Interview with Leica’s Dr. Andreas Kaufmann

I first met Dr Andreas Kaufmann at the Pacific Palisades home of Otto Nemenz two years ago. “We have an interesting story to tell you,” Otto said, as Santa Monica Bay glistened in glorious magic hour light. “It’s about Leica cine lenses.”

The saga involved several degrees of separation that began more than 30 years ago, with Otto and his good friend Christian Skrein dreaming of Leica lenses for high-end 35mm motion picture production.

Jump cut to December 2005. Christian Skrein met with Andreas Kaufmann, and said, “I have a concept and a friend in Hollywood, Otto Nemenz. He and I have had a dream for many years”

Later that evening, Otto received a phone call from Christian. “Otto, we have our dream.”

Otto asked, “What dream?”

“Leica Cine lenses.”

“How is that possible?”

“We know the new owner of Leica.”

I stayed in touch with that owner, Andreas Kaufmann, as the Leica Summilux-C lenses were developed and introduced. This past weekend, at the annual International Leica Society meeting, I did an informal interview. In light of today’s announcement of a substantial strategic investment from Blackstone Group, our talk was timely.

Jon Fauer: What is the background to your investing in Leica? 

Andreas Kaufmann: Formerly, our family owned the biggest paper, pulp and packaging company in Austria. We owned this for 101 years. Otto Nemenz’s father was a sales representative for one of the pulp companies we owned. Our family started selling part of the companies in the 1990s because we realized it was much too CAPEX (Capital Expenditure) intensive.

But, I had a strong belief, and our family history shows it, that you can’t influence stock markets, but you can create value in companies. Stock markets are like a casino. I presented an idea to my brothers. If you have the right strategy, a little bit of luck and a good management team, you can turn companies into a value creation engine. That was the theory. So we set up ACM. The name comes from my two brothers and me. Nowadays we call it Austrian Capital Management because my brothers are not involved anymore. We set this up in 2002 as a new entity to buy into new industries to try to create some wealth out of what we had.

ACM bought its first company in the Wetzlar region in 2002: Weller Feinwerktechnik, which we still own today.

I heard you started out as a teacher? How did that happen?

I studied German Literature, Political Science, History and Linguistics at the University of Stuttgart. I graduated, wrote my thesis, and became a history teacher at a Waldorf-Rudolf Steiner school from 1983-1998.

Why did you do that?

Quite simple. My school life took place during the late 1960s and through the 70s.  I was heavily influenced by the ’68 movement. When I finished school, my goal was to revolutionize the world. I had to abide by the decision by my family that none of us could go into the management of the family company. So, I was totally free and studying was…well you had to study something.

In the late 1970s I belonged to the group of founders of the German Green Party—the first ever. I was still studying. In 1983, after I thought I had finished my thesis (although that took longer), I started teaching because for me, school was a kind of reforming element. It was a Rudolf Steiner school and you could change things.  The school was responsible for its own finances, because in Europe most other schools are usually run by the state. But this was private.

Is that how you learned about business?

Partly. On the other hand, since 1987, I was introduced into the wealth management of my family. From 1991 on, I was on some of the boards of our capital management companies, on the board of our Cayman financing company and the board of our North America real estate company–so I had a dual life. On the job training. I didn’t know much about management then and I’m still learning.

How did you acquire Leica?

I moved to Salzburg, Austria in 2002. In that year, I came up with the concept of ACM ACM Projektentwicklung (Project Development) GmbH, Salzburg. We looked at several investment scenarios.

One thought was what would happen if we re-entered the pulp-paper-packing industry via Sweden—which my brother later did. He manages that now on his own.

We invested in a precision machining company, Weller-Feinwerktechnik because it had always been profitable, and they wanted to sell in 2002. That was the first time we were in Wetzlar. My co-managing director was Wolfgang Kisselbach. His father, Theo Kisselbach, was the key guy in the Leitz factory for development and marketing. This gave us a sort of connection with the Leitz environment. In 2003 we bought Via Optik and decided we’d do something in the optical industry. In 2007 we set up CW Sonderoptik to develop Summilux-C Cine Lenses.

