S02E02 – Sir Martin Sorrell

In this episode, Brendon and Russell sit down with Sir Martin Sorrell, British businessman founder of WPP, the world’s largest advertising group, and current chair of S4Capital, a media company focused on building a modern digital advertising and marketing platform for global minded clients.

Direct from the offices of S4Capital, which as of this recording has reached US dollar unicorn status with a market cap of over $1.3 billion, the conversation with Sir Martin spanned topics ranging from mergers and acquisitions to unicorn valuations, to advertising in the age of the two-second ad.

A fascinating, uncensored conversation with one of the biggest influencers and legends within the advertising industry.

Transcript:

Russell Goldsmith:
Thanks for downloading Show 98 of The C-Suite Podcast, the second in our special series of episodes that we’re recording in partnership with the European PR Agency, Tyto, and their own Without Borders Podcast, where we are interviewing leaders of unicorn companies to find out about the key issues, pain point, and challenges that startups face and how they can address them with a strategic approach to marketing and communications.

Sir Martin Sorrell:
I didn’t know this. I was doing this under false pretences and that we were promoting Tyto PR.

Russell Goldsmith:
Ah, right.

Sir Martin Sorrell:
Whoever Tyto PR is.

You conned me into this. Conned yet again.

Russell Goldsmith:
Conned again. Now, I was hoping you were going to behave yourself.

Sir Martin Sorrell:
That’s also under false pretences, again.

Brendon Craigie:
Well, I guess we’re sponsoring this…

Sir Martin Sorrell:
Oh, you’re the sponsor? How much are you paying for this?

Russell Goldsmith:
Not enough. Believe me, not enough. So, once again, he’s managed to interrupt me on my intro, as he did back in Cannes last year.

I should introduce the fact that I’m at the offices of S4 Capital, and we’re here to chat with the group’s chairman.

Sir Martin Sorrell:
Just when we start the podcast the drills start.

Russell Goldsmith:
I know. That’s all right. We’ll work our magic on that

Sir Martin Sorrell:
The sound engineer is fine?

Russell Goldsmith:
We’ll get rid of that. The person who you can hear interrupting me once again is Sir Martin Sorrell, the group’s chair.

Sir Martin Sorrell:
It’s not a group, by the way, it’s a company.

Russell Goldsmith:
A company, I do apologise. The company’s chair and I’m sat with Tyto’s founder, Brendon Craigie, who I am hosting these unicorn interviews together with.

Now, a quick introduction, S4 Capital PLC, if you don’t know, is a media company focused on building a modern digital advertising and marketing platform for global-minded clients. And in 2018 merged with MediaMonks, its content practice, and MightyHive, its programmatic practice and went on to add a further seven, is that correct?

Russell Goldsmith:
No, it’s actually up to nine.

Sir Martin Sorrell:
Nine further content programmatic and data companies.

Russell Goldsmith:
Six content and three data, analytics and programmatic.

Sir Martin Sorrell:
Fantastic. Now, as I mentioned just before, I met and spoke to Sir Martin Sorrell at Cannes Lions back in June last year.

Sir Martin Sorrell:
We lived to tell the tale.

Russell Goldsmith:
We enjoyed it.

Sir Martin Sorrell:
So did I.

Russell Goldsmith:
Now, since that time and in November, he announced that his group has reached US dollar unicorn status, with a market cap of over $1.2 billion.

Sir Martin Sorrell:
$1.3 billion as of today.

Russell Goldsmith:
$1.3 billion?

Sir Martin Sorrell:
Yes.

Russell Goldsmith:
We are getting news as it comes in.

Sir Martin Sorrell:
Over one billion pounds. We’re now a sterling unicorn.

Brendon Craigie:
Congratulations.

Sir Martin Sorrell:
And a verifiable fact because there’s a market that establishes the value.

Russell Goldsmith:
Right, so on that note, the first question then…

Sir Martin Sorrell:
I gave you a good lead-in there.

Russell Goldsmith:
Yes. When we set up this series that myself and Brendon are doing, most descriptions of unicorns state that they’re privately owned businesses rather than publicly owned. Obviously there are some definitions that just say it’s a company worth $1 billion or pounds, but does that definition matter to you? Because you were quite clear in making that point.

Sir Martin Sorrell:
Well, it was a nice sort of hook to hang on the progress that we made. We came back to the market when we injected S4 Capital into what was then a shell company called Derriston, which was a standard listing on the London stock exchange. I think it was on 17th September 2018. We’ve been going at this for about 18 months and after 15 months we got to dollar unicorn status. That was a nice thing to say. I mean, it has veracity because there’s a market value, whereas a lot of the claimed unicorn valuations, as you said, are private valuations and they’re pretty meaningless. They’re extrapolations of minority funding.

