François Maisonrouge has worked his entire lifetime as a banker and financial expert. He served Credit Suisse as a managing director and chairman of life science, back when he also worked for Roche and its senior management. Since 2007, Maisonrouge has been working with Evercore Partners; today he is its Senior Managing Director (www.evercore.com). François Maisonrouge graduated from Harvard Business School, and he is a member of the Board of Advisors of the Harvard Business School Health Care Initiative.
In this talk with Xecutive.net – which follows an earlier interview in this journal with legendary Frederick „Fred“ Frank (who died in 2021) – François Maisonrouge opens up about his career as a finance specialist, his experience regarding Roche and about changes in the current educational and financial approach of universities as places of learning, versus universities as incubators for companies. François Maisonrouge answers questions about his work for Roche and its senior management back then, Dr. Fritz Geber and Dr. Dr. h.c. Henri B. Meier, a duo which, just as with Yves Saint Laurent and Pierre Berge, constituted a perfect tandem.
Xecutives.net: Mr. Maisonrouge, you have worked your entire lifetime as a banker and financial expert. You served Credit Suisse as a managing director and chairman of life science back when you also worked for Roche and its senior management. Since 2007, you have been working with Evercore Partners, today as its Senior Managing Director (https://www.evercore.com/). You have made many very big deals. It is illuminating to observe your track record and read about all the key companies you have worked for: your life’s work has definitely been centered in the nexus of the healthcare, biotech and pharmaceutical businesses. Why did you specialize within these converging fields of industry at a very early stage?
François Maisonrouge: So – luck. Because I was a generalist as a banker at the beginning of my career. And I thought, at the time, which was the Eighties, the business wasn’t as siloed as it is now between the different industry specializations. But I started – by luck – doing deals in the pharma area. I just thought it was fascinating in terms of that convergence of technology and capital. So, little by little, I concentrated my work life around that. And I can tell you, a lot of the best things that happened in my life were as a result of serendipity. I apologize for not having a phenomenal grand slam (laughs).
Xecutives.net: You graduated from Harvard Business School, a famous elite university, notable also for the financial resources that have allowed this wealthy endowed academic institution to invest in venture capital projects. Fred Frank graduated from Stanford University. Unfortunately, he passed away in September 2021; our Xecutives.net interview was doubtless the last one he gave. Frank offered us very deep insights into difficult yet also profoundly philosophical issues regarding the handling of money for investment purposes and value creation, also regarding US universities that often have a nice filled cash box for investments and research projects. You are a member of the Board of Advisors of the Harvard Business School Health Care Initiative. What is it you profited from studying at Harvard some three decades ago, and do you observe changes in its current educational and financial approach?
François Maisonrouge: I think that at the time I was in business school, students were much more interested in finance – and how it actually fueled innovation – than just innovation. So, if you look at the class that we had thirty years ago – well, now it’s thirty five years ago – a big number of the class went into finance, but not the finance of the hedge funds etc. but the actual finance of raising money for companies. And the student body of Harvard has moved away from that, and they’re much more interested in going into startups. So, I would say that there is a bigger number of people who aren’t doing directly but being the agents of doing at Harvard Business School.
Now, the role that we have in the Health Care Initiative is around the learning about health care that is going on at Harvard Business School, not anything else, which is that we are trying to give ideas to the faculty around what it is that would equip students for a career in the world of heath care. And that’s our role in that work. That’s what we try to provide for the school. For me, it’s a very satisfying opportunity to exchange with people who are generally successful people in the world of health care, and crossfertilizing ideas.
Xecutives.net: There are two major issues that many interviewees have pointed out, which are also of great importance for Europe and also for Switzerland, but which receive little attention. On the one hand, there is a great philanthropical giving in the USA, and people who come into money are willing to give up large amounts of money to their universities and schools, which enable them, somewhat independently, to invest in long-term research projects, resulting in companies vested with billions of dollars. On the other hand, what is also confirmed by Prof. Dr. Thomas Zurbuchen of the NASA, Prof. Dr. Heinz Riesenhuber, Frederick Frank and Dr. Dr. h.c. Henri B. Meier, is that there are many more young people in the USA who want to dare, risk and fight for something in the marketplace. In contrast, too many young students in Switzerland and Germany are looking for secure jobs in governmental bureaucracies, most probably a sign of post-industrial decadence. This self-pigeonholing phenomenon could also be described as a career of risk aversion. What experiences have you had in this regard since you know Switzerland and the USA very well?
François Maisonrouge: Well, if you think about the role of university, one needs to think really hard about university as a place of learning, or university as an incubator for companies. And I think we need to be careful about the future of universities if they really all veer toward just being incubators. There’s a good mix to find, a good balance to find, I think, between being purely a place of learning, and purely a place of entrepreneurship.
