#393 The Marketing Genius of the Michelin Brothers

0:00 The Michelin brothers have to be one of the best co founder teams that I've ever read about. So one brother made the product. And the other brother sold the product and they did their respective jobs. better than anybody else in the world. Andre Michelin may be the greatest marketer of all time. And his brother Edward is one of the greatest industrialists of all time. In fact, Edward would give

0:19 the following speech to his employees counselling. Says little streams make big rivers. A single minute lost each hour. Adds up to eight in a day. twenty four hundred minutes in a year.

0:31 That's forty hours per worker. If our factory employs twenty thousand workers and each loses that minute per hour That is the equivalent of three hundred and thirty three years of work. Lost. The best founders in history were all looking for ways to save both time and money. The Michelin brothers were no different. In fact, there's a line in one of their biographies.

0:51 That says saving both time and money. Was one of the principal конц. Of the chiefs. That is how I know that if they were alive today They'd be running Michelin on ramp.

1:02 Ramp is the presenting sponsor of this podcast. And ramp is a guaranteed time and money saver. Ramp gives your business easy to use corporate cards for your entire team. automated expense reporting and cost control. Michelin was one of the fastest growing and most innovative companies in the world in their day.

1:19 many of the fastest growing and most innovative companies in the world today. are running their business on ramp. Why? 'Cause one of the reasons is because Ramp has the most talented technical team in their industry. Becoming an engineer at ramp is nearly impossible.

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1:48 All of your business's financial operations. And as you're about to hear. The Michelin brothers would have loved that. Ramp has built a team of A plus players. That would make Steve Jobs proud.

2:00 And what kind of product can a team Of A plus players build. A product to create so much value for their customers. That the customers never leave. Ramp is an example of that. Last year, twelve thousand and fifty nine businesses signed up for Ramp.

2:13 And only eight. of the twelve thousand and fifty nine businesses decided ramp wasn't for them. I run my business on ramp, and so do most of the other top founders and COs I know. Make history's greatest entrepreneurs proud by going to ramp.com. To learn how they can help your business today. That is ramp.com. There's another tool in technology I want to tell you about, and Ramp actually uses this tool. It is Vanta.

2:35 I just told you that Ramp has the best technical talent in their industry. Now becoming an engineer at Ramp is nearly impossible. Knowing that. The team at Ramp Trusts Vanta was a huge positive signal for me. And when I talked to Vanta's founder, Christina, it became obvious why Ramp uses Vanta.

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3:37 A Vanta customer number three. Manual compliance is slow and painful. Doing everything by hand takes months. The Michelin brothers would not tolerate Wasting valuable company time doing something with labor when technology can help you automate it. And number four, you stay secure over time. Vanta keeps checking your systems constantly so you don't fall behind or forget anything important. Your intelligent security assistant. Works around the clock.

4:04 Vanta will help you win trust. Close deals and stay secure. Faster. and with less effort. Go to vanta.com to learn more. That is vanta with a V, V-A-N-T A.com to learn more. And if you tell them that David from Founders sent you They'll give you a thousand dollars off. That is vanta dot com.

4:22 So I spent the last two weeks reading two biographies on the Michelin brothers. And both books centered around how they took over a bankrupt And a decrepit factory? And then turn it into one of the leading tire manufacturers in the world. In fact a place.

4:34 That the company still holds more than a hundred years later. So the two books I read were Michelin, A Century of Secrets, which details how the two brothers kept their entire operations. Shrouded in secrecy? While simultaneously going to extreme lengths. To make their company and its products known to the world. And the second book was The Michelin Men Driving an Empire. So the first book was actually translated from French

4:56 By my friend Camera Priest, who also helped me. with last week's book on Michael Ferrera. Cameron and I have been texting all week about the just insane stories that are in these books. So most of what I want to talk to you about is the genius that The older brother Andre applied to marketing and advertising.

5:12 But there are a lot of things. There's just a lot of things in in in the story I think will blow your mind. At least they blew my mind. And Even more amazing is what Andre was doing in marketing and advertising. before there was any kind of playbook to learn from. He starts coming up with great ideas in the late eighteen hundreds, for God's sake.

5:28 Before I get there. I need to give you There's a few things you should know, like some prehistory and some background. Uh before we get into how Andre came up with all these great ideas essentially to market what would seem like a commodity product. It's a it's a tire. There are other people's

5:42 Making tires. So the the prehistory that's important was the fact that the brothers were asked To take over a failing family bus so the two brothers, Andre's the older one. And Ed Ward. He's the younger one.

5:56 They will eventually turn this failing factory into Michelin. It was not that at the time. And so Andre, when this happens, he's in his early thirties. Edward is in in his late twenties. Andre was trained as an engineer and he was the obvious choice

6:11 to run a factory manufacturing new products, right? But he wanted to live in Paris and not the remote and isolated part of France. Where the factory is located. So in a reversal of roles. He convinces his younger brother, who is an art student. To run the factory instead.

6:26 And so I was thinking about this while I was reading both books. The artist. The the brother that's the artist is going on to be is going to come go on To become one of the greatest European industrialists in history. While the engineer may be the greatest marketer in history.

6:40 Another thing to know, when they start doing this, they had no experience. They're very unlikely You wouldn't have predicted that these two brothers would go on to do what they accomplish. But As you're gonna hear. They're both wicked smart.

6:52 Relentlessly resourceful. Very secretive, which is actually really important. I'll I'll talk more about that later. They're obsessed with quality and obsessed with winning. And then I think one of the most important traits that just It just jumps out in both books is the fact that they're both a default aggress They don't dilly dally and wait for opportunities to come to them. They they're default aggressive. They go after them with everything they have.

7:15 So When they did not when they take over the factory. They didn't know what product they should be making. So at the time This small factory that's about to go bankrupt that was founded by their grandfather. Was producing farm tools and then assorted products made from rubber.

