Renzo Rosso made his first billions by bringing a sexy Italian touch to the ultimate American icon, blue jeans. Now he’s building an international fashion conglomerate that could one day rival LVMH
When Renzo Rosso arrived in Manhattan to open his first Diesel jeans store, he deliberately picked a spot directly opposite Levi’s on Lexington Avenue. “I wanted to show how beautiful our product was, in front of them,” says Rosso, a mischievous grin spreading across his tanned, unshaven face. Diesel didn’t have enough merchandise to fill the 15,000-square-foot space back then, in 1996, so Rosso did what seemed logical to him and built a bar and DJ booth. “In the beginning, every few months, we’d close the store at 6 o’clock and throw a party,” he says in his occasionally impenetrable Italian accent. “And we would party.”
Now 57, the father of six claims he’s retired from the party circuit, but his graying blond curls, skinny jeans and knuckles tattooed with his initials give him the air of an ageing rock star. Rosso’s desk overlooks Diesel’s hulking campus, a maze of glass and steel surrounded by vineyards an hour outside Venice. From his swanky office, decorated like a pricey bachelor pad, he presides over a fashion empire that has made this farmer’s son a billionaire. He debuts on this year’s list of the world’s billionaires with an estimated net worth of $3 billion. Rosso owns 100 percent of Diesel, which has evolved from a jeans specialist to a much broader lifestyle brand (T-shirts to shades to fancy chairs) in the 35 years since its inception. Through a holding company called Only the Brave, Rosso has spent the last decade snapping up majority stakes in small, prestigious fashion houses all across Europe: Paris-based Maison Martin Margiela, Amsterdam’s Viktor & Rolf and, this past December, Milanese label Marni. Group revenues for 2012 hit $2 billion. Fashion pundits wonder what Only the Brave will scoop up next in the increasingly competitive industry landgrab that has, in the past two years, seen Italian jeweller Bulgari, suitmaker Brioni and menswear label Gianfranco Ferré sold to larger foreign investors.
In fact, the Marni acquisition followed a rare disappointment for Only the Brave. In 2012, Rosso tried to buy Italian couture house Valentino, put up for sale by London private equity outfit Permira. He was the runner-up, he says, losing out to an investment vehicle backed by Qatar’s royal family, who reportedly paid around $860 million. The bid marked the first time Rosso seriously considered seeking outside funding. “That was an important investment,” he says, perched on a $6,000 white linen sofa from Diesel’s home furnishings line. “We would’ve needed the banks.” He’s aware that to compete with Qatari money, not to mention fashion’s two French kingpins—LVMH and PPR—he may have to consider a public offering. He’s just not sure if that’s what he wants. “The size of the group is quite nice,” he says, before pausing. “Never say never.”
Rosso’s first business venture came long before Diesel, which he cofounded at 23. As a child on his parents’ farm in Italy’s Po Valley, he was given a rabbit by a schoolmate. He discovered it was pregnant, so instead of handing it to his mother to be added to a pie, he started an impromptu breeding business for pocket money.
In his teenage years, Rosso admits to having been more concerned with girls and his electric guitar than academics, enrolling in a textile manufacturing course at Padua’s Istituto Marconi because he’d heard it was easy. At 15, hunched over his mother’s Singer sewing machine, he made his first pair of jeans: Bell-bottoms, with 16½-inch flares. Soon, he was charging his friends a few dollars a pair. He remembers rubbing the stiff denim on concrete to soften it up, or distress it—a technique he doesn’t take credit for inventing, though he was among the first to use it.
At 20, Rosso joined Moltex, an Italian manufacturing outfit owned by Adriano Goldschmied, an early denim guru who went on to found his own popular line, AG Jeans. By 22, thanks in part to a $4,000 loan from his father, Rosso was 40 percent owner of Moltex. In 1978, the duo renamed the company Diesel, a nod to the decade’s oil crises, when diesel suddenly became a viable fuel alternative. The fashion pack didn’t warm to the unusual, unglamorous name right away, but Rosso is nothing if not patient. Diesel was one of the smallest of a slew of denim labels under the Moltex banner at the time, including the popular Daily Blue and Replay lines. In 1985, Rosso sensed Goldschmied wanted to focus on his more successful brands and bought his partner out of Diesel for $500,000. Struggling to break into the US market, he made an early bet that the style-conscious, flush youngsters of that Wall Street boom era would pay a premium for jeans that were brand new but looked vintage. American department store buyers weren’t so convinced.
“My cheapest pair of jeans was $100,” Rosso remembers. “This was 1986, when the most expensive pair in the US was Ralph Lauren, at $52.” Early believers included Ron Herman, whose landmark Los Angeles boutique, Fred Segal, was the first in the US to stock Diesel’s pricey pants. Herman recalls being struck by the quality of Rosso’s fabric, which he partly attributes to the location of Diesel’s factory, nestled between rivers that flow to the Adriatic. “Textiles absorb conditions from the ground up, like food,” he says. “There’s great water in Molvena. It was the denim equivalent of farm-to-table.” Soon, upmarket stores in Boston, Seattle and New York were stocking Diesel. Early on, there was always the proviso that if Rosso’s clothes didn’t sell, he’d buy them back or pay for the retail square footage wasted.
Rosso now calls Maison Martin Margiela his “second baby”, lifting up his polo-neck to show off one of his five tattoos, this one on the nape of his neck: The company’s signature seam-stitching, four discreet lines where a jacket’s inside label would be.
(This story appears in the 05 April, 2013 issue of Forbes India. To visit our Archives, click here.)