Great contacts…?
Observation on Lazard’s hiring of Rodrigo de Rato, first drafted on Dec. 9, published on Dec. 20, 2007
---------------------------------------------------------------------------------------------------------------------------------------------
Now we could write a similar article about Goldman Sachs, Morgan Stanley or the Ceberus Fund, but instead, we
prefer to focus our analysis on the investment bank Lazard. And therefore the kick off question to this
commentary will be the following: How good can an investment bank be, if it decides to hire someone like Rodrigo
de Rato to head of its London office?*
And, of course, the answer to this question is: Not so good. After all, neither an ex-Minister of the Economy, nor
an ex-Director of the IMF will have gained any experience in the average investment bank activities**. And so it is
pretty unlikely that he will be able to add significant value here.
For too removed has he been from the every day trench work that he could now still hope to lead therein.
Now, obviously, it would be stupid to presume that Lazard is not aware of Mr. de Rato’s non-existing track record
in the industry. And so it is clear that they must have had something else on their mind, when they decided to hire
this ex-politician for their London office. For too likely is it that they will have to pay considerable bucks to him, that
one could now still assume, that they do not know what to use him for.
Given therefore, that it cannot be Mr. de Rato’s insider experience which has sparked off his hiring, it is only
reasonable to presume that it will have been the ominous “great contacts” that an ex-”leader” like him supposedly
has, which have led to his signing on. And so it only makes sense to spend a minute or two on contemplating
what the net value of such a “contact philosophy” really is. For too much does the whole world seem to evolve
around it, that one could now still avoid de-constructing it.
To do this however, we do not want to waist time with the not so secondary issue as to when a contact actually
turns into being one ***, but rather focus directly on the question, as to how helpful a “contact# really is, if he is
more likely to consider a proposal from someone he knows, than one that is submitted to him by a complete
stranger. For as much as there is a legitimate argument to be made about the fact, that trust has already been
established in the earlier relationship, and that, hence, the cost for evaluating the respective opportunity will be
somewhat reduced, the feasibility of that will still have to be looked at a second time. And so it really is not
sensible to systematically prefer the earlier over the latter. For too much would one thereby limit one’s own
possibilities that one could now still hope to maximize one’s profit here.
No, if we want to be honest here, we have to accept, that the right to a preferential treatment between business
partners has to be hard earned by a history if shared risk taking. And so a contact who awards his favours on the
basis of prestige, cannot be half as useful as he supposedly is. For too little has he understood how to balance
risk and open-mindedness effectively, that he could now still help his friend to improve the latter tremendously
No, no, if we do want to do this balancing act justice here, we have to admit, that every time we peddle to prestige
we are not doing enough to maintain our personal clairvoyance. And so the hiring of Rodrigo de Rato can only
hinder Lazard´s ability to make the right investment calls. For too much has it directed its resources towards
glamor and appearance now, that it could now still hope to naturally go beyond it.
Given therefore that first priority of any investment bank should be to manage its analytical clarity, Noah denkt™
cannot help but rate Larzard as a “sell.” For too much has it hampered itself now, that one could now still hope to
compete like this..
--------------------------------------------------------------------
Footnote*: And how good, one might add, is the business section of a newspaper that celebrates his hiring as a clever and cutting-
edge move? (see the Sunday edition of El Pais, from Dec. 9, 2007)
Footnote ** : such as managing M&A projects, selling investments to high-value private clients, bundling risk in the CDO market , or
allocating funds in the money markets etc…
Footnote ***: After all, some people like to call someone that they know a “contact”, if they have exchanged a business card with
him, or funnier still, if they have, by some coincidence, been the same room with the said "contact".
Observation on Lazard’s hiring of Rodrigo de Rato, first drafted on Dec. 9, published on Dec. 20, 2007
---------------------------------------------------------------------------------------------------------------------------------------------
Now we could write a similar article about Goldman Sachs, Morgan Stanley or the Ceberus Fund, but instead, we
prefer to focus our analysis on the investment bank Lazard. And therefore the kick off question to this
commentary will be the following: How good can an investment bank be, if it decides to hire someone like Rodrigo
de Rato to head of its London office?*
And, of course, the answer to this question is: Not so good. After all, neither an ex-Minister of the Economy, nor
an ex-Director of the IMF will have gained any experience in the average investment bank activities**. And so it is
pretty unlikely that he will be able to add significant value here.
