The world is teeming with millions and millions of dealmakers, entrepreneurs and ibankers. Each unique as a snowflake yet invariably fuelled by the ambition to do mighty things. Meeting a new one is usually quite a pleasant experience. It helps me forge new friendships and partnerships while allowing me to rethink the way I carry out the work I do. I always learn from a fellow businesswoman or businessman.
One should appreciate these motivated individuals as one would art.
We all have our own tastes. Some of us prefer Contemporary Southeast Asian Paintings over Pre-Columbian Art. Others enjoy only Islamic Art or perhaps Sporting Art, a genre which may include paintings that depict great hunts in the plains of Africa. There are also people who obsess over old Master Paintings and who may adore with great fervour a particular artist, like the great Canaletto. To have one’s preference is no crime. However, it’s important to try and nurture curiosity about other styles, approaches and methods. You can learn a great deal from exposure to different art forms. The same holds true of business.
In the paragraphs that follow I’ll briefly touch on the following:
- Two individuals who do seemingly different yet similar deals
- A new way of looking at today’s ibanker
- A remarkable young entrepreneur I met in Singapore’s Changi airport en route to Bali
- The ibankerpreneur mindset and how to cultivate it
Mrs. & Mr. Smith
Just as there is sometimes commonality between two art forms, so can parallels arise between magicians of business when you observe them carefully. You notice that, though their modus operandi differs, they’re actually similar creatures with often equal aims. Allow me to illustrate by referring to Mrs. & Mr. Smith (they are real people though not married).
Mrs. Smith travels around major financial centres to meet with, urge and convince investors to invest 5 million dollars to finance exploration of a gold mining project in Suriname.
Mr. Smith attempts to convince some of China’s largest hospitality companies to fund the development of, among other things, a luxury hotel in the beautiful Alpine resort town of Bled, in Slovenia.
Mrs. Smith (“The Gold Seller”): she has in place an agreement with a small gold mining company. The agreement states that in the event that she manages to raise the necessary capital (i.e. USD5m) for the company, she will receive a fee – either fixed or a percentage of the total amount (the fee can be paid to her either in cash or equity in the gold mining project). So Mrs. Smith will sit face to face with hedge funds, mining investors, family offices, etc. and market the strengths of the project. I’ve worked on several gold mining projects and the truth of the matter is that it can sometimes take a very long time from the time a project goes from being an uninspiring, undeveloped piece of land to one where resources are taken out of the ground, processed, refined and sent to Switzerland to be sold on the market. There are so many variables which need to be taken into account when mining that the risks can be considerably high. For example, you’ll need adequate infrastructure. Where is this piece of land situated and how accessible is it? How will resources be transported? Are there roads and good infrastructure in the vicinity? What studies have been carried out to date and how reliable are they? But, assuming it all stacks up, then if you get in at the early stage – as an early investor – it’s possible for you to make a fortune. Then again, many investors have lost millions and millions on projects which stalled and eventually went dead. So Mrs. Smith must convince people with money that the management behind the mining company has a solid track record and knows what they’re doing and that one day that wild plot of land will be home to a major gold mine.
Mr. Smith (“The Tourism Expert”): he is working with and advising one of the largest tourism operators in Slovenia on a project which requires about €40 million in financing to develop a beautiful hotel complex in Bled. Likewise for him, remuneration will come as some form of success fee. A handsome one at that, too. (When you get €40 million for someone that’s worth a bit of money). To come up with the capital Mr. B has done some strategising. His thinking exercise is predicated on several factors, mainly surrounding who: 1) has money, 2) is a large tourism player, 3) likes Europe and has an appetite for risk and 4) a deal can be arranged with whereby there is more than a simple transaction at play (I explain a few lines down). Top of the list are Chinese investors. They’ve got the money, appetite for risk, are travelling more and more internationally, especially to Europe and, importantly, there could be a way to arrange large tour groups of Chinese travellers to Slovenia. Therefore, a big Chinese player could not only invest in developing a beautiful hospitality project in Slovenia and, in turn, earn an attractive return but could also afterwards help bring tourists to Slovenia on organised tours and make money that way. Mr. Smith figures out that it’s worthwhile to speak to a very large Chinese travel / tourism company – some even have their own passenger planes – and convince them to buy into a hotel project in Slovenia and later fly in hundreds and hundreds of Chinese tourists on a regular basis.