If you get somebody to invest at a fancy valuation and buy 2 per cent of the company, you then extrapolate that by 50 times to get the market cap. And I think that’s sometimes a bit misleading. We’re running at the rate of about, if you pro forma all the things we’ve done, $400 million of revenue and about a $100 million EBITDA before holding our company costs. I think it gives us a peg to hang on, it was a target. It was a validation of the first year that we’ve been going and most people didn’t think that we would get to this sort of scale this quickly.

We’re in 30 countries. We have 2,350 people. I was in Amsterdam earlier this week. I used to think of Amsterdam actually being about 500 people of the 2,350, but we’re growing at such a rate there. Our organic growth rate is 45 per cent and I’m not talking about deals, I’m talking about organic growth, so like for like growth. Amsterdam will be up to about 600 or 700 in very short order. We have a new building that we’re moving into in Hilversum, which is a suburb of Amsterdam, and a new building that we just moved into in Amsterdam. We’ll have two buildings and we’ll have consolidated four or five businesses in Amsterdam into those two buildings.

It’s quite exciting what’s happening there. The vibes and the mood music are very strong. We have a lot of opportunities there. And similarly, in Silicon Valley, we have a similar concentration of about 500 people. We’ve got 1000 out of the 2350 and two centres. Amsterdam, which is good for Brexit and a good capital. I think it’s one of the capitals of Europe, probably the capital that’s gaining most from Brexit. And then we have Silicon Valley, which from our point of view, given the fact that we’re just solely a digital company, you described us as a media company, we’re basically a pure digital play. Given the fact that’s where our focus is, obviously Silicon Valley is critical.

Russell Goldsmith:
Has it met with your expectations when you set out?

Sir Martin Sorrell:

What?

Russell Goldsmith:
The growth and where you’ve got to?

Sir Martin Sorrell:
Well, you know, it’s like what people said when I was at Saatchi or WPP; “what’s the growth ambition?” It would be arrogant to say that you have an ambition and I think a lot of this is not luck – you make your own luck. My dad used to say: “You make your own luck through what you do.” But we didn’t have a specific target and we didn’t say we want to get to ‘X’ in terms of revenue or EBITDA by the end of December 2019, or that we said we want to get to unicorn A status. But I think we’re pleasantly surprised by the progress that we’ve made and I think coming back to your original question, the suggestion of unicorn status, whether it’s meaningful or not, it means something to people’s minds.

I mean, the interesting thing is the US has the largest number of unicorns, followed by the UK, followed by Israel and would you believe Amsterdam is number four? It was GP Bullhound who does this annual analysis. Now it’s quite interesting that we’ve got in two of the top four large concentrations, Silicon Valley and Amsterdam. For us, as a purely digital business, it’s really a good structure, actually an excellent structure.

Brendon Craigie:
Can I ask you a question, Sir Martin, about the point you said about Amsterdam being good for Brexit, is that a perception thing or is that a very real issue?

Sir Martin Sorrell:
That’s reality. I was there and we had a dinner with some of the MediaMonks people and MightyHive people in Amsterdam. They were saying how, it’s a good indicator of what’s actually happening, with the cost of housing, expenses and there’s a bit of inflation there. And the reason is that a lot of companies – people talk about Paris, they talk about Berlin, they talk about Frankfurt, they talk about Milan, they talk about Madrid – but I think actually Amsterdam is very cosmopolitan. It’s well located physically, geographically. It has a good airport, Schiphol, which is a big airport. It’s a good hub.

What I was getting at was that it’s benefiting because I think a significant number of companies are now starting to locate their international or European operations there.

Brendon Craigie:
Right, okay.

Sir Martin Sorrell:
If the Prime Minister Rutte, who’s an ex-Unilever guy actually, took off the cap on banking salaries or bonuses and was probably a bit more aggressive, they would grow even faster. Now, there’s a big question about the environmental impact of that and the ESG impact of it, because it’s a small country. I think Amsterdam’s population is about 900,000, so it’s not a big city.

I think people are a little bit worried about, and this is a big issue, that if they take the caps off on compensation, or whatever it is, in the banking industry or the levies off, that it’s going to cause environmental decay.

Brendon Craigie:
Yes.

Sir Martin Sorrell:
I mean, it’s a small country. Holland is not a big country, but it has Unilever in Rotterdam. You’ve got a booking.com there. I mean, really interesting companies. Heineken there, I mean, it’s an interesting capital.

Russell Goldsmith:
I just want to go back to the group structure. You started talking about how many acquisitions you’ve made and how many people too.

