Admiral: How to be a better boss from Co-Founder of £7 billion insurer - Henry Engelhardt

0:04Bosses are powerful forces in our lives and we need to remember that and we need to have better bossage. You might be a great boss already. You could be better. You might be a rubbish boss. You could certainly be better. You know, there is no formula. And I've landed on three things. And one, a great manager makes great decisions. Two, a great manager is great with people. And three, a great manager is creative and innovative.

0:29That's Henry Englehart. He's the co-founder and former CEO of Admiral Group, one of Britain's most valuable companies, currently valued at£7 billion. Fun fact, it's also the only FTSE 100 company in Wales. If you're not familiar with them, they're the company behind Confuse.com, Compare.com, Admiral Insurance, Bell Insurance, Elephant Insurance, Diamond Insurance and Vago Insurance. Yeah, lots of insurance basically. His first book, Think, Lead, Succeed, The Admiral Way, was released in January 2021, and now he's back with a follow-up. Be a better boss. Learn to build great teams and lead any organization to success.

1:11Insurance might seem like a dull subject. In fact, Henry thought the same thing when he first got involved in the industry, which is quite funny. But like our Lemonade episode, which is one of my favorite ever interviews on Secret Leaders, I loved recording this because Henry is a great talker who wraps valuable lessons in personal stories. I could have chatted to him all day long and I think you're going to find something quite infectious about him and his energy. This is also one of the most unique and unusual founding stories I've ever heard on the show. It took me by surprise. You're going to get a lot from this episode.

1:46Henry grabs life and has done so ever since his first job as a teenager. Yeah. Started working when I was 13. It was a place called Poochie's. And it was a real good lesson in some, I mean, I didn't realize it was a good lesson then. I was just interested in the$1.65 an hour that I was earning. But it was a hot dog hamburger place, a little shack, very small place. And up the road, up the strip mall a little ways was a very big Burger King with a lovely parking lot. And yet Poochie's killed it. I mean, they have lines out the door all the time because they did everything really first class. You know, the beef came from the local butcher.

2:24We blanched our own french fries and we charged a bit more, which also hit a positive tone with people who didn't want to feel guilty about, you know, taking the kids out to Burger King for dinner kind of thing. But Poochies, everybody likes it and it's good for you because it was, you know, the beef from a butcher shop, etc. The guy who started it was a jeweler and he started it part time. And then he gave up being a jeweler. And a couple of years later, he had a big house in the suburbs with a swimming pool. He did rather well, but a great lesson in quality. I guess it's rare that people focus so clearly on an early memory of the first place they worked.

2:58And you're speaking so fondly already. I'm imagining it really actually hit a tone for you. Well, it was great food. I ate a lot of it. But process was another thing because we had to serve these customers in a hurry. So where's the piccoli in comparison to the tomatoes? And how quickly can you get to the French fries and scoop them into a bag and so forth and still do it with a smile on your face? And so it was a good study in process. And I wouldn't say because later on, I worked for McDonald's on the Champs -Élysées, actually, in Paris. And there, you know, that's process on steroids. Everything was absolutely regimented.

3:37We were kind of figuring it out on the go. And, you know, we would move things around to suit ourselves. And was your love for entrepreneurship that followed? Did that come from Pucci's then? Well, you know, it was just kind of there. I wouldn't say that I ever set out to be an entrepreneur. I walked into it gladly. But I ended up in startup businesses or self-owned businesses, you know, management-owned businesses quite a lot. When I was in high school after school and on weekends, I worked for a discount golf supply store. And then my father, that was an interesting experience. I worked for him a couple of summers.

4:12He had a business. It grew to the most was about 30 employees. I realized working for him why it could never be a big business. Very difficult business. Wholesale meats because it's sold by weight. And the longer the meat is hanging and not being sold, it dehydrates and loses weight. So, of course, you're buying it at X dollars per pound and selling it for X plus Y. But if it's being dehydrated, you have less to sell. So moving it as quickly as possible was key. And he could do that. Oh, he was an incredible salesperson, buyer and seller unmatched. But his management style was management by screaming.