Both Mrs. & Mr. Smith are essentially doing similar things. There is an opportunity at hand but it requires funding. With additional capital the project can become profitable and provide a good return on initial money invested. The investor gets more (a lot hopefully) money out then they put in.
The sectors differ, as do the geographies, but at the end of the day it’s about dealmaking. Even a friend of mine who is a film producer running around Los Angeles with a completed script trying to raise funding to create an adaptation of Romeo and Juliet which centers on the relationship between an Israeli and a Palestinian is a dealmaker of sort.
An ibanker need not be boxed into a simple definition – that is, an individual who only underwrites new securities or advises on mergers. Indeed it includes the known money movers, M&A experts and Sales & Trading professionals. But an ibanker can operate outside of a traditional investment bank. He or she can work alone or with one or more partners. Also, he or she may operate from home or in a hotel lobby. You would be shocked to know how many successful dealmakers practically work out of hotel lobbies and cafes. I know some who do it out of places such as the Dorchester (London), Plaza Athénée (Paris), St. Regis (New York), The Taj (Mumbai). Similarly, others I know do it from ten-dollar-a-night beachside bungalows.
The ibanker of today and tomorrow should simultaneously be an entrepreneur if he or she wants to achieve maximum impact in his or her work. Let us call him or her an ibankerpreneur.
I’d even include the following people in my definition of an ibankerpreneur:
- A hip dude with a strategy to fill up a bar / lounge / nightclub with people and earn the establishment lots of money and request to have a fee as a result
- An assertive woman who creates a deal out of thin air by introducing a potential seller to a potential buyer and sparking interest between both parties. This is kind of like the film Inception. You plant the idea in each side’s heads. Creativity is by far one of an ibankerpreneur’s most precious assets
Obviously, the move from selling a t-shirt to selling a GBP 500 million hotel expands in complexity but many of the principles remain the same.
Recently I met an enterprising teenager who reminded me that dealmakers, and, yes, ibankerpreneurs, come in all sizes, shapes, colours and ages.
From Asia with love
Three months ago I went to Asia for a bit of business, and of course a little bit of pleasure. If I travel somewhere far and – importantly – warm then I’ll usually add a few or more days on either end for fun. (Life’s short so why not).
This particular time Singapore was the destination. A city where you can feel Asia’s economic rise in the air.
Why was I headed to Singapore? Several reasons:
- Meet with a sovereign wealth fund in order to showcase to them a large Central European hospitality group (they basically own lots of hotels) looking to raise €50m
- Have a working session with a friend who is a partner at a Geneva-based asset management company and who moved out to Singapore for 6 months to assess business potential in Asia. We met to discuss ways we could collaborate together. And of course party it up at 1-Altitude
- Get introduced to a philanthropy advisor who works with family offices across Asia – on impact investing (in essence finance but with a conscience) –> this is the future of finance
- Of course lunch at the wonderful Marina Bay Sands’ rooftop restaurant. The kind of place where you could very well walk in and find a rockstar, academic, arms dealer, hedge fund manager and even a priest enjoying a meal inside. (Likely not sitting together at the same table…well, you never know).
After my meetings were finished and business was attended to I was ready for a break. I left some of my belongings with a friend and hopped in a cab to Changi Airport where I would board a plane to Denpasar Airport to enjoy some downtime in Bali. The plan was to spend a week relaxing and switching off from work. One important item on the To-Do list was to indulge in a couple of yoga sessions in Ubud’s well known Yoga Barn.
Chilling in Changi
So I’m sitting on a comfortable sofa somewhere in this massive airport (I love Changi) when a family of four arrives. They sit down. The husband is chatting away on his mobile as the wife carries a toddler and behind follows their teenage son wearing a baseball cap. I pay little attention to their arrival. I have more important things to do: I’m feasting on a delicious bowl of laksa.
