Pitchforks Come in Different Guises

The Relcalcitrant Shoemaker ~ The Strange Story of Heini Staudinger

„Die gluecklichsten Sklaven sind die erbittertsten Feinde der Freiheit“

„The happiest slaves are the fiercest opponents of freedom“

~ Marie von Ebner-Eschenbach (1830 - 1916)

In 2012, four years after the collapse of Lehman Brothers and the Great Financial Crisis that followed in the wake of that dam-breaking event, a hitherto unknown small business owner by the name of Heini Staudinger from the Waldviertel region of Austria, to the north west of Vienna, up by the border to the Czech Republic, made headlines and over the next few years achieved a degree of notoriety and fame in the German-speaking countries at least that would have made Robin Hood envious. I thought I would share it with you on what, I have just discovered, is an auspicious day for it.

Heini Staudinger was born in 1953, in Voecklabruck, in the upper midwestern part of Austria a typical child of the permissive 1960s. He looks as though he shares a hairdresser with Wurzel Gummidge and dresses - how shall I put it? - idiosyncratically, almost as if he doesn‘t really give a monkey‘s what he looks like or what anyone thinks of him, superficially at least. He says of himself that he is a child of the 1968 movement: idealistic, peace-loving, radical, a bit of a hippy. He went into business in the 1970s, joining that generation of 1968-ers who discovered that business was a place in which they could put their own theories of harmonious, productive co-existence into practice. In his own way he was treading a similar path to those of Yves Chouinard of Patagonia and Steve Jobs at Apple and Ari Weinzweig of Zingermans and countless others who channelled their inner Emma Goldman anarchist tendencies in building culturally integral businesses in their own pig-headed, „you-can‘t-do-that-oh, yeah,-watch-me“ way of which Bo Burlingham has written so eloquently over the years. And was reasonably successful doing it.

He tells the story of being invited many years ago to participate in a panel discussion with Prof. Fridmund Malik of St. Gallen Business School and a few other important business leaders one of whom was the CEO of a large international accounting practice. This CEO spent a good deal of time berating the Professor by telling him that the students being produced by Universities were useless and not fit for purpose. Eventually an exasperated Malik demanded of the Senior Partner that he tell him what exactly his students were unable to do? „Well,“ spluttered the manager „to start with they can‘t greet properly!“ Heini recalls that he intervened by telling them that he had not been to University, but that growing up with his brothers and sisters he had from the earliest age had to help out and work in his parents’ little general store in their home town where he said

„At the age of about two I already knew how to greet customers and welcome them with a smile. At the age of about four I knew how to serve and attend on customers. By the age of five I could do basic arithmetic in my head and by the age of ten we were all proficient in mental arithmetic. And now I think about it, greeting, serving and attending and the ability to do mental arithmetic is about the best preparation for a life in business that I can think of and I couldn‘t be more grateful for my University of Life education in my parents’ shop“,

His business, GEA, was a shoe retailer, of the sort you would find in every small town in the days when choice was limited, everyone grew up wearing more or less the same brands (Clerks in the UK, Salamander in Germany) and when gym shoes (or plimsolls as they used to be called, hilariously, now that I have written that word for the first time in about 40 years, if ever) were worn exclusively in the gym. Where else? At some point in his career, with a few shops in his small business, he took a decision which was to have far-reaching consequences, by buying a small regional shoe manufacturing business whose largest customer he was, in an attempt to save it from imminent bankruptcy. The manufacturer, the Waldvierteler Schuhwerkstatt, was being penalised by the banks for being in the wrong industry and in the wrong place - the Waldviertel region being a designated „structurally weak“ location with attenuating higher credit risk. Heini explains it as follows:

„In 1999, just as we were getting back on feet again the local bank called in our overdraft line of credit, because they could and because they had deemed us to be a bad credit risk as we were in the ‚wrong industry in a structurally weak region of the country.‘ They were so arrogant and so cocksure of themselves and I was so angry that I determined there and then that we would fight tooth and nail to become debt free and not have to rely on them ever again.

By 2003 we had reached that goal but were looking to expand so we revisited the idea of taking on some debt. By this time our business was booming, our stocks of finished and unfinished goods was larger and our factory and buildings were fully restored and in good condition. I felt - rightly - that we had created wealth and substance and were eminently creditworthy. I had to discover that through various changes in the way banks were now obliged - due to Basle II and III - to make credit decisions, that a full warehouse was worth nothing by way of security and a well-maintained property because it was situated in what had been designated as a „crisis region“: was also worth nothing. It was then I realised that the whole system was broken and that banks were acting as crisis accelerants in our economies.

So, we reached out to a few friends and acquaintances and asked them if they would like to lend us some money, that we would pay them the same rate as we would have paid the bank - 4% - and we would write to them once a year to tell them how we were doing and what we had done with their money. I set up a little unit called GEA Sparverein (GEASavings Club) which took in €300K within a week or so and was all we needed. When a week later someone rang us and said that he would also like to give us some money, I had to thank him and tell him we didn‘t need it, to which he answered ‚My bank has never said that to me.‘

We kept the addresses of everyone who had asked to invest in case we should ever need them and went on our way happy to have solved our problem and got rid of our unhelpful and unfriendly bankers.

