Market Masters: Ferdinand Porsche

December 5, 2014 | By Matthew "The Instigator" Guruge,
Ferdinand Porsche

[su_dropcap style=”flat” size=”4″]   J  [/su_dropcap]ust under the tumultuous political climate and war ravaged infrastructure of early twentieth century Germany, lie one man capable of conceiving an industry and a society poised to become its patrons. It was from within this precarious landscape that Ferdinand Porsche emerged as the century’s most influential automotive engineer, defining both sports and economy cars as we know them today.

His erratic career would take him from the humble coach factories of Jakob Lohner & Company to the peaks of racing prestige, from visionary and influencer down to war criminal and prisoner, and from burgeoning companies the world would never remember to a brand it may never forget.

Yet, the Ferdinand Porsche’s story is not only about the company that bears his name. It’s a captivating tale of how one man stood in the middle of an exploding industry, developing and designing its most known products, while being assisted and impeded by his country’s infamous dictator.

Chapter 1: He Had to Learn Somewhere 

Young Ferdinand Porsche

src: stuttcars.com

Porsche began his career in 1893 as an eighteen year old student employee of the engineering company, Egger. The job was suppose to enable the precocious teen the ability to earn a degree while he worked on the shop floor. But, Porsche’s natural feel for his work caught the attention of his superiors and he was soon promoted.

His promotion to the experimental department of the company effectively ended his formal education while giving the young engineer the opportunity to learn about and play with his new fascination: the automobile.

In 1897, the first recognized motor car was produced by Nesseldorfer Wagenbau and a new industry was officially born. Just a year later, the coach making firm, Jakob Lohner & Company, recruited Porsche to head up its new automotive division.

Porsche and his team immediately set to work building the firm’s first car. Within a year, they debuted the C.2 Phaeton, an electric, horseless carriage.

C.2 phantom

Src: cnet2.cbsistatic.com/

Showing an early feel for the importance of personal branding, Porsche engraved “P1” for Porsche number one on all the major parts of the carriage.

And Porsche was just getting started. Three years later, he invented the first hybrid car, called the Lohner-Porsche Mixte Hybrid. The car used an inventive mix of combustion and electric energy. Unlike the modern power switch hybrids, the Lohner-Porsche used two combustion engines to power an electric generator that powered the wheel hub motors.

Though the car was weighed down by its numerous engines, it was by far the most efficient design of its time. It broke several different land speed records and won the Exelberg Rally, all piloted by the eccentric designer himself.

[su_spoiler title=”More on Hybrids “]Today, cars like the Toyota Prius have combustion and electric motors that both power the main drive train. The motors can be combined or used separately to power the vehicle. Conversely, Porsche’s hybrid used the combustion motor to power the electric motor. So, Porsche came up with the hybrid to overcome the difficulties of energizing the electric motor, which was the integral power source, while today’s cars use the electric motor to supplement the combustion engine, which is the integral power source. [/su_spoiler]

In 1906, Porsche was recruited to Austro-Daimler to become its Chief Designer.
He worked at the firm for the next seventeen years. During that time, World War I broke out. The war interrupted the firm’s design work and forced them to begin working on military vehicles.

Porsche was in charge of designing various aircraft engines as well as the highly automated Motor-Moerser mobile cannon. For this work, Porsche was awarded an honorary doctorate degree from the Vienna University of Technology.

In 1923, he left Austro-Daimler, which was beginning to struggle because of poor financial management for another manufacturer, Daimler Motoren Gesellschaft. At the new firm, he earned another honorary doctorate and designed several cars including the eminent Mercedes-Benz SSK.

His tenure at the position would be short, though. After eight years, Porsche left Daimler Motoren Gesellschaft to start his own consultancy with hopes of designing a true economy car and the innovative genius to do it.

Chapter 2: New Firm meets Same Old Depression

Name Plate

Src: porscheengineering.com/

In 1931, Porsche founded his consultancy in the Weimar Republic (modern day Germany) city, Strugart.

He called it: Dr. Ing. h. c. F. Porsche GmbH, Konstruktionen und Beratung für Motoren und Fahrzeuge – roughly, honorary doctor of engineering Ferdinand Porsche’s designs and consulting services for engines and vehicles.

