EVERY SPOKEN WORD
150 min read · 30,010 words- 0:00 – 3:03
How to pronounce Porsche (and why everyone still argues about it)
- BGBen Gilbert
It's definitely Porsche.
- DDDoug DeMuro
Porsche.
- BGBen Gilbert
Porsche.
- DDDoug DeMuro
Yeah, definitely don't say Porsche.
- BGBen Gilbert
Definitely don't say Porsche.
- DDDoug DeMuro
The family says it more like-
- DRDavid Rosenthal
... I'm gonna go-
- DDDoug DeMuro
Like, 'cause I met one of them at one point, they say it more like p- not like Porsche, but more like Porsche. Like, but it's hard-- I think it's a German thing, and I think it's difficult to... But so we all say Porsche.
- DRDavid Rosenthal
Mm.
- DDDoug DeMuro
Porsche.
- DRDavid Rosenthal
Yeah.
- BGBen Gilbert
If you say Porsche with a German accent, it comes out like Porsche.
- DDDoug DeMuro
Yeah.
- BGBen Gilbert
So I think it's almost like-
- DRDavid Rosenthal
Porsche.
- DDDoug DeMuro
Yeah.
- DRDavid Rosenthal
Yeah, yeah, it'll be a little-
- DDDoug DeMuro
Yeah, that's probably exactly what it is. [laughing]
- SPSpeaker
Who got the truth? Is it you, is it you, is it you? Who got the truth now? Hmm. Is it you, is it you, is it you? Sit me down, say it straight. Another story on the way. Who got the truth?
- BGBen Gilbert
Welcome to season 12, episode 6 of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert.
- DRDavid Rosenthal
I'm David Rosenthal.
- BGBen Gilbert
And we are your hosts. Today, we tell the story of Porsche. If you liked our LVMH episode, you are gonna love this one, and not just because it's a European luxury brand. There is possibly even more family drama, creeping takeovers, and complex corporate structures at play. But why is Porsche, the brand and the product, so special? The company has struck an incredible balance of both building some of the world's finest supercars while also being a great daily driver, unlike, say, a Ferrari or a Lamborghini. Of course, these are expensive daily drivers, with the average Porsche costing $110,000, but they have managed to nail being a prestige brand with pricing power and make a ton of cars at 350,000 per year. Today, we'll study how they cultivated such a vibrant community, which, conveniently for them, is comprised of extremely wealthy people. But it has not always been this way, and it certainly didn't start this way. Today's story has Nazis, tanks, the first electric vehicles, and, like most luxury brands, some misadventures in the 1980s.
- DRDavid Rosenthal
Oh, yes.
- BGBen Gilbert
And if you like quirks and features, you're gonna be pumped about our partner in crime to help us tell this story, Doug DeMuro. Doug is one of David and my favorite YouTubers and content entrepreneurs. He operates the largest independent YouTube channel focused on car reviews, with millions of subscribers. He also used to work at Porsche corporate and is about as big of an enthusiast of the brand as you'll find anywhere. In fact, we are filming this episode now sitting in his garage in front of a very special Porsche, Doug's Carrera GT. Welcome to Acquired, Doug.
- DDDoug DeMuro
Thank you for having me.
- BGBen Gilbert
It's wonderful to have you here. Well, listeners, if you wanna know every time an episode drops, sign up for email updates at acquired.fm. Join the Slack. We'll be talking about it after this episode, acquired.fm/slack. And without further ado, David, take us in. And listeners, this is not investment advice. David and I, and Doug, may have investments in the companies we discuss, and this show is for informational and entertainment purposes only.
- 3:03 – 5:07
Setting the stage: German engineering heritage and early auto pioneers
- DRDavid Rosenthal
To set the stage a little bit, I think that even though it's a marketing phrase-
- BGBen Gilbert
The German engineering thing
- DRDavid Rosenthal
... it's worth sharing a little bit of history because it is more than just a marketing phrase.
- BGBen Gilbert
Right.
- DRDavid Rosenthal
So there's a pretty long and incredible history of science and engineering in Germany and Austria. It goes all the way back to the Scientific Revolution and Johannes Kepler. And actually, before World War II, Germany had produced more Nobel laureates in scientific fields than any other nation in the world. Folks like Max Planck, Erwin Schrödinger, Kurt Gödel, and, you know, Albert Einstein. [chuckles] Like, these are all German and Austrian scientists. And, uh, this tradition extends also, of course, to the auto industry. So it is very likely that the first gas-powered transportation vehicle, this was-- looked more like a tricycle than a car, but predecessor of a car, was created by a German inventor in 1864 named Siegfried Marcus. And I say probably because nobody really knows, because Marcus was Jewish, and the Nazis destroyed all records related to him during the war. We're gonna talk a lot about the Nazis here in a minute. Either way, though, Germany definitely did create the first successful production consumer automobile. It was a vehicle called the Benz Patent-Motorwagen, and that was made in 1885 by Karl Benz.
- BGBen Gilbert
I recognize that name, Benz.
- DRDavid Rosenthal
Indeed, you probably do, as do most listeners. Now, around the same time, another German inventor named Gottlieb Daimler sets up his own motor company, and then in the early 1900s, they have a model that they're producing, goes on to be quite popular, is named after the daughter of one of their biggest dealers in their dealer network. Of course, we are talking about Mercedes. I had no idea that's where the Mercedes name came from.
- BGBen Gilbert
Oh, neither did I. Yeah.
- 5:07 – 9:55
Ferdinand Porsche at Daimler: genius engineer—and committed Nazi
- DRDavid Rosenthal
Yeah. Crazy. So Benz and Daimler end up merging in 1924, and thus Mercedes-Benz is born. But okay, you might be asking, what does this have to do with Porsche? Well, turns out quite a lot, because in 1906, Daimler scores a pretty big win in this fledgling German auto industry when they recruit the current Potting Prize winner, the Potting Prize was for Austria's automotive engineer of the year, to come be their new chief engineer at Daimler, one Dr. Ingenieur Honoris Causa Ferdinand Porsche. Now, the, uh, whole doctor, engineer-
- BGBen Gilbert
[chuckles]
- DRDavid Rosenthal
... honoris causa thing, uh, it's a bit of a red herring, although Porsche, the person and the company, would make quite a big deal about it. The dude never even finished college, let alone got a PhD. It was an honorary degree that he got later in life.
- BGBen Gilbert
Wait, the-... Dr. Porsche is like Dr. like the Seuss doctor? [laughing]
- DRDavid Rosenthal
[laughing] Well, he had an honorary doctorate.
- DDDoug DeMuro
He was already doing stuff, though. He was engineering and creating.
- DRDavid Rosenthal
Yes.
- DDDoug DeMuro
Hence, the-
- DRDavid Rosenthal
Hence
- DDDoug DeMuro
... honorary doctorate.
- DRDavid Rosenthal
Yes. Nonetheless, he definitely was a badass engineer, and we're gonna talk about all of the things, the amazing things, that this guy creates. But we also gotta state this upfront, and this is as good a place as any: Ferdinand Porsche and many other folks in the family and in the early Porsche and Volkswagen, as we will see, days were also huge Nazis, and Ferdinand himself not just was a Nazi, but was a very close personal associate of Adolf Hitler. He was a member of the SS, and, you know, we're gonna glorify him and many of these other folks here of their business and engineering contributions, but, like, that doesn't mean that these are good people, [chuckles] so keep that in mind.
- BGBen Gilbert
Yeah. This isn't, like, one of those people that you hear, "Oh, well, you know, at that point in time, the Nazis were so big and powerful, they kinda just got, you know, coerced, or they collaborated." It's like, n- no, this dude was-
- DRDavid Rosenthal
No, no, he was all in
- DDDoug DeMuro
The dude was a buddy.
- BGBen Gilbert
Real big Nazi.
- DDDoug DeMuro
He was there.
- DRDavid Rosenthal
Yeah.
- BGBen Gilbert
Yeah.
- DRDavid Rosenthal
He, he was definitely a Nazi. So when Ferdinand takes this, uh, new post as the head of engineering at Daimler, he moves his family from Austria, where he was the Potting Prize winner, to Stuttgart in Germany. And, uh, Doug, you probably have some more context on this, but Stuttgart is basically like the Detroit of the German auto industry.
- DDDoug DeMuro
Yeah, and it certainly has become more that way since Porsche was, as we'll get to, 'cause Mercedes-Benz is there, and it really does feel like, yeah, a manufacturing cradle, especially for cars.
- DRDavid Rosenthal
Yeah, and I think it's not even-- much like Detroit, it's not even just the car companies, but all the-
- DDDoug DeMuro
Suppliers
- DRDavid Rosenthal
... suppliers-
- DDDoug DeMuro
Yep
- DRDavid Rosenthal
... and the subcontractors.
- DDDoug DeMuro
Everybody you meet in Stuttgart, just like when you go to Detroit, works for Porsche or Mercedes-Benz or a supplier or something like that.
- DRDavid Rosenthal
It is, like, the industry town.
- DDDoug DeMuro
Yeah.
- DRDavid Rosenthal
So Porsche, Ferdinand, it, it's not a short period of time, it's two decades, like, that he is running the engineering and the car design for Mercedes-Benz. While he's there, towards the end of his time, kinda as we're getting into the lead-up to World War II, he comes up with a concept. He thinks that he can produce a small, affordable car that can really become the first German and European f- mass-market automobile. Now, back in the US, there was the Model T and Henry Ford. That existed, but Ferdinand's vision is a small car. The Model T was a large car, like a, like a modern, small automobile that Germans everywhere can, can buy.
