Brunello Cucinelli: 10 Core Ideas
Brunello Cucinelli, known as the King of Cashmere, runs his eponymous Italian luxury design house Brunello Cucinelli in a fascinating manner. In this article, we will share a few Core Ideas derived from a decade of shareholder letters, interviews, and earnings call transcripts.
1. Luxury Is Independent of Time
In his first shareholder letter published in English, Brunello talks about the luxury pyramid, and the company’s positioning: The company began in 1978 as a manufacturer of cashmere knitwear, and today our men's and women's collections are at the top end of the luxury market. The company is constantly expanding and developing, but the philosophy and guiding principles stay the same: innovation and research are key concepts, with the aim always being the highest levels of quality and craftsmanship. According to recent research, there are three segments of the luxury goods pyramid: - the very top, i.e. the smallest segment but also the highest is that of 'absolute’ luxury. - the middle part is that of aspirational luxury; - the base (taking up the most space) is that of accessible luxury; It is precisely in the small but prestigious segment of absolute luxury that Brunello Cucinelli has been positioned by fashion experts. We are proud to belong to the highest level of the 'luxury pyramid' and we realize that being a company in the “absolute luxury” category cannot be a final aspiration but rather a starting point. The object is to apply tenacity and dedication on a daily basis to the consolidation of the balance between craftsmanship on the one hand and the ability to constantly renew ourselves, leaving nothing to chance. Whereas fashion is seasonal and changes every year, the luxury market is independent of time and is based on a solid tradition. The process whereby a brand becomes an authentic luxury brand is a long one and takes decades of experience, history and tradition. Luxury is not a concept we would define as being either accessible or democratic. (2011 shareholder letter)
2. The 8-to-6 Rule
The first example of Brunello Cucinelli’s unique corporate culture is the very strict working hours: Then in our Company, we set these rules and these rules come from our Umbrian heritage, from Saint Francis and also Saint Benedict. I follow what Saint Benedict says.“You should try and be very straight and very sweet, a demanding master and a loving father. “ Now, the 720 employees in our Company, everybody start working at 8 o’clock in the morning and then we finish at 6 and no one is allowed to work after 6, because the human being needs to freshen up and if the human being have time to rest, then the morning after they will be curious and creative.
Also, mobile phones and emails have certain rules: No, it’s not 24/7, because here in the company, you start at 8 AM, and at 5:30 PM you are forbidden to work any further. No emails can be sent to more than two addresses, just one or two. No group mailing. Why must a single email be read by 10 different people, unless it’s the 10 people who are interested in that specific issue? In order to disperse responsibility?
Here, we have no meetings with mobile phones. No one is allowed to bring them into the meeting room. You must look me in the eye. You must know things by heart. You must know all of your business with a 1 to 2 percent error rate. It is also training for your mind. It is also a question of respect, because I have never called someone on a Saturday or a Sunday. No one is allowed to do so. We must discover this, because if individuals rest properly, then it is better. (2015 interview)
3. Company Guardianship
Brunello is the majority shareholder of the company, and the main reason he took the company public in 2012 was to make sure that it would survive for the next 50 or 100 years: So why have we decided to go public, you might ask, what was our need for it? Well, I am 58 years of age, my daughters are 21 and 29, respectively and for all my life that’s the only job I have been doing. We have decided to go public, to be even more international, to be even more open in order to have some partners, guardians, investors beside us who can make this Company survives and thrive for the next 50 or 100 years because I think this is the dream that everybody of us has that is for one’s Company not to die, when the parent dies. We went public in order to be stronger. We didn’t carry that much debt. At the end of 2011, we had more or less one year EBITDA. But obviously…since now, we are slightly stronger than we have no debts, we can definitely see some opportunities that are being offered to us by this fascinating and ever-growing world. The major economists worldwide say that if you go public, you Company lives longer. And last but not least, talking about my age, I always thought that you don’t inherit a Company; you inherit the ownership. So I hope that my daughters one day, with my 62% stake, they will be able to lead this Company together with you, investors, partners, new managers, and new guardians of humanity. [...] What I would like to say is the following…I have being doing only this, I’d like to keep on doing only this.. that’s why I said to my young managers, the other day, that I’d like to be with them until the day when they look at me in the eyes and say to me…your time is over. (Q1 2012 earnings call)
