Thinking Small: The Long, Strange Trip of the Volkswagen Beetle

by Andrea Hiott

  Helmut Krone was not happy to hear what Julian and George had planned. Not only did he feel left out, and not only did it seem that Julian had “sided” with George, he also thought they were simply crazy: Even if they’d asked Helmut, there’s no way he would have left DDB then. Like Bill, Helmut thought there could be only one creative agency, and that was Bill’s agency. Like so many others, he just didn’t think DDB’s model would work anywhere else. When Helmut saw Julian and George walking together through Bryant Park just after they’d resigned, he called out a mocking “cuckoo-cuckoo.”3 And he wasn’t the only one: A lot of people at DDB saw them as traitors, or thought they were setting themselves up to fail.

  As it turned out, however, there could indeed be more than one creative agency in town. In fact, all of Madison Avenue would eventually use the same arrangement Bill had pioneered. It is a transformation that has since been called the Creative Revolution of advertising. It happened in the late 1960s when the entire advertising establishment, mirroring the counterculture as it challenged the status quo, began a structural reorganization, eventually throwing out many of its old policies and ways.

  It might seem like Bill’s students were rejecting him by leaving, but in reality, it was the ultimate sign of his success. DDB didn’t suffer; it actually benefited from their departure. In fact, it was perhaps Julian and George’s move that truly solidified Bill Bernbach as a name everyone on Madison Avenue knew, the leader of a revolution, a man who transformed the structure of advertising and instigated a new norm on Madison Avenue. It was by leaving Bill that his “students” spread his philosophy and ideas, and DDB became a kind of “founding father.” In 1965, Advertising Age wrote: “It is quite possible that the effect of DDB is4 as culturally significant as that of, let us say, writers such as Mickey Spillane, Kerouac, Ernest Hemingway, or artists such as Paul Klee, [or] Andy Warhol.… ” By the 1980s, a whole new generation of advertising agencies such as Wieden+Kennedy (inventors of Nike’s Just Do It ads), Goodby, Silverstein (Got Milk?), and ChiatDay (creators of the Think Different ads for Apple, one of which featured Bill Bernbach himself)—all used the same structure of free association and teams that DDB had begun, to create beyond-the-box ideas born from the spirit and revolution that began with Bill.

  Papert Koenig Lois was a huge success. The agency made millions of dollars and produced scores of legendary ads. Eventually others began to break off from Bill to start new agencies; Mary Wells Lawrence, a protégée of Bill’s who became the first female CEO of a company listed on the New York Stock Exchange (Wells Rich Greene), was one of the more successful and famous ones. Helmut Krone would also leave for a while, and though he would be known as one of the most influential and brilliant art directors of his time, he would eventually go back to DDB and stay there for the rest of his career.

  PKL and their staff in the lobby of the Seagram Building, NYC. (photo credit 58.2)

  In the early years of DDB, Bill carried a card around in his pocket that said, “He might be right.” He would pull that card out in meetings and hand it to the person he was meeting with: It was supposed to remind them both to keep open minds. And that would prove to be something Bill himself constantly struggled with. The more famous he became, the more difficult it was for Bill to remember that the other guy might be right. But even those who disagreed with him found it hard to stay angry at Bill for long. “We disagreed sometimes about how an ad should be done,”5 Helmut once said about his relationship with Bill. “And now and then we played this game of getting a little mutual antagonism out of the way before settling down to work. But he never squashed me … He could have so easily … But he always left me some breathing room. Yes, we argued, but all the while we did it with love … ”

  Bill Bernbach died in 1982 at the age of 71. One of the last things he talked to anyone about was Volkswagen (DDB was working on a new ad for them at the time). When the guys from DDB reluctantly left his hospital room the night he died, Bill reassured them: “I’ll be back on Monday,”6 he said, “and we’ll do some great stuff.”

  “What a different life it would have been without Bill Bernbach,”7 Helmut Krone later said. That was true in more ways than one. No one who ever worked with Bill was able to leave him behind because from that day forward, no matter where they went, their time at DDB would be one of the most important parts of their résumé.8 But a person’s legend is often bigger than the actual woman or man. And “trying to live up to one’s legend” is oftern a road to insecurity or hubris. Bill’s reputation became so big that he was rarely capable of sharing the stage. Some felt that Bill disowned his “sons and daughters” when they left him; he never sent any business their way or praised or recommended them, but in truth, he was always aware of them, watching them from afar. In 1978, for instance, nearly eighteen years after George and Julian left DDB, tragedy struck George’s family: He lost one of his beloved sons. That very next morning, Bill was waiting downstairs in the lobby of George’s building, just standing there quietly, so that when George came down he could give him a hug.

