Coutts Entrepreneurs

Mike Southon: Well this is Mike Southon for Beermat Radio in association with Coutts and today I am delighted to been speaking to Kelvin McKenzie.  Hello Kelvin.

Kelvin McKenzie: Hi there.

Mike Southon: And welcome to Coutts let’s get a bit of background on your self.  How did you start up, went to a posh school or something?

Kelvin McKenzie: I went to Alleyn’s which was a direct grant school, therefore my fees such as they were, because it wasn’t really fee paying, they were funded by London Borough of Southwark and I did very poorly at school. For some inexplicable reason I couldn’t retain information that I didn’t find fascinating  and was going to be of some use to me.

Mike Southon: I can diagnose you with Attention Deficit Disorder or...?

Kelvin McKenzie: I would like to claim that one but I think I was a mixture of being idle and dim about things that weren’t of any interest to me and it was absolutely shocking.  So I took GCSEs which we’ll say I took eight and I passed one which was English Literature. So that was that but the difference was both my parents were local paper journalists and I always knew what I wanted to be.  I always knew I wanted to be a journalist and The Sun seem to me to hit the buttons which I seemed to find interesting.  So I simply wrote to them and asked them if they had a job and they did.  And what I turned out to be there was a round peg in a round hole.

Mike Southon: So what was the job you got?

Kelvin McKenzie: I was just a news sub-editor, I was right down at the bottom of the old ladder.  But when I got there I sort of felt I had come home journalistically and that those things that I did and felt were those things which the Sun revered. And what happened was I worked there for about…I worked my way up the ladder within the newspaper business and I became assistant night editor or something.  And I then was interviewed by Rupert Murdoch for a job in New York on The New York Post.

Mike Southon: So why did he offer it to you?  Why did he say you are the guy for this job, did they have a problem out there, he thought you could fix?

Kelvin McKenzie: No. British Print journalists and British magazine journalists are the best journalists in the world.  They are brought up in a much more competitive atmosphere. The American journalist is a different kind of character, they don’t believe so much in production over there. We write them somewhat shorter.  So I spent two or three years out there.

Mike Southon: Learned your stuff and came back to run The Sun?

Kelvin McKenzie: Yeah and I came back because my family didn’t like it, my wife didn’t, it was a shame really because I would stayed out there.

Mike Southon: So you came back and got possibly the best job in journalism which is Editor of the Sun.

Kelvin McKenzie: Yea. And so I get the job, I am pretty naïve, I am very ambitious for the paper and away we go and thirteen years later, it’s time to go you know.

Mike Southon: But at the time it struck me as, is real seat of the pants stuff from your point of view, you were trying stuff that nobody had tried, some worked better than others but you made the impact at the end of the day.  I mean the circulation figures just went to the roof.

Kelvin McKenzie: Yeah the circulation did great.  The circulation did great remember, remember The Sun reader and me we were the same person.  The way to edit newspapers, they were unlicensed products.  So it’s not like radio, you don’t have to have balance, it’s not television, you don’t have to have balance, it’s an imbalanced business you are appealing to a market and me and that market we cheap by Joe.  I knew exactly without even thinking about it how guys at the building sites and everyone…I knew I knew, I just knew.  So it wasn’t a hard work to me and it might been hard work to colleagues or something like that, I was lucky, I just knew and so and we did great, we did great and cool we did great and then of course when you think you go do something and you make a huge clang and you have got to basically get on with that you know.  You make your errors as well as your triumphs.

Mike Southon: Anyway so you were at The Sun for how long?

Kelvin McKenzie: Thirteen years.

Mike Southon: Thirteen years and what prompted you to move on?

Kelvin McKenzie: Well what happened was honestly…and by the way there will be people listening to this who will know this.  To be truthful the whole thing was going round and round for me, you know I had been with paper forwards, backwards and bloody sideways, and so I was in my late 40s and I went to Rupert, I said, why don’t you make me Managing Editor in Ireland or something, it will give me time to learn how to count the pencils, just generally, paperclips and stuff.  And Rupert said, leave it to me, he came and saw me a couple of days later, and he said, how would you like to be Managing Director of BSkyB.  I thought, get out, I will tell you what, that is quite right to.

Mike Southon: Nice job, cup final tickets the whole thing, free SKY, you know, all the stuff you want.

