Schmid, 47, is not only wealthy. He’ll also look you in the eye and say so. “I always wanted to be free and independent,” he explains. “That’s what being rich means to me.” In Germany, such talk is as new as the idea of a former hockey coach becoming a tycoon. And it marks a psychological shift that may be even more significant in the long run than such vaunted reforms as telecom deregulation or the coming of the euro. Germany is still home to some of the world’s most conservative old money–the Albrechts, Haniels, Quandts and a few dozen other billionaire families who trace their fortunes to the 19th century, bring their bodyguards to their private ski chalets and pay publicists to keep their names out of the newspapers. It’s still a land where the rock-ribbed founders of the famous Mittelstand– the mostly family-owned, middle-sized companies that rebuilt the country after World War II–insist that good engineering, a nice portfolio of bonds and a sense of discretion are the way to heaven. But these days it is also a place where a new class of rich people, represented by Schmid and hundreds of other newcomers working mostly (but not exclusively) in high tech, is coming to the fore. Their boldness in taking risks and the self-confidence that comes from hard-earned wealth are laying the groundwork for big changes in Europe’s largest economy.
Germany is fascinated by Die Jungen Unternehmer, or the young entrepreneurs. Kiosks are stuffed with new magazines trumpeting their successes. In January a television feature program called “Exclusive-Weekend” ran a segment fawning over a twentysomething tech millionaire and his life of luxury. Regular folks are investing more and more in stocks, and Germany even has day traders now. The clearest milestones appear near the blouseless babe on page 1 of the Bild Zeitung, Germany’s most widely read tabloid. MILLIONAIRES IN 100 DAYS? WE DID IT! went a headline last winter. GERMANY HAS INFINEON FEVER, said another in March, on the eve of that semiconductor company’s initial public offering. Even the current gyrations in the tech markets aren’t as painful as they might seem. “This is just the difference between rich and superrich,” says Schmid, granddaddy of the breed, pointing to a wildly fluctuating graph of his share price. “I’m not in love with money.”
Maybe not. But who are Germany’s new role models, and what are they in love with? The basics are pretty clear: almost all are men. Most are well educated, tech literate and formerly middle class. Many have spent time studying or working in the United States. Beyond that the analysis gets trickier, partly because the Unternehmer haven’t had time for a lot of reflection. But one shared sentiment does stand out: the sense that they’ve come of age just as some powerful forces–the tech revolution, the single currency, venture capital–are combining to transform Europe. “We’re lucky to be here at the transition period,” says Stefan Rover, 35, who started a software-consulting business when he was 16 and now runs electronic-banking-software designer Brokat, a world leader. Lucky indeed: his stake is worth an estimated €300 million.
None of these guys started out thinking he’d change an industry–let alone a country. Most young German entrepreneurs say they just dreamed of running a company, any kind of company. “It’s not about money, it’s not about fame–it’s about achieving something,” says Lars Thomsen, 32, munching on gummy bears at the tiny offices of twest.com in Munich. An entrepreneur since he was 16, Thomsen and his brother just got $8 million in venture-capital backing for their company, which produces Web-site modification software. “You cannot imagine how fast things are moving,” he says. “The speed is intoxicating, it’s a drug.”
If so, it’s a increasingly popular high. Christoph Linkwitz, 38, studied economics and then, with two university friends, began publishing travel guides. His mother chipped in about €500 to get the venture started. Then the Internet took off, and the three Ph.D.s reinvented their company as a live-auction site called ricardo.de, named for the economist David Ricardo. By August 1998 they were online, and by July 1999 they were trading on the Neuer Markt. Ricardo.de is now buying up rivals across Europe and sponsoring a Formula One driver. “I would lie if I did not say the money motivated me too, but that’s not all,” says Linkwitz, who’s worth about €80 million on paper. As for his mother, her 60,000 shares are worth nearly €6 million. “She’s still wondering what’s going on,” he says, chuckling.
So, perhaps, is Robert Honekamp, 61, another parent of an entrepreneur. He spent his career as an engineer at a utility company in Essen, in the heart of German steel country. His son Roland, now 28, went away to Oxford University, where he first heard the term “start-up” from an American girlfriend. Upon graduation in 1998, young Roland landed a job at Boston Consulting in Munich–not exactly following in Dad’s footsteps, but not really straying too far from them, either. But he met so many people his age who were starting companies and having more fun than he was that in June 1999, he and four friends founded Zooplus.com, an online supplier of pet products. After an exhausting few weeks of pitching to investors, the pet-shop boys landed $8 million in venture capital and are now hiring like crazy from their renovated farmhouse on the outskirts of Munich, where boxes of newly delivered computers clog the entrance. Enough to make a father proud, right? Not exactly. The younger Honekamp reports that after he quit his job, his father had nightmares about cat litter. And though Dad admitted to his tennis-club cronies that Roland was starting an Internet company, he said his son was involved in “financial news.”