4:53Nobody ever did anything right in that place. He just screamed all day long and corrected people. It didn't matter how long they worked for him. It didn't matter what they did. He was just always yelling. So it killed off innovation. He had to do everything. He had to make all the decisions, which is how he wanted it in a backwards kind of way. But it meant the business could never be big. It could only be a small business. It could only be as big as he could reach. And this was something I saw at the time. And, you know, when I did start to run my own departments and eventually a company, you know, I realized I've got to step back.

5:27I've got to let other people do things. Otherwise, this business is going to be small. And I don't want a small business. I want a big business. So you do learn from all your experiences. I think that's one of the main learnings I had from all my experiences. You learn from all your experiences. You may not learn at the moment, but you look back and think about it and you say, yeah, that one taught me this and that one taught me that. And that's how you grow and help yourself to be better. I'm just curious about your dad. So very shouty in management style. What about as a parent? Well, didn't see much of him.

5:56He was gone by the time we woke up in the morning. He'd come home at night just in time because he had to do everything. He was the last one out the door after making all the sales calls and checking everything was all right. We would see him enough to say goodnight. He worked almost all day Saturdays doing sales for Monday morning. And we met, we saw him on Sundays. He was a tough guy to get along with sometimes. Good days and bad days, I'd say. And then after your formative years, so working in different businesses, going through school, what did you do next? I studied journalism, radio, TV and film at university, and I wanted to be a journalist.

6:30In fact, when people ask me what was my greatest mistake, it's an interesting story in that just before my senior, my last year of university, the head of the radio, TV and film department called me and said, we're setting up a special class of directing and we'd like you to be in it. And I said, I'm doing a journalism thesis. I really won't have time, so I can't do it. And in the end, the journalism thesis was a waste of time. I only looked back very soon and wished I had kind of put my blinkers aside and taken that class. What I look back and realize was the real mistake was that I made the decision all by myself without asking anybody, without talking to anybody.

7:10I just made the decision. You need to talk to people. Making decisions by yourself in life and in business is dangerous. And if you just talk to somebody, I'm sure somebody would have said to me, well, you're sure the journalism thesis is going to be that valuable? And isn't this a fantastic opportunity? And couldn't you maybe do them both? Or who knows what they would have said. So that was a, in retrospect, it was a great lesson learned. In retrospect, too, it was a bit of a mistake. OK, fair enough. Things turned out all right. Thanks. I left the U.S. one week after I graduated university and went to France.

7:45Yes, I was chasing a woman. The woman and I have been married more than 40 years now. She lived in Chicago for a bit. We lived in France a bit. And we ended up in the U.K. because the U.K. was our compromise. We speak English. We get American football on Sunday nights. and we're a hop, skip and a jump from Paris. And so that's when I worked at McDonald's on the Champs Elysees. I did some traveling. I worked for a couple of months on a kibbutz in Israel, picking grapefruits and things like that, which was fun. Came back to try and get a journalism job and there were no jobs going. And so I started as a runner on the floor of the Chicago Mercantile Exchange, which is a futures trading exchange in the days when they had the pits and the traders calling out the trades and jostling with each other to get their trades in.

8:28And basically, I wore a gold jacket and a phone guy would hold up a piece of paper. I would grab the piece of paper. I would take it to the appropriate trading pit, give it to somebody else. Somebody would fulfill the order. They'd scribble a few things on the paper, hand it back to me, and I would take it back as quickly as I could to the phone guy. That's what my college education paid for, was running back and forth between the phone guy and the trading pits. They were just starting up a discount futures trading business. Again, an entrepreneurial venture within an entrepreneurial venture within this firm.

8:59And I was on the ground floor of that. And I did the customer bit. And then I took over sales department. And then I took over marketing and sales. And then I became a senior vice president. And this thing was growing like poxy. It was just fantastic. And it was a great education. So I ended up there six years before I pushed on. So you've spent your 20s very, very well. You've selected, even though you have some regrets, you know, just to sort of stop and reflect there, do you have some advice for people who may feel like they've actually missed the opportunity of their lifetime? How could they do what you do?