Kelvin McKenzie: Exactly, no need to flog myself to death, he said, go out give my views on life regularly whether they want it or not, this would be great.  So I turned up there and remember I did effectively but my boss for really for I have been in New York and I have been basically my boss for 15-20 years you know and in fact I say to people actually even the tea lady knew more than I did because BSkyB is quite a big place out in Osterley and she knew how to get around it, I had no idea.  And so I wasn’t responsible for anything so it goes Chief Executive, Managing Director and then department heads okay. And although I was making quite a lot of money I hated the job.  Now the wise thing to do under those circumstances is keep your gob shut, start creating a role for yourself within the company or try to be helpful to those that have got a role, but I am not like that.  You know so I basically after about three or four months wrote a letter of the arse and shove variety to Rupert and a ridiculous letter, a totally absurd letter.  If you read it now, you would simply cringe at the power which you had appropriated to yourself, it was bloody embarrassing frankly.  And so I sent off this letter and I managed…I emerged sort of dazed and sort of confused on the sidewalk you know, skint, I was a minus millionaire

Mike Southon: A minus millionaire.  How did you manage that?

Kelvin McKenzie: I had loads of debts and this and that, don’t ask.

Mike Southon: Is it because of consumption?

Kelvin McKenzie: Don’t ask and so I was doing really enormously poorly but actually funnily enough the one thing I did discover is that no matter what I was I was not a corporate executive which I admire those guys but remember they are being entrepreneurial but within a very, very closed environment.  So the chances of you having a big personality saying what you think, wanting your way no matter what, wanting your way even against your better interests, which is one of the sort of fault lines within entrepreneurs is nil.  And by the way you shouldn’t stay, all you are doing is you are damaging other people, you are damaging that company and you are making yourself very unhappy.  And you’ve got to understand what kind of person you are.  So even if you go out to pushing a broom, manufacturing a broom, starting a shop selling 28 pound hamburgers, doesn’t matter what you do it will be better for everybody if you leave.

Mike Southon: Now it’s interesting because you are not talking about yourself in entrepreneurial terms, you clearly are because of the latest stuff we will talk about the radio stuff but up until that point you had been working for Rupert Murdoch for 13 years.  You are the corporate guy.

Kelvin McKenzie: No I really wasn’t, I really wasn’t which gives Rupert his 101% credit.  He kept me on when actually any non-entrepreneur would have fired me. I was allowed a very, very long piece of rope and eventually I just about hung myself but it took a long time for it to happen.

Mike Southon: But it was definitely time for you to move on?

Kelvin McKenzie: It was definitely time for me to move on.  What was amazing was that after I left BSkyB of course, I waited for the phone to ring.  And I waited and occasionally I reported my line being faulty because it wasn’t ringing.  I am beginning to think I was un-required.  You know I was going to join what was described at the time as Maggie’s Army, we were all bloody unemployed and then the phone went and David Montgomery who was running The Mirror Group newspapers at the time asked me whether I wanted to come and be Managing Director of a cable television station called Live TV and I would be working with my old friend or soon to be old ex-friend Janet Street-Potter. And the issue was that Janet had one view of life and I had another and that’s something else that entrepreneurs and people generally should take on board.  You cannot work with somebody you cannot stand, okay?  It can’t work, it works against the company and will damage the company and may well even paralyze the company.  You need to sort out those issues right?  When there are massive people issues try and sort them out, to work with each other and if it becomes too much it is part of your management responsibility to call one or other and say I am very sorry, here is the cheque, on your bike and by the way if you don’t do that, your company could stumble…I am not saying it will fail but it will certainly be held back.  So Janet and I worked together for a month or so or three months and eventually things got fairly bad between us and so anyway she exited.  And we then went on in a different path, we decided there is no point replicating normal television.  What’s the point of doing that so we invented things like News Bunny which is a guy dressed up in a bear who stood behind the newsreader and either gave thumbs up, thumbs down, or sort of down from side to side depending what the news are. 

Mike Southon: And were you speaking live to News Bunny giving him the instructions, thumbs up or thumbs down?