7:28 Like hoses. The rubber part is obviously going to be important, so keep that in mind. The factory was not making tires. So when the younger brother Edward shows up at the factory, he finds a stack of unpaid bills. A small team of workers who haven't been been paid their full wages.

7:43 In months? And a banker refusing to extend any more credit. So Their grandfather's company's on the brink of bankruptcy. They can't get any credit, so they go to The grandfather's daughter, their aunt.

7:55 And say hey We I need five hundred thousand francs to invest in turning around your dad's company. She says, Give me a day to think about it. The next day Edward goes in and and Uh visits her again.

8:06 She says you can have the money and then she tells him the reason that she asked for a day. She said I had to go to the local convent. And make sure that if this fails. They have a room that I could live there. She literally invest every single last dollar. In trying to save her father's company.

8:23 And was willing to go live with nuns if This failed. So now that he has the money, Edward takes an inventory of everything the factory's making. Most of the products are unprofitable. So he just starts cutting every unprofitable thing. And he decides to focus on their most successful product. Which at the time remember this the late eighteen hundreds. It's a brake pad for horse drawn carriages made from rubber.

8:45 The only problem is Edward was in his own words completely ignorant of rubber manufacturing. Now how he solves And alleviates his ignorance is really smart and maybe even a little genius. So this is what he said. The first necessity was for me to learn my trade. I can only learn it by questioning the workers. So I had to have a conversation with them where I was their inferior. And the best way to get them to talk was to openly and completely admit my ignorance.

9:10 In practice I conducted my questioning. How are you going to do that? Why can't you do it differently? Is there another way? I explain these questions to the worker asking.

9:21 If he encountered any difficulties in the execution. That I had not anticipated. I noticed that even when I knew the issue quite well. This friendly conversation was extremely useful. For gathering facts and then

9:35 is the most important sentence in my opinion of the entire thing he's talking about here. There are things that the man who handles the material for eight hours a day knows. While his boss may be unaware of them.

9:48 This friendly talk was extremely useful. And getting more details. Now, another thing I admire about the brothers is even though their experience They're extremely ambitious. So their idea is like, hey, I don't want to be just this like small local factory. You know, making a profitable

10:04 Product in a dying industry. They are going to, throughout their career, they're going to successfully ride multiple technological waves. This is eighteen ninety one. So horse drawn carriages, which they're making products for. They're currently being displaced. By the bicycle and then soon to be the car. So they're talking about Switching to a market. Can we build products?

10:23 For instead of a dying market. For a growing market. And so they're reading about These inventions that Dunlop is making. With

10:31 The bike tire. And so the brothers had already been talking, they were like, Hey Maybe we should make bike tires. There's gonna be a lot more bikes in the future. We can build the best product in a growing market and be in a way better position. than just making this rubber brake for horse drawn carriages.

10:46 A few hours later, a tourist arrives in the yard of the factory with his bike. His tires have burst and he asked for help repairing them since he knew it was a rubber factory, right? Edward half a day and a and the book says a lot of swearing, which I thought was funny. To repair the Dunlop pneumatic tires. So All that means is Dunlop.

11:05 Is the first person to invent tires that run on air. Instead of solid. Rubber tires. At the time tires filled with air were extremely rare. And they had this we Dunlop came up with this weird idea.

11:17 That you should glue them to the rim. making them very labor and time intensive to repair. So imagine your bike gets a flat tire and it takes you, you know, six hours to fix it. But Edward realizes something, he fixes it, then rides the bike to test it, and he's shocked at how much more comfortable

11:33 Air filled tires are for the rider over solid rubber tires. Before air filled tires. Everybody used solid rubber tires because they were puncture proof and they would last a long time. But they would ex they produce this extremely rough ride. You'd ride around on rubber tires and it would hurt your liver.

11:50 Have to retire. After a while, you felt every ball. And if people weren't using solid rubber tires, they would use st Tires made out of wood, which also felt like shit. So He he sees a a a massive opportunity to make improvement.

12:03 And this insight that he has, he says as long as it takes a day to patch a nail hole. This new tire cannot develop. Market. It will not find a market. What is needed

12:13 is to make it easily removable. Which they will call detachable. Okay. What is needed is to make it easily removable. And that will change the future of the bicycle. And so Edward's first idea For a product, it's hey, we're just gonna take this existing

12:27 And Th this existing product that has potential and just make it easier. To repair to save people time. And so he sets him and the rest of his employees to the task of creating a bicycle tire that rides on air and is easier to fix and repair. Now this is nuts. And so this is essentially the product that he that he

12:42 is attacking at the time. The repair manual that is used for changing a flat tire on a bicycle. was sixty pajes long Of detailed explanations. So we're just gonna make that easier.

12:55 And then we'll find a market. Now they w they had an advantage over Other rubber companies and other tire manufacturers too? is because they were completely desperate and they were in a bad situation. Their backs were up against the wall. So they said we have to recognize the factory's best cards and play them hard.

13:11 This is what I meant about them being default aggressive, which will reappear over and over again throughout our conversation. In May eighteen ninety one, the Michelin factory began producing removable tires. And it never stopped. Now again, this is a technical achievement. No one else in the world had this invention at the time.

13:28 And now for the first time we get to their other superpower. The first Superpower is they built the best products in the world in their category, and that was their goal from the very beginning. I told you there's extremely ambitious. They're seemingly obsessed with winning. That was the talent of the younger brother, right, Edward? The second superpower was that the older brother, Andre, may be the greatest marketer of all time. So the fact that the co founders this is a really important point before I start going into it immediately.

13:52 They make this invention and then they're like we're gonna find the best possible way to market it right away. Really important point to understand is the fact that the co founders and brothers had complimentary skills. This is very important. One makes the product. And one sells the product.

14:07 Andre would show him to be as gifted in explaining tires as his brother was in designing them. And the way that Edward explained this is I'm the champagne, he's the bubbles. So at this point in time they're the only people in the world with a detachable The pneumatic. Air filled.

