For anyone unfamiliar with WPP it may come as a surprise that the world’s largest advertising firm started off as Wire and Plastics Products plc, a British company selling wire shopping baskets. Looking for a corporate “shell” in which to grow the business, Martin, formerly finance director at Saatchi & Saatchi, bought a stake in the company in 1985.
He surprised both the communications and business world with a string of major acquisitions, taking over some of the oldest and most prestigious advertising companies in the world. By 2013, WPP was employing over 170,000 people worldwide and had revenues of £10.4 billion. Martin himself is now thought to have a net worth of more than £200 million and is the second longest-standing FTSE 100 CEO.
He is a graduate of Christ’s College, Cambridge and has an MBA from Harvard. He remembers his childhood fondly, learning business skills from his father, a retailer who ran a large chain of stores in the 1960s. He joined Saatchi & Saatchi in 1975 where he became known as “the third brother”, a reference to his close working relationship with Maurice and Charles, the two co-founders who had fostered a reputation for groundbreaking creativity as well as making bold business acquisitions.
Today Martin is one of the world’s most respected and recognisable businessmen, regularly commentating on financial and economic issues. Keenly aware that he is witnessing a time of considerable upheaval within the advertising world as well as the media as a whole, Martin makes sure to keep abreast of the latest technological developments that have been rapidly reshaping the industry.
Far from being just a holding company, the structure of WPP allows it to support and grow the companies in its roster, providing financial, legal and strategic support as well as giving its constituent firms the opportunity to pool resources. At the time of writing the companies that form WPP are working with all 30 of the Dow Jones 30, 63 of the NASDAQ 100 and 350 of the Fortune Global 500.
It means if someone phones you, phone them back, if someone writes you a note, answer them as quick as you can because they have taken the trouble to write it, don’t ignore them. Those are the sort of things that I think are important.
You grew up in North London, where your father was a very successful businessman himself. To what extent did that experience influence the direction you took later in life?
I used to read the Financial Times when I was about 13 going to school on the bus from Mill Hill to Haberdashers’ so I had an early interest. My father was a retailer and I was very interested in what he was doing. He ran the equivalent of Dixons in the 60s with about 750 stores in the UK so I used to talk a lot about business with him and on Sundays we would get the sales manager’s reports and visit the shops with him.
He also ran a retail division of an industrial holding company called Firth Cleveland which was run by a guy called Sir Charles Hayward. Charles was essentially a metal-basher from Wolverhampton and after the war he went into retail, starting one of the first publicly quoted industrial conglomerates in this country.
He had a wonderful estate in Sussex and I remember one afternoon when I was about 14 he asked me “what do you want to do when you grow up?” and I said I wanted to go into business. He told me “well you must go to Harvard Business School”, which really stuck in my mind and I later did go to Harvard.
My father was also very close to Sir Jules Thorne, a Viennese Jew who founded Thorne Electrical Industries. He landed in the UK with nothing and built a fluorescent lighting factory in Enfield. He was a very good mentor and a lovely man, like a little peanut really, he always took an interest in me. So there was a bit of business background.
I also did Economics A-Level and Economics at Cambridge. I went to Harvard Business School where I was part of what was called “the most naïve class at Harvard” because most of the students were trying to avoid the draft.
I used to read the Financial Times when I was about 13 going to school on the bus from Mill Hill to Haberdashers’ so I had an early interest. My father was a retailer and I was very interested in what he was doing. He ran the equivalent of Dixons in the 60s with about 750 stores in the UK so I used to talk a lot about business with him and on Sundays we would get the sales manager’s reports and visit the shops with him.
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You maintained that very close relationship with your father right the way through, including the beginnings of WPP.
One of my bigger regrets is that we never did anything together. We did try for a couple of months but it was absolutely hopeless. If it had worked it would probably have been even more fun than what I ultimately have done.
Despite being busy he always had time for everyone and I would speak to him three to five times a day even in the most extreme of circumstances. In the depths of the JWT and Ogilvy deals in 1987-89 I would speak to him all the time.
But 40 is a pretty pivotal point, you look back over the first 20 years of your career and you look at the next 20. My father always said you should fashion a reputation for yourself in an industry you enjoy, it doesn’t have to be a public reputation, and then go from there. So aged 40 I borrowed £250,000 from the bank against my Saatchi shares.
You mentioned your time abroad at Harvard but you also went travelling with the now world- renowned historian Simon Schama in 1963.
