Shaper: Mikhail Fridman

Show aired on 10th June 2017

Transcript

Elliot Moss
That was Herbie Hancock with Cantaloupe Island, a great way to start the programme here on Jazz FM. Good morning I am Elliot Moss and this is Jazz Shapers, thank you very much for joining me. Jazz Shapers is the place where you can hear the very best of the people shaping the world of jazz, blues and soul and right alongside them we bring someone who is shaping the world of business. We call them Business Shapers. I am really pleased to say my Business Shaper today is Mikhail Fridman. He is the founder of LetterOne amongst other things, which is an international investment business and you may well of heard about many things that he has been involved in over the years. You are going to be hearing lots from him very shortly. In addition to hearing from Mikhail, you will also be hearing from our programme partners at Mishcon de Reya, some words of advice for your business. And then we’ve got the music and it is a fantastic mix today from the shapers of jazz, blues and soul. Nina Simone is in there, Avishai Cohen is too, China Moses and this from Kandace Springs.

That was Kandace Springs with Novocaine Heart and this is Jazz Shapers as I said earlier and I am really pleased to say my Business Shaper today is Mikhail Fridman and he is the founder of LetterOne amongst many other things philanthropic as well and we are going to come on to that and Jazz and he’s a very colourful man. Thank you so much for joining me.

Mikhail Fridman
Thanks a lot for the invitation. That’s a great pleasure for me.

Elliot Moss
Now tell me Mikhail, you have a very interesting history. You were born in a place called Lviv?

Mikhail Fridman
Correct.

Elliot Moss
And I believe you were really good at maths and physics and at one point wanted to be a researcher?

Mikhail Fridman
Yeah that was the kind of initial idea when I graduated school. I had two choice frankly with the music and math and physics and you know, my parents insisted that I should be a scientist and I was as you said, quite successful in things and I started to deliberate and I tried to enter into the best Soviet University at that time in Moscow. Unfortunately I was rejected there not because of my academic knowledge but primarily because of my Jewish religion. At that time it was pretty difficult to get there with kind of a family name like mine.

Elliot Moss
This is mid-80s, 1980s or so.

Mikhail Fridman
Yeah the beginning of the 80s. It was 1980 actually so therefore I was obliged to go another University. So in 1981 I entered also Moscow University but with kind of second tier and that’s… it was a bit less ambitious from the point of view of science but it has allowed me to concentrate more on some other things like theatre musical or other things which I am very happy by the way.

Elliot Moss
And what is interesting is you, you talked about the issue of being Jewish at that point and I remember many years ago when I was a child raising money and awareness of Refuseniks as people were right then and then things fundamentally shifted with Gorbachev and Perestroika and Glasnost and so on and you made a very interesting decision which was to start to go into the world of business and that’s… I mean there are a few other things in between but what interests me is why? I mean, not a traditional path to take for a young man at that point in the history of that country?

Mikhail Fridman
Yeah actually it’s a good question. You know in the mid-80s when Gorbachev came it was clear that something happened in this country and actually the first things that took place, that kind of liberalisation for leaving the country which was absolutely crucial for the Soviet Union and the thousands and hundreds of thousands of people, primarily Jews and other people emigrated to abroad; to United States, to Israel and so on and I had the chance to do the same. And it was a kind of obvious choice either I should leave the country and go to Israel or probably the United States or to try to do something in the Soviet Union. And it was still unclear whether it would be possible to make some scientist career in that time because it still was pretty lot of restriction but it was a couple of new opportunities which arise in that time and I think first of all there was private business initiatives which were explained. It wasn’t just small, tiny, private, entity corporate use, very primitive, very kind of simple form of private initiative but there was a huge temptation for us as young people and we just graduated. For me, my friends and my partners we had just graduated University and we decided to try it you know and the decision was primarily because we thought that in case it will not happen, in case we will not succeed we will just leave the country, emigrate somewhere. You know, and we established a very small entity called Cooperative and started to do some the first student’s, let’s call it business. Our first business was we hired our kind of colleagues from University and fortunately that came quite successful. We made pretty big, you know, kind of improvement and development of that business and it was in really short period of time where our income was relatively big compared to Soviet standards let’s say and that was the kind of reason why we decided not to emigrate. Actually all of my partners were seriously considering emigration at that time and because of the success I kind of convinced them and you know, we all been convinced it’s probably, it’s not the right time to do, let’s stay here and try and achieve something else.

Elliot Moss
Well look it started with window cleaning and look where it’s lead. Stay with me for much more from my Business Shaper today, that’s Mikhail Fridman. Time for some more music because we go back to him, this is Nina Simone with My Baby Just Cares For Me.

