Porsche (with Doug DeMuro)

It's definitely Portia, portia, portia. Yeah, definitely. don't say Porsche, definitely don't say the family.

Does it more like like, cuz I met one of them at one point? They say more like, 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, Porsche.

Yeah, if you say Porsche with a German accent, it comes out like, Porsche, yeah, so I think it's almost like, yeah.

Yeah, that's probably exactly.

Is it you? is it you? is it you who got the truth now? Is it you? is it you? is it you? Sit me down, say it straight.

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, I'm David Rosenthal 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.

I think that even though it's a marketing phrase, the German engineering thing, it's worth sharing a little bit of history because it is more than just a marketing phrase. Right? 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 Two, Germany had produced more Nobel laureates in scientific fields than any other nation in the world. Folks like Max Planck, Erwin Schrodinger, Kurt Godel and, you know, Albert Einstein, these are all German and Austrian scientists. And this tradition extends also, of course, to the auto industry.

Wait, the doctor Porsche is like doctor, like the Seuss.

Doctor.

Well, he had an honorary doctor, he was already doing stuff, though, he was engineering and creating. yes, hence the honorary doctorate, 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 got to state this up front, 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. We're 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, so keep that in mind.

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 kind of just got, you know, coerced, or they collaborated. It's like, No, this dude was a buddy, real big. Yeah, yeah, he was definitely a Nazi.

So, when Ferdinand takes this 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 Doug, you probably have some more context on this, but Stuttgart is basically like the Detroit of the German auto industry, and it certainly has become more that way.

Since Porsche was as we'll get to, because Mercedes-Benz is there. And it really does feel like, yeah, manufacturing cradle, especially for cars, yeah, and I think it's not even much like Detroit.

It's not even just the car companies, but all the suppliers and the subcontractor, 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.

It is like the industry town, yeah, so Porsche Ferdinand. 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.

Automobile that Germans everywhere can can buy, 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 in mass at that point.

So this really was a challenge to build a car that could be affordable enough for the average German person to buy it. And indeed, it was a challenge. Because the board of Daimler-Benz rejects it. They're like, not like we, we can't do this. We make expensive cars for wealthy people, right? They get into a huge fight over this, and Ferdinand ends up leaving the company pretty acrimoniously in 1929.

Mercedes-Benz and Porsche? Like, there's some bad blood, it heats up and it cools down, and there's. There's more to discuss on that in the future, for sure. But they ultimately do share that town too, so like there's rivalry, but like, they're also. You know, you hang, you have beers with, you know you can't avoid hanging out with. Mercedes-Benz employees also love it.

So once he leaves, Ferdinand bumps around for a little while. And then, in 1931, he starts a consulting firm to kind of advise other car companies, not Daimler-Benz, but other car companies in Germany 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 Doctor Engineer Honoris Causa Ferdinand Porsche Construction and Bertung Gin for Motorin and Persian Bow. I apologize to any German speakers, but to be fair to you, it's a lot. I studied French, and that translates as the doctor engineer 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.

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 is all of his honorary.

Things. 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 Pietsch. Remember that last name, because it is also going to 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 Pietsch, you probably don't know about Adolf Rosenberger. Because shortly after they start the company, Rosenberger was Jewish, and he gets arrested by the Gestapo.

Is the thing? Yeah, Facebook, I feel like that has some kind of like Zuckerberg Association, but I've never really put it together.

Yeah, yeah, there's some. There's some link between Mark Zuckerberg and Facebook.

I just gotta say this early in the episode, we may as well. Like pointed 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 kind of became okay with it. All the German brands.

I mean, you know, most of them use 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 and you know.

What generations have gone by? Also, 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. Yeah, after the war, and I think if it were not for this refounding that we'll talk about in a minute, it would not exist today. Yeah, but yeah, just wild friggin Adolf Hitler.

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? probably.

It is very hard to get actual production and sales data, especially for old cars, especially for cars like the Beetle, which were.

Produced in many countries over many years, I mean, they were building them 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.

Yeah, and I am. 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, both in terms of length of time and number of units produced. Of a single generation model car like the Civic, the Mustang, the F-150, yeah, the beetle, but like, those aren't the same cars, right? The beetle was the same freaking car until the new beetle in 1998.

Interesting when you think about the beetle, because young people today look at it as like a cute classic car. But, like, at the time, it was what you drove to drive your family around. And we'll talk more as we get to post-war. But, like it in Germany at the time is like a real, you know?

Important, practical family car, this original Volkswagen. Did Hitler Volkswagen. One of the things you can do when you start a company. As a fascist dictator, you can create a new city to house this company, in which he did so. Hitler creates a new city in Germany, known as the then called the City of the Strength. Through Joy car, that was the what they wanted to call the Beetle, originally the Straight Through Joy.

Hitler created it. And not just Volkswagen, but, like the Volkswagen Group, one of the largest car conglomerates in the world, that owns many other brands you're familiar with. All out of Wolfsburg, all out of Wolfsburg.

So Hitler creates Volkswagen, he creates Wolfsburg. They do start production of the beetle before World War Two starts. They only make about 200 units. These are super rare today that you find a pre-war beetle.

First of all, where are they? No, well, where are they?

That's the question. And the funny thing is also, they always, they danced around. Even in this period. And then in the decades after that, and then, of course, now there was always kind of flirting with each other, yes.

So first on the Volkswagen side alluded to this a minute ago. It's a pretty amazing story. What happens? Because you would think like, there's no way. You can't imagine that Volkswagen would survive post World War Two, given what we now know.

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 want to buy that car. It's crazy to think about now, and it gives you an idea of how the British would operate their car industries. Constant missed opportunities. But they literally looked at like this the drawing. You know, they have few, the models that they had, few that they had built. And they said now that is, they literally said it is not.

Commercially viable? Wow, wow, so okay. The British government kind of lacked a bit of 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 territory where the factories were, like, on the ground, managing it. Major Ivan Hurst, 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, he's like, Hey, this thing's actually pretty good.

Yeah, totally now. One of the things that I find interesting about the beetle is that each Europe was so war-torn after World War Two was. All these places were in similar situations to Germany. And 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 Citroen 2 CV, they were all kind of looked similar.

You don't see a lot of Citroens in, yeah?

