L E A D IN G E D GE
MARKE T FORCE S How then can family businesses gear up for this 2050 vision? Arbib says the first critical step business leaders need to take is to understand what the disruption might look like, sector by sector, and what the implications are for those incumbents or for potential new entrants. That understanding will inform the strategies they should be adopting as an investor. Families of wealth from business are
renowned for taking the long view. One family principal memorably once said to CampdenFB that despite the disruption and uncertainty Brexit causes now, no-one would care in 10 years’ time. However, Arbib warns against
burying one’s head in the sand. Certain sectors will be disrupted more than others, but all sectors will experience some disruption and no sector exists in isolation. Change often enters from outside the market. Businesses of longevity may be set up to adapt to incremental and linear change and improvement, but the track record of existing companies which thrived during seismic changes in economies is far from great. Coach makers gradually improved
their horse-drawn carriages over centuries then disappeared in a matter of years with the disruptive advent of the internal combustion engine. There was a plethora of search engines when the internet went mainstream and now there are very few. The same natural selection is expected with cryptocurrencies and there are no guarantees Bitcoin will emerge as the new Google. Asked if family businesses must
‘adapt or die’, Arbib says there will be time over the next decade or two for principals to explore more options, like merge, acquire, split, or sell. Arbib says the principals of all ages he
meets at seminars around the world are genuinely interested in the potential for change, especially the next generation. But it is much harder for holders of
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patient capital to make five, 10 or even 25 year plans now. He counsels a constantly evolving plan in the expectation that industry conditions will not remain stable for long. Arbib oversees a family office with
a diversified portfolio across all asset classes, so what is he doing to future- proof his interests? “We are in the early stages of
working out what we do about this because we like it as a theme but there is not a lot of investment product out there that we feel comfortable with or that understands this process. “Things like index tracking might
be dangerous because you have got an overexposure for businesses doing well and an underexposure to some of the disrupters. A lot of value is being created off-market these days.” Arbib paraphrases a 1999 comment
by billionaire investor Warren Buffett, who said there were about 2,000 US auto-makers at the dawn of the industry, that had an incredible impact on people’s lives, and now there are three. How could families know which companies to invest in? A family business may well be
disrupted, but you do have choices, Arbib says. “You can try and lead the disruption
yourself or you can try and buy the disruptors and get ahead of it. You are not entirely exposed—doing nothing is not a great idea, but you do have options. It does not have to be bad news, but it does require some active management.” Stevenson says multigenerational
families can probably protect themselves from the worst excesses of a changing world, but the question is, is this the right thing to do? Stevenson says awareness is slowly
growing among family offices and wealth holders. Sustainable scalable solutions do exist. However, those solutions do not sit well with people who have made their wealth “the old way”.
We need to destroy the opportunities for short-term aggressive money to put quick gains above the
survival of the species
“Your question is, as a high net
worth, do you want to help 500 million family farms out of poverty and return our agriculture to sustainability by promoting agroecology, or would you like a short-term gain that might come from an agribusiness investment that is contributing to our soil problem? “If you are thinking about succession
planning, the latter makes no sense because your kids grow up into a world where everything has gone wrong: We have mass war, a refugee
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