:00:05. > :00:10.across Britain. Temperatures are expected to dip to as low as minus
:00:10. > :00:15.eight degrees. Now it is time for The Bottom Line. You do not have to
:00:15. > :00:21.be narcissistic to succeed in business but it helps - that is the
:00:21. > :00:30.conclusion of a study which suggests a big ego is a catalyst
:00:30. > :00:35.for innovation. We will also follow up on a comment from last week
:00:36. > :00:45.which said Facebook could never have been created here. Why is it
:00:46. > :01:06.
:01:06. > :01:12.the US does so well in business Anita Frew is chairman of a FTSE
:01:12. > :01:19.250 company called Victrex. A global manufacturer of high
:01:19. > :01:29.performance polymers. It is a British success story. We act
:01:29. > :01:34.
:01:34. > :01:39.capitalised in the London Stock Exchange 1.5 million and produces
:01:39. > :01:45.of thermoplastic polymers. They can withstand high temperatures, they
:01:45. > :01:49.act chemical resistant and you would find them in the aerospace
:01:49. > :01:53.industry where they're at engineering wait out of things. You
:01:53. > :02:00.can find them in automotive components weather is a lot of heat
:02:00. > :02:06.and fiction -- friction and also in a spinal cage. It is across
:02:06. > :02:16.industries, it is a global industry and Britain is leading the way.
:02:16. > :02:16.
:02:16. > :02:22.This was a company spun out of the old ICI? In 1993. My CEO is an
:02:22. > :02:29.American and there are many businesses that still exist that do
:02:29. > :02:33.come out of ICI, another one is IMI. We have seen the decline of ICI but
:02:33. > :02:43.we have seen some start-up businesses emerge from that great
:02:43. > :02:45.
:02:45. > :02:53.bays. The North West has a great tradition in Engineering. Richard
:02:53. > :02:59.Farley is my Australian guest. One of the Dragons in the Dragon's den.
:02:59. > :03:07.You're not a Dragon stand but I is still investing? I am. My
:03:07. > :03:17.background is as an economist an investment banker and then manager.
:03:17. > :03:17.
:03:18. > :03:22.I then wrote a book about risk management. I retired at 34 after a
:03:22. > :03:30.healthily paid career in finance and since then I have a back about
:03:30. > :03:37.80 small companies, nothing has because what Anita has got. It has
:03:37. > :03:43.been my model, doing things with universities, particularly Oxfords
:03:43. > :03:47.and other universities. Do you specialise? What is the category
:03:48. > :03:56.you have an advantage in? generally back people. It is more
:03:56. > :04:05.about the people. That is the defining variable. You can amazing
:04:05. > :04:14.-- you can an amazing person. Dragons of them, they were
:04:14. > :04:20.different investment styles on the programme you thought about the
:04:20. > :04:27.proposition and the fundamental economics. It is interesting to see
:04:27. > :04:32.that it is a personal issue underlining that? De Reggae Reggae
:04:32. > :04:36.Sauce, who got the Investment, I realised halfway through that the
:04:36. > :04:43.product was not the source but the product was him and suddenly I
:04:43. > :04:48.looked at it completely differently. He's just an amazing, Lovely guy. I
:04:48. > :04:55.had no idea about the source. You need to do it like hell wine-
:04:55. > :05:00.tasting if it is about the source. Sometimes it is intuition. What
:05:00. > :05:04.hands are you using? Women's intuition is now being recognised
:05:04. > :05:14.as a powerful thing but underneath that there is a lot of logic and
:05:14. > :05:15.
:05:15. > :05:24.intellect. My final guess is Michael Spencer the founder of ICAP.
:05:24. > :05:31.What does it do? It is the largest wholesale broker in the world. We
:05:31. > :05:36.have 50 odd offices around the world - Tokyo, Singapore, New York.
