Paul Archer: Hello, welcome to Building Brand Advocacy. I'm your host, Paul Archer, and today, I'm joined by Michele Galetto. Michele is got an area of expertise and somewhere, which I'm particularly interested in learning about because it's basically the area of brand building that I'm at my weakest, and that is in the luxury space, so Michele welcome. Want to kick things off. Do you want to tell us a little bit about how you came into the wonderful world of brand building?
Michele Galetto: Yes. Hi, Paul. Thank you very much for having me. Hi, everyone. I would say it was by coincidence, so basically, I spent the first 11 years of my career in consulting. I've been working with Eddie Kearney, Deloitte Consulting, KPMG Consulting. I remember the words moment during my tenure and Deloitte Consulting while I was pitching diesel and one specific day iStock in agers at the airport, I was working in North Africa at the engineering of ENI subsidiary, the Italian oil company, so it was really a tough one.
I remember I texted the general manager at Diesel saying, "Wow, you're so lucky. Guys, you're doing an amazing job. While I'm here in North Africa, it really sucks. I don't know. How are things on your side?" He just reply, "All right, why don't you join us." It so started from there. The second part of my professional life started with a text message like, "Why don't you join us, and we moved from there." It was probably just a matter of being lucky at that time.
Paul: Brilliant, and we'll forgive you for your background in consulting. Don't worry. No one's perfect.
Say, what was that first role that you joined in? Was that on an operational side of things? Was that on the marketing? What was Diesel then, that was the Italian subsidiary that you joined, and what responsibilities did you have?
Michele: Oh, that was tricky. I went through a process to be hired, which lasted more or less eight months. I scale up from the HR intern to finally, Mr. Renzo Rosso. I was initially selected to be head of marketing, working with Georgia Preska, who was at that time the vice president for all the business area, and all of a sudden, I don't know why Mr. Rosso told the guys hiring during the hiring process, "All right, I want to meet this guy." There has been another couple of steps meeting Mr. Rosso which ended with two proposals, one to work on marketing side and the other one to work together with Mr. Rosso in developing a little brave the holding company and acting as his right arm.
While I was pleased for having couple of options, it was that moment. It was a naive situation, to be honest. Then I decided to work together with Mr. Rosso. We had a great chemistry, and I was basically involved in everything that was new to the company. All the new business development, all the scouting for new brands to set up this new holding company, reorganizing them, managing them.
I went through, I don't know, Magella acquisition Marni, this were license, all the stuff that were additional to Diesel. On top, I was working side by side with him on very specific topics for diesel or other small initiatives that were taking place at that time. It was a super interesting role, and I have been exposed to people, which I probably would never had any opportunity in life to meet, so it was really a great moment in my life.
Paul: This was what? 2006, 2007, that was?
Paul: Diesel had to be one of the biggest brands in the world at the time [crosstalk].
Michele: It was golden age for Diesel. It was this bunch of crazy people. We were throwing parties, opening new stores, creating any initiative from scratch, and we were making it happening, which was incredible at that time. We launch the underwear business unit. We launch Diesel black gold. Sometimes, I don't know if it's a matter of being in the flow or it's the slightly cool moment for a specific brand, but those years were when Diesel was really on fire almost everywhere. We were booming in Japan, in the US. Europe was doing great. It was really a great moment globally.
Paul: What do you think it was that made Diesel stand out as a brand? What made it different at that time? You have your Levis and your Deni, but also that was high tide, maybe Von Dutch era as well if you remember that. What was it that made Diesel the one that could just cut through?
Michele: The biggest thing about Diesel it was daily planet before diesel was like you buy a pair of Levis like regular mid blue or dark blue and you were wearing them and washing them until the very moment they were fading in the exactly color that you like did better. It took sometime ages to get at that point to give that worn-out look to your planning. What we wrote in the market at the time was the worn-out look that wasn't on the market at that stage.
It was a completely new thing like treatments and different washes. It gave all the consumers an option to create their individual style from now, not in two years or five years or whatever. That around this Danny Walsh theme, we have been able to build a global look and feel like a proper brand mood, which was at the end, responsible of the success we had at that time. We built different collections that also are expanding now to homeware tableware, anything you may think of.
