Ferrari

Introduction

0:00Okay, David, so the question, do you have a favorite Ferrari? Ooh, that's a tough one. I would never actually want to get behind the wheel of it, but I think I got to go with the F40. Of course. I remember just being like a kid in elementary school and getting a model of one and thinking like, oh my God, this is the most incredible machine that mankind has ever created. Yeah, it's the defining supercar. Yes, yes. How about you? I actually have two. One is the car from Charles Leclerc's wedding.

0:31Ooh. It's the 1957 250 Testarossa and the car from Ford versus Ferrari. That 1966 330 P3 is just beautiful. It's got these curves. It looks like a spaceship. It's gorgeous. Ah, beauty and power. Story of Ferrari. Yes. All right, should we do it? Let's do it. Who got the truth? Is it you? Is it you? Is it you? Who got the truth now? Is it you? Is it you? Is it you?

1:01Sit me down. Say it straight. Another story on the way. Who got the truth?

Welcome to Acquired

1:08Welcome to the spring 2026 season of Acquired, the podcast about great companies and the stories and playbooks behind them. I'm Ben Gilbert. I'm David Rosenthal. And we are your hosts. Almost everyone needs transportation. It is a giant market serving a huge human need. And it is one of the top three things that households spend money on along with their housing and their food. And the automobile has become the default way that humans move around the world. And that is not what we're talking about today.

1:40And this episode has absolutely nothing to do with any of that.

Selling Dreams

1:43Today's episode, listeners, is about selling dreams. Oh, yes. We are talking about Ferrari, one of the most paradoxical companies that we have ever studied here on Acquired. Ferrari ships very, very few cars, around 14,000 per year. That is approximately the number of Toyotas that are sold every 10 hours. But of course, we know Toyota and Ferrari are a silly comparison. So what about a company that we have covered in the past?

2:15Porsche. Yeah. Even Porsche ships 22 times the number of cars that Ferrari does. And yet, even though almost nobody owns a Ferrari, only about 180,000 people globally, they have among the highest brand recognition. I would argue that over a billion people know what a Ferrari is. Which means, David, that Ferrari has the highest ratio of people who know about their products to people who actually own their products of any company in human history.

2:50I think we got to scope it to companies that make products that are nominally available for purchase by consumers. But yes. But yes.

Enzo Ferrari's Life

2:58Yes, like the space shuttle is a product, but you can't go buy a space shuttle. Yeah. So I would say Ferrari is the only ultra luxury brand that has reached mass cultural awareness. Yeah. There's some fun numbers just to keep putting this in perspective. There are 10 times more Birkin and Kelly bags made each year over at Hermes than there are Ferraris. And there are 70 times more Rolexes made each year than there are Ferraris. Yeah. It's wild. The paradoxes continue. People are dying for their SUVs, and yet they limit them to just 20% of total volume.

3:33Wait, what is this SUV of which you speak? I'm sorry, Ferrari utility vehicle, because they would never- Yes, the F-U-V. Yes. The Ferrari utility vehicle. Ford, here's another good one, makes 160 times the number of cars that Ferrari does, yet Ferrari has a higher market capitalization. They're worth more than the Ford Motor Company, and Volkswagen, and Honda, and Stellantis, and Mercedes-Benz. This company is worth so much more than most giant manufacturers.

4:06Ferrari makes all of their cars, mostly by hand, inefficiently, and one-off in a single town, Marinello, Italy, and they have the highest margins in the entire auto industry. Of the very few cars that they do make, this is my favorite one, David, about 80% of them are earmarked specifically for people who already own a Ferrari. Right, right, right. So that means there's less than 3,000 new customers buying Ferraris in any given year. It's actually completely insane when you think about it.

4:38This funnel narrows pretty tight. So how on earth did Ferrari manage to build this incredibly valuable business while selling their cars to almost nobody? Well, the answer is bloody. It is half a century of death, and speed, and love, and feeling alive. And of course, there are some of the most clever business model mechanics that we have ever studied here on Acquired. It really is very Italian, you might say. Yeah. It's beautiful, it's tragic, it's romantic. There's death, sex, betrayal, and very, very fast cars.

5:12Well, listeners, if you are interested in the big takeaways from each episode in writing, you should join our email list at acquired.fm slash email. You can also get past episode corrections, exclusive behind-the-scenes photos that we found during our research. We'll be sending some of those out for this episode. And you can vote on future episode topics. Plus, we will give away a little hint about the next episode each time. That's acquired.fm slash email. Come talk about this episode with us in Slack at acquired.fm slash Slack, or by clicking the

5:44link in the show notes. And before we dive in, we want to thank our presenting partner, JPMorgan Payments. Yes, just like how we say every company has a story, every company's story is powered by payments. And JPMorgan Payments is a part of so many of their journeys from seed to IPO and beyond. So with that, this show is not investment advice. David and I may have investments in the companies we discuss. And this show is for informational and entertainment purposes only. David Rosenthal, take us to Italy. Ooh, all right.

Enzo's Early Life

6:12Well, we start in 1898 in the medieval Italian town of Modena with the birth of our hero, Enzo Anselmo Giuseppe Maria Ferrari. Better known, of course, either by the name of the company he would found that bears his last name, Ferrari, or to his hundreds of millions of fans around the world simply as Enzo. So Enzo is born here in 1898 in Modena, the second of two sons.

6:44And his mother, Adelgisa, is a beautiful young woman. His father, Alfredo, is 12 years older than his mother. And his father runs a successful metalworking shop and is kind of like a, you know, fairly well-to-do middle-class entrepreneur about town. And Enzo and his father are often at odds growing up, but part of his dad does rub off on him in this sort of entrepreneurial influence. His dad says something to him which sticks with Enzo for the rest of his life.

