From the beginning, the Hermes Family knew they were in the craftsmen business. Making products that last for generations.

Dave Young:

Welcome to the Empire Builders Podcast, teaching business owners the not-so-secret techniques that took famous businesses from mom-and-pop to major brands. Stephen Semple is a marketing consultant, story collector, and storyteller. I’m Stephen’s sidekick and business partner, Dave Young. Before we get into today’s episode, a word from our sponsor, which is, well, it’s us, but we’re highlighting ads we’ve written and produced for our clients. So here’s one of those.

[Wagmore Garage Doors Ad]

Dave Young:

Welcome back to the Empire Builders Podcast. Dave Young here, along with Stephen Semple. And Stephen, just before he whispered the topic in, this tells you what Stephen thinks about me. He said, “Yeah. I’ll tell you this one, but I don’t think you’re going to know about it because it’s a really high-end fashion.” Yeah.

Stephen Semple:

It’s not exactly what I said.

Dave Young:

Not … Well, I’m telling the truth in a more powerful way. And as we call them in Nebraska, Hermès, but it’s Hermès. Say it for me.

Stephen Semple:

I think it’s Hermès because it’s French.

Dave Young:

Hermès? Hermès?

Stephen Semple:

Yeah.

Dave Young:

Is the H pronounced at the beginning or not? I don’t know.

Stephen Semple:

I think it would be very soft.

Dave Young:

Scarves and things like that, that’s all I know.

Stephen Semple:

Well, the big thing they’re known for is handbags.

Dave Young:

Things I don’t own is what they’re known for.

Stephen Semple:

Correct.

Dave Young:

And I will admit you were absolutely right to think that I probably don’t know a whole lot about these people or this brand.

Stephen Semple:

The more I looked into this company, the more interested I got on it because I got fascinated by some of the history.

Dave Young:

I got to share with you just how much I don’t know about them. You see this shirt I’m wearing as we record?

Stephen Semple:

Yes.

Dave Young:

This is from the fishing department at Walmart. Not the men’s clothing section. Fishing. And I-

Stephen Semple:

And, Dave-

Dave Young:

Here’s the other thing.

Stephen Semple:

Dave, you don’t fish, dude.

Dave Young:

I don’t fish. No, I don’t. I don’t fish at all. I stumbled across these shirts one time. I’m like, “I love these shirts.” But yeah, anyway, they’re not Hermès.

Stephen Semple:

So this is a really interesting company. It was founded in 1837 by Thierry Hermès. And he’s a German-born craftsman. And the company started in Paris. Now, what makes it super rare is here we are, close to 190 years later, and it’s still primarily owned by direct descendants of Thierry.

Dave Young:

Wow.

Stephen Semple:

There you go, Dave.

Dave Young:

Okay. That’s pretty cool. That’s a family business.

Stephen Semple:

That’s interesting on its own, isn’t it?

Dave Young:

Mm-hmm.

Stephen Semple:

So the family owns somewhere between 65 and 70% of the business, and is publicly traded at around a valuation of about $200 billion.

Dave Young:

That’s a lot of billion.

Stephen Semple:

That’s a couple of billion, isn’t it?

Dave Young:

Yeah. Wow. Okay.

Stephen Semple:

They only have like 70% of that 200 billion, so …

Dave Young:

Oh. Well, just downgraded their jet.

Stephen Semple:

Yeah. That’s it. So in 2010, the luxury giant LVMH tried to take the company over, and the family blocked it. There was a time where they tried to take over. And the CEO, Axel Dumas, is a sixth generation member of the Hermès family. So today, they have 300 stores. They do 14 billion EU, which is about 16 billion US in sales, which means they sell $50 million per store.

Dave Young:

I was going to say that’s not very many stores.

Stephen Semple:

No. And put in perspective, Gucci does about 25 million. Prada does half of that. Tiffany’s does about 15 million per store. $50 million per store.

Dave Young:

It’s got to be a front for something else.

Stephen Semple:

Now, their big product, so we talked about … Is this handbag called the Birkin bag. And the Birkin bag sells for anywhere from $10,000 to $100,000 per bag.

Dave Young:

Get out of town.

Stephen Semple:

Yeah. And often sells for more-

Dave Young:

Is it bottomless? Can you crawl into it?

Stephen Semple:

Seemingly, it’s a pretty big bag. I personally-

Dave Young:

Will it transport you to other dimensions?

Stephen Semple:

I personally have never known anybody who’s had one, so I can’t really comment.

Dave Young:

No. No. I just want to touch one.

Stephen Semple:

And here’s the other crazy thing, is they often sell for more on the secondary market.

Dave Young:

Sure.

Stephen Semple:

Yeah.

Dave Young:

Why not?

Stephen Semple:

They’re super-

Dave Young:

Because they only make a couple of them, or enough to sell.

Stephen Semple:

They’re super scarce. You cannot walk into a store and buy one. There’s a waiting list.

Dave Young:

Wow. Okay.

Stephen Semple:

Even celebrities, doesn’t matter who you are, have to get on the waiting list. They’ve really leaned into this whole idea of scarcity.

Dave Young:

Yeah.

Stephen Semple:

They’ve really leaned into it.

Dave Young:

How many billion...