Great Fortunes Are Built on Great Tech. Or Handbags and Bubbly
(Bloomberg Businessweek) -- You can tell a lot about a society by whom it makes rich. Jeff Bezos, Elon Musk, Bill Gates, and Mark Zuckerberg—four of the five wealthiest people in the world by Bloomberg’s tally—all made their money as technologists and engineers. They’ve transformed lives through digital commerce, electric cars, software, and social media, respectively. Judging by their success, technology is the one world-changing, fortune-making engine of the day.
But wait. Who’s that in third place on the Bloomberg Billionaires Index, behind Bezos and Musk but ahead of Gates and Zuckerberg? It’s Bernard Arnault, the chairman of LVMH Moët Hennessy Louis Vuitton, the world’s largest maker of luxury goods. He is a purveyor of sparkling wine, leather goods, clothing, jewelry, watches, and perfume. These are products that have existed—in less glamorous forms, to be sure—for hundreds or even thousands of years. They’re at the cutting edge of fashion, but they’re definitely not of technology.
Any conclusions you formed about the nature of the modern economy by considering Bezos, Musk, Gates, and Zuckerberg have to be revisited in light of Arnault’s net worth of $167 billion as of May 27, up $53 billion just since the start of the year.
Technology wreaks creative destruction, blowing up old industries as it creates new ones. Technologists focus on cost-cutting, efficiency, and scalability. Luxury goods, in contrast, pamper and soothe. They beautify the world rather than turn it upside down. The products in Arnault’s portfolio are mostly few-of-a-kind and high-priced. (Anyone for a pair of Dior Oblique short swim shorts in purple technical canvas at $1,250?)
Maybe, though, the gulf between Arnault and the techies isn’t so vast after all. One thing all five men excel at is building moats around their businesses, differentiating their products and creating reputations for excellence that allow them to stave off competition and protect their profit margins.
There’s also a symbiosis between technological change and opulence—between flux and luxe, you might say. By increasing efficiency and output, technology enriches not just the multibillionaire entrepreneurs but a large class of the mass affluent who use tech products. Those are the people who splash out on Dior, Marc Jacobs, TAG Heuer, Tiffany, and other LVMH brands.
One fun fact: Arnault is an engineer himself, having earned a bachelor’s degree in engineering from the Ecole Polytechnique in Paris in 1971. He simply applied his engineering skills to a different part of the modern economy. And fared just as well as his techie brethren.
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