The first records of the family which would later be known as the Medici appear in the eleventh century. In stark contrast with their later exploits, they started out as insignificant eleventh century lord of the Manor of Potrone in the Mugello. The Mugello is a region of Tuscany as immensely beautiful as it is immensely boring. This family who held Potrone were vassals of the entirely unremarkable Counts Ubaldini (their only moment of note involves an Ubaldino who embarked on a successful clerical career: once elevated to a cardinalship he was featured in the Divine Comedy in the circle of hell reserved for non-believers. Go figure).

Sometime in the late eleventh century the lord of this manor of Potrone might have gained a bit of a reputation as a healer, earning the nickname Medicus. Thereafter, his descendants would be known as the "Medici". This makes tracking their early activities in the wool trade in Florence rather problematic, as the nickname "Medici" is used pretty interchangeably with "da Potrone". This is partially the reason why we're not sure if the eleventh-century proto-Medici were city-dwellers who invested in lands in the countryside, or country lords who moved to the city to partake in the wool trade. It also doesn't help that the Medici made a lot of bullshit up out of thin air when they were ruling Florence and no one was asking too many questions about their origins. According to their self-published history, when Charlemagne was "liberating" Italy from the Lombards, Averardo, an illegitimate son of the Emperor, valorously defeated a giant called Mugello in a battle somewhere northeast of Florence. Averardo and his descendants would reside in "Mugello's Region" from then on.

We do know that the Medici earned their early fortune in the wool trade (recall that at this point in time, wool spun in Tuscany was shipped all over the Mediterranean) and are one of the families that consistently appears in the records of the Republic of Florence: the earliest traceable documents of their residence in the city is dated 1169, when Giambuono Medici requested a permit to build a tower near the Church of San Tommaso. It seems that they were already rather wealthy at this time, as in 1180 Giambuono took the Sizi family to court over who would be patrons of the Church of San Tommaso. Chiarissimo di Giambuono Medici (a younger son?) is registered as a member of a Florentine delegation to Siena in 1201, while Bongiunta di Giambuono Medici (an older son?) was elected to the city council in 1216.

So we have more than enough reason to believe that the Medici were important members of Florentine society from the get-go. In 1240, Chiarissimo Medici (who by then was knighted by the city council) is registered as being a creditor to the Camaldoli Monastery in the Mugello. They were clearly wealthy enough to start lending money, albeit not systematically.

The Medici continue to consistently appear in Florentine records well through the late 1200's and into the 1300's. After the institution of the Gonfaloniere della Giustizia, or "Standard-Bearer of Justice" in 1293 (a sort of supreme judge who presided over the executive, or Podestà, and legislature, the Priori) Members of the Medici family were assigned the very important office multiple times in the next decades.

Fast forward a number of years: When Averardo Medici, a successful trader in the family wool conglomerate died in 1363 he divided his inheritance among his five sons. You might think things would be bleak for his three-year-old son Giovanni. But the Medici were, like many other Italian families, a sort of clan and were in the business of looking out for each other (also, family members make very loyal employees). Vieri Medici, Averado's second cousin, took Giovanni into his service. Vieri was so immensely rich he didn't even do anything for a living. He put up money for other people to set up businesses or buy and sell goods and services, and took a portion of the profits (if it sounds like investment banking, that's because it is).

At age twenty, Giovanni, who had quickly proved his worth to Vieri, was sent to manage Vieri's debitors in Rome (sometimes referred to "Vieri's Roman Branch"). By twenty five, he used his wife's modest dowry to buyout and spin-off Vieri's activity in Rome as his own banking operation. He was living comfortably, but couldn't call himself rich. That would soon change. A series of complex deals whereby he was able to secure portions of the papal income in exchange for fronting money to various Popes and anti-Popes would make him immensely rich by the early 1400's.