Sir Martin Sorrell:
We don’t make acquisitions, we make mergers.

It’s a really important point. We’re looking for people who want to buy into what we’re doing, who philosophically are aligned and who are not looking to sell out but are looking to buy in. The first sentence of every conversation is if you want to sell, don’t come to us. If you want to sell, go to Dentsu or WPP.

If you want to buy into an approach where we’re trying to build – we may be successful and may not be successful – a new age, new era company, this is for you and that’s really everything we’ve done. We’ve done 11 tie-ups, including MediaMonks and MightyHive, in the last year and a bit. Everything we’ve done has been premised on that basis with one exception, Caramel Pictures, which was an assets purchase. It’s a robotic studio that takes wonderful film with food and drink, and works for all the big packaged goods companies.

As Victor Knapp, who’s one of the principals at MediaMonks says, “we merged with more robots than we did people.” But it’s a phenomenal facility. In fact, we used it earlier this week. I was involved in a presentation. They’re absolutely superb technically. So that was the only thing that we did which could be described as an acquisition.

Russell Goldsmith:
Well, the point I was leading to is that on the website it talks about the number of countries and the number of people, but then it clearly states one unitary structure.

Sir Martin Sorrell:
Yes. We think earn-outs create a fragmentary structure. I’ve been credited wrongly with devising that. It probably was Nathaniel Rothschild, the Battle of Waterloo, but what we’re trying to do is to build a unitary company. Everything we’ve done, with the exception of Caramel, everything we’ve done has been on basis half shares, half cash. So people, the entrepreneurs, are totally entitled to capitalise on their hard work and get a little bit more security. But the other half, the consideration, is stock where there are lock-ups. And we’re in it together.

I was talking to somebody who’d worked at Dentsu earlier this week and she said they talk about unitary and they talk about one P&L, but it’s complete nonsense because everybody is just focused on their individual piece. That is the problem with the holding companies. Particularly when you do earn-outs, I mean, people are just focused on their little piece of it, running it autonomously and to the detriment of the whole. And I know at WPP they have ‘horizontality’, which was a terrible word, and which I was partly, if not wholly responsible for. I know that that’s been banned as part of the vocabulary, but that does get to the heart of the matter because everyone in the company is including WPP.

You’re trying to get people to think as one firm. The problem is the execution can be too fast, which I believe Publicis is doing too quickly. They’re destroying more value than they create. They destroy Saatchi, Burnett and BBH. They maintain Publicis and they destroy LBI, Digitas, Rosetta and Razorfish. Now, do I think that the power of one is a bad concept? No, I think it’s the right concept. Do I think being one firm is the wrong concept? No, it’s the right concept. But when you have these traditional assets and when you stick Wunderman in front of Thompson, you destroy Thompson. When you stick VML in front of Y&R, you destroy Y&R.

Arguably Thomson and Y&R, although they may have analogue connotations, are the stronger brands. I’m not saying that these decisions are easy. They’re very difficult and it’s very easy to sit on the sidelines and criticise.

I saw somebody from an Omnicom agency just recently and he said it’s a ticking time bomb. These were exact words, a ticking time bomb just waiting to explode because they’re not doing as much strategically as he thought and many people inside the company feel they need to. Now, the irony of that is Omnicom does better. Their execution is brilliant. They have great agencies, maybe agencies that are more analogue than digital, but they do have great agencies, and they execute well. IPG executes well also. It’s the fastest growing in the last quarter of the holding companies, at 3 per cent.

I think Omnicom and IPG’s advantage is they’re based in America. Their CEOs sit in America, one in New York, one in Palm Beach. And they sit there in what is unarguably the most important market still in the world, $22 trillion out of $75 trillion. The Chinese are coming up fast at about $14 trillion, I think that was the last IMF estimate of the Chinese GDP. But on a per capita basis, America soars ahead.

They sit in America, while the CEOs of WPP and Publicis sit in London and Paris and while one can argue from a time zone point of view that may be a good place to run a global business, I don’t think from a client point of view it is.

When I was trying to run WPP, if you spent a day or two days travelling from New York to Boston, to Detroit, to Chicago and Washington D.C., you could cover, in theory, about two-thirds of WPP’s clientele.

The heart of the business, whether we in Britain like it or not, is still America. And China is coming up rapidly, Japan is important, Germany is important, all these other markets are very important. With President Trump, he’s good for business. Whatever people say about him, he’s good for business. He reduces tax, he reduces regulation, spends money on infrastructure. America is going to become disproportionately more important.

Russell Goldsmith:
Have you met him?

