Luke Johnson comic

#29 Luke Johnson, entrepreneur, investor, philanthropist

Fund Shack
Fund Shack
#29 Luke Johnson, entrepreneur, investor, philanthropist
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In his 20s, Luke Johnson led the acquisition of Pizza Express and as chairman, helped it become the UK’s leading pizza brand. He has since established and helped develop household names, Strada, Giraffe, the Ivy, Zoggs and Integrated Dental Holdings, as part of his family office vehicle, Risk Capital Partners.

He is a successful newspaper columnist, author, former chairman of the Royal Society of Arts, and current Chairman of The Institute of Cancer Research.

In our exclusive podcast, Luke provides a critique of private equity, a critique of public markets, a critique of lockdowns and some of the most sensible advice we’ve heard yet about how businesses should be run in this brave new world.

Uncorrected transcript:

Ross Butler:

You’re listening to a fund Shack, private chat number 29. Welcome to Fund Shack. I’m Ross Butler. And today I’m here with Luke Johnson, well known entrepreneur, businessman, philanthropist, and private investor, Luke. Welcome. And I have to say thanks so much for coming to meet us physically. Cause this is the first time we’d been back in the studio for 18 months. And personally, I think it makes a real difference. Nice to see, happy to be here. I was looking over your bio in preparation for this. And I had to say, and I don’t say this just to flatter you, but I was amazed at the breadth of your your undertakings and your achievements. So you’ve got obviously a varied portfolio. And within that, I recognized about three quarters of the businesses. Now you do consumer, so maybe that’s not so surprising, but that leapt out of me, then you’ve been a successful newspaper columnist over years, if not decades. And I know that that’s not easy to sustain and you’ve been very active on the philanthropic side. You’ve published books. This is quite a productive repertoire. Now you only get one life, so it obviously doesn’t seem strange to you, but why do you think it is that you’ve managed to be so productive across so many relatively varied domains?

Luke Johnson:

Well, I think I’ve always liked to be busy and I have a father who’s had an extremely long career and or they stuck to the one career of being a writer, a journalist, and then an historian. He, he was incredibly productive and write many, many millions of words and published 40 books and so forth. So I think he gave me a good example to follow as a role model. And to a degree, I think life is what you make of it. And if you have the energy either are always opportunities. I think given that most of us perhaps will live to be in our eighties. That means we might well have a 50 year working career. And it seems to me, therefore that we should all plan to have at least two different careers and possibly more I’ve always been interested in people who’ve done a variety of things rather than just one profession and stuck to that their whole working life and then retired.

Luke Johnson:

None of that interests me in the slightest. It’s all that goes against the grain these days because everyone wants to specialize to such a great degree. And if you’re seen to be a specialist in more than one area you’re seen as an amateur in at least one of those, well, there may be some truth in that. And I think I could be accused of being a dilletante at some things in life. And you know, I, I, I don’t deny that if you diversify, then you may have less depth. And you know, there are advantages to focus and specialization, particularly in the modern complicated world. However, the point you made at the beginning is we only have one life. It’s important to keep interested and lively. I think for example, take philanthropy. I’ve served on the boards of a number of different charities and nonprofits over the last few decades.

Luke Johnson:

And one of the great advantages of that is I think it teaches you things and you meet people that if you were only doing business, you wouldn’t. So I would actually encourage all successful people in sectors like private equity or venture capital to seriously consider whatever age, but say in their forties, the idea of becoming a trustee of a school or hospital or some other nonprofit, because I think, you know, it broadens your horizons and that should be partly what life’s about. I think there is a risk if you only do one thing, you get dull and you repeat yourself and the needs to be more to it than that. I think yeah, investing itself is by its very nature. Kind of it’s, you’ve got to have a broad outlook on life because you know, you’re looking at different sectors.

