Most founders follow their passion to start their businesses. The late Enzo Ferrari launched Ferrari so he could follow his true passion.
Go to any Formula 1 race – go to the F1 race at Las Vegas this weekend – and you’ll see plenty of fans wearing Ferrari red. For that matter, go to a Formula 1 race in Italy, and you’ll see endless seas of Ferrari red.
Partly that’s because Ferrari is the most successful team in Formula 1 history, with more driver championships, constructor championships, and race wins than any other team. Partly that’s because of history. Ferrari is easily Formula 1’s longest-standing team. But mostly it’s because of a decision the late Enzo Ferrari – the perfect example of an entrepreneur who finds success by following his passion, and in the process connects with customers who vibe with it – made in 1947.
We’ll get back to that in a moment.
I don’t have millions in disposable cash lying around, but even so, I can engage with most iconic brands. Apple, Coke, Nike? I buy their products. Luis Vuitton, Gucci, Hermes? I could purchase pretty much anything they make. Especially if I decide eating isn’t a priority.
Ferrari? No, not even if I had the means. Sure, if I had the cash I could walk in and plunk down $250,000 to $300,000 for an entry-level Ferrari.
Where Passion Meets Purpose
However, if you were interested in getting one of those new $900,000 SF90 XX Stradales, chances are you wouldn't be able to get one unless you had an established history with the brand—meaning you likely owned several Ferraris before. As such, you probably wouldn’t have been placed on the allocation list.
Hermes? Tiffany? Mercedes? Go ahead, indulge yourself. Purchase as many scarves, rings, and cars as your heart desires.
But not Ferraris.
Clearly, exclusivity enhances the brand. Ferrari's earnings reached 1.6 billion euros. in the past quarter with year-over-year sales up more than 11 percent at 6.46 billion euros. Ferrari stock is up approximately 150 percent since 2019. By comparison, F1 automaker Mercedes’s stock is flat, Alpine Renault is down, and Aston Martin is significantly down over the same period. With just shy of 5,000 Ferrari employees, that’s 1.296 million euros in revenue per employee. All that from selling just 13,600 cars a year.
Success story? Absolutely. But when Enzo decided to start selling cars, his primary goal wasn’t to build a car company.
A Virtuous Circle
He started selling cars so he could fund his race team. Race teams typically lose money, or at best break even. Since money buys speed, any extra money goes into making the car faster. Enzo poured profits from selling cars into building a better race team, and a virtuous cycle was created. Car sales grew as Ferrari became more successful on the track, which meant more money could be put into the race team, which meant even more on-track success.
Just like that, Enzo had created a relatively unique marketing model. Ferrari doesn’t advertise. You’ll never see a print, broadcast, or digital ad. The race team – and its millions in ancillary merchandise, a not inconsiderable marketing tool – is its sole means of marketing.
As a result, Ferrari has also created that rarest of breeds: a profitable race team.
In 2022, the race team earned $50 million on $500 million in revenue, and the brand is valued at nearly $4 billion. Granted, that’s also because Formula 1 instituted a cost cap, limiting the amount teams can spend. Even if Ferrari wanted to spend that $50 million on buying more speed, it can’t. In short, marketing isn’t a cost center. For Ferrari, marketing is a profit center.
Enzo wasn’t the first automaker to use racing to promote his brand. In 1904, for example, Henry Ford set a world speed record on a frozen lake. That achievement became a staple in Ford ads.
But Enzo was arguably the first – and inarguably the most successful – automaker to fund his race team through car sales. And he was the first to make both ventures not just mutually supportive, but also profitable.
Primarily, he didn't seek approval before following his aspirations. He was clear about his goals and discovered how to achieve them. Thus, so can you.
This posting initially appeared at com .
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