It takes a very strong will to say no to growth and investment, because you know it will make what you do change from excellence in to shit. Sometimes your customer base morphs (see Facebook) and you survive. Sometimes your only market was the high end discerning customer, and now that you’re shit, you’re dead.
If the market can support 5 of your nice business, instead of growing 5x (which often enshits) spawn four independent copies.
We've grown tremendously but we're still sub-200 in head count and want it to stay that way. We're rolling in profits because we keep our operation lean and responsive.
It seems to me the enshittification happens when you try and offer a service to the entire world and can't manage to succeed at that unless everyone and their mother uses it, which itself requires shit tons of employees and IT resources and datacenters, and if it doesn't work out, it all goes in the bin.
Ford did try before. For example, the 2006 Ford GT. In comparison, the similarly-priced Ferrari F430 of the era was the mass market automobile with about 5x as many made.
So I wonder how much one should draw from these rationalizations of prestige marketing. At the end of the day Ferrari still uses its larger super-car production capacity to keep even Ford only an occasional entrant into the low-end of market.
I am not saying that is actually the case, but production #s just don't really tell the whole story.
Ford only dabbles in these kinds of cars, they have different reasons for picking the # of units they build. They are a lot like Honda, they are not dedicated to this and they instead just build a small # of sports cars every once in a while to try and improve their reputation.
The article glosses over the core founding purpose of each company too. Ford was founded to build massive #s of assembly line built cars at a price the average worker could afford. Ferrari very reluctantly built street cars to fund racing and decided the sport/luxury cars were the best way to make the maximum money with the smallest # of street cars. Less street cars meant less distraction from building the racing cars.
As you say that's almost entirely due to demand. But the focus should be on how does Ferrari consistently keep such a large portion of the high end car market? Because that's the key to their success. Many companies can make cars that they can sell out in small volumes at Ferrari prices. But they don't see it scaling, while Ferrari does.
Formula 1
There is no other brands that has as much history in Formula 1 than Ferrari. McLaren is the second one in current constructors at 988 race entries but only started fairly recently (compared to Ferrari) to sell street cars, Lotus a distant 3rd one but hasn't been in formula 1 for the last 30years. Mercedes involvment in Formula 1 is fairly recent. In a way, FERRARI IS FORMULA 1 and FORMULA 1 IS FERRARI. Both need each other. Among other F1 teams and appart from Ferrari, McLaren and Mercedes, only Alpine Renault is fully involved and is definitely not in the luxury sports car market. In the case of Aston Martin it is really much more sponsoring/rebranding of a team than a real constructor as the Aston Martin team, formerly Racing Point, is running a Mercedes Engine. Appart from McLaren which is less known in the street there is simply no other brand like Ferrari in Formula 1. Here are some numbers according to Wikipedia:
_"Ferrari holds the record for the most Constructors' and Drivers' Championships won with sixteen and fifteen, respectively.[8][9] Ferrari also holds the record for the most wins by a constructor with 248,[10] the most pole positions with 253,[11] the most points with 10572,[12] and the most podiums with 834.[13] Ferrari has also entered more Grands Prix than any other constructor with 1114 entries and also maintains the record for the most Grand Prix starts with 1111.[14]"_
source with complete table of current and past constructors: https://en.wikipedia.org/wiki/List_of_Formula_One_constructo...
Alfa Roméo and Maserati used to be in the same if not better place than Ferrari in the early 50's. And their place in the luxury market constantly faded once they scaled down (being engine suppliers) then stopped their involvment in Grand Prix racing.
We see similar cases with the highest end Chevrolet Corvette. If you look only at statistics and performance numbers, they are arguably competitive, but cheaper. But GM intends to sell as many Corvettes as they can. They do not particularly restrict them in quantity or with a particularly inflated price that represents their role as a status signal or unobtainable luxury piece.
You're choosing cars (single products) but claiming that businesses are operating in a similar manner. All Ferrari cars are part of how Ferrari operates, while the GT was an exception to how Ford operates.
And I really doubt the applicability of the luxury approach to software. People will vastly overpay to have a 5% faster automobile because it's a personally-owned status symbol and has racing-pedigree. I don't recommend building a company around a new 5% faster database since it isn't a source of prestige for anyone. For many potential customers it'd barely put a mark in their bottom line. And it might be negative if it compromised in any other aspect to obtain it. Benchmarking isn't a reliable winner-take-all marketing approach like racing-based marketing (and it sure isn't as popular).