  In the end, who was most responsible for the VW ads, most claimant to the fame that followed? It’s hard to say. And frankly, it doesn’t matter. The magic was in the interaction. DDB was an environment that nurtured ideas, and it was that inexplicable chemistry that made every new ad at DDB seem unexpected but fated, or as George once put it, “like pulling pigeons from a sleeve.”9

  In the years following the Second World War, the push and pull between Germany’s banks, its businesses, its governments, and its people—especially in the form of labor movements and work councils—evolved into a new system that helped people get out of their own way, and for a while, the market was in a state of grace. No matter which way you slice it, postwar Germany was eventually a major triumph in the history of democracy, a time when the choice was made for a national economy based on freedom, rather than one based on governmental or corporate controls. As the next twenty years in Germany would show, Realpolitik in the country became a matter of economic rather than military might. In an interview from February 1975, in the Swiss journal Finanz und Wirtschaft, West German chancellor Helmut Schmidt summed it up well when he said, “For some years now our economic policy has simultaneously been our foreign policy.”1 And one strong pumping organ of that economic policy has been Volkswagen.

  People in America (and that included me, before spending so much time in Germany) rarely understand what a giant international company Volkswagen has evolved into in the decades since the Second World War. Most of us don’t even know that the VW Group (which is a subset of Volkswagen AG) includes Audi, Bentley, Bugatti, Lamborghini, Seat, and Škoda or that today VW is Europe’s largest carmaker and the second largest car company in the world. In 2009, VW’s corporate earnings were 911 million euros (about $1.2 billion), and this in the midst of a worldwide recession.

  The Volkswagen parent company became an Aktiengesellschaft (Volkswagen AG) in 1960, when it first decided to open some of its shares to the public. In that new configuration, 20 percent of the company was retained by the state government, 20 percent was retained by the national government, and the other 60 percent was sold to stakeholders and shareholders. For clarity, to imagine this same configuration applied to an American car company like Ford, it would be as if the American national government controlled 20 percent of Ford, while the state of Michigan controlled another 20 percent, and the rest was owned by private investors and stockholders. This is not a comparison that would literally hold true, but it does highlight the very different ways the two companies started: VW as a national enterprise, and Ford as a private one.

  While many car companies have had moments where they were at times publicly owned (in other words, owned and funded by the taxpayers and the government), that has been less a rule or founding principle of other car companies and more a temporary fix to save a company from going bankrupt, or to carry it through a changing political and social climate (after the Second World War, for
example, many European car companies experienced some degree of public ownership until they could survive as private enterprises). But the reason why Volkswagen has been more permanently structured as a (partly) publicly owned company goes back to the way the VW company itself was formed.

  Because the plant was built using funds of the German Labor Front—a national, governmental organization that had been formed by the Nazis from the workers’ unions and required all workers to pay fees to it—it was built from the money provided by German workers. And because of that, German workers’ unions (IG Metall, for example), which are economic powerhouses in Germany in their own right, still, to this day, have an agreement with VW that gives them an important stake in the management of the company (an agreement reached between VW and the unions after the Second World War) and a very big say in VW’s decision-making process. Volkswagen’s executives, for example, have to have the consent of labor representatives before they can do something like move the production of a car to a new plant.

  And while the German national government relinquished its 20 percent of VW shares in 1988, the government of Lower Saxony still owns 20 percent. In fact, there is something called the “VW Law” that effectively gives the state government of Lower Saxony the ability to block any resolution that it does not agree with at Volkswagen. So even though it has only 20 percent of the company’s shares, it could nevertheless exercise full control of the plant, but even more specifically, if another car company or person should have controlling shares of the stock, the state of Lower Saxony could prevent them from taking over the company as a whole. (The European Court of Justice, in 2007, ruled that this law was not constitutional, and thus the balance at VW is currently being reconfigured, as is the VW Law.)

  In any case, as it now stands, the people (the workers) and the government (the state leaders) both have a heavy influence at Volkswagen, and the company thus spends a lot of time and energy balancing its management concerns, its unions, its shareholders, its stakeholders, its “daughter” car companies, and its authoritative figures. With such a large size and with so many differing voices, decisions do not always get made quickly or efficiently. The company that few thought would survive in 1945 has become an international economic powerhouse, but it has done so using a business model and a method of production that can appear inefficient and slow at times, operating in a far different manner from other German car companies—companies like Porsche.

  Today, Porsche and Volkswagen are two of Germany’s most famous carmakers. They both started with one man, Ferdinand Porsche, but as businesses, they have evolved very differently over the years. Volkswagen is a giant operation on all counts. Porsche has an incredible image and reputation, but remains more a boutique, luxury car company. (Volkswagen AG sold over 6 million vehicles in 2010, and Porsche sold less than 100,000, but Porsche made more money per car.) The differing sizes and products of these two companies has meant that, though they started in the same place, they have become very different business models. In fact, in Germany in 2007, it would have been very hard to find two companies as structurally different, and with such a differing Weltanschauung (philosophy or worldview) as Volkswagen and Porsche.

  But the split between them goes beyond their structural style and business models, tied to a dynastic feud between two families that are really one family: the Porsches and the Piëchs. It’s such a complex, soap-opera-like family division—one that includes affairs, deals with Arab investors, and every imaginable kind of familial problem, multiplied tenfold—that it’s hard to remember it all started with one man. When Ferdinand Porsche died on January 30, 1951, he left behind a design firm in Stuttgart (the design firm that was in that very moment transforming into the Porsche car company of today) as well as a dealership in Salzburg, Austria (which would later become the biggest dealership in Europe). The financial backing that allowed these two Porsche firms to grow came in large part because of the new agreements that were made between Porsche and Volkswagen when Nordhoff, Ferry, and Anton met on September 17, 1948.

