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The questions that follow are based on the article Airpod Aristocrat by Iain Martin. Please answer question 1 and question 2 briefly. For question 3 focus on Tojners career progression only (and try to answer within 250 words each).

a.Michael Tojner, dubbed as the Airpod Aristocrat, definitely scanned the business environment before investing in battery manufacturer Varta. What attracted him to the sector? Explain briefly. (5 Marks)

b. After the loss of the Apple Contract what are the two things that Tojner did to make his battery business sustainable? What are the two issues that he had to address? (4+4 = 8 Marks)

c. Based on the article write a brief business profile of Michael Tojner (naming the businesses he has been involved with since he began). (7 Marks)

Open with Google Docs In a gray-walled conter ence room on the outskirts of the medieval Ba- varian city of Nrdlingen, the Austrian billion- aire Michael Tojner is toying with a tiny battery. The coin-sized device is a technological won- der. Measuring just half an inch around, the giz- mo packs a hundred times more energy than a household battery ten times its volume, can ful- ly recharge in just 15 minutes and can last five hours on a single charge. A much earlier ver- sion 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 float- ed 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% Micro Marvel acquired most of the company. Nearly a centu- market share for premium wireless headphone Michael Tojner ry later, with the pharma and chemical busi- batteries, which boast extraordinary 40% margins. CoinPower battery on ness long since spun off, Deutsche Bank and the AirPod Pro sales along with deals with Sam- his index finger. The Quandt heirs were selling off the pieces. Rayovac sung, Jabra and Sony drove Varta's revenues up less than an ounce and Johnson Controls bought most of the battery 34%, to $400 million, in fiscal 2019. Tojner's 56% and is the size of four . business, but the tiny microbattery business was stake plus his investment success-the Austri- the last to be sold. an press calls him Mr. 300%"-have landed the "I was the only bidder left for Varta because 54-year-old father of six on the Forbes Billion- nobody dared to buy Varta." Tojner says. They aires list for the first time. sold me a company with negative cash flow. But "With microbatteries, we became the clear mar- everything was supposed be better because we ket leader in a segment which is growing at proba- had an Apple contract. After one year, one small bly 50% to 60% per year," Tojner says. In ten years, battery exploded. We lost the Apple contract. The no one will have a phone without an ear applica- company almost went bust. The bank was ner- tion. There is enormous potential for growth. vous, and I was in the restructuring department Tojner's Varta is the surviving shard of a gi- because we couldn't pay our interest." ant German industrial concern, also called Var- That exploding Apple iPod Nano battery forced ta, which was founded in 1887 and eventually Varta to scrap its $60 million investment into sprawled into pharmaceuticals, chemicals, plas- lithium polymer batteries. Tojner and Varta CEO tics and, yes, batteries. After the end of the first Herbert Schein doubled down on coin-style lithi- World War, the billionaire Quandt family-best um-ion batteries, automating production to fend known as BMW's most powerful shareholders- off low-labor-cost Asian competitors and spend- 54 CONTRARIAN . INNOVATION By the Numbers FATTENING MARGINS Austria's Michael Tojner ran $242 million valuation in 2000. furniture stores, Viennese night- clubs and online gambling sites "Michael is to money what Mozart is to music." before he hit it huge selling tiny says Manfred Bodner, who launched several ven- batteries. But his best business? tures with Tojner, including Bwin, and was best Selling ice cream to tourists. No wonder-check out these prices! man at his wedding. "He loves it, and has a hell Shop: Sugar Factory of a lot of fun making more of it." (Times Square, New York) The university friends didn't speak for four Signature treat: Classic ice cream years after Tojner sold his Bwin stake and lat- sandwich, 58.95 Shop: Bravissimo Santiago, Chile) er launched his own gambling venture, Starbet. Signature trat: Dulce de leche sundae, $6 "Michael is extremely competitive," Bodner