Luke Johnson: Mad Men is spot on about US capitalism

The chairman of Risk Capital Partners belatedly becomes a Mad Men disciple thanks to its juicy material about business.

by Luke Johnson
Last Updated: 19 Jul 2013

Belatedly, I have become a Mad Men disciple. It is perhaps the best TV series ever made about American capitalism.

This is not simply because of the quality of the scripts or the acting. It is because advertising has always been so symbolic of modern free enterprise, and it provides such juicy material about the business of business.

Moreover, the 1960s were the peak of US industrial might, innovation and influence. The annual, average per capita real growth rate was 2.8% in that decade: in the 2000s it was just 0.2% in the US. No wonder the characters exude an air of confidence and optimism.

It is interesting to note that each episode of the drama costs about $3m to make. While this is perhaps twice the budget of most UK television dramas, the ratio is not as great as some might have one believe.

Shows such as Mad Men are efficient to produce because each series consists of 12 episodes: long runs offer economies of scale, unavailable to British shows, which generally have fewer episodes.

What is surprising to its devoted fans is that it is a relatively unpopular programme. Its first-run US audiences are in the two to three million range - by comparison, zombie drama Walking Dead on the same cable channel recently enjoyed ratings of over 12 million viewers.

But I'm pleased to say that AMC and studio Lionsgate will continue to commission the show, because it helps define both organisations - especially within the entertainment industry.

Almost everyone who works in the media watches it, and that halo effect is critical to attracting talent and advertisers. One day I would love to make the British equivalent.


I recently bought a half share in a London late-night bar business called Grand Union. This investment is a case of my career turning full circle. I started out in business in roughly the same sector in 1980, aged 18, promoting parties in a nightclub in Oxford while I was a student.

The industry has certainly got a lot tougher since my first involvement over 30 years ago. Then there were relatively few late licensed premises, and anywhere decent could charge guests on the door - especially at weekends.

In the summer of 1983 I ran a quasi-legitimate weekly club in Fulham Wharf where entry was £5 a head. These days many venues charge approximately the same amount - a collapse of revenue in real terms.

Increased competition is the biggest factor: now many pubs can open until 2am or later. In truth, Grand Union runs bars, not what were once called discotheques.

The smoking ban has also hit the industry hard, as have rising costs for everything from doormen to music performance fees. But well-managed operations can still do well, because twenty and thirtysomethings still like to go out and drink and dance - and meet members of the opposite sex.

Luckily, my new partner, Adam Marshall, is much younger than I am and is therefore much better qualified to run the business. He understands the market of today and knows how to control what can be a challenging business.

Many rivals are not so well run and this provides the opportunity.


Every summer for the past few years, I have delivered a talk at the Royal College of Defence in Belgravia. This is a remarkable institution that provides high-level courses to elite military leaders from all over the world.

For some reason, they ask me to deliver a lesson from the world of business to a room full of top brass as part of their curriculum.

Of course, entrepreneurs are not very like generals. The former focus on profit, customers, products and markets. They tend to be rebels and reject the status quo.

By contrast, army high command is made up of public servants who are engaged in conflicts and battle, and work in an intensely hierarchical structure.

Nevertheless, there are certain areas of common ground. Both require leadership of complex organisations.

Both are about management of people. Both are about winning the mission, planning and execution. Both involve administration, motivation, teamwork, strategy and delegation. In particular, small units fighting in the field are what win wars; and in multi-unit companies like restaurant chains, it is the performance of many individual outlets that determines results.

Moreover, the defence industry is intimately involved with the armed forces. It is one of Britain's largest manufacturing and exporting sectors. While it supplies governments, it still needs to sell, innovate and finance operations.

Many of the senior executives in defence contractors are ex-military men who have transferred to the private sector. So there is crossover between the front line of capitalism and the world of the soldier.

I was never tempted to join up and fight real battles for a living. But I admire those who risk their lives for our safety. Although, thank God, traditional wars almost everywhere have been steadily diminishing for decades, there are still threats to our way of life from terrorists and extremist states.

Britain built its empire and grew rich partly thanks to its martial culture. We cannot disown our history, or our ongoing role in maintaining world peace.

I have often hired ex-officers and have found them excellent recruits: disciplined, diligent, reliable and driven.

Hence, I am happy to do my very small bit to continue our tradition of training the finest military leaders from all nations.

This column appeared in the July issue of MT.

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