MILAN — Remember 1994? In South Africa, Nelson Mandela was the first man of color to be elected the country’s president, while in the U.S., O.J. Simpson was arrested and charged with two counts of murder after the deaths of his ex-wife, Nicole Brown Simpson, and a waiter, Ronald Lyle Goldman. Playstation was launched and the Internet got real with the founding of both Yahoo and Amazon.
More than 5,200 miles away from the West Coast of the U.S., in the Italian city of Turin, a visionary entrepreneur named Marco Boglione launched the world’s first fashion marketplace, BasicNet, the company that currently controls a range of labels, including Kappa, K-Way, Superga and Sebago, among others.
Born from the roots of storied traditional clothing company Maglificio Calzificio Torinese, founded in 1916, BasicNet doesn’t produce or distribute the collections of its brands. Through a digitally advanced platform, it acts like a marketplace where manufacturers and distributors meet to do business. In particular, BasicNet designs and develops its labels’ collections, then the company signs licensing agreements with international producers and distributors, which receive from BasicNet all they need to manufacture and sell the products.
In the first quarter of 2019, BasicNet, which has been listed on the Milan Stock Exchange since 1999, reported a consolidated turnover of 74.6 million euros, up 38.9 percent compared to the same period last year. Consolidated revenues included royalties and sourcing commissions of 12.9 million euros, as well as sales of BasicNet’s directly operated Italian licensee BasicItalia SpA and the recently acquired French licensee, which totaled 61.7 million euros. Last year, net profits totaled 21 million euros, up 97.4 percent compared with 2017.
The company, which in June will bring its collection of retro computers dating back to the years 1975 to 1985 to the Cupertino Historical Society in California for a temporary exhibition, has just named a new chief executive officer, Federico Trono, who succeeds Gianni Crespi.
This strategic move kicks off a new phase for the company, as BasicNet president Boglione explained to WWD in a bubbly, candid interview, during which he also retraced the story of his pioneering digital adventure.
WWD: The company continues to post great results. Is BasicNet performing above expectations?
Marco Boglione: Absolutely not. When I started, I knew I would have seen the results in 20 years. I mean, I knew that I would have known only after 20 years if what I was doing with all my energies was bulls–t or not. At least, today, we can all agree on something: it was not bulls–t. And, from my point of view, you don’t do something like this to arrive here or there.…You do something like this to navigate, to always proceed. I think that where we are now is only the starting point and that the best is yet to come. The future? Who knows? We did this long preparatory path and at the same time the world has changed around us. And it changed as we expected on the one hand, and on the other hand as we needed to fully develop our business. When we started, everybody was making fun of us and they were right. They used to tell me: “You are just dreaming, the Internet doesn’t exist.” But then the Internet arrived and it changed the world. Of course, people used to tell me I was crazy, but maybe I was just seeing what was going to happen in the world.
WWD: How did everything start?
M.B.: Everything started when I was in high school in January 1975 thanks to a priest, my physics and mathematics professor, Brother Roberto Sitia, who used to tell us about computers and what was going on in Silicon Valley. In particular, he told us that a company called Intel had invented the microchip, which opened the way for the microcomputer and then the micro software, the micro network and finally the Internet. When I was young I was following these things like my friends were following The Beatles and The Rolling Stones. There were others that were into Che Guevara and Fidel Castro and then there were the smartest who didn’t care about anything and identified themselves with hippies. I used to meet up with the guys who were sharing my same passion a bit clandestinely, we were the minority of the minorities and the others were making fun of us. We were the so-called nerds. Jeff Bezos was someone like me, only a bit younger. This has been my genetic and cultural imprint. I was not good at school, I found out late that I was dyslexic, they made me going to the Politecnico because that priest convinced the final exam commission to assign me a great score not for academic but for intellectual merits. Actually, my father thought, “he is finally a normal one, he can go to the Politecnico.” And there, my biggest nightmare started. I spent two years asking myself why I was there, I couldn’t dream, I had the feeling that the path to get ready to face real life was too long and complicated, I was dyslexic, I couldn’t focus and then out of the blue I met the person who changed my life: Maurizio Vitale [the grandson of Maglificio Calzificio Torinese’s founder Abramo Vitale]. As soon as I met him, I realized I didn’t have to let him go. It was actually a sliding doors moment. He told me “give up the university and come work with me.” And after 43 years I’m still seated in the same room where he hired me. This is the story of my life.
