The Second Bounce Of The Ball: Turning Risk Into Opportunity
Weidenfield & Nicolson
Sir Ronald Cohen is that uncommon beast: a red-blooded capitalist with a socialist conscience. He’s more than that, however. Rarer still, he likes to articulate his views in public.
This trait, commendable as it is, can get him into difficulties. He’s the founder of Apax Partners, one of the UK’s leading private equity houses. At 62, he’s also an industry godfather who told colleagues they were being too slow to adjust to the hardening public mood and were not transparent enough. He also criticised the non-domiciles who make up much of the higher reaches of private equity for not paying enough tax.
All this from someone who has made a fortune – north of £250 million – from the very same private equity, earned himself a reputation in the City as the driver of the sharpest of bargains when he was at his peak and, when asked about his own tax affairs, says they are confidential. Oh and he’s close to Gordon Brown, no pin-up of the business community.
So, mention Cohen’s name in some circles and it’s quite likely to be met with a hiss. To say he’s not popular among many of his fellow executives is something of an understatement. But putting Cohen’s undoubted occasional hypocrisy on one side, there is a strong case for saying we need more Ronnie Cohens.
For what he is, above all else, is thoughtful. In my experience, too many corporate chieftains are immersed in their own bubble – of making ever bigger returns to mollify investors, motivating staff, keeping suppliers sweet and adding customers to care about anything else.
Don’t get me wrong – Cohen can talk figures, pound signs, interest rates and percentages as much as the next person. What he does display, however, is a desire to think outside the immediate, to step back and to take stock. He says so himself. I remember meeting him in his cavernous offices in Central London – the walls were brilliant white, save for some abstract paintings – and he confessed to being gripped by ‘lofty ideals’.
Most of the time that sees him pronounce on social inclusion and the lack of it. I recall he spoke about Bridges, a venture he’s closely involved with that seeks to provide private-sector solutions to social deprivation. I can hear him now in his heavy accent (he was born in Egypt, a Jew who fled the country aged eleven with his parents and settled in Britain without being able to speak much English and later won a place at Oxford where he went on to head the Union) saying: ‘The environment of high growth and the wealth that has created has led to a situation of many people feeling left behind. There is nothing wrong with a society in which some people are rich and some are poor, provided everybody has the chance to get rich. There has to be fairness.’
He went on to warn about the widening gap between rich and poor and how he feared the likelihood of rioting on the streets if more was not done to close the void. If he’s not setting out his stall on the ills of Britain and the West, his attention is devoted to another area, one where genuine violence does exist: the Middle East (another body he chairs is The Portland Trust which is devoted to solving the Palestinian-Arab schism).
Which is why his book is so refreshing. Yes, we know Ronnie has his contradictions – nobody hosts more spectacular parties in London than Cohen in his not even two but three houses knocked together in West London and his villa in the South of France, near Cannes, has one of the best views in the whole of Europe so not much inclusivity there – but at least in this work, subtitled Turning Risk into Opportunity, he is trying.
Again, many entrepreneurs will carp at the prospect.
They are firmly of the school that creatures like themselves are born, not made – and no amount of textbook instruction will determine otherwise. There are those who take a different view, that there are consistencies in behaviour and outcomes – and that all many successful wheeler-dealers lack is the ability to articulate the lessons they have learned. On this specific issue by the way, Cohen argues convincingly there has been such an explosion in entrepreneurship in the past three decades that it cannot all be down to a parallel surge in the relevant gene pool. The truth, he asserts, is that opportunities exist in a way they never did before.
Nevertheless, as he says, ‘Many potential entrepreneurs who could start out have not started out. Many have failed who could have been successful. The reason is that they are not properly equipped. They have not grasped the fundamentals.’ It’s those basics, drawn from his experience, he seeks to provide.
Why the obscure title? ‘The future has its origins in the present… We can all see where the ball is bouncing today; we know it has to bounce somewhere tomorrow. But few of us try to anticipate where tomorrow’s bounce will be, and even fewer will attempt to take advantage of it.’
While it’s undoubtedly the case that many of Cohen’s implorations carry echoes of every management guide ever written – ‘You can’t learn to swim by exercising on the beach’ and ‘If you pick a provincial line, you arrive at a provincial destination’ – he brings thought and also, uncommon for a business book from a grandee, a degree of self-deprecation. He admits for instance to not backing James Dyson who wanted to take on the giants of the domestic cleaning industry.
Typically, instead of moaning about this failing he seeks to extract the positive – so he adapts Disraeli’s belief that politics is the art of the possible. Watching how others funded Dyson and raked in millions, he now observes, ‘that venture capital is the art of the seemingly impossible.’
In a book that also stands out in an often grim genre for being lucid – all credit to his writing assistant, Terry Illott – Cohen does what few business titans turned authors ever do, and give real life examples at every turn. It’s not autobiographical, nor is it revelatory – Gordon Brown can relax – but it is highly instructive, and compellingly so.
Throughout as well, there is a sense of someone doing what others, notably the back-seat critics don’t do, and that is putting their own money into the innovations of others. Reading it is akin to watching an edition of Dragon’s Den, the entertaining TV show in which millionaires agree to support inventors, but the twist with Cohen is that the numbers are so much bigger.
When Cohen began, the industry he helped create was called venture capital. Only much later did it become more commonly known as private equity. It’s clear he prefers the old usage, with its suggestion of creation and daring. The overall picture he paints of a much-tainted but little understood industry is unrelentingly positive.
Rather than boo him off the stage, his colleagues should applaud loudly – he has done them a tremendous service. Just don’t ask him about what they choose to do with their wealth and time – and certainly don’t mention his own financial affairs.
Review by Chris Blackhurst.