The key step was when we met with Leica in August 2004 and decided that ACM would acquire 27.4% of Leica. We figured we would study the company for one year. But then, how do the Americans say… ‘Oh boy, were we wrong.’  Suddenly everything collapsed at Leica. Management, financing, etc.

By 2005 it was a mess. My two other brothers, C and M, said, ‘What did you do with our money?’

I said, ‘I still believe we have the right strategy. We entered rather inexpensively and were able to get through the refinancing of additional shares at reasonable rates. With the right strategy and the right management, in the end we will create more value than what it is today.’

My brothers said, “you destroyed our money, in what kind of mess did you get us…” And so on.

I guess they were not happy.

It can happen in any family. So I said, “I’m responsible for it, I’ll take it.’ And that was the start of dividing our shares of ACM.

Were you interested in photography or Leica cameras before that?

I learned how to take pictures like a good German boy getting his first camera. When I was young, I got a camera from a photo store along with specific instructions on exactly how to take the pictures: for example, cloudy bright is f/8 at 1/125 th second exposure. It was a very weird camera. I still have it today. It was a Penti from Pentacon Optische Werke in Dresden. It was produced in the German Democratic Republic (East Germany) with an awful lens. But I learned to shoot.

In my last year at university, I had a girlfriend who was enrolled in a 3-year program as a photographer’s apprentice.  She was into photography, definitely. And this is a fascinating story. In the second year of her apprenticeship, she came home and showed me a camera. She held it carefully and said in a reverential tone, “Look what I’ve got.”

I said, “Well…it looks like a camera.”

And she said, “No, no…look carefully at what I have here.”

I said, “It’s still a camera.”

“Not exactly. It’s a Leica.”

I said, “So what.”

She looked at me, probably thinking, what kind of nincompoop is this?

She had bought her Leica camera with the money she had saved and I reacted like a fool. Half a year later, our relationship was over. I never forgot the name “Leica.”

I came back to cameras via the digital world. In 1999 I bought my first digital Canon. I bought it at a Staples in Massachusetts. That told a story in itself, because formerly you went to a specialized photo dealer. Now you could go to a big box office supply store. At this time I was doing a website for one of the companies I had invested in. Now it was suddenly so easy to shoot a picture, edit  it and whoosh—upload it. That’s how I came back to photography.

In 2004 we bought into Leica. In 2005 we had this family crisis and we cut our inheritance in thirds…

This must have been stressful.

I’ve never been scared in my life. Being scared doesn’t help. I don’t think I was stressed. I was under pressure, but when I’m under pressure I take half a day off and think about strategy. This usually works.

In 2005 you could definitely have said that I was under stress but I was focused on what had to be done. It was a tricky situation because I think our chairman of the Leica supervisory board didn’t understand much about digital and didn’t consider it. He had been running Leica since 1996. He was a great guy, but he loved analog photography. Maybe he also really liked Leica’s campaign at Photokina ‘I am a film dinosaur.’ So I thought it was time to replace him and reorganize management.

Our team worked continuously on various projects.  After showing in 2006 the digital Leica M8, we were able to show a complete new product roadmap in 2009 and this was the key element of our success nowadays. In the last year we financed everything from our cash flow and paid back our loans.

Sounds like you’re enjoying this.

I’m already thinking of the strategy for the next 3-4 years. We cannot do it alone. We now have a partner, but we are still the majority. We are committed. I call this Stage 2, the roll-out of Leica as a worldwide brand, because we’re not available in a lot of markets. We’re not available in parts of Russia, Emirates, India, we only have 1 store in Latin America, and so on.

We are planning a concept is called Super Store. The slogan is, “Where the picture comes alive.” And we’ll show more than cameras. The idea is to have 10 to 12 Super Stores worldwide. It will have exhibition space, a studio, it will be the next step.

We will break ground in 2012 for a new building to move Leica back to Wetzlar from Solms. It will be in Leitz Park, next to our other companies.

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