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♪ francine: he has been dubbed the geek of chic. he is a tech entrepreneur in the world of luxury fashion, founding the online retailer yoox as an online marketplace. 15 years later, he merged it with its biggest competitor net-a-porter, creating the biggest online shopping giant. joining me on "leaders with
lacqua" is federico marchetti. thank you for joining me and speaking to bloomberg. fashion or tech entrepreneur, what are you? marchetti: i am 50/50. i think it was my advantage. i look at fashion from a nerd and technology from a business point of view. i try to find a link between the web, fashion, and luxury. lacqua: do you only work for yourself, or that you have revolutionized the way that we do things? marchetti: tech and fashion entrepreneur -- i liked the feeling that i was building something from scratch. i started with no money. my family is a very normal family from the northeast of italy. i really -- i feel like i am a builder. i am not an entrepreneur.
i am not someone who is building and selling, like in silicon valley. i am someone who loves being in a company and wants to build it to last. lacqua: even growing up? do you remember what you wanted to be as a child? marchetti: i always wanted to be an entrepreneur. even if my parents were not entrepreneurs, i really wanted to become an entrepreneur because i wanted to create my own thing, my own project, my own company. i left my hometown when i was 19 and went to milan. i said bye to everybody and i went. think that itou is not typical? marchetti: i think italians, they are definitely brave italians, as you know, but generally speaking, we need a little bit more determination and taking courage. >> yuck!
francine: yoox was a strange name for the radical concept to sell high-end fashion on the web just as other fashion sites were going bust. bring me back to when you thought e-tailing was the future. marchetti: i had just finished my mba in 1989, and at that point in time i said, now or never. i had taken the mba at columbia. i had worked for three years in investment banking with the specific goal of training myself. even if i did not like to be in investment banking, i wanted to learn as much as possible in the shortest timeframe possible. at the time, lehman brothers was amazing. i do not regret it at all. i would do it again because
there is a moment where entrepreneurs, they need to take risks. it is part of our everyday life. there is a moment where, if you go too much, you lose your appetite for risk. so i realize when i was 29 years old, and basically put together my passion for fashion, my appetite for innovation because i always tried to come up with new ideas and looking at things in a different way, which is my 50% tech, also being one of the first to use the internet, that was from my passion of the internet, and i put them together with the competitive advantage of being an italian, being based in italy, that culture, being able to talk with the different brands and to bring them aboard.
francine: did you see it at the time and say, look, i would like to build this company because e-tail will pick up in five to 10 years, or was it simple as saying, let us see how this goes? marchetti: no, my plan which i wrote by myself in fall of 1999 was that it would be a global partner for the fashion brands. the global partner. it was a very ambitious plan. it was not just to try out and test. it was immediately global, and in fact when we opened the doors of the website in june of 2000, -- we just celebrated 17 years, and it was immediately pan-european, both in italian and english, so it was ambitious from the very beginning. i thought it was going to be something amazing in the future,
projecting the customers to that website. i have invented everything starting from a customer point of view. in the end, i am the customer, i am now the customer of net-a-porter, so i wanted 18 years ago that kind of shop to buy and shop from. all of the strategies we are doing now, they look very simple because i put myself in the shoes of the customer. i invent new things all the time. francine: do you remember the first meeting, maybe with the brands or with financing? what did you have to convince them of? marchetti: it was christmas of 1999. i left my job, and i had my business plan. francine: which you wrote yourself? marchetti: yes. i was quite brave because i was
jobless. i did not do looking for capital and continuing to work. i said i will try and go full speed. so in only 45 days, i got my first funding from a very famous venture capitalist in italy, probably the best venture capitalist in italy who has now retired, and i am very thankful. i got i think $1.5 million for 33%. then i started to look for brands. i went to knocking on the door of all the brands without knowing them. i completely cold-called them. lacqua: hi, i have a great proposition! >> yes, i shared my dream with them, and i have to say that the most innovative ones were the ones i had good empathy with,
with net-a-porter? frederico: that is another dream. i had many dreams. i started thinking about merging with net-a-porter around 2009, before going public. i remember it was february. i went public in europe in december 1999, and i thought immediately, the two companies were sharing the same objective, the same goals, to be the leader in luxury online, but we completely took different ways. they were perfectly complemented in terms of geography, customers, business models, so putting them together was definitely going to create the leader, which was the first page of my business plan in a 1999. francine: lacqua: what is your dream now? frederico: my next dream?
