Читать книгу Stuff Matters: Genius, Risk and the Secret of Capitalism - Harry Bingham - Страница 11

For wheresoever the carcass is, there will the eagles be gathered together.

– MATTHEW 24:28, King James Bible

The entrepreneur of these opening chapters seems to be quite some person. He or she needs to be restless and risk-taking, driven and organized, a persuader and innovator and doer all rolled into one remarkable person. You’d think such people would be rare indeed, but you don’t have to be a Carnegie or Edison to make the grade.

Take, for example, one Michael Mastromarino, formerly the CEO of Biomedical Tissue Services of Fort Lee, New Jersey. Mastromarino’s business involved the sale of human tissue – not exactly the kind of business to satisfy a childhood dream, but a perfectly legal one under US law. Sales of skin, bones, ligaments, arterial valves, and other bits and pieces are needed for a whole variety of surgical procedures. Although it may sound a bit creepy to have a free market operating in such things, there are some perfectly sound arguments in favour of the idea and Mastromarino did well at the business. His firm notched up millions of dollars’ worth of revenue and he himself made over $4 million. A textbook example of a free market solving an issue of scarcity, bringing vital products to those in need of them, at a reasonable cost, and driven by no more than a profit-maximizing firm’s desire to make a buck.

Alas, the textbook in question would need to be one in psychopathology. Mastromarino had started out as a talented and capable maxillofacial surgeon, whose main claim to fame was a chapter on bone-grafting in the promisingly titled Smile: How Dental Implants Can Transform Your Life. After suffering a painful fall, he started to dose himself with Demerol, an opioid-type painkiller. He got addicted, his professionalism suffered, and he ended up losing his licence and his livelihood. Fortunately, Mastromarino was restless and a risk-taker. As a surgeon, he’d interacted with tissue banks as a buyer – so why not as a supplier? He had the contacts, the surgical expertise, and that entrepreneurial vim and vigour so essential to the enterprise.

So he set up shop. He found undertakers willing to alert him when they had corpses available. He used his excellent surgical technique to extract good quality tissue, rapidly and without damage. He sold his material to a thoroughly reputable outfit, Regeneration Technologies, Inc. He was in business again. Nothing stood in the way of his success but the lack of raw material.

Driven and well organized, Mastromarino soon found a way round that particular problem too. He started to offer undertakers cash for every corpse they brought in. In poorer parts of the tristate area – the Bronx, Harlem, and Newark primarily – undertakers found the money too good to resist. Of course, there were problems. Tissue needs to be harvested very fresh, and from corpses that weren’t compromised by infectious disease, cancer, or the like. But that’s where the invention and risk-taking came in. Mastromarino learned simply to forge consent forms, to ignore warning signs of disease and cancer, to operate in rooms that were non-sterile on corpses that weren’t refrigerated.

As soon as he or one of his operatives got a call from an undertaker, they were there, scalpels flashing, ready to slice and dice. When leg bones were extracted, they were replaced with PVC tubing and the slits stitched up so the corpse would look OK in an open casket. The undertakers made about $1,000 per corpse, the mortuary nurse about $300 plus salary, Mastromarino somewhere between $7,000 and $15,000. Police later stated that some of the procedures had been carried out so sloppily that surgical gloves were found sewn into the cadavers.

It’s not a story that gets nicer with closer acquaintance, so I won’t go on, suffice to say that Mastromarino ticked every single box on the checklist for entrepreneurs that began this chapter. Risk-taking is only a breath away from dangerous speculation or law-breaking. The drive to build and organize is only a whisker away from a drive to dominate and control. Persua-siveness can also be about lying, creativity about coming up with new and nasty ways to make money or pervert the law. Those entrepreneurial virtues of the first four chapters aren’t actually virtues at all. They’re talents or dispositions which can be put to good use or bad; which can be perfectly judged or wildly excessive. Arguably, the risk-taking aspect of an entrepreneur’s make-up is one which, if unguarded by law and meaningful enforcement measures, will always tend towards the reckless.

Anecdotal evidence for the All Businesspeople Are Bastards theory isn’t hard to find. D’Arcy was reckless, Carnegie a liar, Rockefeller (once) a perjurer, Vanderbilt a bully, Ford an anti-Semite – the list could be extended almost indefinitely. Even today, when ethical standards in business are far higher than they ever used to be, we look at modern day giants – Bill Gates, Steve Jobs, and their ilk – with a weird mixture of admiration and loathing. We admire what they’ve achieved yet can’t help giving credence to the whispers which tell us that Gates is aggressive, Jobs an egomaniac. We tend to believe those whispers regardless of the evidence, because we find it all but impossible to believe that entrepreneurs can be both successful and nice. The strange result is that while the extraordinary improvement in living standards of the last 250 years has come about very largely because of entrepreneurs and business types, nobody seems to love them for it.

