Founders - #97 Enzo Ferrari (Ferrari vs Ford)

Episode Date: November 10, 2019

What I learned from reading Go Like Hell: Ford, Ferrari, and Their Battle for Speed and Glory at Le Mans by A. J. Baime.----Come see a live show with me and Patrick O'Shaughnessy from Invest Like The Best on October 19th in New York City. Get your tickets here! ----Subscribe to listen to Founders Premium — Subscribers can listen to Ask Me Anything (AMA) episodes and every bonus episode. ---[0:01] Racing was the most magnificent marketing tool the industry had ever known.[2:42] Founders vs Managers [3:43] Founders Podcasts on Henry Ford: #9, #26, and #80. [4:29] The passion Enzo Ferrari had for his products [5:50] The same broad features keep recurring over and over again/ In their detailed appearance these broad features are never twice the same. [8:09] Steve Jobs on passion. [12:00] Steve Jobs on building the Macintosh/ Artisans have soul in the game. [13:05] Enzo Ferrari’s schedule at 58 years old / His early life [17:08] Ferrari’s 3 principles for winning [20:20] How Enzo Ferrari started his company / Racing as marketing / Ferrari’s personality and his philosophy on building a business[24:49] Enzo Ferrari’s extreme level of dedication [25:48] How Enzo Ferrari described his product [26:54] How and why the Ford/Ferrari negotiations begin[35:37] How Enzo Ferrari described the process of building a product[38:07] The advantage founder led companies have / I made a mistake here. I said Les Miles when I meant Ken Miles. Les Miles is a football coach. Ken Miles is a race car driver. [40:58] Creative Selection: Inside Apple's Design Process During the Golden Age of Steve Jobs by Ken Kocienda [42:06] Enzo Ferrari on why he doesn’t have a social life. [42:57] You don’t understand. When I go in there, if I don’t really and truly believe I am the best in the world, I had better not go in at all.[49:05] Enzo Ferrari played chess while everyone else was playing checkers.[52:20] It would be a waste of life to do nothing with one’s ability. ----“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — GarethBe like Gareth. Buy a book: All the books featured on Founders Podcast ----Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work.  Get access to Founders Notes here. ----“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — GarethBe like Gareth. Buy a book: All the books featured on Founders Podcast

In 1963, following a business deal gone sour, two industrialists from either side of the Atlantic Ocean became embroiled in a rivalry that was played out at the greatest automobile race in the world. In its broad strokes, this book chronicles a clash of two titans, Henry Ford II of America and Enzo Ferrari of Italy at the 24 Hours of Le Mans. The 24 Hours of Le Mans is a sports car race, but in the 1950s and 1960s it was more than that. It was the most magnificent marketing tool the sports car industry had ever known. Renowned manufacturers built street legal machines that would prove on the racetrack

that their cars were the best in the world. A win translated into millions in sales. It was a contest of technology and engineering, of ideas and audacity. Success could only be achieved by the marriage of brilliant design and steel-wheeled courage. It would require a greasy-fingered visionary to run the show, a team of the most skilled drivers in the world, and the swiftest racing sports car ever to hurdle down a road. All things of which the optimistic Americans believed could be purchased with the almighty dollar. Okay, so that's an excerpt from the book that I read this week and the one I'm going to talk to you about today, which is Go Like Hell, Ford, Ferrari, and Their Battle for Speed and Glory at Le Mans, and it was written by A.J. Boehm. So I've been wanting to read this book for several months, and I decided to wait because

there's a high-budget movie that's coming out next week starring Matt Damon and Christian Bale, among others, about the story that's in the book. The name of that movie is Ford vs. Ferrari. And so what I'm going to do today is I'm going to use this book as the start of a two-part series that I want to do on Enzo Ferrari. So the parts that I picked out of the book that I want to talk to you about today has to do with, like, what can we learn from the founder of Ferrari and his unique personality and the way he goes about things. And then next week, I'm going to go into what may be the longest book that I've ever read for the podcast. I have the hard cover. It's a biography of Enzo Ferrari. It's like 980 something pages. Maybe when I read all of Warren Buffett's shareholder letters, that was probably a little

longer. But I'm going to go into much more detail next week. But this book is a great way to introduce us to who Enzo Ferrari was and to how he thought about building his business. So where I want to start is, we're going to see, so like I said before, I'm going to focus mainly on Enzo Ferrari. But if you happen to read this book, you're going to realize that there's a, it's interesting because it's really comparing and contrasting the difference between a founder and a manager. So you have Henry Ford II, which is the grandson of Henry Ford, who is now taking over a company 60 something years after its founding. And he's going up against Enzo Ferrari, who has complete control over his small company. So I just want to read this section that really highlights what's going

on. Unlike the men who founded American car companies early in the century, Henry Ford, Ransom Olds, the Dodge brothers, the auto men of the day didn't have to know how to design an engine. So they're talking about the people running the companies in the 1960s. They did have to be good at math. And here's a quote from Ford's vice president at the time. He says, this is a nickel and dime business all the way through. A dime on a million units is $100,000. We'd practically cut your throat around here for a quarter. Companies were no longer run by the men whose names were on the cars. Okay, so as of today, I've done three podcasts on Henry Ford. I'll do at least another one in the future.

If you haven't gone back and listened to them, it's Founders No. 9, No. 26, and No. 80. This time period is fascinating to me. And I'm eventually going to do podcasts on Ransom Olds and then the Dodge Brothers. I talked a little bit about the Dodge Brothers on a few of the Henry Ford podcasts because they're crazy, interesting people. So I want to compare now the way that Ford, the Ford organization is talking about their products, right? So they're saying, you know, it's a nickel and dime business. And we're going to compare and contrast that to the passion that Enzo Ferrari has for the products that he's making. And it is completely different. And here's an example of that. For Enzo Ferrari, the internal combustion engine was a symbol of life.

