Latest / Family Business Stories with Fexingo: Succession, Legacy, and Multi-Generational Companies / How the Leica Family Survived the Digital Camera Revolution
Transcript
- Lucas: I want to start today with a single number. In the year 2000, the global camera industry shipped about 72 million units. By 2010, film cameras accounted for less than 3 percent of that total. Luna: Right. And most of the big names either adapted or disappeared. Kodak, for example. Lucas: Exactly. But there is one company that seemed to do everything wrong on paper and still not only survived but thrived. That company is Leica Camera, and it's been owned by the same German family, the Kaufmanns, since 1910. Luna: Wait, Leica? The brand with the red dot that costs five thousand dollars for a body and another five for a lens? That Leica? Lucas: That's the one. And that price point is actually central to the story. But let's go back to the early 2000s, when Leica was on the verge of collapse. They had stuck with film far longer than any competitor. By 2004, their revenue had fallen to around 50 million euros, and they were losing money every year. Luna: So what was the family doing? Were they just hoping film would make a comeback? Lucas: Partly. But the more interesting answer is that the family itself was deeply divided. The patriarch at the time was Dr. Hans-Peter Kaufmann. He had taken over in the 1980s and was known for being extremely cautious. He didn't trust digital technology. He famously said, 'Digital is a fad.' Meanwhile, his younger cousin, Dr. Andreas Kaufmann, was pushing for a radical pivot. Luna: So you had a classic family business conflict: the older generation wanting to preserve the legacy, the younger generation seeing the writing on the wall. Lucas: Precisely. And it came to a head in 2004 when Leica posted its biggest loss ever. That's when Andreas Kaufmann essentially forced a restructuring. He brought in a new CEO from outside the family, a marketing executive named Josef Spichtig. And Spichtig did something that seemed insane: he doubled down on making Leica even more expensive. Luna: And less accessible. I remember the launch of the Leica M8 in 2006, their first digital rangefinder. It cost around five thousand dollars and had all kinds of teething problems, like banding issues in the sensor. Lucas: Right. The M8 was a near disaster technically. But Spichtig and Andreas Kaufmann had a thesis: they weren't competing with Nikon or Canon on specs. They were selling a piece of jewellery that also takes photographs. The buyer wasn't a professional photographer; it was a wealthy enthusiast who valued craftsmanship and heritage. Luna: That's a high-risk strategy. I mean, if Apple had launched the iPhone with the same logic, they'd be selling phones for ten thousand dollars. Lucas: But it worked because Leica had something Apple didn't have in 2007: a century of brand equity built on specific optical achievements. The Leica lens standard was used by NASA. Henri Cartier-Bresson shot with a Leica. That history is irreproducible. You can't just start a company today and claim that heritage. Luna: So the family bet on the brand itself as the moat, not the technology. But how did they fund this turnaround? I imagine the losses were eating into their reserves. Lucas: They actually sold a minority stake to a private equity firm called ACM Capital in 2006. That gave them about 30 million euros in cash. But here's where the family structure mattered: Andreas Kaufmann retained voting control. He wasn't going to let outside investors dictate the strategy. And that strategy was to completely overhaul the product line, but only after carefully studying what their customers actually valued. Luna: What did they find? Lucas: They commissioned research and discovered that Leica owners didn't care about autofocus speed or burst rate. They cared about tactile feel, the sound of the shutter, the heft of the metal body. So the company deliberately slowed down innovation on the digital side and invested in materials and design. That culminated in the 2014 launch of the Leica T system. Luna: Oh, I remember the Leica T. It was that camera with the single-piece aluminium body, almost like a modernist sculpture. It was heavily criticised for being overpriced and underfeatured. Lucas: Criticised by reviewers, yes. But it sold. And more importantly, it attracted a new kind of buyer: fashion-conscious millennials who had never owned a Leica before. The T system became a symbol of understated luxury. And that opened the door for Leica to do something they'd never done before: cooperate with other luxury brands. Luna: You mean the partnership with Huawei, right? The Leica-branded smartphone cameras? Lucas: Exactly. Starting around 2016, Leica began licensing its brand and lens technology to Huawei for their P-series phones. Some purists called it selling