WWD: How do you describe BasicNet?
M.B.: It’s a marketplace. It took me many years to understand how to name this company.…We called this in almost all the possible ways. When we started, I called it syndication, since all the entrepreneurs involved are syndicated with us — some of them receive information to produce, others get samples, many purchase the production from manufacturers and so on. However, in Italy the world syndication is commonly associated with “sindacati,” our word for trade unions. Then, I used the word “network,” we liked it: a basic network, a simple network, efficient…then 10 to 15 years later, people associated this model with the idea of a win-win and circular economy. A company defined by the market and not by four walls, which is win-win in the sense that everybody does what they need and that is also the right thing to do. They act like this not because they are good, but because they are smart, business-savvy. It’s incredible how so many entrepreneurs in the world, hundreds and hundreds, act in unison, making it possible that our brands are not considered local fairy tales, but international labels which perfectly combine a local and global approach — glocal. I’ve always thought about BasicNet in these terms. When on Feb. 8 or 10 in 1994 I first read the Internet protocol and I asked the guy who showed it to me “whose is it?” and he replied “nobody’s,” I said “impossible.” He replied “someone wrote it but gave it to humanity” and I started feeling hot, I was sweating — and years later they told me it was a typical Stendhal syndrome which I had already experimented when I was eight. At that precise moment, I understood that BasicNet was possible.
WWD: What are the values keeping together the different players that are part of the model?
M.B.: For 15 years people didn’t take any care of the model. Everybody was taking care of their own interests. I was saying to distribution licensees: “I enable you to buy directly from the company. You pay me only some royalties when you have sold the products. You can keep the margins.” I think that only few of them really understood the model, but they were getting great benefits. They were not taking any risks and I was offering them to buy from me not products, but a license. I asked them to only sign a licensing agreement, I put at their disposal the use of the brands, the technologies for industrial development, sizing, suppliers, technical details, I didn’t impose them the wholesale price. Distributors started asking for products, manufacturers saw the volume of orders spiking, but everything had to go through a unique platform. If not, we would have witnessed a digital chaos, a crash. So when we started nobody was betting on the model, not even the stakeholders, who have always been super skeptical and this happened probably because of the Italians’ bad reputation.…If we were the same startup in 1994 in the United States, it might have been different…but we might have already been bankrupt. We don’t deal with a generic market like Amazon and eBay…here it’s about fashion, taste, style, culture and the fact that our growth was slow probably means that there was no financial speculation.
WWD: Is there a mission keeping the system together?
M.B.: Nobody cares about BasicNet’s mission. If you are an eBay-er or an Amazon partner, do you really care about eBay or Amazon [as companies]? No, until they continue making money. Our business model is win-win and if they really care about the company they can just buy stocks. The model needs to adapt to every culture, the focus is all on neutrality. Remember that what makes Switzerland rich is not its banks, but its neutrality. However, this works for BasicNet, but not for the brands. Kappa and the other brands have a very strong and peculiar strategic positioning. They are actually the common good that we all defend. The brand value is our real asset. When we started, everybody used to tell me that the licensees would have betrayed the brands just taking care of their own business. But I believed that they wouldn’t have done that because it was not convenient for them. Everybody was thinking that we should have had incredible security measures. But I don’t want to control anything. The fact is that everything transiting through the platform is not questionable. I’m the one telling the licensee how much are the royalties I am owed. In addition, we are the only fashion and textile company in the world having each garment serialized with a unique number, which means that the originality of the products is 100 percent guaranteed.
