Campden FB Issue 76

ISSUE 76 / 2019 COUSIN CAPITAL The Mehta family’s hunt for unicorns SELF STARTERS Unleashing the intrapreneurs in your family business VINTAGE LEGACY Marchese Lamberto Frescobaldi on 30 generations of winemaking

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ISSUE 76 / 2019 IT MAY BE 30 GENERATIONS OLD, BUT ITALY’S FRESCOBALDI COUSIN FAMILY CONTINUE TO BREAK CAPITAL NEW GROUND EVEN THOUGH The Mehta THEIR FAMILY HAS BEEN family’s hunt PROMINENT IN TUSCANY FOR for unicorns MORE THAN 1,000 YEARS SELF STARTERS FROM THE EDITOR Unleashing the intrapreneurs in BEING BOLD your family business To be successful in any type of startup you of innovation alive for seven need to have that unwavering belief.” That generations, how can other VINTAGE quote by Hershel Mehta, from Indian family families do the same? From page LEGACY office Mehta Ventures, who spoke to us for 46 Scott McCulloch goes on the our profile starting on page 22, applied to hunt for family businesses who Marchese Lamberto Frescobaldi on his own startup venture, but it applies right are serial intrapreneurs, before 30 generations of winemaking across the family business spectrum. Startups, we toast the stars of Europe, entrepreneurship, and innovation are terms that showcasing all the nominees and Editor have not always been synonymous with family- eventual winners at the eighth Nicholas Moody controlled enterprises—but that is undergoing annual European Families in a massive shift. That’s why this entire edition Business Awards. Deputy Editor is focused on entrepreneurship and devoted to James Beech helping family businesses grow, evolve, and The boldness we are innovate—whether through financial, intellectual showcasing in this edition has Senior Writer or social capital. taken hold at CampdenFB too. Susan Lingeswaran We are making the intrepid It may be 30 generations old, but Italy’s step into the digital world— Art Director Frescobaldi family continues to break new ground preserving all the in-depth Sean Bennett even though their family has been prominent in profiles, analysis, and insight Tuscany for more than 1,000 years and producing of the magazine, but bringing it Contributors wine for the past 700. James Beech speaks all online and bidding farewell Alison Ebbage to Marchese Frescobaldi president Lamberto to the print edition. So thank Jeremy Hazlehurst Frescobaldi from page 16 about how he sustains you for joining us for the past Scott McCulloch the ancient winemaker. 76 editions. We’ve covered a brilliant galaxy of fascinating Executive Director, Sales From wine we jump to cognac where Susan businesses and will continue to Kevin Grant Lingeswaran recounts how an initial career outside hunt out the best and brightest Remy Cointreau sparked the desire for fourth- at CampdenFB.com. T: +44 (0)20 3763 2804 generation family member Marie-Amelie Jacquet to return. She kicks off our NXG section on page Nicholas Moody Sales Team 34, followed by young Turkish entrepreneur Selin Editor Owen Hart Yigitbasi-Ducker on her passion for social change. nicholasmoody@campdenwealth.com Chief Executive If the Frescobaldi dynasty can keep the spirit Dominic Samuelson CAMPDENFB.COM 1 Published by Campden Wealth Ltd 30 Cannon Street London EC4M 6XH United Kingdom T: +44 (0)20 3763 2800 F: +44 (0)20 3763 2801 E: fb@campdenwealth.com For subscriptions please call +44 (0)20 3763 2800 or go to campdenFB.com ISSN: 2040-8900 Printed in the UK by Stephens & George Print Group Copyright © Campden Wealth Ltd 2019 The contents of this publication are protected by copyright. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means without prior written permission of Campden Wealth Limited. The views expressed in this publication are not necessarily those of the Publisher or any of its employees or agents. While the aforementioned parties have taken every care with regard to the accuracy of all editorial and advertisement material, they cannot be held responsible for any errors or omissions contained therein. ISSUE 76 | 2019

CONTENTS CAMPDENFB | ISSUE 76 | 2019 PROFILE 22 LIKE A 22 FINE WINE PROFILE The Frescobaldi family of Tuscany has been in the winemaking 22 START ME UP business for 700 years. Lamberto Frescobaldi, the 30th How family funder Sanjay generation president of Marchesi Mehta successfully invests Frescobaldi, reveals his strategy his patient capital in the tech for sustainable growth, his entrepreneurialism of India mandate for successors, and and Silicon Valley how his family’s philanthropy is making a real impact 27 ANALYSIS 28 A N ASSET CLASS APART What are the risks and rewards of search funds for family investors? 34 16 33 2 CAMPDENFB.COM NXG 34 M ESSAGE IN THE BOTTLES Marie-Amelie Jacquet traded her financial career for her family’s Remy Cointreau cognac house and never looked back PHOTOGRAPHY: ISTOCK, GETTYIMAGES

REGULARS 1 Editor’s 7 News 12 Letter from 14 View from note the US Asia 42 67 80 FB DIGITAL 42 Spirit of CAPITAL HUB 79 READ THE LATEST collaboration NEWS ABOUT FBs Top Next Generation 68 Cyprus Find out how LEGACY Entrepreneur award- to invest through an AND FOs AT winning Selin Yigitbasi- alternative investment fund 80 PUBLIC GOOD Ducker on making social CAMPDENFB.COM impacts in partnerships 69 Montenegro Why this What do US paintings and Mediterranean country is a parks have in common? new regional hub The clout of The Pew Charitable Trusts 70 Greece What the Special Register means for investors and ultimate beneficial owners 72 88 46 71 88 Higher purpose SUBSCRIBE TO OUR WEEKLY 45 LEADING EDGE Hong Kong entrepreneur Johnny Hon’s aim to make BULLETIN FB ACADEMY 72 BLOCKCHAIN the world a better place REVOLUTION? drives his dealmaking FOLLOW US ON 46 ENTERPRISE INITIATIVE Twitter @CampdenFB Facebook’s investment 94 Icon: Gloria Vanderbilt LinkedIn Campden Family Can fostering signalled Blockchain’s Business & Family Office intrapreneurialism in mainstream appeal, but Instagram @CampdenFB your business solve family businesses were Vimeo your family’s succession ahead of the game conundrum? 51 52 RESEARCH + RANKINGS 52 BEST IN CLASS Who do you know among the finalists and winners of the prestigious CampdenFB European Families in Business Awards 2019? ISSUE 76 | 2019 CAMPDENFB.COM 3

NOTEBOOK Global family office growth soars, managing $5.9 trillion Asia-Pacific and North American 34% 44% increase in the number of family offices over this period, there has been a surge of growth in business families of wealth have of family offices business which is leading to a rise in the ultra-high have more than net worth [UHNW] population,” Gooch said. powered the record-breaking growth in the one branch, Another influence at play in Asia is a major number of family offices by more than one- with a small generational transition. Some families were shifting portion having from a growth-oriented investment model, which third in only two years. as many as five was often favoured by the first generation of The total estimated assets under management wealth creators, to a preservation-oriented model, 67% which could be better suited to later generations of family offices stands at $5.9 trillion, while the which may not have the same entrepreneurial skill wealth of the families behind them totals a vast of average sets as their parents,” she said. $9.4 trillion. family office Growth in the family office space in North Campden Research estimated there were portfolio America, up by 41% over the past two years, was 7,300 single family offices worldwide, up consists of not far behind Asia Pacific. Gooch said the United a significant 38% from 2017. The largest equities, private States, which was known for innovation and proportion of those 7,300 family offices were equity and entrepreneurialism, had been experiencing the based in North America (42% or 3,100 offices), real estate longest economic expansion in its history. followed by Europe (32% or 2,300 offices), Asia- Pacific (18% or 1,300 offices), and the emerging 50% “This is leading to an increase in UHNW markets of South America, Africa and the Middle individuals, which is juxtaposed with a growing East (8% or 600 offices). increase in trend for wealth holders to establish family offices South America, as a means to assume greater control over their Dr Rebecca Gooch, director of research, said investments, including the ability to hire staff the remarkable increase was spurred on by Africa and to broaden and diversify their portfolios. Family the attractive professionalisation of the world’s the Middle offices are also favoured by some, as they allow family office hubs and changing attitudes and East family wealth holders to reduce costs by cutting out the requirements as wealth transferred between offices to 600 middle men/women and provide the services generations. in-house.” “In Asia, where we have seen a remarkable 4 CAMPDENFB.COM ISSUE 76 | 2019

Sustainability helps Benetton’s Hermès Group reputation as well as the planet French luxury brand Hermès enetton is the latest School, said he would consider Benetton’s Group, led by sixth-generation sustainability efforts as authentic. family member Axel Dumas, B global family business to enhance its brand by “At the same time, I also believe that the announced a 10% increase touting their sustainability family shareholders are trying to leverage in revenue in 2018 from the commitments, but family experts on this sustainability drive to improve their year before, amounting to $6.8 note the value-adds of marketing public perception that has been recently billion. Hermès posted a 15% authenticity to millennials and threatened by events such as the [Morandi] rise in net profit reaching $1.6 reputational rehabilitation. bridge collapse,” De Massis said. billion and a further 6% up in From 2020, Benetton Group collections operating income to $2.3 billion will be increasingly sustainable with the Mike Rosenberg, associate professor in use of mono-fibre, organic cotton, natural the Strategic Management Department of or 34% of sales. fibres, cellulose-based labels, natural dyes IESE Business School, said Benetton had and laser and ozone treatments. The group several high profile sustainability initiatives, GOOD compliance tested suppliers against the such as being a leading collaborator in QUARTER company’s code of conduct. Greenpeace’s Detox programme. Benetton’s sustainability report in June BAD underlined a turbulent period for the family. “My guess is that the family has realised QUARTER Co-founder Luciano Benetton returned as that the young people that are their core chairman in late 2017 in a bid to reverse the clients care about these topics and thus they Fiat Chrysler Automobiles record $200 million loss in revenue that year. need to do as much as they can within their Alfredo De Massis, professor of basic business model. FCA stock lost 30% of its entrepreneurship and family business value since 2018 amid growth at the Free University of Bozen-Bolzano “A deeper question is if we really need to struggles, potential emissions and Lancaster University Management buy new colours every season, but so far penalties and the withdrawal Benetton, like most companies, is working from its proposed $40 billion to do less harm in the current business paradigm and that is certainly a good thing.” merger with Renault due to “political conditions in France”. John Elkann, principal of Italy’s Agnelli dynasty and FCA chairman, called the merger plan “an act of courage”. NUMBERS CRUNCHED of UK family boards have female was wiped from the is the global value of representation, compared wealth of the world’s sustainable assets in early was poured into 13,358 to all FTSE 100 companies richest people, often 2018, up by 34% in value in impact investments during at 23%, the Institute for leaders of legacy two years, says the Global 2018, according to the Family Business Research business families, due Sustainable Investment latest Global Impact Foundation found. The to global economic Alliance. The fastest Investing Network average age of board members turbulence—the first growing region was Japan, survey. Respondents in the UK’s largest 201 family downturn in seven years, followed by Australia-New planned to invest $37 firms was 54 years. CapGemini reported. Zealand and Canada. billion into 15,216 impact investments in 2019. $35 bn 12% $2 tn $30.7 tn PHOTOGRAPHY: ISTOCK, PA IMAGES CAMPDENFB.COM 5

