Did you hear the one about the aviation tycoon who offered a dream job to the first person who told a joke? Domhnal Slattery certainly has. Only, he’s not laughing. Instead, Slattery is seriously concerned.

Last year, Avolon, the aircraft leasing giant that he founded less than a decade ago, launched its inaugural graduate recruitment programme. Thousands applied for the opportunity to work at Avolon. Applications flooded in from both Ireland and the world.

Slattery assessed many of the applications, joking to his staff that he wanted to adopt them all. All had excelled academically, volunteered at various worthy charities, won debating competitions and played sport. 

Eventually, the thousands were whittled down to 20, and of that 20, five were destined for a job at Avolon, the aviation equivalent of landing a job at Goldman Sachs.

All 20 were invited into Avolon’s sparking high-rise Dublin headquarters for a full day with the company’s senior executives and staff psychologists.

At the very end, all were ushered into the Avolon’s tiered high tech auditorium, used each day for a staff strategy meeting, where Slattery regaled them with Avolon’s glittering journey from humble start-up to global behemoth within a decade.

And then Slattery, a deft public speaker who once worked as a DJ on a pirate radio station, went off script. Breaking all the rules, he offered one of the five jobs to the first person in the room who got up and told a joke.

The response: silence.

He reiterated the offer. A job in return for a joke.

Again, complete silence.

A year has passed but the incident still weighs heavily on Slattery’s mind, provoking questions about traits he had assumed were quintessentially Irish.

“Are we a nation of storytellers anymore? We have a thousand-year history saying we should be. But we have lost our way,” he says. “How many John B Keanes are out there in the business world who can articulate a vision in an international way?”

It is a topic that clearly animates Slattery, and it is not just confined to 20 ambitious well-educated graduates refusing to tell a joke. Increasingly, as he listens to investment pitches from entrepreneurs, he has grown despondent by the quality of the words and the vision, and the way both are articulated.

To get a venture capitalist to cut a cheque for €50,000 rather than €5,000 Slattery says the pitch needs to move them from quantitative to qualitative analysis by getting the hairs to stand on the back of their neck through an emotional connection.

“We are really, really poor at that,” he says. “In my view, it is a skill that can be learned and constantly practised. It must be taught at schools.

“We act every day. You act when you are being a journalist doing your interview. I act doing my job. It is an acting role: how you position yourself, the tone of your voice, the presence when you walk into a room. All this stuff combines into this view where the person at the other side of the table will say it is binary – it is yes, or it is no. If it is a maybe, you are finished. It has to be a yes or no.”

*****

Sitting in his spacious office in Avolon’s pristine new headquarters, located in the well-heeled Dublin suburb of Ballsbridge, Domhnal Slattery is relaxed, engaging and forensically forthright. 

There is an abundance of art works on the walls throughout the building, although very few employees are at their desk (the art will ultimately be donated to local galleries under Avolon’s CSR programme, while Slattery assures me that his team are merely out cutting deals and dealing with clients).

If the headquarters is well-appointed, so too is Avolon’s balance sheet. From a standing start in 2010, the company has grown to become the world’s third largest aircraft lessor with $27.1 billion in assets, revenues of $2.7 billion and a fleet of 527 owned or managed aircraft at the end of September 2019. There are total orders and commitments for a further 387 new technology aircraft, according to Avolon’s Q3 update.

Slattery says the company has $6.4 billion in liquidity, all ready to spend if the right opportunity drives past. “Think about that. I can write a cheque tomorrow for $6.4 billion if I want to do something,” he says.

Life was not always so honied though. Avolon may be a sparkling success, but it was a success born from financial desperation. A decade ago, financially at least, Slattery was a busted flush, borrowing money from his brother John to pay the mortgage.

Slattery had made a small fortune selling International Aviation Management Group (IAMG), the boutique consultancy he founded with John Morrissey, to RBS in 2001. His aim was to turn that small fortune into a large one building his own private equity firm, Claret Capital.

“It took two years of hard graft and scraping to pay the mortgage. I had to borrow money from my brother to pay the mortgage one month.”

The story of its demise has been rehearsed before, but the detail is still striking. It had successes such as HCA, an American healthcare firm, but lost heavily on Channel 6 television, educational publisher Houghton Mifflin Harcourt and corporate jet taxi firm, Jetbird. The firm invested on behalf of wealthy clients, but Slattery was often the main backer in the deal.

When the downturn came, Slattery was heavily exposed. Unlike many entrepreneurs, he is not shy about talking about the failures.

“I was on my way to building at that time what I thought could be a private equity firm that would be the envy of a Blackstone or a KKR or a Carlyle. That was my vision when I set up Claret Capital. I wanted to build a private equity firm that could be the best in the world,” he says.

“We had little or no investment in real estate. That was never my game. We made some small ones which did not work out. Then the world blew up. I was setting up Jet Bird. After two years of work, on the day we were due to launch, Lehmans go bankrupt. You could not make it up.”

I asked him had he considered bankruptcy. “I had a lot of fights to survive but it was just in my psyche. My father, God rest him, would turn in his grave. I was not going to lie down. I did not make the bloody global recession,” he says. “A lot of my vintage, my peers, they all left or declared bankrupt. Very few reinvented.”

The reinvention was a return to the past: aircraft leasing. Avolon was launched in 2010, but Slattery and a small cohort of trusted staff had been working on it for two years.

“It took two years of hard graft and scraping to pay the mortgage. I had to borrow money from my brother to pay the mortgage one month. I was flatlined. In time we will look back at the lessons of that period,” he says.

“I was going over and back in economy class or where I could get the cheapest ticket, trying to convince guys to back us. The one that came in first was Oakhill Capital in America. It was run by Denis Nayden, chairman of GE Capital, who was the guy who did the deal with Jack Welch to buy GPA. He understood that  the industry was good if you got in at a bad time. And 2010 was the worst time possible.”

Avolon was his way out. “It was,” he tells me, “my Phoenix from the flames”.

Slattery on… Tony Ryan and Fred Goodwin

I have been exposed to some of the great outliers. Tony has been well written about. In my view, probably our greatest entrepreneur but lacked an understanding of the balance sheet. He did not understand the numbers. He understood airlines, he understood deal making, he understood the romance of business. He embedded a sense of excellence.

You mentioned Fred Goodwin. There is a common trait between Tony and Fred – they both suffered from profound God complexes. They set up their organisations where no one had the authority or the bravery to say stop.

That is the biggest lesson I have learned in the last 20 years – how we structured Avolon with the risk committees and so on. I make very few of the business decisions in this company. We remove the ego quotient from business decision making.

I left RBS in 2004 because I had gone on a course in Harvard. A five-day course. Fred came in. He was the big CEO at the time. We asked him a few strategic questions, all senior members of the bank. This guy got the job to ask the questions and Fred shredded him. Shredded him. The line was ‘Fred said’. I turned to the guy next to me and said I was out of there. And I was out of there.

Project i, start-up culture and Irish entrepreneurship

Avolon, and Slattery, did something rather unusual earlier this year, dispatching a regiment of executives to Paris, Stockholm, Berlin, Boston, London and San Francisco.

Their mission? Compare and contrast Ireland with the best start-up ecosystems in the world, and then offer practical recommendations that could improve Ireland’s standing in the start-up world in the short, medium and long term.

The final white paper, called Project i, made for troubling reading. While commending the Irish system as near best-in-class, