Interview with SAP Co-Founder Plattner: 'The World Has Been Living Beyond its Means'
Hasso Plattner, the co-founder of German software giant SAP, is a multi-billionaire. He lost a lot of money in the financial crisis in 2008. But in an interview with SPIEGEL, he defends the system -- capitalism, the stock market, even high bonuses for managers.
The two sides of Hasso Plattner become evident in the eastern city of Potsdam. At one end of the university campus is the high-tech institute that he finances and which is named after him. At the other end is his venture capital firm, through which Plattner buys stakes in start-up companies that promise future profits.
The subprime crisis and resulting financial system fallout have hurt many.
The former IBM manager is a fan of fast cars, has been praised by Bill Gates for his art collection, and engages in wild sailing duels with his arch-rival, Oracle CEO Larry Ellison. But he still keeps coming back to Potsdam.
It is noon on a rainy day in Potsdam. Down in the parking lot, Plattner's silver Ferrari is sparkling. Its windows get terribly fogged up in the mornings, he says, dressed in a shirt and heavy sweater. He's currently looking for an apartment in the area because he doesn't want to keep staying hotels when he's got things to do in the Berlin area. In a few days he is flying to the Bahamas. At least the weather is better there. The economic crisis catches up with him wherever he goes.
SPIEGEL: Mr. Plattner, we want to talk to you about money.
SPIEGEL: A dramatic year for the world economy is drawing to a close. Do you know how much you personally have lost in 2008?
Plattner: I honestly haven't calculated how much less my SAP shares alone are worth. It won't be difficult through. And it's certainly a lot.
SPIEGEL: Well over a billion Euros.
Plattner: Fortunately that's just what it's worth on paper. Right now I'm more worried about my foundation…
SPIEGEL: … which supports a whole university institute here in Potsdam with several hundred million euros. Because it's underpinned by SAP shares?
Plattner: Yes, and of course the foundation loses capital when the share price drops. In this way, it's losing real value.
SPIEGEL: Someone with as much money as you certainly isn't investing it himself.
SPIEGEL: You still want to know how business works?
Plattner: Many years ago I invested money in real estate that I knew nothing about. It went pretty badly. And you know what? It was my own fault. I should have looked into it better first. There can be a damned big difference between publicity photos in a brochure and reality! But my father had an even worse experience.
SPIEGEL: Do tell.
Plattner: He once bought land in Florida. He had only seen it by low tide. At high tide, it was underwater, and every now and again a crocodile would swim by.
SPIEGEL: Have you ever taken a big loss yourself, for example like the owner of pharmaceutical company Ratiopharm, Adolf Merckle, who spent millions of euros betting against VW stock and then ended up brazenly demanding government guarantees?
Plattner: That was a particular kind of speculation. And I can't bring myself to feel much regret for Mr. Merckle's losses…
SPIEGEL: …because somebody who's betting on falling share prices is likely to talk down the company?
Plattner: Not necessarily. Others say that by using methods like short-selling you can control a company, because only those who are really susceptible will react. In the end, though, every kind of speculation is a bet. If you accept speculation, it has to be regardless of whether share prices are going up or down. But when I lose money like that, I don't get to call in the government like Mr. Merckle.
SPIEGEL: Currently SAP share prices have fallen quite sharply. Is that because of the usual unfair market jitters?
Plattner: I have no idea. Maybe SAP was overvalued in years past.
SPIEGEL: Have you ever wished that you had never taken your company public?
Plattner: Oh, you know, secretly you always have thoughts like that. But the company didn't go public because it needed money for investments.
SPIEGEL: That's the usual reason for taking that step.
Plattner: Sure, but we were actually always able to finance our growth from our own coffers. That said, without the stockmarket listing SAP certainly wouldn't have become so popular around the world so quickly.
SPIEGEL: But the ongoing pressure for high returns can strangle a company.
Plattner: Of course, there's always that demand for growth. And as a CEO, you can feel like a gladiator in the Colosseum. The jeering crowd of ancient times has been replaced by today's analysts who give you the thumbs up or down. And of course shareholders will be angry if SAP's high profitability drops. But if you're going to play the game, you have to play by the rules. And it's a game that's being played around the world. We can't allow ourselves to have any illusions about that.
SPIEGEL: Sometimes it's a nasty game. In 2005, Deutsche Bank CEO Josef Ackerman announced a 25 percent return for the company while at the same time saying it would lay off more than 6,000 employees.
Plattner: Objectively speaking, he was completely right. His bank needed those returns in order to stay globally competitive. He just expressed it badly. It's something that's understood almost everywhere around the world, just not in Germany, where one sometimes comes across a confused social romanticism.
SPIEGEL: What's utopian about people wanting a just society?
Plattner: Is German society unjust, then? Ever since the economic miracle of Ludwig Erhard, we Germans have been entrenched in a capitalist business system, on top of which we have super-imposed the cloak of a "social market economy"…
SPIEGEL: …which we find reasonable, because it softens the effects of extreme capitalism.
Plattner: I completely agree. But there's a feeling in this country that we don't want capitalism any more, and instead want something different, something nicer. But nothing better exists, despite all the system's weaknesses and its dark sides. East Germany showed us where a communist planned economy would lead us. Some people have started talking fondly about those times.
SPIEGEL: For example, the actor who played the police detective on the TV crime show Tatort, Peter Sodann, [now running for the largely ceremonial post of German president on behalf of the Left Party in an election next year] said: "I won't let the GDR be taken away from me."
Plattner: For me, that's just curious. On the other hand, the man is a candidate for the office of president of the republic.
Customers queuing outside a branch of Northern Rock in London, September 2007.
Plattner: That really bothers me too. The only thing to do is take a look at the world, Cuba for example.
SPIEGEL: But one of the origins of the financial and economic crisis was the relentless greed for ever increasing returns.
Plattner: That greed is there. But even more decisive was the fact that stakeholders took on unmanageable risks. All of them at that -- bankers, politicians, analysts, rating agencies, American homeowners and European small investors. People who don't understand what Lehman certificates are shouldn't buy them. At every level, the intransparency of the risk was largely responsible for the crisis. Most people didn't know what they were buying anymore. So these dangerous investments were able to infect the whole world without people noticing. Once the disease broke out, it was already too late.
SPIEGEL: When did it first become clear to you that this crisis was bigger than all previous cyclical fluctuations?
Plattner: At first I saw television pictures of the long lines of people outside branches of the British bank Northern Rock. People were suddenly scared -- of mismanagement by their bankers. Some time later I was in the Caribbean, on Martinique, where Americans like to vacation. All at once they had disappeared. Then you saw pictures everywhere of Americans forced to leave their houses because they could no longer pay their mortgages. Even today I find that incomprehensible, since the banks don't get anything from having the houses sit empty. They can't get rid of them anyway. They could have at least spared those people the trauma of not having a roof over their heads.
SPIEGEL: Isn't that typical for this extreme trait of capitalism? First everyone wants to hit it big, then everyone runs away.
SPIEGEL: What was the result? Had it become too easy for Americans to live on credit?
- Part 1: 'The World Has Been Living Beyond its Means'
- Part 2: 'We're All in a Complete Fog'
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