con- Shop: Glaces Glazed (Paris) tinues. "It is not easy to partner with him.... Signature treat: Two scoops of "Black Sugar Many people got burned along the way." Sex Magle," $4.90 Tojner himself has felt some heat. He has been Shop: Mousseline (Jerusalem) Signature treat: Two-scoop glass of saffron ice cream, $4.20 accused of defrauding taxpayers of $43 million Shop: Gomaya Kuki (Tokyo) through deals to buy public housing on the cheap. Signature treat-Two scoops of salted sesame, $5.10 He denies all wrongdoing, but the investigation has made him a fixture in the Austrian press. AirPod Aristocrat Cont The microbattery business also has some shad- ing on research to significantly boost power. ows hanging over it, with reports that Samsung Longtime Varta board member Sven Quandt and other Varta clients have begun using batter- says his family considered bidding, but it took ies from Chinese battery makers Eve Energy and Tojner to transform the small company into a MIC-Power, rattling analysts and investors. Var- world leader. "These companies were in a big ta is fighting back with legal action, filing a pat- business group," he says. "People were not so fo- ent infringement suit in Texas in February. But cused on profits, on reliability, on how to grow technology battles are almost never won in court the company. Michael is a driver." "I think German companies are sometimes The high-tech realm of microbatteries and lu- very quick to underestimate the potential of their crative Silicon Valley contracts is an unlikely Asian competitors, and this unfortunately seems perch for a peripatetic entrepreneur who got his to be the case with Varta," says Commerzbank an- start selling ice cream to tourists. alyst Stephan Klepp The 1,400-room Schnbrunn Palace was for Warburg Research's Robert-Jan van der Horst 300 years the summer residence of Austria's rul says Varta's juicy margins will be squeezed by the ing Hapsburg family and is now one of the most competition, but its heavy investment in robots famous landmarks on Vienna's tourist trail. It will keep "Made in Germany" batteries rolling off was also the start of Tojner's entrepreneurial ca- its Bavarian factory floors. Van der Horst points reer. In 1991, while studying law and business out that in their old-fashioned hearing aid busi- management at Vienna University of Economics, ness, "they actually employ just 10 people who he secured the rights to run an ice cream stand produce a total output of 1.4 billion batteries a inside the palace grounds. year." Varta's microbattery business is similarly Tojner was a young man in a hurry, and he used efficient. the profits from the ice cream stand to expand wil- Whatever the future holds, Tojner seems confi- ly-nilly into a mail-order business selling kitchen dent that his technology will keep Varta ahead of mixers to post-communist Hungary, Vienna night the pack. "Our quality is better, so that is why we clubs and even a chain of furniture stores. can ask for a premium," he says. "With Apple and "Ice cream has an even higher margin than mi- Samsung, these [headphones) cost a lot of mon- crobatteries, so it laid the foundation of my en-ey. The battery, the most important component, trepreneurial life," Tojner says. "The period was costs maybe 5, but you will go crazy if it doesn't quite wild because I was 23, 24, and it was all fi- work after eight months." nanced by the ice cream business and some bank loans. I almost went bankrupt." FINAL THOUGHT After earning Ph.D.s in both law and business management, Tojner sold the enterprises and "CHANCE IS ALWAYS POWERFUL. LET YOUR HOOK BE ALWAYS CAST. launched his own venture capital fund in Vien- IN THE POOL WHERE YOU LEAST na. He scored a big hit with Vienna-based online EXPECT IT WILL BE THE FISH." gambling portal Bwin, which he took public at a -Ouid HOW TO PLAY IT By Jon D Markman Like them or not. Apple's iconic white AirPods have become ubiquitous, spawning a vi- brant 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 com- munications Its newest chip designs, aimed at the mass market, integrate active noise canceling and mirroring For wireless earphones, this means immer sive 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. Ata recent $68, the shares are excel lent value. Jon D. Markman is president of Markman Capital Insight and the editor of Fast Forward Investing. SUSAN KINAST/GETTY IMAGES (LEFT: PATRICK WELSH