4. The +20% System
Brunello Cucinelli pays their workers, on average, 20% more than other companies to retain world-class talent and ensure them good living standards: We manufacture through craftsmen over 80% of our items in the Umbria region, then something in Tuscany, Marche and Veneto region. I talk about Umbria because these skilled hands have been there for ages; we have 8,000 people manufacturing high-quality luxury goods from apparel to knitwear, and out of these 8,000 people, 2,300 work exclusively for us. These 2,300 people account for 330 micro companies, from 7 to 9 employees each independent companies. The average age of the owners is 41 years of age, very young companies, and then the average age of employees is 40, which means that we have a very high-quality artisans, absolutely not old. And then we pay them 20% more on average vis-à-vis the market. And now, I’d like to spend a minute on this because I’m very, very keen on it. [...] But where do we find this 20% more from? Well, in an item that comes out of the factory wholesale at €350, it includes €60 of manual skills. And when I talk about manual skills, I’m talking about manual work, not machinery. So this €350 item is then sold for €1,000 at Via della Spiga, Milan or in London. So my question is, is it not possible that we can find €20, €25 between €350 and €1,000? In this way these people can earn €80, €85 instead of €60. So, and this is our strength, so there lies our strength for the future. (Q1 2012 earnings call)
And there is more than just the higher salary: The whole company takes a ninety-minute lunch break; employees can go home to feed their families or eat at the heavily subsidized company cafeteria — they pay less than three euros — and still have time for a nap afterward. (Given the quality of the cafeteria—where long tables are set with bottles of Pellegrino and wine, and local ladies serve minestre, pastas, platters of grilled meat, and salad — a nap is recommended.) Cucinelli has also installed a small library, near the theater, where workers and visitors are encouraged to browse volumes that look as if they had been selected by an eager undergraduate: there are works by Dante, Kafka, Proust, Ruskin, Rawls, Nietzsche, Derrida, Deleuze, in many different languages. (2010 interview)
5. Be Careful With Growth
Brunello Cucinelli is also very careful with growth, and speak a lot about the importance of "not being too widely distributed" as an absolute luxury brand: We believe in a growth that is gracious, sustainable, respectful, a growth that might be 9% when things do not go too well, then the following year 12% or 13%, but when we open a store, we must be very, very careful, we waited for four years in order to land a great location in Miami in the right prestigious location. Then we are opening in Aspen in September, in the right location, so this is my message. I believe in a Company that grows always maintaining high quality, high craftsmanship, and hopefully high taste; a company with products not too widely distributed products, because that’s where the difference is made. [...] We wouldn’t like to perform any acquisitions, because we would like to grow with this brand, with this lifestyle, with this visual, with very same things. Ahead of me, I see a very fascinating world, a world that is fascinated by the very nice Italian luxury ready to wear. Obviously, we must be there creating fresh contemporary, very high craftsmanship, but at the same time, I’d also like to give moral and economic dignity to craftsmen’s work. (Q1 2012 earnings call)
How Brunello talked to investors before going public: We went public, and we have more than 50 percent American investors as shareholders. Before going public, I said to them, ‘Are you looking for a company that grows very fast, that makes profits that are too high, in our view, quick profits? Do not invest in our company. Do you want a company that grows in a gracious way? That allows suppliers to grow alongside it, so that your artisans can grow as well as the company’s staff? (2015 interview)
Although, despite this careful growth framework, Brunello Cucinelli has grown its revenue and EBIT at ~500% and 1000% respectively since 2009:
6. Always Give Back
Brunello uses his personal wealth as well as part of the company's profits to give back to society. A good example of this is his School of Craftsmanship which he started back in 2013, located in the small Italian hamlet of Solomeo: We began several projects during the year, with results which allow us to concentrate our thoughts on consistent and serene growth. We invited young people to come here to Solomeo to learn craftsmanship and therefore to pick up again the traditions that have always enabled Italy to excel in the world; the School of Craftsmanship has begun giving courses in the hamlet on a variety of subjects (with the contribution of the Brunello Cucinelli Foundation for those not relating to the Company): Mending and Linking, Textile Arts, but also Masonry and Horticulture and Gardening, important for our business and our local area and above all for giving the work of a craftsman its due dignity. A dignity which has unfortunately been lost to a large extent but which still remains the foundation on which we have built our company and the beauty of our country. We are hoping and planning to initiate new courses and thereby extend the School over future seasons by inviting new young people to complete the path in which we believe. (2013 shareholder letter)