Kelvin McKenzie: Well sometimes we had to have editorial conferences so that how on earth could a tax rise be a thumbs up you stupid. So we did that, we did Topless Darts, yes the weather in Norwegian which was an absolute belter…a lot of all this stuff, a lot of all this stuff which is enormously cheap as long as the idea is clever.  You see it’s the idea that matters not the investment, right?  As long as the idea was clever, you could have got it to work.  Now Trinity Mirror made a shocking error, they decided to shut Live TV because it was losing £8 million a year.  Actually today it would probably be making somewhere between 10 and 12 right and if you put the normal multiple on it, it would probably be worth £300 million which is a darned sight more than The People and The Sunday Mirror make between them right?  So actually they would have done better to have stayed with the television and flogged the papers.  And that goes to show how things change in life.  The idea that in the media specifically that people know is ridiculous.  Absolutely ridiculous, nobody really knows which is why you have to really tip your hat to Rupert who has been doing this now for 55 years, I mean as an entrepreneur.  He is a strange mixture, he is an intrapreneur, I.E he operates as an entrepreneur within a publicly quoted stock.  There is no doubt to my mind that is the toughest of all the all the asks because you are opening your books to everybody, every decision you make is available to analysis.  So you are doing that and you are being bold, so that’s… whereas if you are bold in a private company and you make a mistake actually a) not too many people know and even if they do know actually you say I don’t know what your issue is.  This is my money I don’t care.  Right I don’t care alright I do care about the fact that the company is not worth this much but actually it’s that same decision which I got wrong there, it’s the same decision making process which got me right over there.  So that to me the geniuses the number one geniuses of this world are the Rupert Murdochs, just behind them are the geniuses who create major companies privately but there is no doubt the most difficult of them is the first one. And so any way I then leave that and then for a short while I am Group Managing Director for The Mirror Group.  The newspapers were in a bit of trouble and they asked me to sort them out and we started to do that.  But while I had been doing this, it became quite clear to me that whatever else was my destiny in life it wasn’t in corporate life.  Yeah corporate life didn’t suit me and strangely it doesn’t suit lots of people now.  And I am very pleased to see it, very pleased and in corporate life they are finding it increasingly difficult to find and retain really super talented people.  So then I have an idea and there was a failing company called Talk Radio which was a national AM brand which I thought I could turn around.  So I went along to Rupert and sold it into him and his colleagues and they agreed to fund it, they agreed fund me as long as I put in alongside money myself. So I had my money and I invested my money alongside Rupert.  I mean obviously he put in the majority but for me was a lot and I was going along there and actually things were getting worse.  So I bought the company and things are now getting worse, so they are my resident genius actually now running a company losing £16 million a year which by the way you either feel strong in yourself or those kinds of numbers soon find you out.  So finally I decided that Talk Radio was too much like the BBC and yet we weren’t doing a tenth as well or twentieth or fiftieth as well.  So I said right we are going to change this this fall and of course from that moment although we lost money, we lost less money and eventually today probably make £6 or £8 million a year from losing £16 million and became the first business, the first commercial speech business in this country that made money.  It continues to do well I sold out some two years ago now for a hundred million.

Mike Southon: Why did you sell out?

Kelvin McKenzie: Because the shareholders including Rupert wanted to go to the door and actually at the time I was very upset and said that this was the wrong move.  Actually as with most things connected with Rupert it was entirely the right move because if you sold that business today, my bet looking at the state of the radio business market, if I got £40 million for it, £40 million to £45 million for it, I had done very well.  So timing is an important moment when the entrepreneur chooses or is forced to go to the exit door.

Mike Southon: And you were finally a real entrepreneur by that stage I guess?

Kelvin McKenzie: Well yes and of course the issue there is you have your ideas, you are batting them through, you are hiring people, you are doing this, you are doing that…the one thing you’d learn is you need good people.  You know you may be clever in some areas, I am not clever in all areas, right, I may be vaguely clever in some areas, I am not maybe clever in all areas.  You need to establish about three, four, five colleagues who have good brains on them, had been tested, yeah there is no use just bringing somebody in from outside and saying oh well you can run all that.  Okay, don’t do that, just see what their judgment’s like…you know you are the leader of the team. You’re are the captain of the team but you are not the best player…you aren’t the best batsman, you aren’t the best bowler and you aren’t the best bloody fielder and if you think you are, you have gone mad and at some stage, you are going to drop a Christ Almighty clanger right?  Now actually you may have made so much money in the meantime that you don’t care about that and so in the end, it was quite clear to me that I wasn’t the best at a whole series of things but I did have an instinct about what was right and what was wrong in terms of the content and we had a very good finance guy and we had a very good guy for something else and at the end of the day it worked. But we came right to the bloody edge, I mean you know there were times when our cash at the bank was going…by the way this is the only thing that matters, the only thing that matters that is the essential issue and this is where you fail or you succeed.  So all that happened and then we sold out.

Mike Southon: And how long ago was that?

Kelvin McKenzie: That was two years ago.

Mike Southon: Two years ago and you did well out of it financially?

Kelvin McKenzie: I did well out of it financially, I made you know the thick end of 10 million quid one way over the other.  I had invested though, you know I had invested it wasn’t 10 million from nothing, you know I must have put in about a million and a half myself and then I went on.  I bought into I thought, well you know I must be a genius, this bloke’s clearly got brains to spare, it’s only a matter of time.  And there was a magazine company in the most tremendous difficulty, so I bought a whole lot of shares, I bought 20% of the business and I tried to turn it around.  I failed and because I bought paper, right I lost a million and a half quid and after that I decided to take the advice which I had actually ignored before which is when an entrepreneur has made their money, what they must do is they must go on a long holiday for six months or so not by the way to rest, because if you are a natural entrepreneur the chances of you resting are absolutely zero.  It’s designed to stop you doing something stupid right and so to anybody listening to this, who is an entrepreneur - six months do nothing, in fact if you can make it nine months or a year, do nothing.  The money will make you plenty of money and then make up your mind.  The issue is that if it’s taken you a long time to make your money, it would be quite interesting to see whether you have the energy to do a start-up and put in you know those hours, 12 hours a day, six days a week, 15 hours a day, potentially damaging your private life and your family life and your relationships within it.  I mean there is a lot of prices to be paid for it but remember it’s you, it is one of those curious things where personality and business absolutely come together so although you know your relationships may suffer there is probably almost nothing you could do about it.  It’s part of your DNA.

