Transcript
Lindsey Graham (0:00)
Want to get more from business movers? Subscribe to Wondery for early access to new episodes, ad free listening and exclusive content you can't find anywhere else. Join Wondery in the Wondery app or on apple podcasts. It's May 1934 in the Kaiserhof Hotel in Berlin, Germany. 58 year old automotive engineer Ferdinand Porsche follows a man in a black military uniform along a hallway. Ferdinand is breathing heavily, struggling to keep up, but the young officer pays no attention to Ferdinand's discomfort. He rounds a corner quickly and approaches a door to a private meeting room. Without waiting for an answer, the officer opens the door, then stands back and gestures to Ferdinand to enter. Seated at a desk inside is a small man wearing a neat suit, his hair parted to the side. Catching his breath, Ferdinand nods in greeting. Good morning, Herr Hitler. Adolf Hitler, the Chancellor of Germany, looks up from a document he's reading. A few months ago, Hitler announced his intention to rejuvenate the German automotive industry by by building a new car that ordinary people could afford. It's exactly the kind of vehicle that Ferdinand has dreamed of building for almost a decade. So as soon as he heard about Hitler's plans, he put his name in for consideration. Looking at Ferdinand, Hitler waves the paper he's holding in the air. I have your telegram. You wish to offer your company's services to the Reich. Ferdinand is surprised by Hitler's quiet voice and relaxed demeanor. It's quite different from the fiery, impassioned speeches he's famous for. Yes, I'm pleased you receive it, Herr Hitler. My company has some exciting ideas that I think will interest you. No. Hitler puts up a hand to cut Ferdinand off and shakes his head. Ferdinand hesitates, afraid he sparked Hitler's legendary temper. But then Hitler goes on. I don't want to look at any one of your old cars. I asked you here today because I want you to design an entirely new view. One that's at the cutting edge of new technology. One that the German people can be proud of. It should be capable of reaching speeds of 60 miles an hour. It should get at least 35 miles to the gallon. It should have an air cooled engine and be able to carry two adults and three children. And it should cost no more than 1,000 Reichsmark. Do you think your company can do that? Ferdinand swallows nervously. Hitler's demands are ambitious and nearly impossible to meet at the price he sets. Still, Ferdinand doesn't want to disappoint a dictator. I'll put my engineers onto it straight away. Please do that, Dr. Porsche. This car is vital to the future of the Reich. We may come to rely on it sooner than you think. Of course, Chancellor. Are there any other specifications? Hitler's piercing blue eyes seem to stare right through Ferdinand. Yes, the project has a name and it reflects its importance to the German people. The Volkswagen this meeting with Adolf Hitler marked the start of a complex relationship between Ferdinand Porsche and the Nazi regime. The Volkswagen, or people's car, would give Ferdinand the chance to finally achieve an ambition he'd held for years to radically reshape the automotive industry in Germany. But it would also cast Ferdinand into the arms of a brutal and murderous fascist regime, and it would take years for his company to escape the stain of its Nazi past. Business Movers is sponsored by shokz. This is a business show and making it is my business, which means I take audio seriously. My microphone is German, my preamplifier is English. My digital converters are high spec. Everything is chosen for quality so that if you were to listen to this podcast on some magnificent vacuum tube stereo through gleaming tower speakers, you'd be able to say that's a good sounding podcast. But no one does that, do they? I don't either. 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Steven, Brandon and Bruno, the business owners of Sandcloud, reinvested their 2% cash back to help build their retail presence. Now that's serious business. What could the SparkCashPlus card from Capital One do for your business? Capital One what's in your wallet? Find out more@capitalone.com SparkCashPlus terms apply from WonderEAP I'm Lindsey Graham and this is Business Movers. Today, the German car manufacturer Porsche is synonymous with speed, luxury and world class engineering. Its factories produce more than 300,000 high spec vehicles every year. From the luxury SUV Cayenne to the all electric Taycan and the iconic 911. Together they've made Porsche a multi billion dollar company. But its origins had nothing to do with super powered sports cars. Porsche began with one man, an ambitious, restless engineer who wasn't interested in speed, but bringing the automobile to the masses. Ferdinand Porsche was born in 1875 in what is now the Czech Republic. He had no formal education beyond the trade schools of the Austro Hungarian Empire. But he had a rare instinct for engineering. And he was in the right place at the right time to use those skills to full effect. Ferdinand came of age just as the internal combustion engine was beginning to redefine travel. When Ferdinand was 10, German engineer Karl Benz patented the world's first gasoline powered car. Within a few years, Central Europe had become the hub of a new automobile industry with with a host of manufacturers setting up factories there. It was in one of these pioneering firms that Ferdinand got his big break. In 1906, at the age of 30, Ferdinand was appointed lead designer at Austria's top carmaker. And over the next few years, Ferdinand pushed the boundaries of automotive engineering. When World War I broke out, Ferdinand's skills were sought out by the Austro Hungarian armed forces and he was set to work designing artillery, transport, tractors. And by the time the war ended in 1918, Ferdinand was one of the world's most experienced automobile engineers. But Ferdinand didn't always work well with others. He had high expectations of his colleagues. He demanded perfection and resisted compromise. And he