Founders - #393 The Marketing Genius of the Michelin Brothers

Episode Date: July 3, 2025

Your family asks you to take over a failing factory in a remote part of France. This “family business” comes with a stack of unpaid bills, a small team of workers who haven’t been paid in months, and a banker refusing to extend any more credit. You cut every unprofitable product and go all in on making rubber tires. You have no experience and don’t know a single thing about rubber manufacturing. You have a genius insight that selling tires is a waste of time and instead you should create the conditions for your product’s success. You organize the entire company around this core loop: encourage more driving → which leads to more movement → more movement leads to more wear → more wear leads to more tire sales. A simple and beautiful organizing principle emerges: a tire company will prosper if people travel more, so let’s help them do that. You make promiscuous use of the press. You write columns advertising the joys of the new activity of driving. You draw the maps, create the routes, and build thousands of road signs across France. All for free. Why? Because better signage means longer trips, more driving, and more tires sold. You publish the Michelin Guide — a free travel book with locations of hotels, restaurants, mechanics, and sites to see. You create the Michelin stars which become the global gold standard in fine dining and help people travel far for great food.  You stimulate demand through spectacle. You sponsor races, airshows, and contests with cash prizes. You make smart bets early so by the time cars appear in large numbers you already own the roads. You create the most successful company mascot of all time and create a family dynasty that lasts 100 years. You're not one person, but two. André and Édouard Michelin, two brothers and one of the greatest cofounder teams in history. This episode is what I learned from reading Michelin: A Century of Secrets by Alain Germain and The Michelin Men: Driving an Empire by Herbert Lottman. ------ 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. ----- Automate compliance, security, and trust with Vanta. Vanta helps you win trust, close deals, and stay secure—faster and with less effort. Find out how increased security leads to more customers by going to Vanta. Tell them David from Founders sent you and you'll get $1000 off. ----- Join my free email newsletter to get my top 10 highlights from every book ----

The Michelin brothers have to be one of the best co-founder teams that I've ever read about. So one brother made the product and the other brothers sold the product and they did their respective jobs better than anybody else in the world. Andre Michelin may be the greatest marketer of all time and his brother, Edward, is one of the greatest industrialists of all time. In fact, Edward would give the following speech to his employees counseling, says little streams make big rivers. A single minute lost each hour adds up to eight in a day, 2,400 minutes in a year. That's 40 hours per worker. If our factory employs 20,000 workers and each loses that minute per hour, that is the equivalent of 333 years of work lost. The best founders in history were all looking for ways to save both time and money.

The Michelin brothers were no different. In fact, there's a line in one of their biographies that says saving both time and money was one of the principal concerns of the chiefs. That is how I know that if they were alive today, they'd be running Michelin on Ramp. Ramp is the presenting sponsor of this podcast and R ramp is a

Guaranteed time and money saver ramp gives your business easy to use corporate cards for your entire team Automated expense reporting and cost control Michelin was one of the fastest growing and most innovative companies in the world in their day Many of the fastest growing and most innovative companies in the world today are running their business on ramp Why because one of the reasons is because ramp has the most talented technical team in their industry growing and most innovative companies in the world today are running their business on ramp. Why? Because one of the reasons is because ramp has the most talented technical team in their industry. Becoming an engineer at ramp is nearly impossible. In the last 12 months, ramp has hired only point two, 3% of the people that applied.

That means when you use ramp, you now have top tier technical talent and some of the best AI engineers working on your behalf 24 seven to automate and improve all of your businesses financial operations. And as you're about to hear, the Michelin brothers would have loved that ramp has built a team of a plus players that would make Steve jobs proud. And what kind of product can a team of a plus players build a product that creates so much value for their customers that the customers never leave? ramp is an example of that last year 12,059 businesses signed up for ramp and only eight of the

12,059 businesses decided ramp wasn't for them. I run my business on ramp and so do most of the other top founders and CEOs I know make history's greatest entrepreneurs proud by going to ramp.com to learn how they can help your business today, that is ramp.com. There's another tool in technology I wanna tell you about and ramp actually uses this tool, it is Vanta. I just told you that ramp has the best technical talent in their industry and how becoming an engineer at ramp

is nearly impossible. Knowing that the team at ramp trusts Vanta was a huge positive signal for me. And when I talked to Vanta's founder Christina, it became obvious why ramp uses Vanta. Vanta helps your company prove you're secure so more customers will use your product or service you can think of it like an intelligent security assistant that helps your company pass audits without tons of manual work.

This is important because number one, customers need to trust you if your company handles sensitive data, customers want to know that it's safe. The certifications that Fanta helps you get prove that you take security seriously. Number two, Vanta helps you win deals and close contracts, you will lose deals without it. Many big companies won't sign contracts unless you are certified. No certification equals lost sales. This is why the average Vanta customer reports a 526% return on

investment after becoming a Vanta customer. Number three, manual compliance is slow and painful. Doing everything by hand takes months. The Michelin brothers would not tolerate wasting valuable company time doing something with labor when technology can help you automate it. And number four, you stay secure over time. Vanta keeps checking your systems constantly

so you don't fall behind or forget anything important. Your intelligent security assistant works around the clock. Vanta will help you win trust, close deals, and stay secure, faster and with less effort. Go to Vanta.com to learn more. That is Vanta with a V, V-A-N-T-A.com to learn more. And if you tell them that David from Founders sent you, they'll give you $1,000 off.

