A style survivor: Donatella Versace is teaching a new generation of designers how to thrive

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Once a party animal, now the head of a fashion empire, Donatella Versace has lived through both good times and bad. Now she's teaching a new generation of designers how to thrive. Susannah Frankel meets her

The Dorchester hotel, in London's Park Lane, is a glittering haven of well-mannered, gilt-edged luxury, currently shielding some of the British capital's most well-heeled guests from the gale-force winds and driving rain outside. That is not to say it is even remotely quiet. It is the afternoon of the premiere of Harry Potter and the Deathly Hallows and the world's most famous boy wizard is taking tea in one corner. In another, X Factor teen sensations One Direction pour out of a lift in a suitably high-spirited manner, dressed for the occasion, in all their finery. Take the same elevator to the third floor and the doors open to reveal Paije Richardson, equally glamorously attired. Two floors further up and Katie Waissel, this year's requisite publicity-courting hate figure, all tousled-up hairdo, sequins and lace, is waiting to join her contemporaries before making her way with the rest of them out on to one of the most hotly anticipated red-carpet events of the year.

It seems only apposite, with this in mind, that in the penthouse suite, way above it all in her customary London residence, über-blonde Donatella Versace is sipping Earl Grey ("like a very English lady"), surrounded by preternaturally handsome assistants (male) and wearing a little black dress that, for all its apparent simplicity, makes her diminutive Barbie doll frame appear more pneumatic still. This, after all, is a woman who understands the highs – and indeed lows – of celebrity culture, and indeed its relationship with fashion, better than most. In fact, it would not be unreasonable to claim that, back in the Eighties and Nineties, and with her brother Gianni alongside, Ms Versace paved the way for the star-spangled mania that was soon to come. It is the stuff of fashion folklore that Versace created the supermodel, that glamorous behemoth that transformed the mannequin from passive clothes horse to modern-day idol and then mogul almost overnight. And while Gianni, nine years Donatella's senior, was busily creating show-stopping, high-octane fashion for such heavenly creatures to wear, his little sister, a party animal par excellence, was scouring the world persuading the beautiful and famous to appear in the greatest advertising campaigns in history. Shot by Richard Avedon, Bruce Weber and Irving Penn and featuring everyone from Madonna to Elton John and from Naomi Campbell to Jon Bon Jovi, these were as unashamedly flesh-flaunting and highly coloured as, and even more highly camp than, it is possible to imagine. At that time, Donatella Versace was responsible for brand image, and she did her job extremely well. Today, and since the death of her brother in 1997, it is well known that she is also the company's creative director.

It has not been an easy ride. Versace's battle with substance abuse is well documented and, to give her the credit she is due, this naturally extremely private woman has spoken remarkably openly about a subject that remains, elsewhere, one of the industry's not so well-kept secrets. Nor has the house of Versace been immune to the effects of economic downturn. Still a family-owned business – Donatella has 20 per cent, her older brother, Santo, 30 per cent, and Gianni bequeathed his 50 per cent to Allegra, his sister's daughter by former model Paul Beck – Versace has struggled to maintain independence in an industry that has rapidly been consumed by corporate giants, and life for all concerned has become not quite so carefree as it once was. Having conquered her demons, however, Versace's greatest gift now appears to be her ability to overcome and adapt to any challenges fate has handed her, and, with a new co-CEO, Gian Giacomo Ferraris, formerly of Jil Sander, in place, the company is gaining momentum once more. Sales in 2010 are expected to reach more than €280m, up from €268m in 2009. Retail and wholesale revenues both grew 13 per cent in the first nine months of the year, compared with the same period in 2009. This is good to see. While pretenders to the Versace school of Baroque splendour are too many to mention, the real thing is still the most dazzling – and, of course, heartfelt – by far. And Versace, over and above anyone else, has always been the living, breathing incarnation of just that.

Today, Donatella Versace is not here to discuss the past, or even the present. Nor will she be attending the opening of the aforementioned film. Instead, with her eye fixed firmly on the future – her own, her company's and the fashion industry's more generally – she is in town to host a dinner for some 100 young designers and friends, to launch the Central Saint Martins 20:20 Fashion Fund. The celebrated fashion school moves into a new home in King's Cross next year and Ms Versace has donated £20,000 with a view to encouraging others to follow suit. (John Rocha, Browns' proprietor, Joan Burstein, net-a-porter.com and more have all done the same.) She has also just returned from 10 Downing Street and a quiet word in Samantha Cameron's ear to the effect that this country's colleges and young designers are desperately in need of the Government's support.

True to form, Versace has nothing but praise for the Prime Minister's wife. "She's a beautiful woman. I never saw her before. Very impressive. Beautiful skin. Gorgeous eyes. Beautiful body. She's sweet. She's easy. And she's, how you say, she talks to you not in long, long sentences. Short sentences. But straight to the point. I asked her, 'please, you need to do something about this', and I'm sure she will. She understands how important it is."

