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TIP659: Hermès Stock Deep Dive w/ Shree Viswanathan
We Study Billionaires - The Investor’s Podcast Network
The Legacy of Family Control in Luxury Business
Hermes stands as a quintessential example of a family-owned and controlled business, having operated under this model since its inception in 1837 for over 187 years. This legacy of family ownership is critical, surpassing other attributes like quality and craftsmanship in importance. Currently led by Axel Dumas, a sixth-generation family member, alongside his cousin Pierre, who oversees product quality, the company's leadership structure underscores the influence of family ties. The rarity of sixth-generation family businesses is highlighted by statistical data, which shows that only 3% of family businesses reach the fourth generation and the odds of sustaining a sixth generation are 500 to 1. This longevity contributes to a distinctive operational ethos linked to the founder's mentality, characterized by an insurgent mission, an owner's mindset, and a deep focus on frontline activities. According to research, companies embodying these traits can offer returns to shareholders that are three times greater than those of traditional companies. Hermes benefits from this family-centric operational model, which preserves its heritage and competitive edge within the luxury sector, controlled by the three branches of the founding Dumas family.
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