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Jazz Shapers

Shaper: Sir Martin Sorrell

Transcript

Elliot Moss
Welcome to the Jazz Shapers Podcast from Mishcon de Reya. What you are about to hear was originally broadcast on Jazz FM however the music has been cut or shortened due to rights issues.

Welcome to a very special Jazz Shapers Uncut. This is where today and in next Saturday’s show as well, we get to have a more indepth conversation with a brilliant and unique Business Shaper. My guest I am thrilled to say is Sir Martin Sorrell, Founder of WPP, the advertising and marketing services group, and S4 Capital, an advertising and marketing company for the digital age. Raised in northwest London, the grandson of Eastern European immigrants, Sir Martin attended Cambridge and Harvard and after nine years of doing many things, as he said, including leading acquisitions for Saatchi & Saatchi, the London ad agency, he quit, he was forty, this he thought could be his last chance to build his own business. He and a partner bought a controlling stake in Wire and Plastic Products, a company that made wire shopping baskets, and under his leadership, he built the renamed WPP into the world’s largest advertising group of companies with a market capitalisation of over £16 billion, 400 companies with over 200,000 people in a 113 countries, stunning the market with acquisitions of ad agencies, J Walter Thompson, Ogilvy and Mather and many others. Sir Martin, with a tenure of 33 years, became the longest serving and highest paid FTSE 100 CEO. When he left the company aged 73 he said, “I had nothing to do and I wasn’t going to go and play golf.” A few weeks later he founded S4 Capital, building a purely digital advertising and marketing services business, aiming to offer a better, faster, cheaper service than established players. Clients already include Google, Nestle and Procter & Gamble. We’ll be chatting to Sir Martin in a few minutes about all of this and much more. We’ve also got brilliant music from amongst others, Astrud Gilberto, Hot 8 Brass Band and Esperanza Spalding. That, Ladies and Gentlemen, is today’s Jazz Shapers Uncut. Here’s Jimmy Ponder with Mean Streets No Bridges.

That was Jimmy Ponder with Mean Streets No Bridges. He hardly needs introduction but I am giving you one anyway, Sir Martin Sorrell.

Sir Martin Sorrell
You mean Jimmy Ponder or me?

Elliot Moss
You. Both. If you’d have been listening, and Sir Martin wasn’t on, you would have heard him say “no, no, that’s not right. No, no, that’s not”, we hadn’t even started the programme. It’s really great to have you here.

Sir Martin Sorrell
Good.

Elliot Moss
I’m going to give you a couple of moments to explain what S4 Capital does but then I am much more interested in you, even though you have got so much to talk about from a business point of view. Tell me about S4 Capital?

Sir Martin Sorrell
Well, S4 Capital is a purely… it has four basic principles, purely digital because that’s where the growth is, you know, digital as you will know at Mishcon and Jazz FM, digital is growing faster than traditional, in fact traditional is not growing fast, it’s declining faster and faster, and so digital is growing about 20% and the addressable market is probably 550 billion to 600 billion of advertising spend around digital and this is another 500 billion marketing services and the 700 billion in trade budgets and associates, so the whole thing is about 1.7/1.8 trillion but we are really focussed on the first 550/600 and the second 500 of the advertising market and services sector, and it’s growing at 20% as opposed to traditional being down so, overall markets probably overall segment of advertising is growing at about 4% or 5%, maybe a little bit less. So, that’s one reason. The second reason is, or second principle is, that we have three fundamental areas that we are interested in. We call it the Holy Trinity which may not go down in certain circles but the Holy Trinity, first, party data that is owned client data driving the creation of digital advertising content, fit for format, fit for purpose because we think the classic holding companies which I tried to run one for 33 years or so, their structures and their approaches and their routing in analogue services is causing problems for them, their silos are causing problems for them, so advertising digital content, driving programmatic and data and analytic so, it’s a continuous loop, it’s rather like an election cycle without an election date, you know, the, if you look at Michael Bloomberg’s campaign, you know, people would say he won the air war, that’s the media war, but lost the ground war, the you know in the trenches, the fighting in the trenches, you can use that analogy, the day-to-day, hand-to-hand combat around the new media, social media. So you have that loop of data driving the creation of content, pumping it out programmatically, watching wat Elliot does online, you know he is on WSJ.com in which case we will serve him with content that compares whatever we are talking about to a business, you are on a fitness site to a fitness programme and the best model I have seen is the Netflix model, I mean, in the last couple of years I think Netflix have tuned it to a an always on, a 24/7 always on model and we are working closely with Netflix on a global basis and that I think is the best example that I can think of, of that model working so that’s the second principle. The third one, you mentioned this, faster, better, cheaper, we call it more elegantly speed, quality, value. Faster is about agility because most CEOs, CMOs, I am sure this is not the case at Mishcon but, and they complain about their organisations being too siloed and not agile enough. Better means understanding the digital ecosystem more effectively, probably 16 or so companies so, Google, Facebook, Amazon, Tencent, Alibaba, Apple, Microsoft, Adobe, Oracle, Salesforce, IBM, SAP, ByteDance, Bidoo, Snap and Twitter, there are others you’d throw in but those 16 companies we see ourselves as partnering with them hardware, software platforms, partnering with them to make sure that our clients optimise their digital budget allocation so that’s better and cheaper means, not ZBB anymore, I am not zero based budgeting anymore because that’s been discredited by some things that have happened recently there by putting too much pressure on costs and reducing innovation and indeed branding spending but in a world which is growing slowly, where there’s very little inflation, very little pricing power focussing on cost is something that inevitably analogue clients in particular as opposed to the digital fast growing tech companies focus on. And then the last principle is a unitary structure that not the silos of the holding company, we’ve refined out offer to content, digital advertising content, and data and analytics and programmatic we have basically two brands of MediaMonks and MightyHive and we now we are putting them together. For example this morning we pitched a piece of business as S4 on Friday we are continuing with that, we are pitching another major piece of business now as S4 and increasingly we are bringing the content, the data analytics and programmatic together as one.