NOTEBOOK NEWS IN BRIEF Reimann family dealmaking ramps up AB Holding, the family office and chairman of the Succession at Ricola Reimann-controlled Felix Richterich, 60, principal J for the German billionaire JAB Holding Company, Riemann family, broadened reportedly told Bild: “There of Swiss herbal products its $50 billion spending spree is nothing to gloss over— manufacturer Ricola, from acquisitions of food and beverage these crimes are sickening.” producers to pet care providers. The seventh-generation family relinquished daily duties on The expansion came while the pledged a €10 million ($11.2 million) 1 May to non-family director reclusive siblings were thrust into the donation to charity. The full report was global media spotlight in March. Research expected in 2020. Thomas Meier, 48, while they commissioned into their family’s Philippe Pele-Clamour, an affiliate his son, fourth-generation wartime history revealed their deceased professor at business school HEC Paris, marketing director Raphael ancestors’ brutality towards slave labour said the matter was a reminder of the during Nazi rule. importance of the behaviour of each Richterich, 34, became JAB expanded its presence in the pet care generation within an industrial dynasty. the new vice chairman of sector by agreeing to buy National Veterinary “By entrusting an academic specialist to the CHF 325 million ($319 Associates, one of the world’s largest conduct this research, the Reimann family veterinary and pet care service organisations, allows a rigorous process to be put in place million) firm. for an undisclosed sum in June. in a dark period of history,” he said. Wealth tax praised In February, JAB acquired “What matters is the search for the truth, US ultra-wealth holders, Compassion-First Pet regardless of the time spent, or the money including financier George Soros Hospitals for $1.2 billion. that they will give.” and son Alexander, heiresses Compassion operates Liesel and Regan Pritzker, speciality, emergency and Abigail Disney, praised and general practice presidential hopeful Elizabeth veterinary hospitals Warren’s proposed tax of 2% across the US. on wealth of more than $50 Owned by Germany’s million and 3% on wealth of second wealthiest family, more than $1 billion. The cut JAB invested heavily would raise an estimated $2.7 in the food and beverage industries since 2012. It has trillion in 10 years. controlling stakes in Keurig Dr Henderson’s new Pepper, Jacobs Douwe Egberts, Pret a Manger, Krispy Kreme Doughnuts and leaders Espresso House. Pret said in May it plans to Lee Shau-Kee, Hong Kong’s convert as many of the 94 shops in the UK chain Eat as possible to its new Veggie Pret second-wealthiest man, concept in response to changing tastes. has retired aged 90 as Meanwhile, a spokeswoman told chairman of Henderson Land CampdenFB the family principals, Development. The property siblings Renate Reimann-Haas, Wolfgang giant said Lee stepped away Reimann, Stefan Reimann-Andersen and “due to his advanced age”. Matthias Reimann-Andersen, “were very His sons Peter Lee Ka-kit and ashamed and pale like a white wall” by Martin Lee Ka-shing, took the historic revelations of their family’s over as joint chairmen and wartime activities. Peter Harf (pictured), a managing partner managing directors. 6 CAMPDENFB.COM ISSUE 76 | 2019

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LETTER FROM THE US SIX BIG WAYS THEY HAVE TAKEN FAMILIES OUT FAMILY FIRMS OF THEIR COMFORT ZONES HAVE EVOLVED intensified over the past generation. Family enterprises have changed Nowadays families think deeply dramatically in the past 15 years. Scott McCulloch sets out six areas of major flux about their purpose and values— how they integrate corporate social The world was a different place in the 2000s responsibility into their business goals when CampdenFB was launched. While and decisions. The next generation, in issues of good governance and succession particular, don’t see social impact as planning are always front of mind for family distinct from business performance. principals, the new century has opened up Which brings us to them. the family business space to more pressure on more fronts than ever before. Are these six areas NEXT GENERATION indicative of what’s to come? This cohort has morphed radically. SUSTAINABILITY Whether modern business practices Sustainability has long been a hallmark of family firms. have shaped them or the other The challenge to survive past the second generation way around is unclear. They are hasn’t changed much. It’s the other definition of increasingly leading enterprises sustainability—engaging stakeholders about a firm’s into new sectors, new products, environmental and social accountability—that has new services, and new territories. Digital-native millennials especially 8 CAMPDENFB.COM have fully embraced digitalisation. They have taken families out of their comfort zones. GLOBALISATION Commerce is globalised. Family firms have had to adapt. There are new competitors in their once- safe domestic markets. Customer loyalty has diminished. Yet the drive for international growth has hauled families out of traditional markets only to expose them to new competitors. Even small businesses are selling, sourcing, and doing deals across borders. As family enterprises become more international, so have their owners. Many are geographically dispersed, which has piled social challenges on top of operational ones. LIFECYCLES Industry lifecycles are shortening. Compared with even a decade ago the rate of business change has accelerated. Indeed, in roughly ISSUE 76 | 2019

By Scott McCulloch Scott McCulloch is a North American media consultant and former editor of CampdenFB 10 year cycles, family firms now THREE-QUARTERS OF FAMILY FIRMS AGREE tend to make two big changes to THERE’S A NEED FOR DIGITALISATION their companies. Some are good at it. When Marseille-based Daher the next generation get sandwiched in the middle of morphed from a service-orientated senior figures and stall out even younger next gens? It company in the 1990s to an was not an issue a generation ago. industrial aerospace conglomerate, it showed incredible agility. America’s DIGITALISATION Kohler, meanwhile, has change down The biggest change by far is how family firms are pat with business lines as diverse as approaching digitalisation to rejuvenate their business engines and bath products. Families models and develop new revenue streams. Unfortunately, are making frequent transitions of many firms still view digitalisation as e-commerce or leadership to keep regenerating. But social media. They are not necessarily aware of the how long can chief executives stay in deeper benefits of becoming technological disruptors office without hindering innovation? (rather than the disrupted) or staying ahead of the curve in hot areas such as IoT (Internet of Things), robotics, LONGEVITY virtual reality, and blockchain (see feature on page 74). It is not uncommon to see three generations working in the same Three-quarters of family firms agree there’s a need for enterprise. Family firm chief digitalisation, according to one KPMG study, but they executives remain in office for an may not fully understand the significance or possible average of 25 to 30 years. Longevity benefits. Families are far more dynamic and innovative has changed the playing field. The nowadays, but there is still progress to be made. One notion of co-leadership is cropping thing is certain: More change is coming. up more frequently in families. Will CAMPDENFB.COM 9 ISSUE 76 | 2019

BRIEFING Philippe Weil Philippe Weil is the founder of PJ Weil Ltd— Family Office, based in Tel Aviv, and divides his time between Tel Aviv and Zurich. He is a member of various international think tanks and global associations and a guest lecturer. FAMILY FORTUNES judgemental of the rich. Wealthy A new book finds out why so many wealthy families do people (individuals as well as entire not transfer their assets properly to the next generation. families) often have to deal with Philippe Weil, author and family office principal, says issues of entitlement, jealousy, excess, the answer to this question is fascinating, and doesn’t or lack of self-esteem, lack of purpose necessarily have to do with finance and very high expectations. It is very confusing and also lonely—you What inspired you to write Woes of What are the challenges do not feel you have permission to the Rich: Seeing Beyond the Money? facing affluent families? complain, to worry and to question; Many professional books about There are challenges that are you are this dream everyone has! the issues of affluent families have particular to business-owning been written. Most are written for families (succession, shared How did you go about writing the professionals servicing such ownership, etc) and others and researching the book? families. I thought I'd write a book which only challenge families It’s all about life experience. I am that is specifically for the families with financial wealth (keeping it myself a member of an affluent themselves. In my book you can learn together, trust-fund babies, etc), family. I am working in the field of much about what money does to but most of the deep challenges are private wealth for over 30 years. families. It can be read by the parents, common to all affluent families. For the book, I gathered all the siblings, children and relatives as Society expects the affluent to be of stories and experiences I heard at well as friends. This book invites a high moral standard and to lead work, at conferences I attended the reader to deal with his and her by example—on the other hand, and the hundreds of conversations family’s issues before it is too late. the same society is also jealous and I had with clients, friends, peers, mentors and the tabloids, as well as my personal story. What has been the reaction from readers so far? The book came out in Hebrew back in October 2017. A wealthy second generation couple contacted me after reading my book. They needed to deal with their family governance. In preparation for the work, they purchased additional copies of the book, so that all family members could read the book simultaneously. Due to this preparatory reading it was easier to get started in the process of planning and implementing the governance this family so needed. Most families thank me for opening up the dialogue and for giving them a tool to address the difficult topics which would otherwise not be addressed in time. It enabled them to start a conversation and to overcome some “angst” of opening a Pandora’s box, but postponing the issues will not solve them. One has to address the “woes of the rich” head on, before they become court cases and destroy the family. 10 CAMPDENFB.COM ISSUE 76 | 2019

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MARKET INSIGHT The chase of the thrills Founded in 2009, Cookson Adventures has pioneered the concept of world firsts in luxury adventure travel. Henry Cookson, the company’s founder, reveals how his team delivers incredible travel experiences for his clients in family business Why are more and more wealthy Right: Henry Cookson, and experienced something new. business family members keen explorer and founder of Curiosity is central to all of our adventures. to invest in experiences, rather Cookson Adventures, than assets, with Cookson next to the statue of It’s what unites all our guests. That’s why the Adventures? Lenin at the Pole of concept of ‘world firsts’ is so important to Spending a week basking in the sun on Inaccessibility, the us—it’s the unique nature of doing something board a superyacht is no longer enough. Antarctic’s most remote that has never been done before that appeals Rather, travellers—particularly successful spot, during his record- to our clients’ curious side. individuals—want to come away from breaking trek in 2007 their experiences feeling enriched; feeling How can business families benefit like they have broadened their horizons from experiencing a unique travelling experience together? We approach each adventure with a blank canvas and pride ourselves on engineering every trip to be something that our guests will remember for the rest of their lives. No two trips are ever the same, nor two days of any trip. Our approach means we end up crafting an adventure that’s truly personal to the family. Recently, a trip that I am incredibly proud of combined a luxury experience in 12 CAMPDENFB.COM ISSUE 76 | 2019

Antarctica with ground-breaking scientific THE BEAUTY How does your Cookson research. We arranged for a client to OF LUXURY IS Adventures team cater for the undertake a cruise around the Antarctic THAT IT IS, IN differing perceptions of luxury Peninsula, enjoying stunning scenery, ITSELF, ONLY A travel your clients of differing ages incredible wildlife and memorable activities PERCEPTION. and cultures may have? that included sailing into the caldera of PEOPLE SEE That’s the biggest challenge, but one that a volcano, diving beneath the waves in a THE WORLD gives us the greatest scope to be creative. submersible, and hiking on the ice. DIFFERENTLY However large or small the request, we look to our network of experts from around the As part of the expedition, the family world to help us design an adventure unique funded important scientific research to the client. into the discovery of a new species of killer whale. A project 15 years in the The beauty of luxury is that it is, in itself, making, the donation allowed for a only a perception. People see the world dedicated research vessel to be chartered differently. And although different members off the southern tip of South America, of a trip may wish to undertake different and skin samples taken from this killer activities, we will aim to unite the group whale previously ‘unknown to science’. through appreciation of the wider experience. The team of scientists met up with the For example, younger clients on a superyacht client at the end of the expedition to go safari might wish to take to the waters on jet through the findings and the secrets of skis, whilst the older members of the party Type D killer whales. trek on nearby icebergs. ISSUE 76 | 2019 CAMPDENFB.COM 13

