Damon Buffini is the most important person that you’ve probably never heard of. Often described as the most influential black man in Britain, Mr Buffini used to head one of the largest private equity firms in the world.
His story, from the humble beginnings of a council estate in Leicester, to the soaring heights of the City, becoming the captain of the private equity industry and one of the most powerful men in finance, is an extraordinary one. Now aged 53, Mr Buffini is preparing to leave the firm he helped build into a global powerhouse. In this rare interview, Editor-in-Chief Sabian Phippen talks to the witty, insightful and inspiring Mr Buffini, as he reflects on his life, career and what the future holds.
SP: Would you say that you had a difficult childhood?
DB: Now that depends on what you define as difficult!
SP: Well, you weren’t exactly born with a silver spoon in your mouth…
DB: Yes true. My mother was a single parent as my father went back to America when I was 18 months old. My mother refused to go; at that time [early sixties] it was very difficult for mixed raced couples in America.
So my father went and my mother stayed. We lived on a council estate in Leicester and had extended family there; my maternal grandparents lived there too. We didn’t have any money. Until about 1970, I was the only black kid on our estate; it was 99.9% white, and me! It was quite challenging sometimes, but I never really thought about it much. We had quite a good family structure, which in hindsight probably made it a lot easier than it could have been.
SP: Did you know from an early age what you wanted to do in life?
DB: No absolutely not. Social mobility in this country was really enhanced in that period by the grammar school model. I passed my 11 plus and went to Gateway Grammar School, where lots of bright kids from council estates went. It really worked for me. It was sporty and quite demanding.
Education is the key to everything
Looking back I didn’t really know what I wanted to do. The fact that I received a great state education is something that I’m really thankful for. It gave me a platform to consider many options. It’s one of the reasons why I get involved in a lot of educational projects because education is the key to everything in terms of social mobility. When I talk to young people in schools I cannot stress that enough.
SP: Do you think that there is a problem with social mobility in Britain today?
DB: There is an issue and it’s a documented issue – read the Alan Milburn commission report. One of my relatives is a very senior Doctor, also educated at state school. He also bemoans the lack of young applicants for medicine from his background. So it does appear that we have a social mobility issue in many areas.
In the 60s, 70s and 80s the professions were real gateways for social mobility. Unfortunately entry and progress in these careers has become a little bit self-sustaining. There are real barriers to get into most professions; for-instance you have to attend University, pass extra exams etc. Plus the private school system is very successful at training their students for these jobs. They create fantastic educational experiences and therefore the young people they produce are very well suited to the professions in particular. I know that the professions are trying very hard to change this but it takes time.
SP: You went to Cambridge University to read Law, did you not think about pursuing a Law career?
DB: When I was about 14 I focussed on a law as it looked like a financially attractive career and at the time, financial security was important. With that motivation I managed to find my way to Cambridge to read Law.
I was very fortunate that British Gas agreed to sponsor me through University and in return I agreed to work in their legal department. During the three years spent studying, I spend most of my holiday in British Gas working on easements and way-leaves. Unfortunately I found the work very dull and obviously the law was not for me.
It is important to make a career in something you enjoy
Consequently I left Cambridge without a job, turning down lots of offers from law firms. My mother thought I was crazy. I went to work for a friend of mine in Leicester who was selling word processors – the precursor to the computer – it’s that long ago! He said; “we’re going to sell these machines by cold calling people”. I had no idea what he was talking about!
Anyway, he sent me on a three week sales course at Rank Xerox. It was fantastic and I learnt so much. I was the only person on the course who had been to University. It was all about selling and how to persuade people to buy. It became obvious that some sort of commercial activity was right for me and that provided me with the direction I needed. In hindsight it also taught me that it is important to make a career in something you enjoy – you are much more likely to be good at that than something you don’t.
SP: At what point did private equity enter your mind?
DB: Private equity didn’t exist when I left University, so it wasn’t a proactive career choice as such. On reflection, in my career I’ve been very fortunate to have been able to work with entrepreneurial people that have been incredibly supportive.
When I left Leicester, the first company I worked for was the LEK Partnership. LEK now employ around 1000 people but at the time I was employee number nine. I had an opportunity to learn a lot very quickly, working with very smart people, doing lots of interesting work. A good foundation. LEK offered to fund part of the tuition fees at Harvard Business School to their employees that gained entry. I hadn’t really heard of HBS at the time but it was a natural bridge from a law degree to a commercial career.
SP: What were the biggest lessons that you learnt doing your MBA at Harvard?
DB: I loved it. It was a real introduction to various different aspects of business. It also gave me some thinking time. When you’re in your mid-20’s, I don’t think you really know what you want to do – I certainly didn’t. So that constructive thinking time was very helpful to me. I also lived in America which was a very interesting experience and enabled me assimilate a different culture. I’d highly recommend it.
SP: Despite the high costs of some MBA’s today?
If you’re not going to invest in yourself, who’s going to invest in you?
DB: I paid for most of the two years myself and that was when the exchange rate was a dollar to a pound – one to one – so it was really expensive! My view is that if you’re not going to invest in yourself, who’s going to invest in you?
SP: Talk me through your early days at Schroder Ventures.
DB: I remember the first time I heard about venture capital. It was October 17th 1987, very memorable as it was Black Monday – the day the markets crashed all over the world. I went to a drinks party held by Schroders, the merchant bank. I always try to be early and in this instance everyone else was ten minutes late. As a consequence I had twenty minutes with Win Bischoff (now Sir) the CEO of Schroders and Nick Ferguson, who was the founder of Schroder Ventures.