  Porsche had two children, Louise and Ferry, and it was to them he left the Porsche businesses when he died. Louise and Ferry had a close relationship, but they were very different people: Ferry, as he described himself, was more of a mother’s boy, and had a tender, spiritual side that Louise perhaps had as well, but that she was less apt to show. Louise always came off as very strong, sometimes rude or gruff, with a personality much more like her father’s. Today, Ferry’s sons carry the Porsche name, and Louise’s children have the last name of the man she married, the man who was in prison with her father in France, Anton Piëch. As was always the case with Ferdinand Porsche himself, business and family remained deeply intertwined; thus the rivalries, miscommunications, and struggles within the family soon extended to the Porsche and Volkswagen firms, and have played out in the wider German arena of politics and economics since Ferdinand Porsche’s death.

  In Ferdinand Porsche’s will, he gave Ferry control of the Stuttgart design firm, and Louise control of the Austrian dealership. Anton, Louise’s husband, hardly outlived her father, dying very suddenly in 1952. Louise was thus left to raise her four children more or less alone and simultaneously hold down the Austrian side of the Porsche company. Ferry and his family were dealing with the German part of the Porsche business in Stuttgart, a town and country where “Porsche” was already a name that carried weight. The Porsche and Piëch children thus grew up in different countries, and in very different ways. The Piëch children were sent to Austrian boarding schools, for instance, schools that Louise’s son, Ferdinand Piëch, the family member who would (much later) become the leader of Volkswagen, now describes as “elitist, Spartan, and strict.” Ferry’s boys, on the other hand, went to the Waldorf schools, German schools inspired by Rudolf Steiner. Steiner is the founder of Anthroposophy, a philosophical movement guided by “living through deeds of love, and allowing others to live with tolerance for their unique intentions.” One oft-repeated motto of the Waldorf schools (which are still prominent in Germany today) is, “Receive the children in reverence, educate them with love and send them forth in freedom,” a big difference from the Spartan, strict world that was known by Ferdinand Piëch! But the Porsche boys could be harsh too, often reminding Ferdinand Piëch, for instance, that he did not directly bear the Porsche name.

  But even though he did not carry the Porsche name, there had rarely been a minute in Piëch’s life when he could escape the ghosts of his father and grandfather. When he would begin his rise at Volkswagen, for example, there would be rumors about his father Anton’s complicity in labor camps during the Second World War. Many tried to keep Piëch from rising to authority, saying that if the story got out about the role his father had played in the use of forced labor at VW, it would not bode well for the company’s public image. With Ferry still around, the Porsche boys could lean on their father, a man who was able to be more accountable for himself, to discuss his activities during the Second World War with them and with the public, and to share or deflect the burden of that weight. Both Louise and Ferry gave their children a great deal of love and support, but growing into adulthood without a father certainly took its toll on Ferdinand Piëch.

  In any case, these kinds of underlying tensions within the Porsche and Piëch families understandably carried over into the workplace. For example, in the 1960s, Ferdinand Piëch (who was working for the Porsche company at the time, and had not yet joined VW) created a race car known as the Porsche 917. But his method of building this car—using the best parts and the best research and engineering advisors, regardless of time and cost—caused a great deal of tension. The Porsches disagreed with his reasoning and approach, and this exploded into a huge family argument, though the 917 was a landmark race car, debuting in 1969 and going on to win Le Mans.

  By 1970, it had become clear to Ferry and Louise that their children were not getting along and that the fighting was affecting the business. They ultimately made the decision that
none of their children would be allowed to work at Porsche ever again. The children could own their shares in the company and be on the board, but they couldn’t hold official management positions there. This is how Ferdinand Piëch ended up at Volkswagen. His response to this new rule was to start working at Audi, which eventually led him to VW.

  As Ferdinand Piëch became the chairman of the board and guiding personality of Volkswagen, so too did the two companies take on the Porsche/Piëch feud. The Porsche brothers criticized the VW business model and their cousins’ complicity in it (and they also contested the VW Law, which would have kept them from being able to own VW). But Piëch learned how to operate in the VW world, and it worked to his benefit and to the benefit of VW (Piëch saved VW from financial troubles and deflected yet another near buyout from Ford). The feud reached its boiling point in 2008, when Porsche nearly took over Volkswagen, after the ECJ ruled against the VW Law, thus making such a takeover possible. It might have been the most heated move for acquisition in all of German industry, made all the more spectacular because it almost worked: Porsche nearly took over VW, a company fifteen times its size. But it had been a speculative, hedge fund kind of move, heavily involving stocks, and when the market collapsed in 2008, the deal collapsed as well. The Porsche company was thus left vulnerable, with copious amounts of debt, very angry investors, and the possibility that they would have to file for bankruptcy. All this, and in the blink of an eye.