Paul: That journey of going through from there but you've been lucky enough to be at the seat of some incredible brands subsequently from there. Going on from there to be working at Largo. Then you switched, then got acquired by Net-a-Porter, and now Keaton like going through such a various different brands and retailers that sell lots of brands. What is the one thing that you think makes a brand successful above all others? What is the trend, that vain, that runs between all of those massive successes that you just see time and time again that should be obvious but maybe isn't?
Michele: There are probably two or three things that mainly refer to the same main topic. The first one is make sure you have a very clear value proposition coming from the brand DNA, which has to remain always the same. The brand DNA, it's something that never changes. It's like your reason to be on the market and your main point of difference. The other thing that is super relevant is the ability to keep this DNA customed over time and to upgrade or show different faces season after season. It's always the same, but you bring out slightly different aspects of the same thing If you keep repeating the message and you keep creating interesting new things, interesting new passages like new shades of messages, that is the way you can succeed.
It's not about changing, it's about evolving, keeping a very stable route, but showing something that is a evolution, which is where science and magics mix together and create something special. This coming with people, with good food. For instance, I remember the years that Diesel where basically I didn't feel any stress for work. I was working like crazy, and a lot of people were, but it was very fun situation. There was an incredible environment made by young guys and senior executives, which-- We had an incredible experience, great ideas, a super design team. We were all mixed together creating something that was much more than the sum of the single individuals. That was the chemistry of creating a successful brand.
Paul: Have you ever seen that go wrong or where do you think brands can lose it? I'm always fascinated. I see quite often a brand will get a big buyout, private equity, or someone will come involved. They'll get rid of some part of that DNA, maybe the founder, and then those companies often start to then decline and lose their way with it. Have you seen that experience? What's the first error that people make when they start to lose their way once they've found it?
Michele: I think this is mostly where science meets magics. The cure of sales generally, it's not very well aligned with the curve of the coolness of the brand. Sales are still growing even though the brand is probably going a little bit down in terms of coolness. At a certain point, you need those visionary people that really understand what's going on at the brand and in the market and are able to match the two things to tune in market, demand and offer.
What happens sometimes, or probably most of the times is that when-- I don't know, a private equity or anyone else get a brand from the market, they try to simply change the receipt and they say, "We are Paul and now we want to hire Mark and this is going to be better," which could probably be unless you really understand what is changing in the alchemy. I believe that probably only the founders or the people were really embedded into the brand DNA are able to make those decisions. It's Steve Jobs, Mr. Ross. Those guys really understand what's happening and how they came to offer in the demand.
Paul: Talk to me about the founder, Mr. Rosenberg. Did you say from Diesel?
Michele: Rosso, yes.
Paul: What was he like? What made him different? What was it like to work with? Oh some of the funny stories you had from that?
Michele: He was a genius, by the way. A total genius. I think it's the person who most shape my career and influenced the way I am now as a professional and sometimes also as a person. I think I've never met anyone more generous and with a super clear vision of the future of brand and the industry. He has this really incredible attitude to understand people. It was funny because my office was just next to his, and sometime I found myself looking for the people entering his office. Banks CEOs followed by an intern at Diesel showing him something.
He was meeting with everyone, which was probably-- As you can imagine he was the president, the founder, whatever of over 1 billion Euro group. He was super busy with different meetings, but he was always super curious to hear what you were achieving. sometimes, of course, the flip side of the coin was that if you were trying to get his time without bringing something relevant, then it was not that kind.
He was trying to say, "I'm happy to meet with everyone as long as you have something for me. If it is wasting my time, then this is not a situation." I think the most important part of his personality was to be super open to anything and to anyone. Now probably there this word, which is a little bit operated, which is inclusivity. He was inclusive by nature. He was any topic, any person there's no gender, religion, color, nothing. He was hungry to get new things from whatever they would come in. He had this incredible attitude to elaborate all these little bites coming from different people, markets or staff and creating his own vision. That was super fascinating to me.
Paul: Fast forward now, you are now at a brand Keaton. Tell us a little bit about this brand and how you fit into the mix.