Some of our ambivalence comes from reasons that have a lot more to do with us than with any sensible estimation of Messrs Gates, Jobs et al. For starters Bill Gates is obviously a very rich man. Humans are perfectly well used to the fact that we’re not all equally well endowed, but the scale of inequalities in wealth runs far beyond ordinary biological diversity. Take speed, for example. I’m 43. I go jogging occasionally, but I’m far from obsessive. Even as a youngster, I was never a particularly fast runner. Usain Bolt, on the other hand, is a sprinter so prodigiously gifted that he can simultaneously win an Olympic gold, break a world record, and fool around ten metres before the finishing line. Yet, viewed in terms of cold mathematics, Usain Bolt isn’t all that much faster than I am. He can run the hundred metres in about ten seconds. I could comfortably run it in twenty. On that simple measure, Bolt is twice as good as I am.

Or take looks. Jude Law and Brad Pitt and a young Paul Newman are all, I’m happy to admit, better looking than I am. But how much better looking? We’ve all got the same numbers of eyes, noses, mouths, and ears. None of us are deformed or have a skin condition or any startlingly displeasing physical feature. The differences in our physiognomies come down to tiny differences in the exact weight and balance of our features – a matter of millimetres here, a shade of colouring there.

When it comes to money, these happy resemblances are entirely absent. A careful cross-country study of household wealth conducted in 2000 put the median household wealth in the United States at about $39,000. (Median is the ‘man in the middle’ way of looking at averages, so that exactly 50 per cent of households has total wealth above the median level, and exactly 50 per cent has total wealth below that level. The British median household wealth, by the way, was a few thousand dollars higher than in the United States. America is richer in aggregate, but wealth in Britain is more evenly spread.) Now, $39,000 is a perfectly nice amount of assets. You yourself may be poorer or richer than that, but, almost by definition, the chances are that you know somebody whose household is not so far off that level of aggregate wealth. Unless you are a hermit, or hang out exclusively with the very rich or the very poor, then you can’t help bumping into somebody who’s on or around that median level.

To Bill Gates, however, that $39,000 is an entirely trivial sum. He’s worth around $60 billion. That’s almost two million times better off than the ‘man in the middle’ median. If Usain Bolt was that much faster than me, he’d be running the hundred metres in one one-hundredth of a millisecond. If Jude Law was that much better looking than me – well, he just couldn’t be. Most ordinary human attributes just aren’t scalable in that way. Because financial wealth is conjured from far beyond the reach of biology, aggregating profits over the entire globe and then capitalizing them to reflect a value of all future profits too, it produces outcomes that nothing in nature has ever accustomed us to. Evolution simply hasn’t given us a template for dealing with a message which, crudely interpreted, reads ‘you are two million times worse than that geeky bloke with the unfortunate glasses’. And, naturally enough, humans being human, we tend to react to the unfamiliarity of that message in the simplest possible way: by disliking the unfortunate person who delivers it.

There are other reasons why business types are generally unloved. The good that entrepreneurs do goes largely unnoticed – even by themselves. When I spoke to entrepreneurs and asked them about their own contribution to the wider public good, they all, every one, began by talking about their charitable and philanthropic work. Money donated, time given, organizations put to work. And they all missed the point. Missed it by a mile and two hundred and thirty-something years, because back in 1776 Adam Smith wrote:

It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages.

These lines can’t be too often repeated. Entrepreneurs don’t have to be nice guys to do good. They do good by being entrepreneurs.

An example: one of those I interviewed was a serial entrepreneur called Martyn Rose, a vigorous fifty-something who’s donated a large amount of time and cash to a number of charities. Back in the 1970s, Martyn made his first investment in a company that made waterproofing chemicals. He invested during a recession – invested everything he had and borrowed heavily on top – and discovered that waterproofing chemicals sold well in times of hardship. Instead of chucking stuff out when it started to leak, consumers bought something to patch it up and keep it going. The investment did well. He reinvested his profits. He improved his products. He made some efficiency savings. The company grew and went on to make his fortune. (His first fortune, that is; he made a few more after that.)

In speaking about, and disparaging his achievement, Martyn said that if he hadn’t done what he’d done, then someone else would have done it and that, in any case, it was only waterproofing materials, for crying out loud. It wasn’t a cure for cancer. It wasn’t cheap energy. It didn’t put food in the mouths of the starving.

That’s all true, but Adam Smith teaches us to think differently. When Adam Smith wrote, the world around him was desperately poor. Poor in all kinds of things including, as it happens, cheap and effective waterproofing materials. The lack of those materials wasn’t a particularly significant part of the problem. You could have made a list of the hundred things that the world back then most needed and waterproofing materials would not have been on the list.

