Davos Dispatch: Andrew Weinberg, Founder, Managing Partner & CEO of Brightstar Capital Partners Shares Five Highlights from the World Economic Forum’s 50th Annual Meeting
I’ve been fortunate to attend the World Economic Forum’s Annual Meeting in Davos for nearly the last decade. While there are always engaging conversations and interesting themes, I felt this year was marked by a tangible change in the conversations. The emphasis moved from deliberation to action. In session after session and behind the scenes, I noticed a more detailed dialogue taking place – one focused on what can be done to address the most important issues of the day rather than just discussions on what the issues are. Here are some of my highlights:
- Stakeholder Capitalism. This year, the theme of the Annual Meeting was “Stakeholders for a Cohesive and Sustainable World.” While this concept may seem ephemeral or conceptual, it permeated every session I attended or spoke at, as well as the dialogue on the sidelines. The question wasn’t whether to engage all stakeholders, including employees, customers, communities, investors, and shareholders, but more specifically how to do it effectively.
Leaders in offices and boardrooms across the world, in both public and private companies, are trying to figure out the answers. With new constituents being the focus of stakeholder capitalism, finding the right balance between them all will be a key challenge that businesses will have to address going forward.
Climate Change Occupied Center Stage. Microsoft certainly helped lead the way going in to the Forum’s Annual Meeting with their recent announcement on a plan to be completely carbon neutral by 2050. With the topic taking center stage throughout the program, I’m optimistic that we’ll see similar announcements from the world’s largest companies often in collaboration with governments and other stakeholder groups.
There’s no doubt that Microsoft’s announcement served as a catalyst, as did the Forum’s Climate Initiative, but future generations were well represented in the discussion for the first time. Greta Thunberg’s speech attracted worldwide attention and the Forum’s own media analysis showed “How to Save the Planet” was the media’s #1 topic.
But the key point for me is not the increase in the number of discussions or media coverage, but the dramatic shift in the nature of these discussions towards specific goals and initiatives. Organizations across the board, from incumbents to disruptors to companies and countries with the largest CO2 footprints, are all trying to figure out the best ways to proactively deal with climate change and mitigate climate risk.
- From Understanding Technology Disruption and the 4IR to Ecosystem Strategies. One of the more interesting things I did at Davos was moderate a panel on “ecosystem strategies,” or how companies create value by designing orchestrated networks that span multiple industries and sectors. (For a deep dive on ecosystem strategies check out this Harvard Business Review article.)
We’ve never been at a more interesting time for disruptive technology, or a more critical time for creating ecosystem. It’s a complex conversation, but one that many innovative companies are having. The reality is, given the rapidly changing nature of industries, figuring out how and why to develop an ecosystem strategy is vitally important to any company’s competitiveness. With the stakes so high, it’s imperative to examine the past and learn from examples of organizations that were able to create successful ecosystems, and also from those that failed.
- The Rise of Private Equity. One major highlight was participating in a panel on the future of private equity and how themes that other corporate leaders are discussing fit into the asset class. The growth of private equity has been enormous. In 2009, private equity firms completed 1,927 deals worth $142 billion, according to the financial data firm Pitchbook. By 2018, there were 5,180 private equity deals worth $727 billion. That still pales in comparison to the overall capital markets, but it’s encouraging to see both LPs and GPs engaging to better understand what the future drivers of growth will be.
- The Shift Continues from Public to Private Markets. I also participated in two investment stewardship sessions, and was struck by the consensus that the massive shift of capital from public to private markets is going to continue for the foreseeable future. In the US, for example, the number of public companies has decreased by more than half since 2007, while the number of private companies keeps growing. Right now, there are roughly 200,000 privately-held and family-owned companies in the middle market alone. For us at Brightstar Capital Partners, that means a continued focus on founder, family and entrepreneur led businesses. We’re determined to understand the needs of these businesses, what they can teach us, and how we can help them grow and successfully navigate the challenges ahead.