Luke Johnson:

You’re not the specialist, you’re not the most cases, the executive, the doer you’ve got to stand above that. So that will kind of make that, that probably adds to your ability to be a successful investor. Maybe I think one of the challenges for private equity is that although they pretend to themselves, they aren’t the specialist in terms of how to run a business or a particular industry. I’ve sat on boards with private equity executives who are, they’re telling the managers how to run the business and making decisions that I think should be delegated to the executives who are full-time in that business and the arrogance, sometimes the private equity executives in thinking they know best, lets them down. I think there are some areas where private active, very good, you know, buying and selling, for example, raising finance, they’re pretty good at that. Some of them are pretty good at picking talent but above and beyond that, you know, knowing markets, knowing competitors, you know, understanding the intricacies of the technologies that they’re working with, really being able to spot the best executives, but the operational level to work with.

Ross Butler:

I’m sure you’re right. And I actually, I think I do agree with you, but to play advocate slightly, if it didn’t work, would they, would they do? It is certainly the, the, the trend is for greater activism and certainly the institutional investment community buys the idea of interventionists private equity firms. So presumably they look at the data and think, well, those that are a bit more muscular in their approach with executives do better. There must be some cause and effect.

Luke Johnson:

It probably is if they’re the right private equity firm and as you well know, you know, it depends which court, all of PE house you’re talking about. I think we’re all humans and I think private equity investors have as much ego as anyone. And, you know, according to Maslow’s hierarchy of human needs, once they’ve developed a certain quantity of wealth what’s next, and obviously what’s next is some degree of, of status.

Luke Johnson:

And that would mean them adding value or making a difference and being important in the ownership so that the value of Grecian is partly thanks to them. Now, I would normally accept that the financial engineering aspects of deals are probably down to the PE house. I E of it bought it on a low multiple can they sell it on a high, multiple, have they added the right amount of leverage to goose the returns? Have they made a clever bet in the first place? All those things of course are down to them, but above and beyond that you know, quite often I think, you know, it’s debatable whether they really make a difference. Now, I think there are some very good private equity investors. And I would say on average, you know, successful private equity investors are clever people. And you know, obviously if they succeed and they, you know, get backing from limited partners and, and show good returns, then they can’t be that thick.

Luke Johnson:

However, it’s amazing what leverage in a rising market can do. And, you know, generally speaking over the last two decades, certainly, you know, it’s been a, a pretty good game to play. I would say private equity in terms of accumulating returns for investors and indeed enriching private equity investors. I think, and I’m not talking about myself so much because I’m not really an institutional private equity investor or executive, but I think it’s as, as good a career as one could pursue, if, you know, you want to get rich in a pretty safe way because you are playing with other people’s money to a very large degree. And you know, you, you get a, a very, you can write very big checks. And so if you get your bets right, then you do extremely well. And to a large degree immuno head say wind tails, other people lose. So, you know, private equity as a career has proved a pretty good bet. And I suspect it will continue for some time because you know, there are a lot of organizations raising big funds and there’s a lot of pass the parceling, which to a degree, you know, is self-fulfilling Hmm.

Ross Butler:

You’ve packaged yourself up to some degree as one of those people, because yes, you’re not an institution, but you’ve got risks, capital partners. You could have just been Luke Johnson, the big wealthy investor, but for some reason you see it as useful to be seen as part of that community. Well, I think probably a lot of people prefer to deal with a brand and organization rather than an individual. I think in individual is more egotistical inevitably. I think when we set up risk capital partners over 20 years ago, the sort of private office was much less common. I guess if I’m we’re doing it now, you know, that’s what I would do. Also. I have more money now than I had 20 years ago. In the meantime, we also did raise a fund with limited partners. And you know, it’s say for one investment is, is now spent and we’re returning funds and it will show a good return to our LPs.

Luke Johnson:

And I think it’s been a success, but I didn’t want to do another one. The point about the fund of course, is it’s a very, very long-term commitment. It’s really a 10 year commitment from all the partners. And indeed obviously the limited partners. So it’s a very unusual structure in terms of most jobs, if you like. And it really is a partnership arrangement rather than employment arrangement and all the longevity and loyalty required that, that displays. And indeed, I think if you look at the history of most PE houses that falling apart more often than not, I would say it’s because the partners fell out, you know, and that may have been because they made some bad investments, but quite often it’s literally personality clashes leading to the founding partners of the organization, not getting on et cetera. And that’s what leads the LPs to then desert them.

