Dall’abbandono della carriera nello sci alla decisione di diventare un businessman.
MY VOCATION, THE BUSINESS AND THE SUCCESS
Aged sixteen, I specifically felt that business and success in the world of work was to be my path, not skiing. Coming from a family of industrialists, I realised that my secret desire was to restore to my family the success achieved a generation before thanks to my grandfather. To be perfectly frank, I wanted to get rich and make those childhood dreams of extreme wealth come true. I wanted to give up skiing, but skiing was my mother’s excuse for living in Cortina, a city she was deeply in love with and adored living in. And so, a real battle began with my mother, who played on the immense regret my father would suffer if I gave up. I continued to ski with the distinct feeling that every day spent in Cortina would be a wasted day.
In the context of a family with a generous number of relatives (especially cousins) who would potentially compete for the “command posts”, there was no way I could wait until I was 24/25 to go back to Bologna and somehow attempt to climb my own personal ladder. I needed to obtain specific information on the subject and take action as soon as possible. So, at age seventeen I finally stopped skiing and returned to Bologna, terminating my studies in order to begin university. From there I began conducting agonising research into family business, finance and economy in its broadest sense. Despite all this, my father kept me in the dark about everything. When he would talk to my cousins about family business and such matters, he would quickly make me go away. For me, this was a humiliation. In a sense I hated him. I was also annoyed that, despite how enormously charismatic I found him, he didn’t have the same ambition as I did to go higher than we already were. So, I ended up secretly rummaging and nosing through his drawers in order to expand my store of knowledge on the business world and, more specifically, industry assets. I would also buy economics magazines, even though at the time there were very few. In any case, my daily growth was clear and consistent.
My father did however teach me a clear lesson which I’ll never forget, and which still touches me to this day. He said to me: “You must study, and after you graduate, you’ll be able to access everything you want. You will have the family keys in your hand”. And that’s what happened. After a few years he stood aside, I became the father and he became the son. With just one move all the hardships he had made me really suffer were atoned for.
Volevo, detto molto schiettamente, diventare ricco e trasformare in realtà tutte quelle illusioni di estremo benessere economico che nutrivo da bambino.
MY FIRST BLOW AND THE PROBLEM OF FRAGMENTATION
I was eighteen years old when my grandfather’s second wife died. My grandfather himself had given her some shares of the family business with the advice to return them to us, his legitimate grandchildren, upon her death. But things didn’t go as they should have. Her sister forged her will, bestowing all the shares on her daughter, that is, my grandfather’s wife’s niece. It was a bit of a nightmare for me because I had placed great expectations in this takeover which didn’t happen. We sued the niece and went down the legal route but, as unfortunately often happens in Italy, nothing came of it.
This takes us to the early 1990s, when my family’s main business was in the construction industry. The industry was facing an inevitable crisis and the outbreak of the “Mani pulite” investigation further put the brakes on it. During this deadlock in my family’s business, I was also coming to realise another problem that had weakened my climb: the excessive splitting of shares between numerous branches of the family. I was twenty-two when I realised that we needed to try and reaggregate something, even if I wasn’t sure which “slices” to focus on, and what “cake” I should try and recreate. It was obvious I needed to work downstream, not on what had already been reduced to a minimum. The two founders, my grandfather and his brother, already had six children who in turn had some of their own, so you can imagine the extent to which the total was split.
Of course, I couldn’t go to my father, ask him for a billion lire and hope that some unselfish relatives would let me buy shares in order to begin an overhaul. I was attending university and my father was giving me about a million lire for every exam I completed. Sure, it was money, but given that I was completing about five or six exams a year on average it was no way near enough to enable me to do something concrete to complete my mission.
THE FIRST OPERATIONS AND IMA
Avevamo all’epoca anche una partecipazione di maggioranza in questa azienda che produceva macchine automatiche, per la quale mio nonno aveva fatto da venture capitalist. Aveva in pratica finanziato un ingegnere che si occupava di questioni commerciali, il quale aveva conseguentemente messo in piedi l’impresa. Questa stava andando molto bene, avendo la leadership in un settore di nicchia: capii che probabilmente era quella la perla su cui investire.
In those days we also had a majority shareholding in a company which produced automatic machines, in which my grandfather had acted as a venture capitalist. He had basically financed an engineer who was active in the commercial sphere, which led to the establishment of the company. As they were leading in a niche industry, it was going very well. I realised that this was likely the pearl I ought to invest in. I intended to re-aggregate part of the family assets, starting with two or three businesses which lived off tenders and produced gravel and concrete. At the time these businesses were perhaps going “not so badly” and also included some country houses. I thought these might be sold in order to act as a nucleus for the equity I needed to begin my overhaul and the “purge of relatives” precisely within that automatic machines company, which interested me more than any other.
What did I do create my first assets? Well, first of all I sold my red and white Harley Davidson 883 and a Porsche that my father had given me for Christmas a few years before, which made approximately 91 million lire. To buy what I needed, this being 25% of the shares of these gravel and concrete manufacturing companies that I was talking about before, I needed quite a bit more: 1 billion 200 million. Using this 91 million I obtained a loan of 1 billion 109 million lire from a credit institution, of course using all the shares that I would go on to buy and therefore those 7 or 8 country houses which I mentioned before as collateral. These constituted a decent capital base that would uphold the already good profitability of these companies.
At that point I finalised a set of sales which opened the door to my end goal: IMA. At the time it was no more than a medium-sized enterprise. It had a turnover of about 70 billion lire without any kind of profitability, but I detected considerable potential in it. I didn’t have many certainties or information to rely on for my project but, as I have always done in my life, I verified my strategy using this thought: "We make machines to bag tea; what percentage of tea in the world is consumed loose and what percentage is consumed in a bag?"