That was Nina Simone with My Baby Just Cares For Me. Mikhail Fridman is my Business Shaper today talking about the middle to late 80s as the ability to make money became… it happened in Russia and probably to many people surprised outside of it and probably no less surprised people inside of it and it kind of worked for you Mikhail and it worked for your friends. You talked about the Cooperative, you talked about the window cleaning business. I love the notion of that. It gave you a flavour as you said, you had nothing to lose you were going to emigrate anyway. Those friendships that you formed at that time I imagine were very important to you. Over the years how important have friendships been in business for you?

Mikhail Fridman
You know I am very proud that together with my partner and colleague, we still retain our relation, many years as you said it started from a very simple business like washing windows. Anyway now, as you have just called it, International investment business which is also proud for me but we are still the partner and we are still the friend and I think it’s one of our biggest achievements you know, compared with our kind of financial success. I think that’s quite a unique situation because I think to retain a really warm and close personal relation is extremely rare for human being right. And I think that based on a simple issue, we have always kind of tried to discuss all issues together and to find a compromise you and to find a common ground for all our principle decisions. Of course it is easy to say, not easy to achieve but fortunately I was lucky to have a partner who really kind of on the same page as I am and I am really a happy person from that point.

Elliot Moss
What makes you happier though? Is it that, that success of friendship or the success financially that you have achieved? And the financial success we know about, it’s public and it is significant but does that make you as happy deep inside of you as the friendship you just described?

Mikhail Fridman
You know I think both. Both things. I think actually relation is a combination between relational and you know emotional things right. I doubt it would be possible to retain this relation without having any financial success. But at the same time I think, I’ve seen a lot of example when the people who is very successful and been in really good relation and like each other when the kind of success effectively destroyed this relation right? So I think that for me my happiness that I am living in this kind of very sustainable environment. It seems to me it’s one of the most important goal for every person right to live in the stable wall, to work closely with the people you know, you respect and they respect you and so on and if it is combined with a success of your joint let’s say initiatives, I think that’s mutually important.

Elliot Moss
Stay with me for more from my Business Shaper today, that’s Mikhail Fridman and there is a lot more to tell you about his various business pursuits. Latest travel coming up in a couple of minutes and before that some words of wisdom from our programme partners at Mishcon de Reya for your business.

You are listening to Jazz Shapers with me, Elliott Moss. Every Saturday morning I am very lucky I get to meet someone who is shaping the world of business and doing a pretty good job of it too. Anyway right now more importantly Mikhail Fridman is my Business Shaper and we have been talking about transitions of the ability to earn money in a system where you couldn’t, of fighting some kind of injustice where your religion would get in the way of you succeeding and friendship and Mikhail it brings me neatly I think to the ventures that then happened afterwards because window cleaning is one thing, setting gas companies and setting up banks and retail business – pretty complicated stuff. Obviously you are a very intelligent man in an academic sense. How did the business acumen evolve?

Mikhail Fridman
You know, maybe it sounds a bit strange but I don’t think the business as such is intellectually a very sophisticated issue. I think frankly speaking to a certain extent physics or math is by far more kind of challenging things right? Intellectually again. What is the most important things in business according to my experience I would say it is a combination between let’s say analytical knowledge but also to combine with a good understanding of human nature. Of course you know human nature and because at the end of the day business is about desire of people, about stimulation, about incentives, you know what we would like to accept, what we would not like to accept you know and that sometimes should be kind of gut feeling that you have from let’s say, from nature, from your genes, from your parents or whatever and you have to combine a list of things, it’s really kind of out of business my guess. So I think that it was pretty simple sequences of events which push us in certain directions in business. It started from simple things like I mentioned when we started to trade something, when we decided for increasing our volume of operation we should have some more working capital and at that time it was almost impossible to get working capital from the bank, private bank didn’t exist in Soviet Union and we decided the most simplest way to get money for working capital is establish our own bank actually. You know at that time it was quite simple, you know so we just did initial capital, for raising capital for the bank was like $10,000 or so…

Elliot Moss
It’s a good idea you know, I think this is the way forward. At that point, you know I can’t get access I am going to create my own bank.

Mikhail Fridman
Absolutely you know. Maybe it’s not absolutely according to the Wall standard of doing banking business but…

Elliot Moss
But you know what, needs must. I mean this is where you were and this is how you adapted.

Mikhail Fridman
Correct and at that time we did not care too much and we didn’t know too much about the standard of doing banking business. Right now we know a bit. Right now we are the largest private bank in the country. So but we established the bank and the first couple of years we have been the largest borrower in that bank you know, so we have got certain clients and we borrow money for our own operation. Fortunately it was mutually successful, you know, fortunately and when we started the something else, we started to import loads when we decided to balance this operation we need experts….