Michele: Keaton, probably, it's not the same coolness. It's very different part of the industry is the ultra high end luxury. It's the development of traditional Neapolitan tailoring. We have this approach on qualities. Everything that we do is handmade in Italy. We are a fully integrated business. We produce our own fabrics, and we arrive at the final product. It was founded in the mid-'60s by Mr. Chiropona. He was really obsessed with quality. There's something that he was always saying, which is, "We start where everyone else stopped."
When I arrived at the first time, I said, "All right, this is corporate bullshit." I understand everyone has to find its own way to find a space on the market. I am here three years now and I'm definitely entering--It's not a matter of taste. You can like or not like something, which is perfectly understandable, but when it comes to quality, you can't recognize the way fabrics and the manufacturing of the thing done. I've never seen anything at this level.
We have around 850 employees, almost half are tailored. Most of them are trained in our tailoring academy. It's really an incredible environment. We are serving ultra networks individuals. Of course, all these quality and stuff that I'm just talking about have a big value.
Paul: To give us a bit of a frame, how much would a suit cost for example?
Michele: The very enterprise in the US, it's a little less than $10,000, but we quickly moved from that to three times. It's super easy.
Paul: That's a hell of a suit, a $30,000 suit. People talk about walking in the room with a $3,000 suit, and they're all Exxon, but a $30,000 suit, that is a play, that's a statement.
Michele: [laughs] That is the reason why I was saying with Mr. Jeff Bezos. We have a long list of famous clients that are usually wearing Keaton. Of course, we offer also the service which is aligned with the price tag. Most of the time for most of the clients, we fly our own tailor from Naples to their home. They take measurements, they go back, they fly back again to make the first fitting. They readjust everything, and they finally fly out again to deliver the final product.
Sometimes it's a little bit tricky. If I have to say our working business, it's not as relevant as those super relevant clients around the world. We are developing our own retail network, which is around 60 stores around the world and is proving to be very successful. On top of that, as I was saying, we have those extremely important people that we call customers that are used to service that is unbelievable. Making them happy, It's the biggest challenge that I have ever seen in my life.
Paul: [laughs] Obviously, I'm all about understanding advocacy and how word of mouth travels. How does a billionaire find out that they need to spend $30,000 on a suit? How's Jeff Bezos think that this is where he should allocate some of his hundreds of billions that he has knocking around?
Michele: That's probably the trickiest part of the job because these people are mostly insensitive to any form of communication. We are doing times where advertising, yes, we are doing that. We are doing Instagram cover. Yes, we are, but honestly, even though we are trying to target as much as possible, our communication, it's very hard to get those elite clients. I think that our main driver to convince customer is our Trium Procedure. If you walk through the collection and you try something on, you touch it, you feel it. You probably understand that you never had anything like that in your wardrobe. As long as you can afford it, then you are pulled in.
Paul: Are they finding about this when they're in one of your stores, or is this something which carries from one billionaire to another billionaire when they hang out on their yachts together and discuss?
Michele: That's the thing. Surprisingly, their word of mouth is moving around. Sometimes we are invited from our work clients to events. Looking around, we see all different people in the world gathering together that are all our clients. I've been to a Wedding before COVID and I have been invited by one of our clients in London. I found that that event probably a dozen of other clients coming from India, Middle East, US. Apparently, this kind of inner circle of people, which gathers together.
I don't know if it's word of mouth or if they start talking about the way they dress, but probably, they look at each other and they see small details. Consider that we are not a super-branded company. For instance, the $30,000 suit has no logo. It's just these small dot, I don't know if you've seen them. Can you [crosstalk].
Paul: If you move yourself a little bit more. Oh, hang on, we've lost your focus. You're out of focus now. [chuckles]
Michele: Let me see, but it's just like these small embroidery with the [crosstalk].
Paul: The little red dot?
Michele: Yes, that's it.
Paul: That's incredible.
Michele: That's nothing.
Paul: When you know, you know because you walk into a room and there's another guy in a $30,000 suit, you're going to say, "Hey."
Michele: He's chasing here. If you know, you know.
Paul: That's what counts. This is where I'm really fascinated about how that happens. A core belief of mine is that the way that you get advocacy is by providing the most remarkable service you possibly can. So good that they feel that they have to remark upon it. They have to tell other people from it. Is that what you are doing? Is that the experience of having a tailor fly to your yacht or your house in the Hamptons or who, wherever it is and fit you up and then just put on the most incredible suit? You feel that you have to tell people, or is there other ways that you are nudging people over the line to try and make sure that those conversations happen?