No, but the 2 CV 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 it. Yeah, super interesting.

So that's Volkswagen, but put a pin in them. We'll come back to them in about 50 years.

Because there's a lot more to say on Volkswagen, and 50 years, that's about how long they would make that one model of the beetle.

Yes, the new beetle would get introduced, I think in 1998, and the first ones post-war were made in, like 1948.

After the war, and we should say, during the war, Ferdinand Porsche was designing tanks, yes, and other military trains on the elephant.

Anti-tank tank the most powerful land-based tank ever created. A terrible. But be like just the range of design talent that he had, like, he designed the beetle, and he designed the largest anti-tank tank.

Yeah, and also some of the very first hybrid and electric cars in history. But at that time, battery technology wasn't advanced enough, and so you're lugging around this huge weighted battery pack to get almost no juice out of it. And so it didn't really go into production.

He was a genius. This is also it runs in the family. Too many of his descendants are both engines and cars geniuses. After the war, Ferdinand and the son-in-law, Anton Pietsch, are both arrested by the French as war criminals tried in France.

Ben, you did a little research on the technical thing they got him on. Which is why they only had two years. Was for the forced labor that they took the imprisoned Jews and forced them to work in the factories. But all the other war crimes that were stacked against them ended up not being charged. And so quick trip in and out of prison, quick, quick to your trip at a war criminal prison.

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 to. He's also arrested for war crimes to 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, What are we gonna do? You know, we got to rebuild the family, Are we gonna restart the business?

Yeah, and David, are you getting all this from? I know you read like five hundred dollars worth of textbooks on Porsche, so there is this.

Incredible history of Porsche, called Excellence, was expected. That was written by Karl Ludwig son, and we have to owe a big thank you to him for the research. For this episode. This work is like, I mean, the photos, the archive work that are in this, this volume, it's it's incredible.

I read a coffee table book that was like the complete illustrated history of the 9-eleven. 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 write a normal amount of research on. All this stuff is in these like huge, heavy bound.

Pictorial books. These are amazing objects that, like, are being produced, there's just such a like, like, visceral, tangible quality to them. That is that we don't usually cover on acquired, right? Okay, so Ferry and Louise go back to Austria.

Doug Can you contextualize what a big moment in, like, world history this is? 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 right and say, no, there were a lot of sports cars before. But it was really a thing of real enthusiasts. Wealthy people, that sort of thing 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, 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.

I went in research and when I looked up, you know, some of those sports cars pre-Porsche and you look at them. Yeah, things are like Franken cars, they are huge, right? And the engines are like the engine. Bays in the front of the cars are two-thirds of the length of the car. There's this one Ferrari from that era, and I look at, I'm like, how do you even steer this thing?

Like, it looks like a boat. The thought at the time really was, you want to go faster, more more power, which of course creates more weight, which of course creates the need for more power. And they did that, but it was unwieldy.

Yeah, I mean, even like to this type of carrera GT sitting behind us, that's not a large car.

Right, right, and that was a Porsche thing, and it was an even more of a Porsche thing at at this time.

Totally. And David, you said a word there that if people aren't into cars, they may not know this. Supercharged Doug What does it mean to supercharge a car?

Basically, you know, an engine takes in air, and that's kind of air helps, air mixes with the fuel, and it creates a combustion. More or less, that's how a combustion engine works. Supercharger push it like, pushes in even more air to create more power, basically, so the term supercharged would be referring to like. Takes the same engine. But adds this thing to kind of force more power through to, like, literally force more air in.

Yeah, and then I don't think turbos had been invented yet, and turbos would obviously become a big thing for Porsche's much later.

The concept of turbo is actually fairly similar to supercharging, except that it spins something that adds even more air basically. And and thus turbochargers result in power kind of being produced as the car makes more power, it makes more power, if that makes any sense, yeah, it kind of like spins itself up in a faster way, and there's kind of pros or cons to either either of them. And for those following along at home.

This is like end of the 40s.

1947 type era, yeah, those couple years after the war, when everything was kind of getting figured out. Yep, so Ferry has this idea. He's like, Oh, I likes driving my supercharged beetle. This is really fun to have a small car that also had a lot of power in it.

Doug Why is the desirability of these cars so different today?

The, well, I mean, production numbers is probably the biggest component of that one, right? They made literally a zillion beetles. And the 356 is special because it really kind of was one of the the real touchstone moments of the sports car coming out of the war. How we define the sports car today. It was a special thing and it was a special time and a special moment. And a lot of them also weren't treated all that well. Ultimately, the 356.

So obviously in Khmun, and then and then, even when Porsche moves back to Stuttgart here in a minute. Their production capability is not nearly as large as Volkswagen, so they need to price these things pretty high. They price them at $3,750, the German equivalent of $3,750 in the late 40s, that's about $42,000 today. But we're talking about war-torn Europe that you're trying to sell this in, like.

Initially it was slow, they took them a while, the first couple years they only made like a couple hundred of them or something like that. It was initially pretty slow, but then things started to kind of kick around, people in Germany started to get some money and things started to take off.

Thing. And in Germany, it was the 356.

Sorry, the deal is we want your Austrian company to distribute our Volkswagens. And in order to coerce you to doing that, we're in the consulting work, we also want the consulting work. Okay, but but Ben, you're on the right track.

This is a hell of a sweetheart deal for the Porsche family. I mean, you are right to be saying, why would the German government do this? Do you know what kind of royalty? It was? Enough that it was?

Very meaningful, very meaningful cash flow, and probably not even at the time not even clear just how right, amazing.

It would write Nobody knew that the beetle was gonna become the international right hit that it would, but it was also. 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 going to talk as much about the Austrian operations of Porsche for the rest of the episode. But it becomes a huge business.

I mean, what an opportunity to be given a distribution network just as the car is starting to become, like, a big thing exclusive.

Right to Volkswagens, and they're in countries, not just in Austria, they're all over the place.

Yeah, they're all over the place in Europe, and even more incredibly. So. What the family decides is that Ferdinand and Ferry, the original Ferdinand and his son Ferry. They're gonna be back to Stuttgart and take over, retake over the kind of German operations of Porsche. Louise and Anton, the son-in-law, they're gonna stay in Austria and run this dealership business. Anton dies in 1952, and Louise is the one who builds this business, like Louise and her children. Turn that into this huge, you know, the largest car dealer network in Europe.