That is Vanta.com. So I spent the last two weeks reading two biographies on the Michelin brothers, and both books centered around how they took over a bankrupt and a decrepit factory, and then turned it into one of the leading tire manufacturers in the world. In fact, a place that the company still holds more than a hundred years later. So the two books I read were Michelin, A Century of Secrets, which details how

the two brothers kept their entire operations shrouded in secrecy while simultaneously going to extreme lengths to make their company and its products known to the world. And the second book was The Michelin Man Driving an Empire. So the first book was actually translated from French by my friend Cameron Priest, who also helped me with last week's book on Michael Ferreira. Cameron and I have been texting all week about the just insane stories there in these books. So most of what I want to talk to you about is the genius that the older brother Andre applied to marketing and advertising. But there are a lot of things, there's just a lot of things in

in the store I think will blow your mind, at least they blew my mind. And even more amazing is what Andre was doing in marketing and advertising. Before there was any kind of playbook to learn from, he starts coming up with great ideas in the late 1800s for God's sake. Before I get there, I need to give you, there's a few things you should know, like some pre-history and some background, before we get into how Andre came up with all these great ideas, essentially to market what would seem like a commodity product. It's a tire.

There are other people's making tires. So the pre-history that's important was the fact that the brothers were asked to take over a failing family. So the two brothers, Andre's the older one and Edward is the younger one. They will eventually turn this failing factory into Michelin. It was not that at the time. And so Andre, when this happens, he's in his early thirties. Edward is in his early 30s, Edward

is in his late 20s. Andre was trained as an engineer and he was the obvious choice to run a factory manufacturing new products, right? But he wanted to live in Paris and not the remote and isolated part of France where the factory is located. So in a reversal of roles, he convinces his younger brother, who was an art student, to run the factory instead. And so I was thinking about this while I was reading both books. The artist, the brother that's the artist, is going to go on to become one of the greatest European industrialists in history, while the engineer may be the greatest marketer in history.

Another thing to know, when they started doing this, they had no experience. They're very unlikely, you wouldn't have predicted that these two brothers would go on to do what they accomplished But as you're gonna hear they're both wicked smart Relentlessly resourceful very secretive which is actually really important. I'll talk more about that later they're obsessed with quality and obsessed with winning and then I think one of the most important traits that just Just jumps out in both books is the fact that they're both default aggressive. They don't dilly dally and wait for opportunities to come to them. They, they're default aggressive.

They go after them with everything they have. So when they did not, when they did take over the factory, they didn't know what product they should be making. So at the time, this small factory that's about to go bankrupt, that was founded by their grandfather, was producing farm tools and then assorted products made from rubber, like poses. The rubber part is obviously going to be important. So keep that in mind. The factory was not making tires. So when the younger brother Edward shows up at the factory, he finds a stack of unpaid bills, a small team of workers who haven't been paid their full wages in

months, and a banker refusing to extend any more credit. So their grandfather's company is on the brink of bankruptcy. They can't get any credit. So they go to the grandfather's daughter, their aunt, and say, hey, I need 500,000 francs to invest in turning around your dad's company. She says, give me a day to think about it. The next day, Edward goes and visits her again.

She says, you can have the money. And then she tells him the reason that she asked for a day. She said, I had to go to the local convent and make sure that if this fails, they have a room that I could live there. She literally invest every single last dollar in trying to save her father's company and was willing to go live with nuns if this failed. So now that he has the money, Edward takes an inventory of everything the factory is

making. Most of the products are unprofitable, so he just starts cutting every unprofitable thing and he decides to focus on their most successful product, which at the time, remember this is the late 1800s, it's a brake pad for horse-drawn carriages made from rubber. The only problem is Edward was in his own words completely ignorant of rubber manufacturing. Now how he solves and alleviates his ignorance is really smart and maybe even a little genius. So this is what he said. The first necessity was for me to learn my trade. I can only learn it by questioning the workers. So I had to have a conversation with them where I was their inferior. And the best

way to get them to talk was to openly and completely admit my ignorance. In practice, I conducted my questioning in the tone of a friendly conversation by saying, How are you going to do that? Why can't you do it differently? Is there another way I explain these questions to the worker asking if he encountered any difficulties in the execution that I had not anticipated. I noticed that even when I knew the issue quite well, this friendly conversation was extremely useful for

gathering facts and then is the most important sentence in my opinion of the entire thing he's talking about here. There are things that the man who handles the material for eight hours a day knows, while his boss who is necessarily occupied with multiple issues may be unaware of them. This friendly talk was extremely useful in getting more details. Now another thing I admire about the brothers is even though they're experienced, they're extremely ambitious.

So their idea is like, I don't want to be just this like small local factory, you know, making a profitable product in a dying industry, they are going to the other career, they're going to successfully ride multiple technological waves. This is 1891. So horse drawn carriages, which are making products for they're currently being displaced by the bicycle, and then soon to be the car. So they're talking about switching to a market, can we build products for is a dying market, for a growing

market? And so they're reading about these inventions that Dunlop is making with the bike tire. And so the brothers had already been talking to like, hey, maybe we should make bike tires. There's gonna be a lot more bikes in the future. We can build the best product in a growing market and be in a way better position than just making this rubber brake for horse-drawn carriages. A few hours later, a tourist arrives in the yard of the factory with his bike. His tires have burst and he asked for help repairing them since he knew

it was a rubber factory, right? So it takes Edward half a day and the book says a lot of swearing, which I thought was funny, to repair the Dunlop pneumatic tires. So all that means is Dunlop is the first person to invent tires that run on air instead of solid rubber tires At the time tires filled with air were Extremely rare and they had this wind Dunlop came up with this weird idea that you should glue them to the rim Making them very labor and time intensive to repair So imagine your bike gets a flat tire and it takes you you know, six hours to fix

it. But Edward realizes something he fixes it then rides the bike to test it and he's shocked at how much more comfortable air filled tires are for the rider over solid rubber tires. Before air filled tires. Everybody use solid rubber tires because they were puncture proof and they would last a long time. But they would they produce this extremely rough ride. They said like, he'd ride around on rubber tires and they were puncture proof and they would last a long time, but they would, they produce this extremely rough ride. They said like, he'd ride around on rubber tires and it would hurt your liver after a tire after a while

you felt every bump. And if people weren't using solid rubber tires, they would use tires made out of wood, which also felt like shit. So he sees a massive opportunity to make improvement. And this insight that he has, he says, as long as it takes a day to patch a nail hole, this new tire cannot develop a market, it will not find a market. What is needed is to make it easily removable, which they will call detachable. Okay.