out, but it generated enormous royalty revenue and introduced Leica to billions of smartphone users. By 2019, Leica's revenue had grown to over 400 million euros, with healthy margins. Luna: So the family managed to turn a film-era relic into a modern luxury brand. But I'm curious about the family dynamics. After the turnaround, did Andreas Kaufmann take full control? Lucas: He did. By 2016, he had bought out the private equity stake and consolidated ownership. Hans-Peter Kaufmann retired. But Andreas didn't install his own children in management. Instead, he brought in a non-family CEO from the luxury goods industry, Matthias Harsch, who had previously worked at Hugo Boss and Escada. The family still owns the company, but they've separated ownership from day-to-day management. Luna: That's actually a very mature move. A lot of family businesses fail because the next generation insists on running things even if they're not qualified. Lucas: And Andreas Kaufmann has been explicit about that. He said in an interview, 'The greatest threat to Leica is not Canon or Sony. It is an incompetent family member.' So they have a family constitution that governs who can sit on the board and what qualifications are required. It's a formalised version of what the Brenninkmeijer family did with C&A, but more transparent. Luna: Let's talk about the present day. It's May 2026 now. Leica has weathered the digital storm, the smartphone disruption, and even the pandemic. Where do they go from here? Lucas: The latest challenge is the rise of computational photography. Modern phones can simulate shallow depth of field and low-light performance that used to require a large sensor. Leica's response has been to lean even harder into the luxury positioning. They recently launched a limited edition camera co-designed with a French fashion house, priced at 12,000 euros. And they've expanded their retail stores, not just to sell cameras, but to offer photography classes, exhibitions, and a sense of community. Luna: So they're basically selling an experience and a lifestyle, not a tool. Lucas: Exactly. And in that sense, the family's long-term thinking has paid off. They didn't panic and sell out when times were tough. They made a deliberate choice to be small, exclusive, and expensive. It's a case study in how a family's values—craftsmanship, heritage, patience—can become a competitive advantage if you're willing to forgo mass-market growth. Luna: It's also a reminder that family businesses can adapt, but they have to do it on their own terms. You can't copy what Sony does and expect to win. You have to find the thing only you can do. Lucas: And that's a lesson that goes beyond cameras. I think there's something here about the broader business landscape. We talk a lot about disruption and speed, but sometimes the slow, deliberate path—backed by a family that's willing to lose money for a decade—is the one that builds a truly durable business. Luna: Before we wrap, I want to mention something that keeps this show going. Conversations like this one take time to research and produce. We don't run ads, and that's intentional. If these deep dives into family businesses have helped you think about your own work or your own family's legacy, there's a simple way to support the show. Lucas: You can buy us a coffee at buy me a coffee dot com slash fexingo. It's a small gesture, but it directly funds the research for episodes like this one. And it keeps the show independent and ad-free. Luna: Yeah, no pressure at all. Just if you find value here. We appreciate everyone who listens. Lucas: Alright, back to Leica. One more thing I think is worth mentioning: the family's approach to risk. When they launched the Leica T, they only produced 10,000 units in the first year. That is a very small number for a global product launch. But it meant they could gauge demand without overextending. Luna: So they used scarcity as both a marketing tool and an inventory buffer. Lucas: Exactly. And that's a tactic any business, family or not, can learn from. Don't bet the farm on a single product. Use small batches to test the market. Then scale only when you see real demand. Luna: I like that. It's almost the opposite of the 'move fast and break things' ethos. Lucas: And it's worked for 110 years. The Kaufmann family didn't just preserve a business. They preserved a philosophy. And that philosophy—slow, careful, quality-first—is what allowed them to survive a revolution that killed most of their competitors. Luna: That's a good note to end on. Next week, we look at a very different family legacy: the Browne family behind the iconic British trench coat, Burberry. We touched on it briefly in an earlier episode, but we want to dig deeper into how they nearly lost the brand and then rebuilt it. Lucas: Looking forward to that. For now, thanks for listening and we'll talk to you next time.