7:15A company is perfect when the number of partners in it is odd and less than three. I.e., don't take on partners, always be self-sufficient. It's a great quote. We should say that much of this history, this whole episode, comes from the fantastic, really definitive biography of Enzo called Enzo Ferrari, written by Luca Del Monte, who worked at Ferrari and Maserati for many years. And then after he retired, dedicated about a decade of his life to researching and writing this definitive biography.

7:45It's really excellent. So anyway, his mother and his father are always fighting. They're always yelling, arguing, swearing. And this has a very different effect on each of their two children. For Enzo's older brother, who is named after his father, he's also named Alfredo, nicknamed Dino, to tell them apart. He, Dino, becomes like the golden child. He's the peacemaker, the pleaser, the striver, the smart and successful one. He's going to make his parents proud and he's going to take over the family business. Because Enzo, on the other hand, as the younger brother, he just takes right after all the

8:18sort of less savory parts of mom and dad. He's mischievous. He doesn't apply himself in school or paying any attention. And, you know, why should he? His family's got money for the place and time. His older brother, Dino, the golden child, you know, is going to make them proud. He's going to take over the family business. Enzo can just kind of knock about town. He dreams of someday maybe becoming a journalist or an opera singer, mostly so that he can, you know, hang out with the showgirls. Oh, what could have been? A very different Enzo Ferrari. Ah, well, his life is an opera, as we shall see.

8:50So there's one thing, though, that really captivates Enzo's spirit, which is the new

Automobile Racing

8:55modern sporting and leisure pursuit of automobile racing. And one blissful night when Enzo is a teenager, he declares to his best friend his true intention in life. I am going to be a racing driver. And that dream does indeed come true, but probably not in any way that Enzo expected that night. Because very shortly thereafter, World War I breaks out and two tragedies happen to Enzo

9:26in quick succession. First, his father, Alfredo, contracts pneumonia and dies. Unrelated to the war, he just got pneumonia and suddenly died. Shortly thereafter, his older brother, Dino, the golden child, goes off, enlists in the Italian army, where he also contracts pneumonia and dies. So Enzo is left alone with his mother that he needs to support. The family business is gone. And because Enzo has never applied himself, he has no discernible skills or ability to

9:59continue it or, you know, really do much else that would provide gainful employment for him here. That was supposed to be Dino's role in the family. Now, before Enzo can stop to really think, he too gets drafted into the army, where he also comes down with pneumonia and nearly dies, but he survives. He's the one who survives. He has a quote later in life where he sort of acknowledged this emotional burden and his life's work that he would go on to create, where he said, I feel alone after a life crowded by so many events and almost guilty of having survived.

10:32Yeah. I mean, the title of his memoirs is My Terrible Joys. Tells you everything you need to know right there about Enzo's life. Yep. So when he comes back home to Modena at the end of the war, he has no hope, but he does still have his dream of motor racing. And remember, he's still like a teenager, basically, at this point, a late teenager, early 20 something. He starts making noise to his mom about selling the family house to finance buying a racing car and that he's going to go out and race this car and win prize money to support them.

11:05It's an audacious plan. It's an audacious plan. His mom is like, uh, no. How about instead? How about this? Why don't you go try to get a job at a car company and see where things go from there? Enzo's like, OK, OK, fair compromise. So his mom arranges for him to travel to Turin, big city in the northeast of Italy, where he interviews for a job at Fiat. And Fiat is the biggest Italian car company at the time and will come back up many, many times in this story.

11:35It is, as you all probably know, essentially the Ford Motor Company of Italy and the family behind it. The Agnellis are the wealthiest and most important industrialists basically in the history of Italy. And today they own and control both Stellantis, which is the merged result of Fiat, Chrysler and Peugeot. And they also own and control Ferrari. Don't worry, don't worry, we'll get there. We'll get there, but not for, I mean, the better part of a century here. Yes, yes. So back to Enzo here in 1918.

12:07Fiat, of course, rejects his job application because, again, he has no discernible skills. But Enzo is persistent. And in 1919, he lands a job at a new startup automobile company called CMN.

Coach Building Business

12:21And there he pledges his future salary, like the next several months of his salary, to purchase for himself one of the company's sports cars that he then goes off and takes racing. So he didn't have to sell his house to finance this dream, but he did pledge his future salary. Now, this is an important point to land here. With very few exceptions, one of which we'll talk about in just a minute, motor racing at this point in time was a private individual sport.

12:52Drivers generally bought and raced their own cars, either because they were independently wealthy and successful and could afford their own staffs and mechanics to maintain these cars. These were folks known as gentlemen racers. That's right. I've heard that term. Yes, and this is the group of people that ultimately, once Ferrari gets founded, become Enzo's core client base. Or the other group of drivers at this time are like Enzo. They're these kind of like hustlers and dreamers who managed to glom on somewhere in the car industry and leverage that into entering races.

13:23But basically, motorsport was this like passionate sort of privateer pursuit. Not organized professional racers on highly paid teams. Yes. So Enzo enters into this world and he does pretty well. Well enough not only to send some prize money back home to mom, but also to attract the attention of Alfa Romeo, which is Italy's other large car company at the time, although much, much smaller than Fiat. And Alfa has one of Italy and Europe's few, if not only, in-house racing teams.

13:57So even though most racing that's happening is privateers, Alfa has their own racing team, which is pretty unique for Europe at the time. So they scoop up this young, hotshot, talented driver Enzo to come and race for them. I know this is a huge coup for Enzo. Like basically his whole dream as a teenager is coming true. He's racing. He's making money from prizes. He's part of this Alfa Romeo team that's going to support him, provide him great vehicles to race and also mechanics and everything he needs.

14:28So he hatches a plan that he's going to cash in on this newfound fame and notoriety by starting his own business. He's going to be an entrepreneur, just like his dad. So at age 22, in 1920, Enzo starts his first company, a coach building business in Modna called Carrazzeria Emilia. Now, what is a coach building business? This is another really important point to understand about the car business at this point in time.