The Universal Library of Solomeo, and the importance of reading: October also saw the presentation of the major new endeavor for the “Universal Library of Solomeo,” another thousand-year project conceived by the Brunello and Federica Cucinelli Foundation for the village of Solomeo and our local region. Inspired by the great Library of Alexandria conceived by Ptolemy I, the Universal Library of Solomeo aims to collect a huge number of publications from around the world in a limited number of disciplines, including philosophy, architecture, literature, poetry and crafts. The Universal Library of Solomeo will be housed in the noble Villa Settecentesca, surrounded by a large park, adjacent to the Church and Theatre in the heart of Solomeo, which we call the Hamlet of Cashmere and Harmony. It is through this work that we would like to give life to Emperor Hadrian’s thought, “Books showed me the way of life; when I grew up, life made me understand the content of books.” (2021 shareholder letter)
7. Humanistic Capitalism
In every letter, Brunello is preaching about his business philosophy of combining ethics, quality, and human dignity. Here's from 2016: Since our listing on the Stock Exchange we have claimed that walking along this path together would imply the essential sharing of a set of values that place the human being at the centre, to enable him/her to express at best their positive, social and creative nature. These are precisely the values that have enabled the company to develop over the years according to the ideal of a sustainable, healthy growth, in keeping with nature and its rhythms. We have always wanted to combine the ethics of profit with the in-born value of quality in all its forms: dignity of work, beauty of life, value of craftsmanship, promotion of creativity and exclusivity, harmony with the surrounding environment, and the ability to keep pace with the times. From the Solomeo hamlet to our boutiques worldwide, from the hands of our artisans to the new websites, the dream we keep pursuing is a corporate philosophy that features consistent and uniform traits, that embraces all those who belong to this company and addresses honest and simple words to all co-workers and clients. (2016 shareholder letter)
In 2017, Brunello was awarded the Global Economy Prize from Kiel Institute for this exact philosophy: During 2017 we received important recognition at an international level, being awarded the Global Economy Prize by the Kiel Institute for the World Economy. We were deeply moved by the Laudatio because it especially exalts the ethical values towards which we have constantly aspired during the history of our enterprise and states as follows: “Brunello Cucinelli personally personifies the tradition of the Honourable Merchant,” referring not only to our products but also to the relationships we cultivate with the people surrounding us. It is fundamental for us to keep alive the preservation there once was for feeding the soul, maintaining a human privacy far from the noise of technology so that the life of man may be restored by the right silence, by affection, by rest and by care for ourselves. In November 2017 we had the honor of being invited by Marc Benioff, the founder of Salesforce, to the “Dreamforce” conference in San Francisco to discuss “gracious technology” and before a vast audience of people believing themselves to be “Young Modern-day Leonardos” we made an appeal for the discussions and the new inventions to bring to technology the same grace that characterizes humanity’s most fascinating aspects and relations. The question we perceive as being fundamental is “how” to apply these highly important new technologies so that they can combine with the desire for calm and silence, harmony of thought and the soul, the enlivening feeling that arises from contact with art, culture, and nature. (2017 shareholder letter)
8. Products for Generations
What fascinated Brunello about cashmere from the beginning was the incredible long-lasting quality: Acting as guardians and keeping up traditions, combined with highly specialized manual skills, contribute to the creation of unique items, which can be handed down and repaired, as they are part of a “human life cycle.” We believe the ethics of repairing and mending to be another important theme of our days: when technology turns to the future and seems to leave behind anything that does not work perfectly, a human gesture is called for to repair, restore, recover: all these actions mirror a mind-set focused on evolving, adjusting, renewing without losing the past, indeed valuing it in order to hand it down – richer and more beautiful – to the new generations. In our factory we have a whole department devoted to reconditioning, repairing these garments. We believe that the culture of repairing means teaching and transmitting knowledge to others and to the future. (2019 shareholder letter)
