Hermès has long held a special place in luxury-seekers’ eyes as one of the most elite brands from which to own bags and scarves. Its popularity has been no secret—still, in the past decade, sales have popped 226%, taking the brand to new heights. 

With that sort of boom, particularly amid a recent slowdown in the luxury industry, it’s hard to think of Hermès as just a dusty old company that’s been around for nearly two centuries. 

Instead, it’s best thought of as somewhat of a startup, said Pierre-Alexis Dumas, the French company’s artistic director and sixth-generation Hermès heir.

“I always like to say that Hermès is an old lady with startup issues because we’ve grown so fast in such a small period,” Dumas said during a CBS News 60 Minutes episode released in December. “How can you grow so fast without changing what makes you strong?”

There are several ways in which Hermès is doing things differently than its competitors, such as prioritizing quality over quantity. That’s why, Dumas said, even if Hermès bags come with a price tag of over $10,000, it’s for a justifiable reason. 

“Speed is the structuring value of the 20th century,“ he said. 

“We went from horse carriages to the internet. Are we going to be so obsessed with speed and immediate satisfaction? Maybe not? Maybe there is another form of relation to the world, which is linked to patience, to taking the time to make things right.”

The Hermès formula is unlike that of its rivals, but it has worked. Its 2014 sales were €4.1 billion, and by 2023, those figures had swelled to €13.4 billion. The company’s shares have risen 284% in the last five years. 

Hermès’s journey has been so spectacular that it’s spawned millionaires among the founding family’s distant relatives. Dumas has been with the French bagmaker for nearly two decades, presiding over the recent growth wave.

Few others have been able to replicate Hermès’s success in maintaining a loyal client base among the affluent while remaining relatively inconspicuous. For instance, the company doesn’t have a marketing department. Yet demand for iconic Hermès bags has consistently outstripped supply—a phenomenon that has unintentionally added to the French company’s allure.

Scaling new heights: Hermès style

A single craftsperson works on a bag, which can take at least five years of training and several hours to make. That automatically creates scarcity as Hermès produces fewer bags than mass-produced brands, which, in turn, pushes prices up. 

Some critics have raised issues about the bagmaker creating artificial scarcity. But Dumas pushes back on this idea.

“It makes me smile that this is a diabolical marketing idea. That can only come out of people obsessed with marketing,” he said. “Whatever we have, we put on the shelf, and it goes.”

The company has been looking to train more artisans to help quench a seemingly insatiable thirst for Hermès bags. 

Another criticism of Hermès’s model is how shoppers can’t simply walk into a store and expect to buy a Birkin. They must work their way up with a proven purchase history of other Hermès items before they can see their most sought-after bags worth thousands of dollars.

A few shoppers have recently rallied together to sue Hermès for deliberately making it difficult to buy its top-tier products, even if people are willing to pay the money for them. 

So far, that case hasn’t yielded consumers any success, as a U.S. judge said during a hearing last year that “Hermès can run its business any way it wants. If it chooses to make five Birkin bags a year and charge a million [for] them, it can do that.”

Despite Hermès’s methodical approach to bag-making, the sixth generation of the founding family has also sought to learn from their ancestors’ mistakes. 

“I don’t want to be like my predecessors in the family, that is to say, to die in office,” Axel Dumas, the executive chairman of Hermès, told the Financial Times in September when speaking about succession planning. “The risk is falling in love with what one has made, and not being able to change. At some point, you need fresh eyes.”

Representatives at Hermès didn’t immediately return Fortune’s request for comment.

A version of this story originally published on Fortune.com on Dec. 17, 2024.

This story was originally featured on Fortune.com

Hype is growing from leaders of major AI companies that “strong” computer intelligence will imminently outstrip humans, but many researchers in the field see the claims as marketing spin.

The belief that human-or-better intelligence — often called “artificial general intelligence” (AGI) — will emerge from current machine-learning techniques fuels hypotheses for the future ranging from machine-delivered hyperabundance to human extinction.

“Systems that start to point to AGI are coming into view,” OpenAI chief Sam Altman wrote in a blog post last month. Anthropic’s Dario Amodei has said the milestone “could come as early as 2026”.

Such predictions help justify the hundreds of billions of dollars being poured into computing hardware and the energy supplies to run it.

Others, though are more sceptical.

Meta’s chief AI scientist Yann LeCun told AFP last month that “we are not going to get to human-level AI by just scaling up LLMs” — the large language models behind current systems like ChatGPT or Claude.

LeCun’s view appears backed by a majority of academics in the field.