MARKET INSIGHT Where in the world are families How does Cookson Adventures host Cookson Adventures choosing to experience with Cookson unforgettable travel experiences for meticulously crafts Adventures at the moment and families while preserving the planet travel experiences what are your recommendations for for future generations? that mix adventure experiences for 2020? Our endeavours in the world of conservation and luxury for its Our experiences are so different that I don’t and sustainability come from my own love of global client base. think I could recommend one in particular. nature and time spent, after school, travelling These bespoke A client may wish to participate in important in Kenya and working as a guide on a riding expeditions are conservation work, so we team them up safari. Something stirred in me whilst riding designed for people with world-renowned scientists to help with around the plains of Africa, interacting with with a curiosity and breakthrough discoveries. Or they may wish the wildlife, including some of the world’s most thirst for exploring to undertake a high-octane, adrenaline-fuelled endangered species, and learning from Maasai without sacrificing experience that puts them out of their comfort elders about their tribal ancestry. the highest levels of zone. Whatever the request, we have an excellent comfort and safety. team of researchers that works incredibly hard I am now fortunate to be in a position where For further to get to know each client and their individual I can try and affect change in the world via information, visit: requirements and passions, so that they can major conservation projects that our clients https://cookson refine all the details of a trip and build something are keen to contribute toward. Previously, adventures.com unique and extraordinary. we’ve organised for our client to support a info@cookson project that re-homed 250 juvenile tortoises adventures.com However, what I will say is that the new way in the Galapagos Islands—a location they had +44 (0)20 7736 0452 to explore is by submersible. Exploring the world been absent from in over 200 years. We also 2 Clearwater Terrace, in a private submersible is as close as possible to regularly promote shark-tagging with scientists Holland Park Avenue, travelling to another planet. Today’s technologies as part of diving trips, so that we can continue London, allow guests of all ages to spend unique moments to learn more about the health of our oceans W11 4XL under the ocean’s surface and have a real and monitor the movements of endangered United Kingdom opportunity to discover what no human has ever shark populations. Conservation will always seen before. run as a thread through our adventures. OUR ENDEAVOURS IN THE WORLD OF CONSERVATION AND SUSTAINABILITY COME FROM MY OWN LOVE OF NATURE AND TIME SPENT, AFTER SCHOOL, TRAVELLING IN KENYA AND WORKING AS A GUIDE ON A RIDING SAFARI 14 CAMPDENFB.COM ISSUE 76 | 2019

By Susan Lingeswaran VIEW FROM ASIA-PACIFIC Senior writer, CampdenFB, Campden Wealth become the new beneficiary for the region’s wealthy? According to the HONG KONG FAMILIES latest reports—Singapore and its $2.4 GRAVITATE TO SINGAPORE trillion asset management industry. It was a drizzle that turned into a storm. When the Hong Historically, Hong Kong and Kong government announced changes to extradition rules Singapore have competed for position allowing people to be sent to mainland China for trial, it not as Asia’s premier financial centre. The only triggered a political crisis, but an economic one too. riches held by Hong Kong’s tycoons For Hong Kong investors and democracy advocates alike, have, until now, made the city the the extradition bill reinforced concerns the Beijing-backed larger private wealth base, with 853 government was corroding the legal wall seperating the local individuals worth more than $100 judicial system from the mainland’s—the One Nation, Two million—just over double the number Systems policy put in place when China took back Hong Kong in Singapore, according to a 2018 from the UK and Macau from Portugal. wealth report by Credit Suisse. For the ultra-wealthy, however, the key worry was that Beijing would eventually be able to seize their assets. If the bill became But as the weight of Beijing’s might law, mainland Chinese courts could request Hong Kong courts is being increasingly felt in Hong freeze and confiscate assets of Hong Kong residents, and Chinese Kong, the balance is starting to tilt in and foreign nationals living or travelling through the city. Singapore’s favour. Widespread reports Weeks of protests and violence did eventually force the bill’s have cited wealth managers receiving initial legislative debate to be shelved, but it could still be large flows of new money in Singapore revived in the future. from Hong Kong, while some foreign Continued chaos in the city has thrown Hong Kong’s wealth managers said they were suitability as a wealth management hub into doubt, with local scrapping plans to open offices in media reporting many of the city’s ultra-wealthy residents are Hong Kong in favour of Singapore. considering shifting their assets offshore. So, who is about to Property brokers have also reported increased inquiries from Hong Kong- ISSUE 76 | 2019 based fund managers, private investors and family offices. And Hong Kong’s family office space is beginning to feel the heat. China’s rapidly growing super-rich are choosing Singapore over Hong Kong as their base due to its political stability, language and rapid air connections with China. David Chong, chairman of Labuan, an independent trust company providing advice to family offices and high-net-worth individuals, told The Straits Times he was aware of family offices that manage at least $200 million AUM looking to locate in Singapore rather than Hong Kong. For now, officials from the Monetary Authority of Singapore have cautioned wealth managers against aggressively marketing their services and capitalising on their rival’s political turmoil, but as Beijing’s grip on Hong Kong tightens and the ultra-wealthy community look to secure its future, it looks like Singapore will be crowned Asia’s new premier financial centre. CAMPDENFB.COM 15

The 30th generation winemaker Above: and Switzerland. Canadian business continued Marchese Lamberto Frescobaldi was Lamberto to grow by 13%, while Asian sales grew by 7%, raised on the stories of his eminent Frescobaldi with China accounting for 56% of that growth— ancestors who have produced wine admires the indicating it will soon be the region’s most in Tuscany since the beginning of views of the important market. the 14th century. They were explorers, musicians, vineyards scholars, bankers and politicians, trading with across The United States, however, saw turnover drop European courts and supplying wine to royalty Castello by 10%, due to a change of importers after a long and the papacy, as the family archive reveals in Nipozzano collaboration in the market. documents dating back to the 1200s. “The world is looking for quality wine and Yet the story that resonated the most, his that is what we need to deliver,” Lamberto favourite tale about his namesake from childhood, Frescobaldi says. speaks to his approach as the principal of the huge $230 million winemaking family business “[China and India are] difficult markets, I need operating across seven beautiful estates. to do more!” “Our ancestor, Lamberto Frescobaldi, built in 1252 a bridge over the Arno River to connect his lands to the centre of the town of Florence,” he says. “The bridge now is called Ponte Santa Trinita [St Trinity Bridge]. The family still lives in the later 16th century palace located on the square which bears the family name. It speaks to his commitment to building enduring foundations for sustainable prosperity. As the 52-year-old president of Marchesi Frescobaldi, he is responsible for all the agriculture and wine products, as well as the development of the company, including acquisitions. Don’t sit on what you received, create more than what you are given,” Lamberto Frescobaldi says. “Be responsible for the capital and set goals. Don’t act impulsively.” His sense of careful stewardship has borne fruit on the vine in more ways than one. The various companies in the group produced 11 million bottles of wine in 2017, sold in 90 countries around the world. The most significant international markets for Marchesi Frescobaldi are Italy, the United States, Germany, Switzerland, Canada, Japan and the Asian market in general. In 2017, the group turned over €205 million, an increase of 4% compared to 2016 from all its activities, including wine sales, restoration, retail and agricultural products. It was a growing trend over the previous decade, which saw group turnover increase 65%, from €58 million in 2004. Wine sales in Italy grew by 8%, credited to the domestic market’s increasing interest in quality wines and the strength of the group’s brands. The business grew internationally by 2% overall. Europe proved notably healthy, with an overall business growth of 15% led by Germany 16 CAMPDENFB.COM ISSUE 76 | 2019

PROFILE Under the Tuscason Lamberto Frescobaldi opens the cellar door on 700 years of noble Italian family business at Marchesi Frescobaldi. James Beech hears how he sustains the ancient winemaker with shrewd acquisitions, partnerships and innovations PLANTING THE SEEDS 1960s, Vittorio’s brother, Piero Frescobaldi, began to lay the foundations of a modern distribution In 1950, the previous Marchese Lamberto network in Italy and abroad. After Piero’s early Frescobaldi and his son Marchese Vittorio, today death in 1964, his younger brothers carried on his honorary president of the family business, set work: Ferdinando focusing on the Italian market about modernising the agricultural techniques and Leonardo on the international business. and winemaking practices of the principal family estates, particularly at Castello Nipozzano, Lamberto Frescobaldi, son of Vittorio, says he Castello Pomino and Tenuta Castiglioni. always knew he wanted to deal in agribusiness since he was aged 13 and has no regrets today. Vittorio Frescobaldi expanded in the 1960s, encouraging vinicultural specialisation at new “I began very early at the age of eight to work vineyards planted in suitable soils. Soon, more in the vineyards during the summer. Before it was than 500ha of vineyards were planted on the a game, then after finishing agriculture studies at family estates surrounding Florence. In the early university, I began working on the project of ISSUE 76 | 2019 CAMPDENFB.COM 17

planting new vineyards. That was my first job, Right: and even now after so many years what I love the Lamberto most is planting a new vineyard.” Frescobaldi’s Medieval Today, Frescobaldi is president of the namesake operating company that manages the business built the with a holding company above. His management bridge style is one where “delegation is essential—if between the not, you don’t have time to imagine how to family’s land develop the company.” and Florence The expansion ethos instigated by the father is “I BELIEVE THAT THE FUTURE also held by the son. OF OUR FAMILY COMPANY IS TO EXPAND INTO NEW WINE AREAS The acquisition of Tenuta CastelGiocondo in THAT CAN STRENGTHEN US” Montalcino in 1989 is considered an important milestone in the development of the business. It was followed in 1995 by a partnership with the Californian Robert Mondavi business to create the Luce della Vite estate, which the group took full control of in 2016. Frescobaldi studied agricultural science and management over four years at the University of California at Davis. He was the natural liaison between his clan and the Mondavis when the two families coinvested in vineyards in Tuscany’s Maremma. More partnerships followed, exposing Lamberto to alternative methods of viticulture which would influence the traditional practices back home in Tuscany. Lamberto succeeded his uncle Leonardo Frescobaldi as chairman of Compagnia de’ Frescobaldi, the family holding company, in 2013. In 2017, the group acquired Tenuta Perano at public auction. The acquisition marked the official entry of the group into the Chianti Classico market. The Ristorante Frescobaldi restaurant in London was inaugurated in 2015 as the result of a joint 18 CAMPDENFB.COM ISSUE 76 | 2019