Mike Southon: You obviously make fun of banks as we entrepreneurs do.  Well I mean you are rude about everybody, so it is no great…

Kelvin McKenzie: Nobody is safe.

Mike Southon: Nobody is safe from you but you have ended up at Coutts, I mean why was that?  I mean you could go…

Kelvin McKenzie: I was recommended to Coutts actually.  But they actually did me a good turn.  I wanted to buy a house that had a stub lease like a 11 year lease around the back of Harrods and the guy was flogging it to me.  I said well how am I going to get the mortgage on this.  He said fine go to Coutts. I met the Relationship Manager who I’ve still got today…a guy called Jerry Baker

Mike Southon: And how long ago was that, you joined Coutts?

Kelvin McKenzie: That was about a bit more than a decade ago.

Mike Southon: All right so you have been with him 10 years?

Kelvin McKenzie: So I met him explained what I wanted to do.  He said fine and actually had the whole thing sorted about in a matter of weeks.  And so to see an efficient smooth operation where the answer in the end was yes and the thing I quite like about Coutts is that they are more yes than no.  You know not every proposal you are going to put to a bank is going to get the nod from them but in my experience it was the bank that liked to say yes and you can’t do better than that.  So where I’ve wanted to borrow money for any reason whether it was literally a house or car or for whatever reason I have always just gone to Jerry and this is what I want to do and he has always come back literally within a couple of days and said yeah, no or whatever and it’s much more likely to be yes.  So for people like me there are two things I like.  I like consistency of employee, I like the fact that I am going to speak to the same bloke who I know something about his family background, I know something about what sport he liked, there is some relationship over and above just straight commercial and secondly, that when given the choice to say yes or no, these guys say yes.

Mike Southon: And do you use the Coutts network because obviously there is you can come to Coutts networking events,  you meet other people

Kelvin McKenzie: I do, I don’t regularly, the best night I have ever had in my life outside my kids and all the rest of it is a entrepreneurs dinner held at Coutts in which effectively it was a hundred entrepreneurial based clients on the Coutts’ list all having dinner.  All divided up into tables of ten or twelve in which everybody there were a hundred people just like me, I have never laughed so much in my life. 

Mike Southon: One last question.  The changing phase of entrepreneurship I mean do you think it is a good atmosphere for entrepreneurs at the moment?

Kelvin McKenzie: Yeah it’s a fantastic moment for entrepreneurs.

Mike Southon: But even with what government is doing with the tagar relief

Kelvin McKenzie: No no the CGT is an absolute disgrace.  People risk their houses, risk their savings, 18 hours a day they are entitled to spectacular awards.  Me, no tax at all.  No tax at all by the way would be the greatest thing this country could have seen so if you start off, if you have a capital and the amount of capital going in which values the company at X, nobody should pay a penny.  Absolutely nobody pay a penny.  Actually I don’t really agree with the buy to let guys… buy to let is not entrepreneurial activity.  You are buying house, housing is not going to be wiped out.  Right, even if it falls 20% or 30% you still got 70% of your investment right?  Entrepreneurs when they set out, there is a very good chance and the majority of them don’t succeed.  The ones you read about in the papers they are the rare guys right?  Theses guys are going to be wiped out and may be wiped out for the rest of their lives okay.  And then their lives would be completely changed.  The ones who make it, they should get exceptional returns. Remember we need more entrepreneurs, there is going to be more and more of us.  I mean why it’s fantastic and one of the good things that television has done, has done many good things but this is a great thing, it shows like Dragons Den and stuff like that because actually it gets people thinking a different way.  And you see these mad guys come up with you know bloody one man, one man bands and stuff like that and you are thinking to yourself you know what, that would never work that. How do you know, who knows.  Perhaps it will work, perhaps the ones that they rejected actually will make more money than the ones that they accepted.  But all the time you are looking for intelligence.  Right it’s what you are looking for as well the idea is the idea.  What you are looking for really is intelligence.

Mike Southon: Well food for thought there. This has been Mike Southon for Beermat Radio in association with coutts having a lot of fun speaking with Kelvin McKenzie.  Kelvin thanks very much indeed.

Kelvin McKenzie: Thank you very much, very enjoyable.