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.

Yeah, I think that car people had always known the car heads, kind of this reputation.

They weren't like lawsuits against Porsche about the Porsche got sued.

Yeah, it went to jury trial. Porsche was found liable, at least partially liable. Wow, and that's a big deal if you're an automaker, because they got 1300 of these out there, right?

Was, um, and this is the value of the car now, like production was initially intended to be higher than it ended up being. They stopped it early and so they had a they had some some weird issues happen.

There was a changing regulation that forced them to build a lot of them sooner than they thought. So they ended up flooding dealerships with them earlier than they expected to, and the car didn't sell well. When it first came out, the sticker price was $440,000, and they dropped fast. You could get them in 080708, you could get him for 250 all day long, and now you can't. They don't exist under a million dollars.

Apple stock or Career? Current GT would be a lot more fun to own.

But it would have they all completely took off. Wow, it's funny.

I thought that this, you know, was gonna be a fun little digression about the Carrera GT, but I realized now actually, this is a super important point to the business history. While they were drawing on the brand equity to make the SUV, this was a big part of putting cash back in the bank of the brand equity. Yeah, and to do it on the same production line.

It also helped legitimize that facility because up until that point, except for the ones built in Austria, all the Porsches had been built in Stuttgart. In Zuffenhausen. In that factor, that's same factory for all these years, and so this car helped legitimize. Like, Oh, we might be making a factory in east Germany where we're building SUVs. But we're not straying too far, we're still doing our thing.

So this point is an interesting one because it is something that other luxury brands do as well. I remember reading when Louis Vuitton first started coming out with the more approachable wallets and clutches. And ways that you could tiptoe into participating in the brand story. They were also releasing $100,000 $200,000 special handbags that were new products or new collaborations with other designers. That, you know, we're still Louis Vuitton, we.

Which I'm sure we'll talk about shortly. Oh yes, so on the back of this, like, incredibly bold plan and turnaround and success by Vita Keg. I mean, he becomes a legend. And Porsche goes from death's door less than 400 million euro market cap when he takes over to by 2007, Porsche's market cap is 32 billion euros. Better investment than a Carrera GT.

So they never had to have any like help once they scrape that bottom of whatever. It was 400 million dollar market cap.

Nope, Porsche is saved, it will be independent forever, families will never have to sell that. Equity research analyst can eat his words.

There's another chapter to the story. So that's a hundred X market cap growth. is that right? Did you say three hundred million to thirty two billion? Yes, that is a hundred x.

Market cap growth in a decade.

Occasionally, there are these hundred baggers available in the public markets. And like, you only know about them looking backwards, but like, it's crazy. You don't have to be an early-stage venture capitalist to find these. They exist elsewhere.

Sometimes portion of all things, of all things. Oh, I suspect. In most of these cases, though, to take advantage of it, you would have had to have kind of been insane like to have invested in Porsche at that point.

Even if you had told a person in 1993, Hey, this guy's coming in, he's gonna kill. The entry-level stuff, go back to doing entry-level stuff and then do an SUV. You'd be like, how do I get out of this?

Because he was the fourth CEO, it would definitely. I don't want to be any part of watching its straws.

It would seem, but it's like buying Amazon in 2001 or two, when things looked the absolute bleakest. Like, that's how you could have gotten a hundred bag around the public markets, maybe even a thousand at this point. But like, come on, who would have actually done it?

Yeah, and the 32 billion euro market cap, it's not crazy, because by this time, Porsche is doing almost two billion euros a year in operating profit.

Turns out, these SUVs and making only supercars is a very profitable a lot of margin there and.

China was starting to take off at this time, too. So the final sort of chapter to the Vita King era on the product production side was the Panamera. The sedan Porsche makes a sedan now, Doug, I'm curious your thoughts on the Panamera. I had always also been like, Porsche made a sedan.

That has become especially true as Porsche's business and all luxury brands business grown in Asia. At the time, though, I think they just they had an SUV, they had done that, so it was like, all right, you know, sedan is the next, the next place. We want to compete.

We have a very particular way that we do things in a very particular market, we serve with a very particular type of product to like. Let's have a pull a full product suite.

Just like everyone else, probably that 100x growth, don't you think? I mean, I think they looked at it and said, Holy crap, Boxer made us a ton of money, came and came. It made us a ton of money.

It would have worked and did work. It was not what brought down the company, not at all. Like you think, like, if you were naively following along, you might think. And then they got too big for their Britches. And you know right. They expanded the product strategy too much and the brand came crashing. Like, No, no, no, like this works and it, it worked beautifully, just ultimately under different ownership. So let's talk about what we've been alluding to all episode here.

We're now in work, the first time to pull together the best guy over at Porsche over, let's do it again. So I.

Think Ferdinand Piache took over as CEO of the whole VW group, I believe. In the same year that Vita King became CEO of Porsche in 1993. Fernand's obviously much older, coming towards the sort of twilight years of his career. You can see how this would make sense if it were true, whether it's true or not.

Porsche Yeah, the sitting active CEO of Volkswagen, as a family member of the Porsche Piache family, has voting shares in Porsche Yes.

And he's on the board, the supervisory board of Porsche, so they thought they were done with the family drama. Here it's.

Turns out there's, there's another chapter. So isn't it obvious, then, that it would be hard for Porsche to take over Volkswagen?

Well, Porsche, and thus the families needed something to do with the cash. And at the time when they start this, VW shares are a pretty good investment, like they're not trading super highly, like it's pretty clear to them that it's undervalued, and VW is a critical partner to Porsche. So I believe certainly, certainly to the public and probably also to the families. Vita King positions this as like, Hey, we're deepening the partnership. They don't announce, like, Hey, I'm trying to take over VW, you know, out of my seat at Porsche. September 2005 Porsche spends four billion dollars to acquire 20 of the VW group on the open market.

