The art of staying ahead of the game

BOOK REVIEW The Second Bounce of the Ball: Turning Risk Into OpportunityBy Ronald CohenWeidenfeld (£20): The book is a dissection of the anatomy of entrepreneurship, illustrated from Sir Ronald Cohen's experiences in co-founding and building up Apax, which has invested in 350 ventures in everything from biotechnology to bookselling, writes Jonathan Guthrie.

Skilful sportsmen can divine where the second bounce of a ball will occur. So it is in business. Everyone can see where the current growth area is. The trick is to spot where the next opportunity will be.

The metaphor chosen as the title and theme for this distillation of the wisdom of venture capitalist Sir Ronald Cohen is precise, intelligent and apt.

So is his book, written with help from professional author Terry Illott. It gives little away about the personal or political life of Sir Ronald, a pioneer of European venture capital, co-founder of private equity firm Apax and friend of Gordon Brown's. This is not an autobiography.

But it is one of the best books written on entrepreneurship in recent years. It will reward any reader interested in cracking the conundrum of commercial success, from start-up owner to City banker.

"Some successful entrepreneurs portray themselves as battling against all the odds and succeeding by a supreme effort of will," writes Sir Ronald.

"But if you look behind the bluster of those memoirs, you will nearly always find something much more calculated and better thought through." His aim is to substitute thought for bluster.

Entrepreneurs, often lacking formal education, can have difficulty putting their philosophy into words. However, this is not a problem for Sir Ronald.

His Jewish parents quit Egypt after the Suez crisis with just 10 Egyptian pounds in their pockets. He was 11, and arrived in the UK speaking only French and Arabic.

Ferociously intelligent, he went on to Oxford, was elected president of the union and won a scholarship to Harvard Business School.

The only sentimental indulgence that Sir Ronald allows himself is to record that he was exiled clutching his stamp album, a boyhood treasure.

What follows is a dissection of the anatomy of entrepreneurship, illustrated from Sir Ronald's experiences in co-founding and building up Apax, which has invested in 350 ventures in everything from "biotechnology to bookselling".

Some of Sir Ronald's smarts can be found in a thousand other business self-help books. An example is his advice to plunge in - most plans for start-ups never proceed through the timidity of the would-be founder.

Entrepreneurs are advised to persevere - inevitable setbacks can be turned into opportunities.

But Sir Ronald's analysis of entrepreneurship is broader and subtler than in most titles. He stresses the importance of looking for opportunities in markets with the scale to fuel substantial growth.

He encourages readers to be alert for the inefficient markets where value can be mined. He emphasises the role that fluctuating business cycles can play in the success or failure of a venture.

There is also sensible counsel to founders on adjusting their management style as their small business turns into a bigger one.

He paraphrases Disraeli in suggesting that venture capital - and by extension entrepreneurship - is "the art of the seemingly impossible".

The successful entrepreneurs he has backed, including Sir Richard Branson, Sir Stelios Haji-Iannou and Mike Lynch, are comfortable with company accounting and the technicalities of ownership and financing.

But beyond this, he says they have "X-ray" vision that allows them to see through the outer wrapping of a business to the money-making mechanism that lies beneath.

Another virtue of the book is in handling the abstract without jargon or waffle. Only occasionally does Sir Ronald sound like Sun Tzu, or the ninja master of the 1970s television series Kung Fu, as when he writes: "Fundamental to turning an apparent setback to advantage is the exercise of will."

The other significant unnamed presences in the book are two partners who quit Sir Ronald's fledgling investment business, imperilling its survival.

He saved the day by recruiting the respected US investor, Alan Patricof, as a replacement. But the rejection evidently wounded the otherwise-dispassionate author.

He bemoans: "The truth is they were not entrepreneurial enough. When we were working together, one or other of them would always be in a severe state of doubt or depression." As a result "they missed out on a great opportunity".

Sir Ronald quit Apax in 2005 at 60 to concentrate on charitable activities. He set up and chairs Bridges Ventures, which invests in poor UK communities.

He is a prime mover behind the Portland Trust, which pursues similar aims in the West Bank, Gaza and Israel.

He thereby embodies the re-emergent idea that philanthropy is the appropriate leisure activity of the very wealthy.

But he represents a newer concept - that entrepreneurship is a profession, with a skill set that can be imparted and learnt. The Second Bounce of the Ballis a useful piece of evidence in support of that contention.