MILAN — Francesco Trapani doesn’t believe in chief executive officers over the age of 65.
“Of course we can’t generalize but the concept of a ceo is similar to that of a professional athlete, who usually can’t do competitive sports for that many years. That’s the same for a job so stressful as the ceo,” said the former Bulgari and LVMH Moët Hennessy Louis Vuitton executive, marking the starting point of a lively panel he hosted on Thursday in Milan as part of a series of talks staged by Italian daily paper Corriere della Sera.
Trapani’s attendance at the event came a fortnight after his exit from Tiffany & Co. board, following the jewelry company’s acquisition by LVMH in a blockbuster $16.2 billion deal — an operation that was evidently high up on the panel’s agenda.
“My resignation from the board has nothing to do with the deal but it’s due to personal reasons, because there are rules you have to respect when you are a member of a board of an American public company…and I would have been forbidden to pursue some personal projects I cared about,” he said.
“So absolutely there’s no dissent at all. Tiffany & Co. is such an extraordinary company under many aspects, including its inner culture. And LVMH, well, I’m a shareholder and I sold my company [Bulgari] to them, I have many friends there, so there’s no dissent at all.”
Trapani became a shareholder of Tiffany & Co. and was named to its board in 2017. Previously, he was chairman of private equity Clessidra SGR from 2014 to 2016, spearheading the acquisition of the Roberto Cavalli brand in 2015. From 2011 to 2014, Trapani was chairman and ceo of LVMH Moët Hennessy Louis Vuitton’s Watches and Jewelry division and before that, he was ceo at Bulgari. Trapani is the son of Lia Bulgari, one of the grandchildren of the company’s founder, Sotirio Bulgari. Trapani worked for the family company from 1984 until 2011, when LVMH acquired the jewelry house for roughly $5.2 billion.
“I consider LVMH as a partner of outstanding quality because of [Bernard] Arnault and the whole structure, which have a mentality of building value over time, so setting long-term goals to strengthen all their important brands. So I’m sure they will help boost the work of Alessandro Bogliolo, Tiffany & Co.’s current ceo, who was appointed two years ago to breathe new creative life into the brand and accelerate its development.”
The Tiffany deal brought many memories to the mind of the executive. “Of course I’m happy for the [Tiffany & Co.] deal. When I sold my family company there were positive aspects, such as the significant price, but also a certain sadness because I was selling the company my family had for 130 years. In the case of Tiffany, I’m not sad; as a shareholder I’m happy for what I earned selling it to a trusted company as LVMH.”
“When I sold Bulgari it was like 4.30 a.m., I couldn’t even think anymore,” Trapani said. “Years before the deal I tried to merge Bulgari with other Italian luxury companies, but we talked, gave some thoughts and we eventually didn’t manage to do it,” recalled Trapani, lingering on the differences between the French and Italian mentalities and the reason why his compatriots have never managed to create luxury conglomerates.
“The creation of these conglomerates was favored in France because there are luxury companies that were passed down from generations while in Italy we have firms still helmed by their founders. And in some cases, it’s also a matter of coincidence: an entrepreneur more aggressive than others that starts making acquisitions and creates a group. This happens in France but also in Switzerland, for example.”
Conversely, creating a conglomerate in Italy today is “substantially impossible” according to Trapani, because there are few independent companies left in the country and these don’t have the financial assets to compete with luxury powerhouses in taking over key brands.
On a wider scale, the former executive noted a complete change in the luxury market, compared to his early days in the industry. “There were fewer, smaller luxury companies, making fewer, very expensive products for few, very rich people. And the market basically consisted of Europe and the U.S., with the addition a little bit later of Japan. Now it’s a global industry, with public companies and a geography that has changed dramatically to reach basically every country, especially in Asia.”
According to Trapani, a more complex industry and an increasing sophisticated product impact the skills required today in a ceo, who needs to have three qualities.
“First, this person should have a strong strategic ability. Today, there are too many variables as companies count multiple products, multiple channels and multiple countries. A good ceo has to recognize the strengths of a company and focus on the things that could be perfected, while in many cases managers just want to do everything, often delivering mediocre results.”
Leadership comes second in Trapani’s kit since luxury companies are now enrolling “competent, ambitious and mobile” employees and a ceo needs to be inspirational.
“Third, this person has to have international knowledge, to be familiar with and successfully integrate different mentalities,” he concluded.
Trapani also reflected on how the M&A targets are now shifting again on jewelry houses. “It has been a slower journey, initiated by Cartier’s deal and followed by Bulgari. That encouraged big groups to buy these beautiful brands which were having some difficulties in expanding their businesses. But the jewelry market has always been huge,” he said, sharing an estimate of a market worth 370 billion euros.
“This includes many un-branded jewelry, obviously, but the market is paying more attention to brands now. Customers are willing to spend a little bit more to buy a product from a brand, as it acts as a guarantor both for its design and value. This explains the growing interest for jewelry houses over the past 10 years.”
Asked about his favorite piece of jewelry, Trapani expressed his preference for Bulgari’s B.zero1 ring — which “has been a success and helped me a lot,” he said with a laugh — and the brand’s Serpenti line, that rose to popularity in the Fifties thanks to the movie industry and icons like Elizabeth Taylor.
According to Trapani, Bulgari’s cinematic bond, just like Tiffany’s famous link with Audrey Hepburn, contributed to the charm of these companies and made them appealing for today’s customers. “A brand with history has a competitive advantage in general, but especially for the Asian customers,” he noted, adding that these consumers find “reassuring and charming” the storytelling behind a brand and are willing to pay a lot for sophisticated products. “To have success in Asia with a label with no history is quite difficult.”
Asked if he can see China as the next provider of luxury brands, the executive was cautious because of customers’ established notions and strong characterization about what luxury represents and which are the historic countries that generate it.
Sharing his personal interpretation of the term, Trapani said that luxury hinges on the concepts of time and service. “If you have the money, to buy a product is very easy but to benefit from a high-end service is more complicated. Service is such an important element of this industry and represents the real challenge for the companies because they can control the product but things get trickier when it comes to maintaining the brand’s quality with an appropriate service. And that’s why they invest so much in monitoring it and training sales people.”
Currently involved both in a private equity firm launched last year and, more recently, in a London-based public equity, Trapani is one who doesn’t shy away from investments himself. For example, last year he took a majority stake in two Italian food companies, the Briscola pizza restaurant and the Geloso ice cream show. “I’m now eyeing an interesting company operating in the luxury market. Unfortunately I don’t remember its name,” he glossed over with a smile.
As an entrepreneur, he also expressed concerns over the current political situation. In particular, he defined “uncertainty as the real stress factor, a serious weight obstructing entrepreneurs and their investments.”
Asked about Brexit, he candidly responded: “This is a question I don’t know how to answer, it’s a real mess.”
“It looks like they will do the Brexit but there are concerns in the country because if the conservative party won’t have the absolute majority, that would open to possible alliances that could undermine the stability of the whole country…At this point we have to hope Johnson wins, even if I wasn’t pro-Brexit at all,” he said.
Yet a more general trend worries him more. “One of the scariest things in democratic countries today is the fact that disparate, improvised people can win elections, also helped by the wider accessibility to communication such as social media. In a more and more complex world, that requires outstanding skills; we are dealing with improvised people, a scenario that in a big private company would never happen. No one would appoint a ceo that has no experience in that specific field,” he explained, not-so-secretly hinting to the Italian political situation.