Elliot Moss
Now, the exposition you have just given me has, already in two years you have market cap of around a billion point two dollars. Were you as clear 35 years ago when you sat in a small office and said, “I know what I am going to do, I am going to build a conglomerate…”?

Sir Martin Sorrell
No.

Elliot Moss
And, if not, what were you thinking at that moment? Just briefly.

Sir Martin Sorrell
No, you never… I don’t think you… I don’t do brief answers.

Elliot Moss
I know. I thought I’d have a go though. I’m an aspirational kind of person.

Sir Martin Sorrell
No, listen, you don’t, I don’t think you know the bounds of what you are doing so if you said to me at Saatchi’s, you know, I had three lives in advertising in one way or another, one is at Saatchi’s, one was at WPP and now at S4, and it’s very difficult, I mean, thinking back to your question and, you know, if you had asked me at Saatchi’s, you know I was working for the brothers and it was a wonderful environment probably still one of the best if not the best environment, you know. Weekly £1 million account win in campaign, you know with Charlie Saatchi mimicking somebody, you know, with a reporter at campaign, so he’d be mimicking Simon Mellor who was his personal assistant at Saatchi’s and no, great days but you never knew, you know, how far, how fast, what you would do and the same thing goes for WPP. Did we know when we started WPP that eighteen months later we’d make a hostile bid for JWT which was thirteen times our size. No. So, a lot of this is driven by, you know, my father used to say you make your own luck by trying as hard as you possibly can but a lot of this is driven by circumstances, you know, did we have a clear vision for Saatchi’s? Did we have a clear vision for WPP? Did we have a clear vision for S4? Yes, but you know, you, circumstances and the volatility of the moment, you know, one of the people inside MightyHive said to me in New York last week, “why do you think there is so much volatility with CEOs?” you know, Bob Iger becomes chairman, Ajay Banga becomes chairman at Mastercard, and Bob Iger at Disney. There seems to be a lot of change going on and I think the reason is, the volatility is huge so you never know what’s around the corner and it’s both opportunity and threat.

Elliot Moss
Stay with me for much more from Business Shaper, Sir Martin Sorrell. We’ll be back with him in a couple of minutes but first, we are going to hear from one of our partners at Mishcon de Reya, I hope they are as impressive as you, with some advice for your business.

You can enjoy all our former Jazz Shapers and indeed hear this programme again by popping Jazz Shapers into iTunes or your preferred podcast platform, and there are many of them. Or you can ask Alexa to play Jazz Shapers and there you will find many of the recent programmes. But back to today, it’s Sir Martin Sorrell, Founder of WPP and Founder of S4 Capital. Immediately, you explain the market, you feel like you are a macro economist. Were you always like this? I mean, did you at the age of fifteen just say, ‘let me explain a few things to you’, I mean, at what point did you…

Sir Martin Sorrell
I never did that.

Elliot Moss
…but at what point did you go, ‘I just see the connections here and I can then articulate it’?

Sir Martin Sorrell
No, I…

Elliot Moss
There’s very few people in advertising, Sir Martin, I worked in the industry as you know…

Sir Martin Sorrell
And survived to tell the story.

Elliot Moss
And survived. I know I’ve had a whole…

Sir Martin Sorrell
…Burnett. Was it part of Publicis then?

Elliot Moss
No, it wasn’t at the time. 1990.

Sir Martin Sorrell
But then it was a really good age.

Elliot Moss
Then it was Bcom3 and then it was Publicis.

Sir Martin Sorrell
Yes.

Elliot Moss
But it feels like you, as you said opportunity, threat, they are kind of the two sides of the same thing. At what point did you realise you were pretty good at going ‘this is the lay of the land’ because many people call on you?

Sir Martin Sorrell
Never have. Never have.