- DDDoug DeMuro
Which was important because, in Germany in that time, car ownership was not anywhere near as, as big as it was in the United States. Apparently, only 2% of Germans owned a car versus 30% of Americans by the 1930s, and so mobilizing Germans was not something that had happened en masse at that point.
- 9:55 – 12:02
Founding Porsche as a consultancy—and erasing a Jewish co-founder
- DRDavid Rosenthal
Love it. So once he leaves, Ferdinand bumps around for a little while, and then in 1931, he starts a consulting firm to kinda advise other car companies, not Daimler-Benz, but other car companies in Germany and, and Europe, and I think in America, too, on their designs and, like, do some work for them and maybe even design cars for them. And he names it the Dr. Ingenieur Honoris Causa Ferdinand Porsche Konstruktion und Beratung für Motoren und Fahrzeugbau. I apologize to any-
- BGBen Gilbert
[laughing]
- DRDavid Rosenthal
... German speakers out there.
- BGBen Gilbert
Wow!
- DRDavid Rosenthal
That is-
- BGBen Gilbert
You are-
- DRDavid Rosenthal
That is, that's rough.
- DDDoug DeMuro
But to be fair to you, it's a lot. [laughing]
- DRDavid Rosenthal
It's, it's, it's a mouthful. I studied French in college-
- DDDoug DeMuro
[laughing]
- DRDavid Rosenthal
... you know, like [chuckles] and, uh, that translates as the Dr. Ingenieur Honoris Causa Ferdinand Porsche Consulting and Design Services for Motor Vehicles company, and this is the beginning of Porsche the company. And up until 2008 and 2009, which we will get to much later in the episode, that is the company that makes Porsches.
- DDDoug DeMuro
Yeah.
- DRDavid Rosenthal
Wow. So-
- BGBen Gilbert
Yeah, I mean, if you look up, like, the stock of Porsche, and you pick the right Porsche, and there's a couple we'll talk about, that's still the full name of the company-
- DRDavid Rosenthal
Yeah
- BGBen Gilbert
... is all of his honorary things.
- DRDavid Rosenthal
So when he's starting this new company, he enlists the financial support of two people. One is his son-in-law, his daughter Louise's husband, one Anton Piëch. Remember that last name, because it is also gonna be very important as we go along here. And the other person is Adolf Rosenberger. Now, if you are a Porsche history nut, you probably know about Anton Piëch. You probably don't know about Adolf Rosenberger because shortly after they start the company, uh, Rosenberger was Jewish, and he gets arrested by the Gestapo. He gets imprisoned. He eventually bribes his way out and escapes to America, but during the war, Porsche and the Nazis totally appropriate his stake in Porsche, and he's written out of history.
- DDDoug DeMuro
Wow.
- 12:02 – 17:32
Volkswagen and the Beetle: Hitler’s ‘people’s car’ and Wolfsburg’s creation
- DRDavid Rosenthal
Okay, so this new Ferdinand company, in 1934, they land-... one very, very, very large contract [chuckles] that would go down in history, both for the company and the world. That contract would be to design Ferdinand's vision, the small, affordable car for the people, a, a Volkswagen, you might say, in German. That car would go on to become the Volkswagen Beetle, and the company that contracted Porsche to build and design it was Volkswagen, which was established to do so by Adolf Hitler. I had heard rumors over the years, like, "Oh yeah, there's, there's, like, a Nazi connection here." Like, Adolf Hitler founded-
- DDDoug DeMuro
Yeah
- DRDavid Rosenthal
... Volkswagen.
- DDDoug DeMuro
Yeah, that's bigger than a connection.
- DRDavid Rosenthal
[laughs] Yeah. There, there, there's not a connection because it's the same person.
- DDDoug DeMuro
Right, it is, [laughs] is the thing.
- BGBen Gilbert
Yeah, Facebook, I feel like that has some kind of, like-
- DRDavid Rosenthal
[laughing]
- BGBen Gilbert
... Zuckerberg association, but I've never really put it together.
- DRDavid Rosenthal
Yeah, yeah, there's some, there's some link between Mark Zuckerberg and Facebook, like-
- BGBen Gilbert
I just gotta say, this early in the episode, we may as well, like, point it out already, it is crazy how comfortable we all are driving Volkswagens and Porsches, when it was, like, not just a little Nazi-affiliated, like, founded by Nazis. And yet, the way the world has evolved, like, people kinda became okay with it.
- DDDoug DeMuro
All the German brands, I mean, you know, most of them used Jewish labor in their factories at that time, and obviously very different people run the businesses now, and so you just kind of put it out of your mind.
- DRDavid Rosenthal
And, you know, m- generations have gone by. Also, e- less so on the Porsche side of things, more so on the Volkswagen side of things, as we'll see with the history here, there is kind of a pretty incredible refounding of Volkswagen-
- DDDoug DeMuro
Yeah
- DRDavid Rosenthal
... after the war.
- DDDoug DeMuro
Yeah.
- DRDavid Rosenthal
Um, and I think if it were not for this refounding that we'll talk about in a minute, uh, it would not exist today.
- DDDoug DeMuro
Yeah.
- DRDavid Rosenthal
Um, but, uh, yeah, just wild! Freaking Adolf Hitler- [laughs]
- DDDoug DeMuro
It's crazy
- DRDavid Rosenthal
... founded Volkswagen.
- BGBen Gilbert
So the Beetle, this, this, you know, people's car... Doug, you might know this. Did it go on to become the most popular car ever in the entire world?
- DDDoug DeMuro
Probably.
- DRDavid Rosenthal
Yes. It is very hard to get actual production and sales data, especially for old cars.
- DDDoug DeMuro
Especially for cars like the Beetle, which were produced in many countries over many years. I mean, they were building them in, in Latin America through a couple of years ago, maybe 2003 or something, and so it's, like, difficult to figure out. But it obviously, whether or not it was the most or one of the most, it was obviously... The effect of that car is, is clear, you know, today.
- DRDavid Rosenthal
Yeah, and I, um, I, I tried to think. I could not think of any other model. I believe the Beetle, the original Beetle, was- is likely the single longest produced and largest, uh, both in terms of length of time and number of units produced, of a single-generation model of a car.
- BGBen Gilbert
Hmm.
- DRDavid Rosenthal
Like, the Civic, the Mustang, the F-150, they all sold-
- DDDoug DeMuro
All times
- DRDavid Rosenthal
... more than the Beetle-
- 17:32 – 23:29
Postwar reboot: the British ‘refound’ Volkswagen with an order for 20,000 Beetles
- DRDavid Rosenthal
Yes. So first on the Volkswagen side, I alluded to this a minute ago, it's a pretty amazing story, what happens. 'Cause you would think, like, there's no way, you can't imagine that Volkswagen would survive post-World War II, given what we now know-
- DDDoug DeMuro
Right
- DRDavid Rosenthal
... of the origin of-
- DDDoug DeMuro
Created by the guy
- DRDavid Rosenthal
... right, the company. So what happens is, Wolfsburg ends up in the hands of the British at the end of the war. Uh, and there's this whole crazy thing in Germany of, like, all the Allied armies are coming in, and literally Germany and Berlin ends up getting split into East Germany, West Germany, East Berlin, West Berlin. Wolfsburg is in the hands of the British. And remember, because it was a political organization, it wasn't a company before the war, n- nobody owns it. It's this, like, orphaned organization. It's super unclear. There's no, like, proprietorship of it.... So the initial plan that the British come up with, they were going to dismantle the factory and ship it over to Britain, and essentially have Britain appropriate the Volkswagen technology and operations. Like, the Beetle was almost a British car. [chuckles]
- DDDoug DeMuro
Yeah, but supposedly, the British didn't want it. The British saw the plans for Volkswagen, for the, the Beetle, and said, "No one's gonna ever wanna buy that car." It's crazy to think about now, and it gives you an idea of how the British would operate their car industry. It was constant missed opportunities. But they literally looked at, like, this, the draw- you know, the, the models that they had, the few that they had built, and they said, "Nah." That is- they literally said, "It is not commercially viable." [chuckles]
- DRDavid Rosenthal
Wow. Wow. So, okay, the British government kinda lacked vi- vision for this, but a singular British person did see the vision for this, and that is the officer who was in charge of the, the, the territory where the factories were, like, on the ground managing it, Major Ivan Hirst, a legendary figure in Volkswagen history. He finds one of the pre-war production Beetles, the 200 that were made. He starts driving it around, and he's like, "Hey, this thing's actually pretty good. I think we can maybe do something with this here." He also sees, and this becomes increasingly obvious as the post-World War II state of world affairs takes place here in Germany, of like, hey, the, like, the Cold War is about to start. He realizes that West Germany needs a economic revitalization here. "We need to restart German industry, 'cause, hey, the Iron Curtain is falling just to the east here." So he amazingly proposes and convinces the British command to leave the factory in Wolfsburg. M- maybe easier than I thought, 'cause the British [chuckles] didn't want it, apparently, and also to place an initial order, a seed order, to restart the company for 20,000 Beetles that the British military is gonna adopt and use as their main military transport. So not as, like, a tank, but like a... Not an armored Beetle, but, like, they're gonna use it to drive -
- BGBen Gilbert
Whoa!
- DRDavid Rosenthal
- officers and stuff around. Yeah, from that seed order, like, that is now the new Volkswagen. So it's like, yes, Hitler started it, but then Ivan Hirst-
- DDDoug DeMuro
Yeah
- DRDavid Rosenthal
... restarted it.
