How the ‘House of Gucci’ was torn apart
(Third in a series)
In the last two weeks, we looked at the rise of Italian fashion house Gucci, which in its prime was acclaimed the best in the world. But today Gucci is but a subsidiary of a French conglomerate.
Severe and intractable conflicts across and within generations, among fathers and sons, among uncles and nephews, among brothers, and as we will see next week, between spouses, created chaos and led to the company’s downfall.
In 1974, Vasco (one of founder Guccio Gucci’s three sons) died and left no heir. His two siblings, Aldo and Rodolfo, bought out his shares from his widow, and soon each controlled 50 percent of the empire.
At that time, Rodolfo was fighting with his son Maurizio and did not want to share ownership with him. Maurizio would inherit upon his death, but “not a minute before,” he told friends and family, as reported in fashion editor Sara Gay Forden’s book “The House of Gucci.”
“Rodolfo’s biggest mistake was not to trust Maurizio earlier on,” an adviser of Maurizio told Forden. “He held the purse strings so tightly and never gave Maurizio a chance to stand on his own two feet.”
So when Maurizio finally took over, he often “became overwhelmed at the enormity of decisions,” reported his secretary. “Rodolfo had always taken care of everything for him.”
Maurizio had charisma, but lacked strong character. A longtime Gucci ready-to-wear employee likened Maurizio’s attempts at running Gucci to building a house without ensuring a solid foundation.
When Rodolfo was still alive, Maurizio at first grew closer to his uncle Aldo, who called him “little lawyer” (Maurizio was the only family member who completed higher studies). Ironically, Maurizio was also closer to Aldo than the latter’s own children, who resented their father’s domineering personality.
“It wasn’t a question of living with my uncle, but surviving,” Maurizio said. “If he does 100 percent, you have to do 150 percent to show you can do as well as he does.”
Rodolfo held on to his shares, but in 1974, Aldo brought his three sons Giorgio, Paolo and Roberto into the company, splitting 10 percent of his shares equally among them. In short, each then had 3.3 percent of company shares.
“Aldo acted as a generous and fair father, not concerned that he had given away his power to command,” Forden said. “Any one of his sons could now ally with Rodolfo to create a 53.3-percent majority at family board meetings.”
Aldo’s son Paolo constantly battled with his father and the rest of the family. At one time he even manufactured Gucci counterfeits.
He caused much legal and emotional strife. Once, he sued his family over the right to examine company finances. Another time, he sued them for alleged assault and battery.
His brother Roberto told Paolo to eventually sell his shares. “You can’t be a part of us and be a competitor at the same time. If you want to play, respect the rules of the game. You can’t fight the company and remain inside it. If you want to go your own way, then sell your shares.”
But conflict was also brewing on another front. When Rodolfo died, Maurizio got his father’s shares, thus changing the balance of power in the clan.
When Aldo and his sons saw Maurizio produce signed certificates from his father purporting to give him shares before his death, they suspected that the signatures were forged, so Maurizio could save on inheritance taxes. His secretary later admitted that she had done the forgeries.
“Don’t try to fly too high,” Aldo told his favorite nephew. “Take some time to learn.”
Maurizio paid no heed. In 1991, the company was hugely in the red. Maurizio did not understand cash flow, managing “by intuition,” said a longtime adviser. “You can get away with it if things are good, but not when things are bad.”
“What might have worked for Aldo, who had a business fiber that Maurizio lacked, wasn’t going to work for Maurizio,” Forden said.
The world was riveted by the Gucci family wars. Loyal customers were concerned. Jacqueline Kennedy Onassis cabled Aldo: “Why?” Monaco’s Prince Rainier asked how he could help, to no avail.
(To be concluded next week)
Queena N. Lee-Chua is with the board of directors of Ateneo’s Family Business Center. Get her book “All in the Family Business” via Lazada and the e-book version on Amazon, Google Books, Apple Books. Contact the author at [email protected].