Elliot Moss
But people call on you all the time, you know, whether it’s on telly or…

Sir Martin Sorrell
Not really. I mean, no, listen I think my mother said the worst thing ever happened to me was going to Harvard Business School and I think when you sit there, I was nineteen, I was the second youngest out of 700 people in my class. Gary Jonas who sadly died was the youngest, just died recently, he was a classmate of mine and he was the youngest. So, I was young and it was, we were described as being the most naïve class at the Harvard Business School, the Dean of Admissions said we… because it was the time of the Vietnamese draft so to avoid the draft, a lot of the Americans went straight to school. Sat there for two years doing three case studies a day and the question was, “What should the chairman do and why?” Now that was a bad thing because you came out of there thinking you could run the world and you couldn’t run the world for at least twenty or thirty years because you didn’t have any experience. Life is a bit different now because people leave school, I spoke to one young Yale undergraduate just today who said to me, you know, he is going to start an internet-based startup immediately so, a lot of people just go to Stamford Business School for the connections around Silicon Valley and then go off and start their own firm so, a little bit different now but I think what… I think the answer to your question is that you do, you go through that hothouse, I remember Bruce Wasserstein saying that HBS was a hothouse and Saatchi’s actually was a hothouse as well and it forces you or encourages you to think about, you know, HBS or Harvard Business School is about general management, you know, if you want to go for finance you might go to Wharton, if you are more interested maybe in technology you would think about Stamford but HBS is about general management and I think that, that, there was one course in the second year run by, taught by a man called Wickham Skinner who was not a Marine but loved the Marines and in fact our going away gift to him was a Marine helmet, we wrote to the Lieutenant General or whoever it was of the US Marines and made him an honorary member of the Marines, he was a wonderful, wonderful teacher. You didn’t open your trap in that class unless you knew 150% what you were going to say and it, you know, fear of being called on, you know, cold call was heavy but his class was called Manufacturing Policy but it wasn’t, it was about business policy and we studied three industries, we studied furniture industry, electronics and I think it was oil and gas, and the case studies were very general about strategy. Most of the stuff we did whatever it was called was about strategic courses and strategic direction so I think that’s what fashioned me and I was always, I am always interested, I mean, so I think the confluence of politics, economics and what we do in advertising because advertising is really interesting because you get access to all these companies, they can be global companies, multi-national companies, regional companies, local companies, big businesses, medium-sized businesses, small businesses and you get to see and what the clients want is for you to really understand their business and that’s the big opportunity and I think in the older days when people looked back to the lions or the few lionesses but the lions and lionesses of the past, they look for a bit with rose-tinted spectacles but I think it is true that some of the people historically in the industry understood the shifts that were taking place and David Ogilvy was a classically good example of somebody who really, you know, he was really an account man and you know people thought of him being a creative, I think to my mind, he was a great account man because he understood clients well, worked hard at the client relationships and then started thinking strategically what should be done.

Elliot Moss
I remember picking up a film of him doing the pitch to the BT board members that weren’t in the room and it was absolutely about strategy and it was about business, it wasn’t really about the creative mind. Stay with me for much from my Business Shaper, it’s Sir Martin Sorrell, we’ll be back with him in a couple of minutes. But first, time for some more music right now, here’s Esperanza Spalding with I Know, You Know.

That was Esperanza Spalding with I Know, You Know. Here on Jazz Shapers alongside our brilliant Business Shapers, we also celebrate the greatest musicians shaping the world of Jazz, Soul and Blues and we want to encourage support for those musicians in the music industry at a time when coronavirus is clearly having a huge impact on people, industries and economies around the world. We have written a piece, you can find it on JazzFM.com on how you can support the musicians, or the venues, or the music charities you love, whether that’s financially or by communicating and engaging through their media channels and letting them know that you are with them. Thank you so much.
We will return to my brilliant Jazz Shaper Uncut guest, Sir Martin Sorrell, in a few minutes plus we will be playing a track from the Hot 8 Brass Band.

That was the Hot 8 Brass Band with Give Me the Night and this is a very special Jazz Shapers Uncut edition with Sir Martin Sorrell. You’ve mentioned your father a couple of times, you’ve mentioned your mother. Often, anyone in the industry and people who are titans of the world of industry in general will say, ‘Sir Martin Sorrell, he’s tough, he looks at the big picture, he is driven by the numbers, and the numbers are big, 16 billion over here, 1.2 in three seconds over there’ and yet I detect quite quickly a more emotional side – because we are all emotional – but tell me a little bit more about the relationship with your mum and dad?

Sir Martin Sorrell
Well, it was probably more with my father than my mother. My mother was an impossible Jewish mother, you know, used to wrap everything in plastic for good reason because, you know, wrapped everything in plastic because you were worried…

Elliot Moss
Well, it lasts a long time.

Sir Martin Sorrell
…well, they didn’t have much and therefore they wanted to make what they have, last longer and it was amazing she didn’t wrap me in plastic and stick me in the fridge.

Elliot Moss
Actually, I was coming on to that.

Sir Martin Sorrell
A lot of people would have liked that to be the case. So, my relationship with my mother was incredibly boastful, all the usual, you know, Jewish…

Elliot Moss
And you were single and you were the only kid?

