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00:00:01
A nicer way to build an agency, with Pete Martin of AlwaysBeContent
61 Plays2 years ago
Having spent the first part of his career in large agencies in the 1980s Pete Martin started to think about how an agency could be built in a 'nicer' way'. In his own words agencies in the 1980's 'Sucked the money out when times were good, and kicked the talent out when times were bad'.
During this fascinating conversation Pete explains how his agency AlwaysBeContent came into being, and how they structure their business in a way that celebrates creativity, autonomy and responsibility. Pete also explains what defines a 'Holacratic organisation' and shares his experience of the journey to attaining B Corp status.
We also explore why companies with strong, genuine, ESG policies outperform and outlast other companies, and Pete reveals which (now defunct) former clients were 'Bampots'.
AlwaysBeContent website - https://alwaysbecontent.com/
Find Pete on LinkedIn - https://www.linkedin.com/in/peterdmartin/
The Scotsman article mentioned in the episode - https://www.scotsman.com/business/scotlands-very-own-mad-man-pete-martin-explains-his-advertising-ethos-1404735
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Transcript
Podcast Introduction
00:00:01
Speaker
Hello, welcome back to the Untitled SEO Podcast. As you may know, if you've listened to us before, we are not just about SEO, but also about sustainability and interesting theory and practice around running an agency. And I have a guest with me today. On a guest, would you like to introduce yourself?
Meet Pete Martin
00:00:18
Speaker
Hi there, I'm Pete Martin. I am the founder and I guess team leader at an agency called Always Be Content, or Always Be Content, or is it Always Be Content? I can never remember. It's one or the other.
00:00:30
Speaker
I've managed to avoid asking you that in the future, but I quite like the fact that you opened with that, because I like it both ways. Always be content, because in SEO, the answer is always be content, although you wouldn't write it that way, but also always be content, also very good. So you've also mentioned something else in your introduction there that I'd like to unpack
Leadership Philosophy
00:00:51
Speaker
a little. You didn't call yourself a CEO.
00:00:54
Speaker
the managing director before just sort of a team leader. Why is that? Yeah, that's quite, I mean, it's intentional. I think it's become quite natural to us to talk like that. I mean, I've been in the agency business quite a long time and I suppose when we started Always Be Content, the idea was to have a very flat structure and that sort of reflected in some of the language we use inside the business.
00:01:21
Speaker
And it's reflected in the way we organize ourselves. So we don't really have that hierarchical thing, you know, where it sort of makes everything sluggish and more formal than it has to be. So that's probably just reflected in some of the terminology we use.
00:01:39
Speaker
I mean, I don't want to sound like one of these old war horses. When we started Always Be Content, we'd come out of the sort of agency PLC environment where nobody's really happy. So the joke was sort of in the name of the business. The plan was on the one hand to do content marketing because everything's content these days, but also to find a happier way to do business and a more fulfilling way to run your career.
Flat Organizational Structure
00:02:06
Speaker
and that's reflected in the way the business is structured and the way we're structured is reflected in the terminology we use and that's probably why I said that. Okay, so let's go back to the start and see if we can kind of pick into how you arrived at the decision to start your agency in this way. So you started your career in the early 80s, is that right?
00:02:29
Speaker
Yes, I did. I've been in the business a lot. I was struggling to remember which decade it was in. I suppose my career truly took off when I started as a copywriter and spelling and grammar.
00:02:47
Speaker
And I'd left university with a degree in a Master's in English Language and Literature, the most useless degree on the face of the planet. Sounds like a big deal for copyright in there.
00:02:59
Speaker
you think so, but I knew a lot about James Joyce and the Jack of Beings and nothing about the real world, you know, so it sort of, we're starting to work in agency, came as a bit of a shock, came as a bit of a shock to me.
Founding Always Be Content
00:03:11
Speaker
And so that's where it started. But we started our own agency in
00:03:18
Speaker
in the early 90s, an agency called Smarts and it's still going strong. We grew that to a point where we sold it to a PLC and the PLC still owns that business. It's got six branches across the UK
00:03:35
Speaker
And I stuck with the PLC for another 16 years, worked in the UK, was the Executive Creative Director of the New York Agency for a while, and then came back to the UK. And this isn't really to speak ill of any individual, because people were doing what they thought was best for the business and best for themselves. But when
00:03:59
Speaker
When times were good, they sucked the money out. And when times were hard, they threw the talent out. And it got to the point where I was thinking, this is just no way to run a sustainable business, where people can have confidence, not just in the sustainability of the business, but in the sustainability of their careers and how to bring some stability and growth into it. And so that finally got to me.