WWD: Have you ever received requests from other entrepreneurs to adapt the model to other companies?
M.B.: Yes, many times. Almost all the people I meet ask me that and they are the same I used to meet 20 years ago. But they started doing that only six months ago. I always tell them: “Why didn’t you ask me before?” I would like to be remembered among those who understood certain dynamics a bit before the others. As part of my retirement plan, I’m thinking about doing a new business in a different sector. Do you really think I could do that analogically? There is no chance I would do something not developing it with this philosophy.
WWD: Tell me about your retirement. What does it mean for you?
M.B.: I’m planning my retirement as one of the responsibilities I feel toward the company, which is something I care so much and for which I have always put business over pleasure. I mean, the pleasure could be staying here in the company for a while as president. But this won’t be good for the company, which is what I care the most for. I describe my retirement as a step back as a manager and a step forward as a stakeholder for the good of the company. After 20 years of a “ride of the Valkyries” made by kids that are now in their 50s and among them there are few who like me are in their 60s, I think it’s crucial for the company to get 20 years younger. We called our mission “back to the future.” We need to go back to that time 25 years ago when the only thing that existed was the future. That’s why for me this is a new starting point based on solid financial and patrimonial bases. My retirement, which I announced five or six years ago, will see me assigning the latest duties I have — product development, marketing, human resources and information technology — and as a stakeholder I’ll try to maintain the duties for investments and strategic finance. This is not about my personal retirement; I’m actually making a new job for myself embarking on a new challenge, an almost impossible one. One must do things which are not stupid, but which few people try to do.
WWD: Will you keep looking for brands to enlarge the portfolio?
M.B.: Absolutely yes. Brands are our raw materials. We acquire them, we work on them, we sell what we elaborate, which are not garments, but the technical details of the collection. We didn’t pay a lot for our brands, nobody wanted them, they were bankrupt.
WWD: What are the drivers for the acquisition of a brand?
M.B.: The drivers for the acquisition of a brand are three. First of all, we need to have room, there are moments when this company is too busy to focus on a new brand. Second thing, it must be a real brand with no frills, better if it’s global. Third thing it must be cheap, which is a very difficult condition to find. To be cheap, it needs to be bankrupt so it has the right price, which is almost nothing. This happens in particular when it’s a court that sells it at the right price with no traps. And this happened for almost all our brands. However, this is not a rule.
WWD: Does this means that the acquisition scheme came after?
M.B.: Many of our schemes were born in retrospect. We experienced them and then we looked for the demonstration. Being born in retrospect, if the experience changes, the scheme changes. And then there is always the fourth wild card…the opportunity. If you have a hotel and it’s full when Mick Jagger arrives, I’m sure you will always find a room for him.
WWD: Right now, do you see good brands available on the market?
M.B.: Think about those three conditions. Focus on the price. There are good brands around and the conditions would be fine, but maybe there is a fund, there are stakeholders, they want 100 million euros, but I want to pay 10 million. If you ask me for 15 million, we can start the negotiation.…Alternatively, in the case of Sebago they asked me for 25 million euros. I didn’t think twice. But Sebago is one-of-a-kind. It’s the only brand we acquired which was not bankrupt.
WWD: The fact that it was born and based in Italy had a specific impact on BasicNet?
M.B.: I think yes. Italy is a unique market for specific sectors, such as fashion, design, food and micro robotics. It’s an incredible showroom. Those fashion and design brands that find the way to affirm themselves in Italy have the chance to be part of the biggest trade show in the world 365 days a year. I think the distribution business in Italy should be a bit more protected and not publicly slaughtered. Italy is the only country counting about 1,700 beautiful luxury stores. There is one in every town and they are run by great entrepreneurs, who had to face the crisis but are still here. For example, with K-way we started with 30 stores and now we are sold in 900 shops — in what other country would we have been able to do this?