Speaker 2:

But I’m not in denial about the fact that it’s, it’s a a lucrative and on some levels successful structuring of buying assets, because I think there will always be the advantage they have over say, public companies in the private equity are virtually, always willing to buy, sell. Every asset is a sale and they are always willing to buy a new asset. Public companies are slaves to the cycles of the stock market. And very often in my experience, public companies are forced to sell at the bottom and buy at the top. And it astounds me how often I come across situations where there’s a public company in a particular sector that will know that industry very well and have huge synergistic advantages of making a strategic acquisition, but for a variety of reasons, they’re too slow or it’s at the bottom of the market or whatever.

Speaker 2:

They can’t make that acquisition private equity, which doesn’t know the industry as well. And doesn’t have any synergistic benefits makes the acquisition and then flips it to the industrial buyer a few years later at a huge profit. And, you know, you wonder why does the public market always end up paying more? And I guess it’s because private equity are ultimately really M and a specialists, all they do is buy and sell in a sense. And that’s what they focus on. They’re small and flexible, and they have this great timing advantage, which really plays to their strengths.

Ross Butler:

Yeah, I agree with you. I think it’s it’s, it’s one of those things and there isn’t a problem with it. As long as the, those rewards are accessible to as many people as possible. One of the problems is that anyone can invest in the public markets, but it’s, it’s increasingly easy to invest in private equity vehicles, but it’s still pretty difficult for your average, Joe.

Speaker 2:

Yeah. And of course, as we know, private equity certainly represents a tiny proportion of the overall savings and pensions money out there. And as a proportion of overall institutional individual portfolios, it is growing, but it’s still, I would imagine worldwide, you know, under 10% across most diversified forms of savings and it is going to grow structurally more allocation is going to be devoted towards private investments in one sort or another big VC or PE that probably a good thing. I’m not surprised even though, you know, two and 20 relative to public market management fees is high. The level of attention required in investing in private companies is a great deal, more intense. So, you know, I would argue it’s, it’s justified to an extent and the returns are there. And another area where I think private markets have an advantage is they are more willing to put higher levels of debt into investments.

Speaker 2:

Generally, my experience public company fund managers, don’t generally like to invest in companies that have 3, 4, 5 turns of EBITDAR senior debt. Whereas many PE houses are perfectly comfortable with that. And D that they would consider that a standard level of leverage for a normal buyout. So, you know, that financial engineering in rising markets and growing businesses, compounds returns. Yeah. And it’s another advantage that PE has over public markets.

Ross Butler:

So just at this point, may, can we step back to some of our international listeners might be wondering wherever you come from, if you’re not a mainstream private equity guy, could you give us a quick potted history, maybe looking, starting with, well, wherever you’d like, but particularly like pizza express is a signature deal. Sure. Okay. So in my late twenties I, and a group of partners took control of a private business called pizza express.

Luke Johnson:

We merged it with a a group of franchise restaurants, pizza expresses, arguably the leading pizzeria chain in the UK. It’s been going since 1965. We took control of that in 92, and it was very successful. And I was chairman of that during the nineties and the shares rose from 40 P to eight pounds more and off the back of that, I then started doing more deals initially mainly public company deals. And then through the later nineties and into the two thousands, many more private companies, and, you know, over the decades, I’ve probably invested as principal in 50 or more businesses with a strong bias, as you said, towards consumer and in particular areas like hospitality and leisure mainly UK.

Luke Johnson:

And you know, at the smaller end, I, I would characterize the classic investment I do as development capital. That’s my preference. So frequently backing a founder not always taking majority stake quite often the minority stake. Yes, we do buy outs, but quite often, not and pretty flexible in terms of the types of deals we do in the structures. And I think that’s because to a fair degree, most of the time we’d been using our own money, my money. And so we can do bigger and smaller deals. We can do longer term deals. And clearly we don’t have to do any deals at all. I think one of the reasons I chose not to raise a fund when our last one was exhausted was, as I say, it’s a 10 year commitment, I’m 60 next year. And I didn’t want to be marching into my sixties with a sort of, you know, seven, eight year commitment still to go of making, you know, a minimum number of investments in the minimum amount of capital deployed every year.