:05:36. > :05:42.We facilitate financial transaction globally between big financial
:05:42. > :05:48.in in. People may not be aware that there is a huge flow of
:05:48. > :05:53.foreign exchange between banks in the City of London, Japan and New
:05:53. > :05:59.York and government bonds and the cap -- capital flows across the
:05:59. > :06:04.world are generally mind-boggling numbers. We have, for the past 25
:06:04. > :06:13.years, become the biggest global broker in this financial market. On
:06:13. > :06:19.a busy day, we do one a trillion pounds' worth of turnovers. That is
:06:19. > :06:25.1,000 billion. We take very small commissions. What is it?
:06:25. > :06:33.different products are different. If you took foreign exchange, which
:06:33. > :06:39.most people have an understanding of, our average commission is
:06:39. > :06:46.slightly over $1 per million dollars. We have to have a lot of
:06:46. > :06:53.turnover for any reasonable amount of profit. Financial transaction
:06:53. > :06:58.tax, the French want to introduce one, I cannot think of a company
:06:58. > :07:04.worst-hit then something like your company? But I do not agree with
:07:04. > :07:11.you entirely. There is no hope at all of a financial tax being
:07:11. > :07:17.introduced worldwide. The US said they do not supported. I am certain
:07:17. > :07:20.that he would not be introduced in the UK, apart from the fact that
:07:20. > :07:27.our Prime Minister and Chancellor have said so specifically. It would
:07:27. > :07:33.destroy the sit meek -- at the City of London not in the months and
:07:33. > :07:39.years but in a matter of weeks. It would be an exercise and in self
:07:39. > :07:45.flagellation to do it. Tragically, we would have to move our business
:07:45. > :07:51.to New York or Hong Kong if it were to happen. Our business would
:07:51. > :07:58.continue but sadly not in London. You each have some experience of
:07:58. > :08:05.new business. The sad fact for the world is just how many of them seem
:08:05. > :08:13.to have been created in in garages in Silicon Valley. Familiar names -
:08:13. > :08:23.Facebook, Twitter. Somehow, some say, it was inevitable that
:08:23. > :08:29.Facebook was created in the US? Having invested in tiny companies,
:08:29. > :08:34.the big thing is that when we try to get a technology company in
:08:34. > :08:44.particular, we look at expansion in the US because of the size of the
:08:44. > :08:48.
:08:48. > :08:55.market. Already you have a disadvantage in terms of time zone.
:08:55. > :08:59.We almost lost something. 35 years ago, we had a hub of Technology
:08:59. > :09:06.Investment in Scotland. It was known for making technology
:09:06. > :09:10.investment and we had people like Bill Gates and Scott McNealy come
:09:10. > :09:18.into have their business funded by Scottish institutions.
:09:18. > :09:25.happening now? Knows things have changed. The record of technology
:09:25. > :09:30.has some great parts. Rolls-Royce. While we do not have an area where
:09:30. > :09:37.we have outpaced the rest of the world. They have been a lot more
:09:37. > :09:42.innovations in smaller businesses. I do not think the UK is a bad
:09:42. > :09:49.place foreign entrepreneur but we do not have the same depth of
:09:49. > :09:59.culture supporting it in the UK as the US. I cannot thank you can put
:09:59. > :10:04.one finger on a single cause. you find setting up your business...
