NOVEMBER 2014
ENTREPRENEUR SUMMIT
PICTET WEALTH MANAGEMENT
PICTET
BRIEFING
THE INNOVATION
PARADIGM
JACQUES DE SAUSSURE
CHRISTOPHE DONAY
BEÑAT BILBAO-OSORIO
TYLER BRÛLÉ
YONATAN BURSZTYN
OSKAR HARTMANN
RORY CELLAN-JONES
YOSSI VARDI
FROM WEALTH
CREATION TO WEALTH
PRESERVATION
JONATHAN GOODWIN
FRITZ DEMOPOULOS
JOSÉ MARIN
EDWARD WRAY
PIERRE-ALAIN WAVRE
GEORGE COELHO
NEIL RIMER
MICHAEL WAND
YVES BONZON
EDGAR VAN TUYLL
JEAN-CLAUDE ERNE
A SENSE OF
RESPONSIBILITY
NAVEEN JAIN
ETIENNE EICHENBERGER
STEPHEN DAWSON
NICOLAS MÉTRO
BERTRAND CESVET
VINEET BEWTRA
ALEXANDRE SEMBOGLOU
SARAH MARQUIS
MARC PICTET
CONTENTS
THE INNOVATION PARADIGM
Pictet in a nutshell p2
The positive shock of the new p4
Sources of national competitiveness p8
Innovation in practice p10
The start-up nation p14
FROM WEALTH CREATION TO WEALTH PRESERVATION
Successful exits — what’s next? p16
Opportunities in private equity p19
Entrepreneurs tend to share common behavioural
biases when making investment decisions p22
Land or brains? p26
Failing to prepare is preparing to fail p28
A SENSE OF RESPONSIBILITY
Innovation in philanthropy p30
Leveraging philanthropy p32
Structuring philanthropy p36
ANOTHER PERSPECTIVE
Let your soul touch the earth:
go walking p38
POSTSCRIPT
Marc Pictet p40
Editor – Ninja Struye de Swielande
Rapporteur – John Willman
Photography – Aurélien Bergot
Design – Together Design
INTRODUCTION
I
am delighted to introduce this Pictet Briefing, which presents
the highlights from Pictet’s first Entrepreneur Summit, held in
Geneva in September 2014. This one-and-a-half day event was
designed to bring together entrepreneurs to describe their different
and unique journeys and speak about how they had solved the
challenges along the way. It also provided an opportunity to discuss
the new questions that arise once success is achieved. Entrepreneurs
with over 26 different nationalities and from all five continents joined
us for the Summit.
The programme started with a welcome from our Senior Partner,
Jacques de Saussure, which was followed by sessions discussing the
importance and nature of innovation. Some of the entrepreneurs
shared their keys to success while others set out the decisions they
had made after exiting from their businesses.
In the afternoon, the focus was on wealth creation vs wealth
preservation and why the latter is sometimes more challenging
for entrepreneurs. Private equity, public markets and different
investment paradigms filled the afternoon, with financial and family
governance wrapping up the day. Also, participants discussed the
next big megatrends and the investment opportunities they were
currently looking into.
The second day focused on philanthropy, sharing the
achievements of entrepreneurs who had applied their business
skills to solving global problems. The Summit concluded with an
inspirational speech by the adventurer Sarah Marquis who has
realised her dreams by walking across continents.
I hope that you will enjoy reading about the remarkable speakers
at this unique event, and find their experiences stimulating.
Philippe Bertherat
Managing Partner
Pictet Group
THE INNOVATION PARADIGM
Pictet in
a nutshell
Senior Partner Jacques de Saussure
welcomed the entrepreneurs to the
Summit and described how Pictet has
maintained its entrepreneurial spirit
over more than two centuries
I
want to suggest that there is a connection
between a group of mainly first-generation
entrepreneurs and a 200-year-old bank with a
strong family connotation. It is that we like to see
ourselves as a 200-year-old start-up, and we try to
encourage and maintain an entrepreneurial spirit.
This is perhaps strange, since we have to
offer qualities that many would see as the
opposite of entrepreneurship: stability, solidity
and trust in a very highly regulated industry.
Our mission is to offer clients sustainability in
their businesses, their finances and their families
across the generations, which requires a longterm perspective. Our business is a slow one,
which involves developing relationships with
clients that can take years and may last for years.
Yet we are essentially a service organisation:
we are advisers to our clients. Although we have
banking operations, our business model and
culture is more like those of consultancies, law
firms and other professional service providers.
We have to be innovative to build an even
stronger firm to pass on to the next generation.
We do have family connotations: the brand
of the firm is the name of a family which has
been associated with it for most of its 200 years
of history. But we are not a family firm: new
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
2
partners are elected by the existing partners,
with no family ownership or influence.
We elect them in their late 30s or early 40s,
and they start with a small percentage of the
firm. Some of them need to borrow from the
older partners so they can join the partnership.
The cash flow generated by the firm is reinvested
to grow their position, but when it has grown
enough they can start to pay back the older
partners. Free cash flow does not come until they
reach their 50s and then some may be lent to the
next generation.
For this to work, we have to find people with
the right expertise, the right personality
and the right age. If all the partners
were the same age, we would all retire
together, and there would be no
succession process to transmit the
firm’s experience, values and the
capital to the next generation.
The firm has also built up
very substantial value which
is kept in the circle of a small
group of people who can protect
the fantastic jewel that we have
inherited. Our mission is to
transmit this jewel to the next
generation – in a way, we rent
it, enjoy its cash flow while
we work, and then pass it on.
This gives us a long-term
perspective which is very
different from that of a
listed company.
We like to maintain
the family aspect: clients
appreciate the multigenerational stability and values.
But we also have to attract the talent
we need. So if one of the candidates for
partnership is related to an existing
partner, that partner must withdraw
from the selection discussion and
decision. It is not always easy, but it
has worked up until now.
One consequence of this model is
that we must earn a return on equity
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
that is sufficiently high to generate the cash flow
needed to invest in the firm. We have achieved a
good return, although conditions in the business
are getting harder because of the cost of regulation
and other developments.
Some of you may ask yourself why we have
recently converted to a limited partnership.
A partnership in Switzerland is formed of
individuals who do business together, and this
model is not always well understood in other
countries. If we open a branch abroad as a
partnership, we become legal and tax citizens
of those countries, so we opened our foreign
enterprises as limited companies.
And since a partnership does not have the
tax advantages of a holding company in
Switzerland, we could never meaningfully
attach those other entities to the mother
organisation. Also, regulators abroad don’t
understand partnerships – they like to see the
checks and balances of the separate management
and board in companies. So we’ve created a
holding company in the form of a corporate
partnership which preserves the rules of
succession while giving us more flexibility.
One consequence of this change is that we
have lost the privilege of not reporting our
financial statements, which we published for
the first time in 2009 years in August. It is
amazing to reflect that over such a long period,
people were prepared to entrust us with billions
of their money without ever seeing our balance
sheet, total equity and other figures. 
3
THE INNOVATION PARADIGM
THE POSITIVE
SHOCK OF
THE NEW
Christophe Donay,
Pictet’s Head of
Asset Allocation
and Macroeconomic
Research, described
innovation as a key issue
for global economic
growth, investment and
portfolio management
W
orld population growth is declining,
from its peak of 2 per cent a year in the
middle of the last century to 0.8 per
cent today – and it is forecast to stabilise by the
end of this century. This is bad news, because
economic growth depends on two main factors:
demographic growth and productivity gains.
With declining demographic growth,
productivity gains are therefore crucial and they
depend on innovation.
Some innovation is local, with little impact
on economic growth as a whole. But what
interests economists is radical innovation which
drives growth, and there are three types:
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
Technological shocks such as automobiles,
oil and the internet.
Political belief shocks, such as when China
joined the club of capitalist countries – a disruptive
shock that boosted global economic growth.
Cognitive shocks, such as changes in
monetary policy style by central banks or in
fiscal policy by governments. The switch from
Keynesian to supply-side economics since the
1980s has reduced high inflation, raised growth
significantly and sparked a new wave of
industrialisation.