often pursued ideas that were too expensive or too unconventional for his superiors. By the end of the 1920s, Ferdinand was working for the German company Daimler Benz A. There he set his sights on his most radical idea. A car that could be purchased and driven by the masses. But this new concept would spark a final confrontation with Daimler Benz's directors and lead Ferdinand Porsche to the one man who shared his vision for the future of the automobile. Adolf Hitler. This is the first in our four part series on Porsche blueprints. It's fall 1928 at the Daimler Benz factory in Stuttgart, Germany. Seven years before Ferdinand Porsche and Adolf Hitler agreed to collaborate on a new vehicle. Ferdinand hunches over a drafting table and carefully adds the finishing touches to his latest design. But his radical ideas haven't always made Daimler Benz money. And recently the company's directors have been scrutinizing the balance sheet more carefully. Its top end cars are selling well, but Ferdinand's endless prototypes have eaten into profits. Ferdinand looks up as a Daimler Benz director enters the room. He's younger than Ferdinand, sharply dressed and carrying a leather portfolio. Ferdinand puts down his pencil. Has the board read my revised proposal? It has. And it's not the right time for a project of this kind. No, the right time was two years ago, believe me. We know what you think, but you're not listening. Germany's crying out for a car like this. Something efficient, affordable, built with precision, but priced for workers. Dr. Porsche, wealthy people buy cars, not the working classes. That's only because they've been priced out. We're talking about millions of people. This is a potentially huge market. Dr. Porsche, you're an engineer. You do engineering. This is a business decision. And don't patronize me. The director arches his eyebrows at Ferdinand's interruptions. He then opens his leather portfolio and takes out a piece of paper. I should also tell you that we discussed something else at the board meeting. Ferdinand senses the atmosphere in the room change. He eyes the piece of paper in the director's hand warily. Yes. What else was on the agenda? We've decided not to renew your contract when it expires at the end of the year. This is your formal notification. The director places the letter on his desk. Ferdinand ignores it. I see. And this is your final decision? I'm afraid so. Ferdinand shakes his head. He looks at his desk, at the engine he's just designed. An engine that he fears now will never be built. You and the board have forgotten what made this industry great innovation. So please keep making your cars for the millionaires. I'd rather make cars for the millions. Ferdinand Porsche had spent six years designing machines for Daimler Benz. His work had earned him the respect of almost everyone in the industry. He'd built record breaking race cars, pioneered hybrid engines and reshaped German automotive design. But none of that had been enough to save him. Now Ferdinand would have to start all over again. At the beginning of 1929, Ferdinand Aporcia was 53 years old and unemployed. But he had no intention of retiring. Instead, he wanted to get back into the workshop as soon as possible and keep working on his dream of building smaller cars with lighter engines that anyone could afford. Within a month of leaving Daimler Benz, Ferdinand found work with Austrian car manufacturer Steyr. Ferdinand hoped a smaller company like Steyr would give him the freedom to pursue his passion for a mass market. Car. But he was soon disappointed. He was asked to take the lead on designing a new 5.3 liter vehicle that was just as big and cumbersome as the models he'd worked on for Daimler Benzion. But even that car never made it to the market. Within a year, the Great Depression swept across Europe. Car sales fell off and Steyr's management felt they had to halt production. Almost all of the company's staff was laid off, including Ferdinand. He was out of a job again and this time he would be unemployed for more than a year. Because most auto firms followed Steyr's example and went into a form of hibernation. Hoping to ride out the economic crisis, European industrial production slowed to a crawl. So with no prospects of getting a job from anyone else, Ferdinand decided he would become his own boss. He returned to Stuttgart, Germany, where he'd previously worked for Daimler Benz. There he registered a new business in his own name. But Porsche wasn't a car manufacturer like the firms Ferdinand had worked for in the past. It was an engineering concern consultancy. Ferdinand wanted to design cars for other companies, not make them himself. In this new company, Ferdinand served as Porsche's chief engineer. His friend, former racing driver Adolf Rosenberger, put up 3,000 Reichsmark as initial funding, equivalent to around $14,000 today. In return, Rosenberger was appointed Porsche's commercial director. Ferdinand's son in law, Anton Piesch, joined as managing director and took care of day to day business. And Ferdinand's 22 year old son, Ferdinand Jr. Known to all as Fairey, headed up the testing department. Ferry was joined by around a dozen other engineers and designers who were mostly Ferdinand's former colleagues from Daimler Benz. Porsche's small team got its first chance to prove its talents when German automaker Wanderer commissioned Ferdinand to design a new vehicle. The Wanderer W17 was the first car to feature a new overhead valve engine that Ferdinand had been working on at Daimler Benz. But the W17 also cost the equivalent of a quarter of a million dollars today. In the middle of an economic downturn, few people were willing to pay that price. And wanderer sold just 24 of the cars before ceasing production. So although the W17 was far from a success, at least Porsche was in business. And other clients soon followed. Motorcycle firm Zundab and car manufacturer NSU both commissioned Ferdinand to design a small, affordable car. Exactly the kind of opportunity he'd been waiting for. But Ferdinand