Sir Martin Sorrell:
Yeah, it was some time ago, but I did, yes.

Russell Goldsmith:
And what was he like?

Sir Martin Sorrell:
He was fine. It was at a wedding. He was happy.

Russell Goldsmith:
But just on that point then, in terms of talking about all those different other groups, how much of your time do you spend looking at what they’re doing?

Sir Martin Sorrell:
Look at what who’s doing?

Russell Goldsmith:
All these other groups that you were just talking through there.

Sir Martin Sorrell:
Well, I suppose that the direct competitor that we have is Fimalac, the French company, who acquired Jellyfish. That’s our nearest direct competitor. You then go beyond that to the holding companies who claim they do what we do. We would say they don’t, but they would claim they do. And then you have the ex-accounting companies, the Accentures and Deloitte Digitals, who are big. Accenture is a huge company, $125 billion market cap the last time I’ve looked, with $45 billion of revenue. Interestingly, GroupM is bigger than Accenture, which is quite an interesting point, because it’s billings are at $50 billion.

But, they are big companies and they are big beasts to feed, and it’s very difficult I think. They have to win big projects, not the sort of projects we’re interested in. We do compete against Accenture and Deloitte. At the moment we’re head to head with Accenture on a couple of things. At one of our presentations in Latin America, or one of the sales meetings we had, as Circus got together with MediaMonks, were great slides saying MediaMonks ‘four’, Accenture ‘nil’. There had apparently been four presentations, which our lads and lasses claim to have beaten Accenture on.

Russell Goldsmith:
And we can include that in this podcast, can we?

Sir Martin Sorrell:
Well, if there’s anybody out there from Accenture who wants to argue with us on that we’ll see.

Look, that’s the competition, but really, in terms of head-to-head it’s more around Fimalac, I think, and Jellyfish. But they’re really on the media side of the business. They have a content operation, but we’re more content than programmatic.

We’re running at about 70% content now and 30% programmatic. We’re running 70% the Americas, North and South America, 20% Western Europe and 10% Asia. I want to get that to 40%, 20%, 40% and the content side we’ll probably try and bring the media side up. We’re looking at something at the moment which will increase the media proportion probably to around about 35-40%.

I want to balance the group a little bit more to programmatic, data and analytics. And I want to balance the group a little bit more towards the Asia Pacific region.

I worry about Western Europe. I mean Western Europe as a proportion of worldwide GDP has shrunk over the last few years, and I think will continue to do so, so we have to see.

Brendon Craigie:
One of the things, Sir Martin, just looking back over how you communicate around S4, you’re very succinct.

Sir Martin Sorrell:
Nobody has ever said I was succinct!

Russell Goldsmith:
We’ve been talking for 20 minutes and we’ve only done two questions!

Brendon Craigie:
I think if you look at a lot of the coverage around what you’ve been saying, there’s a lot of repetition around very simple, clear descriptions of what you’re trying to do in terms of a unitary structure, faster but cheaper, digital-only. It’s something that comes through very clearly and I just wondered, do you put a lot of thought into that, in terms of making sure that you’re being really clear and consistent about what you’re talking about?

Sir Martin Sorrell:
Well, I don’t know whether you put a lot of thought into it or not. I mean, when we started, we put a lot of thought into what the strategy should be. Purely digital because that’s where the growth is, that ‘Holy Trinity’ model of first body data driving content and a programmatic. Faster, better, cheaper, what our new colleagues, Juan and Lanya Zambrano at Firewood, call speed, quality and value. Speed plus quality equals value. And you can have all three, a lot of people say up to two to three. And I agree with them. You can’t have all three, a slightly more elegant way of pivoting. And the fourth principle, unitary structure, not a fragmented structure. We thought clearly about that.

I think to answer your question is to try and simplify it. There are the two-second ads that MediaMonks created for L’Oréal in Italy on the back of the insight from Facebook that women spend 1.7 seconds on average looking at a post and created a two-second ad around non-celebrity influencers with different skin tones and different hair colours. I mean, the normal reaction of an agency would be able to create a 15, 30 second or 60 second TV ad. And if you think that’s wrong, if you think about the Brexit campaign, take back control. Concentrating on Brexit. These are the best examples of two-second campaigns and two-second ads work.

These are very simple messages that resonate in a world which is 24/7. And our model of Holy Trinity is an interesting model. It’s not a tent pole model. Again, don’t get me wrong, or misinterpret this. It’s not that creative or big ideas are not important. They are essential, they are central. But it’s the way you execute. And tent pole campaigns may not be suitable. I mean, when you look at the Super Bowl ads, the Oscar ads, the World Cup ads and the Olympic ads, an awful lot of time, effort, energy and creative talent goes into it.