PROFILE venture between Marchesi Frescobaldi and the Left: Some of HARVESTING THE FRUIT Good Food Society. “I believe that the future of the members our family company is to of the latest That notion of custodianship extends to expand into new wine areas generations philanthropic endeavours. Marchesi Frescobaldi that can strengthen us,” of the partnered with the prison authorities on the Island Frescobaldi says. Frescobaldi of Gorgona, Italy’s Alcatraz, since 1869. The 70 family inmates serving the end of their sentences on the “Thus, acquiring new island are paid the same union rate as at other vineyard estates gives me a Above: Frescobaldi wineries to harvest grapes and work in clear vision of the future. Lamberto the winery on the island. While they are forbidden We usually invest with our Frescobaldi from imbibing, they learn new skills, regain their own equity, but I don’t have visits the dignity and can support their families. prejudices. We invest in family’s [the commodities] what I vineyard on The group was the only winery to reply know the best; agriculture the prison to the prison’s call for a sponsor in prisoner and agribusiness in general. island of rehabilitation in 2012. It is natural that some of Gorgona your investment will not Right: Vittorio “I believe it is a great project and the impact on perform. The take back is degli Albizi all of us in Frescobaldi is very positive,” he says. to concentrate on what you with his son know the best.” Ferdinando, “I hope it can go on for many years to come.” ancestors of In 1991, Frescobaldi married Eleonora, the But how should family businesses balance Lamberto daughter of Florentine industrialists. He has tradition and innovation? “There is no tradition without innovation,” he replies. “Innovation is the essence of life. Often people are scared of innovation, but it is the only way to give a future for a family in a business. The way to achieve is with good preparation of the future generations to come.” The family was working sustainably before sustainability became a family business cornerstone. “We all need to be responsible for the environment. My goal is to leave a better place that what I received.” ISSUE 76 | 2019 CAMPDENFB.COM 19

PROFILE warned his three university and school-aged Above: ESTATE children Vittorio, Leonia and Carlo, they must Grandmother OF PLAY get a masters’ degree and four years’ experience Anna Negrone before they can ask to join the family business. with Bona The Marchesi Frescobaldi Group is Such is the rule for everyone in the latest and Vittorio— owned entirely by five Frescobaldi generation. Lamberto’s brothers and their descendants: parents— The late Dino’s heirs, Vittorio, He does not see a problem with engaging the sitting with Maria, Ferdinando and Leonardo, next generation of his family to get involved in Leonardo and plus Vittorio’s wife Bona Marchi. the business. However, he is keen to impart the Ferdinando “We are five with me involved, “complexity and anxiety of how you run a family —uncles and but many more that have a stake,” business” to the next generation as part of the shareholders Lamberto says. eventual transfer. of Marchesi “We need to be transparent and Frescobaldi in determined to make the business The successors should be “culturally prepared, the 1950s be healthy.” know the business deeply, be ready to have the Compagnia de’ Frescobaldi SpA business be more important that any of your needs.” is a holding company that owns 100% of Marchesi Frescobaldi, What does Lamberto Frescobaldi want his own the group that manages: legacy to be? u S ix agricultural estates and their “I would like to be recalled as one who has production (Castello Pomino, Castello given structure, stability and growth at the Nipozzano, Tenuta Perano, Tenuta family business.” Castiglioni, Tenuta CastelGiocondo, Tenuta Ammiraglia and Remole) Building a bridge, one might say. u The Attems estate in Collio, the only estate outside of Tuscany “I WOULD LIKE TO BE u T he Ristorante Frescobaldi Firenze RECALLED AS ONE WHO company that deals with food services HAS GIVEN STRUCTURE, u A sub-holding, Tenute di Toscana, STABILITY AND GROWTH controls Ornellaia e Masseto, AT THE FAMILY BUSINESS.” Luce della vite, and Tenute di Toscana Distribuzione 20 CAMPDENFB.COM ISSUE 76 | 2019

Cambridge Judge Business School Executive Education 7-11 October 2019 (3.5 days) THE 21ST CENTURY FAMILY BUSINESS TRANSLATING TIMELESS VALUES INTO COMPETITIVE ADVANTAGE Our research shows how Family Businesses can win in a world of sustainability and social responsibility, where others will struggle. Cambridge Judge Business School Executive Education can show you how: • Learn how to exploit the strengths of a Family Business in the emerging business context • Take away tools to help energise and motivate ALL generations within a family • Driven by the very latest academic thought • A uniquely Cambridge approach, with diverse disciplines in a highly focused, time-efficient programme • Small group size to maximise the value to you • All set within a practical context of governance, tax planning and wealth management. To explore further, contact: +44 (0)1223 768393 | executive.education@jbs.cam.ac.uk www.jbs.cam.ac.uk/execed/family

COUSIN CAPITAL There must be something in the Gujarat Above: “[There is] this hustler mentality within Gujaratis water. India’s westernmost state is the Cousins to always have some sort of trade,” he says. birthplace of some of the country’s Herschel best-known businesspeople—from Mehta ,29, NO CLOSED DOORS Mukesh Ambani, to Azim Premji, and (left) is based Uday Kotak. Enterprise is a cultural obligation for in the US This go-getter mindset can be traced back to their Gujaratis—with just 5% of India’s workforce, the and Sanjay grandfather. Traditionally from a nut farming state produces 22% of the country’s exports. Mehta, 49, family in Gujarat with roots back into the early In India, but 19th century, their grandfather moved to Mumbai Now a cohort of cousins and one nephew, from they operate in the 1940s and established his business and India and the US, are using family capital to invest as a tight-knit strongly emphasised education to his four sons together in early stage startups globally as Mehta team despite and daughter. Ventures. To many family offices that might be a the physical recipe for disaster, but for the Mehta family this blend separation. Sanjay is the son of his grandfather’s eldest of age, experience, and enthusiasm is putting a unique son, and Hershel the son of the youngest son— spin on how family offices invest in venture capital. they have six other cousins. Sanjay was raised in Mumbai in a joint family, with uncles, aunts, and Much of Mehta Ventures’ strategy can be put cousins all living under one roof where everything, down to Sanjay Mehta. An entrepreneur-turned- down to grades in a report card, were shared. angel investor, the 49-year-old has invested in more than 100 startups so far across multiple Despite growing up in the United States, Hershel sectors. He has had several notable exits, the best was raised with the same values of openness. known being India’s largest budget hotel chain OYO Rooms, where he made 280 times the capital “The communication is constant. My parents he invested in the company. made it very clear that my cousins are my brothers and that is it. We let everybody know what is “I remember Sanjay’s conversation with me,” recalls his 29-year-old cousin, Hershel, who joined Mehta Ventures in 2017. “He said, ‘Hershel, you are not broke until you have maxed out your credit cards.” And I laughed at him without understanding what he was really telling me about how to become a successful entrepreneur. “To be successful in any type of startup you need to have that unwavering belief,” says Hershel, a revelation he only came to later on. Hershel says he has countless examples of successful entrepreneurs in his family, where people take pride in starting and owning their own businesses. 22 CAMPDENFB.COM ISSUE 76 | 2019

PROFILE BOUTIQUE FAMILY OFFICE, MEHTA VENTURES SETS THE PACE IN RUNNING, SCALING AND EXITING SOME OF INDIA’S MOST EXCITING STARTUPS. SANJAY MEHTA AND HERSHEL MEHTA TELL NICHOLAS MOODY HOW THEIR FAMILY DYNAMIC WORKS AND HOW TO HUNT FOR UNICORNS going on. There is no such thing as a closed door markets and then started business software and in our household,” says Hershel. analytics company MAIA Intelligence, which was bought by listed Indian company Datamatics in It was family that gave Sanjay a start in his 2015. With two successful exits under his belt, business career. While studying engineering at Sanjay had been investing in real estate and got into Mumbai he used to frequently visit his grandfather’s limited partner investing with Aditya Birla Private chemical trading business where he got an insight Equity Fund, which led to direct venture investing into how to read balance sheets. This led on to in startups and the genesis of Mehta Ventures. an interest in stock markets after this grandfather introduced him to various stockbrokers. So when “I never worked for anyone. So for me, the it came time to graduate in 1993, Sanjay decided support of the family saying ‘We are always there’ to set up his own business Globalware Systems and was paramount. That gives you a lot of confidence Solutions using some family capital. When he found in your risk-taking ability. Globalware Systems and Solutions wasn’t scalable, he embarked on an eye-opening experience running “If it was not for family, I do not think I would two dot com companies in India after going to the have jumped into the venture investing business,” US for a very brief stint from 1999-2000. Both says Sanjay. failed, taking with it a lot of his personal wealth. After the dot com bust he founded Udyog Software Family was critical in Hershel’s decision to join India Ltd, which became the largest selling excise Mehta Ventures too. In his case, Sanjay cemented software company in packaged software in the his resolve during a trip Hershel made back to country. He exited this venture when US-based India in 2017 to volunteer at a non-government Adeaquare Inc wanted to buy into the Indian organisation Aarti Home in Southern India. ISSUE 76 | 2019 It took a while to convince him, since Hershel had been through his own four-year startup struggles with a mobile app Zoupple. “Hershel always had an entrepreneurial bend of mind,” recalls Sanjay. “I’ve always loved startups,” echoes Hershel. “It was my dream since I was a kid to be an entrepreneur and founder. Sanjay said, ‘This [Mehta Ventures] is going to get you closer, this is going to be like the true avenue for you to do everything that you want to do’. It was instant buy-in for me.” Hershel graduated from the University of Miami in 2012 and became a qualified CPA before completing an executive MBA in Venture Capital at US business school Wharton, Pennsylvania in 2018. It was the Wharton course that convinced CAMPDENFB.COM 23

Hershel to take the plunge which in turn got the Above: be very patient. We can wait, and wait for these rest of the family excited about Mehta Ventures. Sanjay Mehta entrepreneurs to grow,” says Hershel. The family provided a pool of capital, which when with Brendan combined with Sanjay’s connections and Hershel’s Blumer (left) And it has on occasion backed a failed founder analytical approach gave the format to start and Daniel again with a new venture. investing directly in startups. Larimer, founders of Scalability is a factor, both for Indian companies Despite the glamorous appeal, investing in Block.one, the looking beyond the country’s borders and cool new startups is not everyone’s cup of tea— tech company international companies looking to get a foot into especially among India’s traditionally risk-averse producing the the Indian market. wealth holders. The Family Wealth Report 2018: EOS.IO A Roadmap for the Indian Family Office found in 2017 “There has to be a global picture, and we want only 12% of the average portfolio is allocated Below: to find investments that touch a larger sum of to private equity direct investments, with an Hershel people,” says Hershel. undefined amount in startups. Mehta volunteering He is also very keen on being the first ‘Indian Sanjay agrees with this conservative allocation. in 2017 at money’ into an international startup. He advocates investing no more than 5% of a Aarti Home, family’s total wealth in venture capital. a South Indian “One day every startup will need to look at India NGO. as a potential market,” explains Hershel. “Sanjay For its part, while Mehta Ventures has a has the connections to help companies scale to majority shareholding in Core Media Group, a India. It is pretty crucial that when we invest fast-growing IT media and marketing company internationally we can help these companies get in India within the business-to-business (B2B) into the challenging Indian market.” technology space, all of its other investments are direct investments and startups. WHAT DOES THEIR PORTFOLIO LOOK LIKE? Since March 2012, Mehta Ventures has invested in more than 100 companies and had 12 exits with an achieved internal rate of return (IRR) of 103% versus the industry average of 30%. This has returned its family investors 19 times the capital they originally invested. Its current portfolio value, or the exit value based on the last round, stands at 7.4 times the capital investment. The goal is to find those evasive unicorns, privately-held startups valued at more than $1 billion. Fortunately for Mehta Ventures, it has had two, OYO Rooms—India’s largest budget hotel chain, and the Peter Thiel-backed blockchain operating system Block.one in which it was an early investor and had a partial exit. Their investments are built on a thesis of patient capital—where supporting an enterprising founder is more important than driving through a profitable exit within a typical venture capital timeframe. “We do not see [startups] as modes to make money. We are not into quick flips. We want to 24 CAMPDENFB.COM ISSUE 76 | 2019