Are you telling me that selling branding rights to Acer laptops and to cheap cologne is (an important) part of their core business?
https://www.ferrari.com/en-EN/corporate/articles/2024-full-y...
To be fair, Rossa Corsa (i.e. "Ferrari red") has changed significantly over the years.
This is not the Ferrari he created. This is the corpo-monster called "brand". Yuck.
Ferrari sells consumer cars to fund racing.
Ferrari is a very rare thing in modern motorsport. A team that races to fund racing.
The average car enthusiast for track days will be seen running Mustangs, Corvette/Camaros, BMW M2/4s, Toyota GR 86s/Supras/Corollas, Honda S2000s, Nissan Z's, etc. But Ferrari is essentially irrelevant.
Sadly, I think Porsche is going that way; before, one could also run with the above gaggle with a decent 911 or Cayman. Now that the entry level is climbing well above the $100k mark new, and what was supposed to be their track car (GT3) is approaching Ferrari prices, they are becoming less and less relevant. And they might not even survive the China situation...
Your local track days where you see the likes that you mentioned - you'll also likely get a few Porches etc too. But there's absolutely a culture of racing higher end cars, the GT3's, Ferraris (488 Pista, 360 Challenge Stradale, starting to see XX's around too), the Valkyrie and Valiant etc. There's also those that grab older Cup cars and track them to the track. There's absolutely a market for turn key, track focused, road legal Ferrari's.
https://www.sportspro.com/decision-makers/politics-and-gover...
(I don't recall if it was Firestone or Goodyear.)
Ferrari had only adopted radial tires in racing a decade earlier. I'm curious as to what deal they got with Goodyear at the time, as radial tires (including high performance versions) were already long ubiquitous in the United States by the time that commercial came out, which I believe was actually after the end of the 308's production run.
I suppose the fact that the #1 car guy in America won't buy Ferrari amplifies the signal that Ferrari isn't actually a car company
That they also won't let you modify your cars to your liking (see Deadmau5's fights with Ferrari) is another
It is uncontroversial to say that Ferraris are cars of note. Somebody will save them. His resources are better spent on the stupidly niche things that nobody will care about if he doesn't. So it's easier for him to say "meh, not for me" than it is for someone to whom those kinds of cars are more relevant.
If you go to the Rolex subreddit, it's full of people getting waitlisted for watches they want to buy and excitedly posting when they finally "get the call" from the dealer — sometimes years later — that they are now allowed to buy the watch. It's a common "strategy" to buy lesser watches to ingratiate oneself with the precious Authorized Dealer™ demigod so that one day you might be able to buy the watch you actually want.
Go search /r/rolex for the phrase "got the call" and prepare to cringe.
If everyone was able to afford a Rolex or a 911, they wouldn’t be cool anymore because their unattainability is what makes them desirable.
That said, even if I could afford a GT3 RS or a Daytona, I would never play their stupid game to get one.
You don't even get a foot in the door with 1 from Ferrari.
I read a Reddit post from someone who had an acquaintance that speed-ran the process (clearly a 9 figure+ individual), and it was ludicrous.
I think it took him something like 3-5 years, while it normally takes double that. I think right out the gate he had to buy a few of them, then he could buy the nice ones, and the special editions, then he bought a used f40 or something like that which was 7 figures, and started participating in the racing experience they have, so there's a parallel track where you have to buy some track focused cars as well. Along the way he made sure to show up at all of the events, and it's important to, because to get on "the list" there is a scoring system behind the scene where everything that a customer does is assigned a point value, and only the customers with the highest level of points get the allocations. That includes things like maxing out options on every curve you buy, and paying up for the bespoke personalization services.
I think it was something like 3 years, 10+ cars, and 10 million dollars to get through the gauntlet.
One of rich folks here I know automatically orders the latest Ferrari, gets it in some months or years, then sells it after driving one month.
Even for some profit. Because he is one of rare people who is "on the list."
Then orders the next one.
Ferraris are a bit like NFTs for boomer investment bankers.
Enzo Ferrari always wanted to make a better Alfa Romeo, and he did. Branding was a side effect that other people exploited later.
Though some of the points may be correct under current management, I think this quote would have Enzo turning in his grave "We are not – we are not – a car company. We are a luxury company that is also doing cars."