So they're buying like the rights to buy shares in the future, and that's usually ways to get around regulatory stuff, right? Like, then you're not exceeding caps if you're buying derivatives rather than the shares themselves.

Yes, and in VW's case in particular, there was actually a law in on the books in German law called the Volkswagen. Oh, yeah.

This is great.

That was designed to prevent a takeover of VW because the state of Lower Saxony still owned the 20 share in Volkswagen. Still does to this day. And it was considered sort of a national treasure, and they didn't want it to be taken over by corporate raiders. They didn't envision that it would be another German auto company that would try to take it over, so it was impossible for an actual direct takeover to happen.

I'm literally gonna read from the Wikipedia here, because the Wikipedia is extremely well-written. Under the Volkswagen law, no shareholder in Volkswagen AG could exercise more than 20 of the firm's voting rights, regardless of their level of stock holding. This law was supposed to protect the Volkswagen group from takeovers. In October 2005, Porsche acquired an eighteen point five three percent stake in the business, and in July 2006, Porsche increased that ownership to more than 25%.

Yes, and part of the reason this all was able to happen is there was a lot of speculation that this German Volkswagen law would be illegal under new EU regulations in 2007.

Porsche now owns more than 50 because they had kept buying after that 25, using all the cheap debt, and they got all the way up to 50, right?

So that only leaves 30 left. Then you've got all the insiders, like, you know, PS and everybody else. Like, who knows how much equity they hold? Plus maybe some long-term holders or funds that aren't gonna sell. The amount of VW shares trading hands on the open market shrinks to pretty close to zero. Um, we know that, you know, markets are supply and demand, just like this car sitting behind us.

Volkswagen, like, briefly, became the most valuable company by market cap in the world. Yes, they did.

So as all of this is happening, Lehman Brothers collapse.

Through the roof, there's all the demand for borrowing the shares to do the short selling.

So you would think that this is like the best thing that's ever happened to Porsche and Vita King, they now own more than 50 of the most valuable company in the world. They're invincible, I believe. The threshold that they needed to get to was 75 in order to consolidate VW's financials into Porsche. And so they had announced that their intention was to buy up to that threshold and to get there. So you think this is great, but this is terrible.

Why can't they sell? Because if they sell, they get a bunch of cash by not liquidating that many shares because it's so valuable.

And they're not gonna be able to sell that many shares at this price before the.

Right, so they basically can't get who's gonna be buying Lehman. Just happened, right? Wow, fascinating.

So at this point, yes.

Ferdinand, Good old Ferdinand, who hasn't moved a single piece on the chessboard. No, he's just watching.

He's on the Porsche Board, and he is still chairman of the VW Board, he's no longer CEO, but he's still chairman of VW. This is when he turns on Vita King. So he and Volkswagen announced publicly to the market that they no longer believe that Porsche is a financially viable entity.

As a deep, trusted partner, yeah, we believe, and.

They say that they have to say this because Porsche is a greater than 50, you know, owner of VW, and so they, you know, have to disclose this in the market. And that as a result of this extraordinary circumstance, VW, led by Ferdinand, is willing to bail out their partner Porsche and save them by purchasing the Porsche operating company. For, you know, the neighborhood of three to four billion euros to, you know, get them out of this predicament.

Wait, and then, just to unpack the statement a little bit more, what he's basically saying it to, like, make it more explicit, is a key partner of ours. Went so deeply into debt to try buying our shares. Yes, that they can't service that debt and are now about to be insolvent and default on loans. So therefore, we will help them out by what is it buying them for?

They they floated a price of three to four billion euros, which remember, like, a couple months ago, this company was trading at 10x.

Whoa, this is literally Ferdinand saying to Vita King if you come at the King.

Exactly what is going on? Yeah, whoa, indeed. So there's a whole flurry of negotiations, you know. This is all against the backdrop of it being October 2008. Within a few months, by January 2009, Vita King is gone as CEO of Porsche.

VW Group So Porsche SE, this new holding company they created, it was buying VW shares.

Yep, already owned 50 of VW, and then VW paid eight and a half billion dollars to buy Porsche. So the families own 50 of VW, and they just got eight and a half billion dollars for Porsche. So they already were pretty high up there in the rankings. But after this transaction, they are now in the top call at 15 wealthiest families in the world. Oh my God.

So post both tranches. After Porsche AG, the operating company, is fully owned by VW. What does the family own?

32 of the VW Group, which remember now also owns Porsche, but they have over 50 of the voting power, so they control VW Group.

It's so crazy. VW the company bought Porsche the company, but really Porsche the family.

Owns it all, owns it all, and they just got an eight and a half billion dollar cash out. Wow, yeah, crazy. So here's the thing now. We're now in 2011, when the second tranche of the buyout happens.

We can still make the best cars in the world, yeah. And the 918 helped to introduce like plug-in hybrid technology, which Porsche knew it would be going in that direction. And so the 918 was like a nut like example. We were talking about before of how they, like, covered the Cayenne with the courier GT by saying, We're still doing this. The 918 helped them say, Hey, we're gonna make hybrids, which is viewed as this like cheap, you know, like little car, the Prius, and so you think of, well, here's the hybrid, and we're gonna do hybrids. But we're gonna start top-down with this crazy, crazy supercar.

Talk about supercars for a minute, because I think it's important to understand, like they don't always make a supercar, right.