Sir Martin Sorrell
…I was the only kid, yeah, well I did have a brother who died a year before I was born, a dry birth death in those days when childbirth was a little bit more hazardous than it is today so, I was the last chance saloon and it was the last chance for my mother had to have a baby I think and so she, you know, she overdid it and she, you know, I was spoilt rigid but, you know, coming from what it, it is often described in the press as being middleclass and it wasn’t because I was born in Queensborough Court and actually the most amazing thing, I went to a dinner at Lords with Eoin Morgan, you know Eoin Morgan the English test captain, or cricket captain, and he amazingly he has a flat in Queensborough Court and we spent about half the conversation talking about Queensborough Court just by Endsleigh Corner so I was born up in the, born in the ghetto in northwest London, midway between I guest Golders Green and Mill Hill but then we graduated to Mill Hill. But my dad was really formative, I mean he was a big influence, he was seven day a week retailer, I watched him work very hard so I probably learnt, you know, on a Sunday I would visit stores with him, you know, he had to leave school when he was thirteen because he had to be an income producing unit for the family. I don’t think my Zaida, my grandfather, worked very hard, he lived according to him to over a hundred years, he cut off a Cossack’s hand, you know, over the barrier of a ghetto at the age of ten, he claimed, we didn’t believe that to be the case. My grandmother was a lioness and I think my father inherited a lot of her characteristics but my dad had, despite the fact he worked seven days a week and we lived in Mill Hill and he had to travel to Putney every morning, right across London, and then would do that on a Saturday, and on Sundays he would get his regional sales figures and I would go and visit stores with him. You know, despite that he always had time for everything, he was amazing in terms of how he could allocate time to anything and everything, that’s a skill that I don’t have and it’s a great gift and, you know, when I was travelling a lot, when I was married for the first time I was travelling a lot with my young kids were, you know, doing 13 plus or whatever it happened to be and my dad would fill in for me absences and I would always be home on weekends but he would fill in for my absences during the week help my kids with their homework and so therefore was a… and then I used to talk to him in, this is the days before iPhones and mobile phones, I used to talk to him and this is not an exaggeration, I would say, I spoke to him at least four or five times, six times a day. We had an incredible relationship and he knew nothing about the advertising business, he knew about it in the relationship in the context of running 750 electrical stores, radio electrical tv stores in the UK so he thought about branding and he thought about… actually he created, he was the first person to create these glass fronted stores so instead of walking down a channel with two windows on either side of you, you had a flush front and he designed it himself although he wasn’t an architect, he wasn’t a designer so he had incredible talent, you know, he was a violinist, he won a violin scholarship to The Royal School of Music when he was thirteen but couldn’t take it up, could speak Shakespeare and Talmud, I’ve said this many times, to an extent, I mean, not “Friends, Romans, countrymen, lend me your ears”, I mean he could do the who kit and caboodle and he used to school me on, you know, with Simon Sharma we used to do these English Speaking Union competitions every year and you had a piece of prose you had to read and then you had to recite a piece and, you know, Henry V at Agincourt, you know, Richard III, As You Like It, Midsummer Night’s Dream, he could recite sixty/seventy lines from memory and the same for the Talmud. Absolutely extraordinary.

Elliot Moss
Can I ask? Obviously you talk about him as if, I mean it’s, you know, super close relationship, he was obviously a role model beyond, he was your closest friend, I sense. Was he, I mean, if he was a hero to you as well, without sounding too schmaltzy, has there ever been anyone that’s touched that relationship?

Sir Martin Sorrell
No, I had a relationship with a lawyer in New York, Phil Reece, who is the senior partner of Davis and Gilbert who are our law firm but I mean it transcended, it like all good relationships and it’s a lesson for the advertising business, you know, it transcends the business and becomes the personal so, yeah, I would say Phil was close, he died about 2002/2003 but, you know, it’s very rare that you find… what you have to do is, in my view, you know people talk about mentors and the relationship, I mean, you have to find somebody who has no agenda as they say and can give you… they may not know the ins and outs of what you are talking about or the business, like my dad didn’t really, but you, I mean, his gift was quite extraordinary in terms of his understanding of people, I mean, he could say to me, you know, we’d be talking about without going into the specifics of it but, you know, I might be talking about a situation where I was having difficulty or challenges or opportunities and he would say to me, most extraordinary thing, he would say, “here is a word that you should inject into the conversation”, as finite as that. I would inject it in the conversation and I would get the desired emotional response or response, verbal response, from injecting that word. His understanding of people was quite extraordinary, it was almost magical and the tragedy about my dad is he always worked for other people until the day he died at 74 and died, in my view, too early, I mean, he used to say, “the bible says three score and ten”, seventy years, so he thought he had his whack. I disagree with him. My mother died when she was ninety and I reckon I was robbed of a few years so, and I just think the tragedy of that was, you know, his parents came, as you said, from as best that we can determine from the Ukraine in 1899 and not speaking any language on their wedding certificate, you know, all the witnesses, the four witnesses, signed with crosses, they signed with crosses too, nobody spoke a word of English, you had to go to school at thirteen at Mile End Central in East London and he was immensely talented intellectually, music, Shakespeare, Talmud whatever and never got the opportunity that he gave me to capitalise on. That is the sad bit of the story.

Elliot Moss
That was Miles Davis with On Green Dolphin Street. That’s it from me and Jazz Shapers, have a good week.

We hope you enjoyed that edition of Jazz Shapers. You will find hundreds of more guests available for you to listen to in our archive. To find out more just search Jazz Shapers in iTunes or your favourite podcast platform or head over to mishcon.com/jazzshapers.

Transcript

Elliot Moss
Welcome to the Jazz Shapers Podcast from Mishcon de Reya. What you are about to hear was originally broadcast on Jazz FM however the music has been cut or shortened due to rights issues.