- DDDoug DeMuro
Yeah, totally. Now, one of the things that I find interesting about the Beetle is that each w- Europe was so war-torn after World War II. It was, the wh- all these places were in similar situations to Germany, in that, like, the people needed to get back to work. They needed to be able to drive and go places, and each European country had their own Beetle. You know, UK had the Mini, Italy had the Fiat 500, France had the Citroën 2CV. They all kinda looked similar-
- BGBen Gilbert
Wait, these are all based on the Beetle?
- DDDoug DeMuro
No, no, no, but they all came from the post-war era, where they needed something small-
- BGBen Gilbert
Oh
- DDDoug DeMuro
... and cheap to, like, remobilize the citizenry, basically.
- BGBen Gilbert
Right.
- DDDoug DeMuro
And so kind of each country developed, had their own, you know, car that did that for each country. But in Germany, of course, the Beetle became a global hit, whereas in those countries, it was more, you know, in their era.
- DRDavid Rosenthal
Yeah, you don't see a lot of, uh, Citroëns in, uh-
- DDDoug DeMuro
Yeah, no, but the 2CV was a huge, huge car, and the French, just like the Germans, needed to get back to work, needed to start building stuff again, and also needed a cheap car to, like, cruise around in.
- DRDavid Rosenthal
Yeah. Super interesting. So that's Volkswagen, but put a pin in them. We'll come back to them in about 50 years. [laughing]
- BGBen Gilbert
[laughing]
- DRDavid Rosenthal
Uh, because there's a lot more to say on, on Volkswagen.
- BGBen Gilbert
And 50 years, that's about how long they would make that one model of the Beetle?
- DRDavid Rosenthal
Yes. The new Beetle would get introduced, I think, in 1998, and the first ones post-war were made in, like, 1948, so yeah.
- BGBen Gilbert
Crazy.
- DRDavid Rosenthal
Crazy. Isn't that wild?
- BGBen Gilbert
It's insane.
- DRDavid Rosenthal
Okay, so what about Porsche? Well, they have a bit of a different path. So after the war-
- BGBen Gilbert
And we should say, during the war, Ferdinand Porsche was designing tanks-
- 23:29 – 33:56
Porsche’s postwar restart in an Austrian sawmill: the birth of the 356
- DRDavid Rosenthal
So Ferdinand's son, Ferry Porsche, who had been working in the business, I think a little bit before the war, and then, and then during the war, too, um, he's also arrested for [chuckles] war crimes, too, at the end of the war. He gets released after six months in the summer of 1946, and he and his sister, Louise, are like, "Well, what are we gonna do? You know, we gotta rebuild the family. Are we gonna restart the business? Let's go figure things out." They return to the family's kinda ancestral home in Austria, and that happens to be quite convenient, because during the last days of the war, as Stuttgart and other large-scale German military production facilities were getting bombed by the Allies, Porsche took about 20 or so of the best, most talented engineers and production people that they had, and they moved them out of Stuttgart-... and they moved them to the Austrian countryside so that they wouldn't be, you know, targeted by-
- BGBen Gilbert
Hmm.
- DRDavid Rosenthal
- so that the Allied bombers wouldn't know where they are. And, uh, this is pretty crazy. They are literally operating out of a sawmill in a farming village in southern Austria named Gmund. We're talking about, like, a couple thousand people maybe-
- BGBen Gilbert
Wow!
- DRDavid Rosenthal
- that live in this area. Yeah.
- BGBen Gilbert
And David, are you getting all this from-- I know you read, like, $500 worth of- [laughing]
- DRDavid Rosenthal
[laughing]
- BGBen Gilbert
- textbooks on Porsche.
- DRDavid Rosenthal
So there is this incredible history of Porsche called Excellence Was Expected, that was written by Karl Ludvigsen, and we have to owe a big thank you to him, uh, for the research for this episode. This work is like... I mean, the photos, the archive work-
- BGBen Gilbert
Yeah
- DRDavid Rosenthal
... that are in this, this volume, it's, it's incredible.
- BGBen Gilbert
I read a coffee table book that, that was like the complete illustrated history of the 911, because for this episode and this topic, you want a visual history. And so it's not like there's audiobooks and Kindle books that we could do-
- DRDavid Rosenthal
Right
- BGBen Gilbert
... our normal amount of research on. All this stuff is in these, like, huge, heavy, bound, pictorial books.
- DRDavid Rosenthal
Right. These are amazing objects that, like, are being produced. There's just such a, like, um, like, visceral, tangible quality to them that is- that we don't usually cover on Acquired.
- BGBen Gilbert
Right.
- DRDavid Rosenthal
Okay, so Ferry and Louise go back to Austria. They're there in Gmund, uh, and, uh, they're like: "Well, what if we start a new company and see what we can do around here? I mean, there's some vehicles we can start fixing up." [chuckles] This is literally like the Sony story. If you remember, uh, when Sony first got started in Tokyo at literally the same time, they started by fixing radios. [laughing]
- BGBen Gilbert
Right.
- DRDavid Rosenthal
Porsche-
- BGBen Gilbert
It was a services business.
- DRDavid Rosenthal
The, the, the second Porsche company, Porsche Construction in, uh, GmbH, which is an Austrian company, that they start-
- BGBen Gilbert
Hmm
- DRDavid Rosenthal
- to do this. So they start up, like, fixing old, you know, military vehicles that are around there in Austria. Unlike Sony in Tokyo, though, where there were a lot of radios in Tokyo, there weren't a lot of cars [laughing] in Gmund. [laughing] So pretty quickly they're like: "Huh, we don't have any more cars to fix up."
- BGBen Gilbert
[laughing]
- DRDavid Rosenthal
And, uh-
- BGBen Gilbert
Bad business. [laughing]
- DRDavid Rosenthal
Yeah. Well, not a, not a large market, uh, shall we say. At this point, Ferry has an idea, and it turns out it's a pretty damn good one. He definitely liked and agreed with his father's vision for a, you know, small car, a car for the masses, a Volkswagen. But, uh, he always had one major problem with the Beetle, which was that it was slow, [laughing] and it just was not fun to drive. So during the war, he actually had a custom Beetle made that he drove during the war, uh, with a supercharged engine, and, uh, Ferry said, uh, later in a 1972 interview: "I saw that if you had enough power in a small car, it is nicer to drive than if you have a big car, which is also overpowered, and it is more fun. On this basic idea, we started the first Porsche prototype to make the car lighter and to have an engine with more horsepower."
- BGBen Gilbert
Doug, can you contextualize what a big moment in, like, world history this is?
- DDDoug DeMuro
Yeah, I mean, it's an interesting concept because sports cars, in general, weren't a thing that much. They were, and there's gonna be people who write and say: "No, there were a lot of sports cars before," but it was really a thing of, uh, enthu- real enthusiasts, wealthy people, that sort of thing, would, would buy cars to go motor racing in the era of, you know, brass era and that kind of stuff. The concept of creating like something more affordable, littler, that was still fun, was like-- it was kind of an interesting idea that, w- you know, this was a real... It was a touchstone of a concept that has really been taken, obviously, by them and refined, and others as well.
- DRDavid Rosenthal
I went ahead and researched it. When I looked up, you know, some of those s- sports cars pre-Porsche, and you look at them-
- 33:56 – 54:47
Beetle royalties and racing: Porsche’s cash engine and brand amplifier
- DRDavid Rosenthal
So that takes us to, you know, the late '40s here. They're starting to produce the 356 in Gmunden. At the end of 1947, Ferdinand Porsche and Anton Piech get released from French prison. They come back to Austria, the family's all together, and they kinda gotta decide what to do here. Right around that same time, Volkswagen's getting back up and running. You know, Hirst is running it. It's, it's, like, the vision they're gonna, you know, make the Beetle for, for Germany and for the world. They come back to the Porsches, and they say, "Hey, we still wanna do business with you, and in fact, we actually wanna expand the scope of our business with you guys, uh, even more than it was before the war. Because we could still really use, you know, technical design, consulting work, and really leadership from you individual Porsches here at Volkswagen. I mean, after all, you designed the Beetle. Two, though: now, you know, we're not a government organization in the same way anymore. W- we need distribution, and you guys have this new Austrian Porsche company that you've set up. So how about this?" They propose two things. One, they say: Let's reinstate that old German Porsche company, the Doktor Ingenieur honoris causa, blah, blah, blah. Uh, we'll recreate the German Porsche company. It'll resume doing the technical design and consulting work for us here at Volkswagen. In return, they give that German Porsche company literally the sweetheart deal of a lifetime, a royalty on every Beetle sold worldwide. [chuckles]
- DDDoug DeMuro
No way!
- DRDavid Rosenthal
Yes, yes. This is how intertwined these two companies are.
- DDDoug DeMuro
Yep.
- DRDavid Rosenthal
So-
- BGBen Gilbert
And, sorry, the deal is, we want your Austrian company to distribute our Volkswagens-
- DRDavid Rosenthal
Yes
- BGBen Gilbert
... and in order to coerce you to doing that work-
- DDDoug DeMuro
And the consulting work.
- BGBen Gilbert
We also want the consulting work. Okay.
- DRDavid Rosenthal
Yeah, but, but Ben, you're on the right track. This is a hell of a sweetheart deal- [laughing]
- DDDoug DeMuro
[chuckles] Yep
- DRDavid Rosenthal
... for the Porsche family. I mean, uh, you are right to be w-- saying, "Why would the German government do this?" So-
- BGBen Gilbert
Do you know what kind of royalty?
- DRDavid Rosenthal
It was enough that it was-
- DDDoug DeMuro
Money
- DRDavid Rosenthal
... it was very meaningful.
