About the art of selling a company and the humane investment banker
Alexander Grünwald is one of the top executives at GCA Altium, a global investment bank with more than 450 employees world-wide. In 2003 Alexander Grünwald and Max Burger were instrumental in creating the btov Circle of Investors.
Florian Schweitzer: Alex, you are one of the most successful Investment Bankers in Europe today. Let us go through your personal journey and out of that try to understand what I would call “the art of selling a company”. If I am right, you created your first company at the age of 21. It was in the early nineties after the iron curtain had fallen and your hometown of Vienna became a gateway to Eastern Europe. How did you come up with the idea to get the “Chiquita” licence and sell their products in new markets?
Alexander Grünwald: Thanks Florian. I am just an investment banker — it’s up to my clients to judge if I’m successful or not, it’s their opinions that matter. Back to your question: I was fascinated by the brand Chiquita — a commodity becoming a global brand. Where can you find that? And I connected the dots: I had no technical skills to create a product but was hungry to build something and go on an entrepreneurial adventure in Austria and CEE.
Florian: Based on what information or experience did you know that Eastern Europe would accelerate its growth and what was your most important learning from that first company you built?
Alexander: I grew up in Vienna — a city that was and still is one of the “Gates to the East”. It was therefore not very difficult to see opportunities arising there after the fall of the iron curtain. The most important learning from my first company was humbleness. But this only happened after I, building on Chiquita’s success, had massively failed with a new business idea in the field of animal feed. That was the hardest and maybe the most important lesson of my life. I had borrowed money from friends and with that failed with my new business because I had underestimated the big established companies defending their territory. It took me way more than a decade to pay back the personal loan and bank debt I’d taken out. It was a horrible time.
Florian: Right after Chiquita you were briefly an advisor and gained some initial experience in M&A, and out of that you started MarchFifteen, the first Austrian early stage VC. You did that together with your school friend Toto Wolff. He then moved into motor sports and shifted his investment focus on established companies while Max Burger hired you to run Altium Zurich at the beginning of 2003. In parallel to your start at Altium — which today is GCA Altium and the European arm of a global M&A firm — you, Max and I initiated the btov Circle of Investors within a couple of days. Without you two that would not have been possible — thank you again!
During these 16 years you grew from EUR 10m transactions to Breitling, for example, which you sold for close to EUR 1bn. What are the three most important things you learned from this journey?
Alexander: The company I built with Toto was MarchFifteen, which we originally called Peter Pan (laughs). I still love that. It is about making ideas fly. Peter Pan is a kids’ hero. It is a great name for a VC firm, but I guess since we planned to list our firm some day it just wasn’t the right name. People said it’s too childish. Well, I will always be a child at heart. To your question: Success is the combination of hard work, the right team, a good strategy and a bit of luck — and then it is execution. That’s how we built our firm into a global powerhouse. Toto and Max will always remain very close friends, role models and mentors.
Florian: Going public with a VC firm — really?
Alexander: Yes, a stupid idea from investment bankers and investors. But they were crazy times during that first Internet bubble at the end of the nineties. We had the most exciting portfolio in Austria’s internet industry, but were told that we did not have a real equity story with our focus limited to Austria, and that we must have a pan-European story instead. Off we went and opened offices in Tel Aviv, Warsaw and Budapest — just to have a story. Salomon Brothers was the underwriting bank and on the day we had got green light to list at German “Neuer Markt” Max, who represented Apax Partners on our Board, and I had a drink at a hotel in Frankfurt after the committee meeting at the Stock Exchange. I asked him if this all made sense. Max’s answer was fresh and honest as always and he asked me if I’d like to hear his answer as a friend or an investor? I said: Both please. He then said: As an investor let me tell you, great — do it. As a friend: Stop that BS and do exactly what you are very good at: Invest in Austria. That is exactly what we did then until 2002. In those years however we became risk averse as did so many investors around us. We took the decision to pay out all the remaining cash we had and closed that chapter as very successful young Internet investors.
Florian: What was the most important learning of that joint venture with Toto Wolff?