A case of blue-sky thinking, perhaps – the generosity of Donatella Versace's outlook is equal to that of her purse strings and this has not been always been equalled closer to home.

"I had no idea that Saint Martins might need money," she continues. "It's so famous. I mean, we all need money, right? We all have problems. But it's so special and you might assume that people are already donating. It's a jewel in the fashion world. It's a diamond. All the biggest designers have come from Central Saint Martins. Alexander McQueen. All of them."

At least part of the credit for that must go to Professor Louise Wilson, the formidable MA fashion course director since 1992, whose sharp tongue and apparently indomitable eye for identifying and nurturing rising stars is second to none.

"Of course, it is vital for fashion to sponsor fashion and it has been hugely successful," Professor Wilson says, only a day after thousands of students descended upon Millbank to protest against government cuts. "But as an educationalist, I can't help feeling that everyone expects the colleges to keep producing talent with no understanding of the savage cuts over the past 10 years, let alone what's to come. Without the colleges, the very face of the industry will change and without sponsorship, both the BA and MA courses at Central Saint Martins would be unable to function. There would be no BA or MA shows, of course, but sponsorship also encompasses bursaries, hardship funds, materials... Sponsorship also brings high-calibre 'live' projects to students working with international companies, travelling to factories and working with leading press and PRs in promotion of projects. Oh, and let's not forget that without creativity, civilisation is dead – and yet the cuts are most savage of all in the arts." Strong words indeed, not that anyone would expect anything less.

For her part, Versace has done more than a little to help over the years. When she first assumed her current role, she employed no fewer than eight recent Central Saint Martins graduates as part of her newly appointed design team. She told me at the time: "I'm open to everything. All the new people I have employed are young. They don't have too much experience, and that's the best thing, because of the amount of passion they put into their work. I brought them to the archives, you know, the Versace archives, to show them the sort of clothes Gianni has done, and they were in heaven, like children in a chocolate factory."

Later, one such "child" was Christopher Kane, who, as a young teenager in Glasgow, saved up his pocket money to buy his older sister and now business partner, Tammy, a fuchsia pink, barely there Versace frock to go out and dance in. Kane first met Versace only months after he graduated, although she gave him some of the signature metal mesh that her brother was known for earlier than that. He was immediately employed by her as a creative consultant and now designs the Versus line. Likewise, Louise Goldin, another CSM graduate, is currently responsible for taking Versace mainline knitwear to more innovative and contemporary heights.

It's a mutually highly beneficial arrangement, says Versace, who, unusually, officially namechecks both designers as opposed to keeping them behind closed doors. "I remember the first time Christopher came. He saw women sewing, this woman doing an embroidery in the atelier, and he just couldn't believe it. Louise, she's very calm, a totally different personality, but she has a level of knowledge and technique that is truly amazing."

More generally: "I think young people love Versace because it is daring. It was never safe. We never thought about chic. During the Eighties and Nineties, people wanted to be chic, elegant, bourgeois... Gianni arrived and wrecked everything, wrecked all the rules. He just wanted people to look fabulous. And that's still what people have to do. They have to look fabulous." Now so overused the word is almost meaningless, it should not be forgotten that it too has its very roots here.

Over and above all else, "newness" has always been Donatella Versace's obsession. When grunge first appeared on the catwalk way back when, she fought tooth and nail with her brother to tone down any make-up and tangle big, blow-dried hair in line with the then mood. "I changed the line-up one time when he was sleeping," she laughs. "He was always screaming at me. We always screamed at each other. But I will never forget that."

"A young designer," she says, back in the present, "gives a more established one a new eye, an eye that is alive today. Established designers – and I'm speaking generally – tend to love what they do and their world. They don't have time to travel enough, maybe, they don't always go to shoots, work with photographers and stylists. They close themselves off to the rest of the world..."

With that, Donatella Versace is off to dress for dinner. Two hours later, she takes pride of place, this time at the Connaught, surrounded by January Jones, Rupert Everett, Alexa Chung, Daisy Lowe, Pixie Lott, Poppy Delevigne, Roland Mouret, Stephen Jones, Tammy and Christopher Kane and, of course, Louise Wilson and her Central Saint Martins cohorts, all of whom are clad in Versace.

"Since the big fashion groups started, of course, it's harder for young people to get started," Versace says. "Now you talk about merchandising, marketing, where to put a product, how much it should cost, entry prices, and for someone straight out of college, that's scary. I think that the pushing of the commercial side of fashion over the past 10 years has maybe killed creativity a little – I'm talking generally here – but that may be changing again now. If I had to give a young designer one piece of advice, it would be to keep dreaming. Fashion is about dreaming and making other people dream. Try to be in the real world as well. Try to balance. But always close your eyes and think: is a woman going to dream about this, is she going to want this, because that is what fashion is all about."

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