9:31Because you moved through the ranks quickly. You know, when I was doing welcome talks at Admiral and I did welcome talks to all the new starters for 20 some odd years, meeting 25 ,000 people along the way. And one thing I'd ask them is, do they have any talent? Any talent? I'm not looking for Olympic gold, but do they have any talent? And by and large, most of them would raise their hand. Those that didn't, I questioned our recruitment policy. But then I would ask them, what are they doing to make the most of their talent? Not what is being done to them, at them, with them, for them, but what are they doing?

10:07And I'd ask these kinds of people the same thing. What are you doing to make the most of your natural ability, because I do believe we all have natural ability. And it's not, oh, I go to work every day. Well, that's not enough. Are you reading? Are you listening to podcasts? Are you talking to people? Are you learning something every day to take yourself forward? And that's what I'd highly recommend people do. And not to give up. Just stay, put your head down and do the best you can. End of the day, if your firm is reasonable, that's what will get you noticed. That's what happened to me. It wasn't that I had any career path in this futures firm.

10:44I just was doing a really good job and doing really interesting new things. I mean, this was in the days. We still had punch cards for computerization. I mean, that's how old this story goes. and uh and you know i would collect information on customers and i quickly realized that actually you know kind of whatever 60 of our business was being done by uh the the you know the busiest 10 of our customers and did we contact them did we do anything special for them and of course we hadn't because nobody had ever even thought of doing that before so taking some initiative not feeling like you're blinkered or blocked just do things and people will take notice so how did you get into startups well that that one was a startup an entrepreneurial startup and you know just i was just in the right place at the right time but then after i did an mba and the mba was very valuable because i learned a little bit about everything strategy accounting finance marketing process all these different aspects of business and i learned a little bit about all of them.

11:52And I became a management consultant because that's the only job offer I had out of the MBA program. So I took it. I had a young family already and needed to have a job. But I didn't like being a consultant. Maybe it was the firm, whatever. It just wasn't for me. So I answered an ad for a company that hadn't started yet, didn't have a name, and it said financial services. And I called up to get the interview. And I remember asking the lady and said, well, which financial services exactly? And she sounded like she wanted to go into the table and hide. She said, well, it's car insurance. And I was at a conference, I remember distinctly, and I took the phone away from my ear and I looked at it and I thought, oh no, what could be more boring than car insurance?

12:32But I really didn't like being a management consultant. So I went for the job, got the job named Churchill Churchill. I joined in November of 88 and Churchill launched on the 19th of June, 89. I took over management of the sales staff and did that for a couple of years until somebody knocked on the door, a headhunter knocked on the door and said, somebody else is starting one up looking for a CEO. Would I be interested? Or managing director, we called it then. And I said, sure would. Off I went to set up what became Avma Group. Right place, right time. But I am attracted to building businesses.

13:05It's interesting. First of all, hugely different skills in preparing and starting a business to running a business and then again to running a big business. And I'm fortunate enough to have been able to gravitate from one level to the next to the next. So going back to the very early days of Admiral, what was your vision? How did you set it out? And how did you think about your culture and your people? I've learned from quite a few negative cultures. I learned that management by hypocrisy is a killer. I learned that many, many offices try and executives try and divide their workforce. Maybe not consciously, but things like company cars and executive dining rooms, they do nothing but divide the workforce.

13:50I worked for somebody once where all the managers had chairs with arms and everybody else had chairs without arms. And one day, one of the chairs with arms went missing. We find that two days later and the arms have been bent out of shape. You know, businesses have enough problems with competition and consumer behavior and regulation and supply chains and partners and stakeholders and blah, blah, blah. Why divide your workforce? So absolutely, that was at the forefront of developing Admo. No company dining room, no company cars. In fact, we eventually went. And one of the things I'm most proud of is there are no offices even today in Admo Group.

14:27You go to Delhi, you go to Richmond, Virginia, you go to Rome, you go to Swansea, you go to Newport, you go to Cardiff, wherever it is. There are no corporate, there are no management offices. There are meeting rooms, but nobody's got an office because walls stop communication. And why would you do that? Why don't you want to communicate with people? Why don't you want to be seen? So all of these things developed over time. Culture is a living organism. It develops and grows. It's constantly evolving. But there were some basic things from the beginning. So for instance, we were a business plan team.