4
SEVEN SOURCES FOR THE POTENTIAL NEXT TECHNOLOGICAL WAVE
TECHNOLOGY SECTORS
POTENTIAL RADICAL INNOVATIONS
INTERNET
Mobile apps
Internet of Things
Crowd-sourcing, Crowd-funding, Crowd-teaching
IT/INFORMATION &
DATA PROCESSING
Extensions of Moore’s law (new-generation microprocessors)
Quantum computing
Big Data
AUTOMATION
Advanced robotics – automation of manual labour and expertise (artificial
intelligence), human/machine interface, drones, decision-making processes
TRANSPORT
Driverless vehicles
Vehicles powered by new energies
ENERGY
Shale oil and gas
Storage and management of electric power
New energies – solar, biomass, wind, geothermal, waves/tidal, hydrogen
LIFE SCIENCES
Pharmaceuticals
Biotechnology – biomakers, nanobiotechnology, targeted biologic therapies,
genomics (DNA decoding), molecular and cellular genetics
Neurobiology (and Neuroinformatic)
Bioinformatics
Immunology
Oncology
SMART MATERIALS
Nanotechnologies
Graphene
Composite materials
Use of soft matter materials (polymers, proteins)
Source: Pictet Wealth Management
Capitalism prospers through innovation,
which is usually concentrated in one country,
or even one city. The first such city was Bruges
in Flanders, where the development of the
stern rudder between 1200 and 1350
transformed shipping and expanded
international trade. Next came Venice with
financial innovations such as banks, insurance
companies and the stock exchange. Antwerp
in the early 16th century developed printing,
followed by Genoa with lending and
accounting and Amsterdam with the Dutch
three-masted cargo ship. The Industrial
Revolution began in Britain with the steam
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
engine, moved to the US at the end of the 19th
century with the internal combustion engine
and in modern times the microprocessor and
the internet. It was only after the disruptive
innovation of the Industrial Revolution that
growth in global production per capita rose
from zero, and it has accelerated into the
present era. Today the US is facing a challenge
as a centre of global innovation from
China, while Europe is between the two
with limited capabilities for innovation
and sluggish growth. 
5
THE INNOVATION PARADIGM
OVER 20 YEARS, US HOUSEHOLD INCOME HAS RISEN 80 PER CENT MORE THAN EUROPE’S
US vs EA DISPOSABLE PERSONAL INCOME
260
US Disposable Personal Income
Index 1993 = 100
EA Disposable Personal Income
240
76% in 20 years,
i.e. 1.8% per year
220
200
180
160
140
120
100
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
Source: Pictet Wealth Management
The table on the previous page lists the seven
sectors which we believe could be the
disruptive sources of the next wave of radical
technological innovation. These will offer
plenty of opportunities for entrepreneurs and
also for investors. And they will also promote
economic growth and job creation.
Growth in jobs in mature economies
requires a minimum level of economic growth,
however: this level is 2 per cent of real growth
in GDP to anchor the job creation cycle. The
failure to achieve that level can be seen in the
underperformance of the European economies
when compared with the US. Over the last 20
years, US real GDP growth has averaged more
than 2 per cent a year, compared with around
1 per cent for Europe. As a result, the disposable
income of US households has risen 76 per cent
more than that of European households over
that period.
Maintaining real growth above 2 per cent is
the main challenge for all developed countries
and it requires big and disruptive innovation to
achieve that. Today, the mature economies are in
a sluggish growth environment of 1-2 per cent
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
and they need to normalise growth around
2.5 per cent. But if there are innovation shocks
over the next decade they could reach 4 per cent.
Whether or not this is achieved will have
consequences for investors. We believe that
returns on European and US equities could
double over the next ten years if there are
innovation shocks. And this could also
substantially raise expected returns on
portfolios blending different asset classes.
So innovation is key for businesses and for
investors at a global level. 
Christophe Donay, who joined Pictet in 2008 as chief
strategist of the Wealth Management unit, has 20 years
experience in financial markets.
6
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
7
THE INNOVATION PARADIGM
Sources of national
competitiveness
Beñat Bilbao-Osorio, Senior Economist for the World Economic
Forum, introduced the latest Global Competitiveness Index and
identified smart investment in skills and innovation as key factors
T
he World Economic Forum’s Global
Competitiveness Report was launched in 1979
covering 16 countries. Its 35th annual edition
has expanded to cover 144 economies, ranking
them in terms of their strengths and weaknesses
when competing in international markets.
When assessing competitiveness, we analyse
the institutions, policies and factors that
determine the level of productivity of each
country. That level in turn sets the degree of
prosperity that can be achieved by an economy.
The consequences of variations in
competitiveness can be seen in the per capita
incomes of countries which were similar at the
time of the first report and now differ
considerably – Korea’s per capita income, for
example, is now more than double Brazil’s.
We have identified 12 drivers that determine
productivity, which fall into three groups:
Basic requirements – countries need
institutions which are reliable, transparent
and efficient; adequate energy and transport
infrastructure; a stable macroeconomic
environment; and a labour force that is
productive because of their health and
primary education systems.
Efficiency enhancers – the quality of higher
education and training; the efficiency of goods
markets; the flexibility of the labour market;
the development of financial markets;
technological readiness; and the market size
in terms of scale and scope.
Innovation and sophistication factors –
whether companies have coherent strategies,
and their capacity for innovation through R&D
and linkages with research centres.
We assess these factors using 114 different
variables sourced from international
organisations and also qualitative data from
an annual survey of executive opinion carried
out by our network of partner institutes.
The latest Global Competitive Index shows
Switzerland to be the most competitive
economy for the sixth tear running, followed
by Singapore. Both countries have very efficient
and transparent institutions, very good
infrastructure, efficient markets and a stable
macroeconomic environment – and both are
very good at producing innovations.
The US has risen two places to third
position, and is still the world’s innovation
powerhouse with concentrations in certain
regions. In the rest of the top ten, there are
European and Asian countries scoring very
highly thanks to their innovation capacity. The
first emerging market is Malaysia in 20th place.
Countries which consistently rank highly in
the rankings are those that are able to develop,
attract and retain talent and can constantly
introduce new products and services. 
PICTET WEALTH MANAGEMENT Entrepreneur
The Next Generation
SummitSeminar
2014 2014
8
Dr Beñat Bilbao-Osorio is Associate
Director and Senior Economist of
the Global Competitiveness and
Benchmarking Network at the World
Economic Forum.
GLOBAL COMPETITIVENESS INDEX 2014–2015
RANK
ECONOMY
SCORE
RANK
ECONOMY
SCORE
1
Switzerland
5.7
33
Chile
4.6
2
Singapore
5.6
34
Indonesia
4.6
3
United States
5.5
35
Spain
4.5
4
Finland
5.5
36
Portugal
4.5
5
Germany
5.5
39
Mauritius
4.5
6
Japan
5.5
45
Turkey
4.5
7
Hong Kong SAR
5.5
49
Italy
4.4
8
Netherlands
5.5
52
Philippines
4.4
9
United Kingdom
5.4
53
Russian Federation 4.4
10
Sweden
5.4
56
South Africa
4.4
11
Norway
5.4
57
Brazil
4.3
12
UAE
5.3
61
Mexico
4.3
13
Denmark
5.3
68
Vietnam
4.2
14
Taiwan, China
5.3
71
India
4.2
15
Canada
5.2
81
Greece
4.0
17
New Zealand
5.2
104
Argentina
3.8
18
Belgium
5.2
127
Nigeria
3.4
20
Malaysia
5.2
129
Pakistan
3.4
23
France
5.1
134
Myanmar
3.2
28
China
4.9
144
Guinea
2.8
Source: World Economic Forum
PICTET WEALTH MANAGEMENT Entrepreneur
The Next Generation
SummitSeminar
2014 2014
9
THE INNOVATION PARADIGM
Innovation
in practice
Successful entrepreneurs Tyler Brûlé of
Monocle, Yonatan Bursztyn of Totto and
Oskar Hartmann of kupiVIP discussed their
businesses – and lessons learnt in building
them – with Rory Cellan-Jones, the BBC’s
Technology Editor
T
he panel brought together three very
different entrepreneurs, operating in
different sectors and different regions.