Doug The way the value chain evolved for selling cars, there's this very clear delineation. And in the U.S. at least until Tesla of separating the dealership from the manufacturer, there is no direct-to-consumer. Was that already, like, obvious at this point in history, when Porsche kind of has these two different companies?

It's an interesting question, I suspect the answer is more or less. In some brands, I bet they were selling direct-to-consumer, and some, I bet they weren't, some of the smaller ones. Maybe I suspect the reason this worked out is because Volkswagen didn't. I mean, these companies didn't want to be the ones who were distributing all these cars across and doing all this, they were focused on manufacturing.

I think there also might have been a technical reason, which is, even though this new Volkswagen was reconstituted as a company, it's only shareholders at this point in time were the German government. So both the National West German State and the State of Lower Saxony within West Germany, which still to this day holds 20 of Volkswagen, which is crazy. Yeah, yeah, they would IPO Volkswagen, I believe in 1960 or 1961, so it was.

Wow.

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Okay, so Ben, you hit on this a minute ago, what the hell? Why is the new, Western controlled West German post Nazi government giving this deal of a lifetime to these former Nazis? And it's not just we'll pay you for the cars.

You distribute that we make, we will pay you for all cars that we make, every beetle, regardless of whether you distribute it or not. Yes, yes.

To the German company, and then the Austrian company has exclusive rights to distribute it. It's a crazy deal, so here's what's going on. It, actually, as crazy as it sound, makes sense. So we talked about a minute ago, the iron curtain and the Soviets, like, it's so hard for us to remember now. But Germany post-war was ground zero for the Cold War, like the battle against the Soviet Union was happening right there, right next door. And so for the West, reconstituting the West German industrial base was of paramount importance.

95, right? You would just have no incentive to earn any additional dollars, right? And that's on the personal side.

It's it's equally bad. On the corporate side, any profits are taxes. So what are they trying to do here? They're trying to incentivize capital reinvestment in the industrial base, so they're basically saying to Portia and others.

Do you think there was some guarantee that the tax rates would lower someday?

Maybe, and I think they did. But as we'll see, Porsche becomes like, it becomes pretty institutionalized there of, like, don't take profits, instead reinvest them in new models and R&D racing to the great benefit of the brand. Yeah, so I mentioned one of the things that Porsche invests in over the years is race cars and racing, and this is super interesting. None of us are racing historians.

That and something you can buy and you or I would not be able to even operate it.

So a super obvious point to illustrate this is, folks are probably, you know, no names like James Dean or Steve McQueen. These famous Hollywood actors that were known as like, you know, they did all these race car films, that they were also professional race car drivers. Yeah, professional as it were at the in the time period, yeah, they competed in like real races.

Imagine Brad Pitt jumping in the Lemans, right?

They'd, uh, they'd come, well, I was about to joke they'd kill themselves. James Dean did kill himself in a Porsche 550 Spider, which Porsche would make a kind of dedicated of racing type vehicle. Although it was also a consumer production vehicle, the 550, that car. That never would have happened if Porsche wasn't incentivized to invest all their profits. Like, I mean, maybe you can say, I'll do, like the legendariness of that car, I mean, they sell for what?

They only made 90 of them in the end. And so, like, it was a car that, in theory, you could go and buy. But while the 356 was like the sports car that you could, gentlemen race, the 550 Spider was for people who like, or really like, let's go racing and like, do it. But, like you said, you could, a person could walk into it.

You kind of see this trend, this moment where you see the bifurcation between anybody can do it and what the very best of the world kind of look like. That seems to be true across everything in the world today. In the way that, like, what Taylor Swift is doing on the stage on her tour has nothing to do with. Like a person who picks up their guitar and is talented and plays at the local bar like she is the SR-71 pilot. And this, you know, I'm playing on a local bar stage is flying a cessna, and the machinery to do so is entirely different. In the same way that you're talking about car racing splitting at this moment in the early 50s, yeah, so back to racing.

We were talking about the Spider a minute ago. I got so excited about James Dean. But Doug, to your point. 356 is in 1951 and 1952. Win their class at Le Mans, they don't win it outright, right? Other bigger, powerful cars win it outright, but they win their engine classes at Le Mans. And these are, you know, yeah, they're modified a little bit.

But, like, you basically buy them, right? Yeah, then that was kind of a special thing, but that was, that was the point of those classes. It was that there were cars for people who could kind of go buy a car on the street and modify it, and.

I think this was pretty unique to Porsche's at the time. Certainly, you could go buy Ferraris, and Ferraris competed and whatnot, but like, again, like we were talking about, the Ferraris were a different thing. Yeah, these weren't 356 is, and I think they were probably also a lot more expensive than the $3,700.

Plus, an important distinction between Porsche and Ferrari in this era is that Porsche was largely focused on road cars. And then the road cars went racing, except for the 550, which was kind of built purpose-built for racing, and there were racing versions of the 356, but the goal was mostly road cars. Whereas Enzo, very famously, he just wanted to race, and he hated his customer, his road car customers, deeply. It wasn't his thing, he just wanted to race. He only sold road cars to kind of finance racing, and a lot of the road cars that he ended up selling were either based on race cars or just former race cars. That he would.

There's this great, great, great Ferry Porsche quote about this, which he would say later about the 911. But I think this also applies in early form to the 356. The quote is we have the only car that can go from an East African safari to Le Mans, then to the theater and then to the streets of New York. And like, that's such a unique thing.

Especially in this era, like, and it remains true. It's kind of like Porsche's thing, yeah, to this day. Like how relatively usable the car is in just about any setting. Like you can drive it to work, you can actually take it on a racetrack. That, like, has remained sort of an ether, whether or not there.

Yeah, I was trying to think of, like, what the right kind of other luxury brand analogy is, you're gonna? Porsche definitely is a luxury brand. It's not like we're making apples and oranges here. It's kind of like a Rolex to me. Is that really good? What do you think?

It's, uh, you buy those watches to wear them, you don't buy them to keep them in a case and ogle at, you know, they're steel. They're originally made for people who are swimming the English Channel or scuba diving. I think it's reasonable to also compare it to, like, continuing in the luxury world. Like a ramo, a suitcase. Those aren't that expensive, they're three times, four times more expensive than regular luggage, but like, they're not a Louis Vuitton truck, right?

