"CEO-Interview: Von Bulgarien in den SDAX - 8.700% mit Shelly" – OAWS-Deep-Dive
Wolfgang Kirsch, co-CEO of Shelly Group, discusses the company's journey from a Bulgarian software firm to a SDAX-listed smart home hardware manufacturer with 160M€ revenue and 25% EBIT margins. The interview covers Shelly's product evolution, community-driven growth, B2B expansion, Amazon channel challenges, and future plans including recurring software revenues and TechDAX ambitions.
Summary
The podcast features an in-depth interview with Wolfgang Kirsch, co-CEO of Shelly Group, conducted by host Timon Wunderlich. Shelly, formerly known as Alterco, was founded in Bulgaria in 2003 as a software company serving telecoms and banks. After selling its core business around 2016, a small team led by founder Dimitar Dimitrov pivoted to smart home hardware, launching their first smart relay in 2018. The key differentiator was eliminating the need for a hub, offering Wi-Fi-connected devices for as low as 10 euros, with local intelligence that works without internet connectivity.
Shelly's growth was largely community-driven, particularly in the DACH region, where organic Facebook groups formed with up to 140,000 members without company instigation. This grassroots adoption by tech enthusiasts — who discovered creative use cases beyond basic light switching, including floor heating, garden irrigation, and garage doors — gave the company a marketing advantage that Kirsch acknowledges is nearly impossible to replicate in new markets. The company now has approximately 120 products across categories including light control, heating/climate management, sensors, security, energy monitoring, and a new range of smart circuit breakers.
On the business model, Kirsch explains that hardware durability (estimated 10-30 year product life) is offset by consistent customer expansion: cloud data shows existing users add an average of two devices per year, generating an estimated 5 million device sales annually from the existing customer base alone. Shelly currently earns 25% EBIT margins — exceptional for a pure hardware company — and is cautiously building recurring software revenue, currently at 800,000€ from a premium app tier, targeting 2M€ in 2026. B2B fleet management software for hotels, retail chains, and commercial properties is identified as a significant future revenue stream.
Kirsch details significant structural challenges with Amazon as a sales channel. Amazon's algorithmic pricing — which automatically matches the lowest price found anywhere — creates a race to the bottom that erodes margins. An incident at the start of 2025, where Amazon sold a 14€ relay for 9.99€ and then demanded increased compensation, led Shelly to effectively exit direct Amazon sales. The company also faces working capital strain: it pays Chinese suppliers 60 days in advance but collects from customers after 100-150 days, a gap that was never prioritized historically but is now being actively addressed with a new CFO and negotiations for Chinese government-subsidized supplier credit programs.
Geographically, the DACH region dominates, but Shelly is expanding with local teams in eight European countries. The US market is described as opportunistic but showing promise, with a potential major retail partnership in final negotiations. Regarding capital markets, Kirsch explains the long journey from Sofia Stock Exchange to Frankfurt Xetra listing (2022) and recent SDAX inclusion, framing these as trust-building milestones rather than immediate stock price catalysts. The stated ambition is TechDAX inclusion, which would place Shelly alongside companies like SAP. Kirsch's leadership philosophy centers on hiring people better than himself in each domain and creating development programs, including sending young talent to INSEAD.
Key Insights
- Shelly's organic community formation — including a 140,000-member German platform and 50,000-member Facebook group neither planned nor managed by the company — is described by Kirsch as an unreplicable competitive moat that effectively replaced paid marketing in the early years.
- Kirsch argues Shelly's 25% EBIT margin is exceptional for a pure hardware company, contrasting it with a prominent German thermostat competitor that claimed near break-even on 100M€ revenue while reportedly running 60-80M€ in losses annually.
- Cloud data reveals that 57% of existing Shelly cloud account holders added an average of four products in 2025, which Kirsch uses to project approximately 5 million device sales to existing customers this year alone, effectively functioning as a hardware-based recurring revenue model.
- Kirsch describes Amazon as deliberately using algorithmic price-matching against the lowest price found anywhere on the internet, which caused a specific 2025 incident where Amazon sold a product below cost, demanded additional margin compensation, and ultimately led Shelly to exit direct Amazon sales.
- Shelly pays Chinese suppliers 60 days in advance while historically collecting from customers after 100-150 days — a structural working capital deficit Kirsch admits was never monitored because the company's cash position never felt strained, now being urgently addressed with a new CFO.
- Kirsch argues that SDAX inclusion is more valuable as a reputational signal than a direct investment catalyst, noting that early investor skepticism was largely rooted in Bulgarian country-of-origin bias rather than fundamental business analysis, which consistent quarterly delivery has gradually overcome.
- Shelly is deploying an electrician certification and onboarding program — including vocational school teacher training — as a channel strategy for reaching non-DIY mass market customers, growing from 900 certified installers at end of 2024 to over 6,000 by mid-2025.
- Kirsch claims that the three-year guidance issued in early 2023 — 200M€ revenue and 50M€ EBIT by 2026, dismissed as unrealistic at the time — is now being met almost exactly, and he views this consistent delivery as the primary mechanism for building institutional investor trust.
Topics
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