i am very practical. my next dream is just to finish the integration. i feel very comfortable now, so we are halfway, actually more than halfway, and we are basically meeting all of the milestones, everything is going well. i'm very happy, but i cannot wait to be finished because at that point we will have a brand-new machine, a brand-new car that is going to go superfast. francine: so who are your main competitors that you worry about? marchetti: i mean, we are worried about everybody but also nobody. we do not underestimate anybody, because it is an industry which changes. i have to say that in the last 17 years, we have always been good in inventing new things and new business models and we never followed anybody, but we are
still followed by many. i think we will continue that because we are innovators and will continue to be innovators. francine: do you worry about being disrupted as the destructor, and if you see the pace of change in which we changed our shopping habits online in the last five to 10 years, what will it look like in five to 10 years from now? frederico: since i started yoox and net-a-porter in october 2015, my mission was to bring the company into the mobile and smartphones. i am a little bit obsessed about smartphones and mobile. i remember in university, i was among the first to get a mobile phone, 24 years ago, it did not fit in my pocket at the time definitely -- than a remember in
2006, i put a strategic priority for my company, mobile then commerce. at that time he was about 21% of our sales. fast-forward to 2016-2017, 50% of our sales, $1 billion of it is coming from smart phones and mobile, so we see the growth coming and we expect the growth to be unstoppable. i see the mobile as being the next shopping center for luxury. so the next department stores will be in mobile phones. francine: how their customers shop is changing, and so is what they are buying. the group's foundation was built on selling designer clothing, shoes and accessories to fashion addicts, the next frontier is hard luxury like watches, jewelry, that costs tens of thousands of pounds.
shoppers are putting more trust in online stores. what is the one thing that will change over the next four to five years. will i be more demanding as a customer? frederico: on the net-a-porter business, we have an importer and incredible customer base made up of people who spend -- women of today, who spend over one million lira easily, to buy a watch. or to buy a watch of 100 thousand pounds or more net-a-porter. they just sold a valentino dress for 35,000 euros. we have the most discerning customer out there. we definitely do not share the same customer base as our competitors. imagine 2% of our customers make about half of the total revenue, so it is very concentrated. francine: you were one of the
first to put hard luxury, with watches costing 30,000 pounds or more, was there any skepticism about selling such things online? frederico: again, i'm a customer. so as a customer, if you are in a great environment with great content, great storytelling, great products and assortment, if you are buying a valentino dress for 35,000 euros, why not bugelatti watch, or any other type of watch like that? francine: but there was skepticism? frederico: of course, but that is the fun part of my job, always trying to push boundaries. i would it is part of my dna and
i will continue to do so. i am super happy that now the highest growth in terms of category is watches and jewelry. and we expect a lot of growth to happen in this. it is another differentiation point. francine: if you had a magic wand and could change something about the company what would it be? ♪
francine: federico marchetti runs one of the largest online luxury retailers in the world. but yoox-net-a-porter is more than that, it is of the most recognizable and expensive fashion houses, creating the technical know-how and logistics that convinced luxury to move on to the web. how mature is the e-market right now? frederico: it is still at the very beginning.
luxury online represents about 5% or 7% of the total revenue, so there is a lot of space for growth. i also feel myself that the company, even if we are the leader with $2 billion in sales, i still feel like we are at the beginning of the story. francine: because we are going to shop differently, so are we going to buy more health and beauty online? will men shot more online? frederico: simply because the new generations are online on -- all the time especially under smartphones. they are growing and they have more spending power, so there is a progression coming soon. francine: how do you think people shop? not just high net worth individuals, do people go online, go to the
store, then buy online, is it very fluid? frederico: yes, i believe that physical shopping will always exist. also for marketing, not only for sales. i remember with marni who was one of our first flagship stores, i remember the japanese customers, the store had the widest assortment, the biggest store we have in the world, not only in terms of traffic but also assortment. the japanese customer, they went online, and they were choosing the things that they liked, ready-to-wear, and then going to the japanese store of marni and asking, do you have this one? in most cases they did not. so we are trying to make sure the experience is one and only one. francine: is that difficult? frederico: the difficult part is
making it simple. for the customer it has to be super simple. so in order to give them simplicity, the behind the scenes is very complex. francine: this is why they are the experts. inside the warehouse on the industrial estate just outside bologna, italy, is the heart of net-a-porter. a warehouse processing thousands of items per day. the tech comes from here in london where experts are trying to develop ai which can help the group anticipate the desires of high net worth clients. federico, how do you sell customerly to a u.k. than you do to at sign customer to a chinese customer? frederico: we sell to customers
in 180 countries, but what makes yoox-net-a-porter different is the level of localization. all of the customers have different localizations, country by country. it is not only about the language but also about the details. i will give you an example, again about japan. in japan, we pick the best career in japan -- courier in japan, everything has to be consistent because we are luxury. the most important thing with japanese customers is delivery by appointment. they do not care about delivery in 60 minutes or 90 minutes. they care that they need to be home when the courier comes, which is understandable, no? in japan does delivery by appointment. i want the package by 5:00 p.m.,
at 5:00 p.m. t the assortment, the price, from country to country -- i think we have over 10 million prices overall. francine: if a young person wanted to go into your business, either in fashion or as an entrepreneur, what would be your number one advice to them? frederico: i think one of the main problem with italians is a they think only about italy. so when these startups, they do not think about the world, about europe, the u.s., japan, china, they stick only to a small country in terms of demand. it is a big country in terms of culture and beauty. i am happy that i went back to italy. but i think my advice is that when you think about a business idea, it needs to be applied globally.