It had revolutionized society. He had watched it all happen during his lifetime. He spoke of automobiles as if they were alive. Cars possess unique behaviors. They breathe through their carburetors. They were skinned with metal. Ferrari's aim, he once told a reporter addressing himself in the third person, is to perfect an ideal, to transform inert raw material

into a living machine. The engine of a car was both heart and soul. It's rumble, the heartbeat of the creature. So when I read that section one Enzo Ferrari's passion is infectious he comes across in the book way more even though he's kind of Machiavellian in nature like I was way more drawn to him and wanting to learn from him then the way Henry Ford the second comes across in the book but what I'm realizing by reading all these books is that we know that interest compounds, money can compound, time can compound, but knowledge also compounds. And so the more you expose yourself to all these ideas that all these entrepreneurs of the past have used in their life,

you realize that there's broad strokes that are the same, and yet their applications can be infinitely different. So I saw this excerpt the other day, and yet their applications can be infinitely different. So I saw this excerpt the other day, and I want to read to you. It has to do with how nature designs things. And it says, nature is never modular. Nature is full of almost similar units, waves, raindrops, blades of grass, etc. But though the units of one kind are all alike in their broad structure, no two are ever alike in detail. So the author lists two ideas here. He says, number one, the same broad features keep recurring over and over again.

So he's talking about nature. I would say that statement is exactly true if you study all these biographies. The same broad features keep recurring over and over again. Number two, in their detailed appearance, these broad features are never twice the same. So those two statements could seem like they're conflict, but the application of those ideas, these broad reoccurring themes, lead us to millions and millions of essentially unlimited different variations of how these ideas can be applied in the real world. So let me give you an example of that, what the author is saying here. On one hand, all oak trees have the same overall shape the same

thicket twisted trunk the same crinkled bark the same shape leaves the same proportion of limbs to branches to twigs on the other hand no two trees are quite the same the exact combination of height and width and curvature never repeats itself we cannot even find two leaves which are exactly the same. Same thing goes for businesses. So why do I bring that up now? Because what immediately jumps to my mind when I'm sitting here listening and reading about Enzo Ferrari, so I've finished reading this book, I've already started reading his biography, it keeps reoccurring. He has a passion for cars and for creating a product that is more akin to like a craftsman than like like a ceo of a large company and i think there's like a that passion is is infectious

and it's also like good marketing when i hear a founder speak about their product in a way that enzo speaks about his cars even though i have no interest in his cars, like you're, you're more likely to, to be attracted to buy that product. And what it reminds me of is this, uh, this quote, I'm going to play into the microphone right now from Steve jobs that happened a few years before he died. And he talks about why having passion for what you're doing with the product you're making, the company you're creating, how you're spending your waking hours is so important. So I'm just going to play that to you real quick. It's about 55 seconds. You have to have a lot of passion for what you're doing. And it's totally true. And the reason is, is because it's so hard that if you don't, any rational person would give up.

It's really hard. And you have to do it over a sustained period of time. So if you don't love it, if you're not having fun doing it, you don't really love it, you're gonna give up. And that's what happens to most people actually. If you really look at the ones that ended up, you know, being successful, unquote, in the eyes of society and the ones that didn't, oftentimes it's the ones that are successful loved what they did so they could persevere when it got really tough and the ones that didn't love it quit because they're sane right who would want to put up with this stuff if you don't love it so it's a lot of hard work and and it's a lot of worrying constantly and if you don't love it you're gonna fail so the. So you've got to love it. You've got to have passion. People say –

So the reason that this is how this relates is because when he's building his company, he's going to have to go – Enzo, that is. He has to go through problem after problem after problem. It's not like a straight line up. And I think what caused him to never quit is the fact that, like, he – there was no separation in his life between what he was doing at Ferrari and living and so I'll get into that now so let me go ahead back jump into the book so I need to talk I think the passion of Enzo has something to do with the city that he lived in and the one that he would rarely want to leave and let me just give you a description of the city in Italy it's called Modena I might be pronouncing that incorrectly. But it says, now speaking about the city, its true fame, however, was its craftsmen.

Absurdly gifted artisans abound so that you can have almost anything made, made surprisingly well, and so cheaply that you must never get used to that miracle. As in all Italian cities and towns, the Modenese held beauty and great esteem. In this city, an old world aesthetic was joined by modernity's defining ambition, to harness power.

It is my opinion, Ferrari once wrote, that there are innate gifts that are particular to a certain region, and that transferred into industry, these propensities may at times acquire an exceptional importance. In Modena, where I was born and set up my own works, now listen to the sentence he's going to say here, right? In Modena, where I was born and set up my own works, there is a species of psychosis for racing cars. Ferrari was a metal worker's son. His name came from the Italian word ferro, meaning iron. He would describe himself as neither a designer nor an engineer, but rather an agitator of

men. Okay, so let's stop right here and think about what has already happened, right? We have Ford vice president, we have it being run by the grandson, saying, you know, nickel and dime, we're going to cut costs, we're going to keep it as low as possible, we're going to produce. I mean, that's essentially the Henry Ford wanted to, you know, his quote is that I'm building an auto, a motor car for the multitudes, right? So he's going to create like the most basic car possible to spread it out to most people. Ferrari's doing essentially the same thing. Ford's making cars for ice making cars they take two vastly different approaches though and even the way they you could see it not only in like obviously their philosophy is going to be

played out the products you make right but also the way they talk about those products you know he's talking about basically having a love affair with this living creature that is the car versus oh we're just going to cut costs and you know know, make the cheapest piece of crap that, that, um, that, um, that we can possibly produce. And what it reminded me of, uh, is when I, I was, uh, I took notes on this when Steve Jobs was 29 years old. He gave this long interview because they're releasing the Macintosh. Let me read another quote from him. He says, we didn't build the Mac for anybody else.