:10:04. > :10:10.I remember starting the business with three other at Guy's. One of
:10:10. > :10:17.these things I look back upon is that I took a view that the project
:10:17. > :10:22.would probably fail but I would be more annoyed not trying at and say
:10:22. > :10:30.in a steady job - I did have a steady job then - I basically took
:10:30. > :10:35.the view that it might fail but I much would prefer to try. What has
:10:35. > :10:41.happened in the services industry - we have lots of start-ups. Even
:10:41. > :10:50.these days, we have small hedge funds breaking away from larger if
:10:50. > :10:55.-- larger companies. The media sector is another one. In the 80s
:10:55. > :11:00.and 90s... He that gives you a clue at what is going on. I've read out
:11:00. > :11:05.a list of businesses which all have an to be SiliconValley businesses,
:11:05. > :11:10.they happen to be in the same space, so to speak, they accosted him one
:11:10. > :11:15.geographical area. When the -- when you go to other areas, they're not
:11:15. > :11:20.in Silicon Valley. There is a heavy tendency towards being a critical
:11:20. > :11:25.mass and a particular geographical area. The Industrial Revolution
:11:25. > :11:31.started around the Derwent Valley, textile industry, everybody then
:11:31. > :11:35.started moving into that. In generates an economy of scale,
:11:35. > :11:41.economies of success competing with each other and eventually,
:11:41. > :11:45.catalysts move into that place to build other businesses. You have
:11:46. > :11:54.financial services. Perhaps we do not have it nearly as well
:11:54. > :11:58.developed. You have north-west as a place of? As I mentioned it, it
:11:58. > :12:05.comes out of research or a university tradition. There is a
:12:05. > :12:11.hard out that we tried to sponsor. The same thing happening Cambridge
:12:11. > :12:15.where hi-tech businesses come naturally. If you have an
:12:15. > :12:21.apprenticeship scheme and all those sort of things, you can create a
:12:21. > :12:27.geographical hub. Around the UK, there aren't as many of them.
:12:27. > :12:37.you think about Hollywood, why doesn't the UK make more movies?
:12:37. > :12:46.
:12:46. > :12:49.They will never make the quantity. I have been involved in... What
:12:49. > :12:59.more do you think our current government should do to set up
:12:59. > :13:02.
:13:02. > :13:08.businesses? What I have seen off government support is normally...
:13:08. > :13:12.It makes me shiver. There is no process. I have failures and
:13:12. > :13:20.successes have only so I have had some process. The staff there is
:13:20. > :13:26.getting back, you just think, why are they doing that? It all add up.
:13:26. > :13:32.Given the money to you, you mean? (LAUGHTER) the market forces aren't
:13:32. > :13:42.there. It may be unfair on small government. They are Honourable and
:13:42. > :13:44.
:13:44. > :13:49.sound nice but mostly it is a waste I think those were worthwhile. I
:13:49. > :13:53.agree with you, most of the incentives are wasted. There's
:13:53. > :13:58.specific targeted to specific industries, and if you want to
:13:58. > :14:06.build manufacturing, making it specific. I think the key to that,
:14:06. > :14:10.I do think Government can do less, but better. They tend to, I think,
:14:10. > :14:15.microengineer it too much. What do you think - we talked about the
:14:15. > :14:20.United Kingdom and Europe, and they are much the same. Do we think Asia,
:14:20. > :14:26.the start up culture... Day India and culture in particular,
:14:26. > :14:31.certainly in the material space. Entrepreneurial. Yes, if you
:14:31. > :14:35.compare India and China to Europe, far more innovative and interested
:14:35. > :14:40.in start ups, you have a Chinese professor, in the material space,
:14:40. > :14:45.coming out of university, has a start up business backed by the
:14:45. > :14:50.Government, that is sold to an international company. It's a
:14:50. > :14:55.cultural thing there, a willing innocence toing -- willing
:14:55. > :15:03.innocence to take and embrace risk. We take the middle of the programme
:15:03. > :15:08.to talk about a topical issue. don't want to spend up talking
:15:08. > :15:15.about the same bill, Stephen Hester's bill, the banks bashing it,
:15:15. > :15:22.but let's talk about it. It is the issue du jeu, and. Michael, I know
:15:22. > :15:29.you've been -- du jeux. And Michael, I know you've been a fundraiser, I
:15:29. > :15:34.would like to hear your take on what is going on. I'm slightly
:15:34. > :15:38.depressed about the debate in the UK. It seems to have been caught up
:15:38. > :15:42.in a political frenzy. Compensation issues are important, but rather
:15:42. > :15:48.than get into a debate about whether bankers are paid too much
:15:48. > :15:52.money or not, I want to remind us all that if we beat up on the
:15:52. > :16:02.financial services industry too much. If we turn this into too much
:16:02. > :16:06.of a which hunt, we are in danger of damaging one of our greatest
:16:06. > :16:10.exporters and businesses. The City of London, I had a lucky, wonderful
:16:10. > :16:16.career which I enjoyed, is the most multinational financial centre. It
:16:16. > :16:22.would do us no good at all if the debate resulted in international
:16:22. > :16:26.institutions, the French banks, German banks, American and Japanese
:16:26. > :16:30.banks, and the Chinese banks thinking that the environment is so
:16:30. > :16:36.hostile that they prefer to make investment decisions elsewhere.
