How bad did Donatella's cocaine use become? What other excesses mounted as she took the company into the 21st century?
In 2004, when she hit bottom, she has admitted to using coke every day and mixing it with sedatives. She became paranoid and barely able to function — a situation that paralyzed the entire company. As her drug use worsened, her spending also became out of control. She spent a fortune on everything, from her hair extensions to private jets to a massive refurbishment of her Milan apartment — all on the company's dime.

How did the once-gaudy Versace aesthetic evolve with Donatella at the helm?

After she kicked her drug habit in 2004 and new management took over control of the house, she toned down the collections quite a bit. They became more tailored and quiet. But just last fall she decided to turn up the volume again on her designs, and they are much closer again to the sexy, ultraglamorous look of her brother's era.

What do you think of the viability of the brand now?

I think that Versace is now living on borrowed time. They missed the incredible growth of the late 1990s, when rivals such as Gucci, Prada, and Armani took off like rockets. Today, Gucci is 19 times the size of Versace and Armani is six times, while both companies were about the same size of Versace when Gianni died. That gap is extremely hard to close now, particularly at a time when it takes tens of millions of dollars just to open a flagship store. As long as the family remains the controlling shareholder, the company will tend to be starved of the investment it needs to compete with bigger groups. As a result, I think it is destined to remain a niche brand — with a huge image — unless they decide to bring in a deep-pocketed investor, such as Gucci and LVMH. However, they have made it clear that they have no intention of doing so.