As soon as I finished my meal I sit back to get more comfortable. I’m about to take out a copy of The Economist when I look over next to me to find the teenager typing what appears to be a professional letter on his laptop. It wasn’t the content of that letter which drew me in for I couldn’t see what he was typing. It was the gravity with which he looked at his screen. That moment he appeared very businesslike and much older person than he surely was.
I was intrigued and felt compelled to start a conversation.
Benjamin the ibanker
The kid stops typing and looks out into space, probably to figure out what to type next. I jump in.
“Looks like you’re doing some serious work there.”
He looks at me with a bit of suspicion which was perfectly normal. “Maybe.”
His mother jumps into the conversation. “He’s our little businessman.”
I turn to the teenager. “Oh yeah?”
“No.” The kid frowns at his mom . “I told you, I’m an entrepreneur.”
“Sorry,” she replies with a smile.
“So am I,” I said. “Kind of.”
“What do you mean?”
“Well…huh…I’m a mix of an investment banker and entrepreneur.”
The kid took a long look at me. He then points up and down at me in one motion. “You don’t look like an investment banker.”
I laugh. He’s right. I’m dressed very casually, have a backpack next to me – the kind you take with you when you go travelling for a month, and to top it off I’m wearing a pair of old havaianas.
“That’s not a nice thing to say Benjamin,” his mother says.
“You’re right. I don’t. I left my suit at a friend’s in town and I’m going on holiday to Bali.” I point to my backpack. “Now it’s time to relax.”
“I thought investment bankers never took holidays.”
Impressive. “Depends.” Benjamin was partly right. But I was more keen to know what Benjamin the young entrepreneur was up to on his laptop. “What kind of business do you do?”
“I create websites for companies all over the world.”
“Is that right?”
“Yes.” Benjamin went on to name a dozen countries.
He had piqued my interest. “You develop and code yourself?”
“No. That’s a waste of time man. A company in India does that. I get clients and send it to them.”
“How do you get the clients?”
“I have a website. Sometimes people contact me there. But mainly I go through the net and find ugly websites and contact the companies and tell them how ugly their website is.”
“Just like that?”
“So the Indian guys pay you?”
“Yes. I have a contract with them. I get 20%.”
Fantastic. I was thoroughly impressed with this kid. “Who wrote your contract?”
“He did it himself,” his father cried, as he put down his mobile phone. “I’m a medical doctor so I had no clue when he asked me for help.”
“I found a contract online and changed the names,” said Benjamin.
I was pleasantly surprised. “Do they know how old you are?”
“The web development company in India, or the clients you speak to?”
“Nope. Never speak to them. All over e-mail. I’ve never spoken once to the Indian company. They just pay me when I get them a client.”
The father moved his seat closer. “It’s unbelievable. Some months, I’m shocked how much he makes. He will hire someone soon. Won’t you Benjamin?”
I was blown away from Benjamin’s enterprising spirit. This kid will probably hit the local Rich List in the not-too-distant future.
“Believe it or not, we do very similar things Benjamin.”
Here was one of the youngest dealmakers I’d met. Sure it probably took him a while to get things going. After all, he has no college degree or MBA. He hadn’t even finished high school yet! Yet he had a gut feeling and went for it.
It doesn’t matter if he earns 1,000 , 3,000 or more Singaporean Dollars per month. What he’s learning not even HBS, INSEAD or NUS can offer.
Much of dealmaking is about movement. If you can deliver a client to a business which sells a product or a service and something materialises then you could earn some kind of fee, depending on the nature of the deal.
When the time is right, you could ask for some form of compensation. Just as referring someone to purchase an item from Amazon gets you a small fee, so should it offline. If you are able to make a business win say over 1,000 dollars then you could ask for a commission or fee. If the sums are small there may not be a need for contracts. Probably not worth it but then again it depends on you and / or whether it’s recurring. However, if you refer someone to a company which stands to make 100,000 dollars or more then you want something in writing.