In 2008, having trebled our revenue to more than €30 million, expanded our workforce from 30 to over 100 employees and turned a decent profit, we were presented with an opportunity to purchase a 4,000m2 production facility from a large company that had become insolvent in our region. We decided to re-activate our little savings club, wrote to all the people who five years earlier we had had to turn down - about 150 of them all in all - to ask if they would like to help us buy the facility. Within one week we had €500,000, a week later we had another €300,000 and in the third week we had to write to people saying ‚please don‘t send us any more money, we don‘t know what to do with it all.‘“

Then things started to get interesting.

The Lehman Crisis came and went and Heini recalled that his investors would call him saying how much happier they were having their money working with him than in the wobbling banks. The constraints of capital had been removed allowing the company to expand and grow at its own pace, with the long-term funding securely in place from a group of local investors who supported the business and trusted him.

Then in 2012 Heini received a formal letter from the Austrian Financial Markets Authority (FMA) advising him that he was involved in illegal banking business, which was a criminal offense punishable by a hefty fine and possibly gaol time. Understandably shocked and not a little intimidated, Heini went alone to his first hearing expecting to be able to explain the situation and receive an immediate reprieve, once they understood what the purpose of the exercise had been and how well it had turned out for the company and the region.

How do you think that went?

He recalls that he was treated with arrogance, bullying and intimidation by the group of bureaucrats and bank overseers, ordered to cease and desist and to reappear at a second hearing in a few months time. Heini switched from intimidated to outraged in a heartbeat and expressed his complete refusal to acknowledge either any wrongdoing or their right to exercise judgement over him, given their own miserable public failure in the most recent past. Then he went to war.

The next chapter unfolded as follows

„The next hearing was set for six months later and we arrived in Vienna with a delegation of seven people to face them down and argue our case. Of course the news had gotten out that I was being persecuted by the Financial Authority and I was receiving a huge wave of sympathy from the general public. This strengthened our resolve. In the vast entrance hall we were informed that we were only allowed to come with a maximum of three people, one of whom could be a lawyer.

As it happens one of the seven in our party was the Editor in Chief of the popular local Viennese newspaper The Falter - Wienerstadtzeitung, who was also a fully-qualified lawyer and therefore entitled to be part of my retinue. They tried to prevent him coming along, of course but he was a member of the local bar and therefore they could find no reason to disallow him. The other member of our troika was a team member from the factory, Sylvie, who knew me well and with whom I had arranged a few codewords that she should say if I started getting too emotional and raging, which, given my indignation I was more than likely to do.

You can imagine that as soon as the bankers realised that the editor of a powerful local newspaper was going to be sitting in on the whole proceedings, they were like chickens in a coop into which a fox had just strolled and tried to come to some arrangement which would have me back down, accept a small fine and then hopefully let the whole thing and me disappear back into the woods. I was having none of it. I told them in no uncertain terms that I had zero, and I underline the word, zero sense of wrongdoing. I had done exactly what the political and chattering classes had been exhorting us to do: invest in our local economy, especially the idiotically designated ‚crisis regions‘, create jobs and build wealth, something the banks whose interests they were protecting had conspicuously failed to. I refused to accept their injunction, I refused to pay €400 an hour to a lawyer to defend myself against nothing when my factory staff were paid a fraction of that amount an hour and I refused to see my actions as criminal. I had done nothing wrong and I would fight them tooth and nail in the court of public opinion and in law and told them to do their worst.“

Heini‘s battle with the Austrian Finanzmarktaufsicht became a cause celebre in Austria and throughout Germany. Here was the little guy standing up to the arrogant bullying of a class and system that had for decades made life increasingly impossible for the small business owners and their companies, companies that were, it was universally acknowledged, the very backbone of societal stability, well-being and prosperity. Here was a David railing against the Goliaths of the banking industry whose own appalling behaviours, then as now, were accelerating, deepening and exacerbating the on-going crisis in local economies. As Heini says, probably with some justification, „They should be grateful to me - until I came along no-one had even heard of the Finanzmarktaufsicht.“ Although my guess is that gratitude for Heini Staudinger is the last thing the boys and girls at that agency feel for their challenger.

The battle went quiet for a while until the FMA decided to go on the counter-attack about a year later and publicly accuse the GEA Sparverein of lulling investors into a false sense of security by using the term „Savings Club“. This, they said, suggests that the investments are protected by the same deposit guarantee scheme that savers received automatically when they placed their savings with a bank. Whereupon Heini informed his investors and suggested that they each individually write to the FMA thanking them for their offer of protection but politely declining it. Heini‘s savers were quite happy to reject the „offer of protection“ and in fact all of them did, citing amongst other things their ability to look after themselves as responsible adults and their trust in GEA and Heini and their lack of trust in the banking class in general. Heini consequently changed the name of the ‚club‘ to „Apfelbaeumchen“ which means ‚little apple tree“, a name inspired by Martin Luther, who when asked what he would do if he knew the world would end tomorrow is reported to have said simply „I would plant a little apple tree.“ Such is the beauty and strength of faith and a FU mentality.

