When one of the industry’s big personalities announces the extinction of industry personalities, First Round takes the death knell seriously.
In a typically wide-ranging and candid speech in London, Guy Hands, the larger-that-life founder of Terra Firma, laid out his vision of what it means “to build a first-class organisation in a world where no-one can predict what will happen, and no-one is an expert”.
Hands, known in City circles as ‘Guy the Gorilla’ and one of the private equity industry’s most recognisable individuals, sounded a lot like he was calling time on the notion of the charismatic firm founder. This was somewhat surprising from a man whose nickname was borrowed from London Zoo’s most celebrated of swingers (above).
The “biggest swinging d**ks” have no place in the post-2007 world of private equity, he said. He framed the conversation around banks, but First Round assumes that private equity firms would be subject to the same “no BSDs” policy.
The “individual heavyweights” of the pre-2007 era that generated huge wealth for both their banks and themselves should give way to team players, said Hands.
“In 2007, people could behave how they wanted – performance was the only thing that mattered. In fact, if you were really bad, but really good, you actually got paid better,” he said. “Today, these people should be fired. Otherwise the same mistakes will be repeated.”
Those in the audience familiar with recent private equity history found a certain pathos in the pronouncement. Amid the animal spirits of 2007 Terra Firma bought EMI, a deal whose failure, in Hands’ own words, prevented Terra Firma from becoming a “mega firm”.
In response to this, Hands has busied himself over the last couple of years bringing in a few team players to Terra Firma, such as former Sainsbury’s chief executive Justin King and Andrew Geczy, who has held a number of management positions within the banking sector. Always good to have another couple of silverbacks in the troop.