Warning!: Naturally, this doesn’t apply 100% of the time. You don’t want to get overly money-driven and fee-focused. Sometimes you do favours and send business to someone because you want to and because it feels good to do so without having any expectations. Plus, my experience has been that when you help someone they remember it and it eventually comes back to you. [ Note: it's not healthy to be overly money or fee-focused. Some people fall so deeply into this way of thinking it's scary. Don't become that obsessive type of animal.]
It all comes down to thinking commercially, seeing opportunities and acting on them. There are opportunities in front of all of us. Yes it’s true that some privileged people get it far easier but the last thing you want to do is to focus on ‘others’. Deal with yourself, your reality and your world and trust me you’ll be fine and will make things happen.
You probably right now know two people who if you connected would both benefit greatly (in the business sense) from that connection. You just haven’t realised that ‘potential’ benefit. That’s what you have to get a feel for. And, luckily, that sense becomes stronger and matures with time and experience.
How to cultivate it
An attempt to put into words a strategy which enables one to inculcate an ibanker type of mindset is, I’m sure you’ll agree, quite a feat. I will elaborate properly on this phenomenon in future posts. For now, what follows are broad pointers. Though obvious, I believe they are always worth noting and revisiting.
The below paragraphs apply mainly to dealmaking and creating deals out of thin air.
1) Start with you
The world is too big, there are far too many sectors and sub-sectors and we are surrounded by way too many opportunities to chase all of them at the same time. There’s nothing wrong with being ambitious and wanting to do it all. We all have a bit of that in us. Besides so many things sound sexy such as: selling large plots of agricultural land to heavyweight Middle Eastern investors; raising money for a bright team of techies whose online business is growing rapidly and could, with an injection of capital, become the next darling of the Internet; starting a small investment fund that’s seeded by friends and family and growing it into an entity with a billion dollar of assets under management; launching a new beverage company with an unseen angle; importing beautiful household furniture from Indonesia and supplying all the big retailers; starting an adventure company for the ultra rich; buying and selling domain names, yachts or private jets; and so on and so forth.
You can do multiple things at once. In fact, some people do real well for themselves by having a bunch of cashflow generating projects on the table at any one time. It keeps them from having to only focus on one thing which can often be a bit boring. The reality, however, is that focusing your time on one particular area will increase your chances of successfully completing that goal, project or initiative, and getting the most out of it. And that is what you want. Once you’ve gained momentum in one area, or earned a good sum of money, you can look into other projects. But, again, you want to pursue one thing more than any other in order to achieve success. Success begets success. Most people I’ve met who’ve achieved great financial success and now have their hands in all kinds of stuff from filmmaking to owning a bank, started off in one particular area. Now they may have tried their luck in different businesses, sectors, even countries, but they ended up focusing on one thing which eventually became a success and earned them the money that helped catapult them to the next level. Once that “thing” you do picks up then you can decide how far to take it – whether it becomes a $100,000 or $1,000,000 a year business. You need to make that happen. Also, what you learn from getting it to a stage where it earns a $100,000 is probably worth ten time that amount. Next time you’ll do even bigger business and will earn far more.
A good starting point is generally sticking close to home. What I mean here is that it can be more efficient for you to spot an opportunity in an area that you understand already or have connections in. This is where you want to further expand your knowledge and to build on an existing strength. For instance, if you already know a little about real estate or have friends, acquaintances or family in the business that already serves as an asset. You can build on that. If you know everyone in the nightlife establishment scene (e.g. nightclubs, bars, lounges) in your local city then that, too, is an asset. My friend Dmitry leveraged expertise he gained working in the mining sector to make his little fortune. Knowing how a business works and having contacts in that world is a huge plus and will save you time if you decide to do business with them. And if they are people you trust then even better.