Michele: It's more or less everything. I would like to share few things. One of our clients in few paths and he said, "Look, I have this problem. I have my home wardrobe that just fit smaller than it was before. What can we do?" We get all of his wardrobe to our shop floor, and we completely remodeled it on his new body tile for free. He was like, [crosstalk].
Paul: Are they all your suits or these are any suits?
Michele: No, no, our suits. It was a good client. We take four to five suits, and we started re-stitching everything to make sure that it was fitting again. This is possible because everything is handmade, so it's easy for one of our tailor to redo the fitting. This is not service. This also gives the idea of-- I'm not really into the word sustainability, but it is really something that we are by design to luxury. It is generally speaking more sustainable by design because we have limited production. We do not have waste. We do have limited leftovers. There's a number of reasons, but also on top of that, we are always trying to keep our clients as happy as possible with what they have already invested into the brand.
It's like we understand the value of things, and we want to make sure that you get the most out of that. This is one example. The other one is how to get these billionaires happy and hanging out together. Sometimes we organize little private event at someone's home, someone's mansion. Probably, it gives more the idea. Probably, six months ago, we organized in New York, a dinner in an incredible location, which is the house of one of our client.
We have been flying a free Michelin Star Chef at his home for a private cooking experience and a wider experience. It's really crazy people. I think that probably, someone tried to account for the wine bottles that have been opened during that night, and it was more than $300,000. It's generous people. They have everything. Sometimes they are happy, just to eat a good pizza with a great chef cooking and showing how to cook a pizza. It's trying to create experiences that stick on their minds, and I don't know.
Most of the time, I have the feeling that these will try net worth individuals because they have everything. Sometimes they are just bored, so they need experience. The same experience that yourself and myself, we are doing with our friends like spend some time together, having a pizza, and just having a nice conversation at home.
Paul: How did you get the brand involved in that? Did you have tailors on site? Did everyone have to wear one of your suits?
Michele: No, it's not at that level. It's going back to the, "if you know, you know." You don't need to wear a jacket or a suit to be in the club. There's no dress code, no secret word to enter the--
Paul: Did they wear your suits, though? Did you make sure you spotted a few that were there?
Michele: Most of them, yes, but we didn't have anyone checking at the entrance to [crosstalk].
Paul: At least no one's signed up wearing their swimmer shorts anyway, so that made sense. It's just such a different space, but you can see the values and the way that the brand grows. It's still there. You are still providing them with value, but understanding what is valuable to a billionaire is different to what is valuable to the kind of person that was buying Diesel jeans, for example, and different for every single brand, but you're still doing the same thing. That mindset of community building, the mindset of providing a remarkable experience so that people advocate for you to tell other people.
You guys seem to have that baked in at the core without too much of the surplus stuff. Presumably, like you said, your ads, if you're buying things like digital ads and Facebook and things, are they having any effect as far as you know if you could call that, it'd be nothing compared to the [crosstalk].
Michele: Very little. I think the main difference between what I have been seeing at Diesel and what I'm seeing now is that Diesel was about creating what Mr. Rossa was saying successful living mood, who was giving the clients, the guys that were buying the feeling or some emotions to be part of a super nice world where everything was possible. It was super light, super engaging, but also funny, and was rock and roll.
The thing here is providing with the best quality you can imagine and make sure that these people are happy and their most incredible needs are met at any time. Sometimes we have someone stepping in in New York at our store saying, "Oh, shit. I forgot I have an event in three days and I need a tuxedo. I need to measure the tuxedo." They'll say, "Wow, that's a lot." Because a tuxedo normally takes a week in Italy, and then you have to have it in New York. We are always trying to match their needs because they come to us because of that. It's probably more related to service and quality rather than the lifestyle that was the key point of differential Diesel.
Paul: When you are trying to serve these demands that people have coming in there, is it because you've got this talent in-house? You have your own tailoring school, right?
Paul: That must make things easier. Tell us a little bit about that, and how does that play into your ability to deliver this unbelievable experience?