Taking the long-term view and making the highest quality of products: Our company and Casa di Moda was founded with the idea of trying to make high quality and handcrafted products, in terms of materials as well as in their processing and packaging, hoping that they would be destined to last over time and be handed down from generation to generation. Over the years, the company has grown a lot, acquiring and consolidating respect and appreciation from customers, trying to pay testimony to the world of Made in Italy, beauty, creative genius, taste and Italian style. We believe that all this has been possible thanks to constant attention to the choice of the most prestigious raw materials, to the work of the skillful hands of our human resources and of all the artisans and façonists with whom we collaborate. Our company has thus evolved into what we imagine the international press, customers and stakeholders recognize as a typically Italian manufacturing company. While remaining focused on the day-to-day business of our company, we continue to take a long-term view that will allow us to pursue our sustainable growth path. (Q1 2022 earnings report)
9. Focus On What You Can Change
During the COVID pandemic, Brunello Cucinelli made three choices based on its corporate philosophies: From the beginning of the crisis, we decided to guarantee employment and wage levels for all our human resources throughout the world, those who, based on a relationship of mutual trust, have worked with courage and creativity, overcoming every difficulty. It was our firm conviction not to ask for discounts from anyone, aware that everyone has a duty to take responsibility and to be aware of the importance of safeguarding the entire production chain. We confirmed all our objectives and investments, convinced by the developments and information we receive from all over the world that this crisis is “short-term” and that the harmony of our project continues to support our growth, as already happened in the second half of the year. (2020 shareholder letter)
This continued focus on the long-term and the health of its entire production chain no matter what obviously made profits suffer in the short-term, but Brunello Cucinelli recovered even stronger:
A lesson that Brunello learned from Thomas More: I continue to have unyielding faith in the wisdom of humanity, and I believe that at a dramatic time for humankind, in this winter of our labors, a new era of responsibility is required of us, the search for a peace forged by great thought. [...] Great challenges demand the courage to walk together and to reaffirm that common sense of humanity that only words can guarantee, when it is based on the brotherhood and wisdom of those who govern the world. We have always believed in the appealing philosophy of Thomas More, who in the 16th century said, “God, grant me the serenity to accept the things I cannot change, courage to change the things I can”. The only thing we can change is to continue to run our business with humility, courage, creativity, and trust. It is precisely this awareness that accompanies our second state of mind, after having experienced a splendid year, imagining great possibilities for the decades to come.
10. Ten Ideals for Life and Work
In 2021, Brunello was invited to speak at the G20 meeting thanks to his Humanistic Capitalism philosophy. There, he outlined his Ten Ideals for Life and Work:
We love and respect Mother Earth: we cultivate our land according to nature and we welcome its fruits as its greatest gift.
We do not use more resources than is necessary or natural. We make careful use of the universe.
We always act as loyal and affectionate guardians of creation.
We believe in the moral and economic dignity of human beings.
During work we support fair profitability and harmony between profit and giving back to the community.
We seek harmony between fair work and human privacy.
We commemorate our forefathers. They taught us to respect the law, and our story is written in their words.
We believe in universalism and we act displaying great respect for all civilisations.
We welcome fair change in order to experience the best from our time.
We are fond of young people and pass down to them hope and the dream of a bright future awaiting them.
A finishing fun fact: Just like the late Einstein, Mark Zuckerberg, founder, CEO, and Chairman of Meta Platforms, is known for not letting daily clothing choices occupy his mind. In 2016, Mark made headlines by posting a photo of his plain wardrobe on Facebook. All it contained was multiples of his signature gray t-shirts and blue zip-hoodies. But what does this have to do with Brunello Cucinelli, you might ask? Well, those gray t-shirts are in fact custom made by Brunello and apparently cost roughly $300 a piece.