Welcome to the second part of my very special Jazz Shapers Uncut with Sir Martin Sorrell, Founder of WPP, the advertising and marketing services group, and S4 Capital, an advertising and marketing company for the digital age. Jazz Shapers Uncut is where we get to have a more indepth conversation with a brilliant Business Shaper and if you missed the first part of my conversation with Sir Martin last Saturday, worry not, it is all on the Jazz Shapers podcast just pop Jazz Shapers into iTunes or your preferred podcast platform, alternatively, you can ask Alexa to play Jazz Shapers. Raised in northwest London, the grandson of Eastern European immigrants, Sir Martin attended Cambridge and Harvard and after nine years of doing many things, including leading acquisitions for Saatchi & Saatchi, the London ad agency, he quit, he was forty, this he thought could be his last chance and indeed his first, to build his own business. He and a partner bought a controlling stake in Wire and Plastic Products, a company that made wire shopping baskets, and under his leadership, he built the renamed WPP into the world’s largest advertising group of companies with a market capitalisation of over £16 billion, 400 companies with over 200,000 people spread across 113 countries, stunning the market with acquisitions of advertising agencies, J Walter Thompson, Ogilvy and Mather and many others. Sir Martin, with a tenure of 33 years, became the longest-serving and highest paid FTSE 100 CEO. When he left the company aged 73 he said, “I had nothing to do and I wasn’t going to go and play golf.” A few weeks later he founded S4 Capital building a purely digital advertising and marketing services business, aiming to offer a better, faster, cheaper service than established players. Clients already include Google, Nestle and Procter & Gamble. We’ll be chatting to Sir Martin in a few minutes and we have also got brilliant music from amongst others, Bob James, Jamie Cullum and O V Wright. That, Ladies and Gentleman, is today’s Jazz Shapers Uncut Special. Here’s Ray Charles with Hit the Road Jack.

That was Ray Charles with Hit the Road Jack. I am delighted to be joined by Sir Martin Sorrell for the second part of this Jazz Shapers Uncut Special. Sir Martin, you had two hundred thousand people working for you…

Sir Martin Sorrell
Not quite. Hundred and thirty two and then we… the associates, that’s companies we own under 50% of was another sixty or seventy thousand.

Elliot Moss
Okay, that’s quite a lot of people though. So, you mentioned your father’s gift for managing people for time as well and all that. In terms of how you saw your responsibility, was your responsibility to shareholders primarily or to the people who work for you?

Sir Martin Sorrell
No, I, listen I think…

Elliot Moss
Because and then in terms of people management, I was going to ask your executive team had to be all over it, I mean you are renowned to be excellent with the detail and yet you have also got people that, you know, once they work with you and they are loyal and you are loyal, you let them get on with it. There’s a… where did you spend your time?

Sir Martin Sorrell
Well, first of all on this thing about, you know, ESG, stakeholders, whatever you want to call it. My view is very simple, we over complicate this stuff and if you are focussed on the long-term this is not me, this is John Brown who used to run BP, 1997 at Stamford Business School I think it was, he made a speech where he said, you know, if you are in business for the long-term everything slots neatly into place, you know, all the stakeholders are taken care of, you know, you invest in people, it gives you benefit in the long-term. You know, you are in the oil business, you don’t rip the oil out of the ground in the shortest possible time, in the crudest way, you do it in an environmentally safe way, if there is a way to do that and you do it properly. So, long termism which is the problem that we have at the moment in my view because everything is too short-term whether you are… if you are running an uncontrolled listed company that’s a company you don’t control, you know, the governance wonks would say control like at S4 I have a controlling share, they would say that’s wrong. I think that enables me, without fear of failure, to focus on the long-term and I think that’s… if you have a lunatic in charge you’ve got a problem but I think long termism is the key issue, now private equity is too short-term, you know, the average hold period is five years, most of them when they make an investment the thing they are looking for before they make an investment is the exit.

Elliot Moss
But you were managing quarterly earnings, I mean you have been doing that for years and years?

Sir Martin Sorrell
Well, we had, yes, and thereby hangs the problem because I think at WPP, if am going to be self-critical for a minute God forbid but if I am going to be self-critical…

Elliot Moss
You heard it here first.

Sir Martin Sorrell
…we didn’t, I didn’t, focus enough on the long-term. Looking at where WPP is now and I am still a major shareholder, the biggest personal shareholder, given the collapse we have seen in the share price recently, it’s clearly, it cannot be done and I don’t think the management is right, clearly, because it’s been two years and they ain’t cutting it so it has to be a change and secondly, they cannot do it in the public atmosphere, it has to be done privately, you can take it private or you break it up, there’s no doubt about that in my mind whatsoever, you know, you were in Publicis or in Burnett as the forerunner to Publicis…

Elliot Moss
And then Publicis.

Sir Martin Sorrell
…and they had to be, they had to be broken up in the same way, there was a broker circular this morning from BNP Exane I think it is who said, you know, here’s the break up analysis and the LBO returns that you will get at various premia to the current market price.

Elliot Moss
Stay with me for much more from my Business Shaper, Sir Martin Sorrell. We’ll be back with him in a little while. Time for some more music right now, here’s Bob James with Nautilus.