This entrepreneurial decision seemed doomed from the start as the economic climate was horrendous. The Weimar Republic was struggling economically and politically because of the one sided fallout of WWI. They were in the middle of a deep depression with a weak currency and high unemployment where people simply couldn’t afford cars. So, consulting contracts to design them weren’t abundant.

Two years before Porsche started his consultancy, the world was rocked by the 1929 depression. But, the Republic was hit harder than any other nation because they still hadn’t recovered from launching their new currency, the Reichsmark. This severe depression was creating a reactionary nationalism and frustration amongst the citizens, which allowed for the new Nazi Party, lead by Adolf Hitler, to gain prominence.

While Porsche was struggling to find contracts and working on projects devoid of backers, Hitler and his new party were quickly amassing support, eventually garnering one-third of the vote. In 1933, two years after Porsche founded his firm, Hitler was appointed by President Hindenburg to be Chancellor of Germany, the Republic’s second most powerful political role.

Just a month later, the Reichstag parliamentary building was set ablaze by unknown arsons. Hitler, leveraging broad fears from the attack, convinced Hindenburg to pass an emergency decree, making Hitler Germany’s dictator. And, with the new regime was about to come a flood of money for the German automotive industry.

Hyperinflation - Rise of the Nazi Party - Reichstag Fire - Hitler becomes dictator

Hyperinflation – Rise of the Nazi Party – Reichstag Fire – Hitler becomes dictator

Upon gaining totalitarian control, Hitler set out to stabilize and bolster Germany’s economy and one of the major facets of his plan to do so was was to motorize the entire nation.

Germany was changing. It’s new leader was stabilizing the currency, investing in automotives and inspiring hope for a depressed people. There was a massive opportunity to capitalize on the moment.

And Porsche was positioned perfectly to do so.

Chapter 3: Leveraging the Nazi’s

Nazi's with Beetle

Src: porscheprototype.com

In 1932, without any serious clients in mind, Porsche had started building a racing subsidiary. The company, Horchleistungs Motor Gmbh – High Performance Engines Ltd., was designing new a “silver arrow” racecar to compete with Porsche’s former employers.

[su_pullquote align=”left”]

“I couldn’t find the sports car of my dreams, so I built it myself” – Ferdidand Porsche

 [/su_pullquote]

The subsidiary, which helped to fulfill Porsche’s urge to create great cars, did nothing for their bottom line. By 1934, the firm was in dire need of a big contract.

Propitiously, this was the same time that Hitler began to search out a company to work on his first automotive initiative: Volkswagon – The People’s car. Hitler wanted to accomplish in Germany what Henry Ford had accomplished in America: create a simple and reliable car that every citizen could afford. He even had the raw idea of a car with a rounded cab like a beetle’s.

In that year, the Nazi’s announced the contract soliciting design proposals. Porsche jumped into action sketching out a design that handily won the open competition. As their only major contract, Porshe’s firm concentrated on the Volkswagen project and built the first Beetle within a year.

Hitler instantly approved the design and pushed for the construction of a Volkswagen Factory to mass produce the Beetle. They decided to place the factory first and then build a town around it, which was how Wolfsburg was first founded.

Porsche wasn’t content just working on Volkswagen, though. He also had his eye set on Hitler’s second program, which gave 500,000 Reichsmark (approximately $3 million today) to fund the nation’s best racing team. But, Porsche had a problem. Hitler had indicated that he was leaning toward giving all the funds to Mercedes-Benz, the nation’s most prominent manufacturer.

Unable to accept the dictator’s incline, Porsche set up a meeting with Hitler to discuss alternatives. He suggested that it would be best for national pride if the money was split between two teams who would compete against each other.

Auto Union's Silver Arrow

Src: speeddoctor.net

Following Porsche’s advice, Hitler chose to split the money between Mercedes-Benz and Auto Union (a conglomerate comprised of Audi, DKW, Horch and Wanderer). This compromise was exactly what Porsche was hoping for because Auto Union didn’t have a suitable racecar.

With 250,000 Riechsmark and no car, Auto Union approached Porsche to bail them out. He convinced the conglomerate to buy Horchleistungs Motor Gmbh and its silver arrow racecar entirely for the majority of their grant.

