Welcome to Edition #72 of Did You Know? (DYK), the weekly newsletter by Gorick Ng, Harvard career adviser and Wall Street Journal Bestselling Author of The Unspoken Rules, where we deconstruct the untold story of how someone (or something) became successful—and what you can do to follow in their footsteps.
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Did You Know? Create your own “success formula”
Your story this week
Did you know? LVMH (which owns the most valuable luxury brands from Louis Vuitton to Dior) created its own definition of success.
You may have heard of Belvedere (the vodka), Louis Vuitton (the fashion brand), Sephora (the store), and Tiffany (the jewelry).
But did you know that these brands, plus the ones that I've pasted at the bottom of this email, are all owned by the same company?
That company is LVMH and its current CEO, Bernard Arnault, is one of the world's richest people.
(So yes, you could conclude that when you walk down the streets of 5th Avenue in New York City, Champs-Élysées in Paris, or any airport, you're staring at storefronts pretty much all owned by the same person.)
How did LVMH get so big?
It’s 1971. Arnault, a French native and heir to a French civil engineering company business, is sitting in a New York City cab.
Arnault asks the driver if he knows the name of the President of France.
“I don’t,” the driver replies. “But I know Christian Dior.”
This interaction “planted a seed” in Arnault’s mind. After all, if a brand has more name recognition than a country’s president, what could that mean for the brand’s potential?
Fast forward 13 years and Dior’s parent company, Boussac, is nearly bankrupt and seeking a new owner. Recalling his taxi ride conversation, Arnault seizes the opportunity. He buys Boussac and launches a company-wide restructuring of Dior—a move that earned him the nickname “The Terminator.”
In just 3 years, Arnault increased Dior's annual revenue by 2,011% to $1.9 billion.
But, he wasn’t done. Arnault noticed that “the luxury market was made up of many medium-sized companies that, taken together, could be much stronger in a group composed of several brands." So, he embarked on a shopping spree, starting with LVMH.
In 1990, 6 years after his Dior purchase, Arnault took over LVMH—previously a merger between beverage brand Moët Hennessy and fashion brand Louis Vuitton—and began testing his hypothesis.
Within another decade, LVMH owned over 15 luxury brands including Givenchy (fashion), Celine (leather), and Sephora (beauty).
But, buying companies is one thing. Making them successful is another—and here’s where Arnault's strategy shines. He didn't just want any old brand. He wanted to build a "star brand", or a brand that he defined as "timeless, modern, fast growing, and highly profitable.”
What does each of these pillars mean practically? Let’s dive in::
1. TIMELESS: LVMH companies try to create familiar products with designs that have been around “for eternity.” For instance, “Tiffany Blue®” has been synonymous with Tiffany and Co. since 1845 and the “LV” monogram has been part of Louis Vuitton’s branding since 1896.
2. MODERN: LVMH companies try to put fresh twists on their products through partnerships with contemporary artists and tech companies. Louis Vuitton, for example, collaborates regularly with artists, including minimalist Yayoi Kusama who “refashioned the Louis Vuitton trunk with her signature spots.” Louis Vuitton has also partnered with Apple to create Vision Pro apps that let users “explore iconic collections” and “watch iconic shows in entirely new dimension(s).”
3. FAST-GROWING: While LVMH companies have their tentacles everywhere, they’ve been singularly focused on luxury goods, a sector that sees consistent and rapid growth. In 2022, research found that “the world’s Top 100 luxury goods companies are bigger and more profitable than ever.” Average price points have also increased 25% since 2019. At the top of this list? LVMH.
4. HIGHLY PROFITABLE: LVMH companies try to create products with hefty product margins. In 2022, a Louis Vuitton purse could set you back anywhere from $1,160 USD to $8,850 USD. Meanwhile, in 2024, LVMH reported a gross margin of nearly 69% for the quarter. One might guess that the rough cost to make an LVMH product is less than 30% of its price tag.
Arnault’s approach may be paying off: LVMH is now the world’s largest luxury goods group. In April of 2023, it became the first, and only, European company to join the World Top 10 by market value, hitting nearly $500 billion.
What does this mean for you? The next time you find yourself thinking, "I want to be successful!" remember Arnault, who didn’t just want success—he wanted it so badly that he took the extra step to define what success looked like.
Your strategy this week
Did you know? Define success for yourself!
As we’ve seen time again—from Oprah to the director of Barbie and now Arnault—having a big dream isn’t the challenge: Finding your way there is the tricky part. And, like the founder of FedEx or the creator of instant ramen, Arnault set his sights on building something that hadn’t been done before.
