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Faster, Cheaper, & Better

Founder of WPP and Founder, Executive Chairman S4 Capital

IP Interview
Published on December 27, 2020

Why is this interview interesting?

  • How S4 is built on being faster, cheaper, better than competing services
Executive Bio

Sir Martin Sorrell

Founder of WPP and Founder, Executive Chairman S4 Capital

Sir Martin Sorrell is Founder and Executive Chairman of S4 Capital plc, which is building a purely digital advertising and marketing services business for global, multinational, regional, local clients and millennial-driven influencer brands. Sir Martin was CEO of WPP for 33 years, building it from a £1 million “shell” company in 1985 into the world’s largest advertising and marketing services company. When Sir Martin left in April 2018, WPP had a market capitalisation of over £16 billion, revenues of over £15 billion, profits of approximately £2 billion and over 200,000 people in 113 countries. Prior to that, Sir Martin was Group Financial Director of Saatchi & Saatchi plc for 9 years and worked for James Gulliver, Mark McCormack and Glendinning Associates before that. S4 Capital plc merged with MediaMonks, its content practice, in July 2018 and MightyHive, its programmatic practice, in December 2018 and has added eight further content programmatic and data companies to both practices in 2019 and six in 2020. It is listed on the London Stock Exchange under SFOR.L and after a little over two years, S4 Capital plc has over 2870 people in 30 countries, with a market capitalization of over $2.7 billion. Sir Martin supports a number of leading business schools and universities, including his alma maters, Harvard Business School and Cambridge University and a number of charities, including his family foundation.

Interview Transcript

If we just take MediaMonks, what would you say their competitive advantage would be in winning new content business?

It sounds a bit glib, but it all stems from faster, better, cheaper. The alternative way of describing it is speed, quality, value. Faster, as I said, is about agility; better is about understanding. It’s worth running through the companies; Google, Facebook, Amazon, Tencent, Alibaba, TikTok – to anywhere it goes – Apple and Microsoft, Adobe, Oracle, Salesforce, IBM, SAP, Twitter, Snap, Pinterest, LG, Samsung, Spotify, Netflix.

Can’t the holding companies win some of this business?

They do. I was just talking, in Australia, where there were two big Adobe driven pitches. We didn’t pitch one of them; we weren’t invited on one of them. On the other one, we won. Who did we win against? The incumbent was AXQA. They can, I’m sure, and they will try to. As I say, their organization gets in their way.

When looking at driving a real competitive advantage, as a network, over the next five to 10 years, as S4, what do you really focus on?

Those four things. Focus purely on digital. It’s half the business at the moment and it will be 70% within a few years. Understanding the holy trinity model of faster, better, cheaper. And the unitary structure. Those are the four things and that’s what applies to our content practice around MediaMonks and our data and digital media practice, around MightyHive.

How do you think about allocating the cash flow from the core business?

Our structure remains the same. We don’t pay a dividend at the moment and we’ve said that we’ll probably pay a nominal dividend in due course, but in terms of the rates of return that we get in the capital allocation process, where can you get the better return? The better return is by investing in our business. For example, our Epic investment, our Fortnite investment in India, in the new technologies; our production centers in Buenos Aires or in New Delhi or Kazakhstan or the Ukraine or wherever it happens to be. Those are data and analytics centers. Obviously, also investing in M&A. The structures of our deals remain the same; basically, half shares, half cash. No earn outs because that creates fragmentation. That’s part of the problem. WPP will probably go off and buy companies and they’ll have people who want to sell, which is a key thing. You don’t want people to sell; you want people to buy in or sell into your company and you want people to continue. It’s no good having companies drop dead after the earn outs.

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