The network effects

Superhubs

How the financial elite and their networks rule the world

Sandra Navidi

Nicholas Brealey Publishing 

289 pages; Rs 599

In 2010, Anthony Scaramucci, the founder of SkyBridge Capital, a US-based hedge fund, approached Vikram Pandit, then chief executive officer (CEO) of Citigroup, hoping to buy Citi’s $4-billion portfolio of hedge funds. Mr Pandit obliged. 

Overnight, SkyBridge’s assets under management shot up to $6 billion, catapulting the hedge fund into the big league. 

Where did the conversation begin? Davos. 

Networking matters. And perhaps there is no other place in the world that provides a better platform to do so than the World Economic Forum (WEF) in Davos. 

Set in a small ski resort in the Swiss Alps, the famous annual gathering is a coveted affair and serves as a platform for connecting leaders in the financial industry, with “hundreds of journalists present who broadcast their views to the world.” 

From heads of state to billionaire investors, multinational CEOs, fund managers, the elite of academia including the odd Hollywood celebrity — the gathering of the world’s A-listers makes it the place to nurture relationships that could alter one’s future. 

Though the Davos jamboree is well covered by the international business media, to lay bare its inner workings – the behind-the-scenes networking that culminates in such mega-deals – one needs an insider’s account. 

Sandra Navidi is one such insider. Having worked as the Director of Research Strategies at Roubini Global Economics, the former investment banker who is a regular at Davos-type high-profile events is well placed to peel off the veneer of the global financial system. 

In her new book Superhubs, Ms Navidi attempts to do that and more. 

Ms Navidi’s basic premise is an interesting one. She posits that the financial world is driven by human networks — personal relationships and connections. And like any network, it consists of nodes, links, and hubs. 

The most powerful in this complex human network, are dubbed superhubs. These people – the likes of Jamie Dimon, CEO of JPMorgan Chase; Larry Fink, chairman and CEO of Blackrock, billionaire investor George Soros, Larry Summers, the former US treasury secretary, Nobel Laureate Robert Shiller – who sit right at the top of the financial world wield tremendous clout. 

Ms Navidi argues that their unique position at the top of the global financial system provides them a “wide-angle view which enables them to see the system in its entirety.” This enables them to “cultivate their connections” for tremendous advantages.

She contends that these select few individuals preside over the “most exclusive and powerful asset, a unique network of personal relationships that spans the globe”. This networking power has helped them “shape history, transform the world, and determine the trajectory of the financial system, economy, and the society at large”.

So where do these superhubs network? At exclusive invitation-only platforms: The World Economic Forum in Davos, the meetings of the International Monetary Fund, think-tank gatherings, charity events, and private parties.

That is why people spare no expenses to attend; these events provide “endless peer-to-peer networking opportunities”. Here they not only discuss the most “pressing challenges, cut deals and, most importantly, network”.

It’s an interesting insight. 

Being an insider, Ms Navidi is well placed to give the reader a behind-the-scenes look at the inner workings of the financial elite. She dutifully chronicles the events that dot the calendar and the superhubs that dominate these events. 

Unfortunately, the book lacks the rigorous exploration that accounts of such nature demand. While the events are explored in detail, little is written on actual people-to-people networks. 

Take the case of Lawrence Summers. Mr Navidi chronicles the controversies in which Mr Summers has been embroiled, but she tells the reader little about who constitutes his wide network and how and when this network came to his help. 

Similarly, when dealing with the collapse of Lehman Brothers, she doesn’t go beyond a few lines on how Dick Fuld failed to develop a network that may have prevented the collapse of the firm. 

And while she compares the treatment dished out to Lehman with the help extended to the American International Group (AIG), she does little to explore whether the network played a role or not in the latter’s survival. 

Descriptions of superhubs are more often condensed into a few pages. And apart from a few instances, the finer details of how these individuals managed to build such strong relationships or how they benefitted from them are lacking. 

Occasionally, one gets the feeling that Ms Navidi is more in awe of this network and has failed to put it through the microscope. As she writes: “Although I have attended the WEF several years in a row, I’m still regularly amazed by the fact that everyone around me is famous and that every financial titan who is regularly featured in prime-time news and on the front pages seems to have materialised simultaneously in front of me.”