00:04:28
Speaker
Probably, this is sort of a bit of a diversion, a sort of personal thing. I came to the point in 2016 where my dad passed away, and it wasn't exactly unexpected because he was in his 90s. But it did sort of make me re-evaluate my life and my priorities and what I thought was important. And that was probably a catalyst for thinking, I've actually just had enough of this. This is just not the way I want to do things.
00:04:57
Speaker
I think I should be putting my energies into doing something different and doing it in a different way. And that's where the idea for all of your content came from. We just thought, well, let's try and do something different and start again, which we did with moderate success so far, it has to be said. So you've mentioned the we there, and I know that's not the royal we, I'm not just talking about yourself. How did you gather people around you who felt the same way?
Building a Visionary Team
00:05:27
Speaker
Well, some of the people who coalesced around that idea came from the other agency. Fortunately, my wife was one of them, so they found it quite hard to argue that my wife would want to leave the business at the same time as I did.
00:05:43
Speaker
But another handful of people also just had enough and subject to contractual obligations, they all left and then we grouped together six months later and started the business. And that's just how the cookie crumbled. So I'm really interested in that gap of time between making the decision and actually starting the agency.
00:06:10
Speaker
I know that there'll be people who are younger than either of us listening to this, who want to start an agency, and there's a sort of a mystical period of, well, how do people get from nothing, just a blank sheet of paper, to running an agency that reflects the values they wish it to? I mean, did you spend a lot of time planning, or would you just say, right, on the first of September, the agency will start and sit and drink coffee? And I know that's probably not what happened, but I thought I'd find another extreme.
00:06:38
Speaker
Yeah. I mean, I've started two agencies. If you count a relaunch of, in fact, if you count a relaunch of two PLC agents, I've done it four times. And on the one hand, it's easier than you think. The journey of a thousand miles begins with but a single step said the
00:07:01
Speaker
the ancient Chinese sage Lao Tzu, and that's what you do. You just think, well, I'm just going to start and I'm just going to do it. So that in
Starting an Agency: Challenges and Essentials
00:07:09
Speaker
itself has some sort of the power of some life-changing magic. But prior to doing that, you have to do a little bit of due diligence. You have to sort of be realistic about your
00:07:18
Speaker
what your likely revenues might be, what your likely costs might be, how you're going to, in inverted commas, duck and dive for the first period until you get yourself set up. You will need a little bit of money to tide you over and a little bit of money for some equipment and so on.
00:07:39
Speaker
It's a lot easier to start an agency these days. When I first started, agencies were the principals in all of their clients' dealings, so you had to have some financial solidity. When agencies went bust back in the day, it was because their clients failed and you were on the hook for what they owed.
00:07:56
Speaker
So that was a lot harder. You needed media accreditation and stuff. So it was a lot harder to start an agency back in the day. But these days, you're a good idea of what you're planning to do, what's a bit different. And it really helps to have a network of people and contacts that might potentially give you business. Nothing in this world is guaranteed.
00:08:21
Speaker
But you need a bit of a proposition and a bit of a daring do to go and try and sell it and convert.
00:08:30
Speaker
I think you're touching on the problem about network and the listeners can't tell how old I am, but I'm not as young as some, but not as old as others. And if people in, say, the early 20s or even contemporaries who want to start an agency or start freelancing, ask, what's the first step? I wish they could speak to people. If you don't speak to people, then nothing is going to happen. You can call that networking and you can go to four more networking events.
00:08:58
Speaker
Ultimately, it's just about finding your crowd and finding people who don't find you wholly objectionable and might want to tolerate spending some more time with you. So you also mentioned there about having a proposition, so perhaps a unique selling point or a theme or
00:09:19
Speaker
Yeah, I mean, it's interesting. I'm good friends with a guy who spent a lot of years as a consultant who advises clients on which agencies to select. And this is assuming that somebody's going to start an agency that isn't just a freelance business. It's an agency with a bit of scale and a bit of oomph behind it. And he always says that the thing that you have to go to a client with first and foremost is recent relevant experience.