Right, it's like a once in every 10 or 15 year cycle, they're making one, but it's a very yeah. It's a rare and special thing that they do it, and it seems to be they do it only to kind of prove something or prove a technology. Like the 959 was all-wheel drive, and this car was kind of this new production facility, and and the 918 was the.

Plug-in hybrid technology and how many years do they make them for? When they decide they're gonna do? It's a short model run.

So this car they made 1270, which is considered a lot for a supercar. The 918 they only made 918 units, and in fact, that was considered a lot for a supercar. Its biggest rivals at the time, which were the McLaren P1 and the LaFerrari, they didn't combine to make 918 of those.

Hmm. But the the 918 Spider is what a two million dollar car these days.

Yeah, it was, it was new, was like nine, nine, nine hundred or so, maybe a million after you got a bunch of stuff and it's double.

That's done well, all the supercars have done well, well, I bet I'm sure you'll talk about this in a minute. But um, Porsche is the master just of. Like you, there is a base price, but you're not gonna spend the base price.

You're gonna spend like 40 more than the. But even at even if you figured the base price was like 900 grand, they made 918. You do the math doing. A supercar is real money to be made fairly quickly, as opposed to a Cayenne. That's a long tail. And you make them over a long time to spread out the cost and all that.

Yeah, and so this supercar was a plug-in hybrid.

I don't think I ever knew that all all supercars are now, but the 918 Spider. Was Porsche saying, we're gonna go into this plug-in world? Because they knew what was coming up, I mean, we'll get to in a second with the Taycan, but they knew what was coming out, that hybrids and electric cars were gonna be a thing. Where? So, instead of introducing that with a with a SUV, for example, which is where they should have right, because that's what the market wants it. They said, No, we're gonna do the supercar and show people we're gonna do it and we can do it well and then we'll trickle it down. What did the car world think of that?

Oh, those are gonna be orphaned cars, exactly, and orphaned.

Multi-million dollar cars? Yeah, exactly. It's scary situation. If you own that car and the battery is gone, you don't know what to do. You go to the supplier.

Like, that's the smart brand thing.

But it's not easy, like, if you really think about it for Plus Ferrari. They don't need to, they don't care. I can make the next one, the next one. They keep fighting rich people, they only make what?

13,000 cars a year at Ferrari? Yeah, it's a small operation, so like, it's still. Don't really care about their customers a lot, but what's the rule of luxury? Dominate your customer?

Ferrari was owned by somebody at some point, though, right? Yeah, there were all these, oh God, Ferrari.

Sorry, that is a crazy one also. But the Fiat group eventually had stepped in because Enzo had just driven the company to, but in his pursuit of racing, had, like, driven the company.

It wasn't his pursuit of, you know, derivatives.

No, it's quite different. It was actually a very Italian thing versus the pursuers, kind of a very German thing. Yeah, but um, yeah, that was a real bad situation. Also, none of those companies are independent anymore. It's not, it's not really possible either, because of the way that regulations are structured, especially fuel economy.

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The Cayenne is the midsize and the Macan is the compact. Okay, exactly, and a lot of Volkswagen stuff shared with all these cars engines are shared across tons of model lines now.

Yeah, interesting, which is such a departure for a Porsche, but that's right.

It's for an engineering company to doing this kind of sacrilege. The engine in the Cayenne Turbo, which is the best Cayenne, is in the Lamborghini Urus, an Italian car, the Bentley Bentayga, a British car, but Volkswagen owns all of these. It's in the Audi RS6 and the Audi SQ7, it's like it's everything is now just spread across all these brands.

A little bit echoes of our Lockheed Martin episode that we just did, the heritage of the great Airplanes, the great Porsches. Is this independent? And, you know, engineering, small team culture? But to operate today with, yeah, in the content, you have to be part of this. So the Macan's a big hit, and then we just alluded to it with the the Taycan, the the mission.

So Porsche was pretty early with the concept for permission. Yeah, yeah, not everybody was sure that was gonna catch on electric vehicles, I don't know. People were slow as a result.

In fact, like entire nations were like, Japan is five years behind everyone in electrics. It's the weirdest thing. It's like, they just like, woke up last year and we're like, Oh my god, this is gonna happen in the car world.

I mean, at least five years by. Toyota just started, just came out their first electric car, like yesterday, like, I'm not exaggerating, it was like eight weeks ago.

We gotta talk about that another day on Acquired, like, how did that happen? I mean, they were the they were the forefront of hybrids, totally the Prius, that they invented it all, and now they're like electric.

I don't know. They're still like waiting and seeing electric.

Wild So the take-on comes out. It's a very phenomenal car. Like, I think people are a little unsure at first, but then it's super well received within like three years.

Yeah, no, it's it is, it's been well received. It drives like a Porsche, which I think was everybody's fear about an electric car. That you'd lose the engine sound, you'd lose the feel of it. But the Taycan does indeed drive like a Porsche. Why do you think they came out with a sedan? It was a mistake, for sure.

But relative to the other traditional auto manufacturers, I get the sense Porsche you got to be in the top tier of like, best positioned for an electric feature.

Yeah, yeah, no, absolutely. And and they'll continue to innovate. There's the electric Macan is coming soon, so they say, and so it'll be fine, and Taycan. I mean, one could argue that Porsche needs to come out with an electric, sporty car first because they need.

Interesting thing about the Taycan, So you mentioned the next supercar will be, you know, an all-electric one. I haven't driven in a Taycan. I have watched videos of people driving it. I'm like, What do you? What else do you need to do to make this a supercar?