And there have been, and we'll get to, and we in the 550 Spiders, one of them. There have been some portions that kind of go one way or another in the philosophy. But like, generally speaking, it's sort of a middle of the road. Going back to Ferry's quote about this exact thing can do all these things. Yeah, Doug, one question for you.

I'm gonna keep going to you for terminology, David mentioned. Lamont. What is that Lamont is like?

There are various car races that are considered sort of the big car race, right? Like the Indy 500 is the car race of that racing series. Lamont has always kind of been a place to prove technology. It's a 24-hour race, so you switch drivers. And it's always been a place where some of like. It proves, like, the endurance and the capabilities of a car and of a manufacturer over that time period. It's really serious, it's always raining and it's always a disaster, and it's in the middle of the night and it's difficult.

There's also this, like, Um, you know, a portion would, I think, probably advance this argument that relative to the other races, it's closer to like what you want. For a all-around car, that would also be a drivable car, because, like, fuel efficiency matters.

It's also a road race, so it's not on a racetrack, literally on. They closed down roads in the French countryside and and race on the road. And so there's like, some component of like.

So on the back of all this success, and like James Dean and Steve McQueen and all this. As you would imagine, Porsches start to become quite popular in America. So in 1954, Porsche, which I don't think Ferdinand and Ferry like envisioned, like, we're gonna sell cars in America. This wasn't part of the business plan. But in 1954, Porsche sells 588 cars in the U.S. which was 40 of their entire production for the year. And that 40 basically stays constant, goes way up for a while in the 70s and 80s, but um, kind of never dips below.

It's amazing to think that 588 cars was 40 of Porsche production.

I.

Agree with you, by the way, by your point, that they didn't really have America in the business plan. It's one of one thing. To provide some context is important to keep in mind. The number of like sports car startups happening in Europe at this time was significant. Most of which listeners viewers will never really heard of because they or died. These came up, they showed up, they, they raced a little, they sold some cars, they fail, and that there were tons of these.

Grew and grew well. Part of it was the incredible success of the cars, a big part of it, too, was the royalty on the Beatles.

So you're doing stuff like racing, you're doing stuff like looking international, you're like, what can we invest in that? Like, we're not sure if it's a Roi positive.

Because we know we got the money coming in. And beetle continues to be more and more and more popular. It only continues to embolden them to reinvest the right, so speaking of reinvesting as.

We get to the 1960s. Like the 356 is great. This is amazing car. But it's kind of, I don't know, Doug, where you would put it in my mind. It's kind of it's not quite a modern car, it's like.

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 are showing up. That were refining some of the principles.

Yes, so we're now in the 60s. Ford announces the Mustang Jaguars got. The e-type Chevy comes out with the second-generation Corvette, the Stingray and all these are starting to show up. All, yeah.

Austin He. Everything is like, Okay, there's a lot of pressure. Yep, so okay in.

1962 Ferry Porsche makes the decision. Like, 356 is amazing, you know, rebirth of the company. 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.

Well, Porsche, I mean, I feel that way. Every time I see a Panamera drive-by, I'm like, why does Porsche make this car? But I see them driving by, so that's why they make.

China is why they make that. We'll get to that later. So, the next generation of Porsche's Ferry's son, Ferdinand, known as Bootsy, 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. Probably the most important reason was kind of, 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 everybody will be happy here. Anyway, they decide to cancel the project and double down on sports cars.

No, the 901 I David, I'm not familiar with that model. Yeah, what is that?

Well, this is why I'm Doug, I'm sure you do this. Oh, this is a famous, famous story. I had no idea. I think most people have no idea.

0 X. And, in fact, all Peugeot cars, even to this day, are named 205, 206, 207, 208. That's the two series that 308, 408, 508. And so they trademarked them all, just knowing that eventually that would, that would happen.

Unbelievable. So, I mean, it makes sense. Porsche's like, Well, what do we do? We can't really not sell in France. I mean, Frank wasn't like the biggest market, but it wasn't a small market.

The story that I hear, have heard about this is that they said, Well, we got these badges that say nine, zero and one. Why don't we do nine, one, one, because we have the nine in the water? Hence the 9-11.

I know one, so a couple details that I got on this from Excellence was expected. I believe could be wrong on this, but I believe 901 was the name of the engine project that Ferdinand Piaf was working on. And I think, I think that's the origin of it to yes in Porsche allure. It's that, like the reason these model numbers are like these, the engineering project, right? I start, but that's totally apocryphal, like they jump around, go forward and backward.

It's like, when you're starting a new company and you're you're sending your first invoice, you don't call it.

Yes.

Uh, so funny. And to be clear, so I admired designs of Porsche cars before doing the research for this, but knew basically nothing about the company or its lineup. I've certainly never owned one, and it took me a long time in the research to realize that. There are a lot of car designs that start with nine that are all 9-elevens. There's like, Yes, I don't know, I didn't write them all down with the nine, six, four and the nine, five, nine. And it gets complicated because what ends up happening?

Just like happens every car is, they start to get redesigned as they get, you know, there's the years go on, they need newer models.

But which, you know, version it is, and not all 9-elevens say, 9-eleven on the back, you can't even like.

Maybe that's part of the success of. There's like, sort of a language you have to speak in order to, like, get Porsche to an extent, and.

There's something to that. Well, I think it's really brilliant. I don't know how much this is intentional versus it's evolved this way with the brand, but, like to me, it's just so brilliant. Because there is this tribe language. To Porsches, if you see a 9-eleven, you know instantly that it's a 9-eleven, it is iconic.

Special? It's important to keep in mind at the time you didn't know, right? It was just like this thing. This like sports car they had come up with, and again, there were a lot of sports cars and it was whatever.

Boxer engine, which was a great engine that Ferdinand Piëch designed to go in this first 9-eleven. There's something like cool and unique to that. Like, we've been talking about the difference between Porsches and other cars here. This is a performance engine, but it's a six, right? it's not an eight, and it's rear mount, right?