Yet, even if things only matter a bit, they still matter. We value those things enough to want to buy them, even though we have only a limited budget and plenty of other things we could spend our money on. Add up all a company’s sales, knock off the cost of its inputs (raw materials and the like), and you have a fair measure of how much value – as measured by us, the buyers – that company has brought into the world. And the magic of capitalism is its win-win nature. It’s not just consumers that are made happy by all their tins of waterproofing kit. It’s the people who make them, who are given a decent wage in exchange for their labour, who are able to raise their families without want or worry. And, magic upon magic, the whole merry-go-round whirls round happily enough that the government can take its share of everything in tax, so that schools can be run and roads built and soldiers paid and the sick cared for.

That’s a pretty mighty amount of good, yet it’s a contribution that doesn’t fit our model of what do-gooding should look like. Martyn didn’t personally nurse the sick or bring soup to the homeless. And his motivations were never selfless, based not on ‘our necessities’ but on his ‘advantages’, advantages which ended up making him a wealthy man. Because his contribution didn’t fit our, essentially pre-capitalist, model of what these things should look like, we tend simply to ignore it.

But if the good that entrepreneurs do seems invisible, the harm that they do is very much in evidence. Sometimes workers have to be fired or factories moved. Sometimes competitors are put out of business or raided and broken up. If the benefits of capitalism are so diffuse they become almost invisible, the costs are often painfully obvious and personal. That’s not a good recipe for universal love.

It gets worse. Senior management types are renowned for a kind of cheese-paring pettiness, always inclined to quarrel over pennies where any decent person would just show a little human generosity. Examples are legion. Call a phone company – a company whose business is based, you’d have thought, on permitting two humans to communicate by phone – and yet you have to plough your way through a million menus to get through to an actual human and by the time you do, you’ve got so lost that you’ve been pressing buttons at random and end up being put through to the Major Emergency Response Team when all you ever wanted was to change your calling plan. Or you can maintain a positive balance with your bank 364 days a year, then you go into overdraft for just one day by just one measly pound and you’ll all of a sudden see a whole spatter of charges arise that you probably gave your theoretical consent to somewhere sometime, but whose sheer gall still takes your breath away.

These things are outrageous, at least in the sense that I personally get regularly outraged by them. Yet, in my rational moments, I know why these things happen. Where consumers are happy to measure things in pounds, business types are forced to measure them in pence. A typical phone company might make a net profit of only 7p in the pound, a supermarket more like 4p, a bookstore maybe 2p. An airline is lucky to make anything at all. A bank has a return on assets of around one-third of a penny in the pound. If companies like these start being generous about trifles – a fifth of a penny here, a quarter of a penny there – they’ll destroy their profitability at a stroke.

The British cycling team knows a thing or two about winning. British cyclists destroyed their competition at the 2008 Olympic Games and they’re expected to do the same again in London in 2012. Their performance director, David Brailsford, summarizes his philosophy of success very simply as the ‘aggregation of marginal gains’ – tiny little advantages that cumulate into one insuperable one. The doctrine precisely summarizes the route to nearly all business success. When John D. Rockefeller built Standard Oil, his contemporaries were most often struck by the Napoleonic speed, scale, and completeness of his victories. Yet, as in war, Rockefeller’s strategic successes were built on the finest attention to detail: railroad tariffs, still design, mechanical sludge removal, barrel manufacture, tank storage farms, tank car loading systems, piping costs, shipping operations, international distribution – there was nothing too trivial to deserve his relentlessly efficient attention. Where he led, almost every competent business since has followed.^* Hence the cheese-paring and the ungenerous obsession with trifles.

This chapter has spent most of its time explaining why businesspeople may be admired but are seldom liked. It’s been an extended apology for the entrepreneur weeping tears of rejection into her Château Lafite Rothschild, for the unloved industrialist forced to comfort his grieving soul with another Rolls Royce and an extensively customized private jet. So it’s perhaps time to admit one further truth: that one reason why successful businesspeople are often not liked is that they are often not at all likeable.

I haven’t read many ‘How To’-type books in my life for the simple reason that I don’t believe most such books have anything useful to impart. But one book I did read and learn from is titled simply How to Get Rich. Its author, a magazine publisher named Felix Dennis, has absolutely no professional or academic qualifications to justify his lecturing me – me, a highly rated investment banker and Oxford-educated economist – on the topic, but since he does sit atop an entirely self-made fortune of around £750 million, I’m prepared to extend him the benefit of the doubt.

And Dennis is blunt about what it takes to succeed. Among his words of wisdom:

 If you care about what the neighbours think, you will never get rich.

 If you cannot bear the thought of causing worry to your family, spouse or lover while you plough a lonely, dangerous road…you will never get rich…

 If you are not prepared to work longer hours than almost anyone else you know…you are unlikely ever to get rich.

The truth is that getting rich means sacrifice. And the worst of it is, it isn’t always you that’s doing the sacrificing. You must get used to that, or give up the quest.