where also talking about employment among the young generations in italy, the u.k. and elsewhere. the true story is that the shortage in terms of people trained for digital -- that is why we as a company are part of this coalition in the european union in order to train more people to reach the one million people able to work in digital. i see our company, we are busy looking for talents in the digital all the time, it is part of my job, recruiting -- it is probably still the biggest part of my job, trying to find talent out there. francine: where do you see yourself in five years? frederico: i see them doubling in size. we are on track for growth of
year on year, which is what we did last year. and i see myself still innovating and trying to come up with new ideas and also, enjoying all of the talents that i have recruited. it is fantastic for me, a fantastic experience for me to work alongside people who are working here since we began, 17 years ago, many people. from the chief operating office, the head of r&d, many people. we have veterans from net-a-porter, we have people who have been with them for 10 years and we will be celebrating our anniversary with them. so i feel very lucky to work with such a talented team and that is what i expect in five years, to continue to work with talent to will teach me,
and not only be driven. francine: if you had a magic wand and you could change something about the company, what would it be? frederico: frankly speaking, i have to say nothing. i know it does not sound good, but i think we really have the best business model for luxury. because we have full control of the supply chain, the brands, they want control because they control pricing, the control service, and they control prestige. and this business is about press prestige. so if you have a fragmented supply chain, you lose control and the brands will lose control, and that will not work. this business is about prestige.
♪ joe kaeser is a rare breed of chief executive, dedicating his entire professional life to one company. he joined siemens in 1980, moving up the ranks and around the world for a company described by angela merkel as the flagship of the german economy. siemens truly powers modern life, making everything from turbines, health scanners to ovens and factory equipment. joining me with leaders with
lacqua is joe kaeser, from siemens. thank you so much for speaking to bloomberg. joe: sure. francine: can you tell me about the first day you started at siemens? joe: hard to remember, when i was coming to the company i said, oh my god. i was thinking to myself, i do not know anything anymore about what i studied. francine: do you remember going into it? did you think, this is a company i really want to work for? joe: i was interviewing at different places, but i saw siemens at the time, it was still in the semi-conductor business and the electronics business. so i thought it was really cool, we were about to develop this one megabit chip. we are now at gigabit. so i thought this is where i want to be. francine: how has the company changed?
joe: it is like day and night really. i came in to manufacturing environment, it was about production and process and cost efficiency. there was a very technologically focused company, not much about markets and customers it was much more inside out than outside in. a lot has changed. francine: what was your favorite day? joe: i had many favorite days. whenever my team was celebrate some big success, i would think, this is the best thing which can happen to you, having a great team. francine: how do you manage success or how do you measure success? joe: when you promised something and you make good on your promise, it is about
accountability. that is the ground floor. when people talk about you two different people, at the end that is what really matters when you are remembered. whether you make the numbers or not. after a generation, people say hey, that guy, he actually made some mistakes but actually, he really left a better company behind. francine: talk to me about innovation. what will siemens look like in about 100 years, and how much do you have to innovate and how much do you have to stay close to your roots? joe: i think in the next 170 years, it will likely change a lot. they will accelerate out of solution, it will become more intangible, much more integration necessary to put bits and pieces of products
together. so i hope the world will have become a much, much better world than we had today. francine: few companies have gone through as many technological and industrial revolutions as siemens, but rather than just survive them, it has helped lead them with the advent of electricity to jet engines to wireless communications. but now, siemens is inventing billions in making sure its future is digital, from giant turbines in asia which use ai to products in the u.s. harnessing big data to find problems before they occur. are you worried about the pace of change? if you look at the last 10 years, innovation has gone so fast that you cannot possibly do that over 170 years. joe: that is just what people
thought naturally 170 years ago. people are just naturally concerned about the future because the future is uncertain. the question really is what concerns us, not so much innovation or what technology can do because all those three industrial revolutions revolutions that we've had so far made a difference in the planet and made this society a better society. that is a positive. what is radically going to change is the speed of the change going forward. human society may not be able to deal with that sort of speed, so what i am really concerned about that is that if we do not make this industrial revolution inclusive to society, it may create a lot of challenges, unrest, divided populations, which leads to obviously populism and leads to nationalism and you go all the way down to where we used to be 100 years ago.