So the 356 had a boxer for it to explain what a boxer engine is. You know, a lot of cars, most cars have, well, these days, most cars have inline engines where the cylinders are in a line. A lot of other cars in the past have had V engines, where the cylinders literally make a V for balance, the boxer engine. The cylinders are literally like across from each other.

Strip things down to the core essentials of the car an average person can walk off the street, buy one, operate it.

That's right. Drive to work, have a great time. It wasn't crazy fast or anything else. Yep.

Now the 356, the old 356, it had four cylinders, and so now the 911 have six cylinders. And, like you said, like, it's not a world-class powerful fast car, but it's. It elevates the 356 into a much more like. You can really achieve a lot more with this than you could write the 356 is. This becomes super important from a business side for Porsche because they priced the 911 about 50 higher when they had the 356.

So the plan was originally to have some of the 914s be branded VW.

Yeah, some of them be branded Porsche. Volkswagen had made a little sports car called the Carmen Ghia, yeah, previous to this, like in the 60s, and so the thought was they wanted to replace the Carmen Ghia. Porsche wanted an entry-level car. Let's jointly develop it.

But the decision was made, like you said, the new VW CEO. He actually gets a pretty good deal out of this, so he deepens the relationship with, Yeah, Ferdinand. He gives the car fully to Porsche, but in exchange, VW takes over all of Porsche's distribution in America.

Reintertwining these companies just a little bit. 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.

Well, if history were a straight line, what you were saying would come to pass. Unfortunately, it's not a straight line, or fortunately for for drama on our show.

Porsche's 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.

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, in this case now.

There are technical mid-engine cars, where the engines 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.

I think you have a video where you say the Cayman GT 4 R.S. which is the Cayman at the Boxster. The same, it's the same lineage we're talking about. Here is the best modern Porsche.

Yeah, I feel that way, because the 911 is the Porsche.

Don't hate us.

Yeah, I don't know Doug. I feel like I've seen multiple of the best.

Every car is the best when it comes out, and then it's superseded by the next day, there you go.

One of the differences between YouTube and podcast world is titles, and SEO is really important in the YouTube world, right?

And I don't need to take advantage of it as much as some like my colleagues. Wow.

It's a while around this topic here of engines. I got to imagine this is one of just the huge sea changes that is coming with electrification of performance cars. Right? Like, yeah, a whole different set of calculus, like, it doesn't matter, there's no engine anymore.

Yeah, although you still, even in electric cars, for a performance electric car, you still want the weight to be as close to the middle of the car as possible. For a similar reason, honestly, but the engine component and all that other stuff. Boxer Yeah.

It's gone.

Working actually producing the cars. But the other Ferdinand.

The son of Louise and Anton was hired by the German.

So yeah, he's hopped over. He's, you know, in the one hand kind of like this dark horse kid, right? He's the Austrian side of the family. You know, you've got the car dealership business, all right? But he's also proved himself as like, yep, an incredible engineer, executive. He was in charge of this 914 project.

It's 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.

There's some direct quotes from a lot of them in Excellence was expected. And like, as you can imagine, it's a very delicate topic. And they're also German, so like, they're very, you know, prim and proper, but I think very. He basically admits. He's like, yeah, there probably was a better solution to this. But like, it did mean that we could kind of reunite as a family. And like, I think he said something like. There were still tensions, but we could go to each other's birthdays again, you know, something like that.

Crazy is a rational is still, it's crazy, crazy decision, because, like you said, they were, they were killing it. They were the best family business until this point, and it would have been a very successful one because of the efforts of the family. And especially you got for an NPS. Now. Looking back on this, we know what happens to Ferdinand Piazza before get to. But you've got him on this up-and-coming track where he's so legit. Oh my god. And it's like, been so pissed? it's like, No, you're out crazy.

I mean, he definitely was so pissed. So let's talk about what happens here. Bootsy, he goes off and.

That's the path. Then he goes down. The same thing happened in the Gucci family for anyone who's seen the The Gucci movie with Adam Driver. And there's sort of a family member who wanders off and does some like, effectively, like, brand licensing. He's like, I'm gonna take the family name and make some money off, yeah, which is obviously what I.

Think he also was a very talented. I mean, just I'm to gotten the 9-eleven forgot. It's like he's talented. But. But yes, trading on the name here. The other Ferdinand PS This guy, Oh my god.

Volkswagen and Doug At this point in history, What does the Volkswagen group own brand wise? Yeah, that's an interesting question.

The brands that we know, I think it was just Volkswagen and Audi, Audi had been a separate company, Audi had been a separate company. And it's also important contextually here to to make one really important point about PS and Audi. At that time, Audi was a joke.

Infinity like, I know you, you owned a Kia, right? It's a bit like, you know, Kia and Hyundai are trying to enter the luxury market.

Yeah, really, on that level of like, yeah, I'm gonna stick with Mercedes. Yeah, was the Audi.

55,000, the thing that kind of saved them and.

Brought them back on the contrary, actually, that car was the one that had the. The famous scandal in the United States, where the 60 minutes found that it unintended acceleration would accelerate, which turned out to kind of be unfounded. But their reputation was like, severely, severely damaged by that. But that was this era, that was this era. Audi needed to turn around.

So p.

Volkswagen. So you get the situation where they kicked him out of running the company and then he goes.

Running.

Wild, I mean, he oversaw and launched the new beetle, like literally his grandfather's legacy, the beetle he turned over the beetle model to the the new beetle. How long was Ferdinand Pietsch running?

Volkswagen a long time.

1993, I believe he was chairman until 2015 2016, maybe.

Develops this reputation of being this just iron-fisted, like I can only when you say. I can only imagine how upset he was when they made the decision to end the family involvement. He has this rep of being like, incredibly angry and everything must be to his standard, and so I can only imagine how angry he was. He also. He had 13 children.

Existing. Yeah, restarted. I mean, Doug, you kind of said, but to put a bow on it of what a baller PS was. In 1999, the Global Automotive Elections Foundation, they award him the Car Executive of the Century.

And by the way, that's like uncontested in the car world for an NPS. Just looked at as like, exactly what you're saying. The guy, everybody knows his impact, everybody knows how effective he was, and.

The family's Porsche is just like, Yeah, now you got to get out of here. Unbelievable. Maybe he wouldn't have had the motivation to do, who knows, who knows?