Luke Johnson:

And it’s been very interesting to me over the last 18 months of the pandemic, a lot of private equity houses, particularly in 20 tiny sat on their hands grave mistake. I think they should have been out there doing deals where you yes. And you know, a lot of them were invested anyhow. They had a great deal of dry powder and alley more under invested, and they under are under huge pressure to invest. And, you know, ultimately P house that doesn’t get money to work is no good to anyone. So they will get their money to work. Unfortunately, they may well end up paying too much. Now, usually private equity is pretty good at avoiding those sorts of cycles, as I said earlier, and, you know, they’re astute to people, private equity investors. So they’re very reluctant to overpay, but I sense that quite a lot of houses who’ve got their back slightly up against the wall in terms of the pace of investing.

Luke Johnson:

And that’s not a comfortable place to be. And I’d much rather be in a situation where you take a year off. Things are too pricey conditioned to do difficult. I won’t be investing this year. Thanks. Yep. And then do twice your usual number of investments when times are good for investing. Yeah. So you have that flexibility, which is an advantage. And we come back to maybe the structural advantages, but you mentioned you were active in 2020. I mean, what’s your view of the market and opportunities out there? I’m very much a niche investor. So, you know, I’m not putting a hundred million to work ago or 200 million, whatever it might be, you know, I’m investing I’ve 10, 15 million pounds in each bet. And I think in the end of the market that I tend to operate in, there are opportunities. Two or three of the deals I’ve done in the recent past have been distress.

Luke Johnson:

And there’s obviously some of that going on, particularly in some of the sectors I’m familiar with. And those are deals that the vast majority of private equity houses are not geared up to do. Don’t feel comfortable doing for all sorts of probably good reasons. There’s not much experience of doing distress deals. I mean, there are obviously a handful of specialists that only do them and some of them are very good and really I’m really impressed by the quality of some of those deal doers. But they tend to focus only on that. Again, they would tend to be doing slightly bigger deals and me and some of the deals I’ve done over the recent past has been modest if any competition, which, you know, for most private equity players is, is very hard to achieve. You know, generally speaking, every single deal is got proper advisors and intermediaries and is well-marketed and you know, the, the assets touted widely around the market and there’s plenty of competition and you get a, not a perfect market, but pretty good market price achieved for most assets of, of quality and size.

Ross Butler:

Hmm. Would you say that so I’m just trying to get to grips with what the secret of your success is, which obviously you can’t put on a, on a napkin, but I’m wondering if to what, to, what degree would you say you use your intuition when you are assessing whether something is a good opportunity versus bringing in the advisors and producing reports for, you know, like, so a typical investment executive would then have to go to an investment committee and it would be a group decision, but it would also be a real discipline in terms of dotting all the I’s and crossing the T’s and making sure that there is a really explainable, calculable case. You don’t have to do that. So you can rely more on your intuition, to what extent do you do? Well, I think having the discipline and having a group input is vital.

Luke Johnson:

And you know, there have been occasions in the past where I have not been as rigorous as I should have been, not within our fund, but with my own money. And sometimes it’s blown up in my face and I, you know, I’ve tended always to be at the sort of higher risk, higher reward end of investing. So, you know, I’m much less interested in steady investments that will, you know, gradually make me twice my money. I’d prefer to go for things that make me three or four times my money, but occasionally go wrong and you lose everything. And obviously that’s highly undesirable and never bothered the plan, but it can happen in life. It, it normally it doesn’t actually happen with deals. I do because of leverage it’s because the business hasn’t worked. I do use intuition and inevitably we are you know, social animals who you mentioned at the beginning of this meeting, how much better it was face-to-face than on zoom.

Luke Johnson:

I completely agree. That’s all about what you might call intuition and being a human being. I think private equity investors who pretend to themselves that it’s all science and spreadsheets are under an illusion. I suspect none of them do actually think that because otherwise they wouldn’t be successful. Now I think having checks and balances is essential and they come in all shapes and sizes, not just credit committee, but of course, lenders and others will have their own, you know, in positions, I think relying exclusively on in Aggie accountants and lawyers and other specialist advisors, to tell you all about the business, rather than doing any of your own personal due diligence and having at least some in-house capacity of taking a commercial view on a situation and, and the people running it and so forth is mistake. And you know, I have to say having worked with some bigger PE houses, some of them are very good at all that both having in-house resource, but also getting incredible work from advisors.