Alexander: You can position yourself very quickly as a thought leader in a specific market if you work very hard and have a lot of chutzpah (quality of audacity). What we did was connect the dots with startups, corporates and people, which all together was very successful. Second learning: Stick to your knitting! But joking aside: Toto’s career development is just amazing. I am super proud of him and always knew that one day he would be one of the big hitters. I was right.
Florian: Toto Wolff — are you kind of two brothers?
Alexander: Yes, kind of. We have known each other since we were five years old. We met on the first day of pre-school and have stayed best friends since then. We did MarchFifteen together, I am Chairman of his company, owning 30% of the Mercedes AMG F1 Team, and he is the co-Chairman of the private foundation my wife and I started to commemorate our friend Mary Bendet. Toto ran his first company in my office and he spent a lot of time with our family since his father had passed away when Toto was 13. He has felt first-hand what it means to fall financially from being very wealthy to basically nothing. We were always like brothers — the same happened in my family. My father went bankrupt twice. It was awful. Back then, officials would come to your home on a Friday evening and put a bailiff’s seal on your table, confiscate the table, and sell it to pay off your debt. In those hard hours my father told us both to hold on and keep going. If you fall, get up again quickly and work harder so it does not happen again. We took this lesson to heart.
Florian: You and Toto not only share a lot of past joint businesses, you also share your philanthropic endeavours. You both had a school friend who died because of cancer. The Mary Bendet Foundation supports thousands of children in Israel. You and your wife Nirit take great care to transfer 100% of all donations to the organisations on site. A lot of emotions are related to that work. How many days per year do you invest in it?
Alexander: I probably invest 20 days per year and my wife another 20.
Florian: The annual events are the most professional fundraising events I have ever attended. Probably because there is so much true dedication related to it. I understand how Toto convinced Nico Rosberg and Lewis Hamilton to participate but how do you know former Prime Minister Ehud Barak or Chancellor Schröder?
Alexander: I know Ehud through a very good common friend of ours, and with Gerhard Schröder I was just very persistent. The Mary Bendet Foundation is my real love. Helping kids is what really drives me. My job is great and I love it — and it gives me the means to do what my heart wants and that is helping kids.
Florian: Niki Lauda also joined the Mary Bendet Foundation events. You both knew him very well obviously. What is the most important lesson you got from him?
Alexander: Kudos to the losers — and never give up. Winning is easy, it is from the defeats you learn the most. I knew Niki through Toto. Niki and Toto had a very special relationship, he was sort of a father for him. Niki was a hero, a fighter, legendary. It’s sad that he is not around anymore.
Florian: Where do you see the differences in the startup ecosystems in the Nordics, the UK, Germany or any other country in Europe, and how do you see Romania, Bulgaria, Greece and such?
Alexander: Well to start with one, people should build a statue for the Samwer brothers in Berlin! They have mobilised so much there and have been incredibly successful. In Europe in general there are more and more tech hubs emerging, also in Eastern Europe. I’m sure we will see big, successful companies arise because there are good universities that can equip people with the right skills and an entrepreneurial mindset, in countries where the outlook is more global. Israel is a great example of this successful combination. Romania and Bulgaria, for instance, also have to take a more global approach because their own markets are just too small. And when you combine such a mindset with an environment where “it’s ok to fail” — where it’s accepted that not all ventures succeed and one learns from this — this makes for a setting where innovation can happen.
In Germany and Switzerland, unfortunately, it’s not as accepted that it’s ok to fail. I believe that Switzerland could be much better at producing startups — in theory, we have all the necessary resources. But there’s just not enough hunger, not enough bite. We take our circumstances more for granted whereas people in other areas of Europe are still motivated to capitalise on the freedom they have inherited.
Florian: What in investment banking is science, experience and what is art?
Alexander: It is the combination of psychology, emotional awareness, financial know-how and process. And above all: Do not take yourself too seriously. Listen to what the client wants and execute to achieve his dreams.
Florian: What have you learned as private investor along the way that you’d love to share with your fellow btov investors and the wider community?
Alexander: You always invest in the jockey and not in the horse! Good Management Teams make out of bad ideas great companies while great ideas can become mediocre if executed by the wrong people. This and a bit of mentoring, coaching and door opening make great companies even better.
Florian: Thank you for this interview and everything we do together, Alex!