We built it for ourselves. We were the group of people who are going to judge whether it was great or not. We weren't going to go out and do market research, right? These car companies in the 1960s, American car companies are famous for doing that. We just wanted to build the best thing we could build. When you're a carpenter making a beautiful chest of drawers, you're not going to use a piece of plywood on the back, even though it faces the wall and nobody would ever see it

You will know it's there So you're going to use a beautiful piece of wood on the back for you to sleep well at night the aesthetic the quality Has to be carried all the way through so why am I going on and on about this because when you hear two people talking Which we think about it from a customer's perspective? Which you more likely to want to give your money to the person that that gives a shit about what they're doing that's clearly all in that's extremely passionate about it or the person saying hey we're just trying to make another black model t and hopefully we can do it at 10 10 cents cheaper next year than we did this year

it's just not comparable all right so let's go back into okay so now we're going to start to see um ferrari's schedule he's 58 years old at this so now we're going to start to see Ferrari's schedule. He's 58 years old at this time, and I'm going to tell you a little bit about his early life, but I'm going to talk more about that next week. All right, Ferrari, he worked seven days a week, 12 to 16 hours a day, holidays included. At night, he returned to Modena. That's the city he lives in. He travels a few short miles away to where the ferrari factory is uh he felt extremely

emotionally attached to his city except for his daily drives to marinello he refused to leave modena for almost any reason he's extremely just had one focus in life uh now the difference between let's let's compare and contrast uh ferrari's business model with ford ford makes you know thousands of cars every few days. What does Ferrari do? Ferrari produces just a few cars each week. So who's going to pay for the ability to do that? Paying for it all was a rarefied group of clients who commissioned their cars as if they were pieces of art and paid Enzo Ferrari extraordinary amounts for them. So not only is Ferrari producing a very extreme product,

but he also has, he's a very extreme person. And I'll talk more about that, but here's an example. Like he was just really hard to figure out. He says, Ferrari was a riddle, a man who built racing cars, but refused to attend races. He used to be a race car driver. Actually, that's how he got started. But I'll talk about, I don't think I talk about that more in this book, but I definitely will next week. So he was a man who built racing cars, but refused to attend races. He worked tirelessly to perfect state-of-the-art machines, but he feared elevators. He also refused to ever fly in a plane too. Let me talk to you about his early life here. He says, Ferrari could remember the day he was seduced by automobiles.

He was 11 years old. The year was 1909. One day he rose from bed and set out across the rail tracks adjacent to his home. He hiked the two miles alone. In the countryside, the Modena Automobile Association had organized a race. It was a group of drivers who were going to attempt to break the mile speed record. Donkeys far outnumbered automobiles on Modena's streets in 1909. Motor cars were objects of curiosity, and a chance to see how fast they could go lured a bustling crowd. Enzo took in the scene. So at a very young age, he falls in love with cars. A few years later, he's like, I know what I want to do. I want to be a race car driver unfortunately world war one derailed ferrari's ambitions the war ravaged italy destroying its economy and infrastructure yet here's the the positive out of that negative and yet the war accelerated the innovation of automobiles and airplanes the war left ferrari

penniless his father and brother dead he was relatively uneducated having sat through four years of elementary school and three years of trade school, which he failed out of, by the way. But he possessed a valuable talent, a knack for fixing things. At age 23, he joined Alfa Romeo as a test driver, mechanic, and competitor. In 1929, Ferrari founded the Scuderia Ferrari, a private team that served as Alfa Romeo's racing arm. Remember, at the beginning of the book, it talks about that these races were the greatest marketing tool that the industry ever saw. This is also not new. We saw this back in the early 1900s.

Henry Ford got a lot of publicity, even though he didn't like racing. He entered Ford cars into racing. I think he even raced one and won himself um because he understood the the the value of that attention we also saw it back in founders number 28 when i covered the wright brothers um you know they people from all over the world there'd be tens of thousands of people joining they actually had a demonstration on le mans too i think it was wilbur wright it might have been orville but um you know all these people come and they see them these flying machines and of course a certain percentage of those people at these races and these events are going to want to buy, you know, what's being demonstrated.

Let's see. It said, so he's found a racing team. He won his last race in 1931. He's actually pretty good at it. Ferrari declared that he would never race again. He had a son and he devoted himself to creating a legacy that would live beyond him. So now I want to tell you about Ferrari's three principles for winning. What I would say about him is that I think he was a master at understanding human nature more than almost anything else.

And so we're going to see that here. So he talks about all the stuff he learned, you know, racing and then now starting to build cars. He says, during these years, the agitator of men, as he was nicknamed, studied the psychology of winning. Certain principles were self-evident, and this is a three he came up with. Number one, competition is the impetus for innovation. The fiercer the competition, the faster the cars will go. This also played on how he has a rather, I would say, controversial management style. And one, I don't know if I'd emulate, but I'm going to tell you about it. He believed that competition brought the best out in people.

And so what he would do is he would have multiple people in the company assigned to the same role, and he'd put people in the company, even though they're working for the same goal, against each other because he wanted to make them compete because he thought the results of that competition would be better. He would also engage in almost psychological warfare. So I don of that competition would be better he would also have like engaged in like almost psychological warfare so i don't think it would be very easy to work for him uh number two there is in some men a need to achieve greatness this also applies to people too generally but he says uh when matched with talent this necessity can turn humans into demigods and number three a man who is willing to die at the wheel is always likely to beat a man in a faster car if he can survive until the end of the race. So there's also something I

need to tell you about that I didn't know before I read the book. In the 50s, 60s, this specific part of racing, which is called Formula One, everybody dies, essentially. He's got like, he'll recruit, Ferrari will recruit, let's say, seven, nine drivers. Two will wind up quitting for other reasons. The other seven within a few years will all be dead. Every time in the book, you introduce a new character. Like, oh, why am I, who's this new character?

