The Ex-Hacker Who Would Be Tech King
By Jack Ewing
If you want to know about Kim Schmitz's life -- his cars, his plane, his yacht, his women -- no problem. It's all there in not-suitable-for-viewers-under-18 color on www.kimble.org, Schmitz's vanity Web site. There's Schmitz mooning the camera aboard his yacht in the Caribbean. There he is frolicking on the beach with a lady acquaintance, a former Playboy centerfold known only as Janina.
It's a little harder, though, to find out about the business interests of the 27-year-old ex-hacker. He's stingy with hard financial information about Kimvestor, the Munich-based company he formed in January, 2000, to hold his stakes in a trio of tech startups. Forecasts are no sweat: Kimvestor, which had a loss of $3.5 million in 2000, will have net income of $553 million in 2004, Schmitz insists, though he doesn't say much about the business plan. That's odd, considering Schmitz is already inviting people to plunk down a minimum of $50,000 for a pre-IPO stake in Kimvestor, billed as "The Startup Factory."
Who is this cheeky guy? Well, probably no one outside of Germany cared much until February, when Schmitz put down some $1.1 million of his own money to help rescue LetsBuyIt.com, the nearly insolvent European online co-buying site, in which customers pool their buying power to purchase everything and anything from washing machines to fitness equipment. Schmitz, who made his fortune investing in tech stocks during the boom and by selling a majority stake in his Net security company, TUV Data Protect, also helped the gasping LetsBuyIt.com corral other investors, who pledged an additional $47 million to keep the company alive another year. "He was the decisive investor," gushes Rolf Hansen, the LetsBuyIt.com managing board member responsible for strategy and company development. "He helped saved our life."
Outside LetsBuyIt.com offices, the praise was more subdued. Schmitz took a pummeling in the German press, which questioned his motives and his business acumen. The weekly newsmagazine Der Spiegel, among others, suggested Schmitz was just trying to manipulate the ailing dot-com's share price. Schmitz's reply: "Bulls--t." He put up the money, he says, simply because he thinks LetsBuyIt.com has a great business concept that didn't have time enough to work. "I knows it's boring to be profitable," he writes in an e-mail, the only way he would agree to communicate with BusinessWeek.
Instead, Schmitz sees himself as a victim of German intolerance for anyone who flashes wealth or stands out from the pack. "Germany is a very bad place for somebody with my ego," Schmitz complains. "I want to show my success to the world. I want to motivate young people to take risks, and I do it in a way that Germans are not used to. In the U.S. I would be one of thousands...In Germany I am the one and only."
Few would dispute that last claim. Schmitz's biography is the stuff of local tabloid legend, beginning with his arrest six years ago for allegedly hacking into corporate computer systems and stealing telephone calling-card numbers. Schmitz spent several months in pretrial detention, an experience that inspired him to try using his skills to make a legal profit. "That's where I decided to use my knowhow and skills to become the world's most successful businessman," says Schmitz, with characteristic modesty. He adds, "Wasn't Hitler writing Mein Kampf while being arrested? Not that I like Hitler hehe, it's just that strange people can have strange ideas while being arrested." He punctuates the sentence with a smiley face.
Schmitz eventually received a two-year suspended sentence. That didn't prevent him from getting a $475,000 loan from a government-owned development bank in 1997, which he used to form the company now known as TUV Data Protect, which helps corporations armor their computer systems against attack via the Internet. He also is behind two startups: Monkey, which sells a system allowing people to use their mobile phones to make purchases, and megaCar, which sells a system designed to provide broadband Internet access in cars.
All that is just the beginning, as Schmitz would have it. In 10 years he plans to rank among the world's richest men. At more than 300 pounds, he is already among the world's largest tech entrepreneurs. But does he have a business brain to match? Analysts are skeptical about the LetsBuyIt.com investment. The venture's sales volume -- $8.5 million in the third quarter of 2000 -- won't allow the site to compete with traditional retailers in terms of buying power, say analysts such as Norbert Kretlow of Independent Research in Frankfurt. If true, that erases the main benefit to consumers, which is to pool their buying power to get lower prices on products like TVs.
SPINNING HIS WHEELS.
Never mind. Schmitz is already living a lifestyle to make the Aga Khan blush, renting helicopters to tour the Amazon or partying at a villa in Havana. But isn't it all just show? "That's an understatement," Schmitz replies, a bit cryptically. In private, in fact, Schmitz is more subdued than his Web site would imply. "He's actually very calm and doesn't say much," says Peter Schinzler, a photographer Schmitz once hired for a publicity shoot.
Schinzler does recall, though, that Schmitz insisted on driving to the top of a snow-covered mountain outside Munich, where his souped-up Mercedes became hopelessly stuck. It wasn't until well after dark, with the temperature dropping fast, that a humiliated Schmitz finally agreed to summon rescuers, Schinzler recalls.
Is there a lesson in there for anyone thinking of investing in Schmitz's ventures? Hard to say. But, notes Schinzler, "I wouldn't go driving with him again."
Ewing covers tech companies for BusinessWeek in Frankfurt. Katharine Schmidt, in Stuttgart, contributed to this story