This playbook where you put your brand on a bunch of random things to sell, while the prime focus gets watered down only works for a short period of time.
Aston tried the same thing, going so far as putting their badge on child strollers.
The car industry is going through such upheaval that much of this may not matter in the next 20 years, but I fear they are going to destroy a great brand through a lack of focus.
[1]https://open.spotify.com/episode/2O6toYAw3RjjTQ4SEzKIru?si=1...
I guess I'd rather own Toyota.
"I don't sell cars; I sell engines. The cars I throw in for free since something has to hold the engines in." --Enzo Ferrari
FirmwareBurner•1d ago
Replace Ferrari with Rolex and it's basically the same article. Veblen is such a good business model and place to work, if you can hack it that is.
Imagine you're a sales guy at Honda dealership, well you have to work hard to convince the middle aged dad why buy a CRV instead of a Toyota RAV4.
However, if you work at a Bugatti dealership, you don't need to convince the oil-rich Sheikh why he should buy the 2 million dollar car, he already wanted to buy it before he even stepped in. So not only is your job easier than the guy in the Honda dealership, it's also much better paid. The very definition of inequality. The same is true for other businesses. It's much easier and profitable selling Azure /Office 365 subscriptions to businesses, that some SW solution from a mom & pop shop.
thefourthchime•1d ago
VirusNewbie•1d ago
Does Rolex have other revenue streams aside from overpriced watches?
os2warpman•1d ago
So that's like a $100-200/yr. annual subscription to wear an already expensive watch.
neogodless•1d ago
I've seen people wearing watches, but hell I have hard time identifying the brand of watch, let alone where the person wearing it works.
kulahan•22h ago
However, I agree with the first part of your comment in a way, but it's really not that hard to get a rough estimate of someone based on how they choose to present themselves. They didn't exactly get forced into that look.
neogodless•22h ago
Though I'm wondering what, exactly, defines the appearance of a specific lawyer who pushes for accident victims to sue, or businessmen that participate in wage theft. How do you tell them apart from... other lawyers or random people wearing suits?
no_wizard•22h ago
Wage theft is rampant here, especially for lower wage workers. The government simply doesn't exist in a capacity to actually prevent these things, and people in general are too apathetic to other peoples well being, let alone engaging in appropriate political discourse, that the needle rarely moves forward for your average citizen.
kulahan•21h ago
kridsdale1•1d ago
The people who did the training and have the surgical ability to fix a Rolex deserve $1000.
An elaborate precision machine that is 35mm across and hand-built over a year (so they say), it makes sense that “cheap” Swiss watches are $9000. Rolex retails for 2-4x of that due to brand cachet and artificial scarcity, even though they are by far the highest volume manufacturer.
mohsen1•23h ago
kulahan•22h ago
caycep•22h ago
VirusNewbie•22h ago
caycep•21h ago
Watch market above that starts getting weird. You have some special models, technically equivalent w/ cosmetic bling hitting $80-100k
wiether•23h ago
TIL
caycep•22h ago
wdb•19h ago
VirusNewbie•19h ago
davedx•23h ago
caycep•22h ago
deadbabe•1d ago
fragmede•23h ago
kulahan•22h ago
wcfrobert•23h ago
Luxury brands spend millions on marketing and brand awareness. In some sense, all the "sales work" have already been done before a person sets foot into a Bugatti dealership. Reputation takes decades to build but just a few missteps to destroy. Brand is way more fragile than people think. As soon as Bugatti stops making great cars, they'll fall into a place where they can't compete in the luxury market, nor the mass market Japanese car brands like Honda or Toyota.
In that sense, luxury fashion seems to be a easier market than watches or cars. You don't need an innovative engineering team. Just spend millions on marketing to uphold the common narrative you are a luxury brand. And that shirts with your logo on it costing 10x more than a similar product at say H&M, is not only justifiable, but sensible.
FirmwareBurner•21h ago
When was the last time you saw an ad to buy a Bugatti Chiron?
GuB-42•18h ago
The simple fact that you (and me, and everyone else here) know about it show that people in marketing are doing their job.