The answer was 85% and 15% respectively.
The world was becoming increasingly westernised, and for this reason I thought that the custom of loose tea would gradually diminish over the years, making room for tea that came in bags (which had already made a foothold). A theoretical further increase in the consumption of tea in bags, for example from 15% to 25%, could represent a momentous turning point, guaranteeing the company a life of at least 100 years.
At the same time the company was diversifying through investments in the field of pharmaceuticals. This sector was countercyclical and would guarantee a high level of sustainability over time, perhaps by means of obtaining leadership through the sale of certain machines. This was confirmed by the average increase in the population size and life expectancy.
FROM IDEAS TO FACTS: THE TURNING POINT.
In my mind the idea was well-defined, but at that time I needed money to join IMA with conviction. At age 25 I fell into the favour of a banker to whom I set out my project; I explained to him that I intended to list the company on the stock exchange and to implement a well-targeted development. He trusted me, understanding that I wasn’t all talk and charm but someone with truly tangible ideas. He loaned me 14 billion lire (about twice my father’s assets) and accepted my request to only take my future purchases as collateral without damaging any of my father’s estate (both real estate and shares). I was young, naïve perhaps, but definitely brave; how I was going to pay back that money didn’t even occur to me. I would think about it later, for now all I wanted was to become a great businessman. Even today, I joke with my friends that back then I had a better life, without all the considerations and caution brought about by maturity. It is also true that back then banks rewarded ideas, something which is totally inconceivable today. Today’s credit institutions only lend money to those who have money.
First of all, I purchased IMA shares, taking my shareholding (which was 12%, shared with my brother) to 30%. By involving my closest cousins in scraping together the remaining shares, I completed the familial reorganisation which I had set out to do. We liquidated four significant business partnerships and I consequently ended up being the director of this new organisation. This essentially saw me as the majority shareholder, with 30% of the shares, and my three closest cousins with the rest (70%).
I was 24 and, caught up in the euphoria of the moment, did something which still makes me smile to this day. After 13 years, I met up with my middle school sweetheart and, within 24 hours, asked her to marry me. It was probably a not entirely conscious way of trying to please my father, rather than something I really wanted. Anyway, she accepted, and we were married. It was evidently a not very well thought-through decision, given all the debts I had (although I had no doubt that I would settle them in a short time), and my mission to turn IMA into a driving force that would generate a lot more than it already was. My time and my thoughts were all focussed on my dream: to become a great businessman. My days were dedicated to that and nothing else; no holidays, no hobbies, at least for then. The marriage lasted about 6 years.
In order to start paying off my enormous debts I sold the real estate gained in my earliest investments in the gravel and concrete companies, and then also proceeded to engage in Stock Exchange trading. I managed to access credit lines and therefore carry out some rather experimental trading operations, using only my signature as a guarantee. Nowadays, as I said before, it wouldn’t be possible to get credit without the help of money, but it was different in those days, when one’s signature was actually very valuable. At the same time, with the help of the substantial devaluation of the lira against the German mark (Germans were our only main rivals), IMA was able to keep the prices lower and therefore quickly earn market shares. Between 1992 and 1995 IMA thus enjoyed a considerable growth that led us to launch the process of listing it on the stock exchange.
This new avenue put me in contact with numerous traders and different portfolio managers, enabling me to obtain information and intuitions surrounding certain investments, which in turn led me to undertake operations that proved highly profitable. For example, I remarkably ended up with a good 20 billion lire of shares in Seat Pagine Gialle, which, once sold, yielded a return of 5-6 billion lire. Similarly, I earnt 2 billion lire on the Banco di Napoli from Monday to Friday, not bad for a 26-year-old guy.
I sold real estate, did some trading, and in the meantime, IMA entered the stock exchange, increasing from 70 billion lire in value when I undertook my takeover to more than 400 billion. Within a few years my debt was fully paid.
IMA’S MANAGEMENT SITUATION AND MY ROLE WITHIN IT
I had achieved my first goal; my debts were settled. At that point I found myself dealing with strategy and planning within this company which, thanks to me, had become a giant, and for which I also acted as investor relator. I was basically the one who dealt with the investors, disclosing IMA’s results and plans. Because I was additionally dealing with purchases, I had my eye on the management structure, and after some time I noticed the first alarm bells. I saw an excess of unsuitable management, by which I am also referring to the actual ability of said managers, who to me didn’t seem to be the very best. I felt this might lead to some problems. On several occasions I mentioned it to my uncle, who was the company chairman at the time. A year and a half after entering the stock exchange, management control made a miscalculation, forecasting a significant profit which actually turned out to be a loss. I was given the ugly task of informing the investors of the incident, although basically nothing happened as a result. This taught me a big lesson for the rest of my working and non-working life: you need to see your promises through, seeking to be as reliable as possible in the predictions you make.
I took charge of the necessary managerial change, ensuring that the son of the president, my cousin, was in the driving seat. To this day he is president and CEO, having done his job brilliantly all these years. I faced the situation head-on, with all the character needed to manage a troublesome “family affair”, as the company could not of course get in the way of the then president too much. My uncle didn’t talk to me for eight months, can you imagine? If you compare IMA’s success today with all the negative results of that period, this change was just what we needed. After four years as manager and having put the company back on track, I decided, aged 29, to abandon my managerial role and stay on as a “simple” shareholder, without any particular motive. I felt it was time for a change.
This experience taught me another “anti-bourgeois” life lesson: my uncle and my father maintained that the companies existed to feed their children, but that wasn’t the case. In listed companies there are managers and shareholders, and these two roles are very different and must not be confused. You can be an excellent manager and an awful shareholder, and vice versa. Executing both roles is no easy task.