Tyler Brûlé, born in Canada and now based in
the UK, has launched two ground-breaking
publications – most recently Monocle, a high
quality print product at a time when the
world was going digital. Yonatan Bursztyn
from Colombia bought his first manufacturing
enterprise at the age of 28, launched a
sportswear line in 1990 and now owns Totto,
an international retail chain. And Oskar
Hartmann, born in Kazakhstan, founded
kupiVIP in 2008, an online shopping club
which rapidly became the leading Russian
fashion e-commerce company.
Rory Cellan-Jones asked the three to
describe the origins of their businesses,
and talk about what went right and what
went wrong.
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
10
‘We are thinking
about some vertical
integration by
selling magazines,
because buying
magazines in shops
now is such an
awful experience.’
Tyler Brûlé
TYLER BRÛLÉ
Why the future is still made of paper
When we started Monocle in 2007, digital was
already big in the media space and there had
been one cycle of boom and bust. It was clear to
us that it had to be a global magazine because we
had seen so many companies licensing their very
famous brands around the world. But every time
they licensed, they damaged their brands,
because they were using publishers who could
not afford the quality and that chipped away at
the mothership. We said let’s assume all of our
readers read English, and do one edition for the
entire world. That means we have to sell the
magazine to advertisers like Rolex just once, and
we also create a clubby group of readers around
the world and advertisers liked that.
Raising funds was tricky, because venture
capitalists and private equity companies were
not interested in investing in magazines. But
eventually a woman running a Family Office for
an old-school Spanish family liked the plan and
said it would invest if there were only family
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
investors at the table. It took another year to
raise the rest, but we got a group who were all
readers and saw themselves as consumers.
Recently we brought in Nikkei as a strategic
partner in a deal that represents a 10x return
for our investors.
We were able to bring people together who
had a long-term view on the media. But we take
a conservative approach: we have to be sure that
everything we do will make us money. We didn’t
venture down the road of an iPad edition
because that would have cost us roughly two
issues of advertising – and a lot of monthly
magazines are getting out of it anyway because
of the cost. We’ll let the BBC and New York
Times be the pioneers.
Start-up has been co-opted by all things
digital, but there are other ideas that can succeed
which can’t get funding – and that needs to
change. We are thinking about some vertical
integration by selling magazines, including
those published by others, because buying
magazines in shops now is such an awful
experience. 
11
THE INNOVATION PARADIGM
YONATAN BURSZTYN
Building a global brand from Latin America
I’m the youngest of five brothers and my oldest
brothers talked about business ever since I was
little. As I grew up, I worked with all of them, as
I wanted to become the CEO of a company. One
of them said that it was better to go straight
from manufacturing to retail without
distributors and that it was important to build
a brand to control the market. So I started
manufacturing backpacks with synthetic
materials, because leather had become too
expensive. We mixed that with fashion, where
the brands came from first world countries but
we created our own. I learnt that you could
compete anywhere by doing it better – if you
copy, the best you can be is second.
We have around 500 stores and we are in the
process of converting part of our sales to online.
Traditionally, Latin American consumers
haven’t liked giving credit card details online,
but traffic congestion is changing that and
boosting internet sales.
Our second priority is to build a global
brand: we want to raise the international
share of our sales from 50 per cent to 80 per
cent by 2020. We are already in Spain and in
2016 we will enter the US where there are
45 million Latin people who know our brand.
When we expand abroad, we start with
franchises to establish a physical presence.
We tell our franchisees to focus on the basics
as my father and grandfather did. Just as with
Tyler’s paper publication, people still want
service and to communicate with a face
rather than a keyboard.
We are not interested in selling the business
or getting into the stock market. In the last few
years, though, people are knocking on the door
because Latin America is exciting now, but they
just want to milk the businesses. Fashion is
always changing, and treating it as a short-term
business undermines the brand.
‘I learnt that you could compete
anywhere by doing it better – if you
copy, the best you can be is second.’
Yonatan Bursztyn
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
12
‘I have found that the most profitable
opportunities are not in new business
models but in established models that
customers like.’ Oskar Hartmann
OSKAR HARTMANN
Replicating successful Western businesses
in Russia
Although I was born in Kazakhstan, I decided to
live in Russia because I loved the country. I
looked for business opportunities, and decided
that I wanted to adopt a proven business model
such as Starbucks or Vente-privee, the French
e-commerce company. But I wasted one or two
years of my life failing to convince Western
companies to start a business with me in Russia
– a market of 140 million people. My conclusion
was that Russian consumers would not get value
unless local entrepreneurs replicated such
businesses. So I started kupiVIP based on the
Vente-privee model and I’ve replicated about
20 businesses in Russia – and owning companies
is better!
I fully agree with Yonatan on old-fashioned
business practices: the most profitable question in
business is not what is new, but what will not
change. Shopping is the biggest entertainment in
the world, and it will never go away. In three years
I built a USD100 million TV shopping operation in
Russia like QVC, and for years people have said TV
shopping would die like the catalogues. But it
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
gives people more and has continued to grow and
one German company worth EURO100 million
ten years ago is a billion dollar company now.
Entrepreneurship is a constant flow of
problems. Your receive emails that start
‘Unfortunately...’ And when nobody wants what
you create, that is also very painful. But one in
a hundred is a success and that makes it all
worthwhile. Also, I now understand why
companies won’t go international: most
successful businesses are local. I analysed 4,000
richest families in the world and found there
were only 100 business models – 80 per cent of
the 10,000 biggest businesses in the world are
still local.
Entrepreneurs always find it hard to
understand investors, but there are now lots of
ways to fund a business – family offices, private
equity, venture capitalists, business angels.
Fifty years ago, this didn’t exist, and a lot of
stupid ideas get funded now. But I think the
world is good as it is now, though I’d like to
see more investors coming to Russia. 
Rory Cellan-Jones, Journalist, has been covering
technology for the BBC since 2007 and covered the
iPhone launch, and the Facebook and Twitter IPOs.
Tyler Brûlé launched Wallpaper* in 1996, selling it in 2002
to focus on developing Winkreative, a full-service branding
and design agency. He launched Monocle in 2007.
Yonatan Bursztyn opened the first Totto store in Colombia
in 1989, developing it into a global brand with nearly
500 stores in 22 countries in Latin America and Europe.
Oskar Hartmann founded KupiVIP in 2008, an online
shopping club selling famous brands at discount. Within
four years, it was Russia’s leading fashion e-commerce
company.
13
THE INNOVATION PARADIGM
THE
START-UP
NATION
The legendary Israeli investor
Yossi Vardi discussed the reasons
behind the entrepreneurial success
of his country in an interview with
Rory Cellan-Jones
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
14
You have to understand that in my country, from
the age of five mothers push you: ‘Is it too much
to expect a Nobel Prize after all we have done for
you,’ they say. Forty years ago, Israelis excelled in
agriculture an industry, but now it is high tech.
Rory Cellan-Jones You have 40 years’ experience
of investing in mainly high tech start-ups in Israel.
I was told recently that more venture capital had been
invested in Israel’s technology sector last year than in
the whole of Europe. Why has it become this
extraordinary place for entrepreneurship?
Yossi Vardi First of all, I don’t think Europe
is a good comparator – it still has a lot to do.
The simple reason why a lot of money is going
to Israel is that people are doing very nicely from
their investments there. For example, the
instant messaging software developer Viber
was acquired by Rakuten for USD900 million in
February 2014. The community-based navigation
app Waze was sold to Google in 2013 for more
than USD1 billion – and to show you what an
astute investor I am, when they offered me five
years ago to enter it for USD5 million, I said they
were crazy. And there’s a list of companies ready
for exits of around USD1 billion.