Two paragraphs later, they're dead. I went and looked up because I was like, how is this even possible? There are a few people every year during the time period right in the book a few drivers they call them pilots though a few pilots would die um eventually by the time you get to like the the 80s they've they drastically made the safe sporter to now uh the sport saver sorry. I looked it up. When you have Senna, which is one of the most famous last Formula One drivers to die, he died in 94.

Since then, since 1994, I think there was about five drivers that died. There'd be five drivers that died in a year in the 50s and 60s. Not only would they die, but their cars would be, they'd lose control of them, and they'd go into the stands. And one time they killed like 70, I want to say 70 people watching the race. It's just, this is a really insane, insane time period, insane story. But it attracts very extreme personalities to the point where Ferrari is saying, you know, if you want to win, you have to be willing to die at the wheel.

That, I don't want to die. Not in that way. But this entire book is introducing us. Some of my notes I love is like everybody in this book is hardcore. They're very, very extreme. Okay, so now I want to talk to you a little bit about how Ferrari the company started, racing as marketing, and then we're going to get into more of his personality and the philosophy he has to running businesses. started racing is marketing and then his we're gonna get into more of his personal personality

and the philosophy has to running businesses so one of the drivers the former race car drivers that survived for Ferrari's this guy named chinetti and he gives us this idea to Ferrari about building cars for the masses like not for the masses but not just for racing so says chinetti was an American citizen now and he described what he found in the new world. So he used to be living in Italy, lives in America, and I was coming back to Italy to tell Enzo all this stuff. Roads were filled with big Detroit cars, but the sports car did not exist. There was no such thing. Cianetti had an idea. Ferrari should build cars and sell them in America. It took Ferrari nearly two years to build the first car. In post war Europe, electricity was a luxury. Fuel and manpower were in short supply. So that's part of

why I wanted to play that quote, that audio from Steve Jobs talking about like, if you're not passionate, if Enzo did not, he ran into so many like barriers and obstructions and problems that if he wasn't completely committed and completely passionate he would have given up and as a result we wouldn't have you know the creations that he that he that he made um fuel and manpower were in short supply all we wanted to do was build a conventional engine he later recalled right so he's saying but here's the caveat he puts on there so we want to build a conventional engine only one that would be outstanding so it's a completely high uh set of standards he has for himself and the products he's making he says the first post-war Le Mans

was won by chinetti in a Ferrari the wind now what happens? The wind triggered an instant demand for Ferrari's cars across the continent. Now, he also is—this book doesn't talk about it, but his biography does. People that knew him well considered him a master at marketing. The author states that he invented a lot of marketing that was now used in the past. I don't know if that's true. I've read, what, two books david olgravy by now um i think a lot of the principles that ferrari figured out olgravy also figured out at a similar time but he was definitely very gifted at it um so what he would do it let me give an example of that is like even when there was many times this company

suffering like poor financial results and so they'd have like an abundance of inventory right and but they would hide the inventory because people would travel all over the world to the factory to meet enzo to see the car like it was like an experience right it's not just going to like a car dealership which is kind of like a headache now and people like like enzo i love you know people travel from like america for example like i want to buy a car i want to buy a car and he's like yes okay but you're gonna have to wait several. And he did that because he wanted Ferraris to be desired. And if somebody traveled and he said, okay, here's pick out one of the

six I haven't sold yet. They're not desiring it. He wanted to, and he knew by human nature, the more you wait for something, the harder it is to get, the more you pay for it, the more value you're going to get out of it. It's very interesting. So it says Ferrari funneled every lira or dollar into the racing campaign. Money was tight and the business model demanded that races be won. Why would a wealthy sportsman buy a Ferrari if a Jaguar had proved the finer machine on the track? Nothing like a Ferrari had ever graced American roads. They were cars built by Italian artisans, every detail down to the steering wheel, handcrafted using some of the same method used to make Roman suits of armor

and the royal carriages of the ancient kingdoms. Years later, Ferrari was asked, which of his cars was his favorite? He answered, the car which I have not yet created And which of his victories meant the most? The ones which I have not yet achieved So again, he's taking a completely different approach At this time, Ford's factories He's got giant factories all over the world Highly automated They'll churn out more Fords in 48 hours

Than Ferrari would make all year Enzo's not taking that He's not interested in that. They're hand-built. They're made by artisans. They take an extreme amount of time and they sell, you know, at 20 or 30 times the price of like a base level Ford. And I think one of the important things to realize about that is if you're taking that route, like you're making a handmade product essentially, you're not going to describe that product in boring terms because you're intimately associated with every detail of it and so here's an example of Ferrari's

level of dedication and that's like the main point of this podcast is like even if you're not extremely passionate about the product you're making maybe you're passionate about the problem you're solving or the company you're building but it's the way to describe it to the outside world that I think is really essential like I find there's a lot of parts of Ferrari's personality that I don't find attractive. But one thing I'm extremely attracted to is the way he would describe and talk about why he's doing what he's doing. So check this out. When asked about the root of his mania, think about the word too, mania, that's crazy. When asked about the root of his mania his obsession with victory ferrari told one reporter everything that i've done i did because i couldn't do anything less one day i

want to build a car that's faster than all of them and then i want to die and there's so many great quotes about him talking like this in the book i I freaking love it. Here's another one. This kind of love, which I can describe in almost a sensual or sexual way within my subconscious, is probably the main reason why, for so many years, I no longer went to see my cars race. To think about them,

to see them born, and to see them die, because in a race they are always dying, even if they win, it is unbearable okay so he we're now at the part in the story where he's winning races but he spends all of his the money so basically he was attracted to racing first then he realized oh i'm going to build cars as a way to fund my race team right he becomes extremely passionate about the cars he's building because he's also racing

them at the same time um now this is and this is important because it's going to set up the entire like why this book is written i haven't even got to like what where's the ford versus ferrari and all this uh but to understand why ford henry ford ii has like this vendetta of enzo we have to understand what's happening with Enzo's company first. So it says, Ferrari's company was struggling. He spent all of his profits on racing, and he was badly in need of money. He was being vilified at every turn. So what's happening is, what I was telling you, all his drivers are dying.

