TWENTY: The Most Important Stock on Earth

“Management professors theorized that a chief executive should ideally have between eight and twelve direct reports. Huang now had fifty-five. He had no right-hand man or woman, no majordomo, no second-in-command. Huang also had no designated successor, and as Nvidia grew, its C-suite actually shrank, meaning that there was no scapegoat for mistakes. Board members spoke of his irreplaceability; it was not an exaggeration to suggest that Huang had personally saved the American economy from recession. The US stock market, over the course of Nvidia’s rise, had pulled away from markets in Europe and Asia.

The reconstruction of Barings after the 1890 debacle involved incorporation as a limited company, although most other London and New York investment banks remained as partnerships for another century. So when Barings failed once more in 1995 (as a result of fraud by ‘rogue trader’ Nick Leeson), the shareholders lost their investment, but the elegant

Georgian Baroque-style mansion in Oxfordshire owned by a later generation of Barings rests in the family still. Across the twentieth century, the notion of personal accountability for failures of financial management became eroded. Dick Fuld, CEO of Lehman, whose failure provoked the 2008 global financial crisis, opened his fresh advisory business less than a year later, its reception adorned with the text ‘That was then, this is now.’ But some may prefer the maxim attributed to legendary investor Sir John Templeton: ‘the four most expensive words in investing are “This time it’s different”.

21: Not a Pretty Picture

“The finance sector, and its associated legal and accounting advisers, is rewarded for making a transaction happen, not for the commercial success of that transaction. The ‘advice’ expensively provided is not primarily about the merits of the deal, but principally about how to get the deal done. Bruce Wasserstein, architect of KKR’s takeover of RJR Nabisco, was the doyen of Wall Street M&A advisers for more than two decades before his death in 2009. Wasserstein became known as ‘bid-em-up Bruce’ for his role in encouraging his clients to pay whatever was necessary to get the deal done. The ‘dare to be great’ speech with which he massaged the egos of corporate executives became famous. While the businesses concerned paid his fees, his real client was the ambitious executive teams.

A new management team and its advisers devised an all too common 1990s business strategy: to sell off boring bits to fund exciting acquisitions. But, like other companies, ICI found it easier to overpay for new businesses than to make rewarding disposals of old ones. Burdened with debt and finding growth elusive, the stock price was only a fraction of what it had been a decade earlier. What remained of Britain’s leading industrial company of the twentieth century was acquired in 2007 by the Dutch company AkzoNobel. Blair resigned the premiership in the same year.

23: The Finance Curse

“But between 1981, when Welch took control at GE, and 2005, when Lampert took control of Sears, a new approach to business developed. Managers like Sir Denys Henderson and Simon Marks, Alfred Sloan and Owen Young, had seen themselves as public figures with associated responsibilities to a wide range of constituencies. The generation that succeeded them had a narrower conception of their role. A successor generation of corporate executives paid close attention to quarterly reporting and the stock price.