:16:36. > :16:40.America wants to pay a Frenchman in London a lot of money, it would be
:16:40. > :16:50.stupid to not do it. What about the rest? You are on the board, a non-
:16:50. > :16:55.executive on the board of Lloyds. am, a recent addition. I think we
:16:55. > :16:57.muddled a lot of issues, partly because public money supported the
:16:57. > :17:01.financial institutions. When this happens there's a sense of
:17:01. > :17:07.ownership amongst the public, that, "We want to change things, how can
:17:07. > :17:12.this go on". The other thing we have not dealt with is reward for
:17:12. > :17:16.failure. We haven't found a way to get around that. We have to pay out
:17:16. > :17:20.contracts when you want someone to leave. There's no legislation
:17:20. > :17:26.really that helps that. It's a fact of life. We have all probably had
:17:26. > :17:31.to get rid of people in our lives, and you pay people who are
:17:31. > :17:39.underperforming to go. Until that changes - I think that really
:17:39. > :17:44.irritates the public. I do think the public - I think they are
:17:44. > :17:49.surprisingly nuanced in their view. I don't find much public sentiment
:17:49. > :17:53.from people like you Michael who create a business and make millions
:17:53. > :17:58.out of it. I don't think people draw a huge distinction between you
:17:59. > :18:03.and someone running a failing bank. Richard, you have some experience
:18:03. > :18:08.in that. I think that the system is set up wrongly, probably. The banks
:18:08. > :18:14.have to be protected. They are too big to fail. That protection
:18:14. > :18:19.shouldn't allow them to engage in casino capitalism. I used to run a
:18:19. > :18:23.desk for an investment bank doing that. I don't think they should be
:18:23. > :18:27.allowed to use cheap capital, which is more or less guaranteed by the
:18:27. > :18:32.Government, and take bets in the market. That needs a fundamental
:18:32. > :18:35.look at it. Within a framework people, and you as an economist -
:18:35. > :18:39.people will act in their own interest. If you have trade, if
:18:39. > :18:47.that is working for me, traders will do what is in their interests.
:18:47. > :18:51.Everyone will. Now, we have just a few minutes remaining. Let's devote
:18:51. > :18:58.it to talking about your egos, you all succeeded in your fields. Does
:18:58. > :19:02.that tell us you have big egos, which you grave attention are are
:19:02. > :19:07.self-absorbed, talk about yourself and put your picture on your
:19:07. > :19:12.company annual report several times. Can a quiet person prevail in
:19:12. > :19:17.business. Anita, why don't you tell us whether you think a big ego is a
:19:17. > :19:23.good thing for a person in business. I think a little bit of ego,
:19:23. > :19:27.confidence, is a good thing. You will have a drive to succeed. I
:19:27. > :19:32.think the ego is also for your company and business, as well as
:19:32. > :19:35.yourself. That is the healthiest thing. We have all seen examples
:19:35. > :19:42.where ego dominates, and you destroy shareholder value. If you
:19:42. > :19:46.are self aware, matched by egos, it's a personal combination.
:19:46. > :19:52.added competence. Big ego without competence... That's a worst
:19:53. > :20:02.combination, absolutely. Ego without competence. I have thoughts
:20:03. > :20:03.
