Sandra Navidi - SuperHubs - How the Financial Elite and Their Networks Rule our World

INET works on reforming economic theories to better serve economies. It was founded by George Soros, and the organization quickly found support from other financiers. Its gatherings are prime examples of executive networking, as they attract a truly mind-blowing assortment of Nobel Prize laureates and otherwise überaccomplished academics, central bankers, and top financial executives.

INET: Connecting the Connected at Bretton Woods

The first INET conference I attended took place in Bretton Woods, in New Hampshire’s White Mountains. Together with George Soros and his team, I took a private plane from Teterboro Airport in New Jersey and arrived an hour later at Mount Washington Regional Airport. It was early April, and the majestic Appalachian Mountains were still covered in snow. A minibus picked us up and made a detour to an observation deck to let us take in the imposing, rugged landscape. Although the sun was shining, the cold was paralyzing, so we decided to skip lunch and drive straight to the white, red-roofed Spanish Renaissance-style Mount Washington Hotel. It reminded me of the sort of quintessential American family resort often portrayed in classic Hollywood movies. The hotel has a grand history: In 1944, the United States hosted forty-four countries at the Bretton Woods conference, which established a new global economic architecture, along with the International Monetary Fund and the World Bank. The luxurious interior, with its high chandeliered ceilings, artfully crafted moldings, and grand white wooden columns exuded tradition and comfort.

After settling in, I joined the other guests for a welcome reception at the Conservatory, a rotund hall topped with a grand cupola. I already knew almost everyone, and it felt more like a gathering of friends. The combined brainpower was focused on the fact that financial regulations and policy interventions had not yet caught up to our globalized financial system. The schedule was filled with interesting discussions and world-class speakers. Rob Johnson, the executive director of INET, who had been chief economist of the U.S. Senate Banking Committee and had worked at Soros Fund Management, gave the welcoming speech. The discussions were thoroughly academic and to the financial layperson would probably have seemed hopelessly abstract. Harvard Professor Ken Rogoff and George Soros spoke about the emerging economic and political order, while Columbia University Professor Jeffrey Sachs and Carmen Reinhart of the Peterson Institute discussed postcrisis macroeconomic management. Former U.K. prime minister Gordon Brown, whom I had previously thought to be rather dry, enthralled the audience with an insightful and passionately delivered lunch keynote on global financial issues.

The schedule was packed with sessions beginning in the early morning and stretching into the evening. Dinners started late, and many guests congregated in the bar thereafter. At dinner, one of my favorite speakers, Lord Adair Turner—at the time the head of the U.K. Financial Services Authority—reflected on the economics of happiness. Charles Dallara, head of the IIF, and Nobel laureate Joe Stiglitz illuminated the emerging financial system in Asia. The increasing wealth gap was a prevalent topic throughout the meeting. Other highlights included a discussion with George Soros and former Fed chairman Paul Volcker, and a dinner discussion with former U.S. treasury secretary Larry Summers. It was fascinating to meet these historic, larger-than-life figures, obtain insight into their thinking, and subsequently discuss their views with them in person. Between sessions, people broke away for informal talks in front of crackling fireplaces or in the cozy bar. The event’s framework mirrored Davos’s: Guests were “locked up” in a faraway, hard-to-reach location and therefore by default forced to engage with each other, creating the perfect environment for executive networking.

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This chapter explained why the superhubs’ networks equal their net worth, and how they employ relational capital to achieve the highest return on relationships. There are evolutionary and psychological reasons for the indispensability and irreplaceability of personal interaction in forming profound and robust relationships. Furthermore, executives’ mindsets are programmed to connect, and they use their emotional intelligence, charm, and charisma to proactively build networks. Superhubs understand that networking is a vital part of the financial world, view it as creating mutually beneficial opportunities, and invest considerable time and money to expand and strengthen their links. As we’ll see in Chapter 7, however, most of the executive networking practiced by superhubs occurs within the exclusive confines of members-only conferences and other private events that exclude all but the elite.

CHAPTER 7

Members Only

The Exclusive Networking Platforms of the Global Super-Elite

A DINNER Of CONSEQUENCE: ATTACK ON THE EURO

When the euro crisis was unfolding in 2010, I orchestrated a hedge fund dinner on behalf of Roubini Global Economics, featuring renowned economist Nouriel Roubini, with whom I worked at the time. We regularly held these events with industry heavyweights such as George Soros, Louis Bacon of Moore Capital, Steve Schwarzman of Blackstone, Michael Novogratz of Fortress Investments, Dan Loeb of Third Point, Eric Mindich of Eton Park Capital Management, and many more. The guests, around fifteen in number, would mingle at a cocktail reception and then enjoy a sit-down dinner, during which Roubini would give his macroeconomic outlook, followed by a stimulating exchange of thoughts. These types of events are customary in the financial world, and I was well versed in organizing them.

I had been involved in hosting biweekly idea luncheons at my former workplace, the broker-dealer Scarsdale Equities. These luncheons have been a tradition dating back to the 1960s.1 Twice a week, we received a dozen guests in the glorious Rainbow Room on top of the landmark Rockefeller Plaza where our offices were located. The magnificent rotund, high-ceilinged room on the sixty-fifth floor offered panoramic views of Manhattan’s skyline and beyond. Its crystal chandeliers and mirrored decorations reflected the sunlight and drenched the festive tables and golden chairs in a warm light. The Cipriani family ran the restaurant and catered the richest and most delicious buffet in the city. Even for spoiled, wealthy Wall Streeters, this was a treat, and many famous investors endured the midday commute to discuss investments with peers in the sky. Afterward, we circulated notes on the discussions amongst our clients.

Now organizing the Roubini dinner, I scrolled through my Rolodex. At the top of my list was George Soros, who had attended many of my events in the past. This time, however, to my surprise he scoffed at the suggestion and rejected my invitation rather fiercely. As it turned out, a Wall Street Journal report about a recent idea dinner, sponsored by the little-known brokerage firm Monness Crespi Hardt & Co. for about eighteen hedge fund managers, had triggered a PR disaster with unexpected legal consequences for its guests.2 According to the paper, the conversation had focused on the euro’s demise. The reporter suggested that this conversation resulted in bearish bets on the euro, adding pressure on the European Union to stem the Greek debt crisis. An unrelated quote from George Soros, who hadn’t even attended, warning that the euro might break apart, and the mention of hedge fund legend and Lehman bear David Einhorn’s presence, seemed to corroborate the sinister purpose. The inevitable conclusion: A pack of hedge fund predators colluded to attack the euro and Greece.