14:24 Tire for a bicycle. So they're thinking of ways how do we sell this. A few weeks later, the most read and influential newspaper in France. Announces a race for bikes. The race starts in Paris, it ends in Paris, it travels a total distance of twelve hundred kilometers. The event was scheduled for fifteen days later, and so we see this correspondence between the two brothers.

14:45 You're gonna see that the The older brothers obviously you know the the Don't want this way more aggressive. So the older brother Andre writes his his younger brother says this would make for a fantastic launch. We need to win it. His younger brother writes back.

14:58 The deadline is too short. We will never be ready. Andre, the older brother, writes him again. We're the only ones with a detachable. It is an advantage we have and we may never have again. Figure it out.

15:10 He was dead right in saying that because of what happens next. So the two brothers the favorite of the van. They again they're they've They their tires are entered into the race. They obviously want to win it. The favorite of the event. refuses to sign a contract because he's already signed to Dunlop.

15:26 So they have the idea it's like hey. There was this great bicycle racer named Charles Tarant. He's retired. Let's see if we can coax him out of retirement. So they invite him to lunch. They treat him royally. They essentially it sounds like they got him drunk.

15:38 So they gave they it says after liquor is at a cigar, they propose that he try to race on the Michelin detachable, which is what they're calling it at the time. Three hours later, convinced in half days. Toron signs the contract. In the retelling of their own history, there was an interesting line that it came across. They they call it the House, so the House of Michelin'cause it's kinda it turns out to be a dynasty after this.

16:00 Uh they talked about this lunch being really important and how they were convincing to get Charles to to race for them. And they had a great line in in in recounting our history. They said success is often made of these small details. So the end result of the race is that Charles Races for three straight days with no sleep.

16:18 And he arrives seven hours and forty minutes ahead of the race favorite. Than Andre in a single day. He'll make and run an ad in the largest newspaper announcing the vic victory. I just want to pull out some lines in this. He said the pneumatic is and will remain by its very nature the most comfortable and fastest of the tires. Remember, they are the only company selling this product at the moment, okay?

16:40 We have confidence that the bicycle Public. We'll save our pneumatic. This is an improvement. No, this is a revolution. Now this is the hilarious part. Remember when they're like, Hey We don't have time to do this.

16:52 We can't do this if the younger brother's like we can't do this in fifteen days. We're not. When the race ends. Michelin has twelve tires in stock. They've only been able to make twelve of them. By the end and this is how important

17:06 And they're they're just gift of spectacle. And getting attention. And then drastically increasing the market for their products in an indirect way, which is the main theme of what I want to talk to you about. But That you have twelve tires in stock.

17:18 At the close of the race. By the end of the following year Ten. Thousand. French.

17:23 Bicycle riders are using Michelin. Tires. So if you were in their position, think about this. You you You go from one year from nobody having your tires to ten thousand. What are you gonna do? You're gonna do exactly what the Michelin brothers did, and I think would also play to their nature. They loved

17:39 being focused. That's another thing we'll talk about a lot about. So they're gonna retain from here on in. They're gonna retain a singular Focus everything for tires. Tires for everything. Everything for tires, tires for everything.

17:52 So their dream is like anything that's gonna travel over land. We're gonna put on our rubber. And there's such great lines in both books about this. Let me read two of them to you. This will be until the death of the two brothers. The great ambition of the house.

18:07 Here's another one. The path that the company must take is laid out. It will be tires. Nothing but tires. Michelin will remain specialized. And so when I say Andre may be the greatest marketer of all time, he's the inventor of the Michelin guide. Which leads to the Michelin restaurant stars.

18:23 maybe the most successful guide in history drastically expands the market for their products, but it But it. I'm telling you when I write out all I took all my notes, you know, from two books. I read like I don't know, seven hundred pages for this.

18:37 And when you just list out All of the different marketing ideas. That this relentless and prolific person Had. It's twelve pages long.

18:47 And so let me just give you an example. They obviously said, Hey, you know what? Winning bicycle races seems to be pretty good for business. Maybe we should lean into that. Why are we waiting around For other people to have bicycle races, why don't we have um a bicycle race? Attached to our brand. And then

19:03 What if we set up our this is such a great idea. And then what if we set up the track Right? The race track. In a way that will demonstrate

19:12 The advantage our product has over our competitors. So one of their product's advantages over the competition. was how much easier it was to change. It would take fifteen to thirty minutes to change a tire instead of half a day. So they organized their own bike race. They call it the International Michelin competition, which is hilarious because it's only It's only in France at the time. Then the basic requirement's simple.

19:32 To get into the race, you have to ride on Michelin tires. And then Michelin fills the entire course with nails. Thereby allowing a demonstration of how easy it is. to change a Michelin tire. They're constantly obsessed with having fun.

19:46 And showmanship. with their marketing. It's it's almost like this is like Red Bull before Red Bull. If you haven't listened to that episode I think listening to this and then immediately when you're done listening to episode three thirty three. Which is on Red Bull's founder, Dietrich Matches, which I think is one of the best episodes ever made. You're gonna see a lot of like similarities between them. So what do they do?

20:03 They're gonna go to where all their potential customers are. So they set up this demonstration. at this giant exposition in Paris in eighteen ninety five. Now in this case this is truly international because people from all over the world Go to this exposition in Paris. So they call this demo the Michelin Wooden horses.

20:19 The clever demo consisted of two seats on a rotating carousel trap. One seat is mounted on a tire. And the other Was on a bare wooden wheel. So Their product?

20:30 And the other one is their competition, right? So at the time, the horse drawn carriage market is so much larger. The car market for all intents and purposes barely exists. Let's just put it that way. So volunteers will sit on a seat. And when if they sit on the seat on the wheel wood. They were subjected to quote torment unknown to the since the Inqu Inquisition.