What do you do if you want success, but the definition of success is hazy?
You create your own definition by filling in the following blanks:
- “If I put myself into a time machine and imagine myself at the end of this [program / opportunity / job / life], I will consider myself to have made the most of my time if I can say that I [did / experienced / walked away with] _______, _______, and _______.”
- E.g., “If I put myself into a time machine and imagine myself at the end of my college experience, I will consider myself to have made the most of my time if I can say that I have 3 close friends I can confide in and a software engineer job in San Francisco that pays well enough for me to not just support myself, but also save for retirement and send money home to my family.”
- “Knowing that I want these things, I need to prioritize _______, _______, and _______. This also means I need to not get distracted by shiny objects like _______, _______, and _______.”
- E.g., “Knowing that I want these things, I need to prioritize meeting people, building my portfolio, and getting software engineering experience. This also means I need to not get distracted by shiny objects like this history double major and this clinical research position.”
Remember, not every opportunity will be worthwhile. Arnault, for example, could have picked any fashion brand to start his acquisitions. But he focused on Dior because he recognized Dior’s potential to meet his definition of success—and he was right (despite being a contrarian).
Of course, you won’t always make perfect decisions! Keep in mind that ”failure” can be a necessary part of the journey. And, the more time you invest in creating your own definition of success, and the more intentionally you pursue that definition, the more likely you are to achieve your goals.
I know it because I’ve experienced it: When I was at Harvard Business School, I, like many MBAs, was stressed over how to make the most of my precious 2-year experience. It didn't help that there were so many events on campus, so many guest speakers, so many recruiting events, so many trips... and so little time to do it all.
So, I came up with a framework on how to decide which opportunities to pursue (and which ones to reject). The framework involved 3 yes/no questions:
- Is this something that I can only do (i.e., it’d be a lot harder to do after I graduate)?
- Will this help me go further, faster towards my entrepreneurship goals?
- Will this allow me to meet more like-minded people who could become my lifelong friends?
I then told myself: If an opportunity satisfies at least 2 out of 3 criteria, I'd sign up. Otherwise, I'd pass—and be at peace with my decision.
Before having this framework, every party and every fancy trip looked tempting. That was until I realized that splurging on this fancy trip with people who didn’t necessarily share the same values as I did seemed fun—but wouldn’t quite help me achieve my version of success.
So, I passed—which also opened up a spot to someone who’d get a lot more out of the experience.
Define success for yourself!
Gorick
Sources:
- pasted at the bottom of this email
- one of the world's richest people
- sitting in a New York City cab
- “planted a seed”
- Dior’s parent company
- “The Terminator.”
- $1.9 billion
- “the luxury market was made up of many medium-sized companies that, taken together, could be much stronger in a group composed of several brands."
- Within another decade, LVMH owned over 15 luxury brands
- “for eternity.”
- “Tiffany Blue®” has been synonymous with Tiffany and Co. since 1845
- the “LV” monogram has been part of Louis Vuitton’s branding since 1896
- collaborates regularly with artists
- “refashioned the Louis Vuitton trunk with her signature spots.”
- with Apple
- “the world’s Top 100 luxury goods companies are bigger and more profitable than ever.”
- Average price points have also increased 25% since 2019
- $1,160 USD to $8,850 USD
- reported a gross margin of nearly 69% for the quarter
- the first, and only, European company
- World Top 10
A list of some LVMH subsidiaries you may know (all 75 can be found at https://www.lvmh.com/our-maisons):
- Dom Pérignon - Wines and spirits
- Hennessy - Wines and spirits
- Moët & Chandon - Wines and spirits
- Celine - Fashion and leather
- Christian Dior - Fashion and leather
- Fendi - Fashion and leather
- Givenchy - Fashion and leather
- Louis Vuitton - Fashion and leather
- Marc Jacobs - Fashion and leather
- Off-White - Fashion and leather
- Stella McCartney - Fashion and leather
- Benefit Cosmetics - Perfume and beauty
- Fenty Beauty by Rihanna - Perfume and beauty
- Parfums Givenchy - Perfume and beauty
- Make Up For Ever - Perfume and beauty
- Marc Jacobs Beauty - Perfume and beauty
- Parfums Christian Dior - Perfume and beauty
- Sephora - Perfume and beauty
- Bulgari - Watches and jewelry
- Tiffany & Co. - Watches and jewelry