Michele: That was a vision from our founder realizing that our tailors were growing up at some place and I said, "All right, we need to make sure there's a future for that and not just for the business but also because part of the Italian tradition, Italian tailoring, Italian manufacturing. We need new guys working on that." He invented this tailor academy where our master tailor, the most experienced guys that are working with us. They are teaching the new talents how to make a jacket by hand. It takes three years from cutting, to stitching, to make sure everything fits perfectly. It is a long journey, and it's what it's ensuring our ability to deliver for the next 5 to 10 years.
Without this school, we could probably get at some point where there should be demand, but we would not be able to provide the offer and make sure that we satisfy all of our customers. We are like new young guys joining our most experienced team every year. We are, I would say, trading in general terms, all of our employees and the tailor, especially in the best possible way because we realize that they are the backbone of the brand. Without them, probably none of them would be possible, and you can't replace them. You don't have any factory in Southeast Asia that it's able to deliver the same stuff. That's the only way we have. They are really the superstar of the company.
Paul: I always think that it's the brand that cares the most is the one that wins, not necessarily the one who's got the most money or the best resources. The one who can care deeply enough to get that product to make it just set aside and then cares about people enough for them to convey it. Every single person in your store, they must-- when someone walks in, they must sit there and talk for an hour about how great each item is because this have so much attention to it.
Michele: That's very romantic. Sometimes I also believe that it's true until the moment I walk outside high roads and I see your windows, which is rather used. The thing is here that romantics work, but probably, money work even better. If I'm to comment on our closest competitors, especially at like Chloro Piano, Brunello Cucinelli, their size, they are much bigger than us, and therefore, they have more power to invest, which in this industry sell makes difference. It's romantic, but size matters, unfortunately.
Paul: When you say invest, that's investing in brand and distribution, not they're investing in special technology, for example?
Michele: No, it's more branding and distribution. You are probably what everyone is seeing is that in every single city, all the luxury, it's very polarized in one or probably two at maximum very specific locations. The prices there are crazy high. You can't imagine how much is ran in Sloan Suite and Newborn Suite and Rodeo Drive. It's really an incredible investment. Meaning that if you want to be those prime location, you have to be brave enough to bet on how many sales you'll be able to make in that area.
It's easy when you are a merchandising brand. Merchandising brands are the one that apart from their ready-to-wear collection and making big money with accessories like baseball caps, small leather goods. Those little things that put you in the situation where you think you are belonging to the brand. You just have a product credit card holder, and you are a client of Prada. No, you are not. You are just trying to stop in the door. Unfortunately, we are not that merchandising-driving, so we are hardcore ready-to-wear. If you step in, you have to be ready to spend big money.
There's no way you can just buy something because every little something, it's crazy high at Keaton. Those merchandising-driven brand have more opportunities to grow even if they are not really targeting ultra-high network individuals because more or less everyone can afford something at those brand. It's a little bit harder for us because we are really targeting ultra-high network individuals.
Paul: That makes a lot of sense. I can't buy that handkerchief with the dots on it by itself, then it has to come with a $30,000 suit. [chuckles]
Michele: That's the thing, we are not selling it.
Paul: Folk like me don't get the chance to get in that. This is fascinating. We're heading into a recession, the common narrative is that luxury is pretty recession-proof. Do you think that's the case? What are the next couple of years look like for you guys? Any big plans?
Michele: We had a very good 2021, so we had recovered in truth from COVID, from the dark year, 2020. We are very close to 50% growth this year. Meaning that apparently, rich people are getting richer. I don't know yet, unfortunately, or fortunately.
Paul: Fortunately for you, maybe not fortunately for the rest of society.
Michele: Yes, probably, and business is growing really at its best. Of course, there are area of concern in this very moment, the biggest one is in China, and the situation with lockdown, the protests, and everything that it's happening in the last few weeks. We have a strong growth in the US, so it's focused on specific areas like Florida, Texas, so we have Miami, Dallas, and New York, really booming where-- Those are the areas where we are struggling to meet the demand.