PROFILE “ONE DAY EVERY STARTUP WILL NEED TO LOOK AT INDIA AS A POTENTIAL MARKET\" The elder cousins now have a third addition Above: deep vision and he is a natural born operator. I’m to their full-time deal-sourcing set at Mehta Hershel very keen now to follow guidance and leadership Ventures, their 23-year-old nephew Vatsal Mehta (left) and execute on instructions. And now we are Kanakiya. A computer science major from KJ and Sanjay adding a third element [with Vatsal] who sees Somaiya College of Engineering in Mumbai, Mehta visit something completely different and can actually Hershel describes him as a “born techie and VC. Stanford validate deep levels of complicated technology.” He naturally fits in as a technology diligence whiz University for kid and natural deal finder.” an investment NO TOURISTS summit The ability to combine and strengthen a family The Mehta Ventures portfolio is sector-agnostic, enterprise in the third generation is a rare feat, ranging from medical devices to B2B software-as- especially since many families in other parts of a-service companies, something the cousins see as the world are struck by the ‘cousin curse’— when a strength, rather than a weakness. competing cousins threaten a business by trying to take it in different directions. In the past eight months the three have done 21 US deals. This is in part because they now have So are there any secrets Mehta Ventures’ can access to top quality deal flow by co-investing share on maintaining relationships with cousins? with established funds, like Khosla Ventures, and having a seat at Plug and Play in Sunnyvale, “No secrets here,” jokes Sanjay. “I felt that California—the most active venture capital firm in if somebody could join me that would help Silicon Valley. accelerate the business, they would gain so much from it. And that’s what I think it has proved They are also aided by the freedom to deploy working with Hershel. capital which has helped them make investment decisions much quicker. “While I was doing whatever best I could sitting out of India, with the US arm opening “There is nothing more expensive than a missed we are now having the best of the deals coming opportunity in the startup world,” muses Sanjay. globally,” says Sanjay. “I’m not answerable to everyone,” he says. “We On a day-to-day basis, Sanjay sets the overall are using family money, but it is not like third- strategy, how much capital to deploy, assessing party capital, where if I don’t report it on a yearly exit opportunities, shareholder agreements and basis nobody is going to come after my neck.” how to structure deals. Hershel sources deals, ensures portfolio companies are reporting well, The small nature of the team means that and liaises with the founders, while Vatsal does all communication happens almost constantly between the technology due diligence. the three, rather than through a formal board structure. They bring in lawyers and accountants “The dynamic works well,” says Hershel, built to assist when they need an external adviser or on mutual respect and familial ties. “Sanjay has a consultant to help with financial structuring. Hershel collates updates on their portfolio companies and sends them out to the family investors. Mehta Ventures is one of several Indian family offices engaging in the startup venture capital space, so do the Mehtas have any advice for other Indian next-generation members thinking of getting in on the act? “No-one has to lose for family offices to win ISSUE 76 | 2019 CAMPDENFB.COM 25

PROFILE in the startup phase,” underlines Sanjay. Above: Vatsal go elsewhere. They are going to stay home and “Family offices are no longer considered Kanakiya, build in India. So the opportunity for Indian 23, recently families to really capitalise on the Indian tourists in the startup space. They are finding joined Mehta market is phenomenal.” It has also become startups very attractive as it’s exciting to fund Ventures the sponsor of a new fund 100X.VC – the first the future, engage with the founders, and and is also VC to invest in early stage startups using India small startups are creating big winners.” the chief SAFE Notes. technology Sanjay advises investing in a minimum of 10 officer at One area it won’t be going into at direct investment and startups. 100X.VC present is cannabis. While Hershel is very keen to start investing in the rapidly “Otherwise it is like buying in a lottery if you growing market, the reaction from the do one or two. And do not invest more than family has prevented any investments. 5% of the total assets of your family’s wealth, because this is a risky asset class”, he warns. “We had a little pushback from the family. So we will not begin that journey. We are not sure “Startup investing is not about how many how it will pan out, but hopefully we will see exits you had, it is about what kind of value things changing in that space,” says Sanjay. exit you created. Your one exit with 100x is much better than five exits of 10x each” Yet exposure to impact investing and environmental, social, and governance (ESG) Hershel advises families and individuals not investing is becoming more and more part of to shy away from opportunities, to be visible their decision making. and to engage. “We had an opportunity to invest in Bitcoin. “In this space that’s a mistake. Being visible, Because Bitcoin uses a lot of energy we ended up always willing to talk, showing up, and investing in a coin called EOS, which is a coin, engaging with founders is crucial. You want to and does not consume electricity.” be ultra-competitive in the types of deals you are seeing, and the best way to do that is to be From cryptocurrencies to cannabis, there are a more visible.” plethora of new companies and industries for Mehta Ventures to invest in. How many other After an action-packed 2019, where are family offices are set to join them in the hunt for Mehta Ventures looking to next? the next unicorn? New geographies and new personnel are ISSUE 76 | 2019 top of the agenda. It would like to invest in South-East Asia in the next 12-36 months, and explore Israel and other places with startup opportunities in the next 3-5 years. They also want at least one more family member to join them. “I do not think that there will be a better time than now for Indian families to capitalise on this startup ecosystem,” says Hershel. “It’s very robust and it is full of new entrepreneurs that are looking at Indian startups, that have been massively successful, as their idols. You are not seeing this cultural shift of Indian talent leaving the country to “NO-ONE HAS TO LOSE FOR FAMILY OFFICES TO WIN IN THE STARTUP PHASE” 26 CAMPDENFB.COM

Investigating the family wealth and health issues that matter to you ANALYSIS 28 HOT PURSUIT Could search funds be the alternative investment vehicle that family businesses have been looking for? CAMPDENFB.COM 27

A N A LYS I S SEARCH ENGINES Search funds have gained prominence in the US and are gathering steam in other parts of the world. Why have they caught the attention of family businesses and family offices? Jeremy Hazlehurst reports Imagine you are a young, ambitious, several stages. First a searcher has to find a group of entrepreneurially-minded MBA graduate. You want investors, usually 8-10 strong, and convince them to to run a business, but not a start-up. You do not invest. This usually takes two to six months. Secondly, want to wait decades to work your way up through the searcher looks for a company to acquire, which the ranks of a business. A search fund could be the usually takes one to two years. Thirdly, they run and answer to your prayers. grow the business. On average, the business is held The term originated in the US in 1984 to describe for four to seven years, but some searchers are keen to a vehicle run by a business-savvy person, usually a stay for longer, and if the business is growing well the recently-graduated MBA, who acquires and runs a investors might see the benefit of holding on. And finally, business. Backed by a small group of investors, the aim exit, where investors and the searcher realise liquidity. is to improve it, and sell it for a profit. As the number of MBAs increases, these one-person accelerators are Search funds appeal to investors because the returns becoming increasingly popular. And they are also are good. Between 1984 and 2017, $924 million of equity starting to go global. capital was invested into American search funds. This Over the past 35 years, 408 funds have been raised, generated an aggregate equity value for investors of $5.7 325 in the US, and 83 in the rest of the world. Some 13 billion, while entrepreneurs made around $1.5 billion. of those were in the UK, 22 in continental Europe and 22 The aggregate pre-tax internal rate of return (IRR) by in Mexico. Those numbers might seem small, but interest the end of 2017 was 33.7%, and aggregate pre-tax return is exploding. In 2012, just 10 funds were raised in the on investment (ROI) was 6.9x, says Stanford. Outside the US, but in 2015 the number leaped to 43, according to US, search funds have achieved an IRR of 33.3% and an Stanford Graduate School of Business research. Outside ROI of 2.3x. The median fund returned 2.0x of initial the US, 21 funds were raised in 2017, compared to just search fund investors’ capital, and the top-performing five in 2014, says a study by Spanish business school fund returned 9.2x, says IESE. IESE. Young searchers are starting the process of raising the first funds in Israel, Taiwan, and Japan. Although they have existed for 35 years, search funds So how does it work? The search fund process has are still a niche pursuit. The numbers of MBAs who want to take on the risk of searching and running a business, rather than work for a corporate, will always be small. 28 CAMPDENFB.COM ISSUE 76 | 2019

But as entrepreneurial skills become a more central part of or Singapore because the salary level in Taiwan is lower. more MBA courses, more graduates are deciding that the The search fund model could attract more MBAs to come search fund route could be ideal to maximise their skills. back to Taiwan, and help the economy too.” RIDING THE INVESTMENT VEHICLE The story is similar for Yoshiaki Kurosawa, who is looking to start the first search fund in his native Yun-Fan Chen is a new MBA graduate looking to raise a Japan. He says international investors are interested search fund in her native Taiwan. in a Japanese search fund, and he is now looking for a Japanese backer to give it local clout. He thinks that “In Taiwan 97% of the economy is SMEs, and a lot search funds could work well there. have a succession issue,” she says. “In Japan, there are a lot of major, small-sized “Last time I was back in Taiwan I saw a story on a companies and because it is an ageing society the average magazine front-cover about it, so it is a big deal. Nobody age of a chief executive is over 60-years-old,” he says. talks about search funds, but I think it could be a very good model there. Also, Taiwan has a lot of people with “But there are not so many young people, so it is hard to MBAs from American schools who tend to go to China find successors. There is potential in the healthcare or Marc Bartomeus Simon Webster Marc is the founder and managing director The founder of the first British search fund, of Ariol Capital, as well as chief executive of Webster raised £3 million ($3.8 million) to buy packaging firm Repli. He previously worked in prosthetic limb company RSL and, over 10 a private equity firm in Boston and held several years as chief executive, grew the business business development and sales management through organic growth and acquisitions positions at Promax Electronics in Barcelona, from £3 million to £30 million and EBITDA Agilent Technologies in Stuttgart, and Hewlett- from £0.4 million to £2.4 million. He sold the Packard in Madrid. He went into the world of business in 2005 and has since invested in 35 search funds after taking an MBA at MIT Sloan search funds, and advised many at all stages School of Management. of the investment journey. ISSUE 76 | 2019 CAMPDENFB.COM 29

