Ferrari has the highest ratio of people who know about its products to people who actually own them of any company in human history, and this paradox is the foundation of their extraordinary business model.

1:41nothing to do with any of that. Today's episode, listeners, is about selling dreams. Oh yes, we are talking about Ferrari, one of the most paradoxical companies that we have ever studied here on acquired. Ferrari ships very very few cars, around 14,000 per year. That is approximately the number of Toyotas that are sold every 10 hours. But of course, we know Toyota and Ferrari are a silly comparison. So what

2:12about a company that we have covered in the past, Porsche? Yeah, >> even Porsche ships 22 times the number of cars that Ferrari does. And yet, even though almost nobody owns a Ferrari, only about 180,000 people globally, they have among the highest brand recognition. I would argue that over a billion people know what a Ferrari is easily. >> Which means, David, that Ferrari has the highest ratio of people who know about

2:43their products to people who actually own their products of any company in human history. >> I think we got to scope it to companies that make products that are nominally available for purchase by consumers. But >> yes, >> but yes. >> Yes. Like the space shuttle is a product, but you can't go go buy a a space shuttle. So, I would say Ferrari is the only ultra luxury brand that has

3:08reached mass cultural awareness. >> Yeah, >> there's some fun numbers just to keep putting this in perspective. There are 10 times more Birkin and Kelly bags made each year over at Hermes than there are Ferraris. And there are 70 times more Rolexes made each year than there are Ferraris. >> Yeah, it's wild. >> The paradoxes continue. People are dying for their SUVs and yet they limit them

3:30to just 20% of total volume. >> Wait, what is this SUV of which you speak? >> I'm sorry. Ferrari utility vehicle cuz they would never >> Yes, the FUV. The Ferrari utility vehicle. >> Ford, here's another good one. Makes 160 times the number of cars that Ferrari does. Yet Ferrari has a higher market capitalization. They're worth more than the Ford Motor Company and Volkswagen and Honda and Stalantis and

3:58MercedesBenz. This company is worth so much more than most giant manufacturers. Ferrari makes all of their cars mostly by hand, inefficiently, and oneoff in a single town, Marinelo, Italy, and they have the highest margins in the entire auto industry. of the very few cars that they do make, this is my favorite one, David, about 80% of them are earmarked specifically for people who already own a Ferrari.

4:27>> Right. Right. Right. >> So that means there's less than 3,000 new customers buying Ferraris in any given year. >> It's actually completely insane, right? >> When you think about it, >> this funnel narrows pretty tight. So, how on earth did Ferrari manage to build this incredibly valuable business while selling their cars to almost nobody? Well, the answer is bloody. It is half a century of death and speed and love and

4:53feeling alive. And of course, there are some of the most clever business model mechanics that we have ever studied here on Acquired. >> It really is very Italian, you might say. >> Yeah, it's beautiful. It's tragic. It's romantic. >> There's death, sex, betrayal, and uh very, very fast cars. Well, listeners, if you are interested in the big takeaways from each episode in writing, you should join our email list at