Twenty years ago, it was all about external investment
in Israel, with Intel basing a lot of research there.
What changed that made it the place where every
young Israeli wants to be an entrepreneur?
There are still a lot of investments from
different countries – we have over 300 large
American and European countries here, and
also Far East and Japanese companies. But I
think there was inspiration by example after
there were some successes.
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
What do you look for as an investor?
I realised long ago that ideas are overrated –
lots of companies have the same ideas. There
are three important factors I look for: the first is
talent, which is the one thing that separates you
from the rest of the herd. The second is that I
want to invest with nice people, because at 72,
I have no bandwidth to work with not-nice
people. Number three is that they must be
frugal at the early stage – if they burn the
money, they will go nowhere and will keep
needing more money.
How do you know if someone is talented?
Teachers don’t know, parents don’t know and
their grades are no indication. Their peers know,
so I have a panel of former investees – I have
invested in some 80 companies – and they know.
Lots of places want to be the next Silicon Valley,
but doesn’t it take a long time to build that culture?
We don’t want to be Silicon Valley: we want to
be Israel – very fast with ideas, very fast with
deployment. Scaling is a different story, because
it’s difficult to conquer the world from a small
country in the Middle East – you need to a
network of offices and managerial talent. So the
combination of Israeli start-ups with US and
European companies which buy them works
extremely well. 
Yossi Vardi is Co-Chairman of DLD, whose annual Digital
Conference is Israel’s largest hi-tech gathering. He
has 40 years’ experience of co-founding, leading and
participating in building more than 60 hi-tech companies.
He was the founding investor of Mirabilis which created
the popular ICQ instant messaging programme.
15
FROM WEALTH CREATION TO WEALTH PRESERVATION
Successful exits —
what’s next?
Jonathan Goodwin of Lepe Partners led a discussion
on the next steps for successful entrepreneurs with
Fritz Demopoulos of Queen’s Road Capital, José Marin
of IG Expansion and Edward Wray of Betfair
J
onathan Goodwin began by asking the panel
to discuss the exits they had made from their
successful businesses, and whether they had
any regrets about them.
Ed Wray said he had left Betfair, the online
sports betting business he had co-founded in
1999, two years after floating it on the London
Stock Exchange in 2010. He is still the largest
shareholder. ‘An IPO is not an exit, but it may be
the beginning of that process,’ he said. ‘The IPO
was a real eye-opener: as a private company, you
can make mistakes and get on with it, but
suddenly there is a lot more scrutiny. My biggest
regret is that we weren’t ready for that, and
should have taken wise counsel first.’
After co-founding Qunar, China’s largest
online travel website, Fritz Demopoulos was chief
executive for seven years. Three years ago, the
majority of the business was sold to Baidu, the
Google of China, which provided a lot of traffic
and killed off their direct competitors. Qunar was
listed on Nasdaq in 2013, and he also remains a
shareholder. ‘We have no regrets, but I sometimes
wonder whether we should have brought in
financial investors and stayed independent.’
José Marin co-founded an eBay for Latin
America in 1999, and made a first exit early on
with a cash in/cash out round of USD50 million
from Terra. Later eBay made an approach which –
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
16
‘An IPO is not an exit,
but it may be the beginning
of that process.’ Ed Wray
as market leader – they rejected. EBay then
bought their smaller competitor, took the
market lead and merged the two. ‘It was not such
a nice exit, from a company that is today worth
USD4 billion-plus, but we learnt a lot from it.
My partner and I have gone on to build
businesses in different countries and have made
over 140 angel investments which has kept us
close to the market and entrepreneurs.’
Ed Wray has also made some angel
investments, some very good, others not
so – the bad ones come through first, he
acknowledged ruefully. The most enjoyable
thing he does now is working with Funding
Circle, the peer-to-business lending site.
‘The majority of what I do is talking about
the mistakes we made, which are the most
important thing you learn as an entrepreneur.’
He added that he had started Betfair
because he was fed up with working in a large
business and wanted to see if he could do
something different. ‘I worked 16-20 hours
a day, seven days a week and it was allconsuming. I loved it, but I couldn’t do that
again – I’m married with three kids and you
can’t be that selfish. There’s more balance
now, and I want to give something back
through philanthropy which is also an
interesting intellectual challenge.’
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
Fritz Demopoulos said he had been involved
in three successful start-ups in China. He
enjoyed building businesses and would like
to do it again – he is looking around to find a
new business he can get excited about. But he
admitted that he might prefer to be a chairman
rather than an operating chief executive again
in China’s brutal business environment.
‘Also, my family is really important to me, as
are philanthropic activities, so I’d like a little
more balance.’
Jonathan Goodwin asked Neil Rimer, the
venture capitalist who was in the audience,
how entrepreneurs should manage their exits
without destroying value. Rimer replied that it
was something for the investor to think about
when first investing.
‘Some entrepreneurs don’t have long-term
objectives or the capability to scale up. Our job
is to find guys who are passionate about the
business, half crazy and think their business can
be a USD10 billion company – and partner with
them. The life of our investment is only a short
portion of the company’s life, and if the chief
executive and founders have the ambition to be
there, they don’t have to exit in 10 years when
the venture capitalist does.’ 
17
FROM WEALTH CREATION TO WEALTH PRESERVATION
A questioner asked the panel what he should
do about his business partner who wanted to
accept an offer and exit the business when he
did not: ‘I feel guilty blocking it – so should we
take the money?’
‘My family is really important to me,
as are philanthropic activities, so I’d like
a little more balance.’ Fritz Demopoulos
José Marin’s advice was not to worry about
offers if you are doing what you love. ‘If you
want to do other things, then sell!’
Fritz Demopoulos said that they had turned
down the first of six offers they had received for
Qunar before selling to Baidu – despite family
pressure to accept it. ‘I didn’t want to sell so
early: we were on the way to creating an empire
in China.’
Concluding, Jonathan Goodwin said there
was no simple answer about when to exit and
what to do afterwards. ‘It’s about a journey, and
having the right people around you as you make
the transitions.’ 
Jonathan Goodwin is Managing Partner of Lepe Partners,
a merchant bank created to help media, consumer and
internet entrepreneurs and chief executives grow their
businesses.
Fritz Demopoulos is Managing Partner of Queen’s
Road Capital, a private equity firm focused on digital
opportunities in global emerging markets.
José Marin is Managing Partner and co-Founder of IG
Expansion which creates one to two companies a year
in emerging markets.
Edward Wray co-founded Betfair in 1999, which was
listed in London in 2010. He is a Director of Funding
Circle and LMAX, the world’s leading exchange for FX.
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
18
OPPORTUNITIES
IN PRIVATE EQUITY
Pierre-Alain Wavre,
CEO of Pictet Investment
Office, discussed wealth
creation in private equity
with George Coelho of
Good Energies, Neil Rimer
of Index Ventures and Carlyle
Group’s Michael Wand
O
pening the discussion, Pierre-Alain
Wavre said that Pictet had around
USD21 billion of funds committed to
private equity and venture capital, including
USD2.1 billion over the previous 12 months.
Fifteen years ago, the total had been USD10
million, which had doubled in the second year
and the amount committed had accelerated
over the last five years. Venture capital
accounted for only USD1billion of the total,
though it had been higher as a percentage in
the boom years.
He then asked George Coelho, who had
been an investor through all the different
waves of venture capital, about changes in the
investment environment. Coelho replied that
his investments had ranged from aerospace,
investing at the start in a German low-cost
airline founded by a former Luftwaffe pilot,
then moving on to technology, software,
and now the internet and broadband.
‘Entrepreneurs don’t change – they interact
and behave in similar patterns. It’s very
predictable. Very few entrepreneurs have ever
told me about making lots of money: they always
talk about great ideas. If you build something
great, everything else takes care of itself.’
Turning to Neil Rimer, Wavre asked why
venture capital had outperformed private equity
recently, after years of underperformance.
