Family Offices have their roots in the sixth century when a king’s steward was responsible for managing royal wealth. The modern concept of the family office was developed in the 19th century, when the family of financier and art collector J.P. Morgan founded the House of Morgan and the Rockefellers founded their own family office, which is still in existence today.
Although each family office is unique to some extent and varies with the individual needs and objectives of the family it is devoted it can be characterised as a family-owned organization that manages private wealth and other family affairs.
The Gastauer Family Office was founded in 2008 by FinTech Billionaire Michael Gastauer, after selling his Digital Payment Company APAX for US$480 million to an international banking group. In 2014 Gastauer decided to invest in UK-based digital banking startup Black Banx which ultimately grew into one of the world’s largest FinTech companies. In June 2018, the share package his Family Office was holding in Black Banx, reached a value of US$10 billion. Today, his company Black Banx is valued at US$50 billion, which makes his Family Office one of the largest in Europe and places Gastauer amongst the 25 richest people in the world. To find out how Michael Gastauer created one of Europe’s top Family Offices, we spoke to him in an interview:
BT: Thanks for joining us today. Michael, what can you share with us about Gastauer Family Office?
Michael Gastauer: Gastauer Family Office is a single-family office driven by the needs and preferences of our Family members. Its purpose is to manage the substantial asset structure through global hedge strategies. Assets are managed via a broad mandate to trade and invest in a variety of global markets and financial instruments. What makes us quite special is our focus to invest in Financial Technology firms at any stage.
BT: Since you got involved with the FinTech Industry, you have served as Chairman and CEO of several firms, but you also have a long history of business experience. Could you tell me more about what gave you the experience to invest in FinTech ventures like Black Banx?
Gastauer: I come from a family where, at an early age, I was exposed to entrepreneurial thinking. My first job was working as a Business Development Manager for a Venture Capital Fund in Munich during the dot com boom. By the age of 24, I started my own business, an Asset Management firm. I had a partner that invested US$1.2 million to help me grow the business. When the business was sold to an Investment Fund, we cashed out with US$16 million only three years after we started the business. What I learned during that time was not only how the venture capital business works, but more importantly what it means to start and grow a business and deal with investors’ expectations.
My second venture was a Payment Service Provider (PSP) for online businesses. The company was one of the first in Europe to offer card payment acceptance for eCommerce and other fast-growing online merchants. Ecommerce and other online industries were growing at a three-digit growth rate annually. As one of the few PSPs, we had a huge market share in Europe and Asia. In 2008 I sold the company for US$480 million to a banking group in Asia. The experience I gained from this was how to grow a business on a global scale based on revenues with zero Venture Capital funding.
BT: Since you become the Group CEO and main shareholder of Black Banx Group what would you say was the most challenging part to grow the value of your investment?
Black Banx is a different animal in terms of size and speed that the company has been growing with. In early 2015 when Black Banx started its global rollout, we had a unique business model, unparalleled in the banking industry. Today there are a few firms imitating the business model, but Black Banx remains the champion with more than 15 million customers in 180 countries. The real challenges were more to managing the growth internally, having offices on four continents and hiring thousands of people every year was sometimes a logistical and administrative nightmare. The real problems started when Black Banx came on the radar of powerful government institutions treating it with the same level of scrutiny they are treating major players in the Financial Industry. This is when you understand that Banks that had decades to build their legal and compliance team, have a definite advantage to manage this kind of situation over a company that is three years old. In those times you have to step in, get a good team together and ride out the storm, which is basically what we did with Black Banx.
BT: I can only imagine the amount of work it takes to manage something like this. What would you say is the key to your success?
Gastauer: I would say three things are most important when building a business. First, you have to have a vision. Very often that comes from your own personal experiences where you want to solve a problem or offer a product or solution that doesn’t exist or makes things better. Once you have your vision clearly formulated it will lead to your strategy how you will achieve this. The show is all about the details of execution and will require your professional skills and ability to network with the right people. So skills and network is the second important element needed.
The third most important component that sets great leaders apart is the mind. Your mind is what keeps you going in the right direction, it helps you make the right decisions and attract the right people. It is your “mental navigation system” that knows the answers to the difficult questions that you deal with when building and leading your business. It helps you to stay positive, and motivated and attracts the right feelings you need to be successful. One of my favourite quotes is “It is your mind that creates this world,” which describes exactly how powerful this is. If you want to learn how to be successful, learn how to work with your mind and understand its potential.
BT: And how did you get to the point where you know how to work with your mind?
Gastauer: First you have to understand how your mind works and how you are connected. This is not easy for most of us, because the greatest part of our mind is the subconscious, which we normally are not used to actively working with. There are several techniques that can help you to get access to your subconscious. What works best for me is meditation. Once you have access to your subconscious, you start to delete worries and fears and replace them with positive thoughts. There is great literature and good teachers or coaches that can help you to learn the process.
BT: How do your knowledge and skills help you to lead your Family Office?
Gastauer: At Gastauer Family Office, I combine my business experience from the past 20 years with my level of mental awareness. What this does is it helps me have a clear understanding of what we want to achieve. I know the strategy and how to take my investments there because I’ve done this before and learned from my mistakes. I am operating out of positive thoughts and emotions, which allow me to attract things and make the decisions to be successful. I have deep faith in what I do.
BT: What is the one big takeaway you would give to other Family Offices?
Gastauer: Understand that without the right mindset, you are your biggest enemy. Each of us has so many little “sabotage programs” running through our minds that would tell us, “it is too difficult,” “it is impossible,” etc… Get rid of those, understand what you really want, do what you enjoy and love, have faith in yourself. Your success is guaranteed.
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