First Round: Tall tales

In his book ‘Blink’, Malcolm Gladwell reports that Fortune 500 CEOs are, on average, almost three inches taller than the average American male height of 5’9”. He also cites a previous US study showing that even when you correct for other variables, an extra inch in height is worth an extra $789 a year in salary.

“We see a tall person, and we swoon,” says Malc (who is, incidentally, 5’8” – which presumably makes him an outlier).

It follows, then, that a private equity fund is likely to perform better if it’s run by tall people. And by logical extension, a fund run by one of the tallest men on the planet is basically a licence to print money.

Which brings us to Yao Ming.

Yao, if you don’t know him, is the Chinese basketball phenomenon who spent nine years playing for the Houston Rockets; at a frankly ludicrous 7’6”, he was at the time the tallest player in the NBA.

Having retired in 2011, he’s now dabbling in private equity. According to the 21st Century Business Herald, a Chinese newspaper, he has already launched China’s first ever sports industry-focused fund, and has just bought a majority stake in ES Capital Group; this will be renamed Chongqing Yufu Assets Management Group (catchy) and will attempt to raise a $78.5 million fund.

But before you go and put that commitment cheque in the post, First Round would like to add an important caveat.

Gladwell also notes that in basketball, there appears to be no height advantage beyond a certain point – although there is a minimum bar. In other words: you have to be tall enough, but beyond that point, taller does not necessarily mean better. Maybe it’s the same in private equity?

That said, the bar is presumably much lower. After all, the examples of Messrs Kravis, Schwarzman, Black et al show that you don’t have to be big to be a buyout behemoth. n