I met Charles Dunstone last week, and it got me thinking about the qualities that allow a founding entrepreneur to make the successful transition from private owner-manager to quoted company leader.
When we spoke, Dunstone’s Carphone Warehouse was set to announce an impressive set of results which show that the firm has weathered the economic storm, posting a 13% increase in retail revenues over the last three months of 2008. He acknowledged that things “will get significantly tougher in February when the sales end,” but it’s a remarkable performance nonetheless.
Dunstone comes across as an unassuming and affable chap, but he also has a reputation as an inspirational leader who has the handle on internal operations, anticipating changes in the fast moving communications and technology market, while simultaneously engendering the trust of the company’s shareholders.
It’s a neat trick: there are countless examples of high profile entrepreneurs who have had flirtations with public company life only to go running for the hills when the reality of running a public company bit, Richard Branson, Duncan Bannatyne and Philip Green for example.
The latter, interviewed in the forthcoming issue of Growing Business, was chairman and chief executive of the quoted discount retailer Amber Day. While the shares performed well at first, after a series of profit downgrades, he was forced to resign in 1992 by the company's leading institutional shareholders. He’s enjoyed some remarkable and enormous successes since then, but he has not led a quoted company since.
Similarly, when Richard Branson floated Virgin in 1986, he and his management team retained 60% of the company and ended up buying back the remainder just two years later. That two of the UK’s most successful entrepreneurs didn’t succeed at negotiating the complex challenges of running a public company is emblematic of the frequent incompatibility of entrepreneurs and listed companies.
For those used to moving quickly, breaking down walls with their determination and being masters of their own destinies, becoming a steward for other people’s money is a bitter pill, especially when it’s coupled with having to temper your public image, watch your words and adhere to a raft of new rules and regulations.
Unless you’re Mike Ashley that is, who decided to ignore all the conventions, prompting one analyst to suggest he was deliberately antagonising the City. Asked if he had found life as a quoted company hard, Ashley said: "I find it very challenging, particularly the procedures."
There are of course notable exceptions, and Dunstone is one. If the rumours of Green’s renewed interest in Marks & Spencer hold any water, he could do worse than looking to Dunstone for tips on how an entrepreneur can operate within the regulatory confines of a public company.
© Crimson Business Ltd. 2009