The Agitator

zoom

zoom

Living legend: Steve Forbes has cast an imposing presence over the business world for decades.

zoom

Rock n’ roll capitalist: Bono’s company Elevation last year paid US$250m for a 40% stake in the Forbes media empire.

zoom

Judgement call: The legacy of US president George W Bush will hinge on Iraq, says Forbes.

zoom

zoom

zoom

zoom

zoom

zoom

stop

It’s 10am and freezing in New York City. At the Forbes Building and Galleries on 62nd Fifth Avenue — which houses everything from a publishing empire to military paintings and Faberge eggs — Steve Forbes is in a rush. He may be approaching 60, but there are still deals to be done, industries to be changed, world leaders to be cajoled, and the small matter of making serious money.

“A lot of people seem to think all the world’s coming to an end. It isn’t, I assure you. Wise entrepreneurs, the ones who know how to manage balance sheets and have an eye to the future, only see opportunities,” he says.

Few would disagree that Forbes himself is among the wisest. The publishing empire that he runs — started by Scottish immigrant B.C. Forbes in 1917 — is now worth over US$1bn, led by the flagship Forbes magazine and the money-spinning Forbes.com website. Since taking over as president in 1980, he has overseen nothing but spectacular growth, even surviving the dot.com crash of 2000. Having run for president twice, Steve Forbes has also elevated himself to the role of business guru and elder statesman, and is a close confidant of most Western leaders.

When Forbes speaks, the world generally listens. And Forbes has no intention of stopping speaking, this weekend taking his platform of business ideas to the World Economic Forum in Davos, followed by a leadership forum in Doha.

The Forbes private jet may be busier than ever, and as Steve Forbes checks his briefcase before heading to JFK Airport, his mind is racing faster than ever. “It’s important to go to Davos. People don’t go to Switzerland and then drive three hours from Zurich, in the middle of winter, and not go skiing just to stay in a remote town, unless they think they get something out of it. If you want to take a vacation there are plenty of other places that are more accessible,” he says, adding: “It’s a mobile brainstorming session.

It’s the dinners, the lunches. It’s different when you read something to when you have the piece of information flushed out with living people. Talking is still faster than typing on your BlackBerry.”

And there is much talking to do. Forbes is being joined this week in Davos by Bill Gates, Michael Dell, the bosses of Intel, Coca Cola and BP — not to mention 24 heads of state and Arab business leaders such as Mohammed Alabbar. Top of the agenda, Forbes says, are climate change issues — particularly for Arab companies and countries.

“The interest in green issues seems to grow each year and there will be a number of sessions revolving around that. People realise that unless there are some transporter solutions it’s unreasonable to expect a particular country or even continent to make much progress.

“One region or one country is not going to be able to do it alone. If there’s a consensus people will go along, if there isn’t, people are not going to pull away from their own immediate concerns. A gathering like this does give more dynamism when people go home.”

After Davos comes Doha, and in the past two years Forbes has taken a far greater interest in Middle Eastern business affairs. He launched Forbes Arabia out of Dubai, and has become familiar with the region’s wider business issues. But he insists that talk of the current boom leading to bust is unfounded as Arab governments have been smart enough to diversify their economies.

He rejects suggestions by the likes of Kanoo Group deputy chairman Mishal Kanoo that property markets are on the verge of a spectacular crash. “As any real estate developer will tell you, it’s location, location, location. Even if the market cools off or even has a tumble for a while, the key thing is that a lot of economic infrastructure is being put in.

“This goes beyond physical real estate assets. It’s the brain power. Places like Dubai have made themselves hubs for all kinds of activity, so even if things get ahead of themselves, there is being developed a broad-based economic infrastructure. Wise investors and entrepreneurs are always looking where others aren’t. When you go beyond the headlines, there are opportunities,” adds Forbes emphatically.

He adds: “Look at Texas as an example. 20 years ago it had a terrible crash when oil plummeted, and even some banks went under. But even though that sector was undergoing a depression, Texas as a whole during that time increased its population. It was becoming a high tech hub.

“Diversification is key. You can’t prevent excesses in certain sectors but it will certainly enable you to bounce back. And there’s no shortage of liquidity — look at housing in New York, the prices are starting to perk up again after taking a tumble.”