francine: do you think there will be problems to provide solutions for because of this rate of change? joe: the fourth industrial revolution, whatever you call it, people believe it is going to be virtual, sophisticated, invisible, the cloud, a terrible word. that is not true. there will always be trucks, there will always be something to drink, to eat, there will always be cars, there will always be tangible things. francine: are people confusing in addition with globalization? joe: interesting question. maybe. the speed of technology, what they feel is they believe the root cause is globalization, but it is actually the other way around. technology makes it possible to have a global network. that we have our smartphones,
that we are always on at any point in time, no matter where we are, we are always connected, you can talk to almost anyone in the planet, real time. that connectivity is actually a benefit. we like it. affectede negatively by innovation and globalization, you do not like it. and that is what we need to better explain going forward. francine: it was pretty controversial when you went to see vladimir putin a couple of years ago. are you ever concerned about being controversial? ♪
joe: ladies and gentlemen, over the past few days there has been a great deal of media coverage about siemens about personal and other nonrelated business matters. but this is not siemens, and that is not what matters, not it -- nor is it what it should be. joe kaeser made the statement days after taking over as chief executive of siemens after his colleague had been removed. it said a lot about his appeal as a leader, providing clarity and clearing confusion and stability in unrest. he spent the last four years trying to simplify the complex structure of the company. are you happy?
are you happy with the structure now? joe: i am happy with what i see in terms of how our people take ownership literally in what we do. saying that it is my company, it is my responsibility, my job, i am responsible. it takes a lot of confidence to act like that. francine: do you think investors will ever get confused? joe: they only get confused if i try to explain it in too much detail. then i know that i need to shut up, do not confuse them with the details, just show them the way that they want to be. deliver what you said you would do, and it will be ok. francine: what exactly drives you? joe: at the end of the day, business is there for society. business needs to be more inclusive of society, and if society is successful, we will be. we cannot afford to further divide society between the haves and have-nots.
francine: you seem to have very strong ideals. is that why you empower your employees through stock? joe: we call it ownership culture. first of all, if your family business, no matter what size it is and you own it, it is your personal business. maybe a different continent from your parents. what is your natural desire? your natural desire is very likely that you want to give that business to your children in better shape, a natural desire. there are exceptions, but this is probably what the natural desire is, so, inherently, you build a sustainable element of long-termism. more importantly, the second element is -- i own the company, i am long-term oriented, i do the best because it is my company.
no matter who you are, no matter what you do, always act as if that was your own company and you will be fine. even in meeting rooms, we put it on the table and say hey, if that was your company, what would you do? they put so much pressure on meaningful debates. francine: it focuses the mind. joe: i would do it anyway. really? really? is that what you want? francine: does that mean that you worry about short-termism? joe: a little bit. francine: in business over all? joe: it is only a matter of time. many things are invented and cultivated in america, and it comes to different places. francine: how do you change that? joe: that is a very good question.
