Carl Zeiss Foundation

The Carl Zeiss Foundation (Carl-Zeiss-Stiftung in German) is a unique private industrial foundation and the sole owner of two world-renowned German technology companies, Carl Zeiss AG (specializing in optics and optoelectronics) and Schott AG (a producer of specialty glass). Established in 1889 by the brilliant physicist and social reformer Ernst Abbe, the foundation was designed to achieve two primary goals: secure the long-term economic future of the two companies and use their profits to promote science. This innovative structure effectively insulates the businesses from the pressures of the stock market and short-term profit-seeking. For a value investor, the Carl Zeiss Foundation is a textbook example of a “permanent holding” philosophy, where corporate strategy is measured in decades, not fiscal quarters, creating a powerful model for sustainable growth and long-term value creation.

Unlike a publicly traded company with thousands of shareholders, the Carl Zeiss Foundation has a remarkably simple ownership model. The foundation owns 100% of the shares of both Carl Zeiss AG and Schott AG. This has several profound implications:

• No External Shareholders: The companies are not listed on any stock exchange. This means management doesn't have to cater to the demands of Wall Street analysts, activist investors, or market sentiment. Their sole “shareholder” is the foundation, whose objectives are long-term stability and scientific advancement.
• Profit Distribution: The profits generated by the two operating companies are handled with a clear purpose. A significant portion is reinvested back into the businesses to fund research, development, and expansion. The remaining profits, or dividends, are paid to the foundation, which then uses the funds to support scientific research and teaching, primarily at universities in the German states where the companies were founded.
• Governance by Statute: The foundation is governed by a detailed statute created by Ernst Abbe. This document lays out the principles of corporate governance, employee rights (which were revolutionary for the 19th century), and the foundation's mission. It acts as a constitution, ensuring the companies adhere to their founder's long-term vision.

While you can't buy a piece of the Carl Zeiss Foundation, its operating model is a masterclass in the principles that value investors cherish. It embodies the idea of treating a business as a long-term asset, not a tradable security.

The foundation structure is the ultimate defense against short-termism. Management can invest heavily in ambitious, multi-year research projects without worrying about a temporary dip in quarterly profits. This freedom to plan for the very long term is a tremendous competitive moat. While a publicly-listed competitor might be forced to cut R&D spending during a downturn to meet earnings expectations, Zeiss and Schott can double down on innovation, knowing their owner is patient and supportive. This is exactly the kind of durable, forward-thinking management that legendary investors like Warren Buffett seek out.

The foundation acts as a steward rather than a speculative owner. Its goal is to preserve and enhance the value of the companies for future generations, not to extract maximum profit in the shortest time possible. This “stewardship” mindset fosters a culture that prioritizes:

• Product Excellence: A relentless focus on quality and technological leadership.
• Employee Welfare: The original statute guaranteed employee rights like paid leave, pensions, and an eight-hour workday, decades before they were common. A stable, skilled workforce is seen as a core asset.
• Social Responsibility: Profits are channeled back into society to advance science, creating a virtuous cycle of innovation.

The Carl Zeiss Foundation offers a powerful lesson for every investor. When analyzing a potential investment, look beyond the ticker symbol and ask questions inspired by the Zeiss model:

• Who owns the company? Is there a stable, long-term-oriented ownership structure, such as a founding family or a major institutional holder with a reputation for patience?
• How does management think? Do they talk about the next quarter or the next decade? Look for evidence of long-term strategic planning and consistent reinvestment in the business.
• Is the company built to last? Assess the company's commitment to its products, employees, and customers. A business that treats its stakeholders well is often more resilient and profitable over the long run.

Ultimately, the Carl Zeiss Foundation is the purest expression of thinking like a business owner—the very heart of value investing. It reminds us to seek out businesses with durable competitive advantages, run by stewards who are building for eternity, not just for the next earnings call.