Just wild. But Volkswagen much bigger company than Porsche, right? Yeah, he got kicked out of his own company, so he went and ran a much bigger one that competes with it, and then he grew even bigger. Yeah, yeah.

Yeah, wow. So back to the Porsche side, this decision was was just really not good or 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. Ernst Fuhrman becomes the first non family member CEO of Porsche. He was actually part of the original Elite Engineering crew back in the Sawmill and Gamoon.

Like it suffered from that stigma, for sure, the saving grace was it was actually a pretty good car to drive. 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. Yeah, so, like, people, people, right? Yeah, we'll take this as the entry Porsche of the time, but it wasn't a 911.

It wasn't a 911, and it wasn't a 914 either.

Like, it was a totally different thing. And the 914 was a small, lightweight, compact roadster removable top, the 924 was a. It was definitely a different kind of situation.

So Furman had a quote on it when gonna, you know, asked about, like, what is this? 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. I mean, I guess that's true, right? And that's also true of the 914, but like, can you come up with something?

Can you come up with something that is not using the word not to describe? Who wants it?

Well, how about you say who would want it? Yeah, this is for the poor customers.

Right, right, right, and and I get it, but also it's just like in in whole philosophy of it, it's not a Porsche. Even more concerning is the 928. So Furman makes a decision as the new CEO of the company that it's time to replace the 911 and.

That was like a federal report that came out that said, like, basically all cars on the market are unbelievably unsafe. And people, our citizens, should not be driving around to them.

And so all cars need to change and regulation started to really show up. Like in this time period, that in the car world. The 60s are kind of viewed as like the last bastion of just like anything goes. And some very special cars came out of that era. And the 70s, everything started to get. The oil crisis was a big factor because that started to screw with emissions. And then you had all these regulations about bumpers and safety and seatbelts that you know, we're very important and beneficial. But at the time, it was like other killing our fun.

It is astonishing how much safer cars have gotten. I mean, don't you look at these like cute old Porsches? They're so much smaller, right? And you look at the big ones day and you can lament. Oh, cars have gotten so big, but cars have also gotten so much safer far, and they're faster than they were back then.

So it's it's kind of the best of all worlds, and in most cases, they're more efficient also. Hmm, totally.

So, in 1978, Furman introduces the Porsche 928, with the stated intention that this is going to eventually replace the 911.

I want to defend the 928 a little bit here because it was a. This is an important moment in Porsche's history. When we look back on it now, it seems insane that the 911 would go away. Like, how could that be? But it's important to keep in mind that, like the 356 went away, and that was the Porsche.

So the 928 comes out in 1978, and.

Rising tide that lifts all boats, lots of disposable income. Wall Street is ripping a lot of pinstripes. Yeah, it seems like actually a really good time for fast cars.

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 Piazza families. When they exited operationally from the business, they still own the business, so they're still like the supervisory board.

I know you have some first-hand experience of the legendary Great, the Great, one of the great stories in the auto industry. The 928, though, I just provided an impassioned defense for it. It would never felt like the right car to Porsche, I'd never felt like the right car to. Especially the employees who had kind of fallen in love with this 9-eleven. I did been in production now at this point for probably 20 years, 25 years maybe, and the 911 was Porsche.

We had timeline and this is like a like on a whiteboard, yeah, like on a whiteboard or something to the wall, 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, you know, it should be replaced because it's old, you know, that's the thinking at the.

People, and that's what was said, like that one thing in German culture, we're like, when something has been decided, it's been decided, an edict has been given and the cars 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 gonna do, but the morale was low and they knew this. And so Shoot 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 all the way onto the wall. And extends the 911s timeline, you know, indefinitely, including on to the literal wall.

Complete 180. And this would be a good story to invent if you needed.

Right, especially if you're trying to, you're trying to like, boost the the reputation of the CEO among the among the workers.

He drew the line right, and there's a perfect line, which is Shoots just looks over at. The chief of Engineering, goes, Do we understand each other?

Right, and then he walks out. I always wondered if the story was true. I worked at Porsche ten years ago and had become friends with Porsche's general counsel in North America. When Peter Shoots retired, he moved to Naples, Florida, and the general counsel at Porsche and Peter Shoots 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?

That's awesome to get that validation because there's so many of these stories that right on the show. We're like, we're like. This is probably apocryphal, and there's really no way to verify it now.

Of course, if your shoots, you'd want to tell the story because it's become so famous, but you know, it's not like, at least the story is real. It's a great story.

Yeah, I mean, literally he extended the line right of the production line onto the wall, right? So do they keep making both cars? Yeah, so they kept making, I think they made the 928 until 1995.

You'll get into more economic realities of this situation as the 80s kind of draw to a close, whatever. But the problem with this decision was the company was planning on ending the 9-eleven. And so by drawing that line, symbolic though, it was, we're gonna keep doing this. It also committed a lot of the company's resources to now refreshing something that they hadn't planned on refreshing, yeah.

So in the go-go years of the early through mid 80s, no problem, right more. Let's we'll do it, we'll do an ICO, we'll issue some NFTs. 2021 Yeah, exactly. In fact, I think shoots was like, let's make airplane engines.

It's not a good situation because now you have three aged products and so the economy is slowing and your cars are not really competitive. Yes.

So shoots, 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..

Japan was kind of having an economic boom. And as a result of that, they started making these sports cars the exact sports cars you're describing. So, the Nissan 300 ZX. Just 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.

We're 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.

Yeah, and again, the 911 isn't threatened by this, right? But the 944, 968 hell.

Yeah, is threatened by race, like nobody's buying those. And the 928 by then was so old that sales were a trickle by 90. There were three products, which was the night, the entry level, which was the 944 that became the 968, then there was the 911, which was actually the nine, six, four, nine, eleven. By that point.

That nobody wanted, that nobody wants. They literally only made three cars, and they were all three number nine cars. It was a complete disaster.

I mean, the Porsche's never named cars, well, even now. But like, yeah, at the time you had again, you had to like, speak the language you had to like. And by the way, the 911s all said Carrera on the back, so everybody's like.

All carreras are 911s, but all 911s are not carreras today. That has changed over the years.