You know, the thing about electric cars is they all can accelerate incredibly well. And that's like, insane. And Taycan is faster than this. It's faster than everything it does, 0 to 6 in like 2 seconds.

But isn't it also like tuned to drive like a track car, where your 15th lap is gonna be just as performant as your first?

Yeah, and so it's beneficial not to. But at the end of the day, a four-door car, especially one that's made in not limited quantities, is never gonna have the effect that, like a supercar, halo car has on. Like, really showing people what a brand can, like, do. And so they will. I suspect in the next couple years, they will come out with a the next supercar, which will be, you know, look like this. And they'll only make a thousand and it'll cost two million dollars and it will be fully electric. And do 0 to 60 in one and a half seconds, and even more.

What do you? What are the performance characteristics of the next generation of supercars gonna look like? Like, what do you, humans can go like a second?

So I think that will continue to help. The values of these cars increase. Because at the end of the day, as cars age, they all get slow, right they? This car is now mod that fast by modern standards. So you start to look for other things that make them special, which is the feel, the sound, etc. I was I had a press car dropped off the other day, a Kia EV6 GT, which is the electric Kia crossover.

Well, so that brings us to today, when, or I guess more accurately, last fall September 2022, when VW Group re-IPOed Porsche, The Porsche re-IPO is the largest European IPO of all time. The initial market cap of Porsche at trading was about 75 billion dollars. Today, that's up to about a hundred and fifteen billion dollars.

Call it nine months later, as the investment bankers would say. Like, there was a lot of value unlocked by making this its own company, which I think is legitimate. I think there's an element to being able to own one of the premier luxury companies in the world without having to commingle it with a bunch of other stuff. And so, like, all shareholders of Porsche can purely just be shareholders of Porsche. And you when you look at the financials and you understand, like, okay, they have incredible margins relative to you. Look at the rest of VW's portfolio, it's fine, it's interesting, though.

Like Doug, to your point. Operationally, though, you can no longer extricate these right companies so you can financially extricate them purportedly. But even then, how do you? how do you?

Financially extricate, like development costs of a powertrain that's used in multiple vehicles or a platform. I mean, the type version of a type of the taekwondo called the e-Tron GT. How do you, you know?

It's all, it's all intermingled. So yeah, if it's not actually operationally any different, then you do have this question. We're like, okay, value was unlocked by just looking at the market caps. But like, actually, what happened there is? You got better at marketing a security, right?

So it's interesting. Ludwigson Carl Ludwigson, who wrote Excellence was expected. He published a new edition of it last year. And in the Forward to it, he said. The reason I did it now is that the old independent Porsche is done like. This is a completely different company now and I can fully put a bow on that original Porsche. So even though there was a re IPO of Porsche, it's never gonna be the same independent Porsche.

Yeah, and by the way, you can choose to buy Porsche A G, the independent spin out of VW, or you can also on the stock market go and buy Porsche SE. And the family, I didn't realize that it's still on the.

Market So.

Some other interesting things about Porsche today? The family, as we mentioned, is complete control, both of VW and Porsche. So in some ways, it's still the same old Porsche, even though it's all commingled. Here's the sort of nail in the coffin. Or, in my opinion, argument on is it a separate company or not. Oliver Bloom is both the current CEO of VW Group and Porsche.

I guess Media King was right, he was right in everything that he was doing. He just he didn't win the Game of Thrones, right?

Fascinating. So digging into the business a little bit, they do over 40 billion dollars a year in revenue right now, when you look at the breakdown of that. Interestingly enough, two-thirds of it has come from SUVs, and there's a good amount of it that comes from the take and to. So, the 911 has sort of grown slowly over time. The 718, that's the Boxster Cayenne. Not a lot of revenue coming from that. Yeah, that's sports car sales just slow.

Yeah, it's not the same, but it helps give them more legitimacy.

Yes, and the Panamera does have pretty decent sales, but still nothing compared to the monster that is. The the SUVs. Yeah, when you look at where they're sold, this is quite interesting. China is, as Porsche would account for it, their largest market. But the reason that I put that caveat in there, because it's at 26 is is China.

So they have Germany Germans, like a true German would like.

Germany is 10 and rest of Europe, excluding Germany, is 23, so, you know, it's all of Europe together would be bigger than China.

But Germans? One of the interesting things is, you know, the Chinese only buy four doors, they only want four-door cars. There's almost no, because there's no heritage Porsche in China.

They're just like the kind, right? Wow, yeah, I mean, we're used to it now. But I remember the first time I was seeing Porsche SUVs, it's like, Well, that's.

That's a sports car brand, this is weird, right? But for them, they never had the sports car brand, so it's just like normal.

It's crazy. North America is very close to China, it's 24 in terms of sales, and then the rest of the world's about 16. So interesting thing when you start to look at both the amount of cars that they make now, because it's huge and the margin structure associated with that. So last quarter, they delivered 80,000 cars, and that's growing about 20 year-over-year.

So that's a quarter of the delivery, though. Yes, wow, so.

Last year, they delivered about 350,000 cars. Yeah, so this really is a scale organization at this point. This is not Ferrari, this is not Lamborghini, these are mass manufactured vehicles. And I know they would say, Oh, we're not a mass-market thing.

I compared the brand to Rolex earlier, I think we're a brand perception that's true, but from the operations of the company really is. It's Louis Vuitton, like they make a Louis makes a lot of stuff. This is the correct analog.

So I had this in my notes much later, but I want to bring it forward right now. Porsche is Louis Vuitton, Ferrari is Hermes. Yeah, and I think that this whole time I well researching, I always had this like broken thing in my brain where I was like, how how do they make so much stuff? When they're Hermes and they're not Hermes? Yeah, they were once Hermes. But as soon as they started making the SUVs, that's not who they are. They have tiered access to luxury, like different luxury products, with a shared brand that unifies them.