Some of it may not be worth the effort that was put into it. And it may be more about aggrandisement rather than it being effective, either in brand building or in activation. I think you have to think carefully about it.

Brendon Craigie:
Coming from your past role where you were representing one of the largest, most established…

Sir Martin Sorrell:
The largest.

Brendon Craigie:
The largest.

Sir Martin Sorrell:
Not anymore, it’s number two to Omnicom. Omnicom has a higher market capitalisation.

Brendon Craigie:
Now you’re kind of playing this role of disruptor. Have you found…

Sir Martin Sorrell:
I’m not playing the role.

Brendon Craigie:
Well, you are a disruptor.

Sir Martin Sorrell:
Yeah, I would say we’re more disruptor than disrupted, although at some point in time we’ll become disrupted too.

Brendon Craigie:
I’m guessing that’s kind of fun. But putting that to one side, have you had to adapt your approach as the figurehead communicating around what you’re doing? Do you have a different style to before?

Sir Martin Sorrell:
I’m not conscious of adapting the style. I mean, it might be so, but I haven’t thought about it that way. We focus clearly on different things. I’ve had three iterations; Saatchi, WPP and S4. Saatchi was purely about globalisation, WPP was about continuation of globalisation and the foothills of technological development. S4 is purely about technology. That may demand different styles. But I’m not conscious of it. All I’m conscious of is trying to explain in simple terms, which is what we tried to do at WPP.

WPP gets indicted frequently and that may be because the new management wishes to try and justify its own strategy, or whatever strategy there is there, by saying it became over-complicated. Simplicity probably is the hobgoblin of small minds, and there aren’t neat solutions in our business. It is inherently messy. Good people are inherently difficult to manage or bring together.

I used to say the following all the time and it used to get me into trouble. When you say that good people are difficult to manage and average people are easy to manage, average people become difficult in order to prove that they’re good or to try and prove that they are good, so it defeats the purpose.

But I do believe that. I’ll give you a very good example. WPP sold its interest in Globant, which is right in the sweet spot of what WPP is trying to do. I’m interested because I’m still a shareholder in WPP. They bought this Floridian e-commerce Amazon company agency, Wunderman Thompson. They buy that and they sell 20 per cent of Globant. The loss in value on that 20 per cent stake in Globant – I was doing the calculation a couple of days ago because they sold at $52 and Globant is now about $125 – is $500 million. Half a billion dollars of value has been lost.

I’m sure the chairman of WPP doesn’t even know they lost $500 million on it. But I would urge him to go and calculate it. And that was because somebody somewhere said, “Let’s just get rid of it,” without thinking through quite what they were getting rid of. Now, it may have been a good idea to sell 60% of Kantar, but to sell 20% of Globant, which is right in the sweet spot of what WPP is trying to do, was just plain nonsense. I described it as criminally negligent and I say again on this podcast, it is now doubly criminally negligent.

I was talking to somebody last night about it. Why did they make that decision? I think it was because they made a blanket decision and decisions are never like that. You can’t make blanket decisions, particularly in our business because it’s inherently a messy business because it involves people. Our business is about people and it’s about motivating, incentivising and managing people, the good people being difficult to manage. The average people probably being easier to manage, and probably like that. Forgive the rant. I think that’s an important point.

Russell Goldsmith:
How does that conflict work then in terms of, if you’re still shareholder at WPP, but you’re…

Sir Martin Sorrell:
I’m by nature a collector.

Russell Goldsmith:
But you’re actively obviously pitching…

Sir Martin Sorrell:
I remember Norton Simon, if there’s anybody listening to this podcast they won’t know who Norton Simon was, but he built a big food company. He was a big art collector rather like Charlie Saatchi. And Norton Simon said; “Collecting as a disease. You never know when to sell, so I’m diseased.”

Russell Goldsmith:
How important is PR to build S4 Capital? You’re at events and you’re talking about S4 Capital regularly, but where does the importance lie with that and then ensuring that you’ve got your companies like MediaMonks, etc, getting their share of voice as well.

Sir Martin Sorrell:
Well, they do a very good job. I mean, just today I saw in an email that MediaMonks has boosted significantly their communications staff across the globe. And that’s partly because MediaMonks has increased in size. I think when they became part of the group, or the company, in July of ‘18 there were about 625 people. Today they are about 1,850. They’ve sort of tripled in size, by the number of people, in just over 18 months. That’s one of the good things, so when your top line is growing by 45 per cent and the industry in which you’re operating is growing by 20 per cent, you almost don’t have the time to spend the money to catch up.