And it's not just Ferrari. They all die. This is an insane time in human history that they're engaging this. He says in the newspapers, he used to be called the magician of Maranello. That's the city that his cars are made in. And now he's being called the monster of Maranello. One contact driver's wife called him an assassin. So another nickname he picked up for his whole life is an assassin because so many of his drivers die many of his drivers die and his thoughts he's like had he not brought an italy another world championship

had he not raised the reputation of italian automobile into the stratosphere so he's looking i mean this is this is a kind of a hardcore person he's like well you know these deaths are unfortunate but they're they're necessary and let's not focus on the individual deaths let's focus on like what it says about there he's extremely nationalistic right um and and a lot of these race war like at the time they're like no these italians won oh the germans won like it was very almost like a miniature like a war is playing out on the race field right or the racetrack so he said the old man was livid and so he came up with a plan and this is what i mean by he's very like machiavellian he's a great strategist he's just uh and to serve his goal I don't know if you want to be like this with

individual like personal relationships you're probably not a good way to like he almost essentially uses people to to get what he wanted um so I don't again like I think if I don't I don't think it's like that's something you want to do with people that you could probably be successful by not doing that but that's definitely something that we see over and over again like there are people that you know they're so they're so focused on their goal that they're willing to do you know things that other people may not appreciate and Ferrari is definitely like we can't hide the negative parts of who he was like it's very apparent when you study him so anyways uh he comes up with this idea right and he he's like i'm gonna sell my cut my i'm gonna so he's getting i need to explain this to you a little bit better he's

getting vilified by some people right but he's also saying hey i'm doing this for the pride of italy for you know he's he loves his country he loves the city he loves the region he's at him he says okay you want to vilify me i'm going to sell the best italian car company to the Americans. So I'm going to go here and I'm going to negotiate with Ford. And let me give you the difference between Ford and Ferrari's time. Henry Ford II, at the same time, he's doing negotiations with Ferrari. Ferrari's like, I'll let you buy my company for $18 million, right? At the same time, the Ford organization is investing 800 million dollars to open a new um a new factory in europe so that gives you kind of the difference of scale between the two businesses ford has tens of thousands i think they have like they might have like 300,000

employees something something crazy like that ferrari has like 200 so this is how and why the ford forari negotiations began. If the market abroad was the future and racing victories translated into sales, the Ferrari factory could be a brilliant strategic acquisition. Iacocca got the go-ahead to explore. So you might know this name, Lee Iacocca. I read it, you know, it's funny how life works, but I read his biography like 18 years ago. Because at the time I was reading, like, instead of reading books on founders, I was reading books on like CEOs and stuff. So I read his book, like Jamie Dimon's book, et cetera, et cetera.

Well, at this point in history, Leo Cocos, he's like a, he's a high paid executive in Ford. He hasn't yet had a falling out with Henry Ford II, which he will, which causes him to leave and go to Chrysler. And then he does maybe one of the greatest company turnarounds ever. So if you're interested in that, you can study his story. But he's the one saying, hey, we're going to try to go and buy Ferrari. And so now he sends over this other executive. His name's not important, but he's going to meet with Enzo Ferrari. He says, yes, Ferrari said. He was interested in striking a deal. He chose Ford because he was a great admirer of Henry I. That's actually true, but he does not like Henry II. He doesn't like

Americans in general. He would sell his factory to the Americans as long as he could retain control of the racing team. He had no interest in the customer cars running that division mean I never felt myself to be an industrialist but a constructor Ferrari told the Ford man the production development of my firm is only of interest to me if I can if it is conducted by others but be quite clear then in the construction and management the racing cars I want absolute autonomy so he's setting up this deal but he has a bunch of requests right and I and in hindsight I think he's setting up the request so he could he could this is a ruse I need to tell you that right up front like he's never going to sell it to Ford

he's just wasting their time uh the asking price was 18 million I already told you that um it says as negotiations moved uh moved about uh the executive reported back to Henry Ford II. Never did it occur to the Ford men that the whole deal could be, in fact, an elaborate machination, a ruse, that Enzo Ferrari may have had another agenda completely. By this time, news of the deal was public knowledge, making it headlines all over the world. It would be the most unusual merger in automotive history. The Italian press was up in arms. It was as if most unusual merger in automotive history. The Italian press was up in

arms. It was as if they were losing a national treasure, the Ferrari automobile, to these arrogant Westerners. This pleased Ferrari. It seemed that he was not the monster of Maranello after all, but a monument to Italy. See what he was trying to do here? No Italian would ever, ever underestimate his value again. So he's reading the document, the Ford prepares this document. Okay. Here's our official offer. He says, as Ferrari read the document, the Ford men saw him underlining certain passages in violent, uh, in red ink. In the margin, he drew a large exclamation point. It was clear he was angry, but here Ferrari said, holding the document, it drew a large exclamation point. It was clear he was angry. But here, Ferrari said, holding the document, it is written that if I want to spend more money for racing, I have to request authorization to do so from America.

It is also written that way in the English. Is it also written that way in the official English text? Because he's reading in Italian. Where is the freedom that I demanded right from the start to make programs, select men, and decide on money? But they're like, but Mr. Ferrari, you're selling your firm to us, and you pretend still to dispose of it at your pleasure. Ferrari's face contorted, something uncoiled inside of him. My rights, my integrity, my very being as a manufacturer, as an entrepreneur, cannot work under this enormous machine, the suffocating bureaucracy of the Ford Motor Company, he shouted. Okay, so this, why am I telling you this? Why is this important? One, it gives you an insight into Ferrari's personality.