Which is funny because people see it as such a high-end brand. It's almost like the SUVs have managed to, like, get under the radar of the people who buy the sports cars. And the sports cars have this still have this elevated viewpoint. Even though you can actually go to a Porsche dealer and lease them a con for, I don't know, 750 a month.

Whatever it is, you know, right, right. On the scale thing, though, there is another order of magnitude up. And these these other brands do feel much cheaper, so at around two and a half million a year. Is BMW and Mercedes-Benz, and it does feel like Porsche is in a much different class than BMW or Mercedes-Benz. In terms of the sort of hoity-toity ness associated with it. When you get to drive it, you get to own one, and I think that that clearly shows. And the question is, if they made ten times as many Porsches, would we all feel the same way? That, oh, it's just a BMW? Probably like there. There should be an inverse relationship between scale and brand perception, but they have managed to find this like mismatch. Or, like, to your point? It's like skating under the radar, where they are able to make a lot of SUVs and still maintain right what they have. And the question is, for how long, right? or or at what scale?

If it doubled again, like, it's interesting about BMW, because if you think about if you saw Porsches as often as you saw BMW is, would it be special? Of course, the answer is no so.

What do you think the average selling price of a Ferrari is across all their?

That's insane, that is insane. 3x is 3x Porsches, a 3x Porsche, and how many Ferraris are made every year or so?

13,000, 13,000 versus.

350,000. Yes, it's so funny because the enthusiast world there's often a Are you a Porsche person or a Ferrari person? Like, they're not really.

Right, these are two very different beasts.

Yeah, and it's fair to be like, are you a 911 plus supercar person for a Ferrari person? But the rest of Porsche shares the name Porsche. But is a completely different thing, right? Yeah, they're nowhere near each other. It's almost like Porsche should go get even more aggregate market cap by like, spinning out. Just. They're like Hypercar there and I the 911..

Man, that's crazy. Fries 330s.

Ferraris average selling price is 330,000.

It's interesting, right? Like, I mean, you're Doug Demuro, you won't occur a GT, you don't own a Macan.

Well, yeah, I mean I, but they're cool. I mean, I would get one to a lot of people, but that's a good point. Like, I haven't went and got a Porsche SUV. Truthfully, that the reason it's ridiculous.

It's the funniest thing because I'm one of my David, my closest friends drives a Porsche Macan and his wife drives an Audi. Oh, this is a totally different thing. This says something very different about who I am. She was driving his car the other day and she was saying, Oh, I hate being seen. Or that you don't want to be driving around a $75,000 Porsche, and yet this thing that you have, it's ridiculous.

I know it's an interesting point. I never really considered that. I just I'd like to be casual for my normal cars. Also, I think that, like having the Porsche SUV is kind of like, it's almost more in your face than this.

It's like getting, um, like the Masters logo embroidered on your golf clubs, you know? it's like, Okay, like, I know you didn't play in the Masters, but like.

Okay, that's cool, right? It's it. That's exactly how I look at it, like, Okay, that's, that's fine, but it's not.

It's got a Model 3, that's a good guess, that's it, David drives, and that's why what I would.

Mazda CX-5.

Okay, some more back to Porsche. A couple other interesting observations just for listeners trying to keep track of home of like, what are the profiles of these businesses look like? I always think gross margin is an interesting place to look to understand the strength of a brand, because it's basically showing. Like, what can you mark up over your cost of goods sold and sell it to people and still have them swallow that price, right? BMW As we mentioned, ten times more units of BMWs sold than Porsches are down at 17 in terms of gross margin. So they they really aren't marking up much above their cost of goods in order to ship those cars.

Do not care what it costs, people just pay and pay and pay. And by the way, the 330 average price thing, like that's, I'm just like, still astonished by. That's an unbelievable amount of money when you really think about it for 13,000 cars a year.

To put it another way, because let's round 48 to 50. If you have 50 gross margins. It means you go buy a bunch of stuff, you assemble it, and then whatever it costs you, you double that to sell it to.

The customer, I mean, Ferrari still charging like two grand to put Apple CarPlay as an option in their cars. I am dead serious. Like heated seats are like 800 bucks extra in Ferrari. Hmm, you get the idea?

So switching gears, but staying on gross margins because David, you brought up LVMH earlier. LVMH is gross margins 68%.

Yeah, going into doing this episode, I sort of wondered, in the back of my mind, has Bernard Arnault and LVMH ever made a run at any of these? Yeah, luxury auto companies? And if they have not, maybe this is the reason why, like, they're just in a better business.

Yeah, it's hard businesses, it's a lot of stuff, it's a lot of things. It's a. it's a. it's a different business.

Any attributions? Harder? Yes, and it takes a really special type of person and and and team to run it. I mean, it's it's engineering and art, whereas there's not engineering in anything that LVMH owns. I mean, I'm sure there's people who work there, whose title or engineer, but it's correct.

Yeah.

Yeah.

So if I were to guess, I would say, maybe Bernard Arnault has kicked the tires on, like Ferrari, Lamborghini, but more on like licensing agreements than trying to own those businesses. Because I just don't think it actually works into the rest of the flywheel in the same way. Like you gotta own a factory that makes these cars, you got to do all the R&D plus.

Scalability is harder, and you alluded to the dealerships and the distribution. distribution is hard. You're shipping stuff on giant boats all the way across the world and all that. Should we talk power?