What is needed is to make it easily removable and that will change the future of the bicycle. And so Edward's first idea for a product is hey, we're just gonna take this existing and this existing product that has potential and just make it easier to repair to save people time. And so he sets him and the rest of his employees to the task of creating a bicycle tire that rides on air and it's easier to fix and repair. Now this is nuts. And so this is essentially the product that he that he is attacking. At the time, the repair manual that is used for changing a flat tire on a bicycle was 60 pages long of

detailed explanations. So we're just going to make that easier. And then we'll find a market. Now they they had an advantage over other rubber companies and other tire manufacturers to is because they were completely desperate and they were in a bad situation, their backs were in a bad situation. Their backs were up against the wall. So they said we have to recognize the factory's best cards and play them hard. This is what I meant about them being default aggressive, which will

reappear over and over again throughout our conversation. In May 1891, the Michelin factory began producing removable tires, and it never stopped. Now again, this is a technical achievement. No one else in the world had this invention at the time. And now for the first time we get to their other superpower, the first superpower is they built the best products in the world in their category. And that was their goal from the very beginning, I told you, they're

extremely ambitious. They're extremely obsessed with winning. That was the talent of the younger brother, right, Edward, the second superpower was that the older brother Andre may be the greatest marketer of all time. So the fact that the co-founders, this is a really important point before I started going into it immediately, they make this invention and then they're like, we're going to find the best possible way to market it right away. Really important point to understand is the fact that the co-founders and brothers had complimentary skills. This is very important. One makes the product and one sells the product. Andre would show him to be as gifted in explaining tires as his

brother was in designing them. And the way that Edward explained this is I'm the champagne, he's the bubbles. So at this point in time, they're the only people in the world with a detachable pneumatic air-filled tire for a bicycle. So they're thinking of ways, how do we sell this? A few weeks later, the most read and influential newspaper in France announces a race for bikes. The race starts in Paris, it ends in Paris, it travels a total distance of 1200 kilometers. The event was scheduled for 15 days later.

And so we see this correspondence between the two brothers. You're going to see that the older brother is obviously, you know, the one that's way more aggressive. So the older brother, Andre writes his younger brother says, this would make for a fantastic launch. We need to win it. His younger brother writes back. The deadline is too short. We will never be ready. Andre, the older brother, writes him again. We are the only ones with a detachable it is an advantage we have and we may never have again. Figure it out. He was dead right in saying

that because of what happens next. So the two brothers go to see the favorite of the event they again they they they their tires are entered into the race they obviously want to win it. The favorite of the event refuses to sign a contract because he's already signed to Dunlop. So they have the idea. It's like, hey, there is this great bicycle racer named Charles Toront. He's retired. Let's see if we can coax him out of retirement. So they invite him to lunch. They treat him royally. They essentially it sounds like they got him drunk. So they gave it says after liquors and a cigar, they propose that he try to race on the Michelin

detachable, which is what they're calling it at the time. Three hours later, convinced in half days, Toront signs the contract. In the retelling of their own history, there was an interesting line that it came across. They call it the house, so the house of Michelin, because it turns out to be a dynasty after this. They talked about this lunch being really important and how they were convincing to get Charles to race for them. And they had a great line in recounting their own history.

They said, success is often made of these small details. So the end result of the race is that Charles races for three straight days with no sleep and he arrives seven hours and 40 minutes ahead of the race favorite. Then Andre, in a single day, he'll make and run an ad in the largest newspaper announcing the victory. I just want to pull out some lines in this. He said the pneumatic is and will remain by its very nature the most comfortable and fastest of the tires. Remember, they are the only company selling this product at the moment. Okay, we have confidence that the bicycle public will say of our pneumatic, this is an improvement.

No, this is a revolution. Now this is the hilarious part. Remember when they're like, hey, we don't have time to do this. We can't do this if the younger bro is like, we can't do this in 15 days. When the race ends, Michelin has 12 tires in stock. They've only been able to make 12 of them by the end. And this is how important and they're just gift of spectacle and getting attention and then drastically increasing the market for their products in an indirect way, which is the main theme of what I want to talk to you about. But they have 12 tires in stock at the close of the race.

By the end of the following year, 10,000 French bicycle riders are using Michelin tires. So if you were in their position, think about this, you, you go from one year from nobody having your tires to 10,000, what are you going to do, you're going to do exactly what the Michelin brothers did. And I think would also play to their nature. They loved being focused. That's another thing we'll talk about a lot about. So they're going to retain from here on in, they're going to retain a singular focus, everything for tires, tires for

everything, everything for tires, tires for everything. So their dream is like anything that's going to travel over land, we're going to put on our rubber. And there's such great lines in both books about this. Let me read to them to them to you. This will be until the death of the two brothers, the great ambition of the house. Here's another one. The path that the company must take is laid out. It will be tires, nothing but tires. Michelin will remain specialized. And so when I say Andre may be the greatest marketer of all time, he's the inventor of the Michelin guide, which leads to the Michelin restaurant stars, maybe the most successful

guide in history, drastic expands the market for their product. But that was just one great idea, his best idea. But I'm telling you, when I write out all, I took all my notes, you know, from two books, I read like, I don't know, 700 pages for this. And when you just list out all of the different marketing ideas that this relentless and prolific person had, it's 12 pages long. And so let me just give you an example. They obviously said, Hey, you know what?