He did this whole thing because it hurt him that he was being vilified by his own people, and it's actually really smart. Like, oh, now Ferrari is going to be American? No, no, it's our national treasure. And the second thing is when Henry Ford II hears about this, he dedicates essentially unlimited resources to beating Ferrari because Ferrari is having a lot of financial success because they were winning a bunch of races.

Specifically, they were winning Le Mans, I think think like four or five years in a row. I forgot how many years in a row, but a lot. And so now Henry Ford's going to say, okay, well, he's going to spend $18 million to buy Ferrari's company. Now he spends like $40 million in a year just developing race cars. So that's why at the beginning of the book they're like, well, the Americans thought they could win with all my dollar. Turns out they were correct. Now, something that covers in the book that I'm not going to talk at all about because I want to focus on Enzo Ferrari, the person, is Ford approaches the way a big company does,

and they don't have any success for like two years. And then they have to hire this entrepreneur, Carroll Shelby, who builds, you may have heard, Shelby Cars. I actually, he's so fascinating in this book, and he's such like a misfit and a troublemaker and like a smartass that I'm immediately like attracted to learn more about him. So I ordered a book. He's eventually going to be a future Founders episode,

but I'm not going to cover him at all. He's actually, Matt Damon is going to play Carroll Shelby in that new movie, and I'm going to go watch the movie next week before I record the second part of this series to see if maybe there's anything in there that I can bring back to you guys that new movie. And I'm going to go watch the movie next week before I record the second part of this series to see if maybe there's anything in there that I can bring back to you guys that's useful. But so I'm just going to give you the basic plot of the book. We obviously know how it turns out.

Ford's not successful. Eventually, he gets the right people in place. Shelby being integral to one of the people very important to that success. And eventually, you're going to dethrone Ferrari. And Ferrari's going to sell his company to Fiat. So that's the basic premise of the people very important to that success and eventually you're going to dethrone ferrari and ferrari's going to sell his company to fiat so that's the basic premise of the book but i still want to focus on what what like what we learned from enzo from the book so this is enzo describing the process of building a product and this goes back to like what i feel is his main

attribute and one that i want to emulate is the fact that anything you're working on like bring passion to it passion is universal it doesn't matter what culture you're from what country you're from it's universally attractive to to other humans and i think like you're going to be better off all of us will be better off if we're working on something we're extremely passionate about because you can't hide passion and it's it's understandable even if you don't you know you know what's so funny about passion like you can hear from the the the way the annotation of a voice or gestures or body language you can see it even if you don't know what they're saying all right um all right so it says he once described the process of building such a car now this is ferrari in the first act of his labor the maker

conceives what his creature is to be think about that he calls himself a maker and he talks about what he's making a creature like a living thing goes to that. He dreams of it and he sees it in detail and he lays down the plan of work which he entrusts to a band of helpers who share his passion. A racing car, in fact, does not necessarily come into being as the creation of a superior mind, but is always the compendium of the common unflagging and enthralling work of a team fired by a common enthusiasm. There follows its construction, which must nearly always be done in record time, although it never takes less than six to eight months of feverish work. The next stage is the assembly of the car and its testing,

which is the most delicate, the most engrossing, and the most dramatic phrase. So halfway through that paragraph, you forget that he's talking about a car. He has to bring it back around in the last sentence or two, that he's actually talking about a car. And what's also interesting to me, the more I learn about him,

is that he only opens up about his creation, about the product that he's making, the company that he's making. So here's more about his personality. A confidant once described the old man's temperament as closed, like a walnut. Ferrari had created a Shakespearean world where intrigue was always brewing, and men sometimes paid for mistakes with their lives. He talks about he would hide, he would always wear glasses. He would, he essentially would not let people inside. He wanted to have, he wanted to collect information, not give information, right? So this is, he wrote his memoirs. This is a quote from his memoirs. He talks, he says, the facial expression, a smile or frown or whatever it might be,

is merely a form of defense and should be taken only as such. He's a very little sneaky little dude, man. Now, there is one thing in the book that has nothing to do, well, it has something to do with Ferrari, but it's not Ferrari specifically. So if you're going back to the movie, Christian Bale in the movie is going to play this guy named Les Miles. Les Miles, like Carroll Shelby, is like right-hand man. So let me give some background. Forbes is having a lot of, not having any success trying to beat Ferrari for several years.

They were running everything by committee. Even though all this is happening in Europe, all the decisions would have to be approved back at Ford's headquarters in Michigan. And it was just like it was terrible. It was a typical like big company way of doing things. what I'm going to route to read to you is Les Miles, which is the character Christian Bale plays about what changed and why the fact that Ford eventually handled, gives Shelby saying, hey, you're now in charge. You make all decisions. And Shelby's not in Detroit. He's in this, he has a tiny little company in Venice, California with a band of misfits. Les Miles is definitely one of these misfits. Carroll Shelby, if you hear him talk, he's definitely a misfit. So the reason I bring this up is because this is the advantage that founder-led companies have over larger, you know, a company that has a committee

structure. It's just not led by the person that created it anymore. And so Christian, what Christian, what Christian Bale is telling us, what Les Miles is telling us, right? He's telling us that he can finally do what, well, let me read it to you first, okay? So he says, we have several advantages over other people who have played with the car, meaning the car they're trying to be Ferrari with, Miles told a reporter. We can react to a suggestion. We can do something right now. We don't have to go through elaborate procedures of putting through formal design changes. If we decide we don't like something, we can take a hacksaw and cut it off

practically everything we do is a panic operation but if anyone can do it we can so what essentially les miles we're going to call christian bale is telling us is that they the people competing with ferrari can finally what can finally do what ferrari could be do could have could do the whole time like ferrari didn't, he was a dictator of his company. He didn't have to ask for permission. He made a decision and it happened right away as opposed to the Ford racing team. It's just like, oh, we got to get it cleared through three levels of management. There's got to be a meeting. Like they describe some of the meetings these people have. It's hilarious to me. So I went, oh, we can't make a decision. We got to get 25 people.