14:58For most companies and especially car companies that were making sports cars, the actual bodies or the coaches were built and designed by third party coach builders. The cars were just an engine and a chassis that the car maker would deliver. And then the clients would go to a coach maker like this one that Enzo is starting up and have them build the body to their taste and specifications that would go on top of, you know, the mechanics of the car. Yeah, it reminds me of our Rolex episode where the movement makers were totally different than

15:31the case makers, which were totally different than the jewelry stores that sold them. Not the sort of integrated way that we know it today of the movement maker is often the same as the case maker. And then you often just sell sort of pseudo directly. Yes, totally. In this case, it's actually a holdover from the horse drawn carriage days where the coach builders built carriages, but they obviously didn't supply the horses. So the same thing starts to emerge here in the early automobile industry. So Enzo's admittedly pretty half-baked plan here is that thanks to his sure to come, you

16:05know, new fame and fortune as an Alfa Romeo race car driver, customers, Alfa Romeo customers and customers of other car companies are going to come banging down his door to build their car bodies, to build their coaches. What the connection is between being a good race car driver and being a great coach builder. I'm not sure. And neither is the market because the business does not go well. It's a failure. And within two years, Enzo is bankrupt. Now, perhaps relatedly, Enzo's sort of metal as a professional race car driver also proves

16:41to be good, but he's not great. He has all the talent, all the skill, but he comes to realize he doesn't have the one final thing that separates the true motorsport champions from everyone else. He's too afraid to die. He can't push himself and the car to the point that it's really, really, really on the edge. The limit, as they say. The limit. Yes. Part of this, of course, is his sort of haunted past. You know, the deaths of his brother and father. Your death has had this huge presence in his life, but also it's very much his presence.

17:15So once he joins the Alfa Romeo team, there's two sort of senior drivers on the team who really take him under his wing as mentors and they become friends. And Enzo watches them both die during races at the wheel. The first of which Enzo was the first person to find him. And he actually literally died in Enzo's arms. And so after all these experiences, Enzo just, he can't push himself to do the same thing over and over like they did. And that is the sick reality of racing, at least in this point in history, is it is the

17:47people who are absolutely willing to go right up to that line and maybe cross it. Often cross it. I mean, it kind of defends where you put the line. Those who win are the ones who are absolutely willing to die. I mean, on our Formula One episode, we talked about through the seventies, right? There was an average of more than one death a year in Formula One out of a field of only like 20 drivers. So yeah, that's the reality for a very long time in this business. And paradoxically, that's also part of the appeal. So in 1924, Enzo makes the decision to quit racing, cast off the coach building business,

Alfa Romeo Dealership

18:25and instead open a Alfa Romeo dealership in Modena. Oh, I didn't know this. He's now married. He wants to have a family. His son, naturally named Dino, would be born a few years later. Dino after his father and brother. Basically, he's going down the time-honored path of retired ex-athlete with some degree of notoriety opens local car dealership.

18:48Pioneering. Pioneering. Now, toward the end of his racing career, Enzo had also gotten more involved in the actual management of the team and gotten to know some of the managers of Alfa Romeo, the company itself. So he still has these close connections to the company, which are certainly going to help him in becoming a dealer. And then the very next year, the Alfa Romeo board of directors makes the inexplicable decision to drastically cut back on their racing activities. And they're going to keep the company team, but only going to enter a few races and the

19:20budget is going to be cut. And so Enzo's like, whoa, whoa, whoa, whoa, whoa, whoa, whoa, whoa. Hang on a sec here. I need the publicity from the Alfa Romeo racing team. That's my only like connection to fame here and why people would come to my dealership and buy my cars. I kind of need to have Alfa's racing on a regular basis. So he goes to Alfa Romeo headquarters in Milan with a proposal.

Scuderia Ferrari

19:42I understand that you want to cut the expense, you know, sort of day to day of running your own racing team. What if I take it over and all the races that you don't want to run? You bless me, your dealer, Enzo Ferrari, as the official racing agent of Alfa Romeo, and I'll put together my own private team. I'll hire the drivers. I'll hire the mechanics. I'll cover the costs. Right. It's like a fully outsourced racing team. That's just kind of a contract relationship. You don't have to have this on your books. This is a sort of loose affiliation.

20:14And for Enzo, what better marketing activity could you imagine than to become the quasi official racing agent sort of second team of Alfa Romeo? Yep. And thus, the first iteration of the Ferrari business is born. The Scuderia Ferrari, which is the name that he gives to his new racing team, Scuderia being stables in Italy. It's a stable of drivers and cars for Alfa Romeo. And the Ferrari racing team to this very day in Formula One and elsewhere is the Scuderia

20:47Ferrari. That is the SF that you see on the Ferrari shield everywhere. Yep. And for a team that would go on to adopt the prancing horse, I am loving the thick metaphor here with the stable and the... Oh, Enzo, as we shall see, is a natural-born marketer. So, important to note a couple things here. The Scuderia Ferrari is very much intended to be a junior partner to Alfa Romeo, or at least Alfa intends it that way. But, Enzo does, in the back of his mind, have broader ambitions.

21:23As we alluded to with the whole coach building thing, unless you're one of the few new, at this point, really mass assembly line consumer car companies like Fiat or like the Ford Motor company over in America, the line and the barrier to entry between being a garage who develops and maintains racing cars and graduating to making your own cars that you sell to the privateers who go racing is pretty thin. And Enzo's always got this in the back of his mind.

21:56And he's got some examples out there. So, there are other garages, for lack of a better word, out there in Italy at the time that have made the jump from developing race car versions of other cars made by other manufacturers to selling their own cars. The prime example being Maserati right there in Modena, right across town, the Maserati brothers. In the video game world, this is modding. Yes. You're sort of taking someone's kind of basic game and souping it up into something really special for you that you're customizing.