A N A LYS I S services industries, or something related to foreign workers Top: Chart one shows a growth in search funds, peaking in 2015 when because the government is keen to bring more in.” 43 were raised, leading to a record 17 acquisitions in 2017. Middle: Chart two shows that services and software companies are Why then should families with businesses or family by far the most popular sectors. Bottom: Chart three shows that there offices pay more attention to search funds? Firstly, are plenty of untapped markets for searchers. search funds are a way for high net worth investors or family offices to invest in real businesses, perhaps in sectors that they understand and where they have know-how and contacts. Although they might sound risky, investors can get involved with US-based funds of search funds such as Relay Investments and Pacific Lake Investments, which provide knowledge and spread risk. In less transactional markets where personal relationships are highly valued, business-owning families are often perfectly-placed to find companies with search- fund potential. It is common for groups of investors to pool their skills, sitting on the boards of companies where they can add value, for instance. The second reason search funds could appeal to families is as an exit solution. “They really are the perfect exit for a smaller family business,” says Simon Webster, who began Europe’s first search fund in 1993 following an MBA at Columbia Business School and has since invested in 35 search funds. “If you want somebody who is going to [buy, then] run the business sensitively, and not make too many radical changes straight away, it is the ideal option.” While private equity firms tend to bring in an established chief executive, and feel no compunction about tearing things up and flipping the business as soon as possible, a search fund tends to take a slightly gentler approach. “Typically, a family business owner cares about the future of the company,” says Marc Bartomeus, who raised Spain’s first search fund following an MBA at Massachusetts Institute of Technology. Bartomeus has run Repli, a manufacturer of industrial containers, since 2015. “They would be very sad if they sell the company and they see a few years after that the company is not doing well,” he says. “It is an economic transaction and they want to maximise the price they get for the sale of the company, but at the same time they want to know that the new owner will take care of the company as much as they did in the past.” Also, search funds tend to fit better with smaller businesses which private equity houses, for instance, wouldn’t consider. Search fund acquisitions in 2016 and 2017 in the US had a median purchase price of $13.1 million and revenues of $10 million, slightly up from $12 million and $7 million the year before. The median purchase price/EBITDA multiple is around six. Outside the US, the median purchase price was slightly lower, at $9.3 million, revenues were $8 million and 30 CAMPDENFB.COM ISSUE 76 | 2019

purchase price/EBITDA multiple was 4.9. Smaller family Yun-Fan Chen businesses are often right in the search fund sweet-spot. A Tawianese native, Chen took a bachelor’s degree in Business EYES ON THE PRIZE Administration at the country’s National University then worked as an auditor Apart from size, what else makes a potentially good search in Taiwan. She then made the leap fund target? There are two sides to it. One is the business to Europe by taking an MBA at IESE itself. Something with highly recurring income is good. Business School in Barcelona. During Businesses from profitable closed search funds tended to her time in Europe she interned at a have 50% or more recurring revenue. Also, a business search fund in Lisbon, Portugal. She should be growing faster than GDP—6% would be a is currently fundraising for the first healthy figure in developed economies. High EBITDA traditional search fund in Taiwan. margins and stable cash flow history are also desirable, as are a large, diversified customer base, low capex, and Yoshiaki Kurosawa a track record of weathering downturns. Something that Kurosawa is the managing partner is “quite hard to break,” says Webster. The new chief of JBS Partners, the search fund he executive should be able to come in and kick the tyres for a founded. He began his career in the year without the business suffering, before making changes. financial industry working for Tokio Marine, a global insurance group, where Historically, about 30% of US companies acquired by he worked on financial and managerial search funds are in the services sector, including retail accounting, M&A, and project and business-to-business (B2B). Between 2010 and 2017, management in Japan and the US. He technology and software accounted for about 25%. holds a BA from Waseda University in Unsurprisingly, that number has increased compared to Tokyo, Japan and an MBA from IESE the 1985-2010 period. Healthcare and other types of Business School in Barcelona, Spain. technology businesses have accounted for about 10% of acquisitions since 1985. larger role in growth than in South America, where bank debt is harder to get so growth will play a larger role in The most popular sector for search fund acquisitions the mix. outside the US has historically been the services sector, followed by healthcare and internet/IT. In 2016 and WHAT MAKES A GOOD SEARCHER? 2017, the most popular sectors for acquisitions were manufacturing and transportation. “To me, it is very difficult to identify who would be a great entrepreneur,” says Bartomeus. A second element that makes a good search fund target is the owners. Ideally, they should be looking to sell, “It is the same as a job interview. It is very difficult to perhaps because they are nearing retirement age, or in the identify who is the best candidate until you have worked case of a family business, have no successor lined up. with him.” IN PURSUIT OF RETURNS However, he says that one great thing about a search fund, from an investor’s point of view, is that How do the new entrepreneurial owners improve things? investors can part with a relatively small amount of Generally, they will not make radical changes, but would assets—enough to cover salary and expenses—while the be happy to increase revenues by 5% a year, perhaps searcher searches. through a slicker sales operation or more sophisticated financing. Returns will come from a mixture of growth “You can see how committed they are to the project, and leverage, and the proportion will depend on the you can observe how they are dealing with business region. For example, in Europe leverage might play a owners, how they are searching for companies, or selecting the companies that they want to buy,” says It is the same as a job Bartomeus. interview. It is very When the time comes to invest significant cash, investors have scoped out the searcher. Webster says they difficult to identify who is the should be open and willing to listen, and have achieved something in their pre-MBA career by staying in one best candidate until you have organisation and progressing. Humility also matters. worked with him These freshly-minted MBAs are in the early stages of their search-fund journey. As baby boomers age and succession issues loom ever-larger for family-owned businesses, this new generation could soon find themselves spoiled for choice. ISSUE 76 | 2019 CAMPDENFB.COM 31

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The next generation of family business taking on the world NXG 34 OPENING THE CELLAR DOOR How fourth-generation Marie-Amelie Jacquet rediscovered her passion for her family’s Remy Cointreau empire after a career in finance 42 THE SOCIAL NETWORKER ISSUE 76 | 2019 CAMPDENFB.COM 33

NXG PROFILE Cognac’s custodian A childhood spending summers among her family’s Remy Martin vineyards in the Cognac Christophe Bourrie, Remy Martin’s ambassador for the region of France gave Marie-Amelie Jacquet South-East Asia, India and Middle East regions had been a deep appreciation for her family’s history. doing the rounds and discovered some clients had been She speaks to Susan Lingeswaran about storing historic Louis XIII cognac bottles from as long as the seeking her own path and coming back into 1940s. Was there someone out there who had an even older the family fold bottle, Bourrie wondered? The only way to find out was to ask the family that has owned the brand for generations. In 1881, the very first shipment of the finest and most exclusive cognac in the It was Marie-Amelie Jacquet who got the call. The world landed on the shores of India. 41-year-old is a fourth generation member of the Heriard Not just one or two, but 45 cases Dubreuil family, which has run the Remy Martin cognac of Remy Martin’s Louis XIII, created house for more than 90 years. Fascinated by her family’s in 1874 and earmarked by the trading history, having only joined the business five years earlier as a company Ernsthausen and Oesterley, financial controller, Jacquet proposed an idea to look at the were carefully offloaded at records of the company to see when the first bottles of Louis the Port of Calcutta before XIII were shipped to the region. the ship sailed off towards Madras and Bombay. Scouring through archives, she not only found the famed Indian shipment, but shipping documents related to a From there, no-one consignment to Penang and two shipments of 30 bottles knows what happened to the precious consignment— arriving in Singapore—both in 1881. whether the bottles found Looking further back, she found the Remy their way to the homes of the Martin Company started exporting their first rich or royal, or were hidden cases in 1875 to Scandinavia and Australia. away in one of the countless palaces of the hundreds of Determined to keep history alive, princely states of India. They Jacquet shared the story with the public were all but forgotten. and launched a global search for the oldest decanters of its prized beverage and the Fast forward to 2015— stories behind them—a search which Remy Martin’s 140th continues today. anniversary—and the family behind the French It is this deep sense of duty to preserve cognac producer was about Remy Martin’s legacy that first drew to receive an unexpected Jacquet to leave an established career in call that would bring this finance and join her family’s business—a historic shipment to the fore. calling that has been passed down through the generations. “Growing up, I never realised how significant the Remy Martin brand was to the world—for me, it was just where my mother worked,” Jacquet explains from her office in Paris. “It was only after talking to people 34 CAMPDENFB.COM ISSUE 76 | 2019

Marie-Amelie Jacquet decanted her financial expertise into her family’s cognac business and has distilled a deep sense of duty into its stewardship

NXG PROFILE about it that I realised how important it is to them. They had such knowledge about cognac and its history and I thought, ‘Wow, we have this legacy of being caretakers of this special brand and we [the next generation] have to make sure it carries on and has a long life’.” A DUTY OF CARE Below: The Under the siblings, the House of Remy Martin has cellar master for become a giant in the spirits sector after merging with As the great-granddaughter of Andre Remy Martin liqueur distillery Cointreau to become Remy Cointreau. It Renaud—a vineyard owner in Cognac blends up to generated €1.12 billion ($1.27 billion) in revenue in 2017-18. and business partner of Remy Martin 400 different heir Paul-Emile Remy Martin—Jacquet eaux de vie Its expanded portfolio now includes Remy Cointreau is a descendant of Remy-Martin’s first to create its and Louis XIII cognacs, Cointreau liqueur, Greek spirit non-family caretaker. Having no family XO cognac. It METAXA, Mount Gay rum, St-Remy brandy, The of his own, in 1910, Remy Martin asked features eaux Botanist gin, Bruichladdich single malts, Passoa liqueur, Renaud to carry on his family’s legacy. de vie aged Westland American whisky, and Domaine des Hautes 10-37 years Glaces whisky. Renaud duly obliged, overseeing a with an average period of great growth and passing of 25 years of All three siblings have acted as chairperson of the the business on to his son-in-law, maturation business at different times and today they remain on the Andre Heriard Dubreuil—Jacquet’s board of Andromede—the holding company of the Heriard grandfather—in 1965 upon his death. Dubreuil family and parent company of Remy Cointreau. It is Heriard Dubreuil’s children— But it is the next generation that is now stepping up Dominique, François, and Marc Heriard to take over as caretakers of the family business—a Dubreuil—who now run the company. path, Jacquet says, she and her cousins felt a strong duty All three had well-established careers towards after pursuing their own careers. outside the family business before being summoned to take over, with “I suppose a lot of it has to do with family values and Dominique—Jacquet’s mother—first being Catholic—we’re big on guilt and we are big on duty appointed as general manager in 1988 and as well,” Jacquet says. then president in 1991. “For me, and I think my cousins will say the same, when we grew up, we were never told you will have to go into the business—we were always told we could do whatever we want, but we have to do it to the best of our ability. “So all of us ended up doing very different things—we have a lawyer, a drone engineer, food specialist, someone who is into real estate, and someone who is into fashion.” For Jacquet, it was pursuing a career as an investment banker, specialising in mergers and acquisitions in London for eight years. “I never actually had plans to join the family business—I always said I would never do that and I was quite happy 36 CAMPDENFB.COM ISSUE 76 | 2019

doing my own thing in Above: “It was not just me as an individual London,” Jacquet says. The family joining, it was the whole next generation— operates visitor some people got involved on the board “But it turns out that experiences, and then a few years later in 2010, three being a banker is a pretty stressful job and I literally including of us, myself, one of my cousins and his broke my back doing it. I had two prolapsed discs at the stopovers at its wife decided to join Remy Cointreau age of 30. historic house operationally.” and cellars “I ended up resigning and spent about a year It was decided all family members recovering from that episode and I started to think that wanting to enter would be made to go perhaps it was a sign I should do something that was a through the proper channels, applying little easier on the body.” for available roles within the company. But while Jacquet knew she wanted to be TURNING POINT involved in her family’s business, what she had not thought about was what role she Jacquet’s time out recovering from injury in 2008 proved wanted to play. pivotal for her. Two years earlier her mother and uncles had gathered their combined 12 children—half of whom “I remember setting up a meeting where were aged over 30—to gauge whether any would be I was going to pitch to the chief executive interested in entering the family business and, if so, to that I was available with a background start thinking about how they wanted to engage. in finance and very keen to work for the company to understand it. “This was the time that the reflection started for me and I thought, ‘Actually, I need to do this now because it “But the first thing he did was welcome is important to me’,” Jacquet says. me and say, ‘Okay, you are going to work with this lady, she is great and she’s “It came from a strong belief that I was born into this going to teach you everything you need family, which is luck, and there is a strong link between to know’—it had all been set up for me, my family and the company. We have this duty of care which I thought was great.” to the brands, the people working for the company, our parents, and to our grandparents who spent most of their After her meeting Jacquet immediately lives looking after it. dived into her new career at Remy Cointreau as a financial controller for the I NEVER ACTUALLY HAD PLANS TO JOIN THE company’s liquor and spirits division—a FAMILY BUSINESS—I ALWAYS SAID I WOULD part of the business she admits she had NEVER DO THAT AND I WAS QUITE HAPPY little knowledge of. DOING MY OWN THING IN LONDON “I knew more about the cognac side, so it was good to start at liquors, but I was really just throwing myself into the work and going to as many meetings as possible to learn,” she says. “The role made it possible for me to attend discussions about new product development or packaging issues, which is around the marketing side of things. I was able to understand the history of the products, why we do things, what we have done before and limited editions, which I think was a great way to learn.” But like anyone starting a new job in a new company, Jacquet says when she started out, she had apprehensions about entering her family business—would they treat her differently? Would it be different from her experience outside the family business? “I really was expecting a negative PHOTOGRAPHY: REMY COINTREAU CAMPDENFB.COM 37