Okay. We'll meet two Thursdays from now at this hotel and we'll meet, there'll be 25 people meeting for six hours and then we'll make a decision. I was like, that's, that's absurd. And the reason I bring this up is because one, it's obviously an advantage that we see over and over and over again in these biographies. The founder led companies just don't have to deal with this. You know, you, it's very clear who is, who, is who who the final decision rests with it also reminds me of a scene that happened several times in that book i did a podcast on the book uh called the creative selection and it was one of the designers and one of the programmers working at apple when they were designing the um he worked on the keyboard

for the original iphone and then also the iPad. And he would describe how decisions were made in Apple when Steve Jobs was alive. And it's completely opposite of what one might expect. He'd have, your responsibility was to demo. Steve would want to see what you work, he'd want to touch it and see it working. And then in a few minutes, he'd make a decision. So like making a decision on the keyboard of, you know, the most important product ever made. It happened in like a then in a few minutes he'd make a decision. So like making a decision on the keyboard of the most important product ever made. It happened in like a matter of a few, I think maybe it was like two or three demos, I can't remember exactly how much, but you're talking about a few, handful of minutes, five minutes, ten minutes, maybe fifteen minutes, and that's it.

Because Steve knew exactly what he wanted, and when he saw it in real life, he said, okay, that's where I'm going, and that's it. There was no, oh, let me go talk to the board of directors, let me go talk to this person. It's done and so that this change that ford made is a reason why they were eventually they wind up beating ferrari you know after once they beat him once they beat him several years in a row and then um then honda and other you know other countries started coming in and winning but i think that's extremely important. All right, so more about Ferrari. This is Ferrari who was asked on if he has a social life.

No, none. Life passes soon enough. If you want to do one thing well, you have to work at it fast. A Ferrari may not be a masterpiece in exactly the same way that a great work of painting or sculpture is, but it represents the work of many

men bringing to life the ideas of ferrari again you know one we see two things there one he has complete dedication to this he doesn't really think about anything else and two he's again describing his product his products like he's like oh it may not be a masterpiece of like a painting or sculpture but he's putting that into your mind as he talks. Okay, now I think of a painting or a great sculpture, and now I think of Ferrari too. The way he describes his products is amazing. So I want to tell you about this random quote because it's been on my mind lately too. There's a quote.

It's a writer's interviewing a famous bullfighter, right? Bullfighters are very similar to race car pilots at the time. You know, you'd be seriously injured if you're not, like you have a dangerous occupation. And so he's interviewing this bullfighter and he says something to him. The writer says, you're the most completely egotistical bastard I've ever met. His response is what I want to tell you that I find interesting. He says, you don't understand. When I go in there, if I don't really and truly believe I'm the best in the world, I had better not go in at all.

So in a lot of the notes that I've been taking, I've been trying to find the parallels for entrepreneurs that you see in other domains, whether it's scientists, but especially like athletes, musicians, other artists, craftsmen like this. This is something that like, it's hard to talk about, but I think the people that feel they're the best in the world at what they're doing, like let's use the example I've used many times in this podcast so far.

I'm pretty sure Steve Jobs thought he was the best in the world at making devices, making computers. I'm positive that he thought he was the best in the world at it. I think there's something, like, it's not sure. If you talk to athletes about this, they're going to tell you that you don't become the best in the world and then think you're the best in the world.

That's not the order it happens. The order it happens is I think I can be the best in the world at it and I'm going to work really hard at it and then I'm going to.'s the reverse order that most people think most people think oh you had the success now You can you know strut a little bit or maybe talk about like, you know Like the fact that you worked really hard now. You're the best in the world. They're saying no. No You need to have that belief going in and I think Steve jobs had that belief. I think enzo ferr Ferrari definitely believed he was building the best cars in the world.

And my point here is even if there's no reason for you to believe that yet, it's probably beneficial for your belief in your potential to get there, whatever it is. And now in business business it's a lot different than a sport than like a a car race or a basketball game for example like because those are zero-sum events like there's one win there's one champion every year there's like and you know 50 or 100 losers or however many people in the racing in basketball it's you know 29 other losers whatever the case is business the reason i it's entrepreneurs should take this because like, there's no, it's all positive some. Like there's very, I mean, obviously some industries where there's one or two winners, whatever the case is, winner take all. But like the vast majority, like we can carve out these little tiny niches

where we can be the best. And like, you can have that belief and then you could find a customer base that also believes that. And if you have that belief and then you could find a customer base that also believes that and if you have that belief And then you have customers that also agree with your belief Then you have a successful business whatever size that may be so I don't know like the best way to describe this I just think that this is something I see over and over again and There's something there in our psyche that I think is beneficial if you can harness that and I've talked about this before I feel like, why are we at a, in the United States,

like we're at a 40-year low to new business creation, entrepreneurship's at a 40-year low. Like you have one thing, like before you can have a successful company, like you have to believe that you can have a successful company. I think most people think it's way too difficult. And something that if you listen to this podcast enough, you read between the lines is anybody can learn this.

It's not like you have to go to school and get a certificate or a license to be an entrepreneur. You got people like Enzo Ferrari. He failed out of everything. He's got like essentially an elementary school education and created one of the most valuable companies and valuable products ever. Like, and you don't have to be good at life.

