Tag: entrepreneurship

How Amancio Ortega became a billionaire At the age of 14, he decided to work as a deliveryman in a shirt store to help his family. At the age of 27, he started a small textile manufacturing business to supply local warehouses. Several decades later, he had become the richest person in Spain and was revolutionizing the fashion industry globally… How did he do it? The protagonist of this story is Amancio Ortega Gaona, who was born in the city of Busdongo, Spain on March 28, 1936. His father, Antonio Ortega, worked as a railwayman and was promoted to head of the Tolosastation, so the family moved there when Amancio was 3 months old. They lived in this city for 12 years and then moved to Galicia. At that time, the Ortega family was experiencing financial needs. The origins of Amancio Ortega in the textile industry One day, Amancio accompanied his mother, Josefina Gaona, to buy groceries for the week on credit at a nearby store. The shopkeeper refused to trust him again because he already owed him two payments. Upon witnessing this, the young man felt humiliated and decided to work tirelessly so that his family would not have to suffer for money again. He abandoned his studies and got a job as a delivery man in the Gala shirt shop when he was just 14 years old. “He was the guy for everything: the same guy who cleaned the store, who ran errands or served at the counter when there was a lot of urgency. Apparently, someone recommended me to the owner, because he was struck by the fact that, since I had set foot in the establishment, I took my work seriously and with a sense of responsibility. And the thing is that I always liked what I did and I was very eager to learn. " -Detailed Ortega in one of his authorized biographies. After passing through the Gala store, at age 17 he was hired as a salesman by the haberdashery Maja, which had a good reputation in the area and was the company where his brothers, Antonio and Josefa work, and where he met whoever was would become his partner and first wife, Rosalía Mera. In this place, he would significantly expand his knowledge of the textile sector. In 1963, after more than a decade working, learning, and saving, he convinced his brothers and his partner to start their own business, which he baptized as “Confecciones GOA” (the initials of his name and surname in reverse), in the which sold for distribution quilted gowns for women and other feminine garments made by himself with the help of his sister-in-law and Rosalía. Thanks to the experience they had acquired in the industry, the business grew rapidly, supplying clothing stores throughout Spain in just a few years. By 1975, Confecciones GOA was consolidated as a powerful company with more than 500 workers and a presence in various European countries. However, Amancio was not entirely satisfied because he wanted to have control not only of the manufacture of the garments but also of the sales to the final consumer; So he decided to take the next step in his business career by creating his own stores. This is how “ZORBA” was born in La Coruña, which would later change its name to “ZARA” because the name ZORBA had already been registered by a local coffee shop. ZARA, the company that revolutionized the fashion industry The ZARA firm from the beginning was focused on a strategy that would make it stand out from the rest, basing its business model on the maxim: “Offer fashion at a low price”, which is why it produced, distributed, and sold its own products, achieving reduce costs for intermediation and provisioning. In addition, this vertical integration strategy allowed the company to update its collections more quickly and control production levels. While it was normal for companies in the sector to renew their collections seasonally and mass-manufacture garments, ZARA began releasing new collections every two weeks and in limited quantities, completely redefining the industry and creating the concept known as “Fast Fashion. ". This business model turned out to be a complete success, persuading customers to shop promptly before items of interest were out of stock and prompting them to visit stores frequently to find new collections being launched. In 1985, ZARA was already in the main cities of Spain and its founder contemplated the possibility of opening its way to international markets, for which he decided to create a parent company called "INDITEX" (the abbreviated name for "Textile Design Industry"), from which it would lead all its manufacturing, distribution and marketing operations. As INDITEX grew, it diversified by creating new brands, such as Pull & Bear in 1991, Bershkain 1998, Oysho in 2001, Zara Home in 2003, and Uterqüe in 2008. Also, the business group acquired the companies Massimo Dutti in 1991 and Stradivarius in 1999. As a curious fact, to baptize his companies Ortega opted for names that were easy to pronounce, both in Spain and elsewhere in the world, and that would sound attractive, although they did not really mean anything. At first, some of its multiple firms specialized in a type of clothing or a specific customer segment, intending to have greater control of each market and limit competition between the group's companies. For example, Massimo Dutti could handle an elegant clothing line for men, while Stradivarius offered a casual and dynamic line for women. Similarly, while Bershka