Moving to an analysis here, let's talk power, yeah, so for any listeners who are new, and based on the Lockheed episode, a lot of listeners are new. There is a section we do called power, which is a way that we try to figure out what enables a business to achieve persistent differential returns above their nearest competitors. So why are they more profitable on a durable basis than other people who compete against them?

Especially relative to Ferrari, have scale economies, being part of the VW group, right, that they can be in SUVs in a way that Ferrari can't. I think you're right, that scale.

Economies enable them to be in the SUV business, which has great margins. Yeah, and that's a that's a thing that you would need to have all these deep partnerships with other car brands in order to do that. Or by one, Yeah, I think that is a differentiating factor against Ferrari.

But obviously, lots of other car brands are in the SUV right business.

The heritage is obviously an enormous factor. The brand is the obvious big, yeah, the big one. I suspect that the German engineering thing also plays a role, like I think now. Not against BMW and Mercedes-Benz, but certainly against like the Japanese. I'm sure their margins are much, much higher than the Acuras and Lexus's of the world. And they. Even though the week. When you really look at it on paper, it doesn't make sense. There's there is some level of like.

And does that, I think, for a long time? That expressed itself in reliability of Porsche's relative to other luxury car manufacturers today is that as much is reliability as much an advantage for Porsche as it was in the past.

Reliability is still excellent, supposedly based on the J.D. Power studies and all that. Now, the question of whether it's actually important for people making decisions by the cars. I'm not so sure how many of those SUV customers are leasing and don't really care if the thing stays reliable. I don't know.

Okay, so moving through them. Branding, yes, obviously, like, especially if if you're trying to enter any space and compete with a luxury brand, you don't have the heritage. There's just no way that you have the 75 years of people believing in your brand and thus willing to pay extra margin dollars for it.

So that's the obvious one, and you can't, you can't manufacture it either. No, like, there's. There are, like, they're not finding any more Brent heritage automotive brands, right? they are, they're just gonna take 75 years, right?

I think that's that's myopic to think that, like, 75 years from now, people won't obsessively care that. Some new brand was forged in the 2020s that had some others in a sequoia about it. That's like the equivalent of racing versus production cars. You could imagine at some point, Tesla's a heritage brand, people gonna be like, there was this crazy eccentric founder.

Yeah, no, I agree with that, but it will take, yeah, as many decades as you think, and.

It'll have to be for something else, though it can't be for racing, like it's something else related to the cars, right?

It would have to be for something else. On your point, I said, performance is a commodity now. The Koreans have been around for 25 years and there's no like emotional attachment to any of those cars, even the older ones. I don't know.

Hmm, brand is it? brand? Scale economies enabling the SUV line. I think that was a good one. There's not really counter positioning. I don't think there was in the younger days, especially the racing younger days, especially with the aggression of Porsche's advertising, Porsche.

Ads have been some of the most iconic just brand advertising of all time, and they were brash.

The reason it's counter positioning is because a lot of car, like very high-end cars, would never dream of showing their brand in such a gritty way and giving their brand voice. Such a yeah.

Risky opposition? I'm thinking of two in particular. Do you have the most famous one?

Of course, is the 993 Turbo, the Arena Red 993 Turbo, and the At the Tech, fortunately, would put up to one picture of the car. And then there was always a tagline that was like, The thing for decades, the famous one was Kills bugs fast. That's what everybody remembers.

So good, so good. The other one that I'm thinking of is Nobody's perfect, yeah.

That ad was great. I had one for my 996 Turbo that I owned at 9-11 years ago and I had it framed. And it said, calling it transportation is like calling sex reproduction, yeah.

David I had the same favorite, one of Nobody's Perfect. Because what they did is the bulk of the ad, when you look vertically down is the top 10 winners at Le Mans, and Porsche has nine of the ten, and it's just Porsche, Porsche, Porsche, Porsche, Porsche like number.

Yeah.

That is Porsche, Porsche. Yeah, he's perfect, he's perfect, so good.

I'm like, Apple, where you're dialed in. Yeah, yeah, lesson that is, that's gonna become less true, I suspect, with all the tech that's in cars. But yeah, I agree.

There's no network economies. There's like, really no benefit to you own a Porsche, therefore I own a Porsche, and I get value out of you owning a Porsche. Particularly a thing other than I can, like, go to cars and coffee together, right?

Yeah, I know we just talked about it a bit, but for me, the racing thing is interesting, even though we didn't spend that much time on the details of it. Throughout the history, I don't know that. We've covered any other companies where there is this kind of like adjacent activity to the core business of the company. That adds so much to the brand value and is worth investing in. I'm just trying to think if there's anything else like this, but I mean, yeah, it has invested billions in racing, in all sorts of racing. But it's not like there's like a software competitions out there, they're right, or you could enter your software in, right, build your brand prestige.

Are there any other companies that?

Do things like that or industries that have like a showcase, right? like a very expensive showcase, where you have to go build a completely different product line.

You know what is like, this is the athletic apparel industry, and Nike, yeah, like they spend, yeah, all of their marketing budget on athletes.

One of the biggest ones that jumps out for me is the brand continuity. This idea that if you loved anything we've ever done, we should be able to fulfill that dream for you today. And not with the exact same thing, necessarily, like, we're not going to sell you the exact model that rolled off the line in 1977. But like, you get to participate in the feeling, and you have to feel the same way about our brand today that you did then. And we're gonna find all these interesting ways to provide you fan service. It's almost like going and watching the new Star Wars movies, where if you liked the original films, even though these aren't like the highest. Like highest grade directing and writing in the world. Like, we are delivering all sorts of fan service moments to you. And I'm not saying that, like Porsche is not making the best cars in the world.

