This is one of the best business books I have read in a while. Indeed, I would rank it alongside Michael Lewis' The New New Thing as an outstanding read.
The House of Gucci is not a book about Asia, but nevertheless it should be of interest to anyone who has an interest in family businesses and in Asia that is quite a lot of people.
It is a well-researched, well-written tale of a family business that grew from a tiny group of shops in Italy to become one of the best-known fashion brands in the world.
What makes the book interesting is the way Sara Gay Forden describes the family's penchant for self-destruction, especially in the third generation.
Gucci, in fact, is no longer owned by the family that created it. Thanks to power struggles in the mid-1990s, the family eventually lost control to Investcorp, which later floated the company and made billions.
The company was established by Guccio Gucci in 1922 and began life as a purveyor of Tuscan leather products in Florence. The business was rapidly expanded by his three sons, particularly by Aldo who took Gucci to the United States.
Under Aldo's stewardship, the Gucci brand particularly the loafer shoe became iconic by the 1950s and 1960s and was sported by film stars.
Then things started to go wrong. Like so many family businesses, it began to self-destruct in the third generation. The brothers produced four sons between them. The first problem arose from Aldo's son, Paolo, who wanted to have more control over product development and got into a feud with his uncle Rodolfo, who managed the Italian side of the business.
Soon, Paolo was threatening to go off and set up his own brand called Paolo Gucci a move the family united to block. Paolo was tied up in legal suits by his own kith and kin, and hit back by asking some very damaging questions about the company's tax evasion at a board meeting.
Forden describes the scene. The board secretary stopped taking minutes in horror, so Paolo produced a tape recorder, whereupon he was gripped in a headlock by his cousin and scratched across the face by his father.
Paolo then broke loose and ran out of the boardroom shouting, "Call the police, someone call the police!" He ran from the Gucci offices through the firm's flagship shop screaming, "Just look! This is what happens at a Gucci board meeting. They tried to kill me."
Paolo then took revenge by exposing his father's personal tax evasion to the US authorities. Aldo, who had built the Gucci brand, was sent to jail. At his trial in true Italian fashion a weeping Aldo told the judge he forgave his son for his sins. Paolo never got back into the business and ended life broke on a farm in England.
The focus of the book then moves to Maurizio, the only son of Rodolfo. He inherited the single biggest stake in the firm and used this along with his enmity for his cousins to edge them out of the business. He allied with Investcorp to buy the other family members out and share 50/50 control with the London-based investment firm.
However, his cousins struck back by informing the Italian police that Maurizio had forged his father's signature as a means to avoid inheritance tax. In the ensuing debacle, Maurizio fled to Switzerland on a motorcycle to avoid arrest and attempted to run Gucci from there. Meanwhile, Investcorp didn't know whether Maurizio owned 50% of Gucci or not, as his cousins wanted the shares sequestered.
One staff member recalls the awful days of 1987: "The company hit a standstill. You practically had to get authorization to buy a roll of toilet paper. It became a company legend that one day to order some letterhead, the company required seven signatures."
Maurizio eventually solved his legal problems and returned to take control. A happy ending? No.
What then follows is a dazzling portrayal of Maurizio and his falling out with Investcorp over strategy. By this point, Gucci is on the brink of bankruptcy and Investcorp is wondering what it has put its money into.
It decides the last thing Gucci needs is a Gucci family member at the helm and a power battle follows which eventually sees Maurizio bought out. You may be feeling sorry for Maurizio on reading this, but don't. For a portrayal of a paranoid, delusional, appalling CEO (Maurizio), this book offers unrivalled material. It has to be read to be believed.
The book ends with the gripping tale of Maurizio's murder at the hands of his embittered ex-wife.
What more could you ask for in a business book?
This is definitely a thinking-person's holiday book. The House of Gucci is a very entertaining business book indeed.
Reviewed by Steven Irvine
Rating: 4.5 stars