22:26Yep. So, Forenzo, in the back of his mind, he's like, okay, this is my opportunity to build my own team, hire my own engineers and mechanics, use hopefully my team's success combined with the Scuderia Ferrari brand that I'm building. Maybe someday I too can launch my full-on car company like the Maserati brothers across town. So, as he gets going with this grandmaster plan and developing the Scuderia, he knows that he needs to build up more than just his own operations. He also does need to build a brand if he's going to sell his own car someday.

22:59And specifically, he needs a logo. And he's got the perfect one. But before we tell the story of the legend of the Ferrari prancing horse, now is a great

Prancing Horse Logo

23:10time to thank our presenting partner, JP Morgan Payments. Yes. And one thing that kept coming up, listeners, in our research for Ferrari is just how global they have been from their early days, of course, headquartered in Italy, but selling cars to the U.S. and around the world as we will soon get to from those early days. And behind any company operating at that scale, there is a massive engine orchestrating money movement behind the scenes. That's right. It's an enormous amount of complexity.

23:42Paying suppliers in one currency, collecting receivables in another, managing exchange risk, adding vendors and suppliers, and of course, staying compliant in all these regions. When you're really early stage, moving money across two or three currencies, you can manage it yourself. But going from three to 20 is like a completely different situation. Yes. And the companies that get this right, that make those strategic investments in payments infrastructure early, those are the ones that scale. That's what JP Morgan Payments cross-currency solutions are built for. They send payments in 120 currencies.

24:15They receive payments in 40 across more than 200 countries and territories. That means that you get seamless integration through their APIs that plug directly into your existing treasury workflow. And that gives you real-time visibility and control over your transactions. The whole goal is to make global money movement invisible. And because there's so much complexity required behind the scenes to make it feel invisible, the stability and scale of JP Morgan's global payments network, plus local market infrastructure, is really what makes it possible. It is one of those things where the scale is the product.

24:47If you do the math, there are tens of thousands of combinations of currencies that you may need to switch in between. Not something you want to take on yourselves. So, listeners, if your business is moving money across borders and you need cross-currency payment solutions that do the hard work for you, check out jpmorgan.com slash acquired and just tell them that Ben and David sent you. Okay, David, so where does the famous, infamous prancing horse for Scuderia Ferrari come from? Yeah, how did all those Ferraris come to have a black prancing horse on them?

25:21And I got to say, it is the strangest thing looking at some of these old pictures because the first thing that the prancing horse went on was these Alfa Romeo cars. Yes, yes. And so there's these old pictures of a Alfa Romeo badged car and the fender sort of in front of the door, there's a Scuderia Ferrari prancing horse. Yes, it's bizarre to look at today. Yeah, listeners, we'll send that out in the email. So, back when Enzo was a promising young racing driver, one of his early fans and supporters was a noble Italian count and countess whose son, Francesco Baracca, had been Italy's number

25:59one ace fighter pilot during World War I, like World War I dogfighting. And Baracca had won 34 aerial victories before he was tragically killed in combat right before the end of the war. And on his airplane, he had painted as his symbol and a good luck charm, the black prancing horse. Now, he's like a national hero and everybody in Italy knows about Count Baracca and his exploits during World War I.

26:30And his parents are fans of Enzo. And so one night after the war, the countess tells Enzo, why don't you paint the black horse on your car? It will bring you luck. And to symbolize this gift, she gives Enzo a photo of her son in front of his plane before he was killed with the horse and with an inscription from her below it that Enzo should use this symbol. That's an official endorsement right there. Absolutely. Absolutely. So here we are now. Enzo is launching his Scuderia, his stables, his horses, and he knows that this is the

27:05moment to put the gift to use as the Scuderia's logo. It's perfect. Stable horses. But it's more than that. This man had been a national hero. Everybody in Italy knows him and knows the symbol. And Enzo has had it bestowed upon him, not just with his mother's blessing, but with the explicit direction to put it on his race cars. So Enzo takes the prancing horse. He places it within a yellow shield, yellow being the city color of Modena, with the three

27:36colors of the Italian flag above. This is just a genius marketing move. The prancing horse reflects both the Scuderia and links Enzo and the team to this national hero. The shield reflects his intention to do battle on the racetrack. And the Italian colors reflect the ultimate ambition to establish this team, this company, and its future cars as the Italian national team and sports car company. So in our research, I spoke to Luca di Montezemolo, the legendary Ferrari chairman who would ultimately

28:12succeed Enzo and really, in many ways, be his heir, as we will tell in this story. Important to note, different Luca than the Luca who wrote the book, David, that most of this narrative is based on. And I asked Montezemolo, you knew Enzo probably as deeply and as well as just about anybody who's still alive today. And there's this kind of popular legend that Enzo was just a racer. He only wanted to race. He didn't really care about business or road cars. And all the road cars only existed to fund his racing activities.

28:46Oh, this is the biggest thing about people today. When I say, oh, we're doing an episode on Ferrari, they say, oh my gosh. Yeah, it's such a crazy story because Enzo really just wanted to race cars and he built this car company. But really, that was just sort of to finance the racing. And he doesn't even care about those road cars. He's not really a business guy. He just wants to make great cars with great engines and send them racing. Completely false. Montezemolo confirmed when I asked him. Enzo was a natural born entrepreneur and marketer.

29:18He really was Italy's Steve Jobs in every aspect. I mean, think about it. What was Steve Jobs? Steve Jobs was not an engineer. He was a marketer. The same as Enzo. Enzo is not an engineer. He's not a car mechanic. He can't build the cars himself. But they both had a sort of understanding and deep appreciation for the technical things that enabled their visions to be possible. Yes. Enzo would say about himself when asked that, you know, he's not an engineer.

