As Paolo Vitelli prepares to hand the reins of his world-dominating luxury-yacht business to his daughter, it seems unlikely that he will be heading into retirement quietly.
The drive west from Turin towards the border with France follows the Susa Valley into the foothills of the Alps. Just before entering the mountains proper the road veers off to Avigliana, a small town surrounded on three sides by snow-dusted peaks. “Look at that,” says Paolo Vitelli. “Mountains. I’m a mountain guy. It is my family tradition and mountain people’s tradition to only take the step you can afford, not a bigger step.”
The founder and president of what is now the Azimut-Benetti Group is sitting in a meeting room at headquarters recalling how he came to buy Benetti, one of the world’s most recognised luxury-yacht makers, in 1985. It was a gamble for the then 38-year-old entrepreneur but the heritage company had financial difficulties and the opportunity was too good to pass up. His thriftiness proved key. “The first 10 years of my business career, I put aside profits for future development. Then the opportunity to buy Benetti came. I went to the judge with the bonds I’d saved and said, ‘I have the bonds, plus my commitment.’ For the judge, it was easy to decide.”
The buyout of Benetti reveals a different side to Paolo: not the wary and risk-averse child of the mountains but the born entrepreneur, quick to pounce on an opportunity. Like his instinctive distrust of debt, this fearlessness courses through his veins. He was 19 when he returned from a trip to London and set up his first business: a successful English-style members’ club in Turin. At 20 he began importing boats from England, the Netherlands and France; in 1969, before his 22nd birthday, he founded his own boat company, Azimut Yachts. “I realised I could do it better than the shipyards I was importing from,” he says. His youthful confidence was well placed: 48 years later, his company is the world’s leading manufacturer of motor yachts.
Azimut-Benetti employs 2,100 people around the world and has six production sites: four for Azimut and two for Benetti. Between 2015 and 2016 the value of yachts in production across the group hit €710m. The Benetti shipyard in Livorno is the only Italian yard capable of building yachts more than 100 metres in length.
Yet we sit down with Paolo at an intriguing juncture for both him and his business. The company head will turn 70 this year and is in the process of handing over the reins to his daughter, Giovanna, who has been involved in the business since 2000, currently as the vice-president. “It is a typical process when the founder hands over to the next generation,” says 42-year-old Giovanna. “You need to structure the company so that continuity is granted not only by one person but by the whole organisation.”
A crucial part of the transition comes down to empowering staff to make decisions, something they haven’t had to do much under the founder’s watch. “My major effort is to teach the managers that when we have a problem, we have to arrive at a solution,” says Paolo. Giovanna backs him up: “Managers who have been here since the beginning are used to one person making the final decision. It’s about training people to be decisive.”
The handover from father to daughter has been many years in the planning. Giovanna has carried out managerial roles across the group over two decades, looking after everything from marketing to marinas. Remaining a family company is paramount. “We have the freedom to create long-term strategies; we can look forward to the future,” says Giovanna. “Sometimes our decisions won’t be rewarded next year but will bring rewards in the long term.”
An example of this is the manufacturing plant in Itajaí, Brazil, that the company invested in before the Brazilian economy began its long slump. “We suffered during the crisis; we lost money,” admits Paolo. “But now there are only three players in Brazil and they are all local producers. All the other international manufacturers have abandoned it so as soon as the market changes we will be in pole position to expand.”
It was partly the company’s long-term perspective, partly Paolo’s suspicion of debt-fuelled growth, that allowed the company to weather the 2008 global financial crisis. Although the business shrank it gained overall market share. “Our conservative approach towards finance meant that we still had the resources to launch new products,” says Giovanna. “And we were the only ones doing so during those years.” This is “the freedom of not having shareholders”, adds Paolo. However, he is keen to make sure that “this freedom does not become a weakness”. For more than a decade, he has had a board of independent directors in place to analyse and assess business decisions. “The message to them is: you must be independent.”
Although he has yet to name the date when he will fully step down it is clear that Paolo is unafraid of ceding control of the Azimut-Benetti Group. As his daughter explains: “For a person who has created such a company, which has been like a second child, I think it’s a sign of great intelligence and foresight to step back and leave the position. It’s also important for the health of the company.”
A pin on Paolo’s lapel – signifying his status as a cavaliere, Italy’s version of a knight – celebrates his life of achievement. It is, however, difficult to imagine him settling into a sedentary retirement. What does he have planned? “I have my hobbies” he says, referring to a clutch of high-end hotels he owns in the French and Italian Alps, and the marina-development business he set up. Managing hotels and looking after a marina business sound like full-time jobs. Is he sure these are just hobbies? “When your work is like play you can’t say you’re a workaholic,” he says. “When I discuss a new boat with Giovanna, or when I visit a hotel to discuss how the menu could be better, I enjoy it. So perhaps I’m more of a playaholic.”
Azimut-Benetti in numbers:
Key dates: 1969 (Azimut founded); 1873 (Benetti established); 1985 (Benetti acquired by Paolo Vitelli)
Shipyards: Avigliana, Savona, Viareggio, Fano, Itajaí and Livorno
Present in: 70 markets
Models on offer: 45
Lengths of yachts: From 10 to more than 100 metres
Planned investment, 2015 to 2018: €100m
Delivery in 2015/2016: 300 units
Where is the best place to prepare for leadership: MBA school or on the job?
GV: On the job. There is too much theory in schools; you need experience on the ground.
Are tough decisions best taken by one person?
PV: A group should put options on the table but the last word comes from one person.
Do you want to be liked or respected?
GV: They’re linked: if you’re liked, you’re respected. This really applies to me: you cannot be respected only for being the daughter of the founder; you have to be liked.
Who do you turn to for advice?
PV: Giovanna is the first person I contact and then my CFO. And I call a few of my directors on the board quite often.
What technology do you carry on a trip?
GV: My iPad and a primitive Nokia phone.
Do you have a run in the morning? Wine with lunch? Socialise with your team after work?
PV: Run in the morning? No but I try to ski every week. I love wine, I couldn’t have dinner without it, but I avoid it at lunch. I used to socialise with my team but no more.
What’s the most difficult part of your job?
GV: Convincing people. A good decision is a decision that is shared by the people that then have to execute it.
Is it OK for employees to disagree with you?
PV: Normally I think again and then say, “I’m always right.” But before that, I do think again.
If you could fix one thing about your company, what would it be?
GV: Creating an innovative spirit that lasts forever.
Have you ever made a mistake that you wish you could take back?
PV: I have made many business mistakes but only one that I regret: leaving a company I acquired in 2001 in the hands of the wrong person.