20:50 Andre's got a gift with words. He's just hilarious. Uh the writer was rattled mercilessly. By bumps on the track. The riders on the pneumatic seats, which were Obviously Michelin tires, the airfield tires, right?

21:03 Experience a smooth silent glide. The president of Франц. Happened to stop by Try. The uh the the demonstration.

21:13 And then congratulated. On the the Michelin brothers on their invention. So then they have this very simple idea like well Most of our business right now is bicycle tires.

21:22 But They have two wheels. Four wheels is better than two. Can we make tires for vehicles that have four wheels? At first they're like oh maybe we should make tires.

21:31 For Horse drawn carriages. But pretty quickly they realize hey. I have a we have a great idea. Four is better than two, but we're pointing it at the wrong target. So Andre Again, the this I love the way this guy this guy spoke.

21:44 He sees the first the first few horseless carriages in Paris. And so he says Why not also put these strange vehicles that make a hellish noise and crawl like turtles On our removable tires. And his little brother says, Wouldn't it be better to concentrate our effort on horse drawn carriages

22:01 Which offer a practically unlimited customer base. This is so smart. Again. Andre just gets it. Andre does not share this opinion. He says the car with tires Will replace the horse. It is not the last progress.

22:14 that one that with one should should proceed. Not even with today's progress. But with that of tomorrow. And Andre's point is I believe That the car is gonna replace the horse.

22:26 Therefore, we should focus and put all of our resources on inventing for the new, not the old. To which his brother then provides the following objection. It is very difficult to port the air tire from the bicycle. To the much heavier car. Andre replies

22:41 The more difficult the problem, the less chance there is of being followed. The more fruitful the triumph will be. True progress. Boldly supported. Always ends up triumphing.

22:53 And so you could think about this in a very simple way. Four tires are better than two. So what do they do? They do another smart Th there's a lot of smart bets they make early. And so they agree to take they're making a ton of money, obviously from manufacturing You know, their their bicycles are. So they agree to take a large profits.

23:09 from making bicycle tires and instead of taking very large dividends from themselves. They're gonna reinvest that profit into creating tires for cars. In other words, they made a very smart bet early. There's not a lot of cars in France when they made this decision. I've read varying accounts, sometimes as low as three hundred and fifty cars in France at the time. To as many as thirty five hundred total cars in France, but not.

23:30 This is thirty five hundred any anywhere from three hundred fifty to thirty five hundred total cars in the entire country at the time. At the time they make this bet, cars are expensive. They're toys for the rich. They require full time chauffeurs that will double as mechanics. These cars could not stray far from a repair shop. In fact

23:47 Many, many years ago, probably five years ago. I read I'm gonna reread it. The biography of the founder of Cadillac, this guy named Henry Leland. It's a he's a fascin he had a fascinating mind, a fascinating experience. He came up with the first successful car company ever founded. And he also came over one of the most successful new car ads by Cadillac. And the ads were successful because it said return trip included.

24:08 At this time it was expected you're gonna go out in your car, at some point it's gonna something's gonna break on it, so your chauffeur has to fix it. And that's the only way you're actually gonna come back. Now, I also think it's important to point out the perspective the Michelin brothers had. So there is this story. I shared a few weeks ago. That I absolutely love. So two shoe salesmen Arrive on a remote island.

24:25 The two Salesman. Right. see completely different realities based on their mindset. One salesman looks around, notices that nobody on the island wears shoes. Rights back to his company. Says, hey, there's no opportunity because no one here wears shoes. The other salesman sees the exact same situation, but reaches the opposite conclusion. He sends back a message.

24:42 Saying there's an entire population that could benefit from our shoes. But s but simply hasn't been introduced to them yet. The Michigan brothers. We're like the second salesman. They look at the market and they're like, Oh my God, we're gonna go all in on making

24:57 car tires that run on air. Because there is an infinitesimal that's the word they use minority of the cars in France running on air. So a small number of a already small number. And they're excited about this. And their point was if you just use their product, they believed in the superiority of their product. So

25:15 If they test out their product and they go for a ride in a car on their product. their uh outcome after that happened. Andre proclaims he's like in ten years all cars are gonna have our tires. our product is just so s obviously superior over the alternative.

25:30 So once they have this new product, they have this air filled Tire. That you could attach and change. And it's uh it's easier to change the tire, it's s much smoother. Right. Now they have to figure out okay, we can bake this thing, but how do we sell this thing? We're we're in it.

25:44 It's such a almost non existent market. So how do we make this happen? How do we sell more tires? This is the genius part. This is the part that I was most fascinated with in both books. You must they they figure out you must create the conditions for your product's success. You must create the conditions for your product's success.

26:02 They converged everything. Around this core Love. Encourage more driving. Which leads to more movement.

26:08 More movement leads to more wear. More wear leads to more tire sales. They realized that a tire company W only prosper if people travel more. So we are not going to sell tires, we are going to sell movements.

26:24 And they commit to this mission for the long term. There's a great line in the book. It says in the year nineteen hundred. Michelin's purpose had been to get more people on the road. And in the mid nineteen twenties, that purpose had not changed. And there's just a litany of great ideas that they use to do this to encourage more people to get out on the road. If more people are on the road, we're automatically we don't have the dirt, we're automatically going to sell more tires. So the first thing they do is they increase demand.

26:47 With spectacle. They viewed races as opportunities to demonstrate their new products. They already knew this worked for bicycle racing. Why wouldn't it work for car racing? They build their own car called the Lightning. And they drove it themselves. In one of the longest car races in Europe. It was the first car ever raced using Michelin tires.

27:07 The exact same thing happened in this race that happened when they were did this for the bicycle race. It gives them a ton of flubility and then orders for tires start flooding in. when they're not driving these races they made sure to sponsor these sponsor air races bicycle races Car races. they would offer to put up money for cash prizes for the uh the contestants that win.

