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`How A Tiny Battery (Thanks Apple!) Built A New $1.9 Billion Fortune
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`I
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`Thirteen years ago, no one wanted to buy a money-losing hearing-
`aid battery maker. No one but Michael Tojner. Against all odds,
`Austria’s “Mr. 300%” turned that $40 million investment into the
`cornerstone of a 10-figure fortune (Thank-you, Apple!). Now he has
`to fend off the copycats.
`
`n a gray-walled conference room on the outskirts of the medieval Bavarian
`city of Nördlingen, the Austrian billionaire Michael Tojner is toying with a tiny
`battery. The coin-sized device is a technological wonder. Measuring just half an
`inch around, the gizmo packs a hundred times more energy than a household battery
`ten times its volume, can fully recharge in just 15 minutes and can last five hours on a
`single charge. A much earlier version powered Neil Armstrong’s camera during the
`Apollo 11 moon landing. Some of the modern ones famously power Apple’s popular
`AirPod Pro wireless headphones.
`
`The batteries are also a financial wonder. Tojner bought Varta, the company that
`makes them, for just $40 million in 2007. Two and a half years ago, the serial
`entrepreneur and venture capitalist floated the company on the Frankfurt Stock
`Exchange; it now has a market cap of $2.8 billion. Commerz bank estimates that Varta
`has a more than 50% market share for premium wireless headphone batteries, which
`boast extraordinary 40% margins.
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`https://www.forbes.com/sites/iainmartin/2020/04/09/how-a-tiny-battery-thanks-apple-built-a-new-19-billion-fortune/?sh=1badd0dd3d72
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`How A Tiny Battery (Thanks Apple!) Built A New $1.9 Billion Fortune
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`Austrian Investor Michael Tojner Hit It Big With Little Batteries.
`
`AirPod Pro sales along with deals with Samsung, Jabra and Sony drove Varta’s
`revenues up 34%, to $400 million, in fiscal 2019. Tojner’s 56% stake plus his
`investment success—the Austrian press calls him “Mr. 300%”—have landed the 54-
`year-old father of six on the Forbes Billionaires list for the first time.
`
`“With microbatteries, we became the clear market leader in a segment which is
`growing at probably 50% to 60% per year,” Tojner says. “In ten years, no one will
`have a phone without an ear application. There is enormous potential for growth.”
`
`Tojner’s Varta is the surviving shard of a giant German industrial concern, also called
`Varta, which was founded in 1887 and eventually sprawled into pharmaceuticals,
`chemicals, plastics and, yes, batteries. After the end of the first World War, the
`billionaire Quandt family—best known as BMW’s most powerful shareholders—
`acquired most of the company. Nearly a century later, with the pharma and chemical
`business long since spun off, Deutsche Bank and the Quandt heirs were selling off the
`pieces. Rayovac and Johnson Controls bought most of the battery business, but the
`tiny microbattery business was the last to be sold.
`
`“I was the only bidder left for Varta because nobody dared to buy Varta,” Tojner says.
`“They sold me a company with negative cash flow. But everything was supposed be
`better because we had an Apple contract. After one year, one small battery exploded.
`We lost the Apple contract. The company almost went bust. The bank was nervous,
`and I was in the restructuring department because we couldn’t pay our interest.”
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`https://www.forbes.com/sites/iainmartin/2020/04/09/how-a-tiny-battery-thanks-apple-built-a-new-19-billion-fortune/?sh=1badd0dd3d72
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`That exploding Apple iPod Nano battery forced Varta to scrap its $60 million
`investment into lithium polymer batteries. Tojner and Varta CEO Herbert Schein
`doubled down on coin-style lithium-ion batteries, automating production to fend off
`low-labor-cost Asian competitors and spending on research to significantly boost
`power.
`
`Longtime Varta board member Sven Quandt says his family considered bidding, but it
`took Tojner to transform the small company into a world leader. “These companies
`were in a big business group,” he says. “People were not so focused on profits, on
`reliability, on how to grow the company. Michael is a driver.”
`
`The high-tech realm of microbatteries and lucrative Silicon Valley contracts is an
`unlikely perch for a peripatetic entrepreneur who got his start selling ice cream to
`tourists.
`
`The 1,400-room Schönbrunn Palace was for 300 years the summer residence of
`Austria’s ruling Habsburg family and is now one of the most famous landmarks on
`Vienna’s tourist trail. It was also the start of Tojner’s entrepreneurial career. In 1991,
`while studying law and business management at Vienna University of Economics, he
`secured the rights to run an ice cream stand inside the palace grounds.
`
`Tojner was a young man in a hurry, and he used the profits from the ice cream stand
`to expand willy-nilly into a mail-order business selling kitchen mixers to post-
`communist Hungary, Vienna nightclubs and even a chain of furniture stores.
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`https://www.forbes.com/sites/iainmartin/2020/04/09/how-a-tiny-battery-thanks-apple-built-a-new-19-billion-fortune/?sh=1badd0dd3d72
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`How A Tiny Battery (Thanks Apple!) Built A New $1.9 Billion Fortune
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`“Ice cream has an even higher margin than microbatteries, so it laid the foundation of
`my entrepreneurial life,” Tojner says. “The period was quite wild because I was 23, 24,
`and it was all financed by the ice cream business and some bank loans. I almost went
`bankrupt.”