I went to the Atlantic City Convention when Lyndon Johnson was facing down Barry Goldwater, then the following year went to East Berlin, Prague and Vienna and on to Budapest. So we saw the West and the East.
We were traveling when there was still the Iron Curtain and you had to go through Checkpoint Charlie. So we saw both sides of the coin but we had a wonderful time in America at the Convention as reporters for the university student newspaper.
Was that a particularly formative experience?
I think it was very formative in terms of trying to understand America and learning a bit more about the East because at the time of course East Berlin, Prague and Budapest were pretty depressing places to be honest. Obviously they have changed immensely since the fall of the wall.
It was formative in the sense of understanding a bit about East and West and admiring the changes that have gone on in the East since the wall came down.
Leading up to the beginning of your role at WPP, you had a very successful career that included working at Saatchi & Saatchi, where you became finance director in 1977. Most of the entrepreneurs I have interviewed for this series have tended to launch their companies earlier in their lives and often don’t have a professional background. What motivated you to start the WPP project at this particular time?
Are you trying to politely say I was an old man?
I, well…
Yes I suppose I would like to have started it five years earlier but Saatchi’s was a good training ground and I could do pretty much what I wanted to there with freedom so long as there wasn’t too much publicity about it. It was the largest agency in the world at that time, and I was, I would say immodestly, a key part of that and it was a great experience.
But 40 is a pretty pivotal point, you look back over the first 20 years of your career and you look at the next 20. My father always said you should fashion a reputation for yourself in an industry you enjoy, it doesn’t have to be a public reputation, and then go from there. So aged 40 I borrowed £250,000 from the bank against my Saatchi shares.
I know we have touched on this already but are there any particularly key bits of advice your father gave you that really stuck in your mind?
I think that one of them was that you shouldn’t flit from one opportunity to another, you should stick to one industry that you enjoy. He would describe himself as a cart-horse, left school at 13 and was the youngest of five. Hard work, commitment, eye for detail, these are all attributes he had. He was passionately interested in what he did but also very family orientated.
Many people who are not familiar with the sector would be surprised to learn that “WPP” stands for Wire and Plastic Products, and that the firm originally produced wire shopping baskets. Could you outline how and why you went about gaining control of the company?
There was a guy called Preston Rabl who wanted to invest jointly with me which he did initially and we bought about 12.5% of the company each and then I upped it to 29.9%. We wanted a small manufacturing company where the management was “mature but not senile”, was the phrase that we used.
We were looking for a firm that had a simple manufacturing process that had not lost money and we could understand and could work with. It had to have a good freehold property so no stresses and strains, no debt, and we alighted on Wire and Plastic Products. It was a great piece of luck that the advisers to Wire and Plastic were Panmure Gordon as the broker, who I had worked with when I was working for James Gulliver and also County Bank, who were bankers to Saatchi’s.
When we first approached WPP, we went to see Gordon Sampson, the Managing Director, at the wire works. We were absolutely starving so we went off and bought some fish and chips and Gordon was convinced we had done it because we wanted to be seen as “men of the people”, which we hadn’t, we were just hungry. So Gordon rang County Bank and said “do you know this bloke, Sorrell?” and they were in a difficult position because they acted for Saatchi’s and felt they had a conflict of interest.
The guy said to Gordon, “let me think about it overnight and I’ll come back to you tomorrow morning” so he called back in the morning and said “all I can say to you is I can’t give you advice one way or another, just let me tell you a story”. He told Gordon a story about Greg Hutchins who was an acolyte of Slater Walker who did a similar shell idea with a company called Tomkins.
Greg bought the shares at 10p and after the first day’s trading the shares were at 15p. So Gordon got the message that it was a deal he should do because it would add value to the business and we were off to the races. But the point of the story is, just like when we took over JWT in 1987 and found a building Morgan Stanley had valued at $30 million which we then sold for $207 million, some of this is about luck and good fortune.
JWT is 150 years old next year and was 125 years old when we bought it. So on another level you could actually say it’s not luck, you could say that when you buy a company that is 125 years old the odds are there is something there that somebody has forgotten about, a tangible or intangible asset, the value of which is in excess of the book value.
What they were doing at JWT was depreciating a freehold; they had a freehold property which in those days used to depreciate by 2.5% per year because those were the accounting rules. So that had been depreciated to nothing when it was actually worth $200 million. Our bid price was $525 million, so 40% of the value was lying in this property in Tokyo.