For too removed has he been from the every day trench work that he could now still hope to lead therein.
Now, obviously, it would be stupid to presume that Lazard is not aware of Mr. de Rato’s non-existing track record
in the industry. And so it is clear that they must have had something else on their mind, when they decided to hire
this ex-politician for their London office. For too likely is it that they will have to pay considerable bucks to him, that
one could now still assume, that they do not know what to use him for.
Given therefore, that it cannot be Mr. de Rato’s insider experience which has sparked off his hiring, it is only
reasonable to presume that it will have been the ominous “great contacts” that an ex-”leader” like him supposedly
has, which have led to his signing on. And so it only makes sense to spend a minute or two on contemplating
what the net value of such a “contact philosophy” really is. For too much does the whole world seem to evolve
around it, that one could now still avoid de-constructing it.
To do this however, we do not want to waist time with the not so secondary issue as to when a contact actually
turns into being one ***, but rather focus directly on the question, as to how helpful a “contact# really is, if he is
more likely to consider a proposal from someone he knows, than one that is submitted to him by a complete
stranger. For as much as there is a legitimate argument to be made about the fact, that trust has already been
established in the earlier relationship, and that, hence, the cost for evaluating the respective opportunity will be
somewhat reduced, the feasibility of that will still have to be looked at a second time. And so it really is not
sensible to systematically prefer the earlier over the latter. For too much would one thereby limit one’s own
possibilities that one could now still hope to maximize one’s profit here.
No, if we want to be honest here, we have to accept, that the right to a preferential treatment between business
partners has to be hard earned by a history if shared risk taking. And so a contact who awards his favours on the
basis of prestige, cannot be half as useful as he supposedly is. For too little has he understood how to balance
risk and open-mindedness effectively, that he could now still help his friend to improve the latter tremendously
No, no, if we do want to do this balancing act justice here, we have to admit, that every time we peddle to prestige
we are not doing enough to maintain our personal clairvoyance. And so the hiring of Rodrigo de Rato can only
hinder Lazard´s ability to make the right investment calls. For too much has it directed its resources towards
glamor and appearance now, that it could now still hope to naturally go beyond it.
Given therefore that first priority of any investment bank should be to manage its analytical clarity, Noah denkt™
cannot help but rate Larzard as a “sell.” For too much has it hampered itself now, that one could now still hope to
compete like this..
--------------------------------------------------------------------
Footnote*: And how good, one might add, is the business section of a newspaper that celebrates his hiring as a clever and cutting-
edge move? (see the Sunday edition of El Pais, from Dec. 9, 2007)
Footnote ** : such as managing M&A projects, selling investments to high-value private clients, bundling risk in the CDO market , or
allocating funds in the money markets etc…
Footnote ***: After all, some people like to call someone that they know a “contact”, if they have exchanged a business card with
him, or funnier still, if they have, by some coincidence, been the same room with the said "contact".
| © Landei Selbstverlag, owned by Wilhelm ("Wil") Leonards, Gerolstein, Germany. All rights reserved. Reminder: Noah denkt™ is a project of Wilhelm ("Wil") Leonards and his Landei Selbstverlag (WL & his LSV). Consequently, all rights to the texts that have been published under the Noah denkt™brand name are reserved by WL & his LSV. The commentary and the reasoning that was provided on this page is for informational and/or educational purposes only and it is not intended to provide tax, legal or investment advice. It should therefore not be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any security or any issuer by WL & his LSV or its Noah denkt™ Project. In fact, WL & his LSV encourage the user to understand that he alone is responsible for determining whether any investment, security or strategy is appropriate or suitable for him. And to leave no doubt as to what this means we urge our user to also note our extended Legal Notice. |
| Conflict of Interest Statement with respect to Lazard Q: Does Wil Leonards hold shares of Lazard? A: No Q: Has Wil Leonards done consulting work for Lazard? A: No Q: Do members of Wil Leonards' family hold shares in Lazard? A: No Q: Have members of Wil Leonards' family done consulting work for Lazard? A: No Q: Are there any other conflicts that Wil Leonards might have with respect to Lazard? A: No |
__________________________________________________________________________________________
__________________________________________________________________________________________
Project for Philosophical Evaluations of the Economy |
| Back to "Companies"-Page |
| 2009, due to an albeit modest recovery of the overall economy in the coming year. |