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Monaco diary: Jonathan Guthrie reports from the Entrepreneur of the Year World Summit
In Monaco, it is possible for the owner of a $10m leisure craft to feel financially inadequate while tying up among the floating Krug palaces in the harbour. Not a bad venue, therefore, for an event that brings together heavyweight wealth creators from 32 countries, including Home Depot founder Arthur Blank, laptop tycoon Barry Lam and Stelios of EasyGroup.
This is the Entrepreneur of the Year World Summit, organised by professional services firm Ernst & Young. Now in its sixth year, it combines an awards contest with a conference and claims to be the “Davos of enterprise”. But I have yet to spot Bono or that actress with lips resembling a startled sea anemone.
However, this morning I did catch up with Wayne Huizenga, the extraordinary serial entrepreneur who was World Entrepreneur of the Year in 2005. Mr Huizenga is the only person in corporate history to have built up and floated six companies on the NYSE, three of which made it into the Fortune 500.
Probably best known as the man behind the Blockbuster entertainment chain, Mr Huizenga said he had been “lucky”. This sounded a bit like false modesty. At one stage Blockbuster, which Viacom eventually bought for $8.5bn, was opening a store every 17 hours. Mr Huizenga later founded AutoNation, the car retailer now capitalised at $8bn, and Republic Services, a waste business worth around $9bn.
The deal he professed himself most tickled by was the $55m purchase of the Florida Panthers, an ice hockey team which he later sold for $88m. No great shakes, you might think – except that he used shares in the Panthers to buy five hotels he later sold for $1.3bn, making a hefty profit.
“We are never smarter than the competition, so if we want to grow twice as fast we have to work twice as hard,” said Mr Huizenga of his vehicle Huizenga Holdings, adding: “No-one ever drowned in their own sweat.” He also quoted two rules of business espoused by Jack Welch, formerly of General Electric: “Rule One: never lose money. Rule Two: do not forget rule one.”
Mr Huizenga made his billions through service innovation in established industries. Blockbuster benefited from growth in VCR ownership, he told FT.com, “but there were already 25,000 video stores [in the US] when we started, so we built bigger, better stores with a bigger range of titles and did not rent out adult movies”. With AutoNation he released value trapped in the cosy relationships between privately owned car dealers and big manufacturers, sharing it with customers.
Earlier Thursday morning, Erich Joachimstaler, chief executive of Vivaldi Partners, a branding consultancy, told delegates that “it’s OK to be disliked”. His point was that branding in crowded markets should be about differentiation. One of his illustrations was a Harley-Davidson ad showing a biker’s back emblazoned with the slogan “if you can read this the bitch fell off”. Um, yes. Crikey.
Mr Joachimstaler quoted this comment from Harley: “What we sell is the ability of a 43-year-old accountant to ride through a small town in black leather and have people feel afraid of him.” According to the consultant, companies need “to explore brand as a personality or a belief system”. Mr Joachimstaler – an ex-pat German living in New York – cited efforts by Germany to shed some brand associations as “safe”, “confident”, “arrogant” and “cold close”. The target perceptions were “flexible”, “warm”, “tactful”, and “spontaneous”. Perhaps Germany is reserving “hilarious sense of humour” for Phase Two.
Chris Patten, rather than the powerful air conditioning at the Grimaldi Forum building, sent a cold draft down the back of European delegates’ necks earlier in the day. The former UK government minister, diplomat and EU Commissioner gave a realistically chilly assessment of the state of the EU. Progress on the Lisbon Agenda, an ambitious plan to make it “the most dynamic economy in the world by 2010”, had been “patchy though not non-existent”, Lord Patten said.
Improvements have been on the North West fringe, he said, in the UK, Ireland and Nordic countries, while progress has been poor in Germany, France and Italy. In France the international competitiveness of its businesses was at sharp odds with the country’s growing protectionism, Lord Patten said. French politicians appeared to believe they could “protect against global competition by [shielding the food group] Danone as they once attempted to shield themselves militarily with the Maginot Line.”
There was little chance, Lord Patten suggested, of the EU closing its growth gap with the US, partly because while “Americans take risks, Europeans take holidays”. Annoyingly for politicians, EU citizens use little of that time to reproduce, thereby constraining labour supply and straining retirement systems. Lord Patten did not push the point, but the conclusion is that west Europeans have reason to feel grateful for those oft-resented Polish plumbers, Algerian fruit pickers and Indian IT specialists.
Paul Ostling, chief operating officer of E&Y, pointed out that the EU is not the only economic power facing a demographic crisis. China will too, in time. A survey published on Thursday by E&Y shows that the unwillingness of Europeans to make babies has meanwhile failed to dent foreign direct investment. The lightly regulated, euro-free UK proved to be the most popular destination.