Winning bicycle races seems to be pretty good for business. Maybe we should lean into that. Why are we waiting around for other people to have bicycle races? Why don't we have a bicycle race attached to our brand? And then what if we set up our, this is such a great idea. And then what if we set up the track, right? The, the race track in a way that will demonstrate the advantage our product has over our competitors.

So one of their products advantages over the competition was how much easier it was to change. It would take 15 to 30 minutes to change a tire instead of half a day. So they organize their own bike race. They call it the international Michelin competition, which is hilarious because it's only in France at the time. Then the basic requirement simple to get into the race. You have to ride on Michelin tires and then Michelin fills the entire course with nails, thereby allowing a demonstration of how easy it is to change a Michelin tire.

They're constantly obsessed with having fun and showmanship with their marketing. It's almost like this is like Red Bull before Red Bull. If you haven't listened to that episode, I think listening to this and then immediately when you're done listening to episode 333, which is on Red Bull's founder, Dietrich Maschises, which I think is one of the best episodes I've ever made, you're going to see a lot of like similarities between them. So what do they do? They're going to go to where all their potential customers are

So they set up this demonstration at this giant exposition in Paris in 1895 now in this case This is truly international because people from all over the world go to this exposition in Paris So they call this demo the Michelin wooden horses The clever demo consisted of two seats on a rotating carousel trap One seat is mounted on a tire and the other was on a bare wooden wheel. So their product and the other one is their competition, right? So at the time, the horse drawn carriage market is so much larger. The car market for all intents and purposes barely exists. Let's just put it that way. So volunteers will sit on a seat and when

if they sit on the seat on the wheel would they were subjected to quote Torment unknown to the since the inquisition Andre's got a gift with words. He's just hilarious The rider was rattled mercilessly by bumps on the track the riders on the pneumatic seats Which were obviously Michelin tires the airfield tires, right? which were obviously Michelin tires, the airfield tires, right, experienced a smooth, silent glide. The president of France happened to stop by, try the demonstration, and then congratulated on the Michelin brothers on their invention. So then they have this very simple idea. Well, most of our business right now is bicycle tires, But they have two wheels, four wheels is better than two. Can we make

tires for vehicles that have four wheels? At first, they're like, oh, maybe we should make tires for horse drawn carriages. But pretty quickly, they realize, hey, I have, we have a great idea for is better than two, but we're pointing it at the wrong target. So Andre, again, this I love the way that this guy spoke, He sees the first first few horseless carriages in Paris. And so he says, why not also put these strange vehicles that make a hellish noise and crawl like turtles on our removable tires. And his little brother

says wouldn't it be better to concentrate our efforts on horse drawn carriages, which offer a practically unlimited customer base. This is so smart. Again, Andre just gets it. Andre does not share this opinion. He says the car with tires will replace the horse. It is not the last progress that one that with one should proceed, not even with today's progress, but with that of tomorrow. And Andre's point is I believe that the car is going to replace the horse. Therefore we should focus and put all of our resources on inventing for the new, not the

old, to which his brother then provides the following objection. It is very difficult to port the air tire from the bicycle to the much heavier car. Andre replies, the more difficult the problem, the less chance there is of being followed, the more fruitful the triumph will be true progress, boldly supported always ends up triumphing. And so you can think about this in a very simple way for tires are better than two. So what do they do? They do another smart there's a lot of smart bets they make early. And so they agree to take they're making a ton of money, obviously, from manufacturing, you know, their their bicycle tire. So they agree to take a large profits from making bicycle tires. And instead of taking very large dividends from themselves,

they're going to reinvest that profit into creating tires for cars. In other words, they made a very smart bet early. There's not a lot of cars in France when they made this decision. I've read varying accounts, sometimes as low as 350 cars in France at the time to as many as 3,500 total cars in France, but not. This is 3,500, anywhere from 350 to 3,500 total cars in the entire country at the time. At the time they make this bet, cars are expensive, they're toys for the rich, they require full-time chauffeurs that will double as mechanics. These cars could not stray far from a repair shop. In fact, many, many years ago, probably five years ago, I read I'm going to reread it the biography of the founder of Cadillac, this guy

named Henry Leland, it's a he's a facet. He had a fascinating mind and fascinating experience. He came up with the first successful car company ever founded. And he also came up with one of the most successful new car ads by Cadillac. And the ads were successful because it said return trip included. At this time, it was expected, you're going to go out in your car at some point, it's going to something's going to break on it. So your chauffeur has to fix it. And that's the only way you're actually going to come back. Now, I also think it's important to point out the perspective that

Michelin brothers had. So there is this story I shared a few weeks ago that I absolutely love. So two shoe salesmen arrive on a remote island. The two salesmen, right, see completely different realities based on their mindset. One salesman looks around notices that nobody on the island wear shoes, writes back to his company, says, hey, there's no opportunity because no one here wears shoes. The other salesman sees the exact same situation but reached the opposite conclusion. He sends back a message saying there's an entire population that could benefit from our shoes, but but simply hasn't been introduced to them yet. The

Michelin brothers were like the second salesman. They look at the market and they're like, oh my god, we're gonna go all in on making car tires that run on air, because there is an infinitesimal that's the word they use minority of the cars in France running on air. So a small number of already small number, and they're excited about this. And their point was if you just use their product,

they believed in the superiority of their product. So if they test out their product and they go for a ride in a car on their product, their outcome after that happened, Andre proclaims, he's like, in 10 years, all cars are gonna to have our tires, our product is just so obviously superior over the alternative. So once they have this new product, they have this air filled tire that you

could attach and change. And it's it's easier to change the tire, it's much smoother. Right? Now they have to figure out Okay, we can make this thing. But how do we sell this thing? We're in a, it's such an we can make this thing, but how do we sell this thing? We're in such an almost non-existent market. So how do we make this happen? How do we sell more tires? This is the genius part. This is the part that I was most fascinated with in both books.