Elliot Moss
It just evolved?

Mikhail Fridman
Yes.

Elliot Moss
But there’s one thing, I understand the analytical piece, I understand the human nature piece. There’s a third thing which you know again is part of the history of you which is you have had to fight for different things in different way. I mean to ensure that people understand what the business is about, when people… there may be a legal attack, it may be something else. That’s a big part of it isn’t it? You must be a very tenacious person?

Mikhail Fridman
Yeah I think to a certain extent in good connotation of this world to be aggressive in business is a positive feature some would say. Not aggressive in bad meaning of that word, to be vigorous, to protect your business interests. I think that’s really important for doing that and especially in an environment like Russia where there is kind of fresh business standard I would say. Not very sustainable, not very stable. So therefore we tried to protect our interest and sometimes we did it, kind of we went to the Court and did what we should do and I think overall I think that’s very important to keep certain morals standard when doing business. If you are keeping this moral standard and you believe that you are on the right side you should be vigorous enough.

Elliot Moss
Stay with me for more from my Business Shaper, that’s Mikhail Fridman. Time for some more music right now though, it’s China Moses who is actually featuring in a festival which we will come on to later that Mikhail has created over in the Ukraine, China Moses with Watch Out.

That was China Roses with Watch Out. Mikhail Fridman is my Business Shaper today. I mentioned very briefly, I just touched on it there that China Moses has or will be appearing in a Jazz Festival you have created. Just give me a little bit about, I know you love jazz and you love music, just tell me a little bit about this festival? Why you created it?

Mikhail Fridman
As you already mentioned I am from Lviv, it is my native city. It is a very beautiful medieval city in the Western part of Ukraine. It’s former… also Hungarian empire, Poland and so on. It’s a huge history behind the city. It’s a handsome city, it’s a city of traders, city of people of different nation and religion and so on, very loyal, very kind of tolerant city and so on. I am very proud that I grew up there. I think I had enormous input from the city generally for my mentality, for my insight and a few years ago, eight years ago I was approached by the Mayor of the city with a proposal to make some gift for the city for you know like renovate a couple of buildings there. As I said it is all buildings and funding this not the best one especially because of unclear 31.54 Ukraine for the time being and I thought about it and I decided not to do that because I think that just provide some you know renovation of capital building is not very kind of sustainable project. I proposed for him that I go think and return to him back and after a couple of days I returned to him and I proposed to him to establish a jazz festival there. I think actually first of all as you said, I like jazz but it is probably not the most important. I think some city they will accommodate for a sort of type of music you know, I would doubtful for instance, I mean a lot of cities like London which is accommodated for everything you know, it’s the capital of the world your know, one of the capital of the world you know, the same probably in Moscow, the same probably in New York, a big city but I would say kind of the spirit of Lviv, the history of Lviv, the kind of architectural look of the city and you know, tradition and you know, people there it seems to fit very well for the jazz music and it says I think it will be useful for having that for artistic purpose because Lviv is one of the most direct artistic place in the Ukraine and I think that would be helpful for the city to have some kind of event there. So frankly one of the reasons was that actually was that achievable for us you know, to right a really first class jazz musician would be possible, it would not require millions and millions of dollars for doing that so we decided to just make a really international jazz festival there to invite first class players and artists all around the globe and make it kind of gift for the city and for tourists and for visitor and for the local inhabitant. And we have done it and fortunately they became very successful. What they proud right now it is not just only the three stages were arranging, each café in the city and each restaurant in the city you can listen jazz music. The whole city is alive all around the clock and you know it’s really kind of the most visible cultural event in the whole country in the Ukraine. We been just like it, I don’t think that’s just because of us that are just the question of the view we have done the right things in the right place.

Elliot Moss
Well it’s actually been in I think, one of the top ten best jazz festivals in Europe as well so it is obviously, it’s obviously been cemented as part of the global fixture of jazz festivals. Brilliant stuff. My final chat is coming up with Mikhail and plus we will be playing a track from of your artists from the festival which is Avishai Cohen. That’s coming up after the latest traffic and travel.

That Avishai Cohen with Lost Tribe, one of the featured artists at the Jazz Festival in Lviv. I don’t say it quite as well as you Mikhail, but in Lviv in the Ukraine. Just for a few more minutes I have Mikhail Fridman with me and we’ve been talking about friendship and business and all the sorts of things that go with success. You were involved in an oil and gas business which you sold to BP. There were some fights in between, you and BP fell out. There was a joint venture. I am going to shorten this long story into a very brief encounter for a moment. John Brown who was Chief Exec of BP is now involved with your business.

Mikhail Fridman
Correct.

Elliot Moss
Tell me about that friendship and how that evolves out of something which looked negative because to me now this looks very positive?