Then there was a trim level of the 924 called the Carrera, it was actually called the Carrera GT, which they later named this car. Right? None of it. It was all confusing. No, you had to be like a German who was into this stuff to, like, figure out the precision level with which it made sense.

Huh? So, as all this happens, Porsche's now a public company. The stock price starts to decline precipitously. And they floated 30 of it, they floated 30 now. No voting control, yeah, but the company.

It was an unbelievably difficult time. And it's kind of funny to think about because now people think of Porsche as Porsche, like this crazy company. It's one of the hottest brands, like you said, probably most, but one of the most valuable brands. And it's only 30 years later, only 30 years later, it was dire straits. I pulled up the U.S. sales figures for Porsche from this era.

Even though the public doesn't have any voting control, everybody starts to think the only thing that can happen here is this company's gonna get bought out. One equity research analyst, actually in a in a research note said that he thought there was a 98 chance that the families would have to sell and that they would accept, you know, some amount of value for their stake, rather than just have it go to zero. So Shoots gets fired, but it's not like that fixes anything. I think it was 1987 when he gets fired. Over the next six years, they cycle through, I think four, three or four more CEOs. Brutal.

It's actually the 959, and another interesting component offshooting that, but the 959 comes out at that time. Which is like their first supercar, so sort of the predecessor to this car. And it actually wasn't commercially successful, sort of in keeping with Porsche's world at the time, but it did. It was kind of a testbed for some new technology, including four-wheel drive in a supercar, which has now pretty much become standard fare. The 959 was really the first car that had that after the 959. Porsche was so desperate, though, that they started taking on projects for other manufacturers. And so it's known in the car world, but not as much in the general world.

The sedan.

That's in the Porsche factory in Zuffenhausen in Stuttgart who designed it. It was a Mercedes car, so it was a Mercedes E-class, like a regular Mercedes sedan, but with a larger engine. And Mercedes felt that having Porsche involved would give it some sports car credibility, Porsche literally produced the car, and then Audi did the exact same thing. How do you need more credibility?

Wow, and it was literally like you have empty production lines, so even though you're not gonna make a lot of margin on this.

Let's at least like you can be our contract manufacturer, yeah, like when you have union contract.

Maybe maybe this was part of the circumstance. You have union contracts to get pay, these people, whatever here. You're not gonna make money, but like, let, we're doing it, and it's something, it's a project for you.

We'll keep your lines go instead of going losing money on having to pay, though. Yeah, right, wow.

It was a tough era, it was like, indescribably tough. And I think this is lost on a lot of younger people who have only seen Porsche in the world of crazy expensive cars. And all the money they charge for colors now and all that. There was a period where it almost all came to, and not that long ago, not that long, wasn't like this was in the 50s, like we were alive.

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So David, this thing that Doug just referenced to me, the money they they charge for colors. You can do a thing today where you go to buy a Porsche and their online configurator, and they have the paint from every single Porsche ever produced in history. And so you're like, you know, there was really something about this particular 911 in this year. I really loved this paint. You can pay them something like $15,000 for your Porsche to be in that particular.

Imagine the Porsche of the 80s, early 90s, like commanding that kind of. It would never have happened. But now the brand has changed so much that, like 15 grand for a color. People are like falling all over the right to do.

It now, why not? The other thing that it's emblematic of which I think we haven't really talked about yet. Of what makes Porsche special is this unbelievable heritage, like the design language that they use. What the 911 is you mentioned earlier, they don't really change it that much from, you know, generation to generation. There's this sort of obsession with put something out there and then spend years and years and years. Tiny little tweaks and refinements, making it the like, platonic form of what it can be.

Right, if you, as a child, wanted a 911, guess what? It's still around, it still looks about the same, and it's still the same level of desirability that you wanted back then. It's so funny.

I feel like the sales cycle for a 911 has got to be 40 or 50 years, right? Like kids fall in love, and then you can't really buy one until you're in your 40s or 50s.

It was always a weird aspect of the brand that, like, you actually weren't necessarily only marketing to like adults, you also had to market to like people. Who would cultivate this passion. That you knew that would become a thing later, when you weren't even in an executive, or you weren't even working there. But, like, that's part of the brand is like, hooking people young and making them feel like this is a cool thing.

So Doug, this thing that we're talking about, this idea that if you loved Porsche ever, we want to deliver on that promise today. Do you feel like that consistency has been there since the very beginning, or do you feel like that's something they learned in their like rise from the Ashes after this?

80s That's a good question, but you have to assume they didn't expect, you know, in 1948, that they would ever even be in the position to deliver that right in 1950s.

Also, like you said, I haven't quite thought about. But I was planning to tell this story of like, Oh my god, Furman wanted to kill the 9-eleven. What a dumb idea. It was like, natural, they killed. the natural thing would have been to kill.

But at that time, it seemed like, you know, now, all these icons have emerged, and all this lore has emerged over the years. But when you really think about, you put yourself in the perspective of those eras, okay, so.

Porsche's in this tailspin, the two eras that happened next are both equally amazing. So in 1993, a guy named Wendelin Vida King 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 against all the, you know, shoots and Furman era decisions.

This is kind of crazy. Also, what kind of company makes one product like, I mean, seriously, what are they? Did they believe that this is a transitionary period, or do they believe like this is the long-term strategy?

It's not like we. The King was like, I am a cost cutter and I will cost everything down. Like he is, much like he has big ambitions. Okay, big, big, big ambitions. This is a transitionary moment. He does want to expand the Porsche model line.

It's not a convertible. Yeah, no, it is. it is. The monster was a full convertible.

Oh, the interiors were, yeah, like the steering wheel and 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 9-eleven had a coat hook on the back of there, you can't put a coat in the boxster. The seat is right up against them, but they shared everything, ah.

Interesting So, Doug, what you're alluding to? This is the Porsche Boxster, which becomes a huge success. And I think the reason for it is that it genuinely is to anybody looking at it like, this is a Porsche. Yeah, not that stupid quote that Furman had of like this is for people who don't want a 911 and don't care about performance, it's like.

It shared the design language, and I think Vitakins thought was the the entry-level. Porsche has always been looked at as a second-class citizen. Like, like it, like Furman literally said, which was true, I mean, everybody thought it, but he said it. How do we make it not look like a second-class citizen? The answer is make it look like a 911 and make it literally, literally share.