00:09:47
Speaker
have you done something that's a bit like what the client might want to do? You might have a different take on it, a different spin in it, but you're going to have to persuade somebody that you have the talent and the experience and the track records to take their money and do something useful with it.
Winning Client Trust
00:10:02
Speaker
I think it's quite difficult to say, I've got a degree in basket weaving, and by the way, Cadbury's, I'd like your advertising account. I think that's quite a stretch. So I think
00:10:14
Speaker
If you've got some reasonable experience, I mean before I started Ninesed, I did eight years as a copywriter, you know, and senior creative and had worked on, you know, TSB and other sort of national accounts for four or five years. I'd got quite a lot of
00:10:34
Speaker
Quite a lot of experience behind me, even though I think we were relatively young and everything's this in a different decade. It's 10 years from now, I think I was relatively young and naive now. But I think, looking back, we were 30 when we started our first agency. And what we lacked in
00:10:54
Speaker
in sort of solidity. We made up for with presumption, you know. So it was, you know, we filled in the gap with bravura. And that went all right, because we learned pretty fast as we went along. I'm just making note of that. What you lacked in ability, you made it with presumption. I don't know where that quote might pop up in my life, but I think it's a good one.
00:11:20
Speaker
I think it speaks of enthusiasm. One of the things I like about people who have relatively new to freelancing or relatively new agencies is that enthusiasm.
00:11:32
Speaker
The real burning desire to make it. There's no comfort zone. You've got to do it. Because if you don't do it, nothing's going to happen. So that's why I like that quote. So to tie this to SEO, it's a challenging SEO to say, we've done this before in this market because it's unethical.
00:11:53
Speaker
to work in two parts in one market. But the way we relate is to say, yes, this is a similar framework or a similar challenge that we've met before, and this is how we made progress with it. Speaking of the word ethic there, the structure of your agency, I read the news article from the Scotsman from a few years ago, to be fair, and it talked about
00:12:22
Speaker
how your, how always be content with a holocratic organization?
Interest in Organizational Theory
00:12:29
Speaker
That's a good question. It's interesting, I mean if you're interested in organizational theory, which if you've ever worked in larger organizations, you end up having to be interested in it because you think how in the hell are things happening here and why isn't, why don't things work better than they currently do. There are sort of
00:12:52
Speaker
When I was getting frustrated within the PLC environment, you end up in thinking like, the way this is organised can't be right. And it isn't.
00:13:08
Speaker
I got interested in organizational theory and there's a great book called, I think it's called Revolution Organization by Frederick Lulac and he talks about the history of organizations and he's color coded them. The first one is the sort of red organization. That's the sort of, if you went back to the sort of brutality of, you know,
00:13:32
Speaker
the middle ages of people just fighting out and literally stabbing each other on the battlefield and killing each other. So it was a very dangerous thing to be a king. So those organisations are very like the Mafia. They rule by fear and power and they tend to leave very little of value in their wake. But as time went on, people realised that constant instability isn't particularly good. So you end up with a
00:14:02
Speaker
what we would call like an orange-type organization, sort of like the Catholic Church or the army that's designed for stability. These don't change, they're very rule-governed. They're very stable, but they don't progress, and they get themselves into all kinds of bother in the background because they're not meritocratic. So they tend towards corruption. So then you come up towards industrial revolution, and then you need a meritocratic organization.
00:14:31
Speaker
And that's still a lot better. And then if you come up towards the 60s, you get these sort of green organisations where, well, it can't just be meritocracy, the business has to contribute something positive society. And then you get the sort of where we are now, where it's actually, it's not just about making a profit.
00:14:48
Speaker
that tends to have bad consequences in the short term and the long term. So you need what you call a teal organisation which is more focused on your environmental, social and governance obligations. And each one of those types of organisations tend to be more productive and more effective than the previous forms of them and tend to do better.
00:15:09
Speaker
And so that's the sort of background to it.
Holacratic Organizations Explained
00:15:12
Speaker
And those last type of organization are also called holocratic organizations. Really, I can't remember the guy who started Holocracy, but it's a defined system with its own vocabulary and its trademarked and you can operate your business through their platform called Glass Frog. And it's got its own vernacular, which is possibly where some of the terminology we use comes from.
