At the vanguard of an ethical business
When starting a business it’s easy to get consumed by P&L and that all-important bottom line (understandably so), but as Sezer Sherif, Founder and CEO of brokerage and investment advisory firm Vector Capital Group explains, that doesn’t mean you can’t build a business with a strong code of ethics and corporate social responsibility (CSR).
Coming from a humble background and growing up in a one-parent household, Sherif’s first introduction to a motivated work ethic came from his mother, who worked multiple jobs in order to support her two children. “We grew up on council housing estates, so not the nicest environment,” he commented, “but I saw first-hand my mother’s ethics of just constant work, to the point that she actually started her own business. She was my inspiration and it taught me that you can take charge of your own future – don’t be afraid.”
However, Sherif’s journey is proof, if any were really needed, that life and business does not follow a consistently increasing upward curve. In reality, it is full of peaks and troughs, and it was during the late 1990s that Sherif’s journey hit one such nadir. His mother’s business was unfortunately unsuccessful, and skyrocketing interest rates meant that the family home was repossessed and Sherif essentially became homeless – moving around from hostel to hostel for the next three years before they could regain any semblance of stability.
While this period was undoubtedly tough, especially for a teenager regularly having to change schools, it also served as the foundation for Sherif’s drive for success. “I knew I was good with numbers and I knew I was a good student,” he continued. “I couldn’t go to university due to my family situation, but I reached a certain age where I took it as my responsibility to look after my family. I always knew I wanted to work in the financial markets, it was just a question of how to get in.”
A numbers game
Sherif’s tenacity essentially saw him badger companies at the London Stock Exchange until, eventually, one offered him three weeks work experience to stop calling them. He commented: “I researched the company, and what they traded in, and got my knowledge up to speed as quickly as I could. So, by the time I arrived my knowledge base was more than some people who had been there for 12 months. In an environment like that, people started to become aware of me. By the end of the three weeks I was offered a job, passed my financial markets exams three weeks later, and then got on the phones.”
Because Sherif didn’t come from the traditional hiring route of the higher end universities, he knew he was up against it. “I worked my backside off,” he continued, “and by the time I was 23 I was made a partner in the company as my performance was exceeding some of the guys who’d been there for 20 years.
“It was then I realised that I wasn’t built to be employed. Even as a junior I was taking charge, and I never enjoyed being told what to do. The key for me was that I was young and still learning, but I had that confidence and self-belief that I could do things better. However, it became all consuming, I had no life – I was working all hours of the day, my family hardly saw me, and I had no time for relationships. This is fine when I was younger as I had secured my family, but it was ultimately not what I wanted to do.”
A fresh start
By his late 20s Sherif decided that he’d become burnt out in the brokering game and was going to start again and build a business of his own - an energy trading house, a foreign exchange brokerage, and a private equity business where he invested into startups.
He quickly grew his team to around 40 people within the group, and used his experience of the financial markets and the relationships he’d built to bring in young hungry talent and branch out across the three businesses. “We were picking up awards across the board and were really getting put on the map,” he added. “Some of those businesses were very successful, and some taught me some harsh lessons from the monumental failures.
“Looking back some of the businesses grew very quickly and I tried to control them across the board. Where I succeeded at such a young age, I let my ego run away with me and I didn’t know how to share my businesses with other people – all I knew was how to dictate to a team around me. I didn’t know how to take criticism, how to mitigate problems when they arose, or how to deal with the obstacles of growing so quickly.”
Having experienced a few business failures around 2012 it certainly knocked Sherif’s confidence to the extent where he entered a kind of semi-retirement. “There was a lot of mess and problems created from bad business ideas,” he added. “I didn’t know how to deal with failure, and given that everything I’d done previously I did on my own, I had no real support network around me to help me deal with the tough times.”
Sherif admits that this period took its toll mentally and financially, but it also allowed him six months to take stock of his situation – deciding that he was either going to sit in the hole he was in, or he was going to make it into a strength.
He continued: “I looked at myself and asked what it was that I had got wrong? Business owners often blame the world around when things don’t go to plan. However, you always have to look internally - at either you as an individual or the way you are building your business, because your business always reflects your character.”
So, this hardship gave Sherif the time, the space and the reality check he needed to look at what was important, what was the right way forward, and what it was that he stood for as a person.