:20:03. > :20:08.of an ego -- egotystical Mr Bean. For me my problem was lack of an
:20:08. > :20:12.ego. When I think of mistakes I did, it was lack of confidence and
:20:12. > :20:18.following through what I thought would be right. If you want to stop
:20:18. > :20:21.supporting someone, or take an opportunity, I was risk averse and
:20:21. > :20:27.nervous about things. I different ego into confidence, which you need.
:20:27. > :20:32.Beside is about risk taking. If you have no competence, you never take
:20:32. > :20:35.risks. You need a minimum level of competence. Ego can be arrogance,
:20:35. > :20:41.and it can be worse if it's something where you want to pull
:20:41. > :20:46.others down to make yourself feel better. I think your point on the
:20:46. > :20:50.the Dom nearing ego. That comes from a place of deep insecurity.
:20:50. > :20:57.It's interesting. A lot of people picture the businesses that you
:20:57. > :21:02.need to have that kind of thirst to dominate. Ambition, you need. You
:21:02. > :21:09.need drive. You have to have drive in business. There is a fine line
:21:09. > :21:15.between an ego overinflated, and becomes destructive and arrogant.
:21:15. > :21:23.You think, particularly in the US and brups sis, and Enron, -- brup
:21:23. > :21:29.sis, Enron, Liaman. A number of ego tistical directors. You need some
:21:29. > :21:35.degree of ego, so long as it's balance the with other skills as
:21:35. > :21:44.well. In your case it's synonymous with your business. That is healthy,
:21:44. > :21:48.you drive for the company, rather than the personnel of yourself.
:21:48. > :21:52.It's a misconception among non- business people, where they think
:21:52. > :21:55.business is cutthroat. I find 90% of business is getting on with
:21:55. > :22:05.people and forming relationships, which people don't understand. I
:22:05. > :22:07.
:22:07. > :22:11.think it's being ruthless. How ego tist tick are you, maybe if we --
:22:11. > :22:17.ego tistical are you, maybe if we asked your employers. I don't know.
:22:17. > :22:21.I look back to '86. Myself and a small group of guys, we were lucky
:22:21. > :22:25.we were in the right place at the right time. We started well. After
:22:25. > :22:30.nine months a colleague came to me and said, "Michael, you are the
:22:30. > :22:34.worst manager I have come across", and I remember it so well. I did go
:22:34. > :22:37.and sit and think about that. I learnt from that, actually. I
:22:37. > :22:41.learnt a lot in terms from that about communication, bringing
:22:41. > :22:47.people with you. Leadership, bringing people with you. You want
:22:47. > :22:51.people to work for you. You can't be a boss who runs a business.
:22:51. > :23:01.have ego, but self aware to take on board that criticism and advice,
:23:01. > :23:05.that's a great thing. Exactly. you find that the correlation
:23:05. > :23:10.between ego, big ego and male... you know, I don't think there is, I
:23:10. > :23:16.think it's too much a generalisation. A lot of women have
:23:16. > :23:21.ego, looking at the entertainment world. I'm sure you have had a few
:23:21. > :23:27.people in the business world, females with egos, where it
:23:27. > :23:33.manfests itself is in a behavioural thing, in board meetings. So you
:23:33. > :23:39.find men grandstand and talk a lot. There's a Peacocky thing. Certainly
:23:39. > :23:45.I have keen that. I think it's too much. Do you want to name names?
:23:45. > :23:50.What I do when I see that - some people find it irritating. I kind
:23:50. > :23:53.of feel sympathy for someone that does that. I think bless them. They
:23:53. > :23:59.need calming down. And then sort of
:23:59. > :24:02.and get them to change. I think it's - I think it's too much of a
:24:02. > :24:07.generalisation. As someone once said the great thing about loving
:24:07. > :24:17.yourself is you won't have many rivals for your affection. Let me
:24:17. > :24:17.
:24:17. > :24:23.thank my guests. Anita Frew of Victrex, entrepreneur, Richard
:24:23. > :24:25.Farleigh, and Michael Spencer, from ICAP. Next week I have three
:24:25. > :24:32.entrepreneurs, 20 something, talking about their business