`
`After earning Ph.D.s in both law and business management, Tojner sold the
`enterprises and launched his own venture-capital fund in Vienna. He scored a big hit
`with Vienna-based online gambling portal Bwin, which he took public at a $242
`million valuation in 2000.
`
`“Michael is to money what Mozart is to music,” says Manfred Bodner, who launched
`several ventures with Tojner, including Bwin, and was best man at his wedding. “He
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`https://www.forbes.com/sites/iainmartin/2020/04/09/how-a-tiny-battery-thanks-apple-built-a-new-19-billion-fortune/?sh=1badd0dd3d72
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`How A Tiny Battery (Thanks Apple!) Built A New $1.9 Billion Fortune
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`loves it, and has a hell of a lot of fun making more of it.”
`
`The university friends didn’t speak for four years after Tojner sold his Bwin stake and
`later launched his own gambling venture, Starbet. “Michael is extremely competitive,”
`Bodner continues. “It is not easy to partner with him. . . . Many people got burned
`along the way.”
`
`Fattening Margins
`
`Austria’s Michael Tojner ran furniture
`stores, Viennese nightclubs and online
`gambling sites before he hit it huge
`selling tiny batteries. But his best
`business? Selling ice cream to tourists.
`No wonder—check out these prices!
`
`Shop: Sugar Factory (Times Square, New York)
`Signature treat:
`Classic ice cream sandwich, $8.95
`Shop: Bravissimo (Santiago, Chile)
`Signature treat: Dulce de leche sundae, $6
`Shop: Glaces Glazed (Paris)
`Signature treat: Two scoops of “Black Sugar Sex Magic,” $4.90
`Shop: Mousseline (Jerusalem)
`Signature treat: Two-scoop glass of saffron ice cream, $4.20
`Shop: Gomaya Kuki (Tokyo)
`Signature treat: Two scoops of salted sesame, $5.10
`
`Tojner himself has felt some heat. He has been accused of defrauding taxpayers of
`$43 million through deals to buy public housing on the cheap. He denies all
`wrongdoing, but the investigation has made him a fixture in the Austrian press.
`
`The microbattery business also has some shadows hanging over it, with reports that
`Samsung and other Varta clients have begun using batteries from Chinese battery
`makers Eve Energy and MIC-Power, rattling analysts and investors. Varta is fighting
`back with legal action, filing a patent infringement suit in Texas in February. But
`technology battles are almost never won in court.
`
`“I think German companies are sometimes very quick to underestimate the potential
`of their Asian competitors, and this unfortunately seems to be the case with Varta,”
`says Commerzbank analyst Stephan Klepp.
`
`Warburg Research’s Robert-Jan van der Horst says Varta’s juicy margins will be
`squeezed by the competition, but its heavy investment in robots will keep “Made in
`Germany” batteries rolling off its Bavarian factory floors. Van der Horst points out
`that in their old-fashioned hearing-aid business, “they actually employ just 10 people
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`https://www.forbes.com/sites/iainmartin/2020/04/09/how-a-tiny-battery-thanks-apple-built-a-new-19-billion-fortune/?sh=1badd0dd3d72
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`who produce a total output of 1.4 billion batteries a year.” Varta’s microbattery
`business is similarly efficient.
`
`Whatever the future holds, Tojner seems confident that his technology will keep Varta
`ahead of the pack. “Our quality is better, so that is why we can ask for a premium,” he
`says. “With Apple and Samsung, these [headphones] cost a lot of money. The battery,
`the most important component, costs maybe €5, but you will go crazy if it doesn’t
`work after eight months.”
`
`L
`
` ike them or not, Apple’s iconic white AirPods have become
`ubiquitous, spawning a vibrant ecosystem for component suppliers like
`Varta. The best way to play this trend with a public company is Qualcomm,
`which designs semiconductors for the next era of low-power wireless
`communications. Its newest chip designs, aimed at the mass market,
`integrate active noise canceling and mirroring. For wireless earphones,
`this means immersive sound and more reliable connections for voice
`controls like Siri and Google Assistant at an affordable price. Qualcomm
`logged 2019 sales of $24.3 billion, up 7.3% year-over-year. The company
`signed an agreement last April with Apple to supply wireless technology.
`At a recent $68, the shares are excellent value.
`
`Jon D. Markman is president of Markman Capital Insight and the editor
`of Fast Forward Investing.
`
`COVER PHOTOGRAPH BY LEVON BISS FOR FORBES.
`
`Send me a secure tip.
`
`Iain Martin
`
`I joined Forbes as the European News Editor and will be working with the London newsroom to
`
`define our coverage of emerging businesses and leaders across the UK and Europe. Prior to joining
`
`Forbes, I worked for the news agency Storyful as its Asia Editor working from its Hong Kong
`
`bureau, and as a Senior Editor in London, where I reported on breaking news stories from around
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`the world, with a special focus on how misinformation and disinformation spreads on social media
`
`platforms. I started my career in London as a financial journalist with Citywire and my work has
`
`appeared in the BBC, Sunday Times, and many more UK publications. Email me story ideas, or tips,
`
`to iain.martin@forbes.com, or Twitter @_iainmartin. Read Less
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