Luke Johnson:

So I wouldn’t decry any of that at all. I think it’s important not to be slavish really obsessed about the reports. I think you have to look at the big picture. You, you almost certainly, at some point have to take a view. I think sometimes, you know, I’ve seen P houses miss a deal because they let relatively small issues cloud the thing, and someone else is more willing to step back and say, you know what, nothing’s perfect, good enough. I like it, et cetera. And it’s the right price and so forth.

Ross Butler:

You need a bias towards optimism to some degree,

Luke Johnson:

I think anyone in capitalism to us. Yes. You know, if you don’t believe in growth and you don’t believe in the positive future, and you don’t believe in the potential of the business, your backing to deliver value, then you probably shouldn’t be taking money on it.

Luke Johnson:

So yes, and I think probably ultimately most PE houses have that frame of mind or the individuals working in them. And so they should and obviously, you know, as well as making a turn on the multiple and the magic of leverage, the other biggest element in any private equity successful investment is growth. That’s the thing that will ultimately deliver the really great returns growth. And indeed, it’s also what the buyer at the other end looks for. You know, I have occasionally invested in businesses that have very little, if any growth and they’re quite hard to sell because, you know, people don’t want to really invest much in stagnant businesses. And why would they, you worry that if he’s not going forward with he’s probably going backwards.

Ross Butler:

You alluded to the fact earlier that you, you invest in relatively small deals. And so they can be the specific situations that you’re assessing, but particularly I’d say at the moment, is, is it not increasingly important to take a more of a macro view as well, given the interventionism, let’s say of the state in various sectors are you having to, are you trying to factor that in, when you look at new businesses in areas that could be locked down?

Luke Johnson:

Well, it’s a very serious point and pretty profound for who’s involved in markets and free enterprise and so forth, you know, have the rules of the game change such that the government will force you to shut in a way that would never in modern history have happened before and, you know, destroy the value you’re trying to create here. Sort of without being ostrich like about it, I’m of the view that these are things one cannot influence. And generally, therefore you can, you know, give yourself a heart attack stressing about them all night long. I think you have to try and focus on your own specifics of situations where you can make a difference but in your own life and your business. And I guess I’m taking a view generally that, you know, with regards to, for example, lockdowns, which have impacted certain sectors, like travel very severely indeed, ultimately society can’t afford many of these more.

Luke Johnson:

They’re just too expensive, both economically, psychologically socially. And so you know, the harms, the undoubted collateral damage of lockdowns are becoming ever more apparent as was obvious because they’re diverse and long-term, whereas of course, daily hospitalizations and deaths from COVID you know, on a daily basis. But you know, governments can’t keep printing money, but I don’t think in the way they have done to pay the bills. And you know, some of the bills for both businesses and governments are starting to fall due we’ve got threats like inflation seven, so on. So big picture means, I don’t think in countries like the UK and many others can really afford to do many lockdowns let alone the fact that I think brief will increasingly show they don’t make much difference. So they really aren’t worth it, both health wise and wellbeing as well as economically.

Luke Johnson:

And therefore I think, you know, it’s probably a pretty good time to take a view and say obviously to a large degree, thanks to vaccines, but also the, the terrible costs of the interventions are such that they cannot be repeated again and again. And so as people keep saying, we have to live with the endemic disease and get on with work and, you know, start earning some money to pay the bills, which means decent businesses that might be shut down if there were another lockdown are probably a reasonable bet, but there’s got to be a discount somewhere in there. And, you know, clearly if one constructing portfolio you don’t want to bet exclusively on businesses are vulnerable to being shut down. And I know one or two P houses were, you know, big chunks of their portfolio have been closed for much of last 18 months.