00:15:37
Speaker
But it's actually very simple. It's just a very flat, organised way of organising your business around core principles, as opposed to having the sort of pyramidic shape that you would have in a classical hierarchical business that's organised into flat circles. And each circle has its own level of expertise. All of the things that are subjectively assumed within a
00:16:00
Speaker
within a business, you know, what you think this is what somebody is going to do. This is what the roles and responsibilities are. They're not spelled out. And those are all made clear in Holacracy. You know, you actually spell out what somebody's domains are, what the limits of the authority are. And the general principle is that everybody's allowed to do what they want within their level of domain with the proviso that they'd speak to the people who might be impacted by their decisions.
00:16:26
Speaker
And that is an amazing break on what people might do. And it leads to better, faster decision making, because you think, well, I think I should do this thing, but I'm going to have to talk to the people who might be impacted by this. Because in another organization, the answer is, what usually happens is I'm not going to do anything until somebody above me tells me to do it.
00:16:54
Speaker
it's a fascinating thing. I've never worked in an agency other than my one, which is this, there's three of us and all three of us. But I have got people I work with regularly who have worked in agencies and they tend to either
00:17:10
Speaker
appreciate that the traditional hierarchy ought absolutely abhor it. I run another podcast called SEO or Die and we call it the punk rock side of SEO because it's looking at challenging the preconceptions about the way we make money and how we operate and the ethics of
00:17:29
Speaker
being somebody who helps businesses grow and trying to work with people who echo the values that we have. The person I run it with, he's from an agency and his attitude is very much work with a really big agency if you want some of your budget to be spent on the five-star meal that they take you out for.
00:17:49
Speaker
which I've never worked in agency and I'm paraphrasing, I think that's exactly what he said. But the style of organisation that always be content is, it seems to me, I don't know if railing against it is too aggressive a way of describing it, but it doesn't seem to fit that at all. It seems to be more like, we've got a bunch of friends who run a housing car here in Ipswich, so a load of people bought a very rundown
00:18:18
Speaker
two or three houses in a row and everyone who lives there makes a contribution to repairing the house essentially and it's it's uh non-autonomous or autonomous i forget which way around it is but you know there is no boss it's all the decisions get made by a committee and some people move in and it drives them mad and they move out
00:18:37
Speaker
Some people move in and absolutely love it, and they've been there for years and years. It's very difficult for you to say for your own organisation, but can you see how somebody might come from one type of agency to a slightly newer level of agency and just go, no, I don't like this?
00:18:57
Speaker
Yeah, I mean, one of the challenges we found in the early days, I mean, we've been going for six years now, was that some people who came from a different style of agent, and I mean, some of them, not everybody, struggled to take us at our word, you know, you are empowered to do the right thing, you know, as long as you tell other people what your intentions are, you know, I intend to do X.
Empowering Employees
00:19:22
Speaker
And they just didn't believe it. And so, and still tried to behave as if they were, as if they were working in, you know, so that sort of learned helplessness, as if they're working in a traditional organisation. And that's, that's quite, that's quite irritating for, you know, for the style of organisation, where we are, where we're, you know, it's like, well, you're, you have the, you have the talent and the training and the, the capability and the,
00:19:48
Speaker
and you've been told what direction we're heading in, you've got the ability to make your own decisions and you keep on asking me to make the decision for you. That is quite irritating, but some people struggle to believe you really. And in truth,
00:20:06
Speaker
I mean, there's a difference between what I would call, I've worked in agencies where it is disorganized. There's a hierarchy, but it is disorganized. I won't tell you which agency it was, but I was sent by the POC to look after the worst performing agency and to turn it round. And it was dysfunctional, only on the basis that it was very hierarchical, but it had a really erratic leader.
00:20:35
Speaker
I'm sorry, I'm using the leader name. There was a guy who sat in the corner office who was really dysfunctional. And he puts it in perspective, just changing that description, doesn't he?
00:20:49
Speaker
Yeah, and this is probably a libelous if I was to name him, but he came in late, he left early, he spent a load of money on expenses, he chased the women. You could probably list all of the traits that went with poor management and fiscal irresponsibility.
