Peter Hargreaves - In for a Penny: A Business Adventure

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First published in Great Britain in 2009 by Harriman House.

Copyright Harriman House 2009

The right of Peter Hargreaves to be identified as the Author has been asserted in accordance with the Copyright, Design and Patents Act 1988.

ISBN: 978-1-90665-941-7

British Library Cataloguing in Publication Data

A CIP catalogue record for this book can be obtained from the British Library.

All rights reserved; no part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without the prior written permission of the Publisher. This book may not be lent, resold, hired out or otherwise disposed of by way of trade in any form of binding or cover other than that in which it is published, without the prior written consent of the Publisher.

No responsibility for loss occasioned to any person or corporate body acting or refraining to act as a result of reading material in this book can be accepted by the Publisher, by the Author, or by the employer(s) of the Author.

As a child I never had aspirations to be an author. Indeed if I had shown any early ability in that sphere, the education system certainly missed it! I was informed in 1963 that my school would not pay the entry fee for me to take O Level (now called GCSE) English literature, a decision they only reversed when I offered to pay the fee myself. Their embarrassment was acute when only four boys in my form passed English literature, yours truly being amongst that quartet.

I suppose writing much of the content for the companys newsletters over the years caused me to reappraise my literary skills, during which time I was flatteringly informed that I wasnt a bad storyteller. When I put pen to paper in 2008, my initial plan was simply to write the story of Hargreaves Lansdown, from its modest beginning in my spare room in 1981 to the present day. Stephen Lansdown and I have enjoyed a great business adventure, and my hope was that others might find reading the story as interesting as we have found living it.

Now that the book is finished, there are two other things that I hope readers will take from the book. The parts that I have enjoyed writing the most are the ones that describe the business lessons that we have learnt over the years. I hope that some of these ideas will help others to establish successful businesses, as we have done. I have no wish to be a management guru, but I do know that all the tips you will find here are ones that have worked for us.

It would have been impossible to write a book about Hargreaves Lansdown without also venturing into the minefield of investment. My hope is that readers will gain some insights into the pitfalls that many investors face, and how they can avoid them in future. From very early on in our business, Stephen and I set out our stall by saying our aim was to provide the best information, the best prices and the best service to our clients. That ambition has never changed. Investors need all the help they can get.

This book describes the story of Hargreaves Lansdown and provides readers with information to help them when investing. However the book is not published by Hargreaves Lansdown and Hargreaves Lansdown has no financial interest. The story and the views are solely mine, the authors.

In For A Penny is both an adventure story and a primer on how to grow a business from scratch. Peters book will take you step by step from the gleam in his eye when he first heard about unit trusts to the hugely successful business that he and his partner Stephen Lansdown run today.

It is a modestly told story of two men who shared a vision that unit trusts would become a major growth industry. From humble beginnings in 1981 they have built a leading financial services business which now has 240,000 clients and a market capitalisation of 1 billion.

Every chapter is laced with humorous anecdotes and valuable business lessons. Peter tells you how each and every member of his early staff was recruited, how the first word processor was bought and the big day when the office moved from his spare bedroom to its first proper office premises.

I will try not to spoil the story for you, but I cannot resist giving a few of the highlights that impressed me most.

First and foremost Hargreaves Lansdowns three important rules put the client first, the business second and yourself third.

Second, the way Peter and Stephen have always been prepared to do anything that needed doing, however menial, themselves. Every member of staff is encouraged by example to have the same approach. Coupled with Peters aversion to meetings, there is never a wasted moment.

Third, Peters down-to-earth approach of reducing every problem to its basics, and the way in which management and staff have always been encouraged to put forward their own ideas, many of which proved to be real winners with the credit being fully acknowledged.

I particularly like the account of the move to a new office when Peter concealed 1500 square feet of space, boarded it up and decorated over it. He knew that if the space was there, it would be quickly occupied. As the business expanded he made sure that every inch of existing space was used up before the dramatic unveiling.

Another very impressive characteristic of Peters is his adaptability. This is particularly evident during the so-called PEP wars. The way in which Hargreaves Lansdowns Vantage platform for clients came into being is a model business success story in its own right.

I could go on but it is your turn now. I hope you will enjoy the story and learn how building a market-leading business from scratch is done. Easily said, not so easily done.

Jim Slater, June 2008

In the early days of Hargreaves Lansdown, before the arrival of the Financial Services Authority, there were occasions when firms like ours were treated to lavish corporate entertainment by investment providers. One of the most memorable was organised by a small life assurance company known then as Target Life. It was an aggressive business which had some good products, even though the investment performance was due in large measure to its willingness to take greater risks than many conventional life companies dared. John Stone, the managing director, was an extremely able businessman who has since gone on to make a second fortune with an offshore life company called Lombard.

The trip which Target Life organised took a number of brokers and advisers to New York and back on Concorde. Even though my partner Stephen Lansdown and I had only been trading for a short time, we had done enough to be noticed in the industry and earn an invitation. John Stone had identified ours as a business that seemed to be expanding rapidly. The trip was a splendid affair, particularly for Stephen who discovered on the plane that he had won the raffle, the prize for which was an upgrade of his hotel room to a suite on the 44th floor of the Hilton, the hotel in which we were staying. (My initial envy later turned to relief when I visited the suite which had floor-to-ceiling windows. As I suffer from vertigo, I couldnt get within two or three feet of them without my stomach turning over. I could not have slept in that room myself.) The trip included dinner at the top of the World Trade Center and a talk by Art Laffer, the charismatic supply-side economist who advised Margaret Thatcher and Ronald Reagan in the early 1980s.