That was Bob James with Nautilus. I am with Sir Martin Sorrell for a very special, and our very first Jazz Shapers Uncut, it’s part two. If you missed part one, just go into iTunes as I said earlier. So, just to understand on the people front for a moment. Do people either get you and they are with you or they didn’t and the won’t? Because I think obviously you are going to be a tough task master.

Sir Martin Sorrell
No. I mean I… I wasn’t a tough task master, I mean you know, we…

Elliot Moss
He says smiling.

Sir Martin Sorrell
No, no, I wasn’t smiling, I’m sorry I’m thinking, no we would sit down at the beginning of the year, we would plot out a three year plan which is what, exactly what we do at S4 Capital, we then plot out the budgets. No, people would describe me as being, you know, into the minutiae, micromanager. I always thought that was a compliment, you know because that goes back to my dad for a minute, right? You know, ‘retail is detail’ was a phrase, not that he used but other people use, and I think if you don’t know, you know, why am I interested in the information? I am interested in it not because I think I need to double check or second guess but I want to know what the hell is going on. You know, if you said to me, you know I put you on a desert island, which three pieces of information would you like? I would like like-for-like gross profit growth, or any growth, gross profit growth that is. Headcount, you know, how much is the headcount up? And then net cash because, you know, our business is basically a big cash conversion business, you know, 100% or thereabouts of profits goes to cash so if the cash starts to go wrong obviously you have got capital payments or you’ve got acquisition payments but if you know what those are if the cash starts to go wrong you are doing something wrong and the head counting, you know balancing revenue increases with headcount increases is critically important because 60% of your revenue is invested, but you know that from the legal business. Property is the second biggest cost or investment and that’s probably usually 6, 7, 8% of revenue so two thirds of revenues are in people, the investment you make in people and I say investment not cost, and investment in property, and that’s more longer term, you can buy, you know for example S4, first half of the year we over invested in people because we were going to have a strong year, you will see the results on March the 18th but you know it was a justifiable thing to do in the first half in order to make the second half successful so, balancing it so, this micromanagement chap, you know he’s an accountant, which I am not technically, you know I am a business school graduate if there is a difference, some people listening, if there is anybody listening will think you know there’s no difference, no so you are thinking about it strategically and tactically and I am just interested in the detail… I would just, one other thing, where I have seen people withdraw from the detail, they fail.

Elliot Moss
And on that thought, which is a good thought, make sure you don’t miss the detail. Stay with me for much from my Business Shaper, it’s Sir Martin Sorrell. We’ll be back with him in a couple of minute but first, let’s hear from one of our partners at Mishcon de Reya with some advice for your business.

You can enjoy all our former Jazz Shapers and indeed hear this programme again by popping Jazz Shapers into iTunes or your preferred podcast platform, or you can ask Alexa to play Jazz Shapers and there you will find many of the recent programmes. But back to today’s guest and the concluding part of our Jazz Shapers Uncut Special with Sir Martin Sorrell. He is the Founder of WWP the advertising and marketing services group, and S4 Capital an advertising and marketing company for the digital age. We’ve talked a little bit about your status if you will as the second generation, the second generation in the family coming from eastern Europe, and not dissimilar to me, I’m third or fourth but it’s, I’ve always had a sort of feeling…

Sir Martin Sorrell
You are much classier than me.

Elliot Moss
That I doubt. I doubt, I mean, I couldn’t possibly comment. The feeling of being an outsider and not in a bad way, not in a kind of a, actually quite a positive way, I feel like I can look at stuff. When I lived abroad I went, well it’s not mine so I can look at it and I can see and this is really funny or there’s the opportunity. It strikes me there’s a bit of the outsider about you just in some of the conversations we’ve had, I mean from an immigrant point of view and Jack Welsh passed away recently, son, only son of the immigrant Irish Catholics. Here I am talking to Sir Martin Sorrell, only son of a…

Sir Martin Sorrell
Second, well second.

Elliot Moss
Second, obviously he is first generation but there’s something about being fearless based on what’s the worst thing that can happen? Is that true for you as you’ve gone along?

Sir Martin Sorrell
I don’t know whether it’s true for me, I mean, I was protected right? Because of my parents and being an only kid and all that stuff and so I don’t quite buy that but, you know, I…

Elliot Moss
Taking on the establishment in the 1980s, 1987 you buy J Walter Thompson that was a essentially a British firm.

Sir Martin Sorrell
Yeah, there was an element, you know, I came… it took fourteen days to do I think thirteen or fourteen days and I remember I flew back from New York overnight on Friday, landed at London Airport and there was a wonderful guy called Len Spooner who was the BA Special Services or whatever they called him in those days, and he came to me with the front page of The Times and Rupert Faure Walker who is now on our Board used to travel in from, I think Saffron Walden or something to London on the train every day and he, there was a Times journalist there and Rupert sort of tipped him off that you know this thing was… because it was all in the papers anyway so it wasn’t insider information or anything like that, and Rupert said you know you should write a piece and the front page of The Times, you know had the story, it was front page of The Times and the back page had a picture of the Wire Works, you know, the Dagenham Wire Works, Wire and Plastic Products. I remember my parents being absolutely amazed, you know, because they had connected The Times to antisemitism between the Wars, it was a, you know, a high Tory newspaper and they, you know, just didn’t have stories that were pro-Semitic as opposed to antisemitic and they were amazed that, you know, a little Jewish boy from northwest London ends up on the front page of The Times. So, there was, there’s an element of that I guess, you know some people say chippy, you know chip on the shoulder but, you know I think knowing your roots, S4 stands for four generations, right? So, it’s my grandparents, my parents, me and my kids. Actually, we probably should call it S5 because you know, there are grandkids as well. So, I just, you know I wanted to, my father changed his name to Sorrell because…

Elliot Moss
What was it originally?