I came across Heini Staudinger in 2013 when his notoriety had made him reasonably famous at least amongst the thoughtful business owners in Germany and witnessed his remarkable presentation and key note speech at the Entrepreneurship Summit in Berlin 2013. I followed his travails for a few years until we moved to Ireland at the beginning of 2015 and then lost track of him. The case against him was still pending at that time, entirely unresolved and he had resumed his primary job of building the business he loved and expanding it into other areas such as mattresses and beds as well as his GEA Akademie (which offers courses in Health, Handcraft and Economy).

I think of him often though, as it was he, in that address, who introduced me to the German poet Rilke‘s wonderful Book of Hours, a three part poem in which a young monk explores his faith and outlook on the world in a series of monologues with his Creator. Heini quoted one section which moved me greatly at the time and has continued to so since and which I have translated repeatedly as none of the available translations seemed to catch anything like the essence of the words‘ message to me. Here is my latest version in which the monk speaks directly to God of his observations of his fellow human beings:

I am only one of your least important

Surveying life from my cell window

Closer to things than people, Fearful

To guess at what will come.

Yet if you want me to bear witness

Before your intimidating glower

Do not think me proud if I say

‚No-one lives their lives.‘

People are chance: voices, pieces

Everyday worries, fragments of happiness

As children muffled and disguised then

As adults masked with faces muted.

There must be vast vaults somewhere

Where all these unlived lives are stored

like suits of armour, or on litters or in cradles.

Lives which none have claimed

Like clothes  that cannot stand unsupported

Sinking crumpled down against

Strong vaulted stone walls.

And when at dusk I leave my garden, full of fatigue

I know all paths lead unerringly

To the arsenal of  life unlived.

Rainer Maria Rilke ~ The Book of Hours (II)

The reference to the „arsenal“ was what caught Heini‘s attention. As he explains it, Rilke is warning us that an arsenal is a storehouse for weapons and that we humans, if we do not follow our inner yearning (he uses the powerfully emotive German word „Sehnsucht“ which also means „longing‘) and leave our lives „unlived“ then the probability of us turning to violence, against nature, against each other and ultimately against ourselves is almost certain. His (Heini’s) calling is, through good and healthy business and through active, passionate, lively engagement with the world he inhabits is to remind us to yield to that yearning and follow its calling before the agony of a life unlived leads us to destructive behaviour and then paralysis.

This is his pitchfork and he has learned to wield it to remarkable effect.

The story has both a unhappy and a potentially very happy end - or if not end per se then at least a „and they all lived happily ever after“ conclusion.

Heini ended up losing the case against the FMA who levied a fine against his financing company of €2,6 million. He refused to pay it and they sent the bailiffs to him to seize assets which eventually forced him into some sort of settlement. But as a result of his battle Austria created a law („Alternativfinanzierungsgesetz AltfG) that introduced the concept of crowdfunding to the country and established a robust legal framework for it. The GEA group now has some 350 investors into its debenture program with some €4.5 million in capital, is growing again after a difficult COVID lockdown period which left the factory with 20,000 pairs of unsold shoes on its books (but which in typical Staudinger creativity he donated to various charities and orphanages in Syria, Bosnia, and at home in Austria with over 5,000 people donating to the company to buy the shoes at cost and ship them to their various destinations). Heini Staudinger has definitely come out the saga as the winner on points, despite having to concede a round to the FMA.

I mentioned at the start of this story that today was an auspicious day for me to be writing about Heini Staudinger‘s story, which I have been meaning to do for a while now. Whilst conducting some catch-up research, I came across a news item that shows him putting himself up as a candidate in this year‘s Presidential Election in Austria. The home page for his candidacy tells me that he needs a minimum of 6,000 registered voters to endorse him before he can be included on the list and that the final day for registration of endorsements is today, 26th August 2022. The Presidential Election is scheduled for the 9th October and Heini is hopeful of at least getting into the play-offs in order to influence the national debate around sustainable economy, business practices and freedom. His candidacy would be a welcome addition of a voice of passion, reason and real world experience in an environment in which those qualities are often lacking.

So if you now have slightly more interest in the outcome of Austrian Presidential Election, which I am betting good money you didn‘t even know was a thing this year when you were enjoying your first cup of coffee or tea this morning, then that will at least have been something. The moral of the story is simple: a well-developed moral code coupled with an ability to stand strong in the face of bullies along with the energizing force of controlled outrage can move mountains, if you pick your battlefield carefully.

In case you are interested, a German language film about the Life & Times of Heini Staudinger was made in 2016 under the title „Das Leben ist Keine Generalprobe“ [Life is not a Dress Rehearsal“].

And finally, if you have recently subscribed to Pitchfork Papers and have taken up my invitation in my welcome letter to introduce yourself to me, but have NOT yet received the reply I have pledged to write, I ask for your forebearance. I have been overwhelmed by the response to Grant William‘s recent podcast interview in which he kindly solicited my opinion and am only slowly working my way through the ensuing postbag. Thank you for your patience. And interest and for subscribing. I appreciate it and you.

Grant Williams @ttmygh

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