Georg Schaeffler’s secret—that he is the 79th-richest person in the world, according to Forbes—first bubbled to the surface eight years ago, when he took a job at Haynes and Boone. Mike Boone, eponymous co-founder of the downtown law firm, got a call one day from his brother-in-law, who deals in homeowner’s insurance.
Boone recalls the conversation going like this: “He said, ‘What are you paying your summer associates?’
“I said, ‘I pay them what the going market rate is.’
“He said, ‘Well, it must be a lot, because one of your new associates just bought a house on Armstrong.’”
The street carves a lazy “L” through the southern end of Highland Park, where homes sell for upwards of $6 million. Boone couldn’t see how one of his new lawyers, who might earn $150,000 a year, could afford such digs.
“I said, ‘No way.’ I said, ‘Who is it?’ And he gave me his name, and I called one of the other partners in the firm, and he said, ‘Oh, yeah, he has a substantial family business in Germany, and he could do that easily.’ That’s all we knew.”
Actually, at that point, even Forbes didn’t have a good handle on Georg Schaeffler (pronounced “Gay-org”). He wouldn’t appear on the magazine’s list of the world’s billionaires for another four years. And Boone and the other partners didn’t have reason to dig any further into the associate’s background. Why would they? From all accounts, aside from the thick German accent and the big house, Schaeffler was just like the rest of the new lawyers. He didn’t know what he was doing, and he put in long hours doing it.
His secret, at least in Dallas, was safe. He’d come here, in some respects, to escape his family background. And it worked. For a time. How that background finally caught up to him is a tale he’s reluctant to tell publicly. But in the first interview he has ever given, in a room he rented in the Hotel Crescent Court specifically for the purpose, with his family lawyer at his side, Schaeffler shared what he could.
It was agreed beforehand: one hour. No photography. No questions about the divorce.
In 1946, Georg Schaeffler the elder, along with his brother Wilhelm, founded a company called INA in Herzogenaurach, Germany. The brothers did well for themselves making buckles, ladders, and wooden handcarts. But the real breakthrough for INA came in 1949, as the Allies lifted some of the restrictions they had imposed on German industries after World War II. It was then that Georg Schaeffler invented the needle roller bearing cage.
One might be curious to learn how the Schaefflers grew INA into a global juggernaut. And certainly needle roller bearings are an interesting subject—both radial and thrust needle bearings, their advantages over ball bearings in certain industrial and consumer applications, and how, surprisingly, at, say, 100,000 revolutions per minute, the principal load in a bearing assembly might actually be centrifugal force rather than the applied load. But time and space, for our purposes, are finite. One hour. Two thousand words.
So let’s keep it simple. Today the company is called the Schaeffler Group, and it includes three main brands: INA, LuK, and FAG (which, it should be noted, since we’re talking about the ball bearing business, is pronounced “ef-ay-gee”). The company builds clutches and bearings and more than 100,000 other components, employing 63,000 people in 180 locations across the globe. Last year, the company says its sales approached $11 billion. Know this: if you have flown on the space shuttle or ever driven a car, of almost any make, your journey was made possible by friction-reducing devices manufactured by the Schaeffler Group.
Georg Schaeffler the younger traveled to the United States for the first time when he was 12, on a family vacation. He remembers standing at the base of the Empire State Building, staring up at its top. Herzogenaurach is a big name, but it’s a small town, and New York City made an impression.
After high school and a compulsory stint in the German military—during which Schaeffler became a drill sergeant and a platoon leader—he graduated from the University of St. Gallen, in Switzerland, spent time working at company headquarters in Germany, and then moved to South Carolina. The company’s first U.S. plant was in a town called Cheraw. He’d attended high school there for a few weeks, living with the plant manager. Now, at the Cheraw facility, he worked on a data-integration project and got more acquainted with the family business, but he was eager to strike out on his own, beyond the Schaeffler fold.
Schaeffler, now 42, is the sort of fellow who prefaces his answers with “Well, there were a number of factors.” To say he is very German is accurate but probably doesn’t help. To say he is a very German, better-looking version of Ray Romano doing a Lili von Shtupp impression also probably doesn’t help. But there you have it.
“Everyone wants to, first of all, find his or her own way,” Schaeffler says. “I think that’s a natural reaction. We don’t just want to be slotted as the elder son, the heir apparent. The other reason is that, if everyone knows who you are, you’re treated differently. They look at you through a different lens. The third reason is that, only if you work in an environment where people don’t know who you are—where you get a fair evaluation as to your strength but also your weakness—can you get the necessary experience.”
Schaeffler speaks like that, in fully formed paragraphs. It will come as little surprise that he once, as a young teenager, requested for his birthday a copy of the German constitution, the Grundgesetz. He says its logic appealed to him.