Sir Martin Sorrell
It doesn’t matter.

Elliot Moss
Right. Because I just thought that. Mine was Moskovsky and became Moss.

Sir Martin Sorrell
No, well actually it was Spitzberg was the name. I actually told Ken Auletta when he wrote the book, and so it was Spitzberg, and he loved a book by Warwick Deeping in 1924 I think it was published, he saw this book by Warwick called Sorrell and Son and the BBC made it into a series and it’s about a sort of Upstairs Downstairs stories about a butler who saves enough money to send his son, it’s about his relationship with his son, to private school, or public school or whatever, probably called public school, and a lovely story but he loved the book so much that he changed his name to Jack Sorrell from Jacob Spitzberg and it was done because in those days there was heavy antisemitism. He was a sort of what I call a barrack room lawyer, he you know, he had no qualifications whatsoever but he went to Court in I think east London to protect sort of, not to protect, to try and defend sort of irregular, let’s put it like this, irregular business conduct.

Elliot Moss
I’ve never met anyone like that.

Sir Martin Sorrell
And, no training but he you know, grew a moustache to make himself look older so but he from the age of thirteen, he was out on his own.

Elliot Moss
We’ll be back with my brilliant Business Shaper, Sir Martin Sorrell in a little while. Time for some more music right now, here’s Jamie Cullum with Frontin’.

That was Jamie Cullum with Frontin’. Here on Jazz Shapers alongside our brilliant Business Shapers, we also celebrate the greatest musicians shaping the world of Jazz, Soul and Blues and we want to encourage support for those musicians in the music industry at a time when coronavirus is clearly having a huge impact on people, industries and economies across the world. We have written a piece, you can find it on JazzFM.com on how you can support the musicians or the venues or the music charities that you love, whether that’s financially or by communicating and engaging through their media channels and letting them know that you are with them. Thank you so much in advance. We’ll return to my brilliant Jazz Shapers Uncut guest, Sir Martin Sorrell in a few minutes plus we will be playing a track from O V Wright.

That was O V Wright with The Bottom Line, an apt name.

Sir Martin Sorrell
The Bottom Line.

Elliot Moss
The Bottom Line, you like The Bottom Line don’t you? As long as it’s looking solid, you don’t like bad…

Sir Martin Sorrell
A weak bottom line.

Elliot Moss
…the big bottom line. Sir Martin let me ask you about money. Your relationship with it is what? You’ve obviously done it extremely well. It doesn’t matter by anyone’s standard, I know there’s always this, I meet lots of people who have done extremely well but, you know, I think 2016 or whenever it was it was a 40 million quid plus package and all that and we can talk about, I met Tony Pidgley, and we talked about his package and it’s like well, he had a great answer, I can’t remember the answer but it was a great answer about that. It’s less about…

Sir Martin Sorrell
So great you can’t remember it.

Elliot Moss
So great I can’t remember it.

Sir Martin Sorrell
I’d like to know what it was and I can give it to you the same.

Elliot Moss
I think his point was, it’s relative and look at the shareholder value I have delivered and what the hell. I mean, but beyond that for you though, it’s not about the money is it anymore?

Sir Martin Sorrell
It’s about actually putting your money where your mouth is. I mean, I borrowed £250,000 actually which at that, I think I probably had a couple of million pounds worth of Saatchi stock and I went to the bank and borrowed some money to buy the Wire and Plastic Products stake, you know, I had done the same again and I put forty million into… which for me is a lot of money, institutional shareholders it may be not but forty million but another thirteen, fourteen million in when we raised more money just recently so I’ve got about £54 million as an investment inside this. I believe in putting your money where your mouth is and also basing it on performance so Pidgley’s answer, you know, when we did the first five year plan, we did it in 1992 and we set share price targets so there were five tranches I think over five years and we would get tranche one if the average stock price for thirty trading days was above one target and this was just at the time of the Blair Government and a lot of people said, “They’ll never get anywhere near those targets” those five targets which were not beating the index or basket of competitors, this was the index and they would say, “We have a Labour Government, never” and then others who were shrewder said, “No, they’ve set the targets. Management will deliver on those targets.” Then we did sort of shareholder return to baskets of competitors. Interestingly, in the early plans, I made, put money in, okay, I went and borrowed more money or realised from other assets, not selling shares, put more money in and in the early… the first two flights that we had of general incentive plans because I wasn’t the only one, there was about twenty people at WPP participate in them, in the first two flights we insisted, I was really keen on this, put your money where your mouth is, make an investment you know treat it as though it is your own money, you put money in, if you want to participate in this plan, you mortgage your house, you mortgage your kids and your family and you invest, for five years. From 1992, right? This has now become the common way of doing it and commit it. It was the institutions that turned round and said, “no, no, no don’t worry about that, you know, if you’ve got stock, pledge the stock” or you don’t even have to do that in the later plans and it lost, to my mind, it lost the edge because I think when a group of people have things at stake, you know, and at S4 all our deals have been done on a half shares/half cash basis, we said to people you buy into our philosophy of creating a new age, new era model, that’s what we want to do and we want to disrupt the old model. It is two things. It’s a messianic, you know it’s a missionary thing and you know you are going to, you can capitalise half of it but you keep the other half and you lock yourself in and we are in this together. That I think is key. So it’s, you know, coming back to the answer, this is entrepreneurial approaches, this is not, you know, Warren Buffett had always said, you know, he doesn’t believe in options, you wouldn’t give a call on a stock to an institution at zero cost so why do you give to the individual. Put money in. That’s the best way to get people to really understand how to build a business and I think that’s fundamental. When you do that then you treat the money as your own.

