Rob Cameron is the Executive Chairman of Cameron Partners, who describe themselves as “New Zealand’s leading investment bank”. Rob also heads the Government’s Capital Market Development Task Force, and is a well-respected business leader with a reputation for thorough lucid critical thinking and a low tolerance for bullshit.
Last year Rob gave a presentation to the Angel Association conference in which he said that the current financial turmoil would result in conditions that would be “worse than anyone alive today has seen”, and was later quoted in the Business Day as saying “We’ve had about 60 financial crises in the western world since 1700 but nothing of this scale or contagion ever”. Rob has never been seen cavorting with Chicken Little before, and so I caught up with him on Christmas Eve to explore what was behind his thinking.
Key points:
Previous crises have affected small numbers of markets or investor groups, but the current crisis is global and systemic
We currently have previously unknown levels of leverage; eg in the 1930’s crisis private sector debt hit at 275% of GDP, but recently reached 380%.
A depression of the scope of the 1930’s is unlikely, due to the speed and scale of recent government intervention. We’re unlikely to see a 20% drop in output or 20% unemployment. Nevertheless, the global recession is likely to last 2-1/2 to four years.
Perceptions of uncertainties have increased, rather than the uncertainties themselves — the uncertainties have always been there, we’re just recognising them now.
Rob also offered specific advice for angel investors:
Focus on having adequate financial flexibility, eg strong balance sheet ratios and access to funding.
Be ready to seize opportunities as they arise. Opportunities in crises are unprecedented, and in recessions we are more likely to see game-changing moves.
Recessions cause huge changes in industry leadership; structural changes in patterns of demand lead to new market opportunities.
And his bottom line: These are unusual times that call for unusual measures.
Here’s something you won’t read about in the papers: More people (like me) get their news from the Internet than from newspapers, and more people under the age of thirty get their news from the Internet than from television, as reported by the US-based Pew Research Centre.
This fact has far-reaching implications for the media, how we conduct democracy, and how we are all involved in creating, telling, consuming, and ultimately mashing up the stories that become history.
I applaud the trend, and am delighted to be part of it, as I have become increasingly weary and wary of the traditional media’s approach to generating news. Having low or no barriers to entry empowers anybody to become a reporter tell their story; competing against free services, established news enterprises are on a hiding to nothing to maintain their markets and revenue streams. At the same time, the lack of recognition and respect for the authority and provenance of information means that it’s all to easy to conflate opinion and fact and get away with it.
The trick for media entrepreneurs and investors will be to develop business models that deliver information that’s of a high enough quality to drive a real value exchange between the information consumer and producer … in other words, how to make a buck out of delivering quality.
The Angel Association (in conjunction with NZTE Escalator) is a running a basic training course called “The Power of Angel Investing” in Auckland, Hamilton, Wellington, Christchurch and Dunedin in February and March (see the course schedule for details). Based on the Angel Capital Education Foundation’s course of the same name, it promises to provide an overview of the angel investment process. The course is aimed at:
Successful entrepreneurs who have exited from their businesses and have an interest in staying involved in early stage companies.
High net-worth individuals with senior business experience who now have the time and interest in investing in early stage companies.
Angel investors who have done from one to three deals.
Community leaders and entrepreneurial support professionals who are interested in promoting angel investing in their communities.
It’s an all day course, and the cost is between $300-$400 depending on whether or not you’re a member of an associated angel club. It will be interesting to see whether the penny gap or time elasticity of demand (a whole day is a lot of time to be sitting in front of an instructor) effect attendance.
SanLu Chairwoman Tian Wenhua was sentenced today to life in a Chinese prison, and two of her suppliers were sentenced to death for their part in melamine contamination cases. According to the China Daily, Tian “was convicted for her failure to stop producing and selling milk products even after she was informed that they were contaminated. She was fined about 25 million yuan (US$3.7 million), too.”
We’re fond talking about how a director’s primary responsibility is to act in the best interests of the company (Section 131 of the Companies Act), and it goes without saying that a director must not break any laws while exercising their responsibility.
But I’m left wondering if it might not be prudent to be more specific in the Companies Act about the company’s relationship to its consumers and the general public.
In any case, it would be good for company directors to specifically acknowledge their responsibilities as part of their induction process. Speaking the words of a public promise, with witnesses, that one can easily recall, sharpens the focus and would encourage better self-awareness of a director’s actions, as well as promoting public accountability.
I propose the following “Hippocratic Oath” for company directors:
In the exercise of my duties as a company director:
I will not deliberately harm our shareholders, other directors, company staff, our suppliers, customers, end-users, or members of the public.
I will always act within the law, and ensure that the company acts within the law. Where I am unsure of the law, I will seek professional advice.
I commit to act in the best interests of the company, ensure that the company meets its obligations, and strive to make the company responsibly successful in achieving the strategy that is collectively set by the Board.
I will not seek to derive unfair personal gain from any transactions with the company or its personnel.
I will communicate clearly in a respectful and professional manner with my colleagues, being diligent and timely in my record keeping and reporting.
I will model behaviour as a director that I would expect from any company personnel.
I will not betray the confidentiality of information that has been properly given to me in confidence, nor will I seek personal gain from such information. Likewise, I will disclose without hesitation any information that that is required to be made available to government agencies, other directors, stakeholders, or the general public.