You must, they figured out you must create the conditions for your product's success. You must create the conditions for your product's success. They converged everything around this core loop. Encourage more driving, which leads to more movement. More movement leads to more wear. More wear leads to more tire sales. They realized that a tire company will only prosper if people travel more.

So we are not going to sell tires, we are going to sell movements. And they commit to this mission for the long term. There's a great line in the book. It says in the year 1900, Michelin's purpose had been to get more people on the road. And in the mid 1920s, that purpose had not changed. And there's just a litany of great ideas that they used to do this, to encourage more people to get out on the road.

If more people are on the road, we're automatically going to sell more tires. So the first thing they do is they increase demand with spectacle. They viewed races as opportunities to demonstrate their new products. They already knew this works for bicycle racing. Why wouldn't work for car racing? They build their own car called the lightning, and they drove it themselves in one of the longest car races in Europe. It was the first car ever raced using Michelin tires. The exact same thing happened in this race that happened when they did this for the bicycle race.

It gives them a ton of flibicity and then orders for tires start flooding in. When they're not driving these races, they made sure to sponsor. They sponsor air races, bicycle races, car races. They would offer to put up money for cash prizes for the contestants that win. This is what they said, to sell tires, we first had to sell excitement. And there's a great line where it says Andre Michelin made promiscuous use of the press. So think about it. It's like when you do these bike races, when you do these car races, when you're sponsoring

air shows, and you're sponsoring every single thing where people are traveling on rubber. Because they're spectacles, the newspapers and the media of the day are automatically for free covering the spectacle. But Andre didn't stop there. Again, he made promiscuous use of the press as one of the greatest lines. He wrote a column every Monday for one of the most widely read papers in France.

The column was called Michelin Mondays. Readers of the column would learn about routes they could take for driving. They'd learn about hotels and inns on that route. Special meals, remember this is going to be the turn into the Michelin stars when he does the guide, you know, many years to the future. They'd learn about special meals on the route. They'd learn about different sites. They'd learn about where the mechanics are.

And Andre was prolific in all things that he did. Not just this, he wrote hundreds of these columns. One of the books made a reference to an idea that appears in the 636th Michelin Monday column. Here's another idea that blew my mind. They built road signs across France. The job of the government was done by a private company. They built all these road signs, thousands of them, for free. Why? Because better signs meant longer trips, more driving, more wear on the tires, and therefore more

tires sold. Every single sign had an ad that said, gift of Michelin. If you think about this, they just designed this core loop, right? Encourage more driving, which leads to more movement, more movement leads to more wear, more wear leads to more tire sales. And then they just figured out how can we keep this loop spinning? How can we expand it? So this is, this is one of the most remarkable things. So in 1900, okay, Andre publishes the very first Michelin Guide. It is a free travel book with maps, locations of mechanics, locations of hotels, restaurants. The goal was to give people helpful information so they drive farther and thus wear down their

tires. Their insight was interesting here. The car is just an accessory to the tire. Now making the Michelin Guide was what Andre loved the most and what he was best at. He starts it in 1900 and he works on it for 31 years until his death. Eventually these little red books that he creates will spawn the Michelin star rating for restaurants and become the global gold standard in fine dining that we still use today.

In fact, when me and Cameron were talking about this book, he said something that was interesting. He's like, it's pretty wild that a guide made by a tire company, you fast forward, you know, 120 years and chefs today will literally commit suicide if they lose one of their Michelin stars. History unfolds in very unpredictable ways. So again, this is another smart bet early. The publication of the first Michelin tire guide informed

new motors. Remember at this time, these were rich people. So the publication of the first Michelin tire guy informed new motors wealthy people accustomed to a certain class about well kept hotels, good restaurants and ways to communicate by mail telegraph or telephone. Andre intended the guide for chauffeurs to whom would be offered free of charge. The extravagance of this wager continues to astonish this 400 page travel guide for users of a mode of transportation. Then only in its infancy represented considerable investment.

It is another smart bet early. I need to bring this up the maps inside the guides, they made those maps, they even printed standalone maps. So you know, the accordion style maps that used to be in like every single car, that device of making it easy to fold and unfold, they, the Michelin brothers invented that they drew the maps, they wrote the guides, they created the routes, they built the signs. And they did this when the market was tiny. So when cars arrived in large numbers, Michelin already owned the road.

It also is important to point out they didn't wait till perfect to start the very first issue in 1900 of the Michelin Guide was very rudimentary. And Andre does something smart. Everything this guy does is smart. He turns the readers and users of the guide into contributors. So in the first guide, he puts this the present edition will obviously be found to be imperfect, but the work will improve from year to year, it will become perfect all the

sooner if drivers will apply more precisely and in greater numbers to the questionnaire. So in every single book is a questionnaire, what did we get wrong? Without them, the drivers and contributors, we can do nothing with them, we can do everything that he does another smart thing. He then runs ads to help improve the guide, which itself is a form of an ad. The Michelin Guide is is essentially an ad described in Discox. So he's going to run ads in newspapers as a call to action to improve the guide, which is also an ad.

