a big work of art, like La Traviata, which lasts forever. And if you really think about what he's saying there, he invented products that sold for decades, products highly likely that will still sell for decades. He would go around and talk to all the factory workers and he would say the same thing over and over again, tell me the problems, tell me the problems. If I know the problems, I can figure out the solutions. He was intensely interested in what was going wrong. I know some of the best founders I know are exactly like this. It's like what Warren Buffett and Charlie Munger said, hey, tell us the bad news because the good news

takes care of itself. We don't have to worry about the good news. Just tell me the problems so we can fix it. He had a really interesting idea of how we're recruiting talent. He would go to all the surrounding schools. Remember, this is not big cities. This is tiny communities, rural communities. And so he goes around to all the different schools. Remember, these are not big cities, these are tiny communities, rural communities.

And so he goes around to all the different schools and he says, hey, give me the top seven students in each class. He would then go and personally recruit them into the company. Michael was also obsessed with studying and knowing every single thing about his industry. When I got to this section, this is exactly what Sam Walton, they said, Sam Walton went into more stores, more retail stores than anybody has ever lived. He was obsessed with knowing everything that was going on in this industry. This description of Michael sounds a lot like Sam Walton to me. He knows a lot of things about the confectionery

industry worldwide. He loves to read and study everything that he comes across. He spends hours and hours and hours in the laboratory. He tries to understand the taste of the public. He wants to know what others are doing. He wants to intercept signs of the future and uncover the latent desires of his consumers. He doesn't limit himself to replicating what others are already doing. Everything is tested and revised according to the needs of the company. It is not enough to see or know superficially, he said. One must understand. He was comfortable trusting his own judgment. People around him, he didn't believe this is what they told him.

He didn't believe that people in other countries wouldn't love the chocolate he's making as much as the Italians do. Even if his initial attempts to export his products into other countries didn't work, he would try again. It, there was no option to not expand. He says, if we are nobody in Europe, we will be nothing even in Italy. He insisted on this. He also insisted on continuous innovation, the refusal of

repetition, what is already known. This is what I meant about that great Edwin land motto. I have a personal motto. Don't do anything somebody else can do. He refused to repeat what everybody else is already doing. He wanted to search for new paths. He wanted to open up new horizons by differentiating from others. He would travel all over the world studying his competitors.

He says, you must go and see, you must understand how the competition's products are affecting ours. You must do this all over the world. Now Michael studied his competitors, but he never told them what he was doing. And so he insisted on expanding in secrecy. Let's say he's buying a new hazelnut plantation, a new factory.

All of these would be purchased under different company names, especially as he became more successful. If he used the name Ferrero, the price would shoot up. So he cloaked all of his operations, just like Rockefeller cloaked all of his operations in secrecy. I think at one point they had like 110 different like name companies that were like named something different, but all owned by Ferrero. Oh, there's another great idea. So he had this idea of hiding the

brand and talking to customers. So what does that mean? One of his secrets for fine tuning his products, he found a supermarket that agreed to put his new products on the shelf without the Ferrero brand name. Then he would hire, he'd have his employees wait outside the store, intercept the ladies who had bought these chocolates, offered them compensation to be interviewed. They would go to the offices. Michael would hide behind a plate glass mirror, so you can't see him,

and listen attentively from behind the glass. And he would also suggest the questions to be asked to the customers, like during this interview. And so incognito, he understood why his new products were liked or were not liked by his customers. He insisted on having a long-term orientation. He said if a new product for the first two years, for the first year, first two years doesn't make money, that doesn't matter.

You must think in the span of five or six years, and in the case of this like new T that he made, it took 10 years to succeed. And this is like the reason he kept talking about, we're going to make, we constantly have to look not where we're at, but where we're going. He had this intense focus on like long-term orientation. Because think about the compounding value of staying in the game for a long time. There is, he has this line where it's like many grandparents today who are eating Ferrero's, ate them, ate our creations as children.

And then those children grow up, and then they have their own kids and they're still eating for and then their kids are eating our creations as well. He believed in daily prayer and meditation. He insisted on going for an evening walk. And his evening walk was a ritual no matter where he was. He was an unabashed perfectionist who lost track of time. In fact, it says in the lab, he tries and retries dozens of combinations. He loses track of time, does not know what is happening outside, whether it is day or night. We had they're doing a test on just one new thing they're trying to make. Okay. In one single day, they do 70 different variations of it in a few hours. He felt his laboratory was magical and while inside it, the outside world ceased to exist. He names his customer and designs with her in mind. This is one of my favorite, I mean, he's got all these ideas, I absolutely love, but this

is one of my favorite ideas. His great care was for her. He repeated to us, remember that if we're good, Mrs. Valeria will buy from us and I can pay all of you. If she doesn't buy, I can pay you for a month and then I have to send you home. That's why I am first a servant of Mrs. Valeria. I can lose money, but we must not lose her trust because if we lose Mrs. Valeria, we lose everything. Michael demanded exceptional uniqueness. He will repeat if you want to go bankrupt, just listen to everybody. We must do something new, something

different, something unique and something against the current. If we imitate the products of our big company, our big competitor companies, we will inevitably lose because they will concrush us with their strength. They are fighter bombers and we are a small boat. They can wipe us out with a single blow. We must keep our distance. Instead, we must invent new products that they do not have. Michael would repeat his favorite sayings 60 times in a single week to make sure that even the most stubborn of his employees would adopt his key ideas.

