How Did Amancio Ortega Get Rich?

Amancio Ortega, the founder of Zara Inc., is the second-richest man in the world at $67 billion. Ortega’s father was a railway worker. Ortega left school at 14 to sew shirts by hand for a tailor. Here is how he became rich.

In 1972, Amancio Ortega gathered the local women into a thousand different cooperatives and formed a company called Confecciones Goa that sold the dressing gowns, housecoats and lingerie they produced. Ortega's siblings and soon-to-be-wife Rosalia Mera also stitched some of the first items by hand in their home. Three years later, he and Rosalia opened a retail store they called Zara that quickly expanded across Galicia, Spain, which is where Ortega still lives in 2016. Zara attracted sales because it sold designer fashions at reasonable prices.

By the mid-1980s, Ortega had spread Zara throughout Spain. In time, he incorporated the brand into a holding company named the Inditex Group and bought 59.29% of the group’s shares, thereby becoming its largest shareholder. Inditex SA (BME: ITX) serves as Europe’s leading fashion retailer and carries brands that include Massimo Dutti, Uterque, Zara Home, Stradivarius, Bershka, Oysho, and Pull&Bear. To date, the Spain-based company has hired more than 92,000 employees, operates more than 7,000 stores and reported earnings of 20.9 billion euros, or $22.7 billion, in January 2016. In the last three years of the decade, Ortega brought Zara to France, Portugal and the United States.

This was the decade when Ortega expanded his wealth by acquiring the Massimo Dutti, Uterque and Stradivarius fashion designs, as well as the Pull&Bear and Bershka brands. Ortega differentiated himself from competitors by limiting advertising, controlling most of his supply chain and expanding as wildly as he could. He also chose wisely when investing in Inditex, which Louis Vuitton, French fashion designer, called "possibly the most innovative and devastating retailer in the world." When the Spanish stock market plunged, Inditex gained, giving Ortega about $45 billion.

By the end of the decade, Ortega owned premium office and retail properties in major cities in Spain, parts of Europe and the United States. Three of his acquisitions were the Epic Residences & Hotel in Miami, Florida; the Torre Picasso skyscraper in Madrid; and a nine-story building also in Madrid, which he bought for $450 million. Ortega also acquired a 21.6% stake in La Coruna, an equestrian center in Larin, Spain. In all, Ortega’s portfolio amassed more than $8 billion, to the point that in 2015, Forbes called him the richest man in the world. A year later, Forbes downgraded him to second on its list of billionaires and named him the richest man in Europe and wealthiest retailer in the world.

Frugality, focus and hard work are three of the reasons for Amancio Ortega's success. Ortega lives a humble life. He avoids publicity, is a workaholic and went without holidays for 25 years. He eats his meals in the company cafeteria along with his employees and visits the same corner cafeteria every day. In fact, Ortega has yet to own an office; the 79-year-old Spaniard works from various design areas and factories instead. Ortega's first interview was in 2000 when he promoted Zara. Even then, the interview was given to only three journalists. The billionaire’s only published photograph until 1999 was an old national ID.

Ortega can also attribute his wealth to his shrewd investing. Most of his fortune has come from Inditex, the world's largest clothing retailer from which the billionaire has received more than 4 billion euros, or $4.5 billion, in dividends. Much of that money Ortega reinvested in property in Europe and America. In 2016, the once-upon-a-time errand boy is richer than Warren Buffett. Zara has 6,200 stores spread in 70 different countries.