- DDDoug DeMuro
Huh.
- DRDavid Rosenthal
Very meaningful cash flow source.
- DDDoug DeMuro
And probably not even, at the time, not even clear just how-
- DRDavid Rosenthal
Right
- DDDoug DeMuro
... amazing it would become.
- DRDavid Rosenthal
Right, nobody knew that the Beetle was gonna become the international hit-
- DDDoug DeMuro
Right
- DRDavid Rosenthal
... that it would.
- DDDoug DeMuro
Right.
- DRDavid Rosenthal
But, but, but it also... The, the German government did know that this was a lot of value, and they also may or may not have known that on the Austrian Porsche side, for the dealership distribution side, that was also a lot of value. So we're not gonna talk as much about the Austrian operations of Porsche for the rest of the episode, but it becomes a huge business. So by the time-... in the early 2000s, when it all gets consolidated back into one company, for most of the two separate histories, that was the larger company by revenue. So the Austrian Porsche company becomes the largest car dealer network in Europe, not just for Volkswagens, but for all types of automotive brands.
- BGBen Gilbert
Whoa!
- DRDavid Rosenthal
They're doing billions of annual revenue within a few years here.
- BGBen Gilbert
I mean, what an opportunity, to be given a distribution network just as the car is starting to become-
- 54:47 – 1:07:01
Building the icon: from 356 to 901/911 and the ‘tribe language’
- DRDavid Rosenthal
Right. So speaking of reinvesting, as we get to the 1960s, like, the 356 is great. This is an amazing car, but it's kinda... I don't know, Doug, where, where you would put it. In my mind, it's kinda, it's not quite a modern car. It's like-... it's, like, close. You know, it's not a Model T-
- DDDoug DeMuro
Right
- DRDavid Rosenthal
... but it's, it's, it's, it's not a-
- DDDoug DeMuro
Right.
- DRDavid Rosenthal
It's not a 911. [laughs]
- DDDoug DeMuro
Right, right, right. And, and what was starting to happen was the 356 was one of the leaders of the charge of the sports car in that era, and what was clearly starting to happen was other sports cars were showing up-
- DRDavid Rosenthal
Yeah
- DDDoug DeMuro
... that were refining some of the principles.
- DRDavid Rosenthal
Yes. So we're now in the '60s, Ford announces the Mustang, Jaguar's got the E-Type, um, Chevy comes out with the second generation Corvette, the Stingray.
- DDDoug DeMuro
And all these are starting to show up, all... Yeah, Austin Healey. Everything is like, "Okay, there's a lot of pressure."
- DRDavid Rosenthal
Yep. So, okay, in 1962, Ferry Porsche makes the decision, like, "356 is amazing, you know, rebirth of the company. W- we gotta invest profits and replace it with a new model." So for a couple years, Porsche had actually been working on a design for a sedan, for a larger model. Seems heretical now. [chuckles]
- DDDoug DeMuro
Right.
- DRDavid Rosenthal
I mean, [laughs] if people-
- DDDoug DeMuro
Right
- DRDavid Rosenthal
... look at the Panamera and like-
- DDDoug DeMuro
Right
- DRDavid Rosenthal
... "Ew!" You know, it was actually, like, gonna be the second model of [laughs] -
- DDDoug DeMuro
Wow
- DRDavid Rosenthal
... of Porsche. Um-
- DDDoug DeMuro
I mean, I feel that way. Every time I see a Panamera drive by, I'm like, "Why does Porsche make this car?"
- DRDavid Rosenthal
[laughs]
- DDDoug DeMuro
But I see them driving by, so that's why they make the car. David Rosenthal: Right, right.
- DRDavid Rosenthal
China is why they make that car. [laughs]
- DDDoug DeMuro
[laughs]
- DRDavid Rosenthal
But we'll, we'll get to that later. So the next generation of Porsches, Ferry's son, Ferdinand, uh, known as Butzi, named Ferdinand, named after his grandfather, founder of Porsche, was working in the company, and he had been leading the body design for this larger sedan that Porsche was gonna make. Ferry decides, for a bunch of reasons, that to cancel the sedan project. Um, probably the most important reason was, um, kinda... I don't know how much of this was government-motivated and how much of it was just sort of like a cabal of, like, Mercedes and BMW. Like, they were the sedan makers, and Porsche maybe could have challenged them, but it was like, "Hey, you know, they've got their turf. We'll keep our turf in sports cars, and-"
- DDDoug DeMuro
Right
- DRDavid Rosenthal
... "like, everybody will be happy here." Anyway, they decide to cancel the project and, uh, double down on sports cars. At the same time, Ferdinand Porsche, Butzi, the, the grandson, his cousin from the Austrian side of the family, Louise and Anton's son, also named Ferdinand, Ferdinand Piëch, he's also joined the company. These two young Turks, the grandsons, Ferdinand, are here in the company, and Piëch is working in the engine department. So turns out that he's a pretty brilliant engine designer. He comes up with, uh, and I believe even as a young kid, uh, Doug, you may know more about this history, like, I think he really was the one that led the development of the six-cylinder boxer engine-
- DDDoug DeMuro
Interesting
- DRDavid Rosenthal
... for Porsche. Now, he didn't invent the six-cylinder-
- DDDoug DeMuro
Right
- 1:07:01 – 1:12:45
The VW partnership returns: 914 success, distribution trade, and oil-crisis stress
- DRDavid Rosenthal
But for this new car, Ferry says, "Hey, we're not really equipped yet to be running multiple lines as just us, Porsche, the company. We need a partner for this new car. Let's turn to our good old friends at Volkswagen and jointly engineer and produce-... this new car with them. So in 1967, Porsche kicks off a joint project with Volkswagen to produce a new mid-engined roadster, which is a smaller, more compact car, and mid-engined, not rear-engined, called the 914. And the idea is that they're gonna make both a four-cylinder and a six-cylinder version of this. The four-cylinder version is gonna be a Volkswagen, the six-cylinder version is gonna be a Porsche. And, uh, Ferry puts his nephew, Ferdinand Piëch, in charge of this joint project with Volkswagen, a very fateful decision, as we shall see. Now, what ul- ultimately happens with the 914, there's a change in CEO at Volkswagen, and the new CEO definitely sees the value in deepening the relationship with Porsche and specifically the relationship with young Ferdinand. So he wants to continue the project, but he's like, "I actually don't think that a sports car makes sense in the VW lineup. Why don't we just have all of these be Porsches?"
- BGBen Gilbert
Hmm. So the plan was originally to have some of the 914s be branded VW-
- DRDavid Rosenthal
Yeah
- BGBen Gilbert
... and some of them be branded Porsche?
- DDDoug DeMuro
Volkswagen had made a little sports car called the Karmann Ghia-
- DRDavid Rosenthal
Yes
- DDDoug DeMuro
... previous to this, like in the '60s, and so the thought was they wanted to replace the Karmann Ghia, Porsche wanted a, an entry-level car. Let's jointly develop it. Porsche gets the more powerful one, the 914 six, the six-cylinder, and Volkswagen get the four-cylinder, but the decision was made, like you said.
- DRDavid Rosenthal
Yeah. The new VW CEO, he, he actually gets a pretty good deal out of this. Um, so he deepens the relationship with, uh-
- DDDoug DeMuro
Yeah
- DRDavid Rosenthal
... Ferdinand. He gives the car fully to Porsche, but in exchange, VW takes over all of Porsche's distribution in America.
- DDDoug DeMuro
Huge decision.
- DRDavid Rosenthal
Huge deal.
- BGBen Gilbert
Wow!
- DRDavid Rosenthal
Huge deal for VW. So we're starting to, uh, re-intertwining these companies just a little bit here.
- BGBen Gilbert
Th- that deal is an enormously wide-ranging partnership because you're trading distribution from one side of your business with the ability to create a product on your other side. I mean, it's, it's basically merging the companies because it's so massively intertwined now in this partnership, where it's not like, "Oh yeah, we partner with them on this one small little thing." It's like, "No, our car that we expect to sell more of than any other car is made by this other company." Meanwhile, on the VW side of things, it's like America, the most important and largest growing car market in the world, n- we, we now own the distribution for Porsche. Like, this-- even if it's not structured this way, this is a merger.
- DRDavid Rosenthal
Well, if history were a straight line, what you are saying [chuckles] would, uh, come to pass. Uh, unfortunately, it's not a straight line or, or fortunately for, for drama on our show. [laughing] Uh, so you're absolutely right, the 914 goes on to be a huge success, sells way more units than the, than the 911, which was the whole strategy. Porsche's cool with this. They're like, "Great, we're making our profits on the more expensive 911. We've segmented out our market." The 914 is the entry level. Porsche sells 100,000 units in the eight years that it's on the market, and I think it really shows-- and, uh, Doug, you can comment on this. There is also a market for mid-engine roadsters, I mean, including the one sitting behind us, regardless of price. Like, th- these are pretty amazing sports cars.
- DDDoug DeMuro
Yeah, Porsches previous to this had all been rear engines, the 911, the, the 356, and so this was a mid-engine, which had-- was starting to really take hold in the car world as the right design because the engine in the middle is really the perfect balance. You kind of can put the engine right in the center of the car, and it gives you, like, perfect weight distribution. When I always talk about sports cars, in my mind, like, God intended sports cars to be mid-engined. That's how-- it's, it's more difficult. The engineering is more difficult than front-engine, but that's how it sh-- and rear-engine is just insane, but Porsche made it work. They've always been great at that, but mid-engine is how it should be.
- BGBen Gilbert
And when you say mid, this basically means that it's still obviously behind where the passengers sit but in front of the rear axle?