29:48He's not a car designer. He's no longer a driver, even though he runs this team. He is, quote, an agitator of men. And that perfectly described Enzo. And I think, you know, perfectly describes Steve Jobs, too. Yep. So if you think about it, what is Enzo doing here with the brand that he's building? There's the prancing horse. And then what's the other famous, you know, visual symbol associated with Ferrari? The red. Ferrari red. Rosso Corsa that he adopts here. And sure, you know, Ferraris are red because red was the assigned national racing color of

30:20Italy. But come on. Enzo is the one who embraced it and imbued this Rosso Corsa with so much more than just the national racing color of Italy. It's not Alfa Romeo's colors. It's Ferrari's colors. Right. When you draw a picture of a race car today, let's say you're 10 years old, you're coloring it red and you're coloring it red because that is Ferrari red. Yes. And what does red represent? It's passion. It's blood. It's desire. It's all of this that is all deeply wrapped up into a Ferrari.

30:52I mean, just look at Italy's other luxury supercar company today, Lamborghini. You know what their colors are? Not red. In fact, their color is every color but red. Because Ferrari has co-opted it. Yep. So back to the Scuderia here. After a couple years, in 1933, the golden opportunity arrives for Enzo. Alfa Romeo finally decides that it is going to disband its official racing team entirely and designate the Scuderia Ferrari as its official racing operation in all races all across the globe.

31:28So Enzo acquires, quote unquote, the entire Alfa operation, engineers, mechanics, everything. And his dream has come true. He is not only Alfa Romeo's official racing team, but by this point in time, Alfa had been nationalized by the fascist Italian state by Mussolini. So he is Italy's official national racing team. There's this one problem, though, which is that Alfa got out of the racing business for a reason.

32:02Because Hitler is coming to power in Germany, and one of Hitler's most important national agenda items is making sure that his German auto industry is the best and that he proves it on the racetrack, just like the Olympics. So throughout the rest of the 1930s, the German state is supporting Mercedes and Auto Union, which would go on to become Audi today. And their cars are just dominating European Grand Prix racing.

32:33So Enzo and Ferrari are like sent out there by Alfa and the Italians to compete, but it's a fool's errand. And so in 1938, Alfa and Mussolini kind of fed up with losing. They actually acquire the Scuderia Ferrari and remake it, you know, as part of Alfa Romeo into this official sort of government entity. Huh. So they decide, actually, we do want to put resources behind this. And now you're kind of the only game left in town since we shut down the other operations.

33:03Yeah. I mean, at the end of the day, this is just rearranging deck chairs because the war is coming. So the very next year, Hitler invades Poland and World War Two begins. Needless to say, European automobile racing is on hold indefinitely. During this period, Enzo gets into a fight with Alfa Romeo management and manages to get himself fired. Yeah, this is 1939. He cares about one thing, and that's auto racing.

33:34It's just not the strategic priority for Alfa Romeo as a company or for the country. And so I think this friction kind of leads to it. The crazy thing is his separation agreement, I think he got paid to leave, but, you know, it's a firing, forbids him for four years from, A, building cars to race them, and, B, using the name Ferrari associated with a racing team or a car builder. Like, he lost the rights to his own name for four years.

34:07Well, I mean, you know, he gave them up to the Italian government, essentially. Yep. So speaking of which, during the war, Enzo creates a new company to feed the Italian war effort that he names Auto Avio Construzione. Auto and Aviation Construction. Which is funny. He sneaks that auto in there, because... Not really supposed to be building cars and racing them, but, like, I'm doing other stuff, too. Yeah. It's not called Ferrari. It's not called Ferrari. But this same company is better known today as Ferrari Societea Per Azioni, or Ferrari SPA, the Ferrari joint stock company that is publicly traded on the New York Stock Exchange under the ticker RACE.

34:50Yes. Best stock ticker ever. Best stock ticker ever, indeed. So what is this company doing?

Ferrari's First Cars

34:56They're not making cars, even though auto is in the name. They're making machine tools in the workshops and essentially factory that Enzo has created there in Modena. And on each tool, throughout the war effort that they make, Enzo has them stamp the prancing horse and the word Scuderia Ferrari Modena, clearly signaling his intentions after the war of, you know, what he's going to do. I bet those are some very valuable collector's items if you can find them. So anyway, Enzo and his factory are pretty good at making these machine tools, and they become part of the war effort.

35:30So as the war wears on and the Allies, you know, push into Europe, Enzo and the government start to worry about them bombing the factory in Modena. So in 1943, he decides that he's going to move all of his operations out to a small little town in the countryside to avoid the bombing. He's going to go about 15 kilometers south of Modena to Marinello. And that's why Ferrari, to this very day, is in the small little hamlet of Marinello, not in the bigger city of Modena.

36:03So even despite the move to Marinello, the factory does get bombed twice during the last days of the war. After the war, that leaves Enzo kind of at a crossroads. The factory is not quite in ruins, but it's been bombed. Disarray. Disarray. Significant disarray. Disarray. And he's just spent the last four or five years building machine tools and gotten pretty good at it.

36:35Yep. And then Enzo gets a visit from an old racing pal, an Italian, but one who spent the war not in Europe, but in exile in America. Luigi Canetti. The man who brings Ferrari to America. So Luigi and Enzo met way back when Enzo joined the Alfa Romeo racing team as a driver, and Luigi was a mechanic on the team who also then became a driver, and he ends up in New York.

37:08And when the war is over, Luigi goes back to Italy to visit Enzo, and he tells him about America. So this is a quote here from Brock Yates' biography of Enzo. Brock Yates was the longtime editor of Car and Driver magazine. Kenetti described the miracle that was America, the aggressiveness of its people, their childlike acquisitiveness, and their bourgeois credulities. Yet, there was a rich upper class whose tastes were European. He had seen them, met them, gained their trust as he kept their aging European automobiles operating through the war years.

37:46He knew they would pay a king's ransom for Enzo's elite machines. And he, Luigi Kenetti, meant to exploit that naive colonial lust. What writing? What writing? Enzo agrees. Now, legends would say later, and Luigi, I think, would probably perpetuate this himself, that Luigi is the one who convinced Enzo to abandon the machine tools business and focus only on cars again after World War II.