27:26 This is what they said. To sell tires we first had to sell excitement. And it's a great line where it says Andre Michelin made promiscuous use of the press. So think about it. It's like when you do these bike races, when you do these car races, when you're sponsoring air shows. And you're sponsoring E every single thing where people are traveling on rubber.

27:44 Because there's spectacles. the newspapers and the media of the day are automat automatically for free covering the spectacle. But Andre didn't stop there again. He made promiscuous use of the press as one of the greatest lines. He wrote a column every Monday for one of the most widely read papers in France. The column was called

28:01 Michelin Mondays. Readers of the column would learn about routes they could take for driving. They lear learn about hotels. and ends on that route. Special meals. Remember this is gonna be the turn into the Michelin stars when he does the guide, you know, many years to the future.

28:15 They learn out special meals on the route. They'd learn about different sites. They'd learn about where the mechanics are. And Andre was prolific in all things that he did, not just this. He wrote hundreds of these columns. One of the books. Made a reference Yeah.

28:30 That appears in the six hundred. And thirty sixth. Michelin Monday. Column. Here's another idea that blew my mind.

28:38 They built road signs across France. The job of the government Was done by a private company. They build all these road signs, thousands of them. For free.

28:49 Why? Because better signs meant longer trips. More driving. More wear on those on the tires, and therefore more tires sold. Every single sign

28:59 had an ad that said Gift of Michelin. If you think about this, they just designed this core loop. Right, encourage more driving. Which leads to more movement.

29:09 More movement leads to more wear. More wear leads to more tire sales. And then they just figured out how can we keep this loop spinning? How can we expand it. So this is This is one of the most remarkable things. So in nineteen hundred Okay. The very first Michelin guide.

29:25 It is a free travel book. With maps. Locations of mechanics, locations of hotels, restaurants. The goal was to give people helpful information so they drive farther And thus will tear down their tires.

29:38 Their insight was interesting here. The car is just an accessory to the tire. Now making the Michelin guide was what Andre loved the most and what he was best at. He starts it in nineteen hundred. And he works on it. For thirty one years until his death, eventually.

29:55 These little red books that he creates. Will spawn the Michelin star rating for restaurants and become the global gold standard and fine dining that we still use. Today. In fact, when me and Cameron were talking about this book, he said something that was interesting. He's like it's pretty wild. that a that a guide made by a tire company.

30:11 You fast forward, you know, a hundred twenty years. And chefs today will literally commit suicide if they lose. One of their Michelin stars. History unfolds in very unpredictable ways. So again, this is another smart bet early. The publication of the first Michelin Tire Guide informed new motors.

30:27 Remember, at this time. These were rich people. So the publication of the first Michelin Tire guy informed new motors, wealthy people accustomed to a certain class. About well kept hotels. Good restaurants.

30:36 And ways to communicate by mail, telegraph, or telephone. Andre intended the guide for chauffeurs. To whom would it be offered free of charge. The extravagance of this wager continues to astonish. This four hundred page travel guide for users of a mode of transportation then only in its infancy.

30:55 represented considerable investment. It is another smart bet. Early. I need to bring this up. The maps inside the guides.

31:05 They made those maps, they even printed stand alone maps. So You know the accordion style maps that used to be in like every single car? That device of making it easy to fold and unfold. They

31:17 The Michelin brothers invented that. They drew the map, they wrote the guides, they created the routes, they built the signs. And they did this when the market was tiny, so when cars arrived in large numbers, Michelin already owned the roads. It also is important to point out they didn't wait till perfect to start. The very the very first issue in nineteen hundred of the mission guide was very rudimentary.

31:39 And Andre does something smart. Everything this guy does is smart. He turns the readers and users of the guide into contributors. So in the first guide, he puts this. The present edition will obviously be found to be imperfect, but the work will improve from year to year. It will become perfect all the sooner.

31:56 If drivers will apply more precisely and in greater numbers to the questionnaire. So in every single book there's a question here, what did we get wrong? Without them, the drivers and the contributors, we could do nothing. With them, we can do everything. Then he does another smart thing. He then runs ads. To help improve the guide.

32:13 Which itself is a form of a an act. The Michelin guide is is essentially an ad to Scott into Scots. So he's going to run ads in newspapers. As a call to action to improve the guide, which is also an And so this is what the ad said. So Mr or Mrs, it is in your interest that the guide be as accurate and complete as it can be, for if Michelin had to work only with its own resources, it would take several years to produce an accurate and perfect guidebook.

32:37 Andre's call for help was an early example of a form of publicity that he may have invented. Containing a question or announcing a competition engaging the reader's participation. All at the same time reminding them of the name Michelin. This is something he does over and over again. More advertising for your advertising.

32:55 So he goes to the hotels that are featured in his guide, which advertises his products. And says, Hey, if you're gonna be in the guide We need to agree. To put these In a special place.

33:07 where patrons of your hotel can see them and pick them up. Then he didn't stop there. He insisted on getting better prices for the people using his guide. So hotels listed in the guide had agreed to indicate prices for each meal. And for different rooms.

33:20 Prices representing a formal agreement to holders of the Michelin guide. An engagement. that Michelin was able to attain thanks to the publicity value of guid the guidebook to hotel keepers. What do you think? I give you publicity.

33:33 You give my readers better prices. So then this may be the first time I mention another trait that both Andre and his brother. Have? And they believe in.

33:43 for the long term. Remember in eighteen ninety one they started making your tires and they'd never stop. The first machine guy could only be used by a small minority. There's not a lot of motorists in France yet. Yet it found its readers.

33:59 It helped that the guide was given away for free for the first twenty years of its existence. And it helped that Andre was hell bent. On making every issue better and better. Here's a line about that. Each new addition was a tour de force, requiring painstaking checking. Updating

34:15 And the introduction of new features. So look how much progress he makes in just five years. First one comes out in nineteen hundred. In nineteen oh five. Сісті тазен копії в The French Guide. had been distributed free of charge. And then Andre advertises the fact that sixty thousand of these free guides are available. You should use them, you should help make them better.