That same inclination led him to study law. That and his own appraisal of his strength and weakness. Schaeffler couldn’t see himself as a day-to-day operations guy, and so, in 1996, with his parents’ blessing, he enrolled in the Duke University School of Law. During Schaeffler’s first year at Duke, his father died. There was no longer anything “apparent” about his heirship. Schaeffler now owned the company, along with his mother, Maria-Elisabeth.
“There were a lot of people at the company who said, ‘Well, obviously he’s coming back,’” Schaeffler says. “It wasn’t even a question in their mind. But if you have to make a decision like this, emotions are not necessarily the best guidance.”
He took a semester off, mulled it over, and decided in the end to finish his studies. He didn’t feel he was ready yet to take the helm. “This company is too big, and there is too much at stake for it to become the proving ground for my own ego,” he says. Mother and son decided to separate ownership and management, bringing in a CEO to run the day-to-day operations. The family would retain control but exercise it from a remove.
On Schaeffler’s way to graduating cum laude with a JD and an LLM in international and comparative law, two other significant events altered his course: he married a German woman named Bernadette Muehlen, and he took a summer clerkship at Haynes and Boone. (Which, in the interest of full disclosure, is the law firm that ably represents the parent company of this magazine—although it did not review this story, owing to the conflict of interest.)
This brings us back to where our story began, in 1999, with the newly purchased and clearly insured house on Armstrong that hinted at Georg Schaeffler’s true identity. He was spending his second summer at the firm and had already received an offer for a full-time position in the finance and international practice group, but no one at the firm really knew who they were working with. He was just another associate. Working silly hours. Coming in on the weekends.
Schaeffler explains his appetite for such tough stuff: “There are people who are born with this money who”—he pauses to find the right words—“who don’t have that desire to have a purpose. Who don’t need to feel this sense of accomplishing something on your own. I need to have this sense that I am doing something. I can’t just sit there and then, well, by 11 o’clock it’s time to get up and we’ll start with a double scotch or something like that.”
So Schaeffler toiled in relative anonymity at Haynes and Boone for a few years. “And then one day I learned that, unfortunately, we were on the target list for Forbes,” he says. “And that day I walked into that partner’s office and said, ‘Okay, here’s what’s coming down the pipeline, and you need to have a little bit more information, to the extent that you haven’t researched it on your own.’”
In 2003, Schaeffler and his mother first appeared on the Forbes list of the world’s billionaires, at No. 83, with a net worth pegged at $3.8 billion. Not long after, a partner quipped to Schaeffler about getting his autograph, but that was the only comment he heard during his tenure at the firm.
Asked what he thought about seeing his name on the list for the first time, Schaeffler says coldly: “I hate Forbes.” His net worth isn’t something he says he ever thinks about. “I don’t waste time on it. Because at the end of the day, it’s a theoretical number that has no relevance. It’s not as if we have a bank account full with all that money and liquidity. I’m sorry, it’s not cash. It’s assets that are necessary so that people can do their jobs. I was brought up to look at this not as ‘This is your playground.’ I was brought up as ‘This is your responsibility.’ That’s one of the reasons why I say I hate Forbes.”
The magazine has continued to stir his ire. Last year, it put him and Maria-Elisabeth at No. 79, with an estimated net worth of $6.8 billion. The Schaefflers, for those who care, sit on the list below a Saudi-UAE tie between Mohammed Al Amoudi and Abdul Aziz Al Ghurair, and above an American named Charles Ergen.
Last year, Schaeffler left Haynes and Boone, but not because of anything to do with Forbes. He’d had a handshake deal that allowed him to travel to Germany whenever family business called. The firm didn’t have any trouble with the deal, but Schaeffler felt his growing responsibilities to the family business would make it impossible to keep his commitments there as a full-time lawyer (though he did recently sign on as a partner with a start-up firm called Standly and Hamilton where he’ll have some flexibility).
Then there was the divorce. Separating from Bernadette was, by itself, almost a full-time job. Or it is a full-time job. As D Magazine went to press in late January, the matter was still being worked out. Even if confidentiality agreements weren’t in place, which they are, one doesn’t get the impression Schaeffler would comment on his divorce. But a sense of how complicated an ordeal it is can be gleaned from how Schaeffler first came to the attention of D. Last summer, a woman named Erika Nazem who owns a fitness club in Plano sent to D’s Events staff an e-mail requesting coverage of her 38th birthday party at Ghostbar. By way of establishing her coverageworthiness, Nazem said many VIPs would attend, including her “life partner,” a man named Georg Schaeffler who was on the Forbes list and in the midst of a “very nasty divorce.” “Complicated” probably understates it.
For the record, Schaeffler and Nazem ended their relationship in late January. Again, he won’t discuss it.
As the interview drew to an end, though, something he said seemed apropos. Schaeffler was talking about why he likes solitude: “If you have the background that I have, you, by your very nature, don’t have a lot of friends. Because you’re always—in the back of your mind, there’s always this ‘Okay, is it your background or is it you?’”
And then the hour was up.