It gets back to the 40 50 year sales cycle with this too, right?

Everybody dreams, I mean, it's your, your whole life, you dream. I grew up dreaming of owning a Porsche, which is again kind of funny as we talk about the SUVs and the volume they do. If you're a little girl or boy, you don't dream of winning a Cayenne like, like you, kids.

Doug, You've talked about this when you worked at Porsche a decade ago and you were much younger. Like, they didn't pay you much. But you got to drive a 911 and that was like the coolest, freaking thing. Everybody wanted to work there.

We get unsolicited resumes all the time, blah, blah. And like, pay wasn't great. And but like you name you know, I work for Porsche, that's so cool and just being a part of it. And then, yeah, having the car was a huge deal.

All right, well, grading feels a little bit odd on this episode, and we killed grading. But we do have Doug Dimera with us. So we are going to give Porsche a Doug score and it's an acquired adjusted to Doug score. It's, uh, you know, we can't grade the entire company on handling.

We simplified this down to to just three categories for the acquired Doug score revenue, growth, profitability, and defensibility. Like, would you want to own Porsche as a stock?

And I think those are the three components. Sort of closing your eyes to where they're trading today, because you always have to, like, evaluate, entry price and all that. But like, yes, are you excited about the company's prospects 10, 20, 30 years from now? Yeah, all right. So let's do revenue growth first.

Growth has been impressive at this scale, not at the rate of the highest growers that we have seen, but still nonetheless impressive. Prospects going forward, though, for revenue growth, I think, are still quite strong. We're obviously in a very different market environment than we have been the past few years, but Porsche is incredibly well positioned on Evie's relative to other traditional. That's actually my whole case. Yep, so I think there's strong as they electrify the rest of their lineup, strong bulkace for revenue growth.

Basically, agree with you. Numerically, I've won it on on them. Versus other luxury manufacturers, it's it sort of depends how you define luxury. Like, I think they'll fare better than Mercedes and BMW in a downturn, and like, way worse than Ferrari, I think they're.

Because so much of their revenue is based on those SUVs, that probably will not be as resilient as right.

There are Macon buyers who will become Q7 buyers. yeah, Q5 buyers, yeah, yep.

Ferrari really isn't a league of its own, though. The broader universe of BMW, Mercedes, all the Japanese brands, Tesla, etc. in America, Ford, you know, all the Ford brands, the Chevy brands. Oh yeah.

I think it was very well. Position or Shannon recession then, like almost any other car company, yeah.

Yeah, there's also this other thing of, like, you alluded to the colors, the money they're charging for colors. Like they've done this, they've perfected this with so many options, and people are just paying it and paying it, paying it. And it seems like there's no end to like what Porsche can kind of fleece their customers for. And it just seems like that's only going to continue to be more and more of a thing going forward. There's become this entire subculture around, like speccing your Porsche and this like, perfect way, and that is obviously big margin stuff for them. Yeah, so I'm seven, you're seven.

Yeah, seven out of ten. Yeah. Next is profitability quite, quite strong for the automotive industry. yeah, very strong, not strong relative to the technology industry and software. Or Apple, that's right.

We didn't say that earlier, but Porsche is a 29 gross margin.

Apple's a 43 gross margin, right, and I believe Porsche's operating margins are in the high teens, low 20s.

I mean, I'd love to own a business that has 20 of every dollar that I earn coming out the bottom.

That's a great business, when you're earning 40 billion dollars, I think I'd go seven again on profitability.

It's a nine for the auto industry, yeah, and it's like a four compared to most businesses that we study. Unacquired, because we only study the very best businesses in the world.

We're not a media business, it's not a technology business.

Right, I'm sitting here thinking it might be a bit high. Margins are pretty impressive. Considering that's the car business. Yeah, that's what I'm sitting here thinking. The car business requires so much, just so much cost.

For the ease of the episode, we're agreeing on a score here. Five feels like a good score, and honestly, like, I think five is the highest score you can give in the audio industry on profit. Unless we're talking about Ferrari, apparently, yeah, which is, like, almost not in the auto industry.

Yeah, right, that makes sense.

What's the last one? Defensibility? Yeah. So this is the biggest question, does Porsche's margin profile and customer love and brand value just only go down from here as they continue to grow? Like?

I just don't think so. From when I worked there till now, it is amazing to me how much more people have become obsessed with Porsches. Every cars and coffee event has become sort of a de facto Porsche event. The used ones, the vintage ones, have just shot up in value to an unbelievable level. Porsche is more loved now.

I think you put it really well earlier when you said people are like, are you a Ferrari person or a Porsche person? And like, the fact that Porsche gets to be in that conversation? Asked, Right, asking, Are you a Lexus person? It's like they're getting away with murder by being lumped in, right, somehow.

They were able to both produce an SUV that gets them 350,000 units annually. Yes, but also mentioned the same breath as Ferrari in terms of like enthusiasts.

I'm like, literally a 10 out of 10 on this because I think this is a thing that I still don't really understand how. They executed this so well, and they've done it better than any other company in the world, right, right?

It's probably true.

They went from making the 911 the everyday supercar to now they're like an everyday supercar company, right? They have a whole gradient of everyday supercars that you can buy, but they're all everyday supercars. And yet people still dream.

It's crazy, I agree, I completely agree. It's and it's. And again, if they love only seems to be growing. Even as their model line expands to what we would consider to be less desirable cars. It's amazing.

Think that's right. So my barometer for this is something I took from the LVMH episode of evaluating brand power. Can you kill it? Is there anything that could happen that would completely kill Porsche?