helping to grow all the companies the family has invested in, including her old haunt Remy Cointreau, winemaking managing consultants Oeneo, luxury multi-brand fashion house The Webster, drone manufacturer Microdrones, personalised diet company WeCook, plus hotel and hospitality brand Alboran. “I am still very involved in Remy—not operationally, but in a supervisory capacity because Andromede is its parent company,” she says. “But as a holding company, we feel very strongly that we want to be active shareholders that can work with the management teams on the strategy and vision going forward.” reaction from other people when I joined Above: Fourth- BUILDING BLOCKS because I was part of the family, but generation I can honestly say I never felt it. The Marie-Amelie Although Jacquet has had her hands full overseeing people who work for the company feel Jacquet serves her family’s large portfolio, her biggest project to date so strongly about the brands that when as an executive has been securing the future of Andromede by leading they did realise I was part of the family, board member the charge to implement a governance structure for her they said it was excellent that the next of Andromede, generation and the next—a process which has taken two generation was already working beside the holding years to complete. them,” she says. company of the Heriard For her mother’s generation, Jacquet says, having only “I was really happy about it because Dubreuil family three members all living in France meant it has been it was the one thing that worried me, relatively easy for them to decide on business matters that they weren’t going to tell me things without the need for formal governance. or they were going to be more careful around me and not treat me like a regular For Jacquet’s larger generation, however, only one family colleague, which is what I wanted to be.” member from each family branch would attend meetings and update their siblings. This worked for a while, but as With the support of her new colleagues and renewed enthusiasm for working for I AM STILL VERY INVOLVED IN a company she truly cared about, Jacquet thrived in her role as financial controller REMY—NOT OPERATIONALLY, BUT IN for the company’s commercial side. A year later, she moved to being financial A SUPERVISORY CAPACITY BECAUSE controller for Western Europe and Africa, dealing with all products in those territories ANDROMEDE IS ITS PARENT COMPANY and then, in 2013, she became the financial controller for duty free and Asia. In 2017, after seven years of working at Remy Cointreau getting to know all its brands, Jacquet decided to move on from having an operational role at the family business. She joined her mother and uncles on the board of the family’s holding company and investment vehicle, Andromede. She now acts as the managing director of Andromede, actively supervising and 38 CAMPDENFB.COM ISSUE 76 | 2019

more family members started taking more active roles in Above: key point for us is that we decided we the companies of Andromede, things got tougher. The Heriard all wanted to do this and we were all Dubreuil family engaged,” Jacquet says. “We realised that while it was easy for our parents controls half of to get in a room and work things out together, our the shares of “We even decided between the 22 generation was more complex because there are 12 of us Remy Cointreau [including partners] of us that we wouldn’t living in different parts of the world and not everyone is and family adopt something unless everyone agreed involved on the same level,” Jacquet explains. members sit on with it unanimously—it wasn’t a case the board of voting and majority—we wanted a “We decided the only way to make sure our generation consensus. We knew that would require remains a stable unit was to think about having a compromises, but everyone ended up governance structure that would suit our needs as getting on board.” a larger group and could be scaled up for the next generation, which has 26 members so far.” With the company’s governance charter almost complete and the next generation In the end, the family dealt with setting up their fully engaged with the future of the family governance charter similarly to how they had managed business, what’s next for Jacquet? before—one member from each family—called branches— would take the lead and sit on the governance committee. “There are always things our generation Together with the consultants they brought in to help them, can improve on—communication is a they defined a set of questions for each member to answer. really big thing because the decision makers do not always share the reasoning “The first point was to ask if we wanted to remain behind their decisions. [Communication] as a family group, which we said we did, and then we was something identified in our generation, were interviewed one by one—including husbands and people want to understand why it is a good wives of my cousins because they are also parents of the thing for the family as a whole so we are next generation.” working on that,” she says. Happily for the committee, they found all members “For me personally? I’m realising more wanted to discuss communication and flow of and more how special the brands we have information, governance and have a formal human are and we need to take care and protect resources process for members to join the business. that heritage so we can pass the torch to Separate consultant groups were set up to build the next generation. frameworks on each issue and now, two years and many meetings later, Andromede has come up with a term sheet “We have a duty to pass something for a shareholders agreement and a charter for the holding along that remains powerful and company, which will be ready to be signed imminently. valuable—not just an inheritance, but everything that goes around it—grow it “It was a surprise, but it was a relatively and let it prosper because we are so lucky straightforward process for us because even though all to have been given this gift.” of us have different ideas or ways of doing things, the ISSUE 76 | 2019 CAMPDENFB.COM 39

MARKET INSIGHT Institut auf dem Rosenberg makes next-gens top of the class Institut auf dem Rosenberg is one of the leading How can Rosenberg prepare international boarding schools for boys and girls my child to become the leader aged 6-19 years. Owned and run by the Gademann of my family business and a family, Bernhard Gademann, the fourth-generation world leader? headmaster, explains how their elite facility gives the The vast majority of our students have young family business leaders of tomorrow the edge an entrepreneurial family background, in a competitive world and we consciously nurture this state of mind in a unique community. Institut auf dem Rosenberg is Above: Bernhard an artisan of education and Gademann, of Institut We collaborate with businesses from a family business of more auf dem Rosenberg, the small startups to big corporates, leading than 130 years, and over four only school of its kind technical universities as well as thought generations of the Gademann offering students such a leaders from across industries in order to family. How does this heritage remarkable diversity in provide a unique learning environment influence your approach to academic choices with that is both inspiring and stimulating. teaching your students? facilities of the highest These wide-ranging collaborations When speaking about tradition, we quality and standard ensure that our education is always think about perpetual values. Acting relevant and understood in a crucial responsibly, showing respect for others real-life context, which is imperative for and understanding the meaning of one’s children and young adults today. privileged start in life are among the virtues that we continue to pass on to Our unique Talent and Enrichment our students for over a century. As an programme features more than 30 institution, we are proud of our own different courses that allow our students heritage and traditions, but preparing to immerse themselves in a world of art, young people for positions of leadership in robotics, entrepreneurship and public 10 or 20 years from now, we understand speaking, to name just a few. These that we must continue to innovate, experiences open horizons and support providing relevant and contemporary their development process beyond education today. classroom education. When our students graduate from At Rosenberg, we encourage an Rosenberg, they combine these values entrepreneurial spirit and believe that with a profound understanding of how fostering this mentality from an early the world is interconnected and a sense of age, rather than waiting until university, optimism for the opportunities, as well as is vital for students to develop an the challenges of the future. aptitude for leadership. Will my child reach his or her full potential for the 21st century in Rosenberg classrooms? Our teams are true artisans of education who apply their experience and skills with great care. Each child is an individual and consequently requires individual guidance and support to 40 CAMPDENFB.COM ISSUE 76 | 2019

discover, develop and nurture talent. interests and ambitions are continuously “AT ROSENBERG, At Rosenberg’s Creative Lab, a world matched by our experts to their WE ENCOURAGE AN aspirations for university and beyond. ENTREPRENEURIAL first-of-its-kind facility to nurture Our students’ learning experience is SPIRIT AND creativity, students experiment with new further augmented through the school’s BELIEVE THAT technologies while experts are at hand to proprietary IDP® App. FOSTERING THIS guide and support students’ projects. How do Rosenberg’s sporting MENTALITY FROM activities enable students to AN EARLY AGE, Inspiration is provided through Talent succeed in business? RATHER THAN and Enrichment courses and includes At Rosenberg, we believe that a WAITING UNTIL weekend trips to leading companies in healthy body and awareness of UNIVERSITY, Europe, as well as lectures and workshops one’s self is a core requirement for IS VITAL FOR run by guest lecturers, such as blockchain a balanced and successful lifestyle. STUDENTS TO technology experts or professors from As such, all students are expected DEVELOP AN Harvard University. to engage in sporting activities at a APTITUDE FOR minimum of two times per week. LEADERSHIP.” The unmatched depth of education at Rosenberg is provided through a Our students can choose from more Institut auf dem Rosenberg, wide range of academic pathways. than 20 different sporting activities, Mr. Manuel Bernardo This, combined with a truly stimulating including tennis, horse-riding, football Head of Admissions programme, enables students to reach and fencing, to name just a few. All Höhenweg 60 their full potential and foster an activities are led by professional 9000 St. Gallen entrepreneurial mindset for the 21st instructors providing the right level Switzerland century. from beginners to competitive athletes. info@instrosenberg.ch What benefits are there at instrosenberg.com Rosenberg from having such a The school’s Health and Fitness low teacher to student ratio? Club is fully equipped with the We don’t run our school like a factory-line latest Technogym® appliances and and having a staff to student ratio of 3:1 permanently staffed with a team of allows us to provide the right specialists personal trainers to provide professional in each academic field. It is a broad guidance for all workouts. The Health understanding that we are all unique as and Fitness Club also offers nutritional humans, favouring different learning advice and liaises with the school styles and methods. Having the necessary kitchen to carefully plan individual head count means that our teachers have dietary requirements. the resources to spend time with each student to ensure that their talents and CAMPDENFB.COM 41 aspirations are met. Truly unique to Rosenberg is the Individual Development Plan—IDP®, designed to ensure that a student’s ISSUE 76 | 2019

MY BUSINESSNXG Social impact and collaboration: SELIN YIGITBASI-DUCKER STARTS UP OUTSIDE THE FAMILY Goodsted is a platform for socially purposeful individuals and organisations who would like to volunteer their skill or donate other resources to non-profit social projects. Fresh from winning the Top Next Generation Entrepreneur of the Year Award at our European Families in Business Awards, founder Selin Yigitbasi-Ducker, a Master’s graduate of design and innovation, and fourth generation member of Turkish conglomerate Yasar Holdings, spoke with Susan Lingeswaran about her passion for social change, product design challenges, and inadvertently benefitting from being a next-gen WHY ISN’T Where did the idea for and development and I was the beginning of my THERE A thought, ‘Why isn’t there journey with Goodsted. PLATFORM Goodsted come from? a platform that is used by THAT IS USED After I graduated from everyone to help contribute How did your idea BY EVERYONE my Masters in late 2017, to SDGs and see the materialise into TO HELP I was determined to find impact we help create? A building a platform? CONTRIBUTE TO opportunities to contribute platform like this could At the end of 2017, I was SDGS AND SEE to the UN Sustainable help leaders of projects introduced by a friend to THE IMPACT WE Development Goals get voluntary help in a Jake Cingel who had the HELP CREATE? (SDGs). While working more structured way’. This vision for creating Civic a few days a week for our family business’ UK marketing operations, I also started looking for opportunities to volunteer my professional skills to create a positive impact, but opportunities were hard to find and weren’t matching my availability, skill sets and interests. Throughout my masters I’d worked on digital platform design 42 CAMPDENFB.COM ISSUE 76 | 2019