34:35 But he does it in a in the Andre way. He he calculated at so many books. Each about an inch thick. If piled up would equal five Ei full towers one on top of the other.

34:47 And then he says, Why are so many people? We we we there's sixty thousand people using this book. Why so many people? We can stack it's five the size of five I found. Why are people using this guide?

34:58 One picked up the red guidebook because it contained the key to some magical experiences. This is just great writing. Opening the door to truly fine hotels. Table set for superb meals. It was a guaranteed time and money. Saver. So from the customers perspective, from the user's perspective, it's like okay, this is free. You guys put all this effort into it.

35:17 All these sixty other thousand people are using it, so it has to be good. I'm gonna get a key to magical experiences. I'm gonna be able to to start going on the road, seeing my country. Staying at wonderful inns, having great meals. But The company's perspective is brilliant. Anything they could get more people to join the automobile age.

35:34 was good for Michelin. The Michelin guides provide them with compelling reasons to try out their cars. And to wear out their tires. The restaurant or the hotel could become the reason for the journey. And this is when they introduced the Michelin star system.

35:48 And the Michelin stars spelled that out. So the initial Michelin star system was a single star. called attention to quote a good table in its community. Two stars. To an excellent table worth the detour.

36:00 What a great line. Worth the detour. No, no, drive a little further. Just just a couple more miles. Yeah, a couple more miles would cost tens of thousands of customers. How many more tires are you selling? And then three, one of the best tables in France. Worth the trip.

36:15 And Ward. knew how to make tires and Andre knew how to make them indispensable. And then again this guy is prolific. Look where we are twelve years after Andre launches this. So now Nineteen twelve.

36:28 Okay. He has twelve of these guidebooks because he starts Translating them. Into other languages. The twelve books now total for the year.

36:37 Seven Thousand and forty six pages. Total printings amounted to two hundred and seventy four thousand copies, I think. The number I heard.

36:49 Thirty million. Of these guidebooks. And so then Andre is advertising the fact that, hey, we have twelve guidebooks, they're in all these different languages, it's 7,000 pages, there's two hundred and seventy five thousand people reading this. But that's not he's not gonna list just those numbers. He says if stacked together.

37:05 The copies printed this year. Would rise twenty times the height of the Eiffel Tower. In fact, they would match the height of mountain. Everest. And then not scared to boast, not scared to promote.

37:17 He says these days there isn't a driver around the world who would want to travel without having a Michelin guide. Handy. And the thing about med forms of media is media begets media. So this becomes so successful that in America. They start writing about this stuff. Keep in mind.

37:34 The book is so incredible. So now you're gonna have the New Yorker. Right, which has a massive audience, talk about this book, which then leads to more free publicity for your brand. So this is what they said in the New Yorker. It says Michelin tires are presumably good tires.

37:48 But one is apt to assume it because the Michelin maps and guides are so good. Not the other way around. The reporter went on to enumerate the wealth. Detail contained in each volume. It is human nature for customers to be predisposed to have a positive view of a brand they've never used the the the product from.

38:08 if it is associated closely with something that they love. And this reporter gets it. They're presumably good tires. Because the guys are so good. Not the other way around. Think about how difficult it'd be like

38:19 Here, I make tires. They're great tires. This is what I do. These are all the the stats and this is the innovations I have. Will you please buy them? That's a lot harder sale. Then hey, you've used this guide for years. Now you're driving Now you have a car, now you're driving more. Of course. You're going to use

38:36 Michelin Tires. Michelin has already provided something for you. Of great value for free. At considerable expense of time. Money and resources.

38:46 What do I mean? With this point. They have a hundred and fifty people. Working on the guide. And they received twelve thousand copies of the questionnaire.

38:55 Okay, so that that questioner slips into every copy, saying, Hey, please Uh, give us your feedback. Please tell us where we're wrong. twelve thousand readers every year are sending back This questionnaire. So you have a hundred and fifty people on staff and you got a twelve thousand volunteers. Helping make this thing better.

39:10 And so then Andre has another incredible idea. Okay, well The guide, you know it's it's a portable It's such a portable tour guide. Why don't we open a tourist office in Paris? So you go to Paris.

39:21 You walk into the office. And you say, Hey. This is the kind of trip that I want to take. This is What I desire, this is how much time I have. Michelin plans the enti they do the rest. They plan the entire trip for free.

39:34 Why? You already know the answer because everything goes back to that core loop. We're gonna encourage more driving. Which leads to more movement. More movement leads to more wear, which will automatically lead to more tire sales. Our company will prosper.

39:48 If people travel more. So let's create the conditions for people to do so. We are not selling tires, we are selling movement. So not only does Andre come up with this genius loop Not only does it create

40:02 Part of The most successful guidebook in history, the one that's still used to this day. The one that's still having effect on high end culinary experiences to this day. He also creates Probably the most successful Company mascot in history. I looked this up.

40:15 It's been voted the most successful company mascot. Uh multiple times. He he creates the Michelin man. This fat Lovable tire man.

40:23 Yeah. Again. The the they they loved demonstration. This is something that a lot of the great entrepreneurs in history A lot of the great advertising and marketing people said over and over again, the the great even the greatest copywriters would say this that not there's not a single ad. that will perform better than one dramatic demonstration.

40:40 So when they invent the mascot and they start running ads. It's this fat, lovable tire man, right? But in every ad he's drinking a cup full of nails and glass. This That rubber mascot

40:53 Becomes a celebrity and a metaphor. The reason he's drinking nails and glass. Is because he says the Michel entire Drinks up. Obstacles. The Michelin man will show up at every single event.

41:03 He even signed some of the columns as it was written from him. He's used in posters. He's used on signs, and he is still around today. And then another core tenet of Andre is the fact that he's just relentless. He's always pushing harder. So there's actually a funny story here before I get to that.