‘You can’t talk about venture capital as an
industry,’ said Rimer. ‘It’s more of an art which
rewards the best managers. If you look at the top
decile or quartile globally, the class has made
returns more than commensurate with the risk
over the years. But investors who can’t get into
the top group look down the list where the
managers don’t have the skills.’ 
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
19
FROM WEALTH CREATION TO WEALTH PRESERVATION
‘Very few entrepreneurs have
ever told me about making
lots of money: they always
talk about great ideas.’
George Coelho
His priorities when investing were first the
entrepreneur and then the market, he said. He
added that there were lots of good investments
that don’t meet the venture capital model and
are better supported by business angels.
Wavre then asked Michael Wand to describe
how Carlyle had recovered after he joined the
firm in 2001, following the dotcom bust in which
it had lost a lot of money. ‘We changed the
strategy to focus on what we thought we were
good at, creating probably the first tech buyout
fund in Europe, looking for equity investments
of USD20-50 million in companies with
enterprise value between 40 and 100 million,
profitable or on the brink of profitability.
‘We’re often seen as less exciting, because
we look for quirky businesses with decent
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
20 per cent annual growth which are never
going to be USD1 billion companies. People set
them up 15-20 years ago, and they’re often very
local: we try to take them to the next growth
phase, perhaps crystallising some value for the
founders, angels or local venture capitalists.
We might internationalise the businesses,
taking them to the US or Asia.
Carlyle had found its niche, he added,
while others served other parts of the market.
One consequence of this was that exits did not
need always to be an IPO. Asked by Wavre to
comment on the observation that different
types of investors brought different things to
the table, Rimer said that there was a growing
trend of companies not going public as much
as they used to.
20
‘You can’t talk about
venture capital as an
industry, it’s more of
an art.’ Neil Rimer
‘We’re often seen as less exciting,
because we look for quirky
businesses with decent 20 per
cent annual growth which are
never going to be USD1 billion
companies.’ Michael Wand
‘Companies can stay private and reach
significant size, and being public is not all
good. There are other paths to partial liquidity
before going public – Facebook and Spotify,
for example. But IPOs may suit a company if
the investors are capped out and don’t want
more dilution, or if funds are needed for
acquisitions.’
An audience member asked whether the
scope of venture capital in technology had
expanded. Rimer replied that it had: from the
early days of low-level hardware, software and
services, ecommerce had grown and with
ubiquitous infrastructure, every sector of the
economy was open to disruption. ‘Things that
were unthinkable ten years ago now have a big
bullseye on them.’ 
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
Pierre-Alain Wavre set up the Pictet Investment Office,
dedicated to very large wealth owners, in September 2010.
George Coelho is on the Management & Investment
Committee of Good Energies, a pioneering clean-tech
investment company whose venture capital activities
he manages.
Neil Rimer, Managing Partner of Index Ventures which he
co-founded in 1996, has invested in Betfair, Genmab,
FundingCircle and many other market-defining companies.
Michael Wand is a Managing Director of Carlyle Group
and Head of its Europe Technology advising group which
advises on growth capital and buyout opportunities.
21
FROM WEALTH CREATION TO WEALTH PRESERVATION
ENTREPRENEURS TEND TO SHARE
COMMON BEHAVIOURAL BIASES WHEN
MAKING INVESTMENT DECISIONS
Managing the liquid part of wealth is simple but not easy,
according to Yves Bonzon, Chief Investment Officer of
Pictet Wealth Management. The rules are straightforward,
but it is difficult to stick to them over time
A
mentor once told me that wealth managers
are in the education business: our job is to
help clients avoid mistakes and make better
decisions. For example, investors should stick to
their long-term strategy and ignore the short-term
noise – to avoid the temptation to buy gold because
some criminals in Ukraine have shot down a
civilian plane. Western intelligence services had
no clue that the USSR was about to collapse a few
weeks before it happened, so investors cannot
make informed decisions on such news events.
However, entrepreneurs are an extremely
difficult group to educate in financial matters,
because they are clever, successful and sometimes
lucky people. As a result they are affected by
several syndromes, including overconfidence:
that can be rash, because public markets are
very uncertain, and there is no longer the
information edge that insiders once had.
Patience is also a virtue, because the time
horizon is key to successful investment. Warren
Buffett once said that the markets were a voting
machine in the short term, but a weighing
machine in the medium term. These days there is
too much capital dedicated to beating the market
average, from over the next microsecond all the
way through to three years. If you have the ability
to take a five-year view, which is one of the
competitive edges of private wealth owners, you
can create value in your portfolio of public assets.
You also have to be disciplined. The shorter the
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
time horizon, the more uncertain the future.
If you invest in a strategy which aims to make an
8 per cent annual return, the likelihood that you
will get close to that target is much higher over
ten years than over the next day, the next month
or the next year. If you look at your investment
every five minutes, it’s a 50:50 chance that the
stock has ticked up or ticked down. Looking at
your portfolio too often is extremely harmful,
and the mobile technology which gives access
to information all the time is very detrimental
to performance.
Public and private markets provide different
sets of opportunities for investors, who should be
harvesting risk premiums when building their
portfolios. In public markets, for example, you
can accumulate term risk premiums by investing
for the long term, credit risk premiums by
investing in riskier borrowers and equity risk
premiums where the return is not guaranteed.
In private markets which cannot be traded daily,
you can try to harvest illiquidity premiums by
tying up your investment.
Once you have gathered the returns from
the market – beta – you can try to do better
by searching for alpha. Investors try to time
the markets or pick securities, but these are
very uncertain. You might be able to get an
edge by processing information faster than
public markets or by being in the deal flow
of private markets ahead of other investors. 
22
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
23
FROM WEALTH CREATION TO WEALTH PRESERVATION
SECULAR TRENDS
EVERY DECADE IS CHARACTERISED BY A DIFFERENT ECONOMIC AND INVESTING ENVIRONMENT
ECONOMIC
ENVIRONMENT
1960’S
1970’S
1980’S
1990’S
2000’S
2010’S
Bretton Woods
Floating FX
Disinflation
Plaza
Fall of Berlin
Wall
EMU
Oil shock
Inflation
Arbitrage
Globalisation
Great global
imbalance
Managed
Western
de-leveraging
Internet
China’s rise
E-trading
Structured
credit
Nominal GDP
and asset
price targeting
EM
discrimination
EUR 2.0
INVESTING
ENVIRONMENT
US Nifty Fifty
stocks
Small Caps
Oil stocks
Gold,
Swiss Franc,
Japanese Yen
Government
bonds
Indexing
Hedge funds
Nasdaq
Nikkei
Swiss Equities
Hang Seng
US Dollar
Emerging
Market
equities
Commodities
Euro
Tactical asset
allocation
and risk
factor based
strategic asset
allocation
Developed
quality blue
chips
US Dollar
Emerging
Market debt
Source: Pictet Wealth Management, CIO Office
But there is a price to pay: if you want abnormal
returns in the medium term, you may have
miserable returns over the short term –
something hard to cope with for many investors.
So when building a portfolio with no
preconceived ideas, you can start with a balanced
asset allocation that reflects secular market
trends, study the risk premiums available and add
more strategic assets, select tactical securities and
then go into private markets with investments
such as private equity and real estate.
It is also important to understand the current
environment, and every decade is characterised by
a different economic and investing environment
– as the chart shows. In the 1990s, the best
approach in a raging bull market was to index,
the Nasdaq and the Swiss markets were among
the best regions, and the dollar was strong. In the
2000s, it was hedge funds, emerging market
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
equities, commodities led by gold, and the euro.
In this decade, it is developed market equities,
the dollar and emerging market debt.
To conclude, beware of preconceived ideas
and fixed recipes that have worked at some
period in the past. The future is uncertain, so
diversify by sources of return, strategies and risk.
Passive investing is a portfolio tool, but you still
have to choose the best index to replicate.
Control your costs and spend wisely for active
solutions. And do not mistake volatility for risk,
as many investors do. 