And so he is, in a way. Whether they’re rich or just hoping to be, Germany’s new entrepreneurial class is gleefully rewriting the country’s financial rule book. Capital used to be something bankers allocated over a silver coffee service after a long courtship. Stefan Jung, cofounder of Das Werk, a postproduction company now partially owned by director Wim Wenders, remembers the process all too well. More than 20 banks refused him a loan to buy the state-of-the-art editing machine he needed a few years ago; finally, a Commerzbank officer got interested enough to help. “It comes down to whether one’s mind is open or not,” says Jung. But now, thanks to venture capital and stock markets, financing is flowing more freely. Silver-haired bankers are scrambling, both to finance new companies and to help entrepreneurs manage their new wealth. For example, Sal Oppenheim, a 211-year-old private bank, is going online, and hiring a specialist from McKinsey & Co. to lead a new IPO team. Brokat’s Rover, for one, relishes the turnabout, deflecting bankers who want to help him invest his private wealth to a money manager in Frankfurt. “Finally, investment bankers are back in their rightful position, providing services to their clients,” he says.
Make that new services. For where the old rich are obsessed with capital preservation, the new rich go for growth. Wulff Matthias, head of private banking at Oppenheim in Cologne, estimates that at least 50 percent of entrepreneurs’ private money goes into new projects. “When they list, they already have a little shell company ready for the next idea,” he says. Like their elder cousins in Silicon Valley, German entrepreneurs are investing in other start-ups, creating a sort of virtuous circle of mentors and funding. MobilCom’s Schmid has invested more than €5 million of his own money in three young entrepreneurs, and Rover €500,000.
What else do these millionaires do with their money? In most cases their consumption still isn’t very conspicuous, at least by Silicon Valley standards. The first thing a newly listed CEO usually does is pay off debts, bankers say. Many buy a first home and a nice car, but most are so immersed in work that they’ve barely begun to spend. “These people still eat spaghetti at home once a week,” says Gerhard Teufel, investment adviser at Bethmann Bank. Ricardo.de’s Linkwitz did go out and buy a black Maserati as his company car, after repaying €1.5 million in loans. He also bought a replica of the Omega watch that Neil Armstrong wore on the moon. But colleagues tease him for wearing the same old shirts.
Time is the most precious commodity for these folks. They’ll lay out more for a nice meal than before, stay in the best hotels or zip over to another city to meet up with a friend. But holidays are surgical strikes, like four days of skiing in Austria. Bankers say their clients will rent a yacht and crew for a party on the Mediterranean for €12,000 per day, rather than bother to buy and maintain one. When pressed, twest.com’s Thomsen admits that he has his eye on a Ducati 916, and Ulrich Schmid, his CEO, would love to buy an ice-hockey team. “The difference between old money and new money,” says Schmid, “is that they buy safe things like art. We like action.”
Brokat’s Rover lives with his wife and two kids in a village near Stuttgart, in a house they bought before the company went public. He has made a couple of concessions to his new status, though: a personal trainer for early-morning workouts, and a private jet. MobilCom’s Schmid keeps a dozen horses for jumping and breeding. That sounds like an old-money hobby, but Schmid says he’s different. “I will never buy a house on the Cote d’Azur,” he insists. “Old money thinks about what others think. New money is free to be individual.” How individual? His favorite toy is a 1999 Harley-Davidson, a Heritage Springer, to be exact (he waited eight weeks to get the precise shade of black he wanted, and bought the full leather outfit to match). One day he’ll hit the American highway, “Easy Rider” style.
Just another aging hipster? Perhaps. But it may also be that the individualism Schmid embodies will have as profound an effect on Germany as the technologies that have made him and his peers so rich. “They play a vital role as pioneers in changing the economy,” says Walter Hanesch, sociology professor at the Technical University of Darmstadt. “They may be less than 10 percent of the population so far, but their value orientation has wide impact in society.”
Germany’s new pioneers are already setting the course for the next generation. French bank Credit Agricole recently asked European teenagers the best way to get rich. Invest in the stock market, said 44 percent of the Germans, twice as many as the French and three times as many as the British. And above all, said 42 percent of the Germans, one must take risks; British, French and Italian youth all ranked hard work first. Das Werk CEO Jung decided to put his 10-year-old daughter in an international school, despite remarks from some friends that the $10,000 tuition is just buying grades. “English is the language of the Internet,” he says, and the school is big on using computers. Brokat’s Rover, who has some strong opinions about schools, having attended 15 while growing up with a father who worked for IBM, wants someday to open a private school of his own. Thomsen of twest.com, who doesn’t even have kids yet, articulates what many of the new rich are thinking. “What if I’m asked by my kids in 30 years, ‘Daddy, what did you do in the Internet revolution of the 1990s? Did you just watch?’ " he says. “I want to have something to say.” Shouldn’t be a problem.