So, in a matter of a few years, Porsche was able to siphon the majority of government’s grant money into his firm’s coffers. Respecting the hand that fed him, Porsche joined the Nazi party and then chose to become an officer in the Schutzstafell (SS).

But, associating with the Nazi’s would come at a major cost for the engineer.

Chapter 4: War, Prison and Heritage

Ferdinand and Ferry Porsche

Src: .stuttcars.info

In 1939, Germany invaded Poland officially starting WWII. Hitler quickly put the Volkswagen project on hold, forcing the Wolfsburg Factory to produce war vehicles instead of cars.

During that time, Porsche would add a heavy tank to his already impressive resume. It was officially called the Panzerjager Tiger (P) but people called it “the Ferdinand.”

After six years of using the Volkswagen Factory to help support the war effort, the Germans surrendered unconditionally. Things looked bleak for Porsche and his projects. They had only manufactured 630 Beetles and members of the SS were widely being tried for war crimes.

At first, there were talks of sending the Wolfsburg Factory to France as a war reparation, but the costs of the operation were prohibitive. Without the money or leverage to fend off the French Government, Porsche and his son, Ferry Porsche, were arrested as war criminals seven months after Germany’s surrender. After six months, Ferry was released. But, his father was to be held indefinitely until an exorbitant bail had been paid.

While Porsche sat in jail, Ferry set out to keep his father’s firm afloat doing anything he could to make money from automotive repair to racecar designs to water pump maintenance.

During that time, he designed and created his first car without his father’s stewardship. It was called the Cisitalia 360 and it was the first racecar with four wheel drive. Ferry sold it and its design to Piero Dusio, a notable soccer player and businessman.

Ferry used the money from the design to pay his father’s bond. When Porsche got back to Germany and saw the car his son had designed in his absence, he said: “I would have built it exactly the same, right down to the last screw.”

[su_pullquote align=”right”]

“I would have built it exactly the same, right down to the last screw” – Ferdinand Porsche

 [/su_pullquote]

Finally reunited and free of wartime obligations, the father-son duo set out to build the first car to carry the Porsche crest, the Type 356. The pair faced multiple problems, though. Their Volkswagen factory was still under allied control and they had no money and no buyers for their 356.

The Type 356

Still, they pressed on and built their prototype by hand in a small factory in Gmund. It was an impressive design, able to reach speeds of 85 mph and punctuated with the thorough excellence that the brand would become known for. It quickly caught the attention of car enthusiasts, creating a broad demand for the car.

Finally able to sell their own cars consistently, the Porsche duo was able to scale the business. In just a few year, they went from manufacturing ten Type 356’s a month by hand in their small Gmund factory to employing 300 and producing eighty cars a month.

Sadly, the Type 356 would be the only car that Porsche would see bear his crest as he died in January 1951 at age seventy-seven.

Although Porsche’s most famous car, the 911, would not be made for another thirteen years, Porsche would die as the most distinguished automotive engineer of the century.

His legacy would show that he was a man whose talents matched his timing, whose country funded his explorations and whose designs would  live on: 

The Beetle New and Old

Src: motorward.com

READ MORE

How They Did It: Xiaomi

November 14, 2014 | By Matthew "The Instigator" Guruge,
leijundiagram2

[su_dropcap style=”flat” size=”4″]F[/su_dropcap]

our years ago, Lei Jun, a renowned Chinese entrepreneur and investor, gathered a dream team of engineers to pursue one audacious goal: “establish a bright new mobile phone company” . In just that time, their company, Xiaomi (pronounced “chow me”) has boldly usurped the Chinese cell phone market, becoming its largest phone provider, ahead of Apple, Samsung and Lenovo.

Xiaomi’s ability to outdo these corporate giants seems to stem largely from their nearly obsessive concentration on their customers. Xiaomi’s slogan is “Just For The Fans” and they clearly take it seriously. So seriously, in fact, that the phrase seems to influence all of the company’s decisions from manufacturing to sales.

This odd overarching philosophy is why Xiaomi’s story of nearly instantaneous success is not just about its great visionary or its brilliant marketing schemes. Instead, its an unfinished and intriguing epic about how an entire company has aligned to accomplish what was thought to be an impossible mission.

READ MORE