struggled to make his designs fit his client's tight budget. With no prospect of Porsche's designs Making a profit. Zundop and NSU shelved their ideas before a single car had been made. It soon became clear that Ferdinand's dream of building an affordable car was almost impossible. And the the current economic climate. So Ferdinand concluded that the only way he'd ever produce a mass market car was if a sponsor with deep pockets subsidized the project. In January 1933, that benefactor emerged. After more than a year of political crisis in Germany, Adolf Hitler was appointed Chancellor of a new government. At first, the rise of the Nazis had a destabilizing effect on Porsche. Ever since the company had been founded, it had been kept afloat by the financial prowess of commercial director Adolf Rosenberger. But Rosenberger was Jewish and the Nazi regime blamed Jews for many of Germany's problems. Rosenberger could read the writing on the wall. His presence at Porsche would damage the company's prospects in this new Germany. So on the same day that Hitler took his oath of office, Rosenberg gathered Porsche's staff together and announced he was stepping down as commercial director. Although he planned to retain his stake as part owner, Ferdinand had lost his financial expert. But that blow was soon cushioned by an intriguing announcement from the new Nazi government. In February 1934, Hitler delivered a speech at the Berlin International Motor show where he unveiled his plan to revive the German car industry. Central to those ambitions was Hitler's vision for a new car that every family in Germany could afford. Ferdinand listened to Hitler's speech on the radio with growing excitement. As soon as it was over, he dictated a telegram to his secretary offering his company's services to the Nazi government. In May 1934, Ferdinand met Hitler to discuss the creation of a mass market German car. The 35 minute meeting covered a lot of ground. Hitler dictated a list of specifications for what he called the Volkswagen, or people's car. It had to be capable of carrying two adults and three children. It had to be air cooled and easy to repair. It had to use fuel efficiently, and it had to cost no more than 1,000 Reichsmark. If Ferdinand could manage that, Hitler promised that the German state would fund the factories to build it. No German company had ever produced a car that cheaply before. But Ferdinand accepted the challenge. But Hitler's strict requirements were not just confined to the vehicle's specifications, but they reached into the structure of the Porsche company itself. Hitler wanted to use the Volkswagen to prove that the German auto industry was the best in the world. But the propaganda impact of the Volkswagen would be diminished if it got out that its designer was a Czechoslovakian. With a Jewish business partner. So German officials dropped strong hints that Ferdinand should apply for German citizenship and that he should get Adolf Rosenberger out of his company once and for all. Ferdinand believed that the only way he'd get his car built was with the support of the German government. And he wasn't prepared to miss out on the opportunity. So he filed his paperwork to become a German citizen. And then, in July 1935, Ferdinand told his friend Rosenberger that his stake in Porsche threatened the company's future dealings with the German government. Rosenberger reluctantly agreed to sell his share of the company to Ferdinand's son, Ferry. In return, Rosenberger received just 3,000 Reichsmark, the same amount he'd originally invested four years earlier. Rosenberger hoped Fairey would sell the shares back to him when the political tide turned against the Nazis and life became easier for Jews in Germany. But that never happened. Instead, Adolf Hitler transformed the country into a totalitarian one party state. And Porsche became one of the Nazi regime's flagship companies. But building the Volkswagen proved no simple task. Hitler's strict budget meant manufacturing costs had to be kept low. But he wouldn't accept any corners being cut when it came to quality either. The only solution Ferdinand could see was to build the vehicle in enormous numbers to take advantage of economies of scale. But no German manufacturer had the capability or know how to build so many cars. There was only one person in the world who knew the secret of mass producing automobiles. The American entrepreneur, Henry Ford. He had made his company the biggest car manufacturer in the world. And by the mid-1930s, his factories in Michigan had produced more than 15 million Model Ts, making it by far the world's biggest selling car. So if the Volkswagen was to become a reality, Germany would have to learn from Henry Ford. Fortunately, Ford was known to be an admirer of the 19 Nazis and shared Hitler's hatred of the Jewish people. So he welcomed German interest in his production methods. So in the summer of 1937, Ferdinand Porsche set off on a fact finding trip to Michigan. And he had a lot to learn. As a designer, Ferdinand had only ever provided blueprints. Building the cars was always someone else's job. But if he's going to satisfy the demands of Adolf Hitler, Ferdinand would have to take a crash course in mad mass production. Business Movers is sponsored by Upwork. Here is a true story. A few years ago, I needed to scale up my podcast production business. We were getting busy and I needed to find a sharp, reliable audio editor. So I went to Upwork and quickly found a freelancer who was not only good, but above and beyond good. You'll hear their name in the credits of this episode, even because their work deserves to be called out. So I know with upwork you can find specialized freelancers in marketing, development, design, podcast, cast editing, who knows experts who are ready to help you take your business to the next level. And posting my job on upwork was easy with no cost. Just register, then browse freelancer profiles, get help drafting a job post, maybe even book a consultation. 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