- DDDoug DeMuro
In this case. Now, there are technical mid-engine cars, where the engine's in the front but behind the front axle, but most people, when referring to a mid-engine car, are talking about a car that has the engine between the passenger compartment and the rear axle. Yeah.
- DRDavid Rosenthal
I think you have a video where you say the Cayman GT4 RS, which is the Cayman and the Boxster are the same, it's the same lineage we're talking about here, is the best modern Porsche.
- DDDoug DeMuro
Yeah, I feel that way.
- DRDavid Rosenthal
[laughing]
- DDDoug DeMuro
But it's controversial because the 911 is the Porsche, so [chuckles]
- DRDavid Rosenthal
Don't hate us in the comments. [laughing]
- BGBen Gilbert
[laughing] Yeah, I don't know, Doug. I feel like I've seen multiple "the best"-
- DRDavid Rosenthal
[laughing] Yeah
- BGBen Gilbert
... on your channel. [laughing]
- DDDoug DeMuro
Oh, you know, every car is the best when it comes out, and then-
- DRDavid Rosenthal
Yeah
- DDDoug DeMuro
... it's superseded by the next best.
- 1:12:45 – 1:23:18
Succession implodes: the 1970 family summit ends with a total exit from operations
- DRDavid Rosenthal
It's gone. Okay, so a minute ago, Ben, you said, like, "Oh, this naturally would lead to a merging of, you know, VW and Porsche," and I was like, "Well..." [laughing] So this is in the late '60s, when the 914 launches. As we head into the '70s, the oil crisis happens in the '70s, and sports cars become less of a thing. People are really worried about this. This is, like, a challenge to Porsche. It's particularly a real challenge to the 914. Interestingly, 911 sales stay relatively robust throughout the '70s.... because it's a luxury good, right? Like, just like in any recession, and, and even, like, sector-targeted ones, like the oil crisis and the auto industry, for true luxury goods, like, those people, like, the market for that is very resilient. The 914, though, very different story. So as we head into the mid-'70s, uh, even though it was a very successful car and project for Porsche as a whole, it starts becoming a real money loser. So this creates a lot of tension in the company. This is kind of a, a backdrop of stress to another, um, family dynamic that's emerging, which is you've got these two Ferdinand grandsons that are kind of vying, starting to vie for control of the company. You know, they're now, gosh, I don't know, probably in their 30s, maybe entering their 40s. Ferry's getting older here. Like, who's gonna take over the company? We've got Succession vibes here. On the one side, you've got Butzi Ferdinand Porsche. He's got the name, he's Ferry's son, and he's a great designer. I mean, he designed the 911, maybe the most iconic car design ever.
- BGBen Gilbert
And this is German Ferdinand-
- DRDavid Rosenthal
This is German Ferdinand.
- BGBen Gilbert
-the one who's working, actually producing the cars.
- DDDoug DeMuro
But the other Ferdinand, the son of Louise and Anton, was hired by the German company also.
- DRDavid Rosenthal
Yes, he, so he hopped over.
- DDDoug DeMuro
So he's also working for them.
- BGBen Gilbert
Oh, I see.
- DRDavid Rosenthal
Yeah, he's-- so yeah, he's hopped over. He's, you know, on the one hand, kind of like this dark horse candidate, right? He's the Austrian side of the family. You know, "You've got the car dealership business," blah, blah, blah.
- DDDoug DeMuro
[chuckles] Right, go do that!
- DRDavid Rosenthal
But he's also proved himself as, like-
- DDDoug DeMuro
Yep
- DRDavid Rosenthal
... an incredible engineer, executive. He was in charge of this 914 project. He managed it with Volkswagen. That was an incredibly successful car until the oil crisis, et cetera, et cetera. So he's like, "Yo, [laughs] this should be my company." Tensions, of course, start to rise, and something pretty incredible happens. You know, we've come across on the show, there are lots of stories out there of family businesses and succession and how all this happens. I don't think there's another case of anything going down like this that I've ever heard of. So in the fall of 1970, Ferry and Louise together call a joint family summit. They're like, "We're gonna settle things." And I don't know, I'm speculating here, but I, I suspect Ferry and Louise were... didn't have a lot of acrimony over it. I mean, they're brother and sister, and they had-- Louise had her company, Ferry had his company.
- DDDoug DeMuro
And they're both making a lot of money.
- DRDavid Rosenthal
They're both making a lot of money. Everybody's happy. This is between the children here. So they call a family summit. At the end of it, they come to a very, very surprising decision. They don't decide that one Ferdinand or the other is gonna take over. Instead, they make the call that the families are going to completely and jointly exit operating the business. Everybody out of the pool, not-- the two Ferdinands, gone.
- DDDoug DeMuro
What?
- DRDavid Rosenthal
Ferry, Ferry himself! Who's running the com- Ferdinand's long dead at this point, the, the original Ferdinand. They're gonna continue owning the company, but they will no longer manage the company, they will no longer operate the company, they will no longer design cars, they will no longer make product decisions. Frankly, this is just insane. I mean, 'cause it's not like... It'd be one thing if they were like, "Oh, you know, we're really not that good at this. Like, we should hire-
- DDDoug DeMuro
Right
- DRDavid Rosenthal
... professional man-" These are lead-- generational talents [chuckles] in the car industry, and the best solution they can come up with is, "You know what? We're all done here." [chuckles]
- BGBen Gilbert
This is crazy. I would be so fascinated to get video footage of what actually went down in that room and the logic that they could walk themselves through to, "This is actually the best outcome."
- DRDavid Rosenthal
There's some direct quotes from a lot of them, and excellence was expected, and, like, as you can imagine, it's a very delicate topic, uh, and they're also German, so, like, they're very, you know, prim and proper. But, um, I think Ferry, he basically admits, he's like, "Yeah, there probably was a better solution to this, but, like, it did mean that we could kinda reunite as a family." And, like, he-- I think he said something like, "There were still tensions, but we could go to each other's birthdays again." [chuckles]
- DDDoug DeMuro
Hmm.
- DRDavid Rosenthal
You know, something like that. So, I mean, I guess in that, you know, if you value family above all else-
- DDDoug DeMuro
Crazy decision
- DRDavid Rosenthal
... maybe it is irrational. It's still, it's crazy!
- DDDoug DeMuro
It's an especially crazy decision 'cause, like you said, they were, they were killing it.
- DRDavid Rosenthal
They were the best.
- DDDoug DeMuro
It had been a family business until this point, and it had been a very successful one because of the efforts of the family. And especially, you got Ferdinand Piëch. Now, looking back on this, we know what happens to Ferdinand Piëch, which we'll get to, but you've got him on this up-and-coming track where he's so legit.
- DRDavid Rosenthal
Oh, my God.
- DDDoug DeMuro
And it's like-
- 1:23:18 – 1:29:51
Strategic drift in the 1970s–80s: front-engine experiments and the attempt to kill the 911
- DRDavid Rosenthal
Yeah. Yeah, yeah. Yeah, wow. So back to the Porsche side, [sighs] this decision was, was just really not good. [chuckles] Really not good. So the first CEO who comes in, the first professional manager CEO, actually is somebody who has been with the company for a long time. Uh, Ernst Fuhrmann, uh, becomes the first non-family member CEO of Porsche. He was actually part of the original elite engineering crew back in the sawmill in Gmunden, so he has a long history with the company. Unfortunately, he was probably a better engineer than a manager, though. His first move is to scrap the 914, and instead introduce the 924. The 924 was another joint project between VW and Porsche. The problem with the 924, I, I, I think it actually was a decent car. Uh, Doug, you actually reviewed a 944-
- DDDoug DeMuro
A 944 recently
- DRDavid Rosenthal
... yeah, which is the kinda next iteration of it. I think it... Well, you, you can say I think it was a good car, but it's not a Porsche. It's a front-engined, water-cooled, like, it-
- DDDoug DeMuro
It suffered from that stigma, for sure. The saving grace was it was actually a pretty good car to drive.
- DRDavid Rosenthal
Yeah.
- DDDoug DeMuro
And so over the years, and even at the time, it was kind of accepted as, "Hey, we all get that it came from a Volkswagen, but sort of the beloved 914, and it drives pretty well."
- DRDavid Rosenthal
Yeah.
- DDDoug DeMuro
So, like, people, people were like, "Yeah, we'll, we'll, we'll take this," as the entry Porsche of the, of the time. But it wasn't a 911.
- DRDavid Rosenthal
It wasn't a 911, and it wasn't a 914 either, really.
- DDDoug DeMuro
No.
- DRDavid Rosenthal
Like...
- DDDoug DeMuro
It was a totally different thing. Yeah, the 914 was a small, lightweight, compact roadster, removable top. The 924 was a, it was definitely-
- DRDavid Rosenthal
Yeah
- DDDoug DeMuro
... a different kind of situation.
- DRDavid Rosenthal
So Fuhrmann had a quote on it when kinda, you know, asked about, like, "What is this?" Uh, he says, "The 924 is aimed at new clients, who either can't afford a 911, or are not necessarily looking for the performance of a 911."
- BGBen Gilbert
Oof. [chuckles]
- DRDavid Rosenthal
I mean, I guess that's true, right?
- DDDoug DeMuro
[chuckles] Right.
- DRDavid Rosenthal
And that's also true of the 914, but, like-
- BGBen Gilbert
Can you come up with something-
- DRDavid Rosenthal
... that's not the right way you wanna position your brand.
- DDDoug DeMuro
But hey, the quiet part loud, kinda...
- DRDavid Rosenthal
Yeah. Geez.