38:19That's false. Enzo was planning to anyway. There's no way that he really was going to go into machine tools. I mean, by 1943, his non-compete is up. Yes. And he's allowed to use the name again. Yes. So, you know, the clock's ticking. The clock's ticking. But it is true, Luigi definitely convinced Enzo about America. And America was critical for Ferrari. And you know what wealthy Americans are extremely interested in when they're considering if they're going to buy an extremely expensive, rare automobile?

38:50They love that cold shoulder of an artist creating the car mysteriously in some small town in Italy who's just interested in racing. He's not interested in mass market cars. You're just lucky to get one of these racing cars, and he couldn't even care less about you. Oh, yeah. Oh, yeah. That sells cars. And boy, does Enzo know it. Yeah, he totally leans into this. This is like part of the perpetrating of the myth. This is why everybody believes, oh, he wasn't really a businessman. He just wanted to race cars. Yeah.

39:21I mean, the whole persona of Enzo Ferrari, you know, the dark sunglasses. Oh, yeah. What's the tidbit you got on the sunglasses? It was an act. You know, we would wear the sunglasses in public and press interviews and meetings with clients or whomever. And then everybody else would leave the room and he'd just take them off and put them on the table. He didn't wear sunglasses all the time. Only when crafting his image. But, yeah, he leaned into it. Yep. So, one way or another, machine tool business is out the window and Enzo is back in cars.

39:561947 is the first year that they get going with the newly renamed Auto Construccione Ferrari, now that he can use the Ferrari name. In 1947, they build three cars just for team racing, just for the Scuderia, in which, during the year, they enter 14 races and win seven of them. Pretty good. 50% win rate for, you know, the newly rebuilt Scuderia Ferrari.

40:26They didn't sell any of those cars. Yes. Enzo Ferrari, to this point in history, has not sold a car yet. No. I mean, how old is he, David? He is, in 1947, he's 49 years old. I mean, this is like this great classic sort of founder myth of the young hotshot who starts this thing. Ferrari, yes, it's a racing team, but it is a car company who sells cars to consumers. And by age 49, Enzo had never done that. Yes. Now, he has established the brand and the myth and put all the pieces in place to create Ferrari.

40:59But yes, he did not sell a single car to a customer until 1948, when they introduced the Ferrari 166 Barchetta at the Turin Motor Show. And Luca Del Monte in his biography writes, For Enzo Ferrari, the 166 MM Barchetta was a declaration of intent. A sports car with a sensual shape, as fast and powerful as it was beautiful and elegant. It was the foundation on which, from that moment on, he would build every road model.

41:34Cars capable of winning races on circuits and roads all over the world. And, at the same time, being the protagonist of the most prestigious concours d'elegance in the four corners of the earth. What a great description of what a Ferrari is. Absolutely. Enzo is really figuring out how to create desire here. Yes, yes. These machines are beautiful and they are deadly. That is the point. You can enter them in a race.

42:04You can be competitive. You might even win, as we see in a second. And you can drive them in brown town and look beautiful and elegant when they work.

42:18Yeah, the Ferraris in this era in history that we're talking about here, you know, the late 40s, 50s, 60s, these were not the most reliable machines, especially the road cars. I think you could also lump in the 70s and the 80s, large chunk of the 90s. I mean, there is this fascinating thing about luxury that reliability is not actually a relevant part of the equation of how desirable, how much do I lust after this machine? I think it's from the luxury strategy book, anti-law of marketing number, something or other, is ensure that your product has enough flaws.

42:53Yes. Boy, do Ferraris have a lot of flaws. Yep. So this first Ferrari, the 166 Barchetta, they produce about a dozen of them that year in 1948, both to race themselves with their own team drivers and also sell them to wealthy private clients. Two of the very first models are sold to American clients through Luigi Canetti, one to Tommy Lee, who is a wealthy Cadillac dealer in Los Angeles, and one to Briggs Cunningham, who is one of the Procter & Gamble heirs.

43:26Ah. You get a sense of, like, who are the customers in America. Right. They're setting the precedent. Others are sold to various European racers and nobility, including Italy's own most celebrated industrialist, Gianni Agnelli, the patriarch of the Agnelli family, which owns Fiat. Some might say the Henry Ford of Italy. The founding family of Fiat. Yeah. Not only the owners, but the founders. He was one of the first Ferrari customers.

43:58He was, indeed. He bought a 166 Barchetta. That's an amazing full circle. Poetic. We'll come back to that at the end of the story. Oh, yes, we will. So then, the next year, Luigi Canetti, he's a real believer in the potential of these machines that Enzo is building to make a lot of money and generate a lot of desire. So he takes one of the 166s, and he enters it in the first running of the 24 hours of Le Mans to be run after World War II, the first post-war running of Le Mans.

44:34And the car that he takes, Enzo doesn't think the 166 is ready for Le Mans. He doesn't want to enter. But Canetti says, no, no, I'm going to go do it. So he takes a privately owned car, owned by the British nobleman and gentleman driver, Lord Selsden, and they win. They win Le Mans. Oh, wow. Like, the whole thing. Not endorsed by Ferrari the company, just a sort of gentleman driver. It is the first major international race victory for a Ferrari car, but it's not run by the Ferrari team.

45:06So this is a big deal. This is the first time it's being run after the war. And here's this startup Italian, I mean, startup, everybody knows the heritage of Enzo Ferrari and who he is. But here's a Ferrari winning. And it's like the perfect illustration of the business model and Enzo's entrepreneurial genius. You know, he's got the brand. It's the Ferrari that won, but it doesn't even have to be his own racing team. Right. Oh, that's interesting. It creates just as much consumer desire for those cars, whether it's him entering the competition or not.

45:37All anybody knows and all anybody in America definitely knows is a Ferrari just won Le Mans. And man, I got to get my hands on one of those things. And it really validates the engine. I mean, this is famously Enzo Ferrari's reputation is he was an engine guy. He's got a few sort of great quotes on this. His comment is, I sell engines and the car I throw in for free. Yes. Such a great quote. Another great one. Aerodynamics are for people who can't build engines.