00:21:12
Speaker
and that agency was losing a fortune on a daily basis and on an annual basis. I've quite forgotten where this was going, but I think there's a
00:21:28
Speaker
there's a difference between being disorganized and being self-organized. And that's what we're asking people to do, to take responsibility. This is your domain. These are the things you would be asked to do. You're responsible for them. You're accountable for them. But you're running yourself instead of waiting for me to tell you what to do. But ultimately,
00:21:53
Speaker
If somebody comes to me and says, I intend to do this, I think, whoa, whoa, whoa, don't do that. There are still checks and balances. And there are still more senior and less senior people. But it just means that their ability to, their domains are more restricted.
00:22:13
Speaker
and domains, domains is one of those, is one of those holocracy words that means, you know, this is the area in which you have, in which you have self control. Yeah, it sounds a lot less stressful in a lot of ways because
00:22:28
Speaker
I can imagine working in it in a far more traditional top-down thing, you're worried about what the boss might say. I agree, it's kind of frustrating, it's possibly a bit sad that some people might think that having the sort of anarcho, and I mean that in a positive way, positive use of the word anarchist, having the anarchist free them,
00:22:46
Speaker
might be a trap to undo them in some way. That's wild. It might just be that 100 years' time, if all businesses are run in a similar way, there might be history books talking about the fact that in the early days, adoption was challenging. And when you're several hundreds of years old or whatever, looking back and going, I remember that. That seems like a very different world back then.
00:23:16
Speaker
I can certainly see how running an agency along slightly more narco or kind of balance lines like this is a good thing internally.
B Corp Certification Journey
00:23:25
Speaker
One of the reasons I want to speak to you on this podcast in the first place is because you're one of the first agencies I've met who are B Corp certified. And B Corp has its controversies as does anything else, but I'm just interested to know how
00:23:43
Speaker
how you came to the decision to pursue B Corp, and also to talk a little bit about ESG, if that's okay. Yeah. I mean, it was quite interesting because we tender for a lot of business, and we have in the past, and there's almost always some question around environmental certification, which is fine if you're
00:24:10
Speaker
a massive conglomerate of some kind that is, if you're a massive contractor that's tendering to build a power plant or something, all of those questions become, all the sort of ISO questions become relevant to you. But we're a sort of human driven,
00:24:29
Speaker
small to medium-sized business. And it just, you know, the whole sort of paper-based frameworks don't really make any sense for us. So we were always looking for a simple answer to that question other than the sort of hand-cranking and answer every time we filled in a form. And we sort of built up a level of expertise in
00:24:56
Speaker
environmental and your sustainability and to some extent governance question sort of by default. I mean our biggest customer when we first started with British Gas and all of the energy companies are interested in your environmental impacts and advising their customers on how to reduce carbon and all the rest of it.
00:25:18
Speaker
So that was sort of one element of it. SSE, another one of our clients, one of the biggest renewable producers in the UK. So that was another sort of strength turbo. So we ended up knowing a lot about environmental standards and credentials.
00:25:36
Speaker
And then equally, we worked with the Scottish government in places like Liverpool and the NHS, where there's a lot of social marketing involved. So we'd sort of got an angle on the social aspect. And then governance, you've already talked about the
00:25:53
Speaker
and having an interest in what formal structures and the impact that those structures have. So we had a bit of an interest in ESG and when I was in New York, we worked a lot on Wall Street and ESG investing is a very big thing. So we sort of had that angle in it as well.
00:26:11
Speaker
So almost by happenstance, we sort of came across B Corp and we thought, oh, this looks very straightforward. Let's, you know, they've got the sort of self quiz thing. Let's fill that in. The trick that you take the sort of self test and the trick is to get to 80 points. And if you get to 80 points, you're probably in scope for your B Corp certification. And what we found was that the first 65 were dead easy.
00:26:40
Speaker
The next five were pretty hard and the ten after that were hellish. So it was sort of a reality check on what we thought of our own accomplishments really and what we were doing.
00:26:54
Speaker
So having just gone through the relatively simple opening process, it forced us to take a solid look at what we were doing. And then the other part of it that came as a bit of a shock to the system when it actually came to certification is filling in the self completion part of it. It was tough to get to the last few marks and all the rest of it.
00:27:21
Speaker
But when it came to the certification part, they started to ask you really hard questions and for documentary evidence. And that came as a shock to the system, partly because of my own behavioral style, I guess, where I sort of like, hey, who needs paperwork, you know, all that stuff.