15:02We were just five of us writing that business plan. And I got the other four together. We had a small round table in this shabby little office we were in. I got them all together. And I said, look, I expect to have a good family life. And I expect to have a successful business career. And I do not believe the two are mutually exclusive. I will work hard. I'm sure there will be sometimes I work really long hours. But by and large, I intend to have breakfast in the morning with my family and dinner with my family in the evening. And that, you know, was one of the tenets of Admiral's culture. If it's good for me, it's good for everybody else, because that's another thing I've learned along the way is you cannot really have two sets of rules.

15:42Everything I did and looked at, you know, I thought to myself, if somebody working for me brought me that expense or did such and such, would I say, yeah, great? Or would I say, no, that's not allowed? Well, if it's not allowed for them, it's not allowed for me. Full stop. You know, you cannot be a hypocrite and expect to be a successful manager. And yet most businesses lay the traps for hypocrisy along the way, perks and things for moving up in an organization. And if you just think about the effect your bosses have had on you, then you can start to get a feel for it. It's funny you say it because I do think it's one of the underestimated and underappreciated benefits of starting entrepreneurship after a few jobs.

16:25You know, in my experience, the benefit that I had working in so many jobs, you know, I worked in a call center selling insurance. You'll be pleased to know it wasn't a bad job. It was an OK job. was quite difficult as you probably are aware like selling insurance cold at night after school until 11 p.m just calling random cold cold calling off lists that they gave us oh cold calling is brutal cold calling so hard and brutal and i got told no 99 times a night until i got that 100th yes but at 16 i became the best person there i won uh like all the bonuses top sales reports etc et cetera, et cetera, because I was just persistent.

17:06I just refused to let it get me down. And I thought it was great practice, sort of turn it into my own game. And then I worked in another business a few years later in publishing. And we worked for a guy who made us, it was brutal. He made us all day long, everyone stand up and sell on our feet. And no one was allowed to sit down the entire day until they'd made sale, like four sales, I think it was, but it was quite hard. It It was B2B media sales for like a travel niche business magazine. No one was allowed to sit down. The manager was sitting down all day long having calls, having food. We weren't allowed to have anything at our desk either until lunch.

17:45And it was just so obviously absurd. Do you know what I mean? Like there was just no part of it that felt reasonable. And so everyone disliked this manager. No one respected them. Everyone ended up leaving, of course. and you see that and it doesn't take long to extrapolate a lesson out of it. You just think if you treat your people badly like that and you are a hypocrite, they won't trust you and respect you and stay with you. Exactly. You know, we came, we turned it around into a positive statement, which is if people like what they do, they'll do it better. And if they do it better, you win because you'll get better results.

18:23So, you know, our culture was not altruistic. Let's have a great culture because we're great, great people. Our culture was how do we get a better result? And that's hugely important to remember is that it's about economic results for a business, because what good is it if you say, oh, we have a fabulous culture and we had it right up until the time we went out of business? No value in that. We want to employ more people and give them the good culture. So we have to have good results. You can whip people and get them to do things for short periods. But we also want this, you know, business is a long run.

18:55You know, It's not like a sports season, which has a different end, and then you rest a bit and you start again. Business goes on and on and on and on. And we want people, because we know that experience is valuable, we want them to stay with what they do. And if they don't like their job, very difficult to go home, flick a switch, and be a happy camper at home. So not only have we ruined their day at work, we probably ruined their home life as well. And then they leave just at the time we've got them trained up. So we go the other way. Let's go out of our way to make Admiral a place people like.

19:29And if they like what they do, they'll do it better. And it has paid off big time for Admiral. So talk to me about Admiral's strategy. You started it when? So I was hired by a managing agency at Lloyd's of London in the middle of 1991 to set up and run what's become Admiral. And they were looking at this direct car insurance thing, which is quite new at the time, because they needed sterling cash flow. They were doing a lot of business of different insurance risks in the U.S., but there's a trust fund in New York and the Americans keep the money there to make sure that these insurers can pay claims.

