Karl Theodor zu Guttenberg

For Bavarian Exile, a Second Chance

Karl-Theodor zu Guttenberg dpa
Sharp exit from politics for Karl-Theodor zu Guttenberg.
  • Why it matters

    Why it matters

    Former minister Karl Theodor zu Guttenberg has been vocal in his criticism of Germany’s slow uptake of digital technology and innovative thinking.

  • Facts

    Facts

    • Karl Theodor zu Guttenberg had his PhD revoked after it was discovered that he had plagiarized parts of his dissertation, leading to the abrupt end of his political career in 2011.
    • In 2013 Mr Guttenberg founded Spitzberg Partners in New York, a boutique corporate advisory and investment firm.
    • The former politician advises companies including Lufthansa and the fintech start-up Ripple on regulation and innovation.
  • Audio

    Audio

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Germany’s former defense minister Karl-Theodor zu Guttenberg, who lost his job in 2011 after a PhD plagiarism scandal, sits in the bare offices of a Berlin startup investment firm. A discussion rages over whether German startups will always simply copy their American peers.

“Copying? Ha! I guess I took that to new levels,” he says.

His past is never far away. Mr. Guttenberg was a rising star of the Christian Socialist Union and a minister, first of economics and later of defense, in Angela Merkel’s second term in government. That was before the plagiarism debacle cost him his PhD title. He departed the political hemisphere with his tail between his legs and these days he says it’s not political ambition that stirs him, but his role as a startup consultant.

After his abrupt exit from politics, Mr. Guttenberg and his family moved to the U.S. East Coast. In New York he founded Spitzberg and Partners, a boutique corporate advisory and investment firm. The former politician advises companies including Lufthansa and the fintech start-up Ripple on regulation and innovation. For some time now he’s also been on the advisory board of Mountain Partners, the holding company of Cornelius Boersch.

“The rhythm of politics makes it hard to tackle the substance of things.”

Karl Theodor zu Guttenberg, Former German Defense Minister and Startup consultant

Mr. Boersch is also a recognizable figure on the Berlin landscape because of his links to the startup scene. As an investor he puts his money into start-ups, mainly in young companies in the internet sector, in developing countries. He’s a close friend of Guido Westerwelle, Germany’s former Foreign Minister, and traveled so frequently as part of Mr. Westerwelle’s delegation that nepotism accusations followed the pair. And it was Mr. Westerwelle who linked Mr. Boersch with Mr. Guttenberg.

Mr. Guttenberg advises Mountain Partners, which builds online market places in Indonesia and provides buses in Chile. But he’s mainly sold his businesses in Canada and the U.S., according to Mr. Boersch. And he is part of a tight network: Nina Shapiro, who long held a leadership position at the World Bank, sits on Mr. Boersch’s council alongside Mr. Guttenberg. He raves about his contacts with leading U.S. law firms and the smart people he employs at Spitzberg.

But on his business card his former posts as economics Minister and Defense Minister feature prominently, sparking the obvious question whether Mr. Guttenberg is only valuable as a partner because of his political connections.

“They don’t really play any role if we’re not doing any lobbying work,” he said, but added that his government experience could be of use to young start-up founders.

“How does a commission work, how does one get things done in Washington, or in Berlin? These are things you learn when you’ve been in politics.”

Mr. Boersch says that’s what makes Mr. Guttenberg useful to him. If someone wants to invest, they need more than money: they need know-how and they need contacts.

“Often who the co-investors are is a bigger deciding factor than who the founders are,” he said. “Many start-ups are overwhelmed with administrative questions.”

What he also offers is what he referred to as “translation services.”

With Mr. Guttenberg as “translator” Mr. Boersch wants to create new start-up factories or “incubators,” which can build made-to-measure tech firms up from scratch, and later help them expand. He started with that a decade ago and now has incubators in 10 countries. By the end of 2017 there should be 20 of them, with offices in Singapore, Argentina and South Africa. Earlier European businesses exported technology to threshold countries.

“Now we’re exporting business models,” Mr. Boersch said.

The concept is tried and tested, not least by the German company Rocket Internet, the Samwer brothers’ startup, which rolls out proven business models in Nigeria, Brazil or Indonesia.

Mr. Boersch has co-created these competitors: In 1999 he invested in Alando, the German copy of Ebay. The founders back then were Marc, Oliver and Alexander Samwer, who made their first million when they sold the firm. Mr. Guttenberg praises Rocket Internet as a pioneer and criticizes the carping about their lack of innovation.

The former minister also levels barbs at politicians who still don’t understand digitization. In terms of investment in fibre-optic network, Germany lags behind South Korea or Japan. Mr. Guttenberg still belongs to the digitalization team of his former political party, but said they’ve been slow on getting the ball rolling.

But he said he doesn’t want to come across as the “wise-ass from America.”

He said that when he was an active politician, he lacked the time to tackle these themes as intensely as he does now.

“The rhythm of politics makes it hard to tackle the substance of these things,” he said. But even with federal elections looming next year, he says he’s not considering a return to politics.

“I think that with my beastly behavior, I’ve contributed all I can to politics. There’s nothing more for me there.”

Pressed further , Mr. Guttenberg would only say “it’s about as likely as the chance that I’ll start farming giraffes in my cellar.”

Miriam Schröder is based in Berlin and covers the city’s start-up scene. Alexander Demling is a Handelsblatt reporter focusing on tech topics. To contact the authors: m.schroeder@handelsblatt.com.

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