- BGBen Gilbert
Can you, can you come up with something that is not using the word "not" to describe [chuckles] who wants it?
- DRDavid Rosenthal
What the s-
- BGBen Gilbert
Like, how about you say who would want it?
- DDDoug DeMuro
... Right, this is for the poor customers. [chuckles]
- DRDavid Rosenthal
Right. Right, right. And, and again, but also it's just like in, in the whole philosophy of it, it's not a Porsche. Even more concerning is the 928. So Fuhrman makes a decision, as the new CEO of the company, that it's time to replace the 911. And, uh, I, I, again, you know, maybe, like, let's give him some credit. This is the '70s, the oil crisis is going on. Like, there's, um, safety regulations. This is post Ralph Nader and unsafe at any speeds. Like, it's maybe reasonable to think that a rear-engine sports car isn't, like, a great strategy to be pursuing here.
- DDDoug DeMuro
And unsafe at any speeds, that was, like, a federal report that came out that said, like, basically all cars on the market are unbelievably-
- DRDavid Rosenthal
Death traps
- 1:29:51 – 1:34:56
Peter Schutz ‘saves’ the 911: the legendary line drawn onto the wall
- DRDavid Rosenthal
Seems like a good time for fast cars, and indeed, it was, including for the 928 and the 924, succeeded by the 944, and still the 911. People still wanted them. I think largely because of that, although I'm sure there were other reasons, too. So the Porsche and Piëch families, when they exited operationally from the business, they still own the business, so they're still, like, the supervisory board. They get fed up with Fuhrman, they oust him, and they bring on a new CEO, an American, [chuckles] as CEO of Porsche, one Peter Schutz. Famously, he comes in, and he redraws the 911 production line. And Doug, I know you have some, uh-
- DDDoug DeMuro
Right
- DRDavid Rosenthal
... firsthand experience of the legendary-ness.
- DDDoug DeMuro
It's one of the great, the great... one of the great stories in the auto industry. The 928, though I just provided an impassioned defense for it, um, it w- it never felt like the right car to Porsche. It never felt like the right car to especially the employees, who had kind of fallen in love with this 911, and it'd been in production now at this point for probably 20 years, 25 years maybe. And, um, the 911 was Porsche to a lot of these people, and the fact that it was gonna get replaced by the 928 was this sad thing, and it had kind of really hurt morale, uh, in Stuttgart, at the factory, all the way up to the, to some of the people at the top. And so the great story is that, uh, you know, the 911, everybody knows the impending cancellation is coming. It's still going, but it's coming, this beloved car. And so, uh, Schutz, Peter Schutz, the American CEO, is sitting in the, uh, the, the office of Helmuth Bott, who's the chief of engineering for Porsche.
- DDDoug DeMuro
... and there's a line on the wall that shows where all the products stop and start, and the, you know, a timeline. And-
- DRDavid Rosenthal
This is like a, like, on a whiteboard or a-
- DDDoug DeMuro
Yeah
- DRDavid Rosenthal
... piece of paper?
- DDDoug DeMuro
Like on a whiteboard or something.
- DRDavid Rosenthal
Yeah, like, tacked to the wall.
- DDDoug DeMuro
Right. And so they're sitting there talking about it. They know that morale is low. They know that the company wants to keep the 911, even though it, y- you know, it should be replaced because it's old. You know, that's the thinking of the, uh, of, of the people.
- BGBen Gilbert
And that's what's was said.
- DDDoug DeMuro
That was-
- BGBen Gilbert
Like, there's a thing in German culture where, like, when something has been decided, it's been decided.
- DDDoug DeMuro
An edict has been given, and the car's out. I mean, the 928 is on sale. Like, it has shown up to replace the 911. In the spirit of these other cars of the time, V8 front engine, it made sense. It was what they were [chuckles] gonna do. But the morale was low, and they knew this, and so Schuz stands up. He's got a marker in his hand. He stands up, he walks up to the timeline on the, on the wall, and he draws a line on the timeline cr- all the way onto the wall, and extends the 911's timeline, you know, indefinitely, including onto the literal wall. Now, this story, of course, is [chuckles] ... This is like the stuff of legend in Porsche. Like, Peter Schuz, the American CEO, saving the 911 in this moment, and a lot of talk about whether this actually happened. Like, did he actually just draw the line and make the complete 180 in decision?
- DRDavid Rosenthal
This would be a good story to invent if you needed-
- DDDoug DeMuro
It would, it would be the perfect-
- DRDavid Rosenthal
... a morale boosting [chuckles]
- DDDoug DeMuro
Right, especially if you were, you were trying to, you were trying to, like, boost the, uh, the reputation of the CEO among the-
- DRDavid Rosenthal
Yeah
- DDDoug DeMuro
... among the workers. He drew the line, right?
- BGBen Gilbert
And there's a perfect line, which is, Schuz just looks over at the chief engineer and goes, "Do we understand each other?"
- DDDoug DeMuro
[laughs] Right.
- BGBen Gilbert
And then he walks out.
- DDDoug DeMuro
I always wondered if the story was true. I worked at Porsche, uh, 10 years ago, and, um, had become friends with Porsche's general counsel in North America. When Peter Schuz retired, he moved to Naples, Florida, and he, he, the general counsel at Porsche and Peter Schuz were neighbors in their homes in Naples. And I-- one day, he went over to his house and asked him, "You know, is the story real? Did it happen?" And apparently, Schuz said, "Not only did it happen, but Helmut Bott was grinning like the Cheshire Cat when I drew that line." Like, it was like this moment, like, we're gonna do this, and it, like, really, apparently really, in, in, in his words, it really actually was a true story.
- BGBen Gilbert
Wow!
- DRDavid Rosenthal
That's so great.
- BGBen Gilbert
That's awesome to get that validation, 'cause there's so many of these stories that we-
- DDDoug DeMuro
Right
- BGBen Gilbert
... tell on this show, where we're like, we're like, "This is probably apocryphal, and there's really no way to verify it."
- 1:34:56 – 1:50:14
Near-death spiral: recession, Japanese competition, collapsing sales, and contract work
- BGBen Gilbert
In fact, I think Schuz was like, "Let's make airplane engines."
- DRDavid Rosenthal
[laughs] Yes, yeah, I think he was. Yes, oh, my gosh. And on the back of, you know, these go-go years and success, they're selling the 911, they're selling the 928, they're selling a lot of 944s. Like, they sold a ton of those things. The families take the company public, so just like a lot of these, like we talked about on the LVMH episode, a lot of these European luxury brands, craftsman brands, uh, they did an IPO. They thought they were being smart. They sold, I think, a 30% stake in the company, but all non-voting shares. Like, "Oh, we're not gonna... No, you know, no corporate raiders here. Nobody will have any voting control except the families. Like, it is impossible that somebody could, you know, attack us because the families all own... You know, it would have to be somebody inside the families [chuckles] who would attack us. Why would that ever happen?" Hmm, well, everything goes great. The stock, you know, doubles within the first year that it's on the market, but then 1987, Long-Term Capital Management blows up. You know, the end of the go-go years of the '80s, not good, not good for Porsche, and not good in a lot of senses. Like, A, just period, economic climate, not good for anybody. B, you're making luxury sports cars. Now, as we talked about in the '70s, the oil crisis in the '70s was really, was bad for Porsche. It was really bad for the 914. The 911 was pretty robust. Like, it was very resilient. I think the same is again true here at the end of the '80s, but they've still got the 928 and the 944 on the market, and, like, those things started sucking wind big time. [chuckles]
- DDDoug DeMuro
It's not a good situation because now you have three aged products-
- DRDavid Rosenthal
Yeah
- DDDoug DeMuro
... and so the economy is slowing, and your cars are not really competitive.
- DRDavid Rosenthal
Yes. So Schuz, though, he continues production of all three lines, and not only does he continue production, he reinvests, especially in the 924, 944 line. They even refreshed it a third time to the 968. I mean, same basic car.
- DDDoug DeMuro
Yeah.
- DRDavid Rosenthal
Like, they're investing resources in this car, and at the... Y- you probably have a s- better sense than me, but, like, another aspect of the kinda recession at the end of the '80s was the exchange rates with European currencies got hit-
- DDDoug DeMuro
Right
- DRDavid Rosenthal
... really hard.
- DDDoug DeMuro
Right.
- DRDavid Rosenthal
And so relative to the Asian currencies in the US, so it became-... I don't know, call it 10, $20,000 cheaper to buy an equivalent entry-level sports car from a Japanese manufacturer.
- DDDoug DeMuro
And it just so happened that at this time, you know, Japan was kind of having an economic-
- DRDavid Rosenthal
Yeah
- DDDoug DeMuro
... boom, and as a result of that, they started making these sports cars, the exact sports cars you're describing. So the Nissan 300ZX-
- DRDavid Rosenthal
Yes
- DDDoug DeMuro
... starts to show up, the Toyota Supra, you know, all these cars are showing up, and by the way, they don't have four-cylinder engines, and they're not 25, 20-year-old platforms like the 968 was, and there was very little reason to buy a 968.
- DRDavid Rosenthal
I mean, it is, uh, I feel like I'm, I'm sort of, uh, in my history, probably all of us barely, you know, starting to enter consciousness here. Uh, you know, this is pre Fast and the Furious, but not that pre Fast and the Furious. All those, you know, Japanese cars that like-
- DDDoug DeMuro
Yeah
- DRDavid Rosenthal
... you know, that got tuned up, the Supras especially.
- DDDoug DeMuro
Yeah.
- DRDavid Rosenthal
This is that era.