And so this is what the ad said. So, Mr. or Mrs. It is in your interest that the guide be as accurate and complete as it can be. For if Michelin had to work only with its own resources, it would take several years to produce an accurate and perfect guidebook. Andre's call for help was an early example of a form of publicity that he may have invented, containing a question or announcing a competition, engaging the reader's participation, all at the same time reminding them of the name Michelin. This is something he does over and over again, more advertising for your advertising. So he goes

to the hotels that are featured in his guide, which advertises his products and says, hey, if you're going to be in the guide, you need to agree to put these in a special place where patrons of your hotel can see them and pick them up. Then he didn't stop there. He insisted on getting better prices for the people using his guide. So hotels listed in the guide had agreed to indicate prices for each meal and for different rooms. Prices representing a formal agreement to holders of the Michelin Guide, an engagement

that Michelin was able to attain thanks to the publicity value of the guidebook to hotelkeepers. What is he saying? I give you publicity, you give my readers better prices. So then this may be the first time I mention another trait that both Andre and his brother have, and they believe in, in the fact that they are willing to invest for the long term Remember in 1891 they start making your tires and they'd never stop the first Michelin guide could only be used by a small minority There's not a lot of motorists in France yet yet. It found its readers It helped that the guide was given away for free for the first 20 years of its existence And it helped that Andre was hell

bent on making every issue better and better. Here's a line about that each new edition was a tour de force requiring painstaking checking, updating and introduction of new features. So look how much progress he makes in just five years. First one comes out in 1900. In 1905, 60,000 copies of the French guide had been distributed free of charge. And then Andre advertises the fact that 60,000 of these free guides are available, you should use them, you should help make them better. But he does it in the Andre way. He calculated that so

many books, each about an inch thick, if piled up would equal five Eiffel towers, one on top of the other. And then he says, why are so many people? There's 60,000 people using this book. Why so many people? If we can stack it to the size of five Eiffel towers, why are people using this guide? One picked up the red guidebook because it contained the key to some magical experiences. This is just great writing.

Opening the door to truly fine hotels, tables set for superb meals, it was a guaranteed time and money saver. So from the customer's perspective, from the user's perspective, it's like, okay, this is free. You guys put all this effort into it. All these 60 other thousand people are using it,

so it has to be good. I'm gonna get a key to magical experiences. I'm gonna be able to start going on the road, seeing my country, staying at wonderful ends, having great meals. But the point from the company's perspective is brilliant. Anything that could get more people to join the automobile age was good for Michelin. The Michelin guides provide them with compelling reasons to try out their cars and to wear

out their tires. The restaurant or the hotel could become the reason for the journey. And this is when they introduced the Michelin star system. And the Michelin star spelled that out. So the initial Michelin star system was a single star called attention to quote a good table in its community. Two stars to an excellent table worth the detour. What a great line. Worth the detour. Now drive a little further. just just a couple more miles a couple more miles of cars cost tens of thousands of customers. How many more tires are you selling?

And then three, one of the best tables in France worth the trip. Edward knew how to make tires and Andre knew how to make them indispensable. And then again, this guy is prolific. Look where we are 12 years after Andre launches this. So now 1912. Okay, he has 12 of these guidebooks because he starts translating them into other languages. The 12 books now total for the year 7046 pages total printings amounted to 274,000 copies. I think the number I heard is they distribute over 30 million of these guidebooks. And so then Andre is advertising the fact

that hey, we have 12 guidebooks. They're in all these different languages at 7000 pages, there's 275,000 people reading this. But that's not he's not going to list just those numbers. He says if stacked together, the copies printed this year would rise 20 times the height of the Eiffel Tower. In fact, they would match the height of Mount Everest. And then not scared to boast not scared to promote. He says these days, there isn't a driver around the world who would want

to travel without having a Michelin guide handy. And the thing about me forms of media is media begets media. So this becomes so successful that in America, they start writing about this. Now keep in mind, the book is so incredible. So now you're going to have the New Yorker, right, which has a massive audience, talk about this book, which then leads to more free publicity for your brand.

So this is what they said in the New Yorker. It says Michelin tires are presumably good tires, but one is apt to assume it because the Michelin maps and guides are so good, not the other way around. The reporter went on to enumerate the wealth detail contained in each volume. It is human nature for customers to be predisposed to have a positive view of a brand they've never used the product from if it is associated closely with something that they love and this reporter gets it. They're presumably good tires because the guides are so good. Not the other way around. Think about how difficult to be like, here I make tires, they're great tires, this is what I do,

these are all the stats and this is the innovations I have will you please buy them? That's a lot harder sale than hey, you've used this guide for years now You're driving now. You have a car now. You're driving more. Of course, you're going to use Michelin tires Michelin has already provided something for you of great value for free at Considerable expense of time, money and resources. What I mean by this point, they have 150 people working on the guide and they receive 12,000 copies of the questionnaire. Okay. So that, that question has slipped into every copy saying, Hey, please give us

your feedback, please tell us we're wrong. 12,000 readers every year are sending back this questionnaire. So you have 150 people on staff and you've got a 12,000 volunteers helping make this thing better. And so then Andre has another incredible idea. He's like, okay, well, the guide, you know, it's a portable, it's such a portable tour guide. Why don't we open a tourist office in Paris?

So you go to Paris, you walk into the office and you say, Hey, this is the kind of trip that I want to take. This is what I desire. This is how much time I have. Michelin plans the they do the rest, they plan the entire trip for free. Why you already know the answer, because everything goes back to that core loop, we're going to encourage more driving, which leads to more movement, more movement leads to more wear, which will automatically lead to more tire sales.

Our company will prosper if people travel more, so let's create the conditions for people to do so. We are not selling tires, we are selling movements. So not only does Andre come up with this genius loop, not only does he create probably the most successful guidebook in history, the one that's still used to this day, the one that's still having an effect on high-end culinary experiences to this day. He also creates probably the most successful company mascot in history.