I don't think so. Nothing that they would realistically do, I mean, but even okay.

Let's say they did, because, you know what, this is what we learned from the LVMH episode. Gucci everything you could think of to kill a brand. They did that. But the heritage there, that it can always be resurrected, right?

He is always going to regular individual still has this thought of Gucci as like, holy crap.

This is, you can never completely eradicate it.

And I think it is the same thing brand gets to a certain level. Is it even possible to kill?

I don't think so. And once you reach that level, that's when you have real brand power, yeah, and I think Porsche is at that level. Because let's say they make a bunch of decisions and they kill the company, it goes bankrupt. Somebody will buy it out of a huge value still, and a huge value is still there.

Pretty good, that's pretty good. Your highest Doug score ever is 72 or 74, something like that, right? Yeah, you can't get any better than that. Yeah, so Porsche is at the top.

I'll start because I've had no opportunity to consume any media in the last three months. That is not specifically for acquired research. I have a random website that I haven't used in six months, but I use six months ago and it was awesome to recommend. And that is Resort Pass.com. Have either of you ever been to Resort Pass.com? It's like.

You've been holding out on me, so I, Jenny and I do this. We will do the same thing you do. But, like, I didn't know there was a platform for it. I do. We just call the hotel and see what you like. Yeah, or we'll book a massage at the spa and be like, Oh, and then with the massage you get the like, right? But now?

I'm just analog resort pass over there.

Okay, my carve-out is I go down these YouTube rabbit holes, which is probably how originally I got to you. But I've been on a Seinfeld cast interview, Oh yeah, rabbit hole, yeah, and there is an amazing compilation of all four of the cast members doing Charlie Rose interviews. And he was so good, I mean, problematic person, but like his, he was one of the legendary, best interviewers of all time, and he did a bunch of interviews with all four of them.

If you see him interviewed anywhere or talking talk anywhere, like contemporaneous, extemporaneously, he is pretty legit, yeah.

He is you would never know, cuz he's so different than the George character. Yeah, yeah.

So he's the biggest difference of all of them, for sure. Have you seen that that bit on curb?

I'll curb your enthusiasm. There's this like whole arc of the show about how like Jason Alexander is not at all like George, and how dare you perceive him that way? And then it's like Jason Alexander is insinuating to Larry David what a loser the George character is, and Larry takes it personally because it's based on him.

I should have said five. Larry David is in this compilation of Charlie Rose conversations, too. Yeah, it's so good, it's so good. I think it's about an hour 20 total, but it's worth it.

Yep, they're all in there. Interesting, Okay? Mine is a YouTuber named Whistlin Diesel. Have you guys heard of him? No, no, I'm not surprised either either.

Oh my God, he's the Mr. beast of the car world. If he's like, it's like, dude perfect on heroin.

It's like that, and he's like this, he's like from Indiana, and he lives in Tennessee, so he's like, just like, kind of like Backwoods dude. But he's channels gotten so big that it's allowed him to do just dumb stuff. And he has become my utter guilty pleasure because you put on his video. And you're gonna see like, deep destruction of something that a lot of people hold dear, and then you're gonna see a lot of comply. In the comments of people being like, I can't believe you would do that.

I.

Gotta watch that this is all just like trash TV, but it is so good to watch.

So I love that other people do this. Yeah, right, right.

I do wonder sometimes about, like, the danger of YouTube and like, Okay, it takes now flying a helicopter inside your garage to get views. Like, I started, I had a Ferrari that was enough, right?

You must be you've talked about this a lot. That like you feel when we're gonna do a whole nother episode of just you and us chatting. But that, like, you started at a time, and if we started at a time where you didn't have to, right? I feel bad.

Like whistling diesels out there, dropping G-wagons through house.

Different thing, but highly recommended, great content. That's actually a great doug we have not talked about, like everything that you do.

Where can people check it out? I make a YouTube videos, my channel is my name, which has become very complicated now that I have a business on a channel. Also maybe regret doing that, but I'm just Doug Demuro. And then I also run an automotive like a car auction website for enthusiast cars, called Cars and Bids. And we're selling something like 30 cars a day or auctioning 30 cars a day, cars and bids right now.

You know, the short version is like, you are one of the most successful YouTubers in the world. You are also an entrepreneur who built a tech marketplace, internet marketplace business. And just took a very large investment from the churning group, one of the best investors in marketplace and content businesses out there. Incredibly impressive, thank you for spending so much time.

Yeah, thanks, so much. thank you. thanks for having me. It was a lot of fun, it really was prepping for. This was so interesting learning all this history that I didn't know, even having worked there.

So fun, thank you guys.

Check out our second show, ACQ 2, if you want more acquired. We just recorded a couple more episodes actually that we have getting ready to come out, that I'm very, very excited about. That, of course, is a way for you to go deeper and nerdier into topics that just either aren't ready for the main show or perhaps are too current for the main show. Since what we try to do here is tell the big, canonical stories. Oftentimes, there are stories in flight where we just want to talk to experts about what's happening. Like, Jake Saper in AI. Talking about what it's doing to the B2B SASS landscape right now and where profit pools may emerge in that.

Yeah, or I'll block Coley, the CEO of Angelus. That was a great conversation with him. We had David Shoe from Retool, all the hits, David.

We've got a slack, we would love to see you there. We're gonna be talking about this episode. Acquired FM Slash Slack. And if you would like to come deeper into the acquired kitchen, you should become an LP. Where we will, at least once a season, have you help us select one of the episodes.

Is it you? is it you? Is it you who got the truth?

You?