The reverse is also true. When publicists in Q4 last year shrank by about 5 per cent. That’s a digital business and an analogue business. The analogue business probably shrank more than 5 per cent. Do you think that within the agencies they’re cutting their costs or the creative directors, the account directors and the planners, or even cutting their salaries by 5 per cent? No, of course not. So, you get an imbalance inside the company, which is exacerbated by the varying growth rates. And the simple fact of the matter is, and why I’m very focused on purely digital, is because that’s where the growth is. And that’s where I see the potential.

I think you can make the argument we’re averagely intelligent. I actually think we’re better than average. But let’s say we’re averagely intelligent. We will do better pushing on an open door. Warren Buffett’s saying about when good management meets a bad business, the bad business wins.

Russell Goldsmith:
And what about your role as a spokesperson for the business?

Sir Martin Sorrell:
Well, Pete came to MightyHive, Chris Martin to MightyHive, Victor and Wes the MediaMonks are, are equally loquacious.

Russell Goldsmith:
Obviously we’ve grabbed you for an hour today, but you must be getting called upon all the time. There’s conferences you’re at constantly.

Sir Martin Sorrell:
Yes.

Russell Goldsmith:
How much does that then impact on actually running and building the business as well?

Sir Martin Sorrell:
Well, you have to balance. It’s difficult and you have to balance it. We’ve created a brand from nothing. We started, literally in this office with one person in June or July or whatever it was of 2018, and then MediaMonks became part of the business in July of ‘18 and the MightyHive on Christmas Eve of ‘18. Those were the two first big moves, or the two pivot points if you like, that we’ve built on.

You have to balance it and it’s not easy. I would say it’s a bit different then to when I was at WPP. That was about a third clients, a third internal and a third external – doing stuff like this, shareholders and other things. I would say it’s probably skewed a bit more now, maybe 50 or 60 per cent with client-related matters, and maybe of the other 40 per cent, 20 on internal and 20 external.

Russell Goldsmith:
I’m conscious of time, because obviously we’ve only got you for about another 10 minutes.

Brendon Craigie:
I was just going to say in terms of that communication side of things, is it something that’s always come quite natural to you or was there a point when you weren’t very good at it and you actually had to focus on it?

Sir Martin Sorrell:
No. I’m not conscious of it and people will say I wasn’t very good at it. They probably say I wasn’t easy or I’m not very good at it now. I think you just try and respond in a natural, not-forced way.

Russell Goldsmith:
We’ve just got a few more questions, some of which we’re asking to all our unicorn leaders. One of which is, what’s been the biggest communications challenge you’ve faced since the launch of S4 Capital?

Sir Martin Sorrell:
think we’ve been establishing a brand. I mean obviously MediaMonks had a following, MightyHive had a following. I think if you asked the leaders of those two pillars of our business, the content practice and the programmatic practice, they would say, they have far more brand recognition today than they had before.

We’ve had to launch a brand and I think we launched it successfully. I think we had brand trial. The opportunity for us is to move from trial to what I would call conversion at scale. We call them ‘Whopportunities’ or ‘Whoppers’. We have one very large client as a portion of our $400 million of revenue and what we have to do is to demonstrate we can do what we’re doing at scale.

The Holy Trinity model, which really is part of digital transformation or business transformation, that’s the business that we’re really in. We were talking about it last week at our board meeting in New York. When we discuss the Holy Trinity model and we talk about first-party data driving digital advertising content and programmatic, that really is the activation part of digital transformation. Increasingly that’s where our business is going to be positioned.

I went through the competition and directly we compete with a business that is smaller than ourselves. Indirectly we compete with holding companies, that are bigger, and with consultancies, which are even bigger than that. So, we have to fashion what we do. We have to be the disruptor. We have to be the motor torpedo boat, and we have to be the Israel or the Singapore, or even the UK now post-Brexit, rather than the US or China or Brazil or India. It’s a very different, and it’s very different, obviously, than trying to run WPP.

Brendon Craigie:
And on that point actually, you’ve been quite outspoken about WPP.

Sir Martin Sorrell:
Yeah. I’m a shareholder. I’m entitled to. Like the loss of value on Globant, yeah.

Brendon Craigie:
But do you think that the founders of other companies that are disrupting industries should be more confident in criticizing the competition?

Sir Martin Sorrell:
I’m not criticizing the competition because they’re not direct competition and by nature and scale, they’re very different to us. Their strategy, if you can define it, is different.

I think I’m perfectly entitled to express a view. I expressed a view on succession there. You have Mark Reed there, you have Andrew Scott and John Rogers – who’s just moved in there and who was in the race to be CEO of Sainsbury. Now he’s joined WPP. You have three people whose lines of activities overlap. I don’t know quite how they’re going to divide it up.