And ethical business
And it was this episode that brought Sherif to the place and person he is today. “I was always 100% dedicated to my work,” he added. “People always talk about chasing the work/life balance, but that wasn’t important to me. I was all about my work. However, the problem was that my work didn’t reflect me, I reflected my work.”
It was then that corporate social responsibility (CSR), came to the forefront of how Sherif wanted to run his business. “As a person that has been homeless twice in my life, I don’t want anyone to suffer in the same way I did. I know what it did to me mentally, I know what it did to me financially, and I know what it could have done to me if I was a weaker person,” he added.
Statistically most people have enough money to survive a month without income – after that most people are homeless, which means in reality, many of us are only a matter of weeks away from the streets – a sobering thought.
Since 2009 Sherif has worked with homeless charities, with the goal of building a business that shares the ethics of the individuals who work there. He continued: “When I set up Vector Capital Group the idea was always to build a group of companies around what I love the most, which is financial markets. However, crucially it was also about getting the foundation of the business correct and this was built around the ethics and the culture that is important to us as individuals.”
Every deal done by Vector Capital Group has to share the character of the individuals within the company and that of its partners. “This is what has actually been our biggest asset as a business and has helped us to grow more than anything else. We hardly ever talk about returns or products to our investors. Clients come to us because of our ethics.”
Sherif added that compassion, integrity and a good set of ethics are fundamental in order to work at Vanguard Capital, in an industry whose reputation has been tarnished over the years. “Ethics and shared values are important,” Sherif continued. “We’re building a family so we want to know that you have the same character, outlook and drive, and then we look and see if you have a complimentary skillset that can bring value to our business in terms of knowledge and experience.
“We know that traders in banks have a bad rap. Traders are not bad people, but the way the banks have been run historically has been bad, and that’s what has generated the negative headlines within financial markets in recent years.”
And it’s here that being a smaller business can be key. The bigger banks have been forced to change their culture to adopt a more ethics-based approach – which can take time to translate through a very bureaucratic framework. However, where banks have traditionally been run on greed and risk, are competitive and have these opaque products, they can all too easily step outside of an ethics-based approach.
“However, in a smaller firm like ours, we’ve grown up with that ethics-based approach,” said Sherif. “While we are competitive people and want high returns, we also want to be able to look ourselves in the mirror and be proud of what we’re doing.
“We are building a model that doesn’t exclude anyone. Traditionally the investment management arena has always been a closed-door industry. It’s been very high-brow, exclusive and secretive. Not much is known about the trading strategies, and the levels of investment for entry have always been very high. I believe we live in an age of free information and technology is more accessible to people than ever. So, why should the man on the street be restricted? If we can create products that are simple, transparent and honest, why should it be just the elite that gain access to that product?”
The bonus of ethics
When it comes to CSR, for Sherif it’s very simple, and that’s knowing what’s important to you. If you want your clients to get a feel for who you are then the easiest way to do that is to find a cause that has a relevance to your business or has an importance to you as an individual. “The uplift from that will mean you’ll attract employees by default,” he added. “It wasn’t part of our design but by saying loud and proud what is important to us and why, individuals wanted to work with us, because our cause was also dear to them. And because we were taking the time to offer support to those less fortunate, it says a lot about our character and individuals want to be aligned with that.
“So, what started off as just us sharing our story became part of our business model, and the consequences of that, which none of us were aware of, was better, more ethical employees, who like the message and share the value.”
Having a good CSR within your business helps to maintain a balance between the bottom line and ethics and values, especially when you’re working within an industry that is high value and is all about the numbers, which can be all too easy to get lost in.
“The CSR side of the business is not only our message to people to tell them what is important to us as individuals and as a business,” Sherif concluded, “but it’s also a way to keep ourselves grounded. I think this is really important and our business model is always linked to our CSR.”
He stressed that the sooner a company implements CSR the better – prevention is always better than cure, and if you do it from day one then it is integrated into the core of your business, which means it is unaffected regardless of whether or not the business model changes.
“Look at Air BnB – they had to launch themselves three times before they got it right, and your model isn’t always what you started with. Amazon’s business model for example, has changed dramatically since they started out. The thing that doesn’t change is your ethics and your mission, so if you get your CSR in place and it aligns with your core principles as an individual, whatever goes on within your business and whatever path it takes, you will always be on the right side of morality, integrity, and ethics.”