Luke Johnson:

I’m very lucky and it’s absolutely luck that I’d sold a whole raft of businesses over the previous couple of years, which would have been smashed to pieces by lockdowns. And thank God I did, because it meant that although I did have certainly a couple of businesses that are, you know, in sort of recovery mode, we say having been severely battered if I’d have had a half a dozen of them, Hmm. It would have been significantly worse. Yeah. I think you’ve got to be right to just focus on what you can influence. And yeah, I do find it surprising that there’s so little commentary on the potential fallouts, like economists used to issue, press releases. If we had a public holiday telling us how much it costs the British economy, and yet we’ve been impartial locked down for two years and well, they don’t issue, press releases about it generally.

Ross Butler:

It’s like, it’ll be all right. We just go along as if nothing ever happened. So I think, I think you’re right. You have to just focus on what you can, what you can influence, but there probably will be reckoning.

New Speaker:

Well, I think there needs to be reckoning because I think overall it can be argued that, you know, in certain ways society slightly lost his marbles over the last 18 months. I think the toll across many aspects of communities in terms of, for example, children and education, young people, generally, they are damage to them. The irrationality and lack of evidence base for some of the interventions and so forth and so on. You know, we don’t want to get distracted into that black hole is such that you know, in, in hindsight, in the years to come, I do think we will realize that grave mistakes have been made and I’m not talking about, you know, locking down two weeks too late.

Luke Johnson:

I’m talking about the very essence of universal lockdowns and the harms of, you know, unemployment and you know, the, the divisions, it creates in society between those who have to still go out to work. And those who sink that everything now is working from home for forever speaking personally, one of the toughest aspects has been people thinking in a rational way when they’re all isolated. Yes. And I think for myself, and I believe for many others, the actually you get things more, right. If you are debating it with others in person. And I think the idea that we’re all thinking rationally because we’re on zoom calls is diluted. I think there are very profound differences. I know for myself, I’ve had hundreds of zoom board meetings and such like, and I can tell you now they are very, very dysfunctional compared to a proper board meeting with people in the room.

Luke Johnson:

Really, definitely no question of it. And for example, if you’ve got a large board and most large organizations and institutions have large boards, there is a massive predisposition towards people, not descending of any kind, when there’s a certain number of people on a zoom call, they are much more likely to stick their hand up or nod to the chair or do whatever it is to say, yes. I just want you to bring up this one point. Can I just question this as extraordinary? How often a non-executive for argument we’ll do that. And then two or three others will say yes, yes. I was wondering about that does not happen on zoom calls. Yeah. And you look at our leadership and the key advisor groups, for example, you know, in public health and others that have been making these draconian and extraordinary decisions all on zoom, not good debate, not good vigorous discussion of what are the, you know cost benefits of this.

Luke Johnson:

Have we thought of the whole picture here? And I think that’s been going on a great deal. And I think because we’re all snug at home, particularly those better off powerful people who run society in industries like private equity. The fact that, for example, you said at the beginning of this meeting, this is the first time I’ve had one of these interviews for 18 months. I can’t tell you how many conversations I’ve had like that because I’ve been in my office and meeting people if I possibly can since may last year. Right. But every banker, every accountant, virtually every institutional person I know of fund manager, P executive has been at home the whole time. Yeah. And I don’t think that’s conducive to critical thinking. And it’s so easy to say, well, what’s more efficient, you know, everything it’s convenience. Yeah. Convenience. Yes. Efficiency is the wrong word because efficiency suggests getting it. Right. It’s convenient. It’s a bit like getting home delivered food. It’s very convenient, but mostly eat.

Luke Johnson:

Yeah. I’d rather eat in a restaurant or have proper cooked food at home. Yeah. After you’ve done some shopping than a crappy meal that is probably more expensive home delivered. Yeah. And yet it’s harder to articulate the benefits because they’re slightly intangible and they’re harder to hard quantification on. And you also kind of alluded to the, everyone talks about quality these days, but there is a real inequality element to this whereby white collar workers like you and I could choose, choose just never leave our homes again. Well, Ft and economist readers love it all. Yeah. Because they run the world and they’re very comfy. They’ve got gardens. Someone collects the rubbish. Someone delivers their food. They, you know, get stuff on Amazon. They might see more of their family was not alike and they’re safe. Meantime every year, every day in Britain, 10 million people are having to go out to work, to keep the broadband going and to deliver the groceries and so forth.