But Andrew, he’s a very talented guy who seems to be doing more on the M&A front. Mark seems to be more involved with clients. And John Rogers. Here’s a guy who was going to become a CEO who now has gone ‘back’ in inverted commas. I mean, I think WPP is a bigger company but he’s gone back to being a CFO. There’s going to be a lot of overlapping areas in the executives in the C-Suite. It’s not clearly demarcated. I think probably there are two jobs there and three people. Just as an observer, I think that’s an interesting situation, but time will tell.

Russell Goldsmith:
Well, talking of time, nicely, we’ve got about five minutes left with you and we’ve got a few more questions. Just quickly on these, you were at Davos just recently. You’ve talked about the need for technology companies to exercise their power responsibly. Do you believe there is a greater onus on tech founders today to act responsibly?

Sir Martin Sorrell:
Yes, I think there is.

Whether it’s issues of climate change and such, I think Nadella really took the agenda at Davos in a way, certainly the public agenda. I think the private agenda was more around what’s the relationship between America and China and that’s a deteriorating relationship, which I think is critical. As critical as climate change. I’m not saying climate change isn’t critical, it is. But the two are really interlinked because China, given its size, is bound to be the biggest polluter and emitter of carbon, so in a sense, they’re linked.

Satya took the lead by saying; “we’re going to go for not just a zero-emissions, we’re going to go for negative to make up for what we did in the past.” So he set a very high bar, and I think it’s a good example.

Now Google has made it clear they’re going to eliminate third-party cookies over the next two years. We don’t quite know how that’s going to play out, but that has a lot of serious implications for the industry. And why did they do that? I don’t know, but I guess part of it is to deal with the privacy issues. It’s going to eliminate a number of publishers. There will be a further debate about whether there are too few publishers, is journalism being crushed? That’ll be another part of it.

A number of the people who relied on third-party cookies are going to go to the wall. We’ve seen a very significant impact, for example, on the market capitalisation of Criteo as result. Criteo always seems to take the brunt of any changes of that nature, or even if it does affect companies like The Trade Desk and others. There’s a lot of things. I think what you’re seeing is the tech companies embracing this. It might be because they’re worried about the privacy debate. It may be they’re worried about brand safety. It may be they’re worried about interference in the elections. It’s probably to do with the fact that they’re worried about regulation.

I mean now, in America, the regulator will review even small tech transactions, not even ones that technically it should. All the regulators are gunning, in Europe and in America on a state by state basis and on a federal basis, for the tech companies because with size comes responsibility. Amazon, Microsoft, Google, Apple are all trillion-dollar companies. There is a bigger company and that’s Aramco. But I think Amazon is now up to $1.3-1.4 trillion, so these are very big companies and with power comes responsibility.

I think they’re starting to see they have to exercise responsibility. I mean, take Google and Facebook. They don’t get much credit for this and I think this is wrong. They have hired, I think Google 10,000 people and Facebook I think 38,000 people. You’ve seen it’s had an impact on their margins and then their costs have gone up as a result. They’re trying to monitor much more the editorial content. Are they media companies? Are they tech companies? I think they’re media companies. They’ve always protested that they’re tech companies.

But I think they’re beginning to act like media companies and make the balance decision. I think the reason they’re doing that is that they’ve been phenomenally successful. I don’t see them, by the way, being eclipsed. The only company I’ve seen in the last year or so that really has got momentum is ByteDance, TikTok, and I’m told ByteDance has $20 billion of ad revenues and TikTok within its $7 billion. That’s the only one that’s moved the needle beyond Google, Facebook, Amazon, Tencent and Alibaba, continuing to march forward.

When they introduced GDPR here, the intention was to put a limit on the big boys and girls. What it’s done is given them a stronger position and I think Google’s decision on third-party cookies will make Google stronger. Not going to make Google weaker.

Russell Goldsmith:
We’ve got time for one last question, because we were on a very tight timescale.

Brendon Craigie:
I’m not sure you’re going to have an opinion on this, Sir Martin.

Sir Martin Sorrell:
Don’t ask the question then.

Brendon Craigie:
Well, you’ve talked a lot about being not particularly conscious of your communications approach. But, one question we’ve been asking all of the unicorn leaders is if you were to go back in time and give your old self some advice on how they could do a better job in communicating, what advice would you give?

Sir Martin Sorrell:
I don’t think surrounding yourself with advisors is necessarily the best thing. When you take advice, the advice tends to err on the side of caution. Not saying or applying, keeping your head down. Don’t put your head over the parapet.