41:21 I I was thinking one time, um when I was reading Rockefeller's autobiography. Likely the richest person on in the world. At the time he retired. But

41:31 Yeah. He actually got richer and wealthier in retirement than he did when he was working because somebody else invented a technology that created more demand for his product, right? And so obviously Henry Ford's ability to mass produce automobiles for the very first time is going to drastically increase the amount of demand for his cuck for his for Rockefeller's product.

41:52 And I remember s Rockfellow sa says something like in his autobiography. Well, like this youngly y lovely young fellow. Henry Ford came to visit today and I just like him so much. I'm like Yeah, I bet you to But you do like'em so much. Considering you probably expanded the

42:05 The market for a product, I don't know, a thousand, ten thousand And so What Andre realizes is like hey, we're we made a lot of progress. We're now in the you know in the nineteen twenties. There's a lot more cars than we started, but we're way behind America and and Henry Ford.

42:19 So I'm not gonna keep asking you to buy tires, I'm going to push hard. for further development of the automobile. And again, they do these massive campaigns. The amount of they don't like oh we're gonna We have an idea and we're gonna put it on like this weak, tepid way. Here, maybe we'll put five thousand followers. No.

42:37 Million hundreds of thousands. millions over and tens of millions over the life of the company. So here's an example of that. In December nineteen twenty two. Andre launches a major national survey for po of popular automobiles. Thousands of posters are pasted on the walls of major cities.

42:53 Thousands of flyers to distribute. Andre explains that in the United States there is one car for every ten people in France. One car for every hundred and fifty. We need to close the gap. Imagine how many tires we'd sell.

43:08 If there were fifteen times the amount of cars on the road than there is today, six months later, he prints another brochure about the same thing. We have a lot of room to grow. We should be making more cars in France. This one brochure. In one month. In nineteen twenty three.

43:25 It's printed six Hundred thousand times. Again, the guy's completely relentless. Hey, we're making money in bicycles, we're making money of cars. I find it personally offensive. Andre found it personally offensive.

43:37 That the buses in my beloved Paris Or he's still using solid rubber and then he does it in a hilarious way. says Andre tease the public transport authorities Into renewing their equipment. By running ads in the press with the following argument.

43:52 Picks. Pigs. Filthy disgusting pigs. are transported on air filled tires because it's more economical and they arrive in better shape. Parisians still ride in buses on solid tires.

44:06 It costs more. And they arrive. Aching all over. I want that business. Two.

44:12 The buses in my beloved city should be riding on Michelin. Tires. And remember this worked. Because the division of responsibility between the two co founders. Andre m sold a product.

44:24 Edward made the product. And The interesting part here is like once you have this up and running, obviously it starts with the product. They didn't market anything until they had a great product. But now, because there's all these innovations that Edward's gonna do, he invents like four or five different uh innovations because he's just he never leaves the factory, he's obsessed with With trial and error. The the the way these things these two uh

44:44 talents work together is that They know that the inventive mind of his younger brother, he's gonna churn out new products. And What would be devastating is he you have this gifted mind, he'd turn you on new products. and yet no one hears about it. So when

44:58 Edward came forward with a new product. You had this publicity machine that was very kept very well oiled by his brother. Ready to run with it and make sure everybody knew. of this product's existence. This is a necessity. This is not optional, as David Ogreve said.

45:14 You can't save souls in an empty church. It didn't matter. If Edward was a genius inventor. If no one knew those products existed.

45:23 So then huge parts of both books. Go into How did the Brothers. manage their business. And so it says the spirit of the house, the house Michelin, okay?

45:31 Tenacity, creativity, secrecy in design and manufacturing. Rigor in management and often humorous advertising. There is just a handful of traits that reappear over and over again in both books. The fact that they're focused. They're super secretive.

45:45 They're obsessed with technology. They're obsessed with cost control and efficiency. And so this factory in this remote part of France that I can't even pronounce, they describe it as the Rome of the Michelin Empire. There the obsession remains. The tire.

46:00 Nothing but the tire. And not just any tire. They had a mantra that they repeat over and over again. The best at the best price. That was their goal.

46:10 For nearly a century, Europe's most secretive company had set its rhythm. Calibrated its clock and adjusted its ambitions according to To this passion. That borders on mysticism. What are they talking? This burnt what are you talking about?

46:24 This burning Uncompromising exclusive obsession they are talking about. The tire. And it seems almost paradoxical that probably the best Firm at

46:34 public relations advertising and and promotion. was also the most secretive. It said Europe's most secretive company. There's all kinds of rumors and innuendo about how secretive they were. All their secrecy revolved around protecting the IP, protecting the inventions. And a few of the ideas away they organized the company actually Uh enhances their secrecy. So it says Michelin's ran a tight ship.

46:53 It helped in keeping secrets that the firm made no appeal to outside sources of financing. Operations and expansion were finance out of profits. Managerial jobs stayed within the family. One student of the family compared the Michelin dynasty to that of the Rothschilds. This is what they said. The same allegiance of each member to the tribe. The same allegiance of all to one.

47:13 Discretion extended to factory operations. Prosperity depended on being first with improvements such as a better resistance. Sure adherence to the road and easier handling. The perfect tire. Came from the research department.

47:27 From patient trial and error. And of course, secrecy would help. In this company, every scrap of paper. Was considered To be a secret.

47:38 So then you have this relentless innovator, you have this person obsessed with secrecy. But Edward would also not tolerate Wasting time or money. He would tell his employees, You have not considered the financial consequences. What was there? What's their organizing principle of the factory?

47:52 Best hire. Best price. You can't do that if you don't watch your costs. You have not considered the financial consequences. I will not tolerate neglect on this point. Since our goal is to produce the best hire At the best possible price. He would not.