Yves Bonzon joined Pictet in 1989. As Chief Investment
Officer for Pictet Wealth Management, he is responsible
for investment strategy and the Investment Platform unit.
He is a member of the Wealth Management Executive
Committee and manages the investment portfolios of
several private clients.
24
Q&A
ARE THERE TRENDS IN THE STOCKS
ENTREPRENEURS LIKE TO INVEST IN?
Entrepreneurs like club deals with people they
know. They like concentration because they
made their money with a very big bet that was
extremely successful! But they tend to forget
that it’s not repeatable, which is where we can
help. And because it’s simple but not easy, they
are easily bored with public market investing
where trading is a waste of time and resources.
HOW DO YOU ASSESS AN INVESTOR’S RISK APPETITE?
That’s a difficult issue, because it’s not fixed.
Their risk appetite tends to increase with good
returns and tremendously decrease after
declines. We have to convince them that falls
present great investment opportunities, but
entrepreneurs often worry when the value of
their portfolio drops. I always say that the price
of sleeping well is prohibitive – the return you
leave on the table is much higher than you think,
and compounds over the medium term.
FROM WEALTH CREATION TO WEALTH PRESERVATION
Land or brains?
Two investment paradigms alternate in surprising
cycles, according to Edgar van Tuyll, Head of
Quantitative Strategy for Pictet Wealth Management
T
here are two ways of investing in asset
classes, countries, sectors or individual
investments, which alternate over time in
terms of best performance. Value strategies buy
assets when they are cheap compared with their
fundamentals, like Japanese equities. Growth
strategies buy assets when their fundamentals
(or market prices) are growing rapidly – for
example US Biotech stocks.
This presentation focuses only on growth
assets, where there are two sources of strong
growth: emerging markets and technology.
Emerging markets effectively reflect the
geographical theme of land: their growth is
usually associated with credit and property
booms in developed markets which then
consume more emerging markets production.
Technology is the innovation theme of brains,
defined broadly from railroads to smartphones.
Bloomberg data shows that of the 30 richest
people in the world, seven come from technology
and telecom. Many of the rest are in consumption,
retail and property – developed market sectors
which lead to emerging market booms.
Another surprising finding is that bull
markets are alternately led by emerging markets
and technology. Every 18 years, there is a
technology-led cycle of around seven years
followed by a relatively shallow recession, then
a seven-year emerging market cycle led by
property followed by a recession which is deeper
because of the excesses of the property market.
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
THE TWO CYCLES ARE MEETING CURRENTLY
TO PRODUCE A COMBINED EMERGING AND
TECHNOLOGY CYCLE, FOR FOUR REASONS:
THE SEVEN-YEAR CYCLE IS SWITCHING to emerging
markets just as a 52-year industrial revolution cycle
is superimposed.
EMERGING MARKETS are becoming increasingly like
developed markets. Some parts of China have
developed country income per capita while frontier
markets are following emerging markets up the ladder.
THE DIVIDE BETWEEN THE US AND CHINA is less clear
as the US manufacturing boom is increasingly making
it a producer for China’s consumers.
THERE ARE NEW INNOVATION CLUSTERS developing
in emerging markets such as China, India and Russia.
To see if this could be translated into an
investment strategy, we segregated four
exchange traded fund categories into two
groups: IT and biotech equity funds for
technology; and frontier and emerging market
equity funds for emerging markets. Analysis
showed that the best periods for these four asset
categories are not the same. So there is an
investment opportunity if there is a way to
switch to the best performing categories
without making forecasts.
We used an equity momentum strategy
to make switching decisions – it draws on the
interaction of diverse buyers and sellers in
financial markets to identify which of land
26
or brains has the upper hand. It then invests
100 per cent in the one asset category that has
the strongest rising trend in prices over several
months (subject to putting no more than
50 per cent in the limited liquidity of the
frontier market ETF). If the best trend is down,
or the chosen asset fails dynamic risk controls,
100 per cent is invested in cash.
Backtesting the performance since January
2005, the annual growth return would have
been 19.75 per cent (after fees). Although this
demonstrates the value of going 100 per cent
long in one of the four assets, it must be done
systematically to profit from it. But so far, the
land versus brains paradigm choice shows
signs of very promising performance. 
RECENT INDUSTRIAL REVOLUTIONS
1780 – 1830 The factory system (first industrial
revolution): textile machinery, metallurgy, steam
power, underwear, manually controlled machine
tools, guns
1830–1870 Transportation age (second industrial
revolution): high volume standardisation, iron rails,
bicycles, paper
1870–1950 Age of science (third industrial
revolution): Bessemer steel, electricity,
internal combustion, running water, aircraft
1950–2000 Computers and internet
2000+ Technology creates revolution of industry
and services
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
Edgar van Tuyll is Chief Quantitative
Strategist of Pictet Wealth Management.
He heads a team of six postdocs in
physics and mathematics who have
been running systematic investment
strategies since 2008.
27
FROM WEALTH CREATION TO WEALTH PRESERVATION
FAILING TO PREPARE
IS PREPARING TO FAIL
Jean-Claude Erne, CEO of Pictet Family Office Services,
explained how effective family governance and financial
governance arrangements can ensure the smooth
transmission of wealth from one generation to the next
I
t was Ben Franklin, one of the founding
fathers of the United States, who said that by
failing to prepare, you are preparing to fail.
The importance of preparation for family
businesses is well illustrated by the fate of the
Busch brewing family – the very innovative and
successful creators of Budweiser, America’s first
national beer.
Founded in 1852, the family passed
through five generations, becoming afflicted
by a series of tragic events including a suicide
and a murder until was sold to InBev in 2008.
The family had become totally dysfunctional –
the father of the last family chief executive
made all the decisions and did not tell him
about the proposed sale. The business was also
badly run with no global strategy and the
family owned only 4 per cent of the company,
without super-voting stock to protect its
interests. Family matters and business matters
were not properly prepared.
Family governance can help avoid such
disastrous outcomes. The wealth cycle usually
starts with a business, and as it expands,
financial assets grow and the family increasingly
depends on them. Entrepreneurship must
develop into wealth management. Ensuring a
smooth transition from one generation to the
next needs foresight, effective governance,
planning and proper implementation.
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
28
Effective governance means formalising a family
strategy which covers what the family wants to
achieve over the generations and how it will
achieve those goals. It should include a mission
statement and values around all forms of capital –
human, intellectual and social as well as
financial capital. It becomes more complex over
the generations, but it should be kept simple.
Financial governance translates the family
strategy into an investment policy with an
appropriate organisational structure. The big
challenge is to achieve a balance between the
sophistication needed by an institutional client
and the flexibility needed by a private client.
The classic set-up starts with a series of
businesses as it expands, together with several
banks – with risk management tools operated
through strong commercial knowledge. But as
wealth grows, the platform needs to evolve, with
various financial governance models depending
on the amount of wealth:
• For less than 50 million euros or Swiss francs,
the private banking model with a few banks
managing parts of the financial assets
• From 50 to 100 million, the entrepreneur model
adds non-financial assets such as real estate,
business etc
• Above 100 million, the ultra high net worth
individual model has a strategy committee
overseeing management committees for both
types of asset, with a global investment manager
• When wealth rises above around 1 billion, the
model becomes that of an institutional investor
with more than one global investment manager.
Converting the family strategy into an
investment strategy involves building a strategic
asset allocation which reflects the investor’s
tolerance of risk. It starts with a wealth analysis
of what the assets are, and a detailed budget of
revenues and costs. The assets are then invested
in three buckets, each with different investment
horizons and risk profiles: financing capital to
cover living expenses; reserve capital for
medium-term needs; and free capital for the
client’s specific targets.
Through all this it is important to realise
that business success is no guarantee of success
in the financial markets. So avoid being penny
wise and pound foolish: there are costs in setting
up financial governance, and it is worth paying
the right price a good outcome. 
