THE ERA OF GREED

“The point is, ladies and gentlemen, that greed (for lack of a better word) is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms – greed for life, for money, for love, [for] knowledge – has marked the upward surge of mankind. And greed … will not only save Teldar Paper, but that other malfunctioning corporation called the USA.”
– Gordon Gecko, in an address to Teldar Paper Stockholders, from the movie “Wall Street” (1987).

1 + 1 = [ whatever you want it to be ]

Nothing better describes the late 80’s and early 90’s than Gordon Gecko’s address to Teldar Paper Stockholders. With those few words, one movie character encapsulated the entrepreneurial process of that era. And I found myself right in the middle of it.

I began working with the Quatro/Crestwin group, a diversified group of public companies with interests in manufacturing of heating and air conditioning products, gold mining, venture investments, water taxis, manufacturing of funeral supplies, compact disc manufacturing, video production, digital media, licensing and replication, and television broadcasting of live sporting events (and more). They were the darlings of the Australian Stock Exchange and the financial markets.

The age of excess had arrived! After breaking away from the “blue suits” in the finance industry in my previous job, I now found myself in a world of fine food, expensive wine, fast cars and the new uniform of several thousand dollar suits and suspenders (imitating the style of Gordon Gecko).

Activity was at a furious pace. Mergers and acquisitions were almost daily events. Financing was easy to get and many a deal was overpriced. Lawyers, stockbrokers, analysts and bankers turned up in an endless stream of suspenders and open checkbooks.

Amid this activity, my teams were engaged in finding inefficiencies in acquisition targets, driving profitability, managing cash and funding growth. Recording and reporting transactions as a historian was the least enjoyable part of our activities, but was essential to ensure the share price stayed strong – supporting even more M&A activity.

My knowledge grew quickly. Exposure to deal making, funding, and close encounters with real M&A, corporate management and financial reporting in a volatile and erratic environment required me to become comfortable with managed risk, uncertainty and changing priorities.

But something else was happening in the world of accounting and finance.

A new way of thinking was emerging that would change the landscape forever.

“Financial Engineering” was raising its ugly head …. And indeed, it was uglier than a haggard, bearded, toothless witch … and remains so today.

Financial Engineering was an art form. It was designed to make transactions appear to be different than what they were. In other words, it involved manipulation of the numbers to deceive the stockholder. It was a way for greed to create wealth that really didn’t exist.

“1+1” was suddenly equal to whatever you needed it to equal on that particular day.

Those in the accounting profession donned their blue suits and rode into battle – devising rules and regulations that would control the way corporations treated these transactions. On the other side were the corporate pirates – the Errol Flynn’s of the corporate world, swashbucklers, parrying and thrusting to find new ways around the rules.

And then there were the auditors – reasonable people, all of them. A couple of bottles of good Scotch and they became even more reasonable, and very understanding of the new thinking embodied in Financial Engineering.

And I was dodging and weaving with the best of them. Dancing the tango with the devil, her seductive whispers tantalizing in my ears.

We had only two rules in those days of greed:-

• Rule Number 1 – Don’t believe your own BS

• Rule Number 2 – Don’t forget Rule Number 1

Of course, the darlings of the Australian Stock Exchange, over time, started to ignore Rule Number 1. They started to believe they could achieve anything. We started to think the legal Financial Engineering we were developing actually proved we were the smartest business people the world had ever seen. Narcissists come in many colors, and camouflaged in expensive suits, in the era of excess they were literally a dime a dozen. My immediate boss had a reputation as “a legend in his own lunch hour”. Multimillion dollar deals were done in the best restaurants, with the contracts handwritten on the linen tablecloths … during alcohol-fueled lunches. Legends indeed!

The fine line between Financial Engineering and something more sinister became more blurred as the ego driven BS encased the truth in an impenetrable mass of meaningless creative language.

Poor executive decisions based on inaccurate information became commonplace, reminding me of one of the things a mentor at my previous job with KPMG had attempted to drill into my head:

“Find that 4 letter word starting with “F” before making a decision.”

(He was, of course, referring to the word FACT.)

Mythology and fact can easily be confused.

I grew tired of the lifestyle: the neverending rush to make more money, the obnoxious and relentless “sucking up” of the bankers, stockbrokers and lawyers. The narcissists risking everything they had on the flip of a coin, hoping their company would land “heads”.

My time in this world was well spent, leaving me with some knowledge that has been indelibly printed on my being:

• At the end of the day, a person’s integrity and moral compass is far more valuable than the shiny objects that temptation slyly puts in front of us

• Accountants of all types are as susceptible to greed as everybody else

• 1+1 will always equal 2, regardless of how much financial engineering tries to prove otherwise

• Cash does not lie

It was time to stretch my wings, take my experience and skill into the real world; the world where I lived or died based on my decisions, my skills and my ability to execute. I was destined to be more than just a financial engineer or a historian.

It was again time for me to become an entrepreneur.

Casting aside my fears, and the security that comes with traditional employment (a false security, I might add – employment is really what happens to you between searching for opportunities), I started the process of defining what opportunities were available in the current market.

Success can be found at the intersection of what one likes doing, what one is good at, and market opportunity.

Melbourne is known as a dining city. I saw an opportunity in fine dining – after all, the last few years had introduced me to the best dining available. It was about time the joy of fine food could be delivered seamlessly to ordinary people.

My next opportunity was clear … What is yours?

Randy