You know, headlights and hood. And also from a production and profitability and operation standpoint, this is so great. You're now sharing so many components, not with another auto manufacturer, but with yourself, right?

So, Doug, what's the difference, then, at this point in time, between the 911 and the new Boxster?

The thinking was that they would continue to move the 911 upmarket, more expensive, more power. So the Boxster comes out in 97 for the 97 model year. And it was a huge deal. I mean, it was on the cover of every car magazine, the whole Porsche has a new car, this is incredible.

DENON And I think maybe even, especially now with the Boxster and the Cayman. The Cayman is the hardtop model of the of the Boxster. It's also a different kind of experience philosophy, and it has over time.

It has evolved even more significantly from 97. Now, the 911 is kind of playing more of a luxury car like touring car role. Almost were, you know, but the special colors and the stitching and all that. And it seems like the more. Porsche is focused more of its sort of true sports car efforts on those the mid-engine cars, as they call in the Boxster, in the Cayman, yes.

It's the entry-level Porsche, for sure, but it's also it's not like you feel like crappy. If you're buying one, you're like, Oh, you know, I'm buying the best version on the market of this particular product. And it was mid-engine again.

So you, you know. Arguably it was the correct place for it. It felt like a true Porsche sports car for the first time. Forces, you know, entry-level car felt like that in decades.

Yeah, so VT King has this awesome quote about the strategy for this. We didn't want to flee from the competition into higher prices, meaning like, not be in the entry-level market at all, he says. We don't want to be Germany's Ferrari. We don't want to be a big fish in a pond that's shrinking, but rather a growing fish with more room to move in a larger lake. I feel like Vt King and Don Valentine of Sequoia Capital would be like brothers-in-arms.

SUV 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, I was like, So it's like a Toyota.

It wasn't the most attractive car, there's no question about that. Everybody hated the design. And you know what, it's been 20 years, it has not grown on you.

Yeah, the macan looks really good, the new, the new kinds look great, too.

Honestly, ever since they redesigned in 2011, but those early kinds. You see him now and you're, like, still ugly.

It also just doesn't look like a Porsche to me. Like, there's not enough that's brought through from the heritage of the. How do you describe the back on a 911, right?

That's sort of like a thing. 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 nights for the 1998 model year, called the M-Class, which was a. That was a revolution and they built in America, which is a really big revolution.

Part of this was a cultural, you know, German thing, for sure, but 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? 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 Cayenne's actually have an unbelievable off-road capability. They have a two-speed transfer case.

It was a hit. Yeah, I think a few things to say about it. There wasn't anything else that was like, I can spend a hundred thousand dollars on an SUV, 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 like 40, 50 grand, and they were just at that time.

SUVs were becoming so important in America. I think there were just like a lot of wealthy people out there and a lot of status focused people that were like, Yeah, there's an SUV I can spend a hundred grand on. Like, Hell, yeah, take my money.

And also that there's a practicality of I kind of need a minivan, but I don't want to drive a minivan. And so I'm driving this new emerging class of SUV. But if I have money, I kind of want the Porsche version of it in Porsche. Must have been thinking.

Hey, we've got all these customers who love our sports cars, we have this brand name that's always been associated with performance. How else can we hook? These people have families, right? And so and in.

Yeah, and the danger here. If you're at home and you didn't know how this ended and you were a smart business person, you'd be thinking, well. This is gonna borrow against their brand equity, like this is gonna drain the bucket, not add new love to the brand bucket. And the magical, incredible, amazing thing about Porsche is they have doubled down on this strategy, it has become a huge part of their business.

They had given a huge shot in the arm back to the performance with the Boxster and the 993 9-11. And then also done the SUV, which they partner with Volkswagen. With Ferdinand Piaget. It kind of makes peace.

She's running Volkswagen at the time, comes out with the Touareg, which was Volkswagen's SUV, and that's that served as the basis for the original Cayenne.

Really, yeah. Portia starts a new whole new production facility in a new part of Germany in Leipzig to make it. And then ultimately, shortly thereafter, makes this car. The courage at the same, and, you know, action facility, that's right.

They were built in the same place. And, you know, I think that goes back to the point you just made that Porsche, the the SUVs. Yes, you'd think you come out with an SUV. It destroys your brand credibility. We've seen this with Maserati.

They're like people who are just listening to the audio. This is the Carrera GT sitting behind us, the carriage.

It's okay.

We've alluded to this amazing machine behind us, like, what is this thing?

The Carrera GT, in my mind, is the greatest driving car ever built. And a lot of people actually said it. It's not objective by any means. But a lot of people who have driven, you know this, and a lot of other cars feel that way about this car. It was a true analog supercar, which means manual transmission. There's very few driver aids in this car like you'd get in a modern car. Stability control, traction control, that sort of stuff is either non-existent or heavily dialed down.

It's a little bit like the original 911 engine that Burton MPs designed for racing.

But then only made it into the right. It dates exactly like that. The crazier thing here, though, being in that time, you could do that because there were no emissions regulations. The concept of taking a race car engine today and putting it into a road car is just non-existent.

My sense is this car, too, has a reputation, partly because Paul Walker died in it of like, unlike a lot of Porsches and the 911. Like. This is something that you need to be really know what you're doing to operate this thing. You can't if you let it get away from you.

Yeah, it has a reputation for being difficult to drive, which I think is somewhat unfounded. But also, especially by modern standards, cars have gotten so much more powerful than this. You know, a new Audi RS3, which is just an Audi says, high-performance Audi sedan that you can buy for 65 70 thousand dollars. It's faster than this car zero. It's not that crazy by modern standards, but at the time, it certainly was.

Something, yeah, but I guess, like today cars like, there's so much stuff, technology in cars to design, to keep you from like doing stupid stuff. And that this car was kind of the end of.

That era, and I think that's why it's so special. It was like the last of these cars that really, you could get into trouble. And and Paul Walker died in one, and there were some other deaths too that weren't quite as high-profile, but there were some serious accidents and some people died in them. And and maybe still will, you know, I don't, it's it's still out there and it's still a dangerous car.

The weirdest thing about high-end cars that have lore associated with them is typically, when someone high-profile dies in it, the value goes up, right? It's like a like, an artist, it's like paintings.