20:05And yet their expenses were in sterling in the U.K. So, you know, eventually they get the profits home, but they need some sterling cash flow. In the meantime, car insurance provides good cash flow. And they looked at the market and thought this new direct thing, direct line was a few years old. Churchill is a couple of years old. There was GA one-to-one. There was about four or five at the time. And they thought that's the way to go. So they recruited me and I joined. They gave me an IT manager and then I hired three other people. So there were five of us. We wrote the business plan, got it approved.

20:37And on April 1st, 1992, we started spending money. We launched on January 2nd, 1993 at 9 a.m. 9 a.m. because it was a Saturday. So we've been trading for 30 years and five months and some days. Who's counting? and it's been good. We got off to a great start. We did some clever things at the beginning. We also got the benefit of an insurance market where prices were surging. It was all insurances. There was a mortgage indemnity problem. There was hurricanes from the late 80s that still were being sorted out. Car insurance was a terrible market. So prices were going way up. We didn't have any liabilities from the past and we were able to get business profitably almost from the from day one.

21:21But we did do something very clever because we were the seventh direct response insurer into the market. So the idea of you always have to be first, I say no. In fact, I much rather prefer let other people pave the roads and we drive behind. And that helped us a lot. Now, the other six were all going for the good driver market, suburban, small car, low premiums, good drivers. We said, well, you know, we're going to struggle to compete on the economics with Direct Line and Churchill and the others that had started a few years before if we go after that market. But what if we went after higher premium business?

21:58Not extreme, but younger drivers, bigger cars, more city dwellers. If the average premium in the market was 300, our average premium was 425. And there were some premiums up at 1 ,000. So we weren't extreme, but well above the average. And that turned out to be a goldmine because, A, those people were shopping more. They had more to gain. They're probably, if they're younger drivers, were in stages of their lives where 20 quid meant a lot, rather than if you're an older driver paying a 300 pound premium, 20 quid, yeah, you know, maybe. So they shopped a lot more, easy to switch. They are riskier.

22:39They do make more claims, but we figured out how to rate them because within big, broad brush of young drivers, there are good young drivers and less good young drivers. And we figured out how to find the good ones. And we are still higher average premium, even though we've got millions of customers now. But that's been the basis of our success for 30 years. The business got off to a flying start. It started to turn down again in 95. Meanwhile, one of the things I negotiated when I joined was an equity stake for myself and my management team. And we had 20 % of the equity. But the parent company kind of figured out that that actually could be very valuable.

23:20And they sort of tried to get it back from us. So we ended up going down a legal route. And we had lawyers and they had lawyers. And we put the case in front of a Queen's counsel who said very calmly, it looks like Admiral does the work and it's in the Admiral name and the customers are with Admiral. And so the value was with Admiral. And we won the day. Our shares were worth something. And meanwhile, that company got bought out. Then the company that bought them out got bought out. We went further and further down the food chain. The ultimate parent was a Bermudan reinsurance company that said, we don't do a thousand people in Cardiff selling car insurance.

23:57So they put us up for sale. 1998, a very big American company bid 111 pounds for us. We were going through with the deal. At their end, it all fell apart. Nothing to do with us, but at their end, we got pulled off the market. Car insurance was in trouble in 98. In 99, it was five times worse. The parent company put us back up for sale. Nobody wanted to buy us. We convinced one venture capital company that what we were doing was interesting. We teamed up with some reinsurers to make the model a very low capital model, a capital light model that produced a lot of profit. We convinced them and together we bought the business out.

24:36And that was at the very end of 1999. We floated the business in September 23rd, 2004 at£2.75 a share. By then, everybody in Admiral Group was a shareholder. So everybody got something. 1 ,400 members of staff split up £56 million the day we floated. And we've kind of never looked back. Everybody is still a shareholder. That's still part of the ethos. Why? We want our people to feel like they own part of the company. Therefore, the best thing to do, give them part of the company to own. And I don't know why more people don't emulate that model. In fact, we've had competitors, insurance investors will ask us, why don't your competitors copy your culture?