Look this up. It's been voted the most successful company mascot multiple times. He creates the Michelin man, this fat, lovable tire man. And again, they loved demonstration. This is something that a lot of the great entrepreneurs in history, a lot of the great advertising and marketing people said over and over again, even the greatest copywriters would say this, that there's not a single ad that will perform better than one dramatic demonstration. So when they invent the mascot and they start running ads, it's this fat lovable tire man, right? But in every ad, he's drinking a cup full of

nails and glass. This fat rubber mascot becomes a celebrity and a metaphor. The reason he is drinking nails and glass is because he says the Michelin tire drinks up obstacles. The Michelin man will show up at every single event. He even signed some of the columns as it was written from him. He's used in posters. He's used on signs. And he is still around today. And then another core tenant of Andre is the fact that he's just relentless. He's always pushing harder for the development of more automobiles. So there's actually a funny story here before I get to that. I was thinking one time when I was reading Rockefeller's autobiography, you know, Rockefeller's likely the

richest person on in the world. At the time he retired, but he actually got richer and wealthier in retirement than he did when he was working because somebody else invented a technology that created more demand for his product, right. And so obviously, Henry Ford's ability to mass produce automobiles for the very first time is going to drastically increase the amount of demand for his cut for his for Rockefeller's product.

And I remember his Rockefeller says something like in his autobiography, Oh, like this lovely young fellow, Henry Ford came to visit today and I just like him so much. I'm like, yeah, I bet you do. I bet you do like him so much considering he probably expanded the the market for your product. I don't know, a thousand, 10,000 X. And so what Andre realizes is like, hey, we made a lot of progress. We're now in the, you know, in the 1920s. There's a lot more cars than we started, but we're way behind America and Henry Ford. So I'm not going to keep asking you to buy tires. I'm going to push hard for further development of the automobile. And again, they do these massive

campaigns. The amount of they don't like, oh, we're gonna, we have an idea, we're gonna put out like this weak tepid way. Here, we will put 5000 flowers, no, million hundreds of thousands, millions over in tens of millions over the life of the company. So here's an example that in December 1922, Andre launches a major national survey for popular automobiles. Thousands of posters are pasted on the walls of major cities. Thousands of flyers are distributed. Andre explains

that in the United States, there is one car for every 10 people and France, one car for every 150. We need to close the gap. Imagine how many tires we'd sell if there were 15 times the amount of cars on the road than there is today. Six months later, he prints another brochure about the same thing. We have a lot of room to grow, we should be making more cars in France. This one brochure in one month in 1923 is printed 600,000 times. Again, the guy's completely relentless.

Hey, we're making money on bicycles. We're making money on cars. I find it personally offensive. Andre found it personally offensive that the buses in my beloved Paris are still using solid rubber and then he does it in a hilarious way. It says, Andre teased the public transport authorities into renewing their equipment by running ads in the press with the following argument. Pigs, pigs, filthy disgusting pigs are transported on air filled tires because it's more economical and they arrive in better shape. Parisians still ride in buses on solid tires.

It costs more and they arrive aching all over. I want that business too. The buses in my beloved city should be riding on Michelin tires. And remember this worked because the division of responsibility between the two co-founders, Andre sold the product, Edward made the product. And the interesting part here is like, once you have this up and running, obviously it starts with the product.

They didn't market anything until they had a great product. But now, because there's all these innovations that Edward's gonna do, he invents like four or five different innovations because he never leaves the factory, he's obsessed with trial and error. But the way these things way these two talents work together is that they know that the inventive mind

of his younger brother, he's going to churn out new products. And what would be devastating is you have this gifted mind, he's churning out new products, and yet no one hears about it. So when Edward came forward with a new product, you had this publicity machine that was kept very well oiled by his brother, ready to run with it and make sure everybody knew of this product's existence. This is a necessity.

This is not optional, as David Ogrevy said, you can't save souls in an empty church. It didn't matter if Edward was a genius inventor, if no one knew those products existed. So then huge parts of both books go into how did the brothers manage their business and so it says the spirit of the house, the house Michelin, okay, tenacity, creativity, secrecy and design and over again in both books. The fact that they're focused, they're super secretive, they're obsessed with technology, they're obsessed with cost control and efficiency. And so this factory in this remote part of France that I can't even pronounce, they describe it as the Rome of the Michelin Empire. There the obsession remains, the tire, nothing but the tire. And not just any tire, they had a mantra that they repeat over and over again, the best at the best price. That was their goal. For nearly a century, Europe's most

secretive company had set its rhythm, calibrated its clock and adjusted its ambitions according to this passion that borders on mysticism. What are they talking? This burnt way they talk about this burning, uncompromising, exclusive obsession. They are talking about the tire. And it seems almost paradoxical that probably the best firm at public relations advertising and promotion was also the most secretive. They said Europe's most secretive company. There's all kinds of rumors and innuendo about how secretive they were. All their secrecy revolved around protecting the IP, protecting the inventions, and a

few of the ideas away, they organized the company, actually enhances their secrecy. So it says, Michelin's ran a tight ship. It helped in keeping secrets that the firm made no appeal to outside sources of financing. Operations and expansion were financed out of profits. Managerial jobs stayed within the family. One student of the family compared the Michelin dynasty to that of the Rothschilds. This is what they said, the same allegiance of each member to the tribe, the same allegiance of all to one. Discretion extended to factory operations.