Yes I suppose I would like to have started it five years earlier but Saatchi’s was a good training ground and I could do pretty much what I wanted to there with freedom so long as there wasn’t too much publicity about it. It was the largest agency in the world at that time, and I was, I would say immodestly, a key part of that and it was a great experience.
Was it difficult to get the investment needed to make some of your bigger acquisitions, thinking about JWT, Ogilvy and Mather and Young and Rubicam?
It was never difficult to do the deals, it was more difficult to make them work. It was never difficult to get the money. We made big mistakes, for example I made a big mistake in 1989 by over-leveraging the Ogilvy acquisition, because it was $825 million, there was no Tokyo property to take out the debt and I did it half debt, half convertible preferred* and I forgot that in a recession, convertible preferred becomes debt. So I made a bit of a boo-boo there and it wasn’t easy.
You have your luck and you make your mistakes. We acquired Ogilvy in 1989, went into recession in 1991-92 and had to restructure the company, but I felt I was the one that got us into that mess so I had to get us out again so I stuck at it.
You were once quoted as saying: “WPP is not a matter of life or death, it’s more important than that”.
That’s a plagiarism of Bill Shankly’s quote, it sits on my desk and it’s something like “football is not a matter of life or death, it’s much more important than that” so I just substitute WPP for football.
What significance does that quote in particular have for you?
Founders have an emotional attachment that managers or turnaround artists don’t have. I have an emotional commitment: if we win something I take it personally, if we lose something I take it personally, if somebody joins us I take it personally, if somebody leaves us I take it personally. It’s beyond just a job.
The media often says that you’re always busy and very restless and have to keep active. Is this really the case or is it a bit of a caricature?
You can ask others but I think that probably is the case. I am very focused on the business, probably too focused. Some would say it’s an obsession, but I don’t think that’s necessarily a bad thing.
I think that one of them was that you shouldn’t flit from one opportunity to another, you should stick to one industry that you enjoy. He would describe himself as a cart-horse, left school at 13 and was the youngest of five. Hard work, commitment, eye for detail, these are all attributes he had. He was passionately interested in what he did but also very family orientated.
How would you characterise your management style?
I don’t think you could characterise it, I think it’s idiosyncratic. When you get knighted you go to the College of Arms to work out a motto and mine is perseverantia et celeritate, or “persistence and speed”. I don’t think business is like brain surgery, certainly not our business. The technology aspect is certainly demanding and not easy but having said that, that is where we are focused.
I think speed is important. If I can’t give an instant response it’s because I am either unsure of the answer or I am worried about the impact of the answer. My father used to say “delay is a negative” and I think there’s a lot in that.
Not that I am comparing our business to politics but I always remember somebody being asked “what’s the difference between business and government?” and he said “every night Gordon Brown goes to sleep knowing there are three things that are going to happen tomorrow morning that he didn’t know about when he went to bed”. It’s not on such a grand scale here but there is always good news and bad news. When you think of the scale of the operation it’s hardly surprising really.
You can ask others but I think that probably is the case. I am very focused on the business, probably too focused. Some would say it’s an obsession, but I don’t think that’s necessarily a bad thing.
How do you account for your own success?
That’s not for me to say, that’s for others to say, it would be presumptuous for me to offer an opinion. My dad said “find a job you enjoy doing” and I think that’s a critical component. It’s a terrible phrase but “a bad decision on Monday is better than a good decision on Friday”, meaning you should just get on with it and I think that’s really important.
It means if someone phones you, phone them back, if someone writes you a note, answer them as quick as you can because they have taken the trouble to write it, don’t ignore them. Those are the sort of things that I think are important.
I think speed is important. If I can’t give an instant response it’s because I am either unsure of the answer or I am worried about the impact of the answer. My father used to say “delay is a negative” and I think there’s a lot in that.
* Preferred stock, similar to normal stock, represent a claim of ownership over a company, however any dividends due must be paid to preferred stock before normal stock (which can be in the form of a coupon rather than in relation to the size of profits. Preferred stock usually do not have voting rights on how the company is run. Convertible preferred includes an option for the holder to convert to common shares after a given date.
About this interview.
This interview has been created for “How Did They Do It?”, an interview series looking at how the contributors have achieved success in their fields, republished here under the Creative Commons Attribution 3.0 Unported License. The author is Ashley Coates.
Sir Martin Sorrell Photo Courtesy: Brand Republic