was in charge of one trend, Oysho and Pull & Bear were managing very different ones. But, as brands grew and positioned themselves in the market, the lines, audiences, and genres they covered began to expand. Amancio Ortega becomes the richest person in Spain During the decade of 2000, companies INDITEX experienced exponential growth, reaching generate employment for more than 100 thousand people and turning its founder into the richest person in Spain and one of the 10 richest people in the world as the Forbes Magazine. “The worst thing is complacency. We have never trusted this company. I was never happy with what I did and I have always tried to instill this in everyone around me… Constant growth is the best survival mechanism. " –Amancio Ortega affirms. It was a fact: that young man who was forced to abandon his studies to help his family financially, had become one of the most successful, powerful, and wealthy entrepreneurs on the planet. However, not everything was rosy in Ortega's business life. Throughout the history of Zara and other of its firms, controversies of different kinds have been unleashed. His companies have been accused of promoting anorexia with dangerous beauty stereotypes, plagiarizing designs, driving rampant consumerism with their Fast Fashion concept, and engaging in exploitative labor practices in developing countries to lower their production costs. Despite everything, the business group continued to expand at an unstoppable rate, setting up stores in major cities around the world. In 2011, Amancio Ortega resigned from the presidency of INDITEX, being replaced by Pablo Isla, but remaining on the board of directors. In 2017, at 81 years of age, he announced that he would leave all his executive functions, marking the end of an era with more than 3 decades of history in which with his leadership he led the business group to the pinnacle of success. The keys to the success of Amancio Ortega and INDITEX What have been the keys to your business success? Here are some of them: Disruption: Since its inception, Ortega has not been afraid to challenge the rules of the industry, which allowed him to develop new business models that eventually began to be replicated by other companies. Their companies are constantly reinventing themselves, exploring new markets, and always staying ahead of their competitors. Focus on the client: For the entrepreneur, it is essential to observe and listen to the client to understand their behaviors, tastes, and needs. He affirms that the best catwalk is the street since that is where the most important trends are identified. The customer is at the center of its strategy in all processes, from the design and production of garments to logistics and distribution. Everything is done thinking about exceeding customer expectations. Diversification: Competing in the market through various brands has been a tremendous success, allowing the business group to position itself in various niches with different value propositions. Technology: INDITEX has a modern operations center in Arteixo, Galicia, from which it controls in real-time everything that happens in its stores, obtaining very valuable data to make production, marketing, and distribution decisions. The company knows with great precision which types of garments are most in-demand in each market, favorite colors, sizes, etc. In addition, they have implemented RFID Chips in their stores to monitor each garment that is sold and to have greater control over inventories. Efficiency: If there is one word that sums up Amancio's business philosophy, that is precisely the word “Efficiency”. He hates bureaucracy. He affirms that it is key to give people real autonomy. Its stores receive new garments every 3 days and its stock changes by 40% every week, maintaining a supply speed that other companies can hardly reach. INDITEX, the largest textile empire of our time Currently, INDITEX is consolidated as the largest textile empire in the world, with more than 170 thousand workers, more than 7 thousand physical stores, participation in more than 200 markets, and sales above 31 billion dollars annually. Since 2001, the company has been listed on the stock market and is part of stock indices such as Ibex 35, FTSE Eurotop 100, and Eurostoxx 600. Amancio Ortega, for his part, is 84 years old and continues to be the richest person in Spain, with a fortune of more than 60 billion dollars as a result of his investments in sectors such as real estate, automotive, and finance, as well as textiles. which is where it has been most successful. He is extremely introverted and maintains a simple lifestyle. It has its own foundation, from which it leads social causes related to education, public health, food, and support for people with disabilities. Thus we conclude the inspiring story of Amancio Ortega, a visionary, innovative, and determined businessman who took a difficult time in his life as his motivation to begin forging his own destiny, building one of the most powerful companies in the world, and becoming a billionaire in the process.. . In his own words: “It is not worth being an entrepreneur just to be rich. Money, in those dimensions that we have reached, we will not need. Money only makes sense, to me, if it is aimed at achieving goals. And if you are successful, may it help so many people who depend on us become something in life. "