Europe, it's a kind of lights in the shadows, so we have cities where we are doing great like London, Milan, Rome. We are cities that are a little bit lagging behind, and we are trying to keep them on track. Overall, in terms of the business expectations are really to grow, to keep this consistent pace of growth and make sure that-- Our target is to get to €200 million turnover between 2023 and 2024. Say, in the next 18 month, probably, for sure at the end of 2024, and I'm pretty happy with that.
Paul: Even at $30,000 a suit, that's quite a lot of suits to sell. [laughs]
Michele: Yes. No, of course, but then we also have smaller things and this also.
Paul: Even more but still sounds fantastic. This has been fascinating. I've got a couple of quick-fire questions I want to jump into, just before we close things up. First of all, what advice specifically about brand building would you give to your 21-year-old self?
Michele: I think this may be valid both for a brand but also for personal branding. Think about your point of difference, why you are different from anyone else on the market, make sure to stick to your real DNA and try to convey the message, broadcast the message, and repeat it, repeat it, and repeat it. That's probably the main thing that could bring someone to be successful today.
Every day, I'm really going crazy, especially with LinkedIn or stuff. I receive probably 20 message every day saying, "Hey, hello, I am Mark. I live in New York. Is there any job I can do at your brand?" I say, "Really? Do you think this is convincing in any specific way, or do you think I am really trying to engage with you with this kind of message?" Sometimes I feel younger generation are not really very much into create or trying to engage with someone. They're like, "Hey, hello, I'm here. Any update for me?" "No, I'm sorry. No updates."
Paul: You need to make yourself different, stick to that DNA?
Michele: Yes. Sometimes it's really frustrating because you can't even reply to those messages. It's frustrating to say no, but come on at surf course. Do you think there's a different way to try to engage with someone you don't know?
Paul: I think that technology makes that better and/or worse. A lot of people are still reaching out in weak ways without adding any value to the person they're trying to talk to, just technology's made it easier for them to reach out to more people in a bad way. Therefore, our inboxes are filled with just crap outreach, which could be so much better. I must get 20, 30 a day. I read most of them, and I'm desperately seeking for a good one.
When I see a good one, I respond to. I'm like, "Great, congratulations. You weren't shit." [laughs] I point it onto my whole team because it's just like, it's not that hard, you just have to personalize it. You have to care about the person to see how I'm going to add value to them. Then you're going to give them something, have some generosity to it, not a take because why would I want to give you something when you're just [crosstalk]?
Michele: That's the thing. If you are 21 years old, please focus the message before sending the message. Try to put in the receiver's shoes and try to figure out if there could be any interest in dealing with you. It's not about just saying hello, it's not your friend. I can be friendly, but I'm not your friend.
Paul: It's that how can you help me-- No, sorry, the message to be, here's how I can help you, not can you help me? It's the wrong way around. Along your way, amazing career in loads of different great brands as they grow, what counter intuitives have you experienced?
Michele: Once again, I don't know, but I'm still very much convinced of reinforcing the message. Initially, I was thinking that if you tell me something twice, it's getting boring, and I'm annoyed. You are constantly going back and forth on the same thing. Now, reviewing with more, probably, experience and a different eye on this thing, I think that message reiteration, it's counterintuitive learning that I got.
It's the ability to stick to a specific message, probably, reinforcing in different way, and this goes to the ability of influence someone and say, "I'm able to influence your behaviors because I am telling you basically the same message in a few different ways, showing different angles of the same stuff," which is not worrying, it's not. It's being able to influence someone else's actions. That's, at least to me, super relevant also when you are managing a complex organization. It's not just a matter of hierarchy like, "I am the boss and you have to do this and that." I need that task to be carry out in the best possible way. I have to be able to influence you, not just to tell you what I am expecting from you.
Paul: That sounds really in line with what you were saying about keeping that DNA core, and that's what great brands are. They're consistent telling the same message, sticking to their values and being who they are and great leaders. I think I read something that apparently being a great leader is telling the same story a hundred times. This has been fascinating. I've really enjoyed this chat, digging into the super high end of luxury, as well as hearing some of the stories there from Diesel. Michele, this has been fantastic. Thank you so much for making the time and being a part of the Building Brand Advocacy podcast.
Michele: Thank you very much, Paul. Thank you very much everyone who's listening.
Paul: Take care. Bye-bye. Bye
We can't wait to meet you.