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Trump or Maxwell? Will Eike Batista Rise Again?

So I guess everyone knows about Eike Batista, the Brazilian who has, at least temporarily, fallen from grace. The big question: can he come back?

I can think of two business personalities similar to Batista’s that we can view as possible models. One is Donald Trump (“the Donald”), the New York real-estate tycoon. The other is Robert Maxwell, the newspaper mogul. Trump came back from near-failure in the early 1990s during the real-estate bust at that time. Maxwell failed and apparently committed suicide in 1991.

All of the three have or had similar, outsize personalities. They were charismatic, big thinkers, bombastic, powerful marketers and self-absorbed self-promoters – all intensely narcissistic. Two of them – Batista and Maxwell were visionaries; Trump has no over-arching vision except to promote his own self-image, which is fine in its own way.

If you are visionary and very narcissistic, that’s a big handicap. It reduces or even obliterates mental agility because of the intense obsession with the vision. Maxwell failed because he had an intense vision, modeled on that of his nemesis, Rupert Murdoch and this reduced his mental agility so much that he could not make the necessary adjustments. I am sure that’s why he committed suicide; because he realized that he couldn’t live with his failure to achieve his vision.

Remember that Rupert Murdoch also almost failed in the early 1990s. So why did he succeed and commercially live on and prosper? Because Murdoch is not at all narcissistic, in fact he is pretty self-effacing. So even in failure he could keep mental agility high because he was not concerned about his image to the same degree and could accept that people might view his vision as having failed.

Ironically that’s why Trump was able to come back from a failing situation. He doesn’t have any sort of vision that he has to defend. As long as he keeps up the image of success from a purely personal standpoint, he can keep on going. Paradoxically, what many people see as Trump’s relative shallowness actually reflects a high degree of pragmatism and business acumen. That’s unusual in narcissistic personalities, but to be fair, some narcissists do learn from their mistakes and can actually reveal a high level of mental agility. I think Trump is in that category.

It’s weird but being narcissistic doesn’t mean that you will have low mental agility; as long as you don’t have a big vision to defend, you can still bounce back with some degree of equanimity. That why Larry Ellison, who also had a skirmish with failure in the early 1990s, managed to come back from this near-death experience; he didn’t have a big vision to defend and that fed his mental agility, even though he is narcissistic himself.

So Batista’s prognosis, in this theory, depends on the relative strength of his narcissism and his vision. The idea is that if you have high narcissism coupled with a powerful vision, that’s probably curtains for your future.

Well we know that Batista has high narcissism, the signs abound. A Playboy wife, a Mercedes McLaren parked in his living room and copious public flaunting of his wealth depict narcissism pretty much at the same level of Trump. Not good.

And his high level of narcissism also speaks to a low level of business acumen. That might seem strange to say of someone who managed to extract so much money from so many apparently smart money people – Blackrock, PIMCO, Brazilian banks, Brazilian government enterprises (OK so they almost certainly don’t come within anyone’s definition of business acumen) and other assorted international financiers and hedge funds.

But we have to remember that business acumen is not the same thing as financial engineering. You can be a great financial engineer but have lousy business acumen. Just ask Jeff Skilling (once of a company called Enron, you might dimly recall).

And Batista does have a powerful, commanding and broad vision. He has pursued that for some time with all his not-inconsiderable will. That vision is going to be pretty hard to let go.

If Batista had the lack of vision of a Trump and the accompanying pragmatism, the outlook would be a lot better. If he retained the same vision but with the low narcissism of a Murdoch, the outlook would be good too. But Batista’s high narcissism and his commitment to a powerful vision bespeak a low level of mental agility and pragmatism, so his future is probably dim.

If Batista lived in the US, I would guess that the outlook for him might be better. But Brazil, like many European countries, has a deep undercurrent of anti-capitalism and anti-entrepreneurialism. Its best friends overseas are Cuba and Venezuela; enough said.  Dilma Rousseff (Brazil’s President) must have been mentally spitting when she attended the inauguration of Batista’s largest offshore oil project, given her background as a revolutionista and committed hard-left social democrat.

The new bankruptcy code in Brazil is better than it used to be, but untested. It will treat him better than it would have even 10 years ago. That being said, I can’t imagine he will enjoy the same relatively positive image as a failed US entrepreneur would do in the US, having gone bankrupt in Brazil.

What could Batista to dodge the bullet? He could find a really good coach and learn to listen for once, but I think that’s going to be kind of difficult for him. He should give up his vision and go back to basics, but that’s probably not on the cards either. Or he could learn not to be narcissistic but you know what the chances of that are.

I would love to be able to report that the outlook for Mr. Batista is good. In many ways he deserves it. He is a risk-taker, innovator and pioneer in a country that badly needs all of the above. But to me the psychometrics are just totally out of whack. It’s just not psychologically credible.

So yes, unfortunately the verdict is Maxwell, not Trump. Batista will not rise again. But I really hope I am wrong.

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Sunday, 25 February 2018

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