I also think, if you think about some of the professors at university and their involvement in private enterprise, it sometimes gives you pause. It seems that every Nobel prizewinner can become phenomenally wealthy by lending his or her name to a venture – some of them, who are, I would say, not incredibly judicious in what they’re giving their name to. And some of this is going to be phenomenally important and some of this is going to be phenomenally flawed. But it’s a bit of a question of numbers.
Because when you think about – one thing that I realized much too late in my life, is that the downside risk of failing is nothing compared to the upside reward of succeeding. And if there’s one thing I would tell François thirty-five years ago, it’s that my appreciation of risk was completely wrong.
Xecutives.net: What was wrong regarding your perception of risks?
François Maisonrouge: Because in the world of entrepreneurship, and the perception is, as you said and as your interview partners said, different in the US and Europe, but the reality is the same in both. You lose – if you fail – if you raise a hundred million dollars. I’m giving an illustration, and it’s a big blowup, unless it’s criminal like Theranos, you’re not giving back the money. You’ll have lost an opportunity for the salaries that were due for a year. But if it works out, you get a phenomenal reward.
I wouldn’t be so depressed about Germany or Sweden or the Benelux or France or maybe the U.K. I mean, there’s been a lot of good science translating little by little into good companies even in those countries. And, you know, there’s a bunch of examples in Switzerland and Germany in biotech. I don’t think there’s kind of a difference in DNA between Europeans and Americans. But I think there’s a difference in environment where the stigma of failing is so much less of a problem in the US. But if you look at the reality of it, it’s not that big of a deal in Europe, either. And it’s funny, I wasn’t defined by going to Harvard Business School. I was defined by going to Centrale de Lyon.
Xecutives.net: What is different in France?
So, you know in France – you live in Basel, it’s not very far from France – in France if you’re a good student you go to an école, then you go to engineering school – and the best one is Polytechnique. One of the very good ones is Centrale de Paris, and then maybe eight or ten is Centrale de Lyon. And I only got into INSA Lyon because, well, when I was in my late teens, I didn’t give myself the chance – I mean, I didn’t put all the effort in my side to go to Polytechnique. When I realized that in the French environment, I would always have the stigma of having gone to the number ten school, not the number one or two schools, I left the country. And that was also a piece of serendipity. If I hadn’t been in the US, I wouldn’t have done what I did. Because it was a different environment. So, you’re defined by your successes, you’re defined by your failures.
Henri B. Meier said something absolutely fantastic to me a number of times, which is when I asked him, I’m very interested in how people create something. And when you think about our Genentech, it was done not by big scientists but by Dr. Fritz Gerber and Dr. Dr. h.c. Henri B. Meier, who weren’t from science. And Henri said something really funny. I said, what process did you actually go through to actually move those large molecules and decide to do that? Putting aside the structures. And he said, we went to our board of scientific advisors, and we asked them the question, etcetera, and they all (chuckles) decided against it. So, we ignored them, and did it anyway (laughs cheerfully). And I think you need to be in a position where, success is about running away from group things.
Xecutives.net: You have mentioned Henri, and you involved with him in financial projects and M&A transactions for the Swiss company Roche.
François Maisonrouge: That was a very long time ago. And you know it’s funny because there were three mentors in my life. And Henri was one of them. By the way, until he retired, I always called him «Dr. Meier». And then, when he retired, it was – well first I was a lot older! The situation – I wasn’t talking to a CFO anymore, I was talking to a very successful individual. He was representing himself, not an institution. And that’s when I went from Dr. Meier to Henri! (Laughs.)
Xecutives.net: And back then, I know it’s twenty years ago or more. Roche is just celebrating its 125th anniversary; the company pretty much changed a couple of decades ago, it really changed, this company, at the end of the 20th Century. How did you perceive this company Roche, at that time? What were its challenges back then when you also worked together with Henri B. Meier?
François Maisonrouge: I think that, at that time, I was thirty-five, I honestly didn’t know as much. I’ve come to a simplification of my view of the pharmaceutical industry, which is maybe too simplified. At the end of the day, the strategy of a pharma company can be reduced to something very simple, which is, putting itself into a product where they have big products. Meaning products that actually are so important to human health, that they are needed by many people. And they need to be scientifically differentiated, and they need to be commercially differentiated. I think that once you are in a position of leadership in areas, you get stuck in a view – there’s a big danger to incumbency.
If you look at Roche in the world of cancer, they did a phenomenal job in the Eighties and Nineties. But they haven’t been revolutionizing, they’ve really been doing incremental things since then. And when you think about where they have revolutionized things, for example, in hemophilia with Hemlibra, it’s actually in places where they were the incumbent. But I think there’s a real question to ask ourselves, when you are the incumbent and you are a commercial leader, should you really ask questions and should you push your organization against accepted wisdom. One thing that I thought was really extraordinary is the development of a COVID vaccine. If you look at the three big incumbents in vaccination, right, it’s GlaxoSmithKline Biological, it’s Sanofi, and it’s Merck.
