Latest / Family Business Stories with Fexingo: Succession, Legacy, and Multi-Generational Companies / How the Zeiss Family Built a Lens Empire Across Centuries
Transcript
- Lucas: So there is a family business that has been around for almost 180 years, it dominates global optics, its lenses are in everything from microscopes to smartphone cameras. And yet the family whose name is on the door hasn't run the company in over a century. Luna: Wait — the Zeiss family. The company is Zeiss, right? But you're saying the Zeiss family is not involved? That's a twist. Lucas: Exactly. Carl Zeiss started a small workshop in Jena, Germany, in 1846, making microscopes. He was a brilliant craftsman but not a great businessman. The real turning point came when he partnered with a physicist named Ernst Abbe. Abbe brought scientific rigor to lens design, and together they built something much bigger. Luna: Right, I've heard of Abbe — he's the one who defined the Abbe sine condition, which is fundamental to lens design. Lucas: That's him. When Carl Zeiss died in 1888, Abbe became the sole owner. And he made a radical decision: instead of passing the company to Zeiss's children, or keeping it for himself, he created a foundation. In 1889, he established the Carl Zeiss Foundation, which would own the company in perpetuity. Luna: So the Zeiss family was essentially cut out? That seems harsh. Lucas: It sounds harsh, but Abbe's logic was that the company should serve long-term scientific and social goals, not family wealth. The foundation's charter says profits should be reinvested in R&D, and also fund social benefits for employees. At the time, that was revolutionary — a company owned by a charitable foundation, with no shareholders, no family dynasty. Luna: And the Zeiss family just accepted that? Lucas: Well, Zeiss's son, Roderich, did try to challenge it. But Abbe had structured the foundation so that the University of Jena and the state government had seats on the board. The family never regained control. So the name stayed, but the family's role became purely historical. That said, the foundation model is exactly what saved the company through two world wars, hyperinflation, and the division of Germany. Luna: Let's talk about the division of Germany. Zeiss was based in Jena, which ended up in East Germany after WWII. That must have been a nightmare. Lucas: It was. After the war, the US military evacuated key scientists and managers to West Germany, and they set up a separate Zeiss operation in Oberkochen. Meanwhile, the original Jena factory was nationalized by the East German government. So for 45 years, there were two Zeiss companies — one in the West, one in the East — both using the name, both making optics, but completely separate. Luna: How did they resolve that after reunification? Lucas: In 1990, after the Berlin Wall fell, the two entities merged back into one, under the Carl Zeiss Foundation. The reunified company had to rebuild its reputation and integrate supply chains. But the foundation structure meant there was no battle over who owned what — the foundation owned the whole thing. That stability is rare in family businesses. Luna: It's also rare for a company to survive being split in half. Most family firms would have collapsed. Lucas: Absolutely. And today, Zeiss is enormous. The group generates over 7 billion euros in annual revenue, employs about 40,000 people, and spends roughly 12 percent of revenue on research and development. To put that in perspective, the average tech company spends about 7 to 8 percent. Zeiss is investing nearly double that. Luna: And a huge chunk of that R&D goes into semiconductor lithography optics, right? The lenses that actually print microchips. Lucas: That's one of their most critical businesses. Zeiss Semiconductor Manufacturing Technology — or SMT — produces the ultra-precise lenses and mirrors used in photolithography machines from ASML. Without those optics, you cannot make the most advanced chips. It's a multi billion dollar monopoly, essentially. Luna: So when we talk about the chip shortage or AI hardware, Zeiss is a quiet backbone. That's incredible for a company founded in the 1840s. Lucas: And they're also dominant in medical microscopy, industrial metrology, and consumer optics. If you've ever bought a high-end camera lens or used a smartphone camera from Nokia, Sony, or Huawei in the past decade, there's a good chance Zeiss made the optics. Luna: Speaking of which — the relationship with smartphone makers. That's a fascinating shift from microscopes to pocket cameras. Lucas: It started in the early 2000s, when camera phones were terrible. Zeiss partnered with Nokia to put certified lenses into phones. That gave Nokia's camera phones a huge marketing edge. Today, Zeiss has similar partnerships with Vivo and Sony. Their brand still carries weight: when a phone says 'Zeiss optics,' people assume better photos. Luna: And the foundation model means they don't have to chase quarterly earnings. That must help in a capital-intensive industry like optics. Lucas: Exactly. No pressure to maximize short-term profit. They can invest in long-cycle projects like extreme ultraviolet lithography, which took decades to commercialize. A public company would have struggled to stomach that timeline. The foundation insulates management from activist investors and hostile takeovers. Luna: But there's a downside, right? The family is gone, so there's no entrepreneurial founder to drive innovation. How does the foundation ensure dynamism? Lucas: That's the big challenge. The foundation board appoints professional managers. Over the years, Zeiss has had periods of inertia — for example, in the 1970s, they were slow to embrace digital imaging. But the foundation's charter also mandates a high R&D spend, which forces continuous innovation. And they've done well with external leadership. The current CEO, Karl Lamprecht, is not a Zeiss family member, but he's been there for over a decade. Luna: It's a trade-off: you lose the family's entrepreneurial spark, but you gain long-term stability. For some businesses, that might be the right call. Lucas: And it's not just Zeiss. Bosch is another massive German company owned by a foundation. The Robert Bosch Stiftung owns 94 percent of the shares. But Bosch still has the family involved in governance, whereas Zeiss truly removed them. Both models work, but they're very different. Luna: If these conversations have moved your work forward in some small way, there's a simple way to keep them going. A couple of dollars a month is genuinely what keeps these shows ad-free and independent. Lucas: Yeah, buy me a coffee dot com slash fexingo. It's low-key, makes a real difference, and lets us keep diving into stories like this without any sponsor pressure. Luna: And honestly, it adds up. A few coffees a month, and suddenly we can spend the time on research instead of chasing ads. So if you've gotten value from the show, that's the place. Lucas: Alright — back to Zeiss. One more thing that's striking. The foundation also owns a stake in Schott AG, the specialty glass company. So the same foundation controls two giants: Zeiss in optics and Schott in glass. That's an industrial cluster that's been quietly dominant for over a century. Luna: Wait, Schott as in Schott glass? Like the glass on your induction cooktop? Lucas: Exactly. Schott makes the glass-ceramic for stoves, the glass for smartphone cover glass, telescope mirrors, pharmaceutical packaging. The foundation owns about 80 percent of Schott. So the Carl Zeiss Foundation is this silent colossus owning two of Germany's most important tech companies. Luna: That's an incredible concentration of industrial power, and yet most people have never heard of the foundation. Lucas: That's by design. The foundation is private, doesn't publish detailed financials, and avoids publicity. Its entire purpose is to ensure the long-term survival of these companies. And it's worked — Zeiss and Schott have both outlived the German Empire, the Weimar Republic, the Third Reich, East Germany, and now they're thriving in the 2020s. Luna: So the ultimate lesson for family businesses might be: sometimes the best way to keep the business alive is to let go of the family's control. Lucas: That's the provocative take. But it only works if you build a governance structure that enforces the founder's values — long-term thinking, reinvestment, and mission. Without that, a foundation can become a sleepy bureaucracy. Zeiss has avoided that by staying at the cutting edge of optics. They've managed to combine the stability of a foundation with the innovation of a tech company. Luna: And they've done it without the family. That's a twist most family business stories don't have. Lucas: It really is. Most episodes we talk about how families held on. This one is about how a family let go — and the business became stronger for it.