- DDDoug DeMuro
They were all starting, just starting to come in then and starting to blow up, and they offered, just as they do today, this great, great value proposition of, like, big power for not as much money.
- DRDavid Rosenthal
Yeah. And again, the 911 isn't threatened by this-
- DDDoug DeMuro
Right
- DRDavid Rosenthal
... but the 944, 968, hell yeah, is threatened by this.
- DDDoug DeMuro
Right.
- DRDavid Rosenthal
Like, nobody's buying those anymore.
- DDDoug DeMuro
And the 928, by then, was so old that sales were a trickle. By '90, there were three products, which was the nine- the entry level, which was the 944, that became the 968. Then there was the 911, which was actually the 964 911 by that point, [laughs] to only make things even more confusing. And then there was the 928, which was the front-engine V8, like, flagship car.
- DRDavid Rosenthal
That nobody wanted.
- 1:50:14 – 1:56:55
Wiedeking’s turnaround: Toyota Production System, one-model focus, and the Boxster platform strategy
- DRDavid Rosenthal
Okay, so [chuckles] Porsche's in this tailspin. The two eras that happen next are both equally amazing. So in 1993, a guy named Wendelin Wiedeking gets appointed as the CEO. Now, he had actually started his career with Porsche in the '80s. As all this crazy stuff is happening, he was, like, a loud voice of protest [chuckles] against all the, you know, Schütz and, um, Piëch decisions. He resigned and left the company. They recruit him back in the early '90s to take over as head of production, and he implements the Toyota Production System [chuckles] at Porsche, which, uh, they must have been, like, the last auto manufacturer in the world. [laughing]
- DRDavid Rosenthal
[laughs]
- DRDavid Rosenthal
I don't know if Ferrari uses the Toyota Production System, but, like, this wasn't, um, new technology at this point in time.
- DRDavid Rosenthal
Right.
- DRDavid Rosenthal
Remember, Porsche's bleeding cash. Being more efficient and more profitable in your operations for whatever cars you can sell is pretty important. He's like the, like, the Tim Cook of, of Porsche here. He gets promoted to CEO, and when he does, speaking of Apple, he kind of pulls a Steve Jobs return-like moment. He cuts the product lines down to just the 911. So this is the right thing that needed to be done, but it's also kinda crazy. He kills the 944, 968. He kills the 928. He takes everything back down to just the 911, and the, like, analyst people, like, car, you know, magazines, ask him, um, "What's your strategy for an entry-level Porsche?" And he says, uh, "Porsche's strategy for an entry-level Porsche is a used Porsche." [laughing]
- DRDavid Rosenthal
Such a good line.
- DRDavid Rosenthal
Such a good line. Such a good line. So by the '95, '96 production year, the 911 is the only Porsche model left on the market, which hasn't been the case since the 356. Like, this is, uh, this is kinda crazy.
- DRDavid Rosenthal
Also, what kind of company makes one product?
- DRDavid Rosenthal
[laughing] Right?
- DRDavid Rosenthal
Like, how-- I mean, seriously, what are... Like, uh, do they believe that this is a transitionary period, or do they believe-
- DRDavid Rosenthal
Yes
- DRDavid Rosenthal
... like, this is the long-term strategy?
- DRDavid Rosenthal
Yes. No, it's not like Wiedeking was like: "I am a cost-cutter, and I will cut everything down."
- DRDavid Rosenthal
[laughs]
- DRDavid Rosenthal
Like, he is much-- Like, he, he has big ambitions.
- DRDavid Rosenthal
Okay.
- DRDavid Rosenthal
Big, big, big ambitions. This is a transitionary moment. He does want to expand the Porsche model line. As we shall see, he greatly expands it. So I think this is pretty brilliant, and certainly for the financial performance of the company, was brilliant, and its survival. I think 911 enthusiasts are less enthusiastic about this, but he decides that rather than the old strategy for the entry-level model of sharing a platform with Volkswagen, what if we have the new entry-level model instead share a platform with the 911? And so what he does is he says, "Let's take the front end of the 911, of the next generation 911, the 996, and use that exact same front end, same headlights, same hood, same everything," and then made it with a new entry-level, you know, back end, you know, the rest of the chassis of the car, revive the old 914 concept that was so successful, mid-engine roadster model with a, uh... How would you describe the-- It's not a convertible, per se.
- DRDavid Rosenthal
Yeah! No, it is, it is.
- DRDavid Rosenthal
It is a convertible.
- DRDavid Rosenthal
The Boxster was a full convertible.
- DRDavid Rosenthal
Okay.
- DRDavid Rosenthal
Yeah. Yeah, yeah. And, and it's also important to point out the interiors were almost entirely shared as well.
- DRDavid Rosenthal
Ah, the interiors were, uh, yeah, like the steering wheel-
- DRDavid Rosenthal
If you-
- DRDavid Rosenthal
... and like-
- DRDavid Rosenthal
The wheel, all the buttons. In fact, if you get into a Boxster, which was a two-seater car, it has a coat hook on the back of the seat because the 911 had a coat hook on the back of it. There--
- DRDavid Rosenthal
Ah.
- DRDavid Rosenthal
You can't put a coat in a Boxster. The seat is right up against the... But they shared everything.
- DRDavid Rosenthal
Ah.
- DRDavid Rosenthal
Wow!
- 1:56:55 – 2:12:44
The SUV gamble that worked: Cayenne, brand protection via halo cars, and VW synergies
- DRDavid Rosenthal
but they're targeting them in a Porsche way. So Wiedeking, like, I don't know how much this was his thinking all along or that he was just emboldened by the success of the Boxster. He really means it. He gets into SUVs. [laughs] And this-- I mean, I, even as, like, a teenager at the time, I, not being that much of a car guy, but I just remember people being like: Porsche's making an SUV.
- DDDoug DeMuro
An SUV. [laughs]
- DRDavid Rosenthal
Have these people lost their freaking minds? Like, who, who on Earth would buy a Porsche SUV?
- BGBen Gilbert
Also, I gotta say, like, maybe all cars were kind of ugly in this period, but I remember when I looked at the first Cayenne-
- DRDavid Rosenthal
[laughs]
- BGBen Gilbert
... I was like, "So it's like a Toyota?"
- DDDoug DeMuro
It wasn't the most attractive car, there's no question about that. Everybody hated the design language.
- BGBen Gilbert
[laughs]
- DDDoug DeMuro
And you know what? It's been twenty years, it has not grown on me at all. [laughing]
- DRDavid Rosenthal
[laughing] Yeah, the Macan looks really good, I think.
- DDDoug DeMuro
The, the new, the new Cayennes look great, too, honestly. The-- ever since they redesigned it in 2011. But those early Cayennes, you see 'em now, and you're like, "Still ugly." [chuckles]
- BGBen Gilbert
It also just doesn't look like a Porsche to me.
- DDDoug DeMuro
Yeah.
- BGBen Gilbert
Like, there's not enough that's brought through from the heritage of the... How do you describe the back on a nine 11?
- DDDoug DeMuro
Right, that's sort of like sloping-
- DRDavid Rosenthal
The fastback.
- DDDoug DeMuro
What happened was the Cayenne was an interesting situation because Porsche was kind of a first mover. They weren't exactly. Mercedes came out with a SUV first in nine-- for the ni- 1998 model year called the M-Class, which was a-- that was a revolution, and they built it in America, which was a really big revolution. BMW came out with the X5 in 2000, and that was also a revolution. The M-Class, Mercedes never had the sporty pretense that BMW did, so that car was just for suburban families. The BMW X5 actually had to be sporty, and it was like, "Oh, so not only can luxury brands build SUVs, but they're sporty." So Porsche comes out in '03. I mean, they beat Audi. Audi didn't come out with an SUV till '07. Porsche was there, like, early, early, early. So but the problem was Porsche had no clue. Because they were early, they had no clue what to do. And so I remember at Porsche talk-- when I worked there, talking to some of these people about the early Cayennes, Porsche literally didn't know what to offer in a SUV, to the point where they actually, uh, legitimately asked some of their American employees: Do we need to offer gun racks as an option for the American market?
- DRDavid Rosenthal
Yes.
- DDDoug DeMuro
They just didn't know.
- DRDavid Rosenthal
I read this. This is so great.
- DDDoug DeMuro
They literally... They were only building sports cars, and they just-
- DRDavid Rosenthal
[laughs]
- DDDoug DeMuro
... they had no concept, no concept of, like, what people would want and what-- The early Cayennes had an optional spare tire on the back, like, like Jeep Wranglers do.
- BGBen Gilbert
[laughing]
- DDDoug DeMuro
Like, you could get that, and you still see 'em run around in it.
- DRDavid Rosenthal
Part of this was a cultural, you know, German thing, for sure, but, uh, like, not understanding America, but, um, I don't think anybody understood... Like, I don't think there were any super expensive SUVs on the market at the time.
- DDDoug DeMuro
The only ones were Land Rover, but they were focused so far on off-roading. But part of the reason the Cayenne was ugly when it first came out is because Porsche decided, "We're Porsche. We're gonna do it best." And so they come out with an SUV that is both amazing on-road and off-road, and the early Cayennes actually have an unbelievable off-road capability. They have d- a two-speed transfer case. They can go high/low gearing off-road. They have air suspension that can lift 'em up and lower 'em. They had all this off-road hardware that, like, you would never put in a luxury performance SUV now. But because Porsche didn't know what customers would want, they decided to give 'em everything, and so the result was it was a big, bulky, heavy car to carry all this hardware, and so it looked-- The, the l-- It, it just wasn't-- It didn't-- It wasn't executed that well from a styling perspective, but from every other perspective, it was a hit.
