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Hello everyone.
Dress code is becoming a thing again.
Because hybrid work is here to stay (unless you’re JP Morgan), there’s a trend in the City of London and Wall Street of ‘dressing up’ for in office days. Brooks Brothers had such low demand for suits over COVID that they shut all UK stores. This year, department store John Lewis experienced a 500%+ increase in suit sales.
The pendulum is swinging. But the most coveted item is the ‘suit trainer’, with bank CEO’s generally opting for the Triple Stitch or the Flexi-Walk.
This week’s newsletter: Hollywood superstar Nic Cage inflation take, Jane Street speed dating, Marc Rowan sweater justification, Jamie Dimon doing Jamie Dimon things and Henry Kravis’ hourly rate.
How To Maximise Your Leverage
Henry Kravis, Co-Founder of KKR, once billed $45 million for a single hour. Here’s the jaw-dropping true story from the golden age of Private Equity…
The final stages of a bidding war for tobacco and food company RJR Nabisco in 1988 involved a dramatic clash between KKR, co-founded by Henry Kravis, and the company’s management team, led by CEO F. Ross Johnson.
Both parties were fiercely competing for control of the company.
Offers escalated, as the tension mounted.
On the top floor of RJR Nabisco’s office, Henry Kravis and his cousin George Roberts represented KKR in one room, current CEO F. Ross Johnson and his management team sat in another room.
And the Board of RJR Nabisco convened in the conference room.
The Board received numerous bids from both KKR and the existing RJR Nabisco board, battling it out to take control of the company.
Finally, the Chairman of the Board told Henry he would recommend their offer...
Hours passed, but Henry heard nothing...
Still waiting around at RJR Nabisco’s office for an update, he grew impatient. It became clear to Henry that the Board was playing their offer against the Managements offer, creating an all-out bidding war. Finally, the Chairman of the Board strolled in with an update…
Chairman: “We’ve got to do what’s best for the shareholders, which includes asking you not to leave. Give us 1 hour to think it through.”
Henry: “We are not interested in an opened end bidding process”
Chairman: “Just stay 1 hour”
Henry: “If you pay KKR’s expenses to date on this deal, we’ll wait 1 hour”.
Chairman: “How much are we talking?”
Henry: “$45 million.”
Chairman: “$45 million for 1 hour? I think I can sell that to the Board”.
Henry knew the value of extra time to evaluate the competing bids in such a high-stakes situation.
Faced with no other option, the Board agreed.
KKR went on to win the bid, with Henry ensuring the $45 million for 1 hour of his time was paid.
The moment became legend - later dramatized in print and on screen in Barbarians at the Gate.
Reflecting on the deal, Henry said:
“It’s about recognizing the value in every opportunity, big or small. In this business - time is one of the most valuable assets you have.”
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Finance Culture
Ultra secretive hedge fund Jane Street don’t have a formal leadership structure, but they do have their own podcast - Signals & Threads. This week an Alternative Data exec spoke about the niche bunch of staffers who source unusual datasets. Essentially, there are ‘speed dating’ events dedicated to niche data. Jane Street have 10-15 speed dates of 10-ish minutes each with potential dataset providers at the conference, and decide whether what is on offer could give their traders an advantage. Watch or listen here.
Ever wondered what one single day of US Treasury Secretary Hank Paulson’s call diary looked like at the peak of the GFC (Sept 2008). Check out the below. Not including calls to his cell or home phone! Taken from Too Big to Fail by AR Sorkin.
Marc Rowan at Apollo gave an amazing quote about why he wears the ‘Rowan Sweater’ and not a suit on this iCapital podcast: “This is how I like to be. If people see me in a suit and tie, they almost get scared. If you're my regulator, I will wear a suit and tie anywhere I see you. And if you have been elected to national office and I'm seeing you in your office I will wear a suit and tie. But if you're coming to me and you're asking me for a campaign contribution - I'm wearing what I want to wear.”
Jamie Dimon and his wife Judy donated $12 million to American historically black colleges and universities (HBCUs).
A lot of noise this week around US Treasuries, inflation, the debasement trade and hard assets. No-one encapsulated the current market mood more than Hollywood superstar Nicolas Cage in his 1996 interview with Playboy:
Recommendations
Watch the entire Barbarians At The Gate movie on YouTube for free! Quality is not great, but who cares. Forget the latest boring Marvel sequel - someone needs to remake this movie.
A very rare interview with Henry from 1987 that is absolutely worth watching here.
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Joseph Cass