Paradigm Shift: German smartphones, made differently

Imagine rural Germany instead of Silicon Valley, sustainability instead of profits. Germany's first smartphone company is different in many ways, not just in the modular design of its devices.

At first glance, the Shift phone looks like most smartphones these days — a black cuboid with rounded edges and a screen covering most of the front.

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But a closer look reveals several lines of text, discreetly printed on the back of the phone: "Warning: Smartphones can be time killers. There is no greater gift for you today than the next 24 hours. Use them wisely, people are more important than machines."

Although successful and growing fast, profit isn't the main priority here. That is in large part due to the company's founders, two brothers who live in a tiny village in rural Hesse.

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With their t-shirts, hoodies, sneakers and thick beards, Carsten and Samuel Waldeck would look right at home in a co-working space in Berlin or San Francisco. But the CTO and CEO of smartphone maker Shift hail from Falkenberg, a tiny hamlet in rural Hesse. It's where they grew up, where they live and where their company is headquartered, in a converted barn. 

"We're sort of something between a company and an aid organization, if you will," Carsten Waldeck explains. In principle, they run Shift like any regular business but with one key difference: they have pledged to never distribute profits to themselves or anyone else. Any money that leaves the company's coffers will finance social or sustainability projects.

"We are in the process of establishing a foundation. As soon as that's up and running, we'll transfer the shares into that foundation and then we will no longer have access to them and will never be able to distribute profits," says Carsten.

So how much money does the CTO make? "In my case it's a little under €1,500 ($1,700) a month that I end up with. What's that called? Net?"

 Carsten Waldeck (rechts) und Samuel Waldeck (links) Shift Smartphone Shiftphone

Samuel Waldeck (left) and Carsten Waldeck are behind Shift — a company with a difference

According to his own assessment, that puts Waldeck somewhere in the middle of the pay scale at Shift. Also worth noting is that those assembling the company's phones in China earn similar wages to the 20-odd staff that work for the company in Europe, which makes them unusually well-paid by local standards.

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Maximizing meaning instead of profit

"For me it's the difference between maximizing profit and meaning," says Samuel Waldeck, "and we have noticed very often in our lives that it's really good to strive to maximize meaning rather than profit although naturally we want to make sure that our company is in good shape. But I'm really convinced that those two things have to coincide." 

Preorders for their phones largely finance the manufacturing of the devices for now. While that is a very safe way of doing business, since, by the time the phones are produced, they have already been sold, it also means that customers have to wait five to eight weeks for their phones — quite a hurdle in the world of instant gratification.

A more sustainable smartphone

Shift phones are modular, allowing their owners to easily replace broken parts and upgrade as technology improves. Part of the price of any Shift phone is also a small deposit that owners get back if they return the device at the end of its life cycle, allowing Shift to recycle the components rather than having them end up in a landfill somewhere. And even if you'd just like a newer model, you can return your phone at any time and get a commensurate discount on the purchase of a new Shift phone.

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The old phone then gets fixed (if necessary) and resold. The idea is to keep any phone alive for as long as possible.

Shift Smartphone

Replacing broken parts is no big deal owing to the phones' modular composition

Expanding differently

With plenty of demand for their unusual product, the logical step would be for Shift to bring in outside investors as a quick way to raise capital. But for the Waldecks, that's not an option.

"As you know, conventional investments always come with dependencies," says Carsten Waldeck. For the people behind Shift, independence is paramount because an investor may not share their unusual vision for the company.

"For us, it is really important to work towards sustainability," says Samuel, "more important than having enough money lying around."

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The biggest chunk of manual labor required to make Shift phones, 80 percent, is final assembly of the devices, something that currently happens in China, although not for economic reasons, as one might think.

"That costs us just as much, the people earn similar wages to those in Germany," says Carsten Waldeck. "But it doesn't make sense to fly all those parts to Germany individually, to package them elaborately so they don't break and then send them back if something breaks after all. That would be an incredible effort and really bad for the environment." Instead, by shipping the phones once they are assembled, they are less fragile, more compact and easier to ship.

"Initially, we didn't think that there would be people crazy enough to actually agree to not distribute profits and to essentially put everything back into sustainable and social projects," Carsten admits. "But it worked."

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