He has the best connections and a great brain for business, yet Mark Carnegie still gets up people's noses.
To his many fans, Mark Carnegie is one of the brightest stars in the business world. They believe he is a rare example of a merchant banker who is an incredibly clever original thinker, searingly honest and loyal. His critics agree that he is extremely smart, but say he is also smug, pompous and loud, with a born-to-rule attitude stemming from his privileged upbringing as the son of the industrialist Sir Rod Carnegie. One investment banker says: "He's the most arrogant person I've ever met; he thinks he's always right about everything. In any negotiation he's the first one to stand up and scream and shout and bully. And he's very good at pissing people off."
Broadcasting industry veteran Sam Chisholm, a powerful figure in the Australian media, shows Carnegie's ability to annoy people. Chisholm abruptly resigned in July as chairman of Macquarie Radio (owned 14% by Carnegie and 66% by John Singleton) after Carnegie publicly announced plans for a fourth Australian commercial television network, putting Chisholm in a difficult position because of his then Telstra and Foxtel directorships and his long association with the owner of Nine Network, Kerry Packer. Chisholm, who recently joined the PBL board, clearly dislikes Carnegie, but will only say on the record: "I found working with Mark Carnegie a very challenging experience and no doubt he found the same with me."
In June, it was Packer executive Peter Yates who crossed swords with Carnegie when the two had a public slanging match at the Australian Broadcasting Authority conference in Canberra. Again, the issue was a fourth Australian television licence. Carnegie says: "I did go f-ing berserk about the existing networks crying poor. There are five million families in Australia and the Government's given three of them $3 billion of spectrum for free." Carnegie, 42, says he is not always the first person to stand up and shout, but "there are some people who just send me f-ing wild". Who? "The people who assume that I, or my clients, or my partners, are stupid. A massive amount of negotiation in Australia starts on the basis that the other person's a f-wit."
It is this bluntness, and his refusal to blend into the herd, that seems to get up the nose of the business establishment that Carnegie's father is so much a part of, but it delights those who have formed close, long-term business relationships with him. That group includes advertising guru John Singleton, investment banker John Wylie and publisher Eric Beecher, who readily admit that Carnegie does not tolerate fools and irritates many people, but who also say he is an exceptional businessman and good company. As Beecher, who worked with Carnegie for a decade when Beecher ran Text Media and Carnegie was a part-owner, puts it: "It's like he wears this set of glasses to see things others don't see. He has this prescience, he thinks like a chess player. He's more like a psychologist or a student of human behavior than a market player."
Singleton credits Carnegie with much of his success in the past decade. "He's added a whole new dimension to what I've been able to achieve - he just comes at business issues from a whole new angle." The two first met when Carnegie was a "very junior ankle-biter" during Conrad Black's takeover of Fairfax in 1990. Singleton says that in the midst of all the other supposed advisory gurus, Carnegie was the only one making any sense. Three years later, Singleton gave Carnegie, then 32, his first serious corporate role in Australia, as chairman of his advertising agency when it was floated in 1993. (Carnegie is still chairman, of what is now called STW Communications Group.)
Carnegie, although close to Singleton, is keen to emphasise that being Singleton's investment partner and adviser is not the only thing he does. He was initially reluctant to do an interview for this profile, fearing that it would be just another excuse to talk about Singleton. "It will be on my tombstone," he jokes. "'Son of Sir Rod and business partner of John Singleton'."
His main focus now is being the co-partner of John Wylie in the boutique advisory and investment group Carnegie, Wylie & Company (CWC). The pair met 20 years ago at Oxford University, where Carnegie was treasurer of the famous Oxford Union (debating society). Early in 2000, they hung out the CWC shingle, which Carnegie describes as an "old-style merchant bank", giving strategic advice to a few clients over a long period and sometimes investing in their clients' businesses. He contrasts this with the deal-driven transactional advice of the big investment banking firms.
"Relationships are very much a defining feature of what I do," Carnegie says. "I have a very small number of deep relationships, less than a dozen. I think business problems are not capable of quick solutions and I genuinely enjoy the deep relationships." When asked how he chooses who to trust as a business partner, Carnegie offers a "family hold back" homily: "If you say 'cut the cake', you know for sure that they're going to cut the cake and take the smallest part. There are very few people who you can absolutely rely on to walk away from a partnership feeling like the other person did better."
Wylie was a Rhodes scholar and the co-head of CS First Boston in Australia at 33. He says Carnegie is "streets ahead" of most people in investment banking, which can intimidate them and make them jealous. "I've worked in New York, London and Australia, and there are not many people that have such an incisive financial mind as Mark. His capacity to cut to the core of complicated commercial issues and immediately see the key upsides and downsides is extraordinary."