46:07That's like that one. The AMD guy, real men build fabs. Yes. Yeah. Yes. Eventually, Ferrari would become very much about aerodynamics in addition to engines. Yes. Yes. But we know where Enzo's heart always was. Yes. He also famously was a late adopter of new technology. Oh, yeah. This is very, very different today. But in the early days, I mean, we're going to talk about Formula One here shortly. But in those early days of F1, other teams figured out, hey, you should probably move the engine to be a mid-engine, sort of above the rear axle, not in the front of the car.

46:42And Enzo is very, yeah, like he's biding his time. He's like, well, wait and see. And he's got this idea that in a carriage, the horse pulls the carriage. Yeah, God put the horse in front of the carriage, so the engine's going in front of the car. Surely the engines should be in the front. Yes. And it took years to adopt the sort of correct, most balanced way to do it because he not only wanted to be a late adopter of technology to sort of let other people prove it out, but also because he was in a position to do so. As a very early sort of luxury pioneer here, he realized that it only helped build the

47:15Ferrari myth. Yes, exactly. To talk about the old ways of doing things. This is the point. It's all about the myth building. Enzo knew exactly what he was doing. He even, there's funny entries in the historical record here where in the same month that Enzo is out there talking about how the engine belongs in the front of the car, in Marinello, there are teams who are constructing next year's mid-engine car. So say one thing, do the other. Yes, yes. Very Enzo. It's worth a moment here to talk about what actually is Ferrari at this point in time after

Ferrari's Business Model

47:53Le Mans and when they're selling the 166 because it's pretty pioneering. It's three separate things all under the same roof. It's its own professional racing team. It is a world-class racing car constructor that builds cars both for its own team and for private clients. And it's also all of the support infrastructure that you need to do both of those things. So it's not like Canadian Lord Selzden could just buy a 166 and drive it up to France and

48:27like enter Le Mans. You got to tune these things for the race that you're driving. And Ferrari is providing that for his own team and for his clients. This is pretty revolutionary. Nobody else had really created something like this before. You know, other car manufacturers, as we talked about with Alpha or Mercedes or even for a point in time, even Fiat had their own racing teams. But they were separate operations. Like, think about the Mercedes racing team today. You know, it is a completely separate operation.

48:58Yes. Or most of the F1 operations today that carry the name of a constructor of a car brand. They're actually separate companies that happen to be owned by... Yeah. Separate locations. Yes. The whole thing. Like, yes, there is some tech transfer, I'm sure, from the Mercedes F1 team to AMG performance cars. But like, it's a tenuous connection. Whereas in Marinello, they're sitting there on the same plot of land. For many decades in the early history of Ferrari, it's the same people. Yeah. Same people making the same cars under the same roof.

49:29Pinnacle of motorsports, road cars that you can buy, built and maintained and serviced by the very same people. That is an incredible proposition as a client. And if you think about it, it's really not that different from any other luxury company heritage out there. Like, Thierry Hermes and his sons making saddles for the nobility and the new haute bourgeoisie on the boulevards in Paris, and also making saddles for the jockeys jumping and racing on the weekends. They're the same people making the same saddles.

50:00Enzo and his team are the same people making the same cars. But I think you nailed this point that I think is a little bit lost today, which is even then, in 1950-ish, you're not just going to go buy a Ferrari and then race it. This is a highly maintained, serviced thing that is not just like a product that you own. It is a bundle of product and services that get it ready for any given situation. Yeah, we joked earlier about the, you know, you could drive these things on the street when they worked.

50:31And that was part of the point. Like, they were built to be racing machines. And a lot of clients didn't race them, or, you know, if they did race them, race them not very well. But the point was you could. This was a weapon. This is not a mode of transportation. That's a trade-off clients were intentionally willing to make. This is not the most practical car. It's going to have all sorts of issues if I want to use it as my daily driver. But it's an amazing race machine. And because I race, or maybe not because I race, I want to own a race machine.

51:02And so I'm buying it, trade-offs and all. Yes, yes. So then in 1950, the pinnacle of motorsport arrives. The new Formula One World Championship Series, as we talked about at great length on our Formula One episode. And Ferrari, of course, would become one of the founding teams and the only F1 team continuously operating from the beginning of the sport all the way through to today. But of course they are.

51:33Participating in the pinnacle of motorsport, as we've just been talking about, is integral to what Ferrari is. And if you buy a Ferrari as a client, what you are buying is a direct connection to that ongoing heritage in a way that you are not with any other auto manufacturer. At least not at this point in history, in 1950. There have been many others who have tried that strategy since, obviously less successfully than Ferrari, and we'll talk about why. But yes, this is the Ferrari formula that they uniquely execute well on.

52:08Yep. So, as we continue the operatic life of Enzo Ferrari here, the re-entry into the racing business and the new pinnacle of motorsport in Formula One, unfortunately, comes with renewed tragedy. Enzo would hire the young Alberto Ascari, who is the son of one of his two mentors who died when Enzo was racing for Alfa Romeo. And Enzo would take Alberto under his wing, treat him almost like a surrogate son.

52:41Until, in 1955, Alberto is killed, practicing in a Ferrari at Monza, at exactly the same age that his father died. And Enzo vows that he will never become emotionally close to a driver again. He's witnessed too many deaths in his life. But unfortunately for Enzo, death during this time was only just beginning to re-enter his life and his company. And the next death is really the one that kind of defines the rest of his life going forward.

53:13Yes. But before we continue this beautiful tragedy of Enzo Ferrari and his company... Now is a great time to tell you about one of our favorite companies, Vercel. Vercel is building the defining developer infrastructure platform for the agentic era. And importantly, just like Ferrari, the crucial part is that every part of the system is engineered to work together at the highest possible level. It's all about performance. And they're not just a deployment platform or just a framework builder or just an AI cloud

53:47anymore. They've become the agentic infrastructure company. And that title actually carries real meaning. It's infrastructure built for agents where they are first-class users of the platform alongside human developers. It's also optimized for human developers who integrate agents into their workflows. And most importantly, it's infrastructure that acts with agency. So, zero config deploys, automatic scaling, self-optimizing performance. The platform handles itself. Self-driving infrastructure, as they like to call it.