Luke Johnson:

And that is a more pronounced inequality on many levels. Then I think every in our lifetimes and you know, there are so many serious issues arise from this such as, for example, as furlough undermined a chunk of the portions of, of, of the nation’s work ethic, you know, at its peak 9 million people being paid to stay at home, why wouldn’t they want that to continue? Is the real reason people are willing to accept lower quality output from working from home because it’s saving them money on commuting. I think that’s a big factor as to why lockdowns have had such enormous support. Seemingly it’s not the science is because people are saving money on their fares. Yeah. What’s your policy or preference with regards to the companies that you own? I don’t want them in the office now. It’s obviously up to individual bosses. I would say, you know, if they think they can run things efficiently and you know, it makes more sense for their particular shape and their workforce to do it at least partly from home a hybrid model, flexible.

Luke Johnson:

I get it. And I think workforce is the stakes will increasingly demand that and companies that insist everyone is in the office every day may struggle to recruit or retain people. With a young people might find it more attractive. I think I would, of course. And I know I do. And I think there are, it depends on the business and the industry and the people in the work. I guess people in my generation are much more likely to say, we’ve all got to be in the room. Those who are, you know, much more use to the flexibility. Should we say video conferencing my argue, now let’s stick to what we’re doing now. And of course there are lots of things that can be done perfectly competently online rather than in person, but when it comes to anything critical key pitch or a key sale or interviewing someone to hire them or whatever it might be that really matters, then I see there is no substitute for doing it in the room.

Luke Johnson:

Yeah. And I passionately believe that. And I think actually it has been a competitive advantage, I believe over the last year in doing stuff that I am in the room when people are willing to be. Yep. And I think it’s helped clinch deals and given me an insight that people who were relying exclusively on zoom in admist yep. It’s the Woody Allen quote, which I’m going to get wrong, but two thirds of success is showing up 90%. Yeah. Okay. We’ll go with that. Leave us with something optimistic. Positive. Can you tell us about bill you’ve got in your portfolio, you liked the look of, or something about the world that you’re optimistic about. Do you use that bogus venture capital phrase pivot? I have slightly pivoted towards areas that are more digital inevitably because historically, you know, I’ve invested heavily in areas like retail and hospitality, which means, you know, shops and restaurants and cafes in pubs and hotels.

Luke Johnson:

And of course, all of those, you know, have struggled over the last 18 months and face possible challenges going forward. So I would still invest in all of those sectors, but I’ve also made an e-commerce investment last year into a gardening products business it’s called Primrose. And that has an October year end, but we think it’s going to deliver for this year’s results because it’s had the principal season now and we’re happy with that purchase. We bought it almost a year ago now. And I think it’s a good sector. And I think e-commerce in that space is growing. Gardening itself has boomed during lockdowns. And I think some of that will stick. And we are looking at further e-commerce investments because obviously it’s going to take an increasing part of the market in terms of people’s overall retail spend.

Ross Butler:

Primrose’s model, do you have to go onto their website to buy their stuff or do they sell it?

Speaker 2:

Yeah. Yeah. I mean, you know, they have an app and so forth too, but mostly people are on the website and, you know, it’s exclusively, it’s not an omni-channel, so it doesn’t have any retail outlets at all. It only needs, you know, only digital and it’s got long established business. And it’s quite a fragmented sector. Actually. There are quite a number of digital players in the overall gardening space. And you know, it’s a sector that we stumbled across, but we like, and I think there’s more to go for. So yeah, I would say that was a deal that we’re excited about and we think has, has lots of potential. And and so inevitably, you know, if you look at e-commerce generally, you know, you’re up against Amazon, but there are some sectors that they are perhaps less focused on. And I think gardening, you know, has some logistical challenges, gardening, for example that Amazon seem less interested in. Right. and they’re such a dominant player, ideally, you know, you don’t want to be directly competing with them. We do work with them actually, as most people do any commerce, but ideally you get people on your own website. Yes. And so yeah, that’s one business we’ve bought recently that we think he’s interesting.

Ross Butler:

Great Luke. Well, it’s been great catching up. Thanks very much for sparing your time.

Luke Johnson:

Thank you.

New Speaker:

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