The madness of King Michael

Why did you choose a career in banking and investment?

I always wanted to work in the City and was excited by financial markets – I used to fantasise that I would like to have been one of the great financiers of the nineteenth century.

How did you develop into a successful entrepreneur?

'I was motivated by feeling that even if I tried and failed, I would be happier than if I didn’t try at all.'

I always thought I would like to build and run a business. Before starting ICAP in 1986, I ran a small team of brokers – and had the crazy idea that we could build a boutique broking firm. I was motivated by feeling that even if I tried and failed I would be happier than if I didn’t try at all. I had no high expectation of success: my two biggest clients told me I was mad so I didn’t speak to others in case it put me off! I put my best foot forward – and got lucky. We did things right and also benefited from the increasing popularity of derivatives.

Did it happen all at once, or in stages?

ICAP started with four people and evolved progressively. By the mid-1990s we had 300 staff. In 1998 we did a reverse takeover and came into the public arena with a 60-odd million pound market cap. Since then we have grown organically and through acquisitions. Our market cap is now at £3 billion sterling.

What are the key lessons that you learned?

Don’t be afraid of making decisions... but accept that there is no chance that all your decisions will be right ones. When they’re not, accept that you’ve made an error of judgement and take it on the chin. Sticking with bad decisions will only compound the mistake.

How did you learn to set yourself objectives, calculate risks and measure your performance?

In the early days of ICAP, I didn’t do any of those things! In the morning we came into work, picked up the phone, and tried to make money.We had no budgets, forecasts or strategic objectives. It was very much on a daily or weekly basis. From the outset the firm was profitable and had a fun, dynamic atmosphere as it was a young and growing firm. Processes were introduced, of course. But it didn’t come instinctively – I’m more of a buccaneering entrepreneur than an organised process manager! I’ve had to develop these skills, although it’s not something that really excites me.

What have been your biggest achievements?

I suppose it would be starting a firm with four people and being in the FTSE twenty years later! I’ve also stayed working full-time at ICAP – and I haven’t sold any of my shares in the company.

What tips can you offer graduates?

'Banking and investment is dynamic and exciting. If you like financial markets, are ambitious and want to make quite a lot of money, it’s a fabulous place to be.'

Banking and investment is a dynamic and exciting area. If you like financial markets, are ambitious and want to make quite a lot of money, it’s a fabulous place to be. I believe that the City of London is right at the centre of the world’s financial industry today – there is no better place to work. Personality is a critical quality: people who are outgoing, with energy and passion, will do well. They also need to be interested in and understand financial markets and it’s important to want to work somewhere fast moving. Finance is increasingly global so languages can be very important and it’s crucial to be able to interact with people of other cultures. You need to be able to develop relationships of trust, reliability and good humour.

What is an interdealer broker?

Brokers establish a venue where people can buy and sell financial instruments – eg bonds, equities etc. The broker provides a pool of liquidity in which people can buy and sell: they can discover prices for buying or selling and then execute their transactions. Instead of making numerous phone calls to other banks to find out their prices, customers can make one phone call to a broker who knows the best price. Customers also use brokers to trade anonymously: if you disclose your identity and the other party believes you have an interest, they may adjust their price so that it’s not the best one. If you go through a broker, you remain anonymous until the point of execution.