In another chapter, Dennis is talking about ownership and tells us:

You must strive with every fibre of your being, while recognising the idiocy of your behaviour, to own and retain control of as near to 100 per cent of any company as you can. If that is not possible, in a public company for example, then you must be prepared to make yourself hated by those around you…That is the dirty, rotten secret of it all, my friend.

His book is, in fact, ‘an anti-self-improvement book’ – because it admits openly that the chances of anyone reading it and then becoming rich are minuscule. ‘The vast majority of you are far too nice.’ If it’s any consolation, however, Dennis doesn’t regard you as rich until you’re worth £40 million or so, or a whole lot more than that if you’re American. So you can be nice and still worth £39 million or, let us say, a round $100 million, which is the kind of compromise I could probably bear to live with.

The lack of niceness you need to succeed doesn’t need to be very profound – and certainly there are plenty of entrepreneurs who rediscover their inner niceness once they’ve made their pile. But it’s a rare entrepreneur who isn’t somewhat obsessive; who doesn’t downgrade their personal relationships while hot in pursuit of the almighty dollar; who doesn’t put aside a concept of ‘fairness’ while at the negotiating table; who isn’t perfectly ready to fire people, close factories, hand out rollickings, or make other tough decisions. Most of the entrepreneurs I spoke to told me that, at the time when their careers were first taking off, they were either single, or had relationships that failed, or had a partner of extraordinary forbearance. Marriages are best formed after the entrepreneurial furnaces have burned back a little.

An obsessive temperament is at work here, of course, but so is a kind of motivational minimalism. The emotional and ethical thickets that the rest of the world blunders around in don’t confuse the entrepreneur. If a particular action is good for the business, then it’s an action that needs to be taken. It ought to be taken with due regard for others – there are good ways to fire people and bad ways; nice ways to negotiate and terrible ones – but the need for the action is never in doubt. That’s why you’ll find that businesspeople tend towards a radical simplicity in the way they talk, negotiate, and operate. That simplicity isn’t the product of either idiocy or genius. It’s simply the result of having only one goal that truly matters.

The same thing lies at the root of another disconcerting characteristic of most successful entrepreneurs: their truthtelling. Most of us like to tell the truth, of course, but we’re caught up in a web of human complexity at the same time. We might know that, let’s say, a particular product line is underperforming, but we also know that Jenny has tried her hardest on the marketing side and the real problem person, Jake, feels a lot of guilt at his failures, and we prefer him by a long way to that creepy person from production who’s just waiting to stick his nose in. On top of which we have convinced ourselves that this year, surely, the market is finally going to improve. At a meeting where these things are being discussed, it’s not that we’ll hold back from the truth, but our expression of it will be compromised by all those other things that compete for our attention. It’s not that entrepreneurs aren’t aware of all those facts about Jenny, Jake and the creepy guy from production; it’s just that those facts, to them, are background. If a product isn’t selling, then it isn’t selling. If the line needs to be axed, it needs to be axed. What is to be done about Jake, Jenny, and the others becomes a secondary problem to be sorted out once the primary decision is taken.

The breathtaking simplicity of this approach is something most of us find uncomfortable, because it relegates to the sidelines all our human emotionality and complexity. That conflict, between business goals and human complexities, lies at the heart of almost every drama about tough businesspeople, from Dickens’s Hard Times to contemporary TV drama like Mad Men. It’s also why businessmen have a reputation for crassness, and an addiction to numbers and facts. The addiction to numbers is certainly there, but that’s only because numbers don’t lie about profits and profits are all that ultimately matter. It’s not crassness that’s to blame, but a frightening simplicity of goals.

Yet for all the discomfort that we may feel around formidably successful businesspeople, there is almost always a respect that goes with it. Martyn Rose’s factories made all those tins of waterproofing gunk. Rockefeller’s refineries turned crude oil into usable fuel. Felix Dennis churns out his magazines. Michael Mastromarino – well, it’s hard to like the fellow and I’m not even going to try, but even he found ligaments for those in want of ligaments, skin for those in want of skin. However complicated our reactions to entrepreneurial success, we can at least see the stuff that’s produced as a result of their endeavours, or the difference made by the services that they’ve provided. Our respect may be grudging, but it’s usually there, however buried.

No such sympathy, however, shelters bankers and investors, traders and hedge fund managers, the dark magicians of all things financial. They’re doubly or trebly cursed: Cursed once for being richer than we are. Cursed twice for their inhuman intensity of focus. Cursed three times for practising an art apparently both magical and pointless. King Edward I of England expelled the Jews because he owed them money and because there is no good PR to be enjoyed by a usurer. Philip IV of France disbanded the Knights Templar and tortured many of their members for the same two reasons. The modern hedge fund manager is unlikely to be expelled or tortured, but governments still tremble at their power. It’s to that power, and to the people who exercise it, that we turn next.