00:27:40
Speaker
So we had to really dig for the evidence and put in place processes where we collected the evidence. Not only that we did the things that we said we did, but that we actually then tracked what the impacts of those are. And that was the hard bit. It took us ages and a lot of toing and froing with them, probably the best part of two years, to get from
00:28:07
Speaker
Hey, 65, we're nearly there too. Oh my god, oh my god, you know. Yeah, there's things that I've looked at. I'm, the first step, I think you'd call it. And there are things that I have never considered in 23 years of running a business. These things have just not been in my brain. By my foolish thinking, we should have looked at it thinking, well, I don't have a car.
00:28:33
Speaker
I was thinking very much in terms of carbon and in terms of environmental sustainability, but there is a lot about it, which is about people as I understand it. And I found that process really interesting and really useful to go. I haven't actually thought about what I would do in this circumstance.
00:28:53
Speaker
So I found it good, but I don't know if I'm going to get all the way through it, if I'm honest. Now I've seen sort of behind the curtain, as it were. I'm quite impressed if I meet someone who has managed to get out the other side, which is the point. It's not an easy thing. It's not.
00:29:08
Speaker
it's not a way of greenwashing and paying some money so you can get a logo. I think it's genuinely difficult and they've certainly put in enough checks and barriers to make it genuinely difficult for you to achieve the certification. I think in some ways
00:29:30
Speaker
The process is easier if you are, they might deny this, but I think the process is easier if you're a small social business. I'm hesitant to say not a real company, but if your fundamental setup is to serve a community of some kind and it's slightly not for profit, I think that makes your task a lot easier. It's possibly easier as well if you're very large and have got
00:29:57
Speaker
the capacity and people and the paperwork and all the rest of it to track it. Being a medium-sized business, we found that difficult. As you say, some of the things that came out of the woodwork were things that we hadn't really considered. We had all of the carbon stuff. We'd covered off all of the external
00:30:23
Speaker
quite easy stuff to do, but what is your local impact? And we have to go, what do we do? And we're like, yeah, we've taken, and this is true, we've taken students sort of paid internship and we make sure that they come from certain backgrounds and all the rest of it.
00:30:40
Speaker
But we do it. Have we codified it? No, we hadn't. Did we have a policy on it? Not really. It was done in the back of a fag packet. And then had we tracked any of it? No, we hadn't. And the same with some of the stuff they asked about, you know, the work in underserved communities. Did we do it? Yes, we did. Did we track it?
00:30:58
Speaker
Yeah, but it was in a document, you know, that was a client document and it was, you know, that was done for presentation purposes. And so we had to go and really rake for the rake for the evidence in amongst our own, in amongst our own systems. Yeah. A similar situation I do, I'm part of the Pro Bono network here in Suffolk in England. And those kind of questions, even at my early stage, it's saying, do you, what do you, how do you
00:31:26
Speaker
help community resilience and things like that.
Pro Bono Network and ESG Profitability
00:31:30
Speaker
And I was like, well, someone from the pro bono network says, well, this organization needs some support. Do you want to do it? And I go, hey, that would be cool. Yeah. And then we talk and then we do stuff and we both go, that was smart. And then that's it. The idea of actually like doing paperwork for it is I was like, I have never even considered that. Yeah, we took them as we would any of our clients.
00:31:53
Speaker
And then a lot of client work, you don't document every step of every way, because most applicants would rather be getting on with the work. And that's it. So that's one thing. And you mentioned when you and I have had conversations before about ESG. And in an email you sent me just before this recording, you mentioned ESG being
00:32:20
Speaker
and sustainability being essential to long-term profitability. We've touched on that with some of the things we've talked about already, but that specific phrase about ESG being essential to long-term profitability, I should ask, can you remember writing that and are you okay to unpack it?
00:32:38
Speaker
Yeah, I mean, there's a load of evidence that, and this comes from the financial markets, that companies with strong ESG credentials, a portfolio of companies that have strong ESG credentials outperforms the index by 6%, 7% a year. And that's
00:33:03
Speaker
That's an astonishing number in financial markets because at 7% a year compound, you'll double your money in 10 years. It makes an astonishing impact. One of the background questions
00:33:19
Speaker
is you go, how does that happen? Why would a company that is interested in its environmental credentials, its social obligations, and the governance structure of the business, how would that deliver 6%, 7% more return than your average business that isn't interested in those things? Because classically,
00:33:38
Speaker
If you went back to the sort of six days, the godfather of monterism, Friedman, the economy, I said, the pursuit of profit is the only business of business. It's about nothing else, your return to the shareholder. And even if you talk to some business people these days, they say, well, environmentalism is a cost, isn't it? It adds money. It would lead you to a greenium. And people don't like paying extra for green products cost extra. And why is that?