Carnegie says this is a skill he learnt from Lloyd Williams. "He was the first person to explain that you reduce everything [in a deal] back to the simplest thing, and once it's simple, it has to be overwhelming. Bet on certainty." He also says Williams gave him his first view of a "genuine grass-roots entrepreneur", triggering an interest in smaller, owner-managed businesses, rather than big corporations.
The Lloyd Williams connection came about through Sir Rod, who was on the board of Hudson Conway where Carnegie worked for two years, in London and the United States. Sir Rod was also a friend, through Harvard Business School, of two other key figures in his son's career: the San Francisco funds manager Warren Hellman, of Hellman & Friedman, and the expatriate Australian investment banker James Wolfensohn, based in New York. Carnegie is the first to admit that his surname has helped him in business, but he also says that this alone is not enough. "Singo's got a great line about me: 'You've managed to get both the valuable things in life: the silver spoon in the mouth and the chip on the shoulder.' You need ambition. The problem is, many people with a privileged upbringing think, 'Well, I can be a do-nothing f-wit'."
Eytan Uliel, who has worked with Carnegie since 1997, says that within the CWC office, Carnegie is known as the washing machine, where concepts, thoughts and ideas jiggle around and come out nice and clean. He rarely writes or types anything. Five years ago, Uliel began compiling Carnegie's Little Blue Book, a 30-page dictionary of Carnegie's pet sayings, many of which are jokes against the investment banking industry. For example: "Al Pacino" (someone who desperately wants to escape from investment banking, but cannot - from a character in the film The Godfather who wanted to escape from a life of crime) and "duck hunting season" (usuallyJanuary, when investment bankers scramble to associate themselves with deals while bonuses are calculated).
This mockery of the investment banking world extends to Carnegie's desk, above which is a picture of the former British Prime Minister Neville Chamberlain waving the famous "peace in our time" agreement from Adolf Hitler after Munich in 1938. Wylie explains that this symbolises investment bankers' desperation to get any deal signed. Carnegie, a keen reader and student of history, also has above his desk a portrait of Marshall Georgi Zhukov, the Russian commander who won the battle of Stalingrad in 1942 and captured Berlin in 1945, and a fish clock, which makes splashing noises on the hour.
This last item points to one of Carnegie's great passions in life: fishing. In Singleton's book, Carnegie spends too much time fishing (about six weeks a year). Singleton recently accompanied Carnegie on a fly-fishing trip to Iceland to try to understand the obsession. "Every week that Mark is working is a week he's away from fishing, so his attitude is that work better be interesting."
Flitting off to go fishing compounds the view of Carnegie's critics that he lacks focus and application. Even Carnegie, when asked about his biggest weakness, says he has a short attention span. He also admits to an inherent long-shot bias, especially in Asia. His disastrous investment in the Indonesian television station SCTV, made through CWC and STW, is an example. In May, Carnegie offered to resign as chairman of STW, describing the investment as "a significant error on my part". (Singleton rejected the offer, describing Carnegie as "irreplaceable" and "not stupid but honest".)
When asked about any mistakes or regrets, Carnegie does not mention SCTV. He says he has made "hundreds of mistakes, every day" but his biggest business regret is not buying the second commercial television licence in Darwin, when it sold in 1996 for $2.1 million. "We were diverted, we didn't really focus on it, I was just a d-head ... If you make an investment, the worst it can do is go to zero. You don't make an investment and you can forgo 10 or 20 times your money. My big regrets have always been opportunities that were obvious and we didn't do them."
His other big regret is not having lived in Asia, which fascinates him. He has a six-year-old daughter, Matilda, with special needs, and he and his British-born wife Tanya have set up a school in Sydney to cater for her and other children with similar disabilities, which include deafness and autism. "It's a big part of our lives," Carnegie says. "Were it not for starting the school, we would have gone to Asia."
Singleton and Wylie are surprised that Carnegie has mentioned the school. Wylie says: "There are any number of people in the business community who are quite happy to sit on boards for charities because they are keen to be seen as doing the right thing. Mark is keen on making a difference and is very low-key, he never publicises it ... he has a gruff exterior, but is a very sensitive and considerate bloke." Singleton says the school is a typical example of Carnegie doing things his own way, after top medical advice that Matilda would be in an institution for life. He also says Carnegie has helped resettle refugee Sudanese families in Warrnambool, although Carnegie is reluctant to discuss it and says Singleton is also involved.
Beecher also says Carnegie is keen to "make a difference" to Australia, but he has not yet worked out the best way to do it. "He thought about politics a while ago but realised his tolerance levels were not up to it." Singleton has no doubt that, certainly within the business world, Carnegie could be anything. "He has the mind, the morals and the ethics to be one of Australia's great business leaders - if he turns up at work."