And none of those three institutions have actually put a COVID vaccine on the market. And it’s actually people who didn’t have anything to lose who actually were the ones who were successful in developing COVID vaccines. I think it’s a really important thing to think about as an observer of this industry, the discomfort that you get and the fear of the new that you have when you are a successful incumbent.
Now, I’m also the chairman of the Pasteur Foundation, which is a bit older than Roche. You look at those young scientists, and even if they are in Paris, number one, it’s a minority who are French. I think a lot of those scientists are quite interested in the translations of science to actually get citations. So, I wouldn’t be so completely doom and gloom about Europe. Because at the end of the day when you look, BionTech, it’s a wonderful story. A couple of Turks in Germany. If you look at Moderna, the CEO is a French guy, the money was channelled by this Armenian guy in Beirut, the Astra Zeneca vaccine comes out of Oxford. You know what Pasteur said, «Science has no borders.»
So, I think what we need in Europe is more of that American optimism and complete absence of fear of failing. And realizing that fear is okay!
Xecutives.net: Yeah, it’s a different approach here, definitely. When I look around at my friends and entourage, this risk aversion is very well established here. It starts at the Kindergarden. Because Mr. Riesenhuber, he was the minister for a lot of things in Germany under Chancellor Kohl, he told me that they were asking students what they would like to do after the degree, and they had the degree in their pockets: Seventy percent wanted to go into government! Which is amazing! And this was an official survey.
François Maisonrouge: That’s the danger of having good government. It’s actually okay when the government’s so good.
Xecutives.net: So, you want to say that the United States they have a bad government, so people don’t want to work for the government there, is that the conclusion? (Laughs.)
François Maisonrouge: No, I don’t think it’s as bad as that. There’s a lot fewer mothers in the US whose mothers would say, I want my daughters to work for the social security system. (Laughs.)
Xecutives.net: I would like to come back again to Henri B. Meier and also to Fritz Gerber. You worked closely with Dr. Dr. h.c. Henri B. Meier, Roche’s chief financial officer back then. How did you establish this contact and how was your working relationship with Henri B. Meier? What was it that he was expecting from you? How would you describe the work with him and with Dr. Fritz Gerber, Roche’s CEO, back then?
François Maisonrouge: I didn’t really have a lot of contact with Fritz Gerber, but I always had the time with phenomenal clients, because they would develop very well-defined ideas, and then they would just hire people to go out and execute. But execute in the best possible way, with a lot of thinking around it. It was a very clear division of labor, and empowerment of people to go out and do things.
What’s amazing is Henri kind of gave me the opportunity to do that as a very young man. You know, he gave me an assignment and let me do that. And Christian, it’s only in retrospect that I’ve developed such gratitude to him. Because, at the time, I really didn’t understand – I didn’t realize – what a phenomenal plank he was helping me get on. In France we say – «donner un coup de pouce» – to give a leg up, you have the same expression in English. So, he really did that. He really gave me a leg up. And I felt very honored, and I felt it like it was my duty to really do my best.
Xecutives.net: You were very motivated, I think, this is a very motivating approach of leadership.
François Maisonrouge: Absolutely! And then, I remember we were doing the spinoff of Givaudan. And I was in charge of that. You know, when you do a spinoff, you have to split the plus and split the minus. And from the point of view of the spinoff company, what they want is all the good stuff, and not the bad stuff (laughs).
I was called into Fritz Gerber’s office. And, you know, one thing that people don’t really realize is the impressiveness of that architecture. If you’re in the old Nineteen Thirties building, right, and those huge corridors! Those huge offices!
Xecutives.net: Very impressive!
François Maisonrouge: They were not only impressive, they were awe-inspiring and scary! And I’m there going into Fritz Gerber’s office, and he sits me down and he looks at me and he goes – this is in French, you know – and he’s tuteing me, using the familiar second person – and then he tells me that I’m the guardian of morality in French! And I’m going, oh my God, I’m the guardian of morality! (Laughs.) And it’s funny, there are times in life, where you know – so it’s different, because when you interviewed Fred Frank, Fred was a contemporary of them all (Henri B. Meier and Fritz Gerber). I was much younger. I was twenty years younger than them all. I was just starting in my career. But I learned so much. I learned so much, including – one thing that annoyed me really so much is when Henri left, and people were saying, well, some of that portfolio down, etc. and criticized him for that stuff. And I’m like, what the hell are you doing? What are you talking about? If he had been there, he wouldn’t have been sitting there, waiting for the portfolio to go down! I mean, he would have traded it. It’s like saying, he’s driving a car, and then somebody else drives it, and then runs a red light, and you’re like wow! He like gave me a car, and you know I had an accident and ran a red light. But, you know, maybe if he’d been driving the car, he would have put his foot on the brake! I mean, it really made me angry.