Elliot Moss
Please come back in a few years, it will be really nice to see you.

Sir Martin Sorrell
I was listening to Lloyd Dorfman, he’s been on your programme twice.

Elliot Moss
Twice. I know, this is great, this is so easy to wind you up. It’s just brilliant. Well, he was really good, I mean I just want to throw that in there as well but you’ve not been too bad.

Sir Martin Sorrell
Well he’s bigger than me.

Elliot Moss
He is bigger than you. Well, he’s bigger than all of us. Listen, it’s been great talking to you. Thank you for your time. Just before I let you go, what’s your song choice and why have you chosen it?

Sir Martin Sorrell
Well, it’s got to be My Funny Valentine and it’s Chet Baker and Gerry Mulligan, I think in a Paris jazz nightclub, I mean Chet Baker died at 29 I think it was and the reason he was a good trumpet player or in my view lyrical trumpet, and I am not a great, I like jazz and when I was young I used to go Doug Dobells in Charing Cross Road where, and buy my blue notes – blue note LPs, you know Thelonious Monk, John Coltrane, Miles Davies, those were the you know, the heroes and it was just this wonderful lyrical track and he was just operating on a totally different planet and when you listen to it in it’s full richness. And also Mulligan as well in terms of his playing, I mean it’s just, it answers the question, you know is there any music that moves me or moves you? And this moves me.

Elliot Moss
That was Chet Baker and the Gerry Mulligan Quartet with My Funny Valentine. The song choice of my brilliant Business Shaper today, Sir Martin Sorrel. “Make your own luck”, he said, “put your money where your mouth is, make sure you have a stake in things” and finally “don’t withdraw from the detail.” Brilliant stuff. That’s it from me and Jazz Shapers, be well, stay safe, have a good week.

We hope you enjoyed that edition of Jazz Shapers. You will find hundreds of more guests available for you to listen to in our archive. To find out more just search Jazz Shapers in iTunes or your favourite podcast platform or head over to mishcon.com/jazzshapers.

Sir Martin Sorrell is the Founder of WPP – the advertising and marketing services group, and S4 Capital – an advertising and marketing company for the digital age.

Sir Martin was CEO of WPP for 33 years, building it from a £1 million “shell” company in 1985 into the world’s largest advertising and marketing services company. Prior to that, he was Group Financial Director of Saatchi & Saatchi plc for nine years and worked for James Gulliver, Mark McCormack and Glendinning Associates before that. 

Leaving WPP in 2018, Sir Martin established S4 Capital plc in May 2018, merging with MediaMonks, its content practice, in July 2018 and MightyHive, its programmatic practice, in December 2018. Since then it has added eight further content programmatic and data companies to both practices in 2019 and one in 2020. It is listed on the London Stock Exchange under SFOR.L and after a little over one year, S4 Capital plc has over 2400 people in 30 countries, with a market capitalization of over $1.2 billion. 

Sir Martin supports a number of leading business schools and universities, including his alma maters, Harvard Business School and Cambridge University and a number of charities, including his family foundation. 

Follow Sir Martin on Twitter @martinsorrell.

Interview highlights

Digital is where the growth is.

My father used to say you make your own luck by trying as hard as you possibly can but a lot of this is driven by circumstances.

Being better means understanding the digital ecosystem more effectively.

We were described as being the most naïve class at the Harvard Business School.

I am always interested.

Advertising is really interesting because you get access to all these companies…and get to see what the clients want, and that is for you to really understand their business.

Did we know when we started WPP that eighteen months later we’d make a hostile bid for JWT which was thirteen times our size? No.

My dad was really formative – a big influence.

(Most of the things we did in class) were about strategic courses and direction, and I think that’s what fashioned me.

(My dad) could allocate time to anything and everything. That’s a skill that I don’t have, and it’s a great gift.

You have to find somebody who has no agenda.

Like all good relationships it transcends the business and becomes the personal.

(My dad’s) understanding of people was quite extraordinary, it was almost magical.

If you are in business for the long-term everything slots neatly into place: the stakeholders are taken care of, you invest in people, it gives you benefit in the long-term.

The investment you make in people is an investment – not a cost.

Where I have seen people withdraw from the detail, they fail. 

I believe in putting your money where your mouth is and also basing it on performance.

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