00:34:09
Speaker
The evidence from the financial markets is that companies with ESG focus do better. How does that work? I've sort of rationalised it to myself in
00:34:21
Speaker
in this way in that a company that's taken care of its environment on social and governance obligations is just better managed. I jokingly referred to the book in the corner office with a load of bad traits, which had loads of bad business outcomes. And if you magnify that up,
00:34:39
Speaker
into a large business, you can see how the lack of governance breeds bad practice and financial irregularity on a large scale. You only have to think about Enron and all that. Those catch up with people eventually. When I was in New York, I had the
00:34:59
Speaker
the great misfortune to work with Lehman Brothers at one point, and they were the rudest, most unpleasant client I've ever worked with. And that sort of, if you'd asked me rationally at the time in the early 2000s, did I think they were good bucks? I'm like, no, these guys think they're the kings of the universe and they're making a fortune. But if I'd thought about it with what I know now, actually, this probably stinks. These guys are
00:35:26
Speaker
a series of phrase, Scottish phrase, Bampots. It's probably rotten at the core in some way. So by in contrast, businesses that take care of their environmental obligations, their social obligations and their governance have covered off their future risks much more clearly.
00:35:50
Speaker
And what they're doing is much less likely to come back around and bite you and society in the ass. And in some ways, I think the sort of governance aspect, I mean, there was a famous example with one of the car manufacturers who, in the Super Bowl a few years ago, where they put out an ad talking about how it's important that your female should be empowered. And it was a little girl go-karting with her dad or something.
00:36:20
Speaker
And it was a beautifully, expensively made ad about the importance of empowering women. And then they released a photograph of their board of directors, which was like 13 middle-aged white men. And it just sort of cut the whole thing off at the knees. And that company was part of the group that was also part of the
00:36:44
Speaker
the scandal around emissions, misrecorded emissions. So these things are not disconnected because they've just not thought them through properly.
00:36:53
Speaker
there's a brilliant phrase I learned just a few days ago from a PR agent who worked with the charity that I could do pro bono work actually for and she used the phrase pale stale and male.
Genuine vs. Superficial ESG Policies
00:37:05
Speaker
I suddenly thought yeah I can see that that does summarize quite a lot of things. So I just wanted to ask a slightly awkward question I guess because
00:37:19
Speaker
I can see that your mission towards sustainability and ESG, the B Corp things are well aligned with you. I think very much you were that way already and developing your ESG policy and B Corp thing sort of helped you flesh it out a bit more, but it was something that was already in evidence. How far do you think it's fair to go to make these things really clear to people?
00:37:47
Speaker
I'm thinking in terms of it's becoming increasingly apparent that millennials, just a pigeonhole, a whole generation, are now looking for an ESG link in the photo of a website and what dangers do you think there are? Have you got any examples, and please don't mention the company names, of ESG policies you've seen on websites you thought they didn't think they were? Yeah, I mean, there's...
00:38:18
Speaker
The biggest examples are in the fossil fuel industry. Everybody knows that. I mean, the classic example, I mean, it's not the previous example. I won't name the oil company that did it, but they put a tweet saying, you know, what are you going to do for climate change? And everyone like, what do you mean? What the hell are you going to do? Do you mean? Stop using the use of stuff.
00:38:47
Speaker
Yeah, exactly. So, I mean, there's a load of it. There's a load of it around. And the challenge is, I mean, it's interesting because everybody understands that they want to do their own bit and
00:39:07
Speaker
you know, save energy at home and recycle and all the other things that are part of being a decent citizen. But there's a limit to what the individual can do. And when the financial system and the way the
00:39:25
Speaker
I mean, it's not really a secret that the fossil fuel companies are making money hand over fist right now, you know, largely profiteering off the back of a war, which I think is, you know, it's pretty much disgraceful, I think, you know, that they've been allowed to do so.