They asked me to London where I was interviewed by Robert Swannell – now the Chairman of Marks & Spencer. He thought I’d be better off at Schroder Ventures which was a very nascent, high growth, new organisation, using capital to invest in small businesses. No one really knew much about venture capital or buyouts in 1988 but it ticked all the boxes for me. All my friends were going off to work for Goldman Sachs, Credit Suisse, McKinsey, Bain all very big firms, but I thought, why not take a risk working somewhere smaller.
We started in 1997 with €500 million under management and grew eventually to over €20 billion
When I joined, the managing partners were Jon Moulton and Peter Smitham; real entrepreneurs and legends! For about six or seven years we were working with very small businesses and doing very small transactions. Then all of a sudden our market changed. Europe came together creating a single trading entity and thus one market. This resulted in the market becoming more attractive to investors, competition coming in from America, which validated Europe as an interesting buyout market. Large companies started to think, ‘well, perhaps we could sell to these venture capitalists?’ As a result the transactions became larger. Coincidentally our parent, Schroders, with whom we had an excellent relationship, decided to focus on public company investment management. This lead to Schroder Ventures becoming independent – the genesis of Permira.
SP: Operating under the new name ‘Permira’, how did you then grow into one of the world’s leading private equity firms?
DB: We started in 1997 with €500 million under management and grew eventually to over €20 billion whilst maintaining good returns for our investors.
I’m a great believer in creating a really effective and world-class team, no compromise. Then make the team a partnership in which everyone is aligned. Then really focus on very clear goals; we were all very certain about what we wanted to achieve. We took the strategic decision to move away from very small transactions (which had been the remit of the firm for 15 years) to much larger transactions.
Finally, we decided that we wanted to be global. All these decisions meant a complete change of emphasis for the firm and different skill sets for the people – quite a challenge.
SP: How important would you say that culture is in an organisation?
DB: Absolutely crucial. Culture is a summation of several factors. We created one partnership, one fund, one firm, one focus. To me that meant convincing partners that we were all it together. There could only be one investment standard, one investment process and one level of quality, regardless of whether you worked in London or Tokyo. There could be no compromise on any of these elements.
SP: How important do you think that leadership and responsibility is?
Leadership is all about setting very clear direction
DB: Leadership is all about setting very clear direction and persuading teams of people that it is the right direction. Then give them the platform to deliver, the leeway to make their own decisions and resources to do it. A leader can’t do everything – it’s unsustainable.
SP: You’ve been one of the most staunchest and high profile defendants of the positive role of private equity. Do you think that despite popular public and media hostility it is, nevertheless, a moral industry?
DB: As Managing Partner it was my responsibility to communicate to the wider world as to what private equity was all about. It’s clear now that private equity is just another share class. Some shareholders, whether they are public or private are good, they do the right thing for businesses and create sustainable environments and some are not. My observations are that private equity is a long-term investor, allows management to take timely decisions and provides real hands on governance.
When I read public company governance codes it seems to me that is what they’re trying to achieve. In some instances, we’re the right shareholders for a business and in others the public shareholders are more appropriate.
SP: What three words would you use to describe your career at Permira?
DB: Varied, exciting and pretty successful.
SP: What makes you want to get up in the morning?
DB: Working with people that really want to make things happen and make an impact – I find that really energising.
SP: You’re frequently cited as one of the most influential black men in Britain
DB: It’s not a long list though, is it?
SP: Very true. Do you feel any sense of responsibility to act as a role model?
To me, aspiration means setting your goals as high as you possibly can
DB: What I feel is important is going to schools and communicating a sense of aspiration. To me aspiration means setting your goals as high as you possibly can. It doesn’t matter what you want to do. Set yourself a goal. Do something with your life. I was recently speaking in a school in Leicester that has almost 100% Black and Asian students with half the class from single parent families and it’s tough for them. Someone showing them that it can be done is important to these young people.
SP: What inspired you to start the Social Business Trust in 2010?
DB: I fundamentally believe that businesses can really make a massive difference in the social sector if you can apply their resources to the right problems. By resources I mean leveraging the skills of their employees. Allowing employees to use their everyday skills to create growth and solve problems in the social sector can really benefit social enterprises and in turn many social problems and thereby society as a whole.
SBT is now operating in over 6,000 schools and 70% of the beneficiaries are under 18
When Adele Blakebrough and I started SBT, our goal was to create a platform whereby businesses could work with social enterprises and thereby help one million people in the UK. So far, after five years, we have 13 social enterprises, operating in sectors such as education and healthcare and have thereby helped over 750,000 people. SBT is now operating in over 6,000 schools and 70% of the beneficiaries are under 18. I believe that is business creating real impact in society.
SP: Is there any advice that you’d give to your 18 to 21 year old self?
DB: Think big. Aspiration is very important. Take the long-term view. Don’t be in too much of a rush. When things don’t go right, learn lessons from it. And really learn from your successes because if you can replicate success in something you enjoy then you’ll have a successful career.
SP: I’ve written a question here: “Retirement?”
DB: Next phase! [Laughs]
SP: In September, you’re officially stepping down from Permira, so what’s next for Damon Buffini?
DB: After 27 years I might take a few weeks to decide!
Seriously, I think the time I’ve spent building Permira and the Social Business Trust has been worthwhile. Looking forward I’d like to be involved in something that has an equal impact, maybe in a completely different space.