A Legacy Transformed: John Elkann’s Journey
“My life was always about being confronted with an environment where you had to adapt.”
What if I told you that the fortune of one of Europe’s wealthiest industrial families is undergoing a quiet transformation? This is the story of John Elkann, the unlikely scion of a dynasty who was thrown into his role in the midst of an attempted coup by management and creditors.
Through his letters we can study the mindset and evolution of this emerging capital allocator. We can follow his journey from a novice, eager to learn, to a sophisticated strategist who restructured his company to maximize his edge and build a lasting legacy.
First, a little context. Exor is the publicly-listed holding company controlled by the Agnelli family, the Italian dynasty behind the automaker Fiat. In 2004, with the automaker in crisis, the family experienced a severe succession crisis and Elkann had to step up and take control. In 2009, he merged the family’s holding companies into Exor. Since then, he has transformed the family’s portfolio, evolved as an investor and leader, and developed a new vision for the company that takes full advantage of his strengths.
Oh, shareholders have also done well.
Source: Exor.com. Chart since March 2009 when John Elkann became chairman and IFI and IFIL were merged into Exor.
Lessons from his journey:
Context is key: To understand an investor’s journey, we have to pay attention to the initial conditions and constraints they face.
One person can make all the difference: Elkann’s partnership with Sergio Marchionne was paramount to his success.
Learn from the best: Elkann studied a variety of successful investors, leaders, and peers.
Investing is a journey: It took Elkann years to evolve to his current sweet spot in which he can leverage his personal strengths.
The Agnelli family’s wealth dates back to Giovanni Agnelli, one of the founding members of Fabbrica Italiana di Automobili Torino, or Fiat, in 1899. His grandson, Gianni Agnelli, became the family patriarch and richest man in Italy. The family’s power was enshrined in the saying: “Agnelli is Fiat; Fiat is Turin; and Turin is Italy.”
The family’s history also has its share of tragedy, including deadly accidents with planes or cars, drug addiction, and suicide. Gianni’s chosen successor, his nephew Giovanni Alberto, died of cancer in 1997 at only 33 years old. Gianni picked a new successor, 21-year-old John Elkann, and appointed him to the board of Fiat.
Elkann is the son of Margherita Agnelli and Alain Elkann, a journalist and writer. He was born in 1976 in New York City but grew up in the UK, Brazil, and France. His parents divorced in 1981 and Elkann became a serious child, watching over his two younger siblings. After graduating high school in France, he moved to Turin to study engineering. In the Financial Times he recounted, “my life was always about being confronted with an environment where you had to adapt.”
According to Fortune, his grandfather tried to prepare Elkann for the challenge during long conversations in Turin. Elkann was also mentored by Gianluigi Gabetti, the family’s consigliere, who, according to Publico, "taught him everything he knew as if he were my son.” Elkann avoided many of the distracting and dangerous pastimes haunting his family (although he does find solace in competitive sailing; his father interviewed Giovanni Soldini, skipper of Elkann’s Maserati trimaran). Instead, he focused on a practical education including a stint in GE’s corporate audit department where he added financial analysis to his skillset. According to the Financial Times, Elkann also received advice from Fiat board member Jack Welch, former head of the WTO Renato Ruggiero, and Lazard’s Felix Rohatyn.
Elkann also gained practical experience through a series of “undercover” internships at Fiat plants in France, Poland, and England where he worked “on the shop floor,” as he told the Financial Times. On the Masters of Scale podcast, he recalled his work at a “headlamp factory in Birmingham” which helped him understand the manufacturing process from beginning to end as well as the Toyota Production System, for which the plant was a supplier.