One business certainly not taking a tumble is Forbes’s own. Although profits are not published, he confirms that revenues on the Forbes.com website are up 50% in the past year, with ten million hits a month.

Seven years ago, when most companies froze their investment in IT after the dot.com crash, Forbes kept it going — even increased it. That has now paid off, with the website soon likely to overtake the flagship magazine in terms of revenues. But just how much is the empire worth?

Last year a 40% stake was sold for US$250m to the Elevation Fund, controlled by rock star and U2 frontman Bono. The deal, put together by JP Morgan, was done to help Forbes develop its digital businesses, though the coming together of a world-famous capitalist and an even more famous anti-poverty campaigner raised many eyebrows.

Forbes though insists that Bono and his advisors are no fools when it comes to business. “We thought it was a great opportunity to sell a minority stake to an investment fund that had an appreciation of what we are trying to do. We wanted to work with people that look beyond just numbers, and they understand content better than I think just about anyone else does,” he says.

“They understand that the boundaries have been blown away so those people who are prepared to take risks and make investments could do extremely well.”

The deal with Bono is likely to see a further evolution of the magazine business into digital publishing, and a strengthening of the website. It is, says Forbes, something all publishers need to do. “You look at one of the mainstays of the advertising business, which has been the 30 second TV commercial. That was bigger than print, bigger than radio. That’s where the bread and butter was. We were in the print business. We weren’t going to be running 30 second TV commercials. But now on our website, you can run 30 second commercials as five second ones. So we’re in broadcasting, not because we bought a TV license but because of the web. The world is only just beginning to grapple with the huge implications of what’s happening there.”

So does the digital drive mean the beginning of the end for the print world? Forbes says: “No that’s overdoing it. The model of newspapers has to change dramatically. Just as radio and TV has undergone many metamorphoses — you had network TV, then crash TV, then music stations. These things change but they don’t disappear. Likewise the print side will become very different.

“It’s not going to see the kind of growth that we have seen on the electronic side but we have found that by having a robust website, that enhances the credibility of the magazine. We don’t see it as a cannibaliser — we see it as one enriching the other.”

While he carries on developing the media empire, the next two years promise to be even more hectic for Forbes, as the run-up to the US presidential elections begins. Given the fact he has stood for the Republican nomination twice, in 1996 and 2000, many experts now look to him for advice on how the political map will unfold over the next two years. Not surprisingly, Forbes says that US president George W Bush’s only criteria for success or failure will be Iraq — but that the president can still succeed.

“Iraq will turn out for the better if the US learns how to fight an insurrection. It’s been done many times before. The Brits did it in Malaya and we’ve done it before as well but we had a strange way of doing this one, which was not to secure areas. Counterinsurgency 101 — they should have taken that course three years ago,” he says.

As for the Democrats, Forbes says it would be foolish to underestimate Hillary Clinton, who he predicts will be “formidable” in a general election.

But what about Forbes himself? Any chance of throwing his hat back in the ring? 11 years ago Time magazine ruined his hopes of the Republican nomination by running a special issue, tearing apart his plans for a flat rate of tax across the US. That same magazine is now advocating the benefits of a flat tax rate.

Like many of Forbes’s other revolutionary ideas in 1996, they were dismissed then but are being embraced now. So does that frustrate him? “No, it underscores the virtues of persistence and remedial education. Eventually people learn. My role in politics now is that of an agitator. The students eventually learn,” Forbes smiles.

As our meeting finishes, Forbes prepares to leave for the airport. Several hours of flying, driving and talking lie ahead in the coming two weeks, but he seems keener than ever. “You see,” he says, “when something is growing rapidly like our business, it makes it very easy to get out of bed in the morning.”

Print | Email | Discuss this article |

USER COMMENTS (0 COMMENTS)

POST A COMMENT

CLICK HERE TO POST A COMMENT

Add your Comment All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason. Please keep your responses appropriate and on topic.
Name *
Remember me on this computer
Email *	(Your email address will not be published)
City
Country
Subject *
Comment *
Notify me of further comments
Security Code *
Please click post only once - your comment will not be published immediately.