Mikhail Fridman
You know, a good question and I would say that doing business you understand that sometimes your interest and your goals could be different, right. It is not good for joint venture definitely and that is what has happened with BP sometimes. It was to a certain extent natural because BP was a global publically owned huge corporate. We have been privately owned, relatively small company which owned you know 50% of joint company. So therefore and in certain level of development the business deviation for goals was probably inevitable. But at the same time I would say that our personal relation was always very correct and always very professional. I respected him, I respect him very much and I hope he has the same feeling towards my partner and me and besides that I would say that our joint venture from a financial point of view was probably the most successful investment of BP in the whole history of BP and finally we have not sold our stock to be sold to Rosnieft as BP as well so we both of us sold our stock to state run company and we completely and BP partly came out from the whole business. And our personal relation retained in good shape actually since then and we have kept our relation alive within all this period of time with John and when, after kind of finish off our joint venture we decided to arrange new entity here like LetterOne. The first idea for investing I guess which was quite a natural idea for us, to include our history in business, the first idea was to invite John as a kind of head of our energy investment and I remember happy that he accepted our proposal and I think he is one of the most professional and knowledgeable person in that area, in that business and of course he is known international worldwide so I think together with him we are doing a very interesting project and I am sure we will get a lot of success there.

Elliot Moss
Very briefly because I am conscious of time, you mentioned moral and legal frame, I am just coming to that moral framework. You have a very strong set of values, you give away a lot of money to philanthropic causes. Just tell me very briefly the most important cause to you philanthropically?

Mikhail Fridman
With all the things one of the most important for us which I would like to mention would be probably Jewish philanthropy, primarily kind of purpose of this philanthropy is identity, the Jewish identity of primarily Russian speaking but not only Jews who are white. We are doing a lot of programme in Israel, United States, Russia, Ukraine, many other countries. Right now we are stuff to do some problem here in the United Kingdom, not for Russian speaking Jews generally for the Jews here and we believe that the phenomena of Jews, they ask for general in the War is quite important I think. Jews made a lot of contribution toward world culture, world science, you know, world politics and so on and so forth so I think they retained this phenomena in vastly changing world and very international because when politicians they are leaving all of us right now, it’s important for the future of mankind so that is what we are trying to achieve.

Elliot Moss
Very good, Mikhail I am going to have to say goodbye and thank you, thank you for being my guest today.

Mikhail Fridman
Thank you for the invitation.

Elliot Moss
Just before I let you go though, what is your song choice and why have you chosen it?

Mikhail Fridman
I would be happy to listen to Dave Brubeck, Take Five.

Elliot Moss
Excellent here it is just for you.

That was Dave Brubeck with Take Five, the song choice of my Business Shaper today, Mikhail Fridman. Totally adaptable right from the start of his career as he moved to become an entrepreneur. Someone who talked about being both analytical and understanding human nature and also importantly being aggressive and protective in business and finally I think, someone who also understood the power and the importance of friendship. Really interesting stuff. Do join me again same time, same place, that’s next Saturday 9.00am sharp for another addition of Jazz Shapers. Meanwhile stay with us because coming up next it’s Nigel Williams.

Mikhail Fridman

Mikhail Fridman was born in Lviv, Ukraine and has Jewish heritage. He graduated from the Moscow Institute of Steel and Alloys in 1986, with distinction, having studied metallurgical engineering.

In 1988 Mikhail co-founded Alfa Group, a multinational conglomerate. He served as chairman of the 50/50 TNK-BP joint venture for nine years and in 2013 he sold his stake in the oil company before co-founding the international investment company LetterOne.

This year Forbes ranked him the seventh richest man in Russia.

Listen live at 9am Saturday.

In the early 80’s I tried to enter the best Soviet University in Moscow. I was rejected, not because of my academic knowledge but primarily because of my Jewish religion. It was difficult to get in with a name like mine.

I am very proud that my partner and I have retained our relationship over many years. It started from a very simple business like washing windows.

I’ve seen a lot of examples where success destroys relationships.

What’s the most important thing in business? I would say a combination between analytical ability and a good understanding of human nature.

Private banks didn’t exist in the Soviet Union so we decided the simplest way to get money for working capital was to establish our own bank. Now we are the largest private bank in the country.

To be aggressive in business is positive. Not aggressive in a bad sense – you need to protect your business interests. It’s necessary, especially in an environment like Russia.

We’ve been to Court. It’s very important to keep certain moral standards when doing business.

I am from Lviv, a medieval city in the Western part of Ukraine. It’s a handsome city, a city of traders, a city of people of different nationalities and religions – very kind and tolerant.  It seems to fit very well with jazz music, so I proposed we set up a jazz festival there.