2) Learn to see opportunities
Everyday, from the moment you wake up until the moment you return to bed for sleep you are presented with lots of opportunities. Some may be trivial while others are truly sizeable. They will appear before you on the street, on the pages of a newspaper, through an e-mail or during a chat with a friend over a pint. Who knows. Perhaps you’ll be presented with an opportunity to buy apples at a discount from your local supermarket today knowing it (i.e. the discount) will no longer be available tomorrow. You have the chance to buy coffee from a cafe where you already have a loyalty card and if you buy one more coffee you’ll be entitled to a free one. You may discover that your friend is looking for an accountant for his new startup and yours is not only great but also offers a £50 gift card to Amazon if you refer a client. Similarly, you may meet someone on a plane who is looking to buy a house and you introduce him to a potential seller and earn yourself the equivalent of a year’s salary.
Seeing an opportunity on a higher level becomes easier when you understand how a business works and earns money. Let’s imagine there are two companies: ‘Familiar Company Inc.’ and ‘Other Company Inc’.
- Familiar Company Inc.: you know the owner or management real well
- Other Company Inc.: you meet someone who works there one evening at a party
Let’s assume that both companies would benefit mutually from doing business together. However they do not know each other.
You’ve known Familiar Company Inc. for some time and have a good relationship with them. One evening at a party you’re introduced to Bill & Ted who run Other Company Inc. You chat and think to yourself that their business could perhaps benefit from getting together with Familiar Company Inc. You know this because you know how Familiar Company Inc. runs and earns money and your curiosity has led you to ask Other Company Inc. lots of questions about their business model. So through curiosity and questioning you learn about Other Company Inc. and you of course take their contact details.
Having then learned about Other Company Inc. you touch base with Familiar Company Inc. and speak to your contact there about this “interesting company” you came across. Through your conversation with Familiar Company Inc. you’ll get a feel as to whether there is potentially something to be done between them and Other Company Inc. Depending on how well you know and trust Familiar Company Inc. you may or may not keep the exact identity of Other Company Inc. hidden at first.
Now it doesn’t mean that your introduction will lead anywhere because there are many variables involved in getting two parties to agree to a business transaction but with time you become quicker at evaluating propositions. Also, each is a learning experience and what you want more than anything else is to gain experience. I’ve wasted time, gotten burnt, been lied to and misled many, many, many times. But that experience has been invaluable. Cliche but damn true.
3) Create, create, create
Spotting opportunities is great but everyone can spot them. It’s like most ideas. They have zero value unless acted upon. Only the implementation and execution matters.
To become a great dealmaker you want to create opportunities. Imagine it all as a creative process. I believe you have to see yourself as a magician.
Two years ago one of Europe’s oldest ski companies was on the verge of bankruptcy. I was sitting in the office reading the newspaper when I noticed a headline about the company. I knew nothing about the ski business whatsoever. However, through my circle I know several big entrepreneurs, businessmen and investors who own or run retail companies and big brands. Perhaps buying a distressed ski company at a discount could appeal to them, I thought. Someone could buy the ski company, revive it and nurse it back to health.
I went online and did a bit of research on the ski company. I found their contact details and five minutes later called and asked to speak to the CEO. Over the following three days I must have called and left messages at least six times. Finally, the CEO returned my call. We spoke and I learned there was a real opportunity to come in and buy the company at a discount. I started reaching out to people I know who I thought would potentially be interested. I called a very wealthy family in Lebanon who already owned retail companies and brands in Europe; an English entrepreneur whose specialty is turnaround and distressed situations; a U.S. sports-focused private equity firm; a very powerful London-based investment banker with cash to spend and a great love of skiing. The following week I flew out with one of them to meet with the CEO of the ski company. We spent 3 days in the relevant country, visited the manufacturing facility, inspected the inventory, learned about the company in detail, including its rich history, and more.
To make a long story short, the investor in question did not end up buying the ski company and so I was unfortunately unable to make a deal materialise – and consequently obtain a nice fee. However, the CEO of the ski company and I went on to become good friends and we actually ended up doing a deal together the following year. Through him I was also offered a senior advisory role to a large Asian conglomerate.
None of this would have happened if I had not created the opportunity for two parties to meet toward a mutually beneficial end.
Another example of creative dealmaking is the story of The Hotel Owner, The Billionaire and The Bluff.