- DRDavid Rosenthal
Yeah. I think a few things to say about it. There wasn't anything else that was like a, "I can spend a hundred thousand dollars on an SUV."
- DDDoug DeMuro
Right. This was before the days of an Escalade even. Cayenne came out in '03. Escalade came out in '99, so it was, it was... The Escalade was ahead.
- DRDavid Rosenthal
But Escalades were, like, forty, fifty grand, right?
- 2:12:44 – 2:22:07
From carmaker to financial drama: Porsche SE, the VW takeover attempt, and the 2008 short squeeze
- DRDavid Rosenthal
under Wiedeking, Porsche is doing everything they possibly can to reinvest in new models, new lines. Like, they're building a new production facility. What more could they do internally with all the money they're making? They can't do anything, so they start looking around for other places to put the cash. Now, at the time, there were rumors circulating in the auto industry that Volkswagen had their eye on Wiedeking, and they were looking to recruit him to be the successor to Ferdinand Piëch. We're now in-
- DDDoug DeMuro
Worked the first time to- [chuckles]
- DRDavid Rosenthal
[chuckles]
- DDDoug DeMuro
... pull together the-
- DRDavid Rosenthal
Right
- DDDoug DeMuro
... best guy over at Porsche over. Let's do it again.
- DRDavid Rosenthal
So I think, uh, Ferdinand Piëch took over as CEO of the whole VW group, I believe in the same year that Wiedeking became CEO of Porsche in 1993. Ferdinand's obviously much older, coming towards the sort of twilight years of his career. You can see how this would make sense if it were true. Whether it's true or not, I'm sure Wiedeking gets rumors of it. Wiedeking's really, you know, kind of feeling himself here at Porsche, right? Like, uh, he's, uh... Hard to imagine a better run. He gets the idea. He kind of has, like, a, uh, sort of Justin Timberlake, uh, Social Network moment of, you know, "Million dollars isn't cool. You know, billion-
- DDDoug DeMuro
[chuckles]
- DRDavid Rosenthal
... You know what's cool? A billion dollars." Being the CEO of Volkswagen isn't cool. You know what would be cool? If we, at Porsche, bought Volkswagen. [chuckles] I'll become the CEO of VW Group when I buy you. [laughing]
- DDDoug DeMuro
[laughing]
- DRDavid Rosenthal
Uh, but remember, though, Ferdinand Piëch is chairman and CEO of Volkswagen Group. He's also a Piëch. He's also on the supervisory board of Porsche because he's also a key member of the family that owns Porsche.
- DDDoug DeMuro
Yeah, the-
- BGBen Gilbert
... sitting active CEO of Volkswagen, as a family member of the Porsche Piëch family, has voting shares in Porsche?
- DRDavid Rosenthal
Yes. [laughs] And is on the board, the supervisory board, of Porsche. So, uh, they thought they were done with the family drama here. It's, uh, uh, turns out there's, there's another chapter.
- BGBen Gilbert
So isn't it obvious then that it would be hard for Porsche to take over Volkswagen? Well-
- DRDavid Rosenthal
Porsche, and thus the families, needed something to do with the cash, and at the time when they start this, VW shares are a pretty good investment. Like, they're not trading super highly. Like, it's pretty clear to them that it's undervalued, and VW is a critical partner to Porsche. So I believe, certainly, certainly to the public, and probably also to the families, Wiedeking positions this as like, "Hey, we're deepening the partnership." Uh, they don't announce like, "Hey, I'm trying to take over VW," [laughs] you know, "out of my seat at Porsche." September 2005, Porsche spends $4 billion to acquire 20% of the VW Group on the open market. Uh, it's kind of little creeping takeover vibes that you alluded to in the intro. At this point, Wiedeking and Porsche's CFO joins the Volkswagen board, and then they keep buying shares, but using another patented Bernard Arnault technique, they do it mostly using various derivatives and options contracts. So they're buying, like, the rights to buy shares in the future.
- BGBen Gilbert
And that's usually ways to get around regulatory stuff, right? Like, then you're not exceeding caps if you're buying derivatives rather than the shares themselves.
- DRDavid Rosenthal
Yes, and in VW's case in particular, there was actually a law in, on the books in German law called the Volkswagen Law-
- BGBen Gilbert
Oh, yeah, this is crazy
- DRDavid Rosenthal
... that was designed to prevent a takeover of VW because the state of Lower Saxony still owned the 20% share in Volkswagen, still does to this day, and it was considered sort of a national treasure, and they didn't want it to be taken over by corporate raiders. They didn't envision that it would be another [laughs] German auto company that would try to take it over. So it was impossible for, uh, an actual direct takeover to happen.
- BGBen Gilbert
I'm literally gonna read from the Wikipedia here because the Wikipedia is extremely well-written: "Under the Volkswagen Law, no shareholder in Volkswagen AG could exercise more than 20% of the firm's voting rights, regardless of their level of stock holding. This law was supposed to protect the Volkswagen Group from takeovers. In October 2005, Porsche acquired an 18.53% stake in the business, and in July 2006, Porsche increased that ownership to more than 25%."
- DRDavid Rosenthal
Yes, and part of the reason this all was able to happen is there was a lot of speculation that this German Volkswagen law, uh, would be illegal under new EU regulations. In 2007, Wiedeking creates a new, separately publicly traded holding company for the family's ownership of Porsche. So it's- there's still the Porsche operating company, the old doctor, engineer, you know-
- BGBen Gilbert
AG.
- DRDavid Rosenthal
AG operating company. There's now a new holding company that owns 100% of the operating company and the VW shares that they've been acquiring.
- BGBen Gilbert
And this is Porsche SE.
- DRDavid Rosenthal
Porsche SE. Porsche SE Holding. And here's where things start to go awry. Wiedeking starts loading up the holding company with debt, with cheap debt, in 2007 to go buy more VW shares on the market. Ultimately, $10 billion of debt that he puts on this holding company.
- BGBen Gilbert
He's got Ferdinand Piëch signing off on this?
- DRDavid Rosenthal
Right, like, why would Piëch go along with this? I think the best as I could figure out is that Piëch was not happy with the then current CEO of Volkswagen and was looking for a way to get his first successor out. So he, he... Clearly, he was trying to recruit Wiedeking, too, so, like, he was benefiting from this, too.
- BGBen Gilbert
Right, yeah.
- DRDavid Rosenthal
He was gonna have his cake and eat it, too, I guess.
- 2:22:07 – 2:34:35
Piëch’s endgame: VW ‘rescues’ Porsche, families consolidate control, and Porsche returns to market
- DRDavid Rosenthal
So at this point, Piëch, [laughing] Ferdinand, good old Ferdinand-
- BGBen Gilbert
Who hasn't moved a single piece on the chess board yet.
- DRDavid Rosenthal
No, he's just been watching.
- BGBen Gilbert
He's just been sitting there.
- DRDavid Rosenthal
He's on the Porsche board, and he is still chairman of the VW board.
- BGBen Gilbert
[laughing]
- DRDavid Rosenthal
He's no longer CEO, but he's still chairman of VW. This is when he turns on Wiedeking. So he and Volkswagen announce publicly to the market that they no longer believe that Porsche is a financially viable entity. [laughing] Uh, because-
- BGBen Gilbert
As a deep, trusted partner of Porsche-
- DRDavid Rosenthal
Yeah. [laughing]
- BGBen Gilbert
... we believe.
- DRDavid Rosenthal
And, uh, they say that they have to say this because Porsche is a greater than fifty percent, you know, owner of VW, and so they, you know, have to disclose this to the market.
- BGBen Gilbert
[laughing]
- DRDavid Rosenthal
Um, and that as a result of this extraordinary circumstance, VW, led by Ferdinand, is willing to bail out [laughing] their partner, Porsche, and save them by purchasing the Porsche operating company for, eh, in the neighborhood of three to four billion euros to, you know, get them out of this predicament.
- BGBen Gilbert
Wait, and then just to unpack the statement a little bit more, what he's basically saying, uh, to, like, make it more explicit, is, "A key partner of ours went so deeply into debt-
- DRDavid Rosenthal
To try and buy us
- BGBen Gilbert
... buying our shares-
- DRDavid Rosenthal
Yes
- BGBen Gilbert
... that they can't service that debt and are now about to be insolvent and default on loans."
- DRDavid Rosenthal
Yes.
- BGBen Gilbert
"So therefore, we will help them out by," what is it? Buying them for...
- DRDavid Rosenthal
They, they floated a price of three to four billion euros, which remember, like, a couple months ago, this company-
- BGBen Gilbert
Was 10x that
- DRDavid Rosenthal
... Porsche was trading at 10x that.
- BGBen Gilbert
Whoa! This is literally Ferdinand saying to Wiedeking, "If you come at the King, you best not miss." [laughing]
- DRDavid Rosenthal
You best not miss. [laughing]
- BGBen Gilbert
Yes.
- DRDavid Rosenthal
This is exactly what is going on. Yeah. Whoa, indeed. [laughing] So there's a whole flurry of negotiations. You know, this is all against the backdrop of it being October 2008.
- BGBen Gilbert
Oh, right. Yeah.
- DRDavid Rosenthal
Within a few months, by January 2009, Wiedeking is gone as CEO of Porsche. Supposedly, when he exits the building, he exits to a standing ovation from Porsche employees, which, I mean, he kinda deserves. Even though, like, all of this craziness, he did go a bridge too far, like-
- BGBen Gilbert
He's-
Episode duration: 3:22:51
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Transcript of episode V_fYfdXpkx4