Jean-Claude Erne is Chief Executive of Family Office
Services for Pictet Wealth Management in Geneva. For
almost ten years he was Managing Director of Pictet’s
Singapore office and Chief Executive of Pictet Wealth
Management Asia
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
29
A SENSE OF RESPONSIBILITY
Innovation in
philanthropy
Naveen Jain, founder and chairman of Moon Express
and iNome, says that philanthropists should use an
entrepreneurial approach to solve problems in education,
agriculture and healthcare
I
f we want to solve some of the world’s biggest
problems, there is no better way than thinking
like an entrepreneur. Entrepreneurs look at a
problem from a very different perspective: they
identify a big problem, they find a good solution
and then they execute it. So the world’s biggest
problems are a big opportunity for an
entrepreneur. Here is how it should be done,
with some examples.
First, define the problem. Many people
think that the education system is broken, but it
is doing what it was designed to do – creating
productive citizens for the rest of their lives. This
is now obsolete because our needs have changed:
every skill learnt becomes obsolete within ten
years with modern technology. The iPhone puts
all the information we need at our fingertips and
has far more processing power than the
computer which landed men on the moon.
Education is still like an old-fashioned
manufacturing production line, moving
children from station to station, teaching
specific subjects and grading them at the end.
But the emphasis for teachers should be on
solving problems, which requires crossing
disciplines. In real life, people get together to
solve a problem, but if children do that it is
called cheating.
Second, never look at the surface of a
problem. Take for example the shortage of fresh
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
water – most of which is used for agriculture.
We should use less water either by using
hydroponic or aeroponic techniques, or different
types of seeds. And lots of water is used in
breeding cattle which are environmentally
damaging in many ways. We could modify stem
cells from cattle to produce muscle tissue in
biofactories and stop using growth hormones.
Third, look for the right business model.
People think philanthropy is about giving
money, but a business that is not profitable is not
sustainable. When a woman asked me for money
to build a bigger shelter for women who had
been abused, I asked what she was selling and
who was her customer. She said the shelter was
the product and the women her customers, but
I pointed out that those customers do not pay.
I said she should treat the women as the
product and the customers as local businesses
who could employ them and will be well-served
by people who want to keep a roof over their
heads. This creates a self-sustaining business
model – which is what the woman did.
With healthcare, the problem is that
90 per cent of the people seen by physicians
have common illnesses, not rare diseases. Sensors
could be attached to cheap tablets and smartphones to diagnose common illnesses
and prescribe treatments. Even in developed
countries, nurse-practitioners could diagnose
30
patients better than doctors, calling in physicians
only when needed and thus reducing costs.
We are living in the most innovative decade
ever, but all we hear is negative news which
evolution made us focus on for our survival.
We can never create a sustainable society by
conservation; it should be about creating. Think
about abundance, think entrepreneurship and
think about solving big problems. 
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
Naveen Jain founded Moon Express which is developing
a robotic lunar lander to explore and mine the moon for
planetary resources. He also founded iNome, the first
company to create the Information Genome of humanity,
and the World Innovation Institute which fosters the
creation of scalable and sustainable solutions.
31
A SENSE OF RESPONSIBILITY
LEVERAGING
PHILANTHROPY
Etienne Eichenberger of philanthropy
adviser WISE explored different projects with
Stephen Dawson of Impetus, Nicolas Métro
of Kinome, Bertrand Cesvet of One Drop, and
Vineet Bewtra of Omidyar Network
ETIENNE EICHENBERGER had noticed three
trends when advising families and foundations
on philanthropy over the last ten years.
• Engagement: people want to go beyond
sending a cheque and to be involved in projects.
• Philanthropists are now driven by results, not
just supporting good – impact is what they want.
• Philanthropy has become more flexible,
providing investment, loans and expertise in
forms such as venture philanthropy and social
entrepreneurship.
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
32
A SENSE OF RESPONSIBILITY
VINEET BEWTRA
I work for Omidyar Network, which is entirely
funded by Pierre Omidyar, the founder of eBay.
We come from an entrepreneurial background,
and we see entrepreneurship as an agent for the
change needed to make the world a better place.
We look for disruptive solutions that produce
some positive outcomes. Over ten years, we have
deployed a little over USD700 million; we are a
private investment company, not a foundation,
so almost half is in equity investments and the
rest in grants.
My focus is education, and we work with
entrepreneurs. One is a little tech firm that has
developed an engine which does adaptive
learning through phones and tablets for people
with low levels of literacy.
On the non-profit side, we discovered an
organisation that does last-mile work with black
kids in townships in South Africa, with
outcomes far better than the national average.
The kids go on to earn 90 per cent of white
wages, compared with the country’s median for
black people of 25 per cent. We helped them scale
it up by turning it into small pay-as-you-go
tuition bundles with after-school human
interaction to mentor the pupils for higher
education – providing poor families with the
same support as well-off families.
STEPHEN DAWSON
There are many different models emerging in
the social sector, which provide a richer choice
and more sustainable impact. Philanthropic
dollars can be used for the R&D element of
venture philanthropy, which can then use
investment and other tools to create eventually
a fully commercial approach.
My starting point as a businessman was to
keep away from government, but you can’t
ignore it in the social sector – it is a big source
of funds and its policies are important. For
example, Impetus manages a government fund
of £125 million for the Education Endowment
Foundation which was set up to help
underperforming schools over its 15-year life.
We also provide management support for
IntoUniversity which helps young people from
disadvantaged backgrounds into higher
education. The proportion getting to university
has risen from 20 per cent to 80 per cent, but it
succeeds because government policy to widen
participation has obliged universities to provide
cash for scholarships.
We pick organisations at an early stage, help
them scale up and make them effective. We
provide funding for infrastructure, an investment
manager to be a critical friend and pro bono
business support to help them build capacity.
Vineet Bewtra, a former investment banker, leads
Omidyar Network’s impact investing strategy in and
from Europe, and is also responsible for its African
education investments.
Stephen Dawson, Chairman of private equity group ECI
Partners, co-founded Impetus Trust which pioneered
venture philanthropy in the UK. He also co-founded
Jacana Partners, an African sustainable investment firm.
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
34
NICOLAS MÉTRO
Kinome’s purpose is to put an end to global
deforestation, not by preserving forests but by
turning trees into a way of improving lives.
While keeping them within boundaries as we do
with pandas and rhinos, we make trees a way to
feed children, improve access to water and
protect crops.
Togo has the highest deforestation rate in
Africa. If we can show its people that forests
bring water back to the wells, we have a chance to
stop it. Trees take time to grow, so we plant
moringa trees which grow very fast and produce
nutritious leaves after 6-10 months.
To make this work, we have to bring
together farmers, NGOs, the Togolese
government and the Red Cross which will help
us with Mothers’ Clubs. We need the World
Food Programme which now understands that
rather than importing food they should grow it
locally. And we need Nestlé and Danone to use
moringa leaves in drinks and bars. All will make
money out of this, but it needs grants to start
planting, and to create social businesses and
distribution organisations.
In Chad, we have convinced Danone to use
gum arabic from acacia trees as a substitute for
synthetic starch. We haven’t planted a single
tree, but we’ve saved millions. Overall we’ve
planted 4 million trees and saved 8 million.
BERTRAND CESVET
One Drop was started by Guy Laliberté, the
founder of Cirque du Soleil, to tackle the water
problem. When we started looking at the
problem, we discovered that work on it focused
only on access, the crudest form of intervention.
We quickly realised that people needed
microcredit to let human capital do more. But
the missing link was changing the behaviour of
communities so that they understand the role
of water, and this is where circus is important.
Circus is street art, and we used its skills at the
micro-community level to change behaviour.
We understood that impact would depend
on how many people we could reach, for how
long and with what ripple effect through
collaboration. We have a project in India which
was an investment of USD2 million to impact
65,000 people, but it grew to a USD80 million
project involving many others and the
government.
Collaboration is harder than we hoped.
Cirque is a collaborative project bringing
together performers from all over the world,
but we found that was counter-intuitive in
philanthropy where there is often competition
for funds. Water is a complex issue and the
problem can’t be solved single-handed – it needs
many different skills. 