Over three-quarters of respondents to a recent survey by the US-based Association for the Advancement of Artificial Intelligence (AAAI) agreed that “scaling up current approaches” was unlikely to produce AGI.

‘Genie out of the bottle’

Some academics believe that many of the companies’ claims, which bosses have at times flanked with warnings about AGI’s dangers for mankind, are a strategy to capture attention.

Businesses have “made these big investments, and they have to pay off,” said Kristian Kersting, a leading researcher at the Technical University of Darmstadt in Germany and AAAI fellow singled out for his achievements in the field.

“They just say, ‘this is so dangerous that only I can operate it, in fact I myself am afraid but we’ve already let the genie out of the bottle, so I’m going to sacrifice myself on your behalf — but then you’re dependent on me’.”

Scepticism among academic researchers is not total, with prominent figures like Nobel-winning physicist Geoffrey Hinton or 2018 Turing Prize winner Yoshua Bengio warning about dangers from powerful AI.

“It’s a bit like Goethe’s ‘The Sorcerer’s Apprentice’, you have something you suddenly can’t control any more,” Kersting said — referring to a poem in which a would-be sorcerer loses control of a broom he has enchanted to do his chores.

A similar, more recent thought experiment is the “paperclip maximiser”.

This imagined AI would pursue its goal of making paperclips so single-mindedly that it would turn Earth and ultimately all matter in the universe into paperclips or paperclip-making machines — having first got rid of human beings that it judged might hinder its progress by switching it off.

While not “evil” as such, the maximiser would fall fatally short on what thinkers in the field call “alignment” of AI with human objectives and values.

Kersting said he “can understand” such fears — while suggesting that “human intelligence, its diversity and quality is so outstanding that it will take a long time, if ever” for computers to match it.

He is far more concerned with near-term harms from already-existing AI, such as discrimination in cases where it interacts with humans.

‘Biggest thing ever’

The apparently stark gulf in outlook between academics and AI industry leaders may simply reflect people’s attitudes as they pick a career path, suggested Sean O hEigeartaigh, director of the AI: Futures and Responsibility programme at Britain’s Cambridge University.

“If you are very optimistic about how powerful the present techniques are, you’re probably more likely to go and work at one of the companies that’s putting a lot of resource into trying to make it happen,” he said.

Even if Altman and Amodei may be “quite optimistic” about rapid timescales and AGI emerges much later, “we should be thinking about this and taking it seriously, because it would be the biggest thing that would ever happen,” O hEigeartaigh added.

“If it were anything else… a chance that aliens would arrive by 2030 or that there’d be another giant pandemic or something, we’d put some time into planning for it”.

The challenge can lie in communicating these ideas to politicians and the public.

Talk of super-AI “does instantly create this sort of immune reaction… it sounds like science fiction,” O hEigeartaigh said.

This story was originally featured on Fortune.com

Dollar Tree really has a discount for everyone. A group of private equity investors agreed to buy the flailing Family Dollar chain for $1 billion, a sharp loss for the Dollar Tree, which acquired it ten years ago for roughly $9 billion.

Brigade Capital Management and Macellum Capital Management will take over the nearly 7,000 Family Dollar stores. That’ll halve the number of stores Dollar Tree operates under its umbrella.

Why couldn’t Dollar Tree make Family Dollar work?

When Dollar Tree bought Family Dollar in 2015, it outbid rival Dollar General in hopes of cementing its status as the king of budget retailers. But Dollar Tree quickly learned that it had snapped up poorly maintained stores and found that Family Dollar had a different customer base that proved to be challenging to serve.

• Family Dollar serves lower-income shoppers and sells a range of household items at varied, but still cheap, price points. Dollar Tree’s customer base tends to have higher incomes and tends to use the store for craft and party supplies that predominantly cost around $1.
• But when Family Dollar and Dollar Tree stores were near each other, they were just similar enough to cannibalize each other’s foot traffic. The business also faced stiff competition from retailers like Amazon and Walmart.

The icing on the small, heavily discounted cake was the Justice Department slapping Family Dollar with a record $41.6 million fine for selling items that were stored in a West Memphis warehouse that was littered with not just live rats, but dead and decaying ones as well.

After it drops the Family Dollar baggage…Dollar Tree said yesterday it’s gaining market share among its higher income customers and may aim to offset President Trump’s tariffs by raising prices at some locations. In 2021, the chain increased prices to $1.25 saying it would allow stores to offer a wider range of products.—MM

This report was written by Matty Merritt and was originally published by Morning Brew.

This story was originally featured on Fortune.com