You just need to be good at one specific thing and do it really, really well. Go back a couple of years ago, a couple of weeks ago, and think about Jim Clayton the other day. Jim Clayton had an amazing life, sold his business for almost $2 billion for Warren Buffett. What did he get really good at? He got really good at building a mobile home company. And guess what if you get really good at anything like that then you can have you'll build wealth beyond that you could

spend in a lifetime and you'll have a really interesting life but like there's no there's no school you could go to like hey teach me how to build the most valuable mobile home manufacturer in the world like but life can teach you that and like i don't know i think that's so um that's why i think entrepreneurship was one of the most interesting things in the world in general because i'm always constantly surprised all these unique ways people find uh products they make and ways to support their family and the fact that like it's wide open and available to everybody not everybody can be a doctor you got to go through a certain you know track to do so not everybody can be all a million different occupations but literally anybody could be an entrepreneur so um i don't know i i think um i think tied to the fact that anybody can do it

is people have to believe they have the ability to do it and i don't know how to solve that problem other than showing you example after example as an example of people that come from almost nothing think about jim clayton he you know didn't have a bathroom didn't have electricity they they they could take a bath there's four people in his family they could take a bath once a week using the same water like that person that guy had no um advantages in life and yet he was ultimately resourceful and built it up over time to to build you know, he built multiple, um, valuable business. Actually built a really profitable car dealership. He

built Clayton homes. He wound up building, building like a little banking empire. So, um, I don't know, man, I just, I'm sure there's somebody listening to this that, that doesn't think they could do it. And you can, if you really think about it and you, you won't give up and you find something you're passionate about you absolutely can okay um we're almost to the end of what i want to talk about in this book you know the general plot of the book and obviously um you know the book is it's a it's a really interesting and fun read but i i want to pull out uh just a few more things here to share with you so one thing is i realize is I realized is Ferrari is out here playing chess and everybody he's going against is playing checkers.

And we're going to get to the point I'm right before he's been beating, Ford has declared war on him for a few years, but is unsuccessful. But Ford is progressing every yearrari knows he's about to lose and so what ferrari does here is what i mean by he's out here playing chess when you're both playing checkers so he said both he enzo and henry the second lived and breathed their companies ferrari has no other satisfaction and has no other satisfaction his family his very life is that creature of his la ferrari that's one of his uh people this guy named his very life is that creature of his, LaFerrari. That's one of his people, this guy named Giano, who was one of his best engineers that worked for a long

time describing Ferrari. He said, Ferrari had an acute talent for using public opinion to his advantage. He was a master of manipulation and subterfuge. Remember, I was referencing this earlier. And in his new era of mass media, he would put his skills to work. He published an article in the Italian magazine accepting defeat before the race began, knowing that this bit of gossip would get picked up by the international newspapers. Now, this is what Ferrari wrote. We know that nothing is being done to resist the steamroller of the Americans. Remember, he's writing this in an Italian magazine.

That's important to understand. To resist the steamroller of the Americans, who will find the road open to success in sports car racing. We fought on the track with autos and at the table against the abuses of power and the regulations. Even while continually winning races, I understood that we were gradually losing them. We intensified our activity to the utmost, but we managed simply to slow down the approach of the steamroller. The battle was lost in advance. So what's happening here? It says, Ferrari was willingly casting himself as an underdog.

Ford was Goliath and he was David. If he lost, well, he had predicted defeat. Henry II had done nothing but buy Le Mans with his countless millions. And if Ferrari won, as he absolutely intended to, well, in a lifetime destined by tragedy and victory, perhaps he would achieve his greatest moments. So that's the year, 1966. Ferrari does indeed lose, but he doesn't come out of it

that much worse for wear. Ford winds up winning. Their business in Europe grows, even at a time in America that it's slowly declining at this point. But Ferrari sells 50% of his business to an Italian company, which he would never have sold it to anybody else. He sells it to Fiat. And then when he dies, that ownership goes up to 90%. The other 10% goes up to his one surviving son because he had one son that died and then he had another son from a mistress. And that son still, I think still to this day, owns 10% of Ferrari. But in the end, Ferrari gets what he wants.

He has the financial stability of a larger company, still able to make decisions in racing, and has a safe home for his passion, his creation. He still runs the company until he dies. All right, so that's the end of the story about Ford and Ferrari. I want to talk about one more thing before I wrap up this story. And this is what I said earlier when I left a note that everybody in this book is hardcore. And it's just an amazing quote by this guy named Bruce McLaren. So Bruce McLaren, he plays a role.

He winds up being a race car driver for Ford. He eventually starts his own racing team, and he founds McLaren Automotive. And he does all of this before 32 years old when he dies. And he dies racing because that was his passion in life. I just want to read this quote to you. It said, McLaren might have known he would someday die at the wheel. He had just published an autobiography in which he had written his own epitaph. So think about the thought process there. You're like, who's going to write an autobiography when they're

28 or 30 years old? And now this is a quote from McLaren. To do something well is so worthwhile that to die trying to do it better cannot be foolhardy. It would be a waste of life to do nothing with one's ability, for I feel that life is measured in achievement, not in years alone. So I just want to encourage you to obviously not to die for whatever you're doing. That's way too extreme. But I like that thought that he says. Trying to do better, it'd be a waste of life, especially it would be a waste of life to do nothing with one's abilities.

And I think in the domain of entrepreneurship, everybody has some way they can contribute, some large, some small, but the idea of creating something and then over time making it better, I think that's a worthy way to spend your life. So I'll close the story here. If you want to read the entire book, or if you want the full story, read the book.

It is extremely fun read. I'd probably go see the movie too. It's going to be fascinating. But anyways, I leave a link in the show notes on your podcast player. If you purchase the book using that link, Amazon sends me a small percentage of the sale at no additional cost to you. If you want to see every single book that I've done, go to Amazon.com forward slash shop, forward slash Founders Podcast. And you'll see it's like a visual representation of the podcast in reverse chronological order.

So it's kind of cool seeing all the different stories that we've covered so far. And of course, you can go to founderspodcast.com and you'll see the books there. You can sign up and see everything I have is at founderspodcast.com. One thing I need to ask of you before I go, if you're enjoying the work that I'm doing and you're enjoying the podcast that you're listening to, please do me a favor this week. Tell at least one friend about Founders Podcast, somebody you know that would be interested in these stories. Text them maybe the link to the website or a specific episode. Anything you can do to help spread the word, I'd greatly appreciate it.

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