00:39:47
Speaker
I think all of that, you can see how, as an investor, you're saying, well, there's a lot of money to be made in there. So the whole intermingling of the financial and the
00:40:04
Speaker
I suppose the wider governance of society, how we tax and levy people who are making exorbitant sums off the back of public suffering. I think there's something to be said about that and they're all interconnected.
00:40:25
Speaker
How does our pension funds, our banks, our investment companies, the fossil fuel companies themselves, how is all of that tied together to incentivise the investors to support it? I think all of that needs to be unpicked and looked at. Some of it comes back to, I'll give you a very straightforward example.
00:40:52
Speaker
why I think it is systemic. It's completely systemic and it really is a question of governance in the widest sense of the word. If you went back a few years, the now infamous Kwasi Kwarteng was Business Secretary and he was responsible for shutting
00:41:11
Speaker
or let me let me rephrase this. He refused to help fund Britain's biggest gas storage facility. So it got closed. It was owned, but it was owned by Centrica, but it needed upgraded and he refused to help fund it. So it got closed. Fast, fast forward a few years and you know, as part of as part of the glide path to
00:41:40
Speaker
to renewables, gas was cheap. Gas was about 2p a kilowatt. And people were, well, we'll use cheap gas, and that will fill in the gap in between being able to build enough renewable electricity. And people will have to electrify the country at some point to get rid of the emissions. But in the meantime, cheap gas will fill in the gap, and that'll be fine.
00:42:02
Speaker
But you can see exactly what the problem with that is going to be because suddenly we've got a war in Ukraine, the wholesale price of gas goes through the roof. It's now something like 25, I'm going to say it's 25, I'm going to get this wrong, but it's probably now 25 per kilowatt for electricity.
00:42:19
Speaker
So the sudden lack of storage meant that the UK's whole energy security was compromised. So the complete lack of foresight from systemic government forward thinking to properly funding and structuring renewable energy investment, it's just completely mistaken. I don't know if that made any sense to you. It does. You've tied it together in a way that
00:42:48
Speaker
that makes a lot of sense. It's not about what you're doing right this second. It comes down to good business management. Again, you can't cut your nose off despite your face. It may be that you can't make, I'm just checking stuff out there now, but it might be that you can't make massive changes right now.
00:43:09
Speaker
But you can make decisions now that will lead to you and your organisation having the flexibility to make larger changes in the future. It's always difficult to talk in deafness because all businesses are so different.
Normalizing ESG Discussions
00:43:21
Speaker
But I think that's why seeing more and more people with good ESG policies is kind of helping everyone move that way. So purely my own, you know, my own
00:43:34
Speaker
experience of it is that the more other people's policies I read, the more ideas I get for my own business basically. It's making it a common conversation that
00:43:46
Speaker
that doesn't sound out of place. It's part of the natural flow of... Can you hear my head sneezing? Brilliant. Less pepper on your dinner, I think. This has been an absolutely fascinating conversation, Pete. I really appreciate it. I've noticed that we've run on a little bit longer than I intended to, but I don't want to slam the door when things are so interesting. But we're going to have to wrap up now. Is there any sort of
00:44:14
Speaker
sign off you'd like to give any sort of final statement or you can sneeze, I mean, it appears to be the dumb thing. It seems to be the dumb thing. I am allergic to cats, so you're fortunate that we do have a cat in this house.
Closing Remarks
00:44:26
Speaker
So this is my wife's plan to kill me early, I think, but she's a, she's a, but yeah, no, that was great. Andrea really enjoyed that. I don't know if I made, was completely coherent at any point. So if you've got, if you, if you want me to clarify any point, anybody who's listening, you'll just reach out to me on LinkedIn and
00:44:44
Speaker
I do enjoy a good debate. I think the other thing I've been saying to people, and this goes for younger people as well as older punters like ourselves or like me, is they often say,
00:45:00
Speaker
you know, keep your opinions to yourself in business, you know, your boss might disagree with you, the accountant might disagree with it, but I think, you know, the time has come where people need to say what they think and, you know, there's no shortage of people with regressive ideas willing to stick their head above the parapet and say horrible things. It's time for all men of good conscience and girls of good conscience to say what they think and put their mouth where their heart is.
00:45:29
Speaker
I think that's a wonderful way to end things. So I'm going to say goodbye, Pete. Would you like to say goodbye? Goodbye, everybody. Peace out, y'all.