Xecutives.net: It’s interesting what you said about Henri B. Meier, about the management, about what you saw, the building, the old history, the family behind the scenes. And that illustrates perfectly the difference between Roche and other companies back then, I think. There were other companies, with another approach? Weren’t they?
François Maisonrouge: Well, I’m a big believer in the power of one. Or, in that case, the power of two. Because – that sense of mission, that sense of urgency and that sense of morality, really depends on one person. And you think about the incumbency. If you think today about a guy like Albert Bourla, right? He completely changed the spirit of Pfizer in a couple of years. I mean, Pfizer, people worked there, etcetera, but did they have that pride of working there? They had market strength, but weren’t corporate or science feeder, and now they are. So, I am a big believer in the power of one. Of one person actually leading.
Xecutives.net: Yes. Fred Frank said that the influence of Henri B. Meier was very big. He also said all the big financial stuff had been decided by Henri and not by Fritz Gerber, which is quite impressive. He said, Fritz Gerber would have been totally lost without Henri B. Meier’s financial skills. That was amazing when he told me that. Mr. Boothby said exactly the same thing.
François Maisonrouge: Yeah, I absolutely agree, it was a great tandem. It was like Yves Saint Laurent and Pierre Berge. You know, a symbiotic relationship.
Xecutives.net: I have a last question and it’s a tough one. It’s a difficult question and it’s also about Switzerland. Switzerland has always found ways to make its way in the world. You know a lot about Switzerland.
François Maisonrouge: My late father-in-law was a «Divisionär», a kind or general in the army. My wife, she’s Italian, but she was brought up in Montreux, and all my life I’ve skied in the valley, and all the time I’ve spent in Basel. So, let’s put it this way, I know western Switzerland from Basel to Brig very well.
Xecutives.net: Switzerland faces major challenges, not only in terms of value creation – that’s Henri B. Meier’s topic – and venture capital, but also political challenges. The relationship with the EU, for example, is a case in point. Another example is its pension fund problem. I wonder how you as a finance manager would solve Switzerland’s pension funds problem, where the working people have to finance the retirees because our pension funds do not earn a sufficient return on the capital of about 1.000 billion Swiss Francs? Which is amazing, and this is the point that Henri B. Meier gets sceptically about. Because our money in the pension funds mindset of security and whatever, this money is not invested anymore in companies. What’s your impression?
François Maisonrouge: The point is, and I think it’s true in every country, maybe not the US, but in every European country, people don’t work long enough. And so you’ve got this imbalance. I mean, they live until they’re eighty something. But the age of retirement at sixty-two or sixty-five was set up when people lived until only seventy-two and now they live – my view is that we should think about not how long you worked, we should think about how long you’re not working until you die. And so I think we need to do two things. Change the retirement age. Which is really hard to do. And secondly, rethink how you’re investing your money to the pension fund.
Xecutives.net: A lot of money in your pension funds in the United States go into venture capital. Venture capital is a big thing in the United States. In a lot of countries, like Israel too, but not so in Switzerland.
François Maisonrouge: Venture capital and equity as well.
Xecutives.net: Exactly. What we do not understand is, most of the giant companies coming from the United States are venture capital babies. We do not invest pension fund money into venture capital.
François Maisonrouge: I grant it’s even worse than that, which is there’s no pension plan, it’s practically just pay as you go, which is the people who are working are paying for the people who are retiring. But I think the solution is to start little by little, and getting people hooked on the fact that they can make bigger returns, and it’s not like the money’s disappearing. And the fact that with your portfolio you’re way better off putting it into venture capital than in something like Swiss Air and Credit Suisse. An interesting little tidbit: when I left Credit Suisse on April 26th, 2007, I sold every share I had of Credit Suisse at 96 and got my shares of Evercore at 14.50. And now Evercore’s ten times that. And Credit Suisse is at a tenth of that.
Xecutives.net: Dear Mr. Maisonrouge, thank you very much for giving your time for this interview. I wish you much success and health!
More interviews on financial topics (English and German):
- Frederick Frank(†) – a venture capital specialist who has never lost his philosophical streak
- Willard Boothby’s smarter art of the deal ventured to value creation
- Prof. Dr. Dr. h.c. mult. Heinz Riesenhuber über seinen Werdegang und den dringend nötigen Kulturwandel in der Wirtschaft
- Dr. Dr. h.c. Henri B. Meier über Wirtschaft und Venture Capital im Zeichen der Corona-Krise
- Dr. Dr. h.c. Henri B. Meier über die Wirtschaft und die Probleme bei der Beschaffung von Risiko- und Wagniskapital
- Samuel S. Weber – about money, investing, gold and the drifting apart of the financial and real economy
- Christian Walsoe on the Economic Giant China and its Global Economic Policy
