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

Davos is a study in contrast. More basic than sophisticated, it presents a curiously juxtaposed backdrop for the power and riches of the participants. Many hotels are rather outdated—it’s a bit like being caught in a time warp. Only a couple of years ago, rotary phones, which are particularly inconvenient when dialing lengthy international numbers, and faxes in the form of endless paper rolls were still the rule rather than the exception. Amenities generally taken for granted, like Wi-Fi, were more a function of luck than a matter of course, and the stoic Swiss hoteliers met complaints mostly with an indifferent shrug. Even the ultrawealthy must tolerate rooms they would ordinarily consider below their standards. I once witnessed a billionaire complain, in an exasperated mien, that his room at the five-star Steigenberger Belvédère was like a casket with a light attached to its lid.

In the last couple of years, however, the village has grudgingly given in to progress. It now even features a futuristic luxury hotel, the Intercontinental, which is owned by Credit Suisse and has been compared to a golden spaceship. Guests who prefer more privacy and space rent chalets; prices start at $150,000 for the duration of the conference—not including staff. A friend of mine, a Swiss investor, rents out his enormous chalet to “the Russian government” every year because they pay him any price he asks. Other friends rent out their two luxury apartments for $6,000 each.

I checked into my cozy, family-run hotel, a fifteen-minute walk from the conference center. Generally, the conference organization assigns hotels, and participants have little or no say in the decision. However, if attendees dole out extra money for a high-level membership, their chances of being assigned accommodations closer to the Congress Centre increase. VIP guests—along with several dozen heads of state—reside at the Steigenberger Belvédère Hotel, which—other than the Congress Centre—is the most important hub of activity during the event, where many major networking parties take place. The less fortunate might be assigned hotels in neighboring villages, requiring a time-consuming and expensive commute.

Despite being sleep-deprived, jet-lagged, and at the brink of exhaustion, I did not want to miss a single second of mingling at the event. After checking in, I trudged through deep snow in mind-numbing, subzero temperatures to pick up my badge. The precious conference badge gives attendees access to restricted and highly secured areas. During the WEF, Davos is the number-one terrorist target in the world: 5,000 heavily armed police officers and soldiers guard the village and man barbed-wired checkpoints. Masked snipers parole the rooftops, and fighter jets sit on alert to protect the no-fly zone. The security team controls the chaos with Swiss precision. Only officially credentialed participants are granted access, all of whom—except heads of state—must leave their bodyguards at the door and wait in line with everyone else. There is no preferential treatment for the upper echelons here.

Equipped with my new badge, I headed for the modern Congress Centre—a big, bright, state-of-the-art concrete maze of a building—where most of the WEF’s formal activities are held. On my way, I crossed paths with Bill Gates, who gave me a friendly nod; IMF chief Christine Lagarde, who said hello; and private equity billionaire Steve Schwarzman, with whom I exchanged pleasantries. At the coat check, where I replaced my messy boots with elegant dress shoes, I ran into Larry Summers, former U.S. treasury secretary and Harvard economics professor, and Robert Shiller, Nobel laureate and one of the most influential economists in the world. Although I have attended the WEF several years in a row, I am 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 materialized simultaneously in front of me.

I was familiar with many who were there, and after some meet and greet, I withdrew from the babel of languages into a quiet corner, where I scoured the database, deciding on which of the roughly 300 sessions I would attend. The choices ranged from talks on the global economic outlook to more unconventional topics, such as the importance of being happy and the human brain. The multitude of opportunities, choices, and people is both invigorating and draining at the same time, and over the years I have learned to allocate my energy prudently. Every first-time attendee is completely overwhelmed, and although the village is small, it takes time to acclimatize and figure out how everything works. Initially, the density and approachability of powerful and famous attendees feels surreal, but as if by gravitational force, people are sucked into this parallel universe before being released into the world again five days later.

THE ORBIT OF THE FINANCIAL ELITE: THE GRAVITATIONAL FORCE OF NETWORKS

The official purpose of Davos is to foster critical discussions to find solutions for pressing global problems. In the past, the meetings have been described as the world’s largest focus group, a method for taking the global geoeconomic temperature. With dozens of Nobel laureates and hundreds of the world’s most esteemed academics and industry leaders, the intellectual firepower is nothing short of breathtaking, with hundreds of sessions, workshops, and interdisciplinary exchanges. Although I can rarely pinpoint at the time what exactly I have taken away from the meetings, I feel that shortly thereafter the information and ideas form a bigger picture, a better understanding and a clearer sense of what lies ahead.

But the real reason why heavy hitters spare no effort or expense to attend? The endless peer-to-peer power-networking opportunities. The WEF is one of the most famous and efficient fora for connecting leaders in the financial industry, with seven hundred journalists present, who broadcast their importance to the world. Contacts made here ripple through professional and personal lives like concentric circles. As the Davos saying goes, “Three days of attendance saves three months of travel.” This is a key benefit for people who can always make more money but can never make more time.

Among the Davos attendees are many titans of finance who pull the levers of the global financial system. This system is not simply interlinked by institutions and transactions, but it is fundamentally a human system, because on the most basic level it is the result of human interaction. Understanding the interconnections of the key players is vital if we want to understand the system as a whole.

Why should we care? Because the actions of a relatively small group of individuals influence everything from national economies to the stability of the system as a whole. The heads of banks, private equity firms, hedge funds, and central banks make fundamental strategic decisions that directly impact industries, jobs, and living standards— our industries, our jobs, our living standards. Yet, despite their pervasive power, these moguls are still simply human. They make mistakes, and they get lucky. They are motivated by honorable or less than honorable goals. And they are driven by ego and emotion, not dissimilar to the rest of us.

Who are these people who reside at the center of the network? How have they achieved their status, and how do they retain it? What are their weaknesses, and what are their strengths? What kind of power do they wield within the global financial system, and what does that mean for the rest of us? These are the questions I set out to answer. Based on four years of research and many more years of personal experience, I realized that network science paired with stories from the lives of influencers can help us understand the complex structure of relationships in the financial world—and what they mean to the overall system.