I don't remember seeing an ad for a Bugatti Chiron, I am obviously not the target market, but I stumbled upon an ad for a private jet! Also other luxury cars and watches that make Rolex look like child toys. I was when I worked in a helicopter company and someone picked up a magazine from the showroom where customers get their helicopters delivered. The content was out of this world, I remember an article on the merits of private jets over travelling first class (I guess anything less is unthinkable), with purchase recommendations. So the ultra-rich get their ads too.
tolien•3h ago
Ads don't just have to be a photo on a billboard, though, or the entire thing of influencers wouldn't exist.
How many times has the Chiron been on Top Gear - I reckon at least three times (I can remember once in the Clarkson era and another time in the Harris/Le Blanc era; the magazine's had one at the Nürburgring at least once)? Sure Bugatti's letting them loose with a multi-million euro car out of the goodness of their hearts.
eschneider•23h ago
Neither is better, or more profitable over the long term than the other, but you really need to know which game you're playing.
potatolicious•23h ago
Respectfully disagreed. The sales people for veblen goods work extremely hard because competition is intense even within that space. The Bugatti salesman is competing with Ferrari, McLaren, Lamborghini, etc.
The margins per-sale are great, but because of your low volumes you experience a lot more volatility. Minor fluctuations in sales have disproportionate impact on your bottom line.
I once worked for a luxury real estate brokerage and had opportunity to talk to real estate brokers who dealt in ultra-high-end real estate (the kind of properties that people make YouTube videos about). One conversation stood out to me that's relevant here:
I asked him about a listing for a Manhattan penthouse that had been making the news (mid-8-figure buy-in), and his response was that it was an incredibly risky property to represent, because the list of potential buyers is perhaps a dozen people long. If none of them move on the deal then you're holding an absolutely immense albatross.
Ultra-high-end goods are generally susceptible to this. Your market is small enough that it doesn't take a lot to existentially threaten you, and there is no shortage of people who want to eat your lunch (just like with any other market).
no_wizard•22h ago
Do you happen to have more sharable anecdotes / thoughts around this? I realize its off topic, however I think it still has value to warrant that.
I'd be interested in anything you can share about it. I'm curious how the 'day to day' folks see things vs how its sold and told to the rest of us via news magazines or books.
potatolicious•19h ago
- At the high end, everyone's got a gimmick. You can't just be personable and charming, you have to be so memorable as to feel like some fictional character. Your clientele are expecting more than mere representation, but something/someone who makes their life actively more interesting.
- Part of this may have been the market (NYC), but I got the distinct feeling that a lot of this was that buyers wanted a NYC fairy tale. If you're wealthy enough, it's not enough to have an agent, your agent has to spring forth and become a side character in the adventure story of their life.
- There's a lot of spilled ink about the mega-wealthy buyers (Middle Eastern oil barons, Russian oligarchs, Chinese billionaires, etc.) but they are a vanishingly small portion of the population of very wealthy people. In general I think most people have a poor appreciation of how little of the ultra-high-end consists of foreigners and high-profile business people that they've heard of.
- Related, there are way more wealthy Americans than most people appreciate, and the sources of their wealth are way more mundane than most people suspect. There are more 8-figure luxury condos being sold to families that own car dealerships and trucking companies than tech wunderkinds or petro-oligarchs. By multiple orders of magnitude.
FirmwareBurner•21h ago
Respectfully disagree. Which oil-rich Sheikh did you see who only has one supercar in their garage and not all of those you listed? These people aren't stock brokers or tech bros who need to work and save money for for years in order to be able to finally afford one dream car, but they own a multi generational empire that makes them enough money to afford all those cars.
>If none of them move on the deal then you're holding an absolutely immense albatross.
Comparing real estate to exotic cars is apples to buffalos. Most exotics are already sold before they leave the factory floor.
potatolicious•20h ago
Except this isn't the main market for Ferrari, McLaren, Lambo, et al. There are maybe a few dozen people on this planet who fit into that kind of stratospheric wealth.
The bulk of their sales are to the "merely multi-millionaire" rich - your business executive, late-career law partner, guy who owns a chain of dental practices, etc. These are people who are not exactly scrimping and saving for their Ferrari, but certainly don't have the infinite money cheat code.
If you think Ferrari's sales ledger is consisted mainly of oil barons and other billionaires, I dunno what to tell you.
buescher•23h ago
thefourthchime•23h ago
kulahan•22h ago
codezero•22h ago
gpderetta•17h ago
FirmwareBurner•22h ago