48:05 He had a like a Visceral disgust. To waste. This is what he would tell his employees. Little streams

48:13 Make big rivers. This is not just watching every little cost. It's watching every little wasted movement inside of the company, right? So he says. Little streams make big rivers. Which means that a single minute lost under each hour adds up to eight in a day.

48:28 That is twenty four hundred minutes in a year. Or forty hours per worker. If the factory employs twenty thousand workers and each loses that minute per hour. That is eight hundred thousand hours in a year. The equivalent of three hundred and thirty three years of work.

48:45 And so what Edward did was he would look All he would he would he would look he would search the world. for great ideas. He didn't care where they came from. And then he would implement those ideas into the business. So He sees

48:57 This the the form of scientific management. Essentially m what's happening in factories in in America on a large scale. measuring and then breaking down tasks into their simplest elements, spreading them across a continuous chain. Describing the Ford Motor Company's conveyor built system.

49:17 that it's obviously a better system. So he takes that idea and he applies it instead of manufacturing cars, he takes it And applies it to manufacturing tires. Now he watches every penny, but he he invests heavily in technology. If you listen to the episode last week. The Michael Ferrara upset.

49:31 Secretive. Obsessed with technology. Doing something for a very long time. No outside financing. It's the same ideas over and over again. Are you seeing this? And again, obsessed with watching costs, but Investing heavily in technology because technology leads to growth and efficiency. The company never hesitates to spend fortunes.

49:48 On industrial robots or ultra sophisticated measurement equipment. Talk about Almost like in a lustful way about his robots and about how beautiful they are. That he thought they had a soul. It's the same thing here. And so we're gonna invest in technology, but we're not gonna tolerate waste. And we'll return to one of his favorite subjects, economy. Saving both time and money was one of his principal concerns.

50:09 He had a penny pinching side. A pathological pension. For efficiency. And he root it out Anything.

50:17 That would slow him down. This is a maxim that he would repeat over and over again and then And a great line, by the way. Slowness. Із спешит о large companies. And a cause of their ruin.

50:29 And so the fact that he was obsessed on making the best product The fact that he would watch his costs, the fact that he invests in in technology, the fact that he was obsessed with the long term. His singular focus was All of this. People would come in like Hey We have this other idea for a product and he would flip out.

50:44 He wanted to hear nothing. About creating a different product. The tire. Just the tire, he would say. Let us not get distracted. Sirens are seductive but dangerous, he would say.

50:54 We have too much to do with our tire to embark on anything else besides. This industry is thrilling. І will reволюtionize the world. I cannot resign myself to seeing it grow. without contributing to it.

51:06 And we're believed in the power of specialization and focus. Now keep in mind. The other competitors. There's a bunch of other Rubber companies. That are making tires, but they would dabble, they would also dabble in other products, they'd make hoses, they'd make shoes, they'd make balls. Not the Michelins.

51:22 They bet the future on one Thing. Tires. The brothers instilled a culture of everything for the tire. And tires.

51:30 For everything. Everything for the tire and tires. For everything and think how crazy this is, right? They start eighteen ninety one. They both die about forty years later. What's the chance of the they picked right?

51:42 What is the chance? Think about this, like Think about what the car was like in eighteen ninety five or nineteen hundred when the Michelin guide came out. The cars from that point you know, even ten, twenty, thirty, forty years into the future, certainly now. They're gonna change in every single imaginable way as the years go by.

52:01 Who the hell? That the single constant Would be the Rubber tires. The Michelin brothers picked right, they could invest.

52:10 If you think about it. What did Jeff Bezos say? Like you should invest in things that won't change. In the beginning of Amazon, he's like You know What's true today that's gonna be true ten years from now. And if you can identify those things, you can uh you can invest heavily in them and re and reap rewards over a long period of time. His whole thing was like

52:26 Ten years from now people are gonna want they're not gonna wake up and say, Hey, I you know, I d I don't want my package faster. I don't want more selection and I don't want lower prices. So let's just invest in those things and then we're gonna reap dividends for decades. That is the key that we we see over and over again these stories. Stay in the game. Do not interrupt the compounding.

52:43 And so Edward would say that he's like he this is what he's talking to his his people in the factory. Do not rest on your laurels. We have customers who came to us at the beginning of our activity twenty years ago. Who have never bought tires from anyone else but us. Because they are good tires. That's the same thing.

52:59 That Ferrero said. That I made the best possible sweets and comforts and chocolates that I could. And now That kid who used to eat my chocolate sixty years ago.

53:09 has grown up is a grandmother or grandfather And their grandkids are now eating. The chocolate. We have people who bought tires for us.

53:20 twenty years ago. They are still buying tires from us because they are good tires. To make good tires. You must make constant improvements. Got to be

53:28 Last year's Michelin. Tire. And finally it helps if you love what you do. Edward stayed in the factory. He says it was an exceptional event

53:38 If he made a departure from his sacred habits, he rarely left. And after his older brother Andre dies unexpectedly from bronchitis when he's in his seventies. Edward tells his doctor. Got to keep me alive for another two or three years.

53:52 The factory needs me. The Michelin brothers love their business and they believed in their mission. You cannot ask for more. And I'll leave you a reminder with the main idea to create the conditions for your product's success. The mission umbrellas embedded their product inside human movement itself. They were engineers of movement.

54:11 They're genius insight. Make the world move. And make sure it wears out your product. When it does. And that is where I'll leave it for the full story, recommend reading the book. One of the books is only available in French, so I'll just link to the

54:24 English version. of the book The Michelin Man Driving an Empire. And if you buy the book using the link that's down below, you'll be supporting the podcast at the same time. Also do me a favor, make sure that you're on my personal email list. You can sign up by going to DavidSenro.com. The link will also be down below.

54:37 I email my top ten highlights for every single book that I read. If you go to the website, you can also read my top ten highlights. I think I have top ten highlights for like a hundred and seventy seven books up there as well. That is three hundred and ninety three books down, one dozen ago. And I'll talk to you again soon.

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