It’s very simple. If someone’s going to write something negative and let’s say it’s going to be a minus 10, if you speak to the person before they write it, you probably can make it a minus nine or a minus eight or minus seven. You might not be able to make it a zero or a plus 10. But if you don’t speak, you don’t change it. It used to be the case if you had Friday afternoon deadline and the reporter would ring you up then the PA would say, “he’s in a meeting” or “he’s travelling”, whereas he’s hiding under the desk. I don’t think that works.

Brendon Craigie:
No.

Sir Martin:
I think you just have to be responsive and some people will disagree with that and that much overused word, authentic, just say what you feel.

Brendon Craigie:
No, I think that’s great advice because I think you need a personality.

Sir Martin Sorrell:
That doesn’t mean advisors are not valuable. They are, but it means that it tends to hem you in and tends to make you overcautious. That would be it, for what it’s worth.

Brendon Craigie:
I think that’s great advice.

Sir Martin Sorrell:
So, anybody who’s listening to this podcast, just to prove.

Brendon Craigie:
You’re going to be bombarded tomorrow.

Sir Martin Sorrell:
Martin@s4capital.com, all those people are listening, just send me a one-line email.

Russell Goldsmith:
You’re testing yourself.

Sir Martin Sorrell:
And I will tell Russell and Tyto our sponsor, we’ll find out exactly how many. These are blind podcasts.

Russell Goldsmith:
That’s right. Well, Sir Martin despite the builders drilling away next door, thank you so much.

Sir Martin Sorrell:
Despite the interruptions.

Russell Goldsmith:
Yes. Thank you so much for inviting us to your office.

Sir Martin Sorrell:
A pleasure. Thank you very much.

Brendon Craigie:
Thank you very much.

Sir Martin Sorrell:
Good luck.

Russell Goldsmith:
Thank you.

So, Brendon, that’s unicorn number two in the can. Initial thoughts off the back of that chat?

Brendon Craigie:
I mean it was fantastic and I just think there’s just so much great wisdom in what Sir Martin was saying. I particularly liked his answer to the last question because I think that, ultimately, as a leader, you need to have a very strong personality and identity that comes through your communications. Yes, advisors can help along the way, but unless you have a very clear idea about how you want to present yourself to the outside world, then it’s going to feel soulless. I thought that was a really great point.

Russell Goldsmith:
What about right at the start we were talking about the positioning of a unicorn, obviously given this is what the series is about?

Brendon Craigie:
I think when you’re growing a business and you’re trying to stand out from the crowd, you’re always trying to find points that you can use to add credibility to your success. And in that sense, I think the unicorn moniker is really helpful and is a great indicator that everyone understands that you’re a serious business and you’re going places.

Russell Goldsmith:
Yeah. And so just as a reminder, obviously we’re two down, eight to go now. What’s your plan for the series and what you’re hoping to do with all the content as well after this?

Brendon Craigie:
This series was inspired by personal experience of working with lots of CEOs and founders of technology companies and just experiencing a sense of being maybe slightly uncertain around how they should be approaching issues to do with communications. We thought that we wanted to do something to help people that were thinking about the challenges around communications, knowing how important it is to their growth and their success. And therefore we wanted to work with you to get a group of people that we think have valuable lessons to share and then to try and capture that.

Russell Goldsmith:
Well, Sir Martin certainly wasn’t shy in coming forward with some of his advice and tips. Yeah, I mean, I loved it, absolutely loved it.

That is actually it for the second episode in this special series. If you want to find out more about S4 Capital, their website is simply s4capital.com. Of course, if you are a unicorn leader listening to this series and feel we should be interviewing you, please do get your people to speak to our people and we will try to make it happen. In the meantime, we’d love to hear any comments you have on today’s chat, which you can do on our Facebook, LinkedIn, Instagram, or Twitter feeds. And those are all linked from the top of the website at csuitepodcast.com.

There you’ll also find all our previous shows and supporting show notes, plus links to where you can subscribe for automatic downloads of each episode via the likes of Spotify or iTunes. If you’ve liked what you’ve heard, please do give us a positive rating and review. We’re also on all your favourite podcast apps, so just search for the csuite podcast and hit subscribe. Just a reminder, you can also subscribe to the Without Borders podcast from our partners at Tyto and all the details for that are on their website. Just head to tytopr.com and click on the podcast link at the top of the navbar.

Russell Goldsmith:
And if you’d like to get in touch with the show, you can do that via our contact form on csuitepodcast.com or you can reach me via Twitter using @RussGoldsmith, or find me on LinkedIn. But for now, thanks for listening and goodbye.

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