He insisted that all shares remain in the family. He said, I never want to have to justify my choices to anyone. You must have financial autonomy. The real CEO of this company is Mrs. Valeria. He was like this with everything. This is, this is how he proposed to his wife. Listen to this, the way he proposes to his wife.

I would be extremely happy if you were to say yes to my proposal to marry you. But think it over carefully and mind you if you accept you marry a man who will always talk to you about chocolate. He is a missionary that is a line in the book. I'm not quoting Jeff Bezos there even though Bezos says that missionaries are the ones who wind up with all the money anyways. Obviously a missionary. This is what he says about this. And you know the next quote is not going to surprise you. I don't think because he just got done proposing to his wife and saying, hey, if we get married, I'm going to talk to you about chocolate all the time.

And he says for me work is a spiritual necessity. I was accustomed to it from a young age and I can't do without it. Only work has the ability to entirely absorb me. My greatest dream is for others to realize that I live for work. Michael believed in constant customer contact. How many of his competitors, the people running that his competitors, the founder, the CEO of the company is hanging out and posting up in the chocolate aisle at some tiny little store in the middle of nowhere, just interviewing and talking to

his customers. Doing this when he's one of the richest people on the planet. And he says, the product must be put at the center of everything. Around the product, all of the company's activities must revolve. He says, a company only justifies its presence in the market if its products manage to satisfy better than its competitors. And he's got a great line about this. Listen to this line.

He says, we create mythical products that create the markets. We create mythical products that create the markets. He looked at his business in a three-part system. Number one, we must discover the latent needs of the customer. Number two, we must transform those needs into a product. And number three, we must design new technologies for large-scale industrial production of those

new products. He believed that if a market was interesting, we must become the leader. One of his favorite metaphors for his outlook, he says, a good entrepreneur must be like a good skeet shooter, hitting the target by aiming not at the launch station, but further ahead, always with an eye on the long term vision, he would remove everything out of his life. You know how Buffett says that the difference between successful people and really successful people is really successful. People say no to

almost everything. Michael has a line almost like that describes his relentless focus, I feel I must continue to concentrate on the work that I'm most passionate about the research forever new products. And in this interview that was published after his death, he gives the same advice from the grave over and over again. He says Mrs. Valeria is the mistress of it all. The CEO, the one who can decide your success or your demise, the one you have to respect, never betray and understand completely. And he serves Mrs. Valeria by inventing on her behalf. He says innovation means to do something different from everyone else. Everyone made solid chocolate, and I made it creamy and Attila was

born. Everyone made boxes of chocolates. And so we started selling them one by one, but wrapped like a gift. Everyone thought that we Italians could not go to Germany and sell chocolate and today it's our biggest market. Everyone made the Easter egg but I thought it could be made smaller and sold every day. Everyone wanted dark chocolate but I said it should have more milk and less cacao. Everyone thought that tea could only be the kind with a bag and hot and I made it cold and without a bag and this tea did not take off for 10 years, but I did not get discouraged because I was convinced that it required time and that my intuition was right and that Mrs. Valeria didn't yet realize that it was what she needed, but then she did and it was a

huge success. I was able to do all this because we're a family business and we're not listed on the stock exchange. This allowed us to grow calmly to have long term plans to know how to wait and to not be caught up in the frenzy of the daily ups and downs. And his final parting advice was his answer to the question what his secret was. He says my secret, always doing things differently from others, having faith, staying strong and putting Mrs. Valeria at the center of everything every single day. And that is where I'll leave it for the full story.

I would say read the book, but unfortunately the book's not even available. So what I'll do is I'll just leave a bunch of my highlights and main ideas in the show notes if you want to read them. Also, if you're not on my personal email list, make sure you go to davidcenter.com and sign up. I email you for every single book I read. I email the top 10 highlights or top 10 ideas from every book. The email is free to sign up free to read. You can also go to davidcenter.com and you can read. I think of my top 10 highlights for like 176, 177 books up there too. A bunch of founders and CEOs I know that read the email and go to the website actually share the website with their entire team. So in case you haven't done that, that's davidcenter.com. That is 392, I think I think

I'm 392. That is 392 books down 1000 ago. Thanks for listening and I'll talk to you again soon.