54:19Yes. Which makes sense when you look at what's already running on Vercel. OpenAI, Polymarket, Stripe. Vercel built the modern platform for the web, which puts them in a really strong position for the agentic web. Yep. Their AI gateway, sandbox, and AI SDK are trusted by everyone from solo founders to the largest global enterprises. And they just shipped something really exciting, chat SDK, which lets you build agents across Slack, Teams, Google Chat, Discord, and more, all from a single code base.

54:50The AI SDK alone gets downloaded 10 million times a week, which is up from 7 million times a week when we recorded our last episode on F1 last month. Vercel really is the one-stop shop for everything you need to build in the agentic era. Tools, frameworks, infrastructure, the whole system engineered to work together. You can learn more at Vercel.com slash acquired. That's V-E-R-C-E-L dot com slash acquired. And just tell them that Ben and David sent you.

55:21All right. So here in the 1950s, the truly, truly beautiful and truly, truly tragic opera of Enzo and Ferrari continues, first, let's talk about the beauty, the Ferrari 250 series, which for some of you means a lot. For the rest of you, we're talking about the Ferris Bueller car.

55:48Undeniably, one of the most beautiful automobiles ever manufactured. But, David, did you know, it is the Ferris Bueller car, but the car you see on screen is actually not a Ferrari. Yes, it's a replica. And Ferrari sued the replica maker after the movie, right? That's right. Believe it or not, it is essentially a retrofitted Ford. Yes. Deeply ironic, given what we are going to talk about in a minute here. And then there's a second version of it that I think is even a less real drivable car that

56:22they used when it slid out the glass and fell down and smashed on the ground. So they did not wreck a real Ferrari. In fact, there is not even a real Ferrari in camera in that entire movie, or at least in that shot. Yes. You don't need to worry. No 250s were actually harmed in the making of Ferris Bueller's Day Off. Yep. So, as we talked about, the first Ferrari that Enzo sold to clients was the 166, but less than 100 of them were ever made.

56:53Which must mean that there was demand for 101, because there's the famous Enzo Ferrari quote that is the business strategy today, Ferrari will always deliver one car less than the market demand. I think that actually might be the strategy today. Back then with the 166, there was demand for a lot more than 101, but they could only make 100. So in 1952, Ferrari comes out with the 250 series.

57:25And this is the first real production Ferrari. And over the next set of years throughout the 50s, Ferrari manufactures a few thousand of them. So, you know, still a very, very boutique, you know, essentially handmade sports car manufacturer, but a lot more scale than the hundred or so. Yeah. Real production volumes. Yeah. And as we were alluding to earlier, this car is just stunning. No matter which variant of it you're looking at it, the one in Ferris Bueller's Day Off is

57:57a 250 GT California. It is truly, truly beautiful. And it was designed not by Enzo Ferrari or even anybody who worked at Ferrari. It was designed by Batista Pinin. It was his nickname. Farina. And his Pinin Farina coach builders. So remember earlier when we talked about Enzo's first business venture was he was going to be a coach builder. Turns out that was not his calling in life, but that was the calling in life for Pinin

58:31Farina. He was basically the Michelangelo of car body coach builders. And Enzo totally realized it, totally glommed onto it, and built this beautiful partnership with Pinin Farina, first Batista himself, and then his son Sergio, and then multiple generations that lasted 61 years. This was a multi-generational partnership that lasts all the way up until 2013.

59:01The LaFerrari? The LaFerrari halo car was the first fully in-house designed Ferrari. And during those 61 years, I believe every single road-going production Ferrari, except for one, I think, was designed by Pinin Farina. Wow. It's quite the run. It really is. So Luca Del Monte in his book writes, Enzo was looking for someone who could complement the mechanics of his cars with their body designs. Body and engine, elegance and power had to go hand in hand and had to be born and grow

59:35together. He said that he was not looking for a tailor, but for a coach builder who worked at his side and conveyed in the shape of the body the power and philosophy of his cars. The coach builder, he said, must be involved from the beginning of the project, not merely called upon to dress a finished project. It really was a partnership between Enzo and Pinin Farina. As much as Enzo would kind of make noise about, oh, I just make engines and then, you know, we slap some aluminum on. I don't really care what the aluminum is.

1:00:06Uh, no, these things were thoughtfully designed and built hand in hand. Pinin Farina was like the Johnny Ive to the Enzo Steve Jobs. That's a great analogy. And in fact, Johnny Ive is going to come back into the story later, as we shall see. Yep. It's probably also worth a quick moment here to talk about the sort of Italian nature of beauty and luxury versus the French nature of beauty and luxury that we've covered on Hermes or LVMH. In both cases, French luxury and Italian luxury, what you are buying when you are buying one

1:00:40of these products is a mixture of craftsmanship and a dream that it represents. But the sort of nature of those two ingredients are different between French and Italian luxury. The primary ingredient in French luxury is the dream and specifically the dreamlike connection to French royalty and this like mostly imagined past that, you know, if you buy a Birkin bag or if you buy a Louis Vuitton trunk, you too can be like the bygone French royalty.

1:01:13Of the nobility. Yeah. Yes. Exactly. Exactly. You can live that dream. You can live that life. And the beauty that's associated with that is, you know, very regal, very soft, very refined, very elegant. And quiet. It's not yelling at you. Yes. There's no engines involved. There are no engines involved. That is for sure. There are French car makers, but we're not going to make any episodes about them, shall we say? Italy, though, doesn't have the same kind of history as France.

1:01:43I mean, it's got like the Roman history and all that ancient history, but it doesn't have