DURING ONE OF MY TRIPS BACK HOME, I VISITED YASAR UNIVERSITY, WHICH WAS FOUNDED BY MY GRANDFATHER Selin Yigitbasi- plan for piloting your idea Speed donated waste art platform and shared them Ducker, fourth and raise this value through crates to repurpose into with potential users. During generation in-kind and voluntary multifunctional market this, Ruben Campos, now member of support’. This became the stalls. The total value of our tech adviser, provided Yasar Holdings first pilot of the digital in-kind support raised in his feedback and guidance. and founder of platform idea. the end was over £20,000 After many iterations, Goodsted ($25,000). I decided to bring in a I set up Goodsted’s development team to create a Left: Selin website using [free website How did you scale up basic version of the platform. worked with builder] Wix and started the Civic promoting the project on your idea into what During one of my trips Makers Craft there. Peckham Levels back home, I visited Yasar Space team to donated temporary space, Goodsted is now? University, which was raise £20,000 students from Goldsmiths Once the pilot was founded by my grandfather. ($25,000) and woodworking mentors successful, I started In the incubator of the volunteered and Martin improving the user university, I met Murat Makers Craft Space in experience design on the Odemis, founder of South London to create a Univerlist, a university space where students and evaluation platform. His experts in woodworking product was fully developed, can circulate waste wood so he offered to help out and materials and create provide his services within purposeful wood products. my budget. He was searching for £10,000 ($12,480) through We still have a long way crowdfunding, but was to go, but the platform struggling. I said, ‘Okay, has continued improving you’re searching for money and our beta version will but, like me, there might be be soft launched soon. others who would love to Individuals who have social be part of it—let’s create a or environmental impactful ideas or projects can post challenges to get help from their community. It can be anything from, ‘Let’s help the well-being PHOTOGRAPHY: COURTESY OF SELIN YIGITBASI-DUCKER CAMPDENFB.COM 43

NXG of dementia patients by submit information. Yes, it definitely did. Yigitbasi-Ducker hosting an art workshop’ Aside from this, tackling Although I have always found her to, ‘I need a strategy or been determined not to development branding for my early stage the business tasks without get financial help from the team through startup’. Organisations a full-time team has been family, I have benefitted an incubator can then track and report quite challenging—the from the networking at her family’s on the activities of their team at the moment only opportunities that come Yasar University volunteers and measure the work part-time because we from being part of a large value of the support. don’t have the funding yet. family business—for Growing up, I have Also, finding and hiring example, connecting with always tried to hide my Any challenges great talent is a continuous my development team family background, to getting the project up challenge and I will be through Yasar University. be valued and accepted and running? looking to get support individually. However, I’ve There are always from our advisers in this My family also saved a realised I should be proud challenges—as an iterative process as well. small amount of money of what the past three process, we are always under my name when I was generations have built having to move and Has growing up in a a kid, so I could make use with their sweat and tears, change things based on of it when I grew older. and use the opportunities user feedback. One of big family business It was a big decision, but to create a positive the recent challenges was once Goodsted started impact in the world for around an aspect of the helped you grow the showing signs of progress, I future generations. user experience design. We decided to spend the money realised that sometimes project? as a seed funding to kick- What’s next for your people would like to sign up start Goodsted. to challenges as a team, but platform and where the ‘offering your support’ process was designed only do you see it heading for individuals. Now we’ve changed it so that teams in the future? can offer their support We are now raising our without the extra admin first external funding, of making each individual while also preparing for the soft-launch for our Above: beta platform. We are Yigitbasi- forming partnerships with Ducker's accelerators and other grandfather, organisations working Selcuk Yasar towards common goals. Below: The We are creating something Goodsted team that will make things is preparing for easier and more engaging the soft-launch for all individuals and of their beta organisations to platform contribute, big or small, to SDGs. My hope is that this platform becomes the new social media go-to for next gens wanting to get involved in social change and in turn, it encourages more and more people to get involved too. ISSUE 76 | 2019

How to achieve best practice in family business for maximum results FB ACADEMY 45 HARNESSING POTENTIAL How the bright sparks who use search funds to electrify their careers can illuminate your family business 50 BOOK REVIEWS CAMPDENFB.COM 45

FB ACADEMY THE GREENHOUSE EFFECT: CULTIVATING INSIDE INNOVATORS Can intrapreneurial initiatives serve the individual aspirations of the next generation and rejuvenate family firm innovation? Scott McCulloch looks at the possibilities I f traditional succession is not a clear-cut Below: President individuals achieve their aspirations,” says John option, how can the next generation add Marc DeSerres Davis, of Cambridge Family Enterprise Group value to a family enterprise inevitably is a grandson in Boston. heading for a challenging leadership transition? of founding arts supply retailer “The needs of the family and collective One area that is gaining traction among Omer DeSerres aspirations are less and less seen as an obligation.” ambitious progeny is intrapreneurial initiatives. and has almost But who are the intrapreneurs and how do they 40 years of Intrapreneurs are more common than create wealth? retail business thought. Vancouver-based Sked Guru founder experience and chief executive Phil DeSerres always knew In any business there are three basic wealth- he would have his own business. The question creation profiles. The first is the builder, who was, would it be within his family enterprise or drives sales, but doesn’t necessarily innovate. outside? DeSerres’s sexagenarian father, Marc, The second is the entrepreneur or external venture creator. Entrepreneurs start from remains firmly at the helm of third- scratch. They raise their own risk capital generation Canadian art supply retailer and tend to operate independently. Omer DeSerres. Then there is the intrapreneur. “I’ve been around start-ups and They behave like entrepreneurs, yet entrepreneurial blood for as long as I develop new value under the auspices can remember,” says Phil DeSerres, who of an existing enterprise. They began working in his family business are the “inside” entrepreneurs. after secondary school. “Family cultures have become more “There was no doubt in my mind that I oriented around individual development was going to have a business.” of talents that focus on helping DeSerres had always gravitated towards his family firm, out of pride 46 CAMPDENFB.COM ISSUE 76 | 2019

and a sense of duty. But when he discovered ESSENTIAL INGREDIENTS: KEY the Intrapreneurial Initiative, a programme QUALITIES OF AN INTRAPRENEUR supported by Quebec’s pension fund manager Intrapreneurs are often described as innovators, CDPQ and Montreal-based Business Families problem-solvers, and visionaries who persevere Foundation, things changed. with dogged determination. “The programme gave me a bit of a window,” Intrapreneurs are “ideas” people. They says DeSerres. He recalls how he contrived to come up with smart ones, stick with them and “tweak something out of the programme that collaborate to bring them to fruition, often by could eventually either fold back into the family seizing opportunities along the way. business or become a standalone enterprise.” Vijay Govindarajan, Disrupter not the disrupted professor of management at Dartmouth College’s Tuck Intrapreneurship is not new. Yet it is gathering School of Business, and pace, not so much as a business fad but as an Jatin Desai, chief executive essential strategy. of US-based DeSai Group, have identified six patterns Why? Business leaders are increasingly faced of successful intrapreneurs. with disruption from start-ups to technology One, that “money is not the measurement” companies moving into their specific space, says for intrapreneurs, is particularly telling. intrapreneurship expert Peter Vogel. The primary motivation for intrapreneurs, Govindarajan and Desai note, is “influence with Despite their market dominance and freedom”. Intrapreneurs appreciate rewards, abundance of resources, established businesses but money is not their starting point. are increasingly uncertain about their future. Govindarajan and Desai describe true intrapreneurs as people with the capability of “They are struggling to adapt to the new making significant, even courageous, shifts from a current strategic direction. PHOTOGRAPHY: GETTY IMAGES, PATRICE LAROCHE Govindarajan and Desai describe this shift as “pivoting”—think Steve Jobs, who pivoted Apple from an education and hobby computer company to a consumer electronics giant. This pattern is often needed to resuscitate a dying company, yet can be unfathomable to mature organisations. reality of disruption,” says Vogel, who directs the Lean Intrapreneurship programme at IMD Business School in Switzerland. “Irrespective of whether you are a family firm of not, as a result of disruption or change, companies are increasingly interested in understanding how they can make sure they are the ones disrupting rather than somebody else,” he says. “That is the underlying pattern.” Understanding, indeed. But can intrapreneurship be taught? And if so, can it futureproof a business? DeSerres, whose mother taught entrepreneurship at Montreal’s McGill CAMPDENFB.COM 47

FB ACADEMY University, can’t say for sure. Yet he is amounts of advice from members of his family convinced his choices helped him. and external professionals. “The programme gave me credibility within “Over the past few years, I have reached out the Omer DeSerres organisation so that I could to captains of the industry, top people that I work on something else.” know, and brought them into the conversations to reinforce my message or specific objectives,” That something was Sked Guru, DeSerres’s Frohlich says. cloud-based scheduling software that helps businesses plan and manage staff schedules. “For any intrapreneur that is extremely important.” Although DeSerres works in British Columbia—dividing his time between Guiding lights developing Sked Guru and hitting the acquisition trail—he taps into the resources of When the next generation commit themselves his family business 2,800 miles eastward. to credible ventures, businesses that have a real chance of turning a profit, senior family “I do not have to worry too much about billing. I keep an eye on it, but I do not have to intrapreneurs innovate for their enterprises. deal with the banks, taxes, and the whole legal An intrapreneur may not face as high risk or reap side since we have our department inside.” the rewards of an entrepreneur, but has access There are other next-generation intrapreneurs to the capabilities of the established firm. like DeSerres. Jason Frohlich is president of Mentorum Inc, an e-learning company that Gifford Pinchot, the US grew out of his father’s language training entrepreneur, author and inventor, technology firm LRDG. is credited with the first use of the word intrapreneur. Pinchot defined A serial intrapreneur and marathon intrapreneurs as “dreamers who runner, these days Frohlich spends most do… those who take hands-on of his time running StimaWELL North responsibility for creating innovation America, a manufacturer of medical- of any kind, within a business”. grade, electric muscle stimulation devices that help athletes perform better and heal faster. That, and his other ventures. Like DeSerres, Frohlich’s brother, Jeremy, participated in Business Families Foundation’s 12-week Intrapreneurial Initiative in which Frohlich’s father, Julius, mentored his sibling in the development of a new business. Mentoring is a key part of developing intrapreneurs. Although Frohlich, 36, devotes less time to LRDG, he has taken significant INSIDE INNOVATION: WHAT IS INTRAPRENEURSHIP? Intrapreneurship is the act of behaving like an entrepreneur while working within an existing enterprise. That means creating new ideas and, crucially, self-financing opportunities towards new forms of value under the auspices of an existing business. Being an intrapreneur is considered beneficial for both intrapreneurs and their organisations. Companies support intrapreneurs with finance and access to corporate resources, while 48 CAMPDENFB.COM ISSUE 76 | 2019