Prosperity depended on being first with improvements such as a better resistance, sure adherence to the road and easier handling. The perfect tire came from the research department from patient trial and error and of course secrecy would help. In this company every scrap of paper was considered to be a secret. So then you have this relentless innovator, you have this person obsessed with secrecy, but Edward would also not tolerate wasting time or money. He would tell his employees, you have not considered the financial consequences. What was their, what's their organizing principle in the factory? Best hire, best price. You can't do that if you

don't watch your costs. You have not considered the financial consequences. I will not tolerate neglect on this point since our goal is to produce the best tire at the best possible price. He would not, he had a like a visceral disgust to waste. This is what he would tell his employees. Little streams make big rivers. This is not just watching every little cost. It's watching every little wasted movement inside of the company, right? So he says, little streams make big rivers, which means that a single minute lost under each hour adds up to eight in a day, that is 2400 minutes in a year, or 40 hours per worker. If the factory employs 20,000 workers, and each loses that minute per hour, that is 800,000 hours in a year, the

equivalent of 333 years of work. And so what Edward did was he would search the world for great ideas. He didn't care where they came from. And then he would implement those ideas into the business. So he sees the form of scientific management, essentially what's happening in factories in America on a large scale, measuring and then breaking down tasks into their simplest elements, spreading them across a continuous chain, thereby making it possible for workers to produce more with less effort. He's essentially describing the Ford Motor Company's conveyor belt system that is obviously

a better system. So he takes that idea and he applies it instead of manufacturing cars, he takes it and applies it to manufacturing tires. Now he watches every penny, but he invests heavily in technology. If you listened to the episode last week, the Michael Ferrerra episode, secretive, obsessed with technology, doing something for a very long time, no outside financing, it's the same ideas over and over again. Are you seeing this? And again, obsessed with watching costs, but investing heavily in technology because technology leads to growth and efficiency. The company never hesitates to spend fortunes on industrial

robots or ultra sophisticated measurement equipment. Remember, Michael Ferraro talked about almost like in a lustful way about his robots and about how beautiful they are that he thought they had a soul. It's the same thing here. And so we're going to invest in technology, but we're not going to tolerate waste. Edward returned to one of his favorite subjects economy saving both time and money was one of his principal concerns. He had a penny pinching side, a pathological pension for efficiency. And he rooted out anything that would slow him down. This is a maxim that he would repeat over and over again. And then in a great line line by the way, slowness is the special defect of large companies and a cause of their ruin.

And so the fact that he was obsessed on making the best product, the fact that he would watch his costs, the fact that he invests in technology, the fact that he was obsessed with the long term, his singular focus fed all of this. People would come in like, hey, we have this other idea for a product and he would flip out. He wanted to hear nothing about creating a different product, the tire, just the tire, he would say, let us not get distracted. sirens are seductive, but dangerous, he would say, we have too much to

do with our tire to embark on anything else. Besides, this industry is thrilling, it will revolutionize the world, I cannot resign myself to seeing it grow without contributing to it. And we're believed in the power of specialization and focus. Now keep in mind, the other competitors, there's a bunch of other rubber companies that are making tires, but they would dabble, they would also dabble in other products, they'd make hoses, they make shoes, they'd make balls, not the Michelins. They bet the future on one thing,

tires. The brothers instilled a culture of everything for the tire and tires for everything. Everything for the tire and tires for everything. Think how crazy this is, right? They start in 1891. They both die about 40 years later. What's the chance of the... They picked right. What is the chance? Think about this like think about what the car was like in 1895 or 1900 when the Michelin

guide came out. The cars from that point, you know, even 10, 20, 30, 40 years in the future, certainly now they're going to change in every single imaginable way as the years go by. Who the hell would have predicted that the single constant would be the rubber tires the Michelin brothers picked right? They could invest if you think about it. What did Jeff Bezos say? Like you should invest in things that won't change in the beginning of Amazon.

He's like, you know, what's true today that's going to be true 10 years from now. And if you can identify those things, you can, you can invest heavily in them and reap rewards over a longer time. His old I was like 10 years from now people are going to want, they're not going to wake You can identify those things, you can invest heavily in them and reap rewards over a longer time. His old I was like, 10 years from now people are going to want, they're not going to wake up and say, hey, I don't want my package faster. I don't want more selection and I don't want lower prices. So let's just invest in those things and then we're going to reap dividends for decades.

That is the key that we see over and over again in these stories. Stay in the game. Do not interrupt the compounding. And so Edward would say this, like this is what he's talking to his people in the factory. Do not interrupt the compounding. And so Edward would say this is what he's talking to his people in the factory. Do not rest on your laurels. We have customers who came to us at the beginning of our activity 20 years ago, who have never bought tires from anyone else but us because they are good tires. That's the same thing that Ferrero said that I made the best possible sweets and comforts

and chocolates that I made the best possible sweets and comforts and chocolates that I could. And now that kid who used to eat my chocolate 60 years ago has grown up as a grandmother or grandfather and their grandkids are now eating the chocolate. We have people who bought tires for us 20 years ago. They are still buying tires for us because they are good tires. To make good tires, You must make constant improvements got to be last year's Michelin tire. And finally, it helps if you love what you do. Edward stayed in the factory. He says it was an

exceptional event. If he made a departure from his sacred habits, he rarely left his workshop. And after his older brother Andre dies unexpectedly from bronchitis when he's in his 70s, Edward tells his doctor, you got to keep me alive for another two or three years. The factory needs me. The Michelin brothers loved their business and they believed in their mission. You cannot ask for more. And I'll leave you a reminder with the main idea to create the conditions for your product's success. The Michelin brothers embedded their product inside human movement itself.

They were engineers of movement, their genius insight, make the world move and make sure it wears out your product when it does. And that is where I'll leave it for the full story recommend reading the book. One of the books is only available in French. So I'll just link to the English version of the book The Michelin Man Driving an Empire. And if you buy the book using a link that's down below, you'll be supporting the podcast at the same time. Also do me a favor, make sure that you're on my personal email list, you can sign up by going to davidsenra.com. The link will

also be down below. I email my top 10 highlights for every single book that I read. If you go to the website, you can also read my top 10 highlights. I think I have top 10 highlights for like 177 books up there as well. That is 393 books down one dozen ago, and I'll talk to you again soon.