you need to be successful in the short term, yet not lose out in the long-term. it is the balance you need to strike. in essence, you need to keep the difference between the short-term aspect and the long-term aspect, you need to keep the distance very close because the wider it gets, the more activists you get who say this is not the performance got we want. francine: it was pretty controversial when you went to see vladimir putin. are you ever concerned about being controversial? joe: the intent was not to be controversial. in march 2014, joe kaeser met with the russian at his residence outside moscow, days after russia had annexed crimea and just as the west was launching its own showdown. president obama: together we condemn russia's invasion of ukraine and reject the legitimacy of the ukrainian referendum. joe: the outcome was complicated
to put it mildly. i did not know that president obama and the european leaders at the same time that i was meeting him were having a press conference in brussels about sanctions. the american president did not bother telling me his appointments, so it was unfortunate timing. and later on i gave an interview, and i remember it was crimea before ukraine, and i gave an interview on german media and i was asked -- how the hell could you even go to see this person? >> [speaking in german] joe: and i said you know it is good to talk to each other, not about each other. i was committing, of course territorial integrity matters,
of course it matters, but honestly, given what we have been through with the russian people, between two world wars, i said, you know, this is a temporary issue. now what happened was, and we know this well, what was in the news and immediate, it was not about the two world wars, crimea is maybe not as material. obviously if you only read that, you would say, what the hell is going on with this person, saying such crap? so it was unfortunate. but i did say that, i made a commitment to the crimean people to industrialize the country. that was the intent. the outcome was learning of me to be more mindful and be more careful about my responsibility. i still do believe that talking to each other in any sort of
president trump: chancellor, thank you very much. such a great honor to get to know you, to be with you. i want to thank all of the business leaders who have joined us. francine: the siemens executive joe kaeser was one of those leaders with the merkel delegation to the white house in march. siemens employees thousands of people in america. this came with a backdrop of
uncertainty after the new president had been less than complimentary about german trade. what do you think will come out of the trump administration? joe: i think the jury is out on this one, obviously, because we hardly made the beginning of the first year, and it could be all the way up to eight years. i don't know. i want to believe he is trying to do the right thing for his country. the style is different as to what we have been used to in the past, and i think the europeans are also well advised to look into what matters to them and what doesn't. whether it is russian collusion or any other things, whether it is business. the united states business. the other topic is global trade,
how to interact together in a modern world of manufacturing, specializing in certain tasks, in a global world. that one matters. i believe, to europe, especially that trade deficits and things like that. people underestimate the desire of the customers. francine: which is what? joe: the desire of the customer is to buy what they like to have. an unhappy customer is an unhappy consumer. an unhappy consumer is an unhappy voter. so you have to be mindful about people's desires. no one forces our goods and products to any american customer. they want to buy it because they believe it is good. so in the end, global competitiveness, we believe, is about innovation and also about a fair sort of dealing with each other. so that is i guess where we need to sort out a few misunderstandings on that one, how global trade actually starts
and develops, and then we will find a way to work together. francine: does making america great again necessarily mean the rest of the world becomes worse? joe: i think that is a point. president trump: millions of hard-working u.s. citizens have been left behind by international commerce, and together we can shape a future where all of our citizens have a a path to financial security. joe: he is the president, and you respect the office, but america is great. it is a pretty darn great country. it is the leading economy in generationxt manufacturing even. you know? google, microsoft, silicon valley, what have you, of the world, they are american. even the car manufacturers have been catching up pretty well from a devastating situation a few years ago, so this is a great country by any means.
and honestly the greatest of it has always been that it was a free country. there is nothing wrong with "america first." i think what would be wrong if we went from "america first" to "america only." that would be complicated. there is still 7.2 billion people to 300 million in this greatest country, so that is where we see a bit of confusion, nobody really understands yet what that means. francine: is europe great? joe: it has challenges because there is no fiscal union, nothing holds as together in terms of a policy standpoint but i think the europe has seen the worst in terms of jumping into all sorts of directions. it seems like sentiment is more integrating. francine: you don't think we can come back? that we somehow forget the concerns of populism in europe
and it comes back uglier in five years? joe: i am very encouraged, first of all that people are saying hmm, people stood up and went to vote. because they saw that things were not going their way. this was what was the most encouraging thing to me. it is time to take it into hand. that is quite positive, honestly. francine: how do you see china? joe: china, hmm. the chinese way is to typically sit down and smiled. look what happens. today, in the western world having not yet fully straightened out what we all of, thewhat we say kind chinese say, hey, if there is no western leader anymore in global trade and things like that, then why don't we do this job for
them because we have a 1.3 billion people, more than europe and the united states together anyways? it was just a few months ago at the one belt, one road summit where president xi jinping was the keynote speaker at the summit, and he said, look, we are going to build the old silk road. 65 nations have signed up already. there were over 100 leaders there, so there might be more than 65, they are going to raise over $100 billion in currency to -- financing to build this. the silk road in ancient times had brought peace and trade, so why not build it again? if you take this one step further, think about 65 to 100 nations, the western road really does not yet know how to deal with global trade and things
like that, what fair trade is all about. they're going to build one road, and it may as well be the new wto. francine: yes, but it is such a big economy. they are trying to move a supertanker. are we going to see a bump as china tries to be a more consumption-led economy? joe: i think china is not exactly a democratic state under western standards in a way, so the government is very clear with the directive of where they are going. there is very little multi opinions about what could be done or not be done and things like that, so they are very effective in what they do. francine: so they have a good handle on it? joe: they have a very clear direction, and their execution force is very strong. we know that there are human rights challenges and things like that, but so far they have been very effective in doing
coming up on bloomberg best, the stories that shaped the week in business around the world. leaders scrambled to close a brexit deal. >> i believe we have now made the deal. >> and washington, challenges keep the government >> we have a lot of work to do. >> congress heads to congress. >> we firmly believe tax reform will lead to wage growth. >> media moguls assess their industry. >> there has been a wake-up moment for the big platforms. >>