Nicolas Métro, who has years of management
experience in large corporations, founded Kinome to
advance forests as a solution to human and economic
development for all.
Bertrand Cesvet, Chairman of Canadian creative services
firm SID LEE, is a board member of One Drop which
he helped Cirque du Soleil founder Guy Laliberté set
up in 2007.
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
35
A SENSE OF RESPONSIBILITY
Structuring
philanthropy
Alexandre Semboglou,
Chief Executive of Rhone Trust,
set out a variety of ways of
structuring philanthropic
activities to achieve a range
of different outcomes
P
hilanthropy as part of any comprehensive
wealth plan has a long history, particularly
in the US where families such as the
Rockefellers, the Gettys, Warren Buffet, and Bill
and Melinda Gates have had the will and the
means to address enormous challenges. Today’s
generation of philanthropists is not confined to
the ultra-high net worth group, and they are
increasingly taking a businesslike approach to
ensure that their donations are used to
maximum effect.
Instead of using a will to gift assets or
leaving them to heirs, assets can be transferred
to a trust or foundation. This is called wealth
structuring, with the objective of succession
planning, asset protection and philanthropy.
There are also attractions in charitable status
which can allow donors to write off some or all
of their contribution against tax.
But if part of the objective is charitable and
part is not, a non-profit may be the best solution,
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
36
CERES FOUNDATION
CERES FOUNDATION
Swiss charitable umbrella foundation
[email protected]
Foundation under Swiss Law
established by Rhone.
Each fund has its specific beneficiaries
with segregated bank accounts or
investment containers.
FOUNDATION ASSETS
Sheltered funds
Sheltered funds 01
Sheltered funds 02
Sheltered funds 03
Sheltered funds (...)
Sheltered funds (...)
Bank Accounts
Bank Accounts
Bank Accounts
Bank Accounts
Bank Accounts
Each new donor has its sheltered fund
giving greater latitude on how funds are raised
and business is done. Activities could also be
operated as a for-profit business if user fees will
exceed costs, as in social enterprises. There are
even for-profit charities in some jurisdictions.
There are alternatives to establishing a
foundation. If the goal is to ensure that a
significant donation is used for a specific
purpose now and in the future, a restricted
donation can be made to an existing charity with
conditions which it is obliged to accept. The
donor benefits from existing expertise and from
competent staff.
Another option is to create a donor advice
fund, with similarities to a private foundation
but without the administrative and managerial
burdens. They are generally operated by public
foundations such as Fondation de France or
charitable organisations as a means of
encouraging philanthropy and supporting
certain causes. The organisation deals with the
burdens and spreads the costs across many
donors and can develop expertise beyond that of
a single foundation. Rhone has established Ceres
Foundation as an umbrella foundation for
several donor advice funds.
Then there are trusts and foundations.
Foundations are separate legal personalities set
up by a founder for specific purposes – more like
companies than trusts, but without shares.
Trusts are not legal entities but private
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
arrangements which come into existence when
a settlor transfers assets to trustees who manage
them for defined purposes or beneficiaries. In
both cases, the settlor or founder gives up legal
ownership of the assets irrevocably.
(...) the perfect amount to leave children is
‘enough money so that they would feel they
could do anything, but not so much that
they could do nothing.’ Warren Buffet
Choosing the right jurisdiction for a
structure is important, with many factors to
take into account, including the likely size of
the charity and the cost of meeting regulatory
requirements in the jurisdiction. For smaller
entities, a management company may be
an affordable option if employing staff is
too expensive.
Achieving the donor’s objectives requires
expertise in selecting the jurisdiction, choosing
the right structure and drafting its purposes
carefully. These are complicated matters, and
it is important to create a good relationship
with advisers. 
Alexandre Semboglou is Chief Executive of Rhone Trust
and Fiduciary Services which took over Pictet’s wealth
planning services, trust and fiduciary activities in 2011.
37
ANOTHER PERSPECTIVE
LET YOUR SOUL TOUCH
THE EARTH: GO WALKING
Sarah Marquis, an adventurer who has walked the globe,
took the entrepreneurs on a journey along her desert and
mountain paths, explaining how she had realised her dreams
S
arah began by saying that she had enjoyed
a varied childhood in the countryside,
climbing trees and watching birds for
hours at a time. Over the last 23 years, she had
been walking the planet on foot – the
equivalent of eight straight years nonstop.
On her epic solo journeys, she had worn out
30 pairs of boots over a distance that would
have taken her round the globe.
How does she do it? ‘One step at a time, and
you get there.’ Why does she do it? ‘I’ve struggled
with that question for many years. I eventually
realised that walking makes me happy. I had
been walking in the desert in Australia for two
months, it was 40°, and I couldn’t wash because
there were crocodiles. And I learnt that to be able
to do things, your heart needs to be OK with it
– the heart, the mind and the body must
combine together.’
She admitted that she has bad days. ‘But
when I’m in the middle of the Gobi Desert,
I can’t have a day off because I need to feed
myself and find a drink.’
She has some tricks – a toolbox of the mind
to get past such times. One is to perform a little
ritual, of sitting down and making some tea.
‘It’s like zipping up in an imaginary bubble, and
I’m safe, I’m home, I’m fine. When I’ve finished
the tea, it’s another day.’ A sense of humour is
also important, she adds.
‘I keep going and I want more,’ she said.
‘I’m not just walking: I’m discovering new
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
territories. Whatever you are doing, you are
the captain of the ship, doing what you want.’
She walks alone for most of the time, so how
does she survive? ‘I’m starving most of the time
and thirsty – I once walked three days without
water. But you have to be aware of your
surroundings – shape, colour, sense, smell,
wind, heat, cold – and this gives you so much
more information. You feel connected to your
surroundings, and to the people around us.’
She treats her body as a laboratory, testing
her ability as a white female to survive with
nothing. She has sometimes hunted for food,
and says that there is food everywhere – snakes,
birds and other animals. But the reality is that
you may not catch anything after hunting for
two hours at the end of a 12-hour day spent
walking. Water comes from wells which can
run dry or turn salty. ‘There is a connection in
the mind between expectation and
achievement. But if you don’t expect things,
you can go further – knowing that you will
eventually get something.
‘On my journeys, I get closer to the earth and
to natural law. Human law is about what you can
or cannot do, while natural law is about food,
water, light – everything. But we are from
nature, we are animals, and it is possible to link
the two worlds. We need the link to the land
to make the world sustainable. I’ve been on a
23-year journey, but all the time, the treasure
was below my feet. That is my discovery.’ 
38
Sarah Marquis has crossed the US from Canada to
Mexico in four months, spent 17 months in the Australian
outback, walked along the Andes from Chile to Peru
over eight months, and crossed alone from Siberia to
Australia in 2010-13.
PICTET WEALTH MANAGEMENT Entrepreneur Summit 2014
39
POSTSCRIPT
Closing
remarks
W
e have just heard a very inspiring talk
by Sarah Marquis, and it struck me
that there are some parallels between
adventurers and entrepreneurs: both go off the
path, push the limits, and care passionately for
what they do.
This has been a good way to wind up
this seminar, which was built around three
pillars: innovation; wealth creation and
preservation; and the responsibilities that
go along with wealth.
Jacques de Saussure described the structure
of Pictet at the beginning of the Summit, and
called it a permanent buyout. As the youngest
partner, I know that it will be an exciting
journey for me over the next quarter of a
century until I retire at 65, but it will be a
marathon rather than a sprint.
We are managers who set the strategy but
we are free to discover and build. We see clients
every day and learn about what they think
about us and what is going on around us.
We are passionate about finding solutions.
We are entrepreneurs and we know what
it is to innovate, to build and preserve wealth.
So I believe we are the right partner for
entrepreneurs, and I thank you for finding
the time to share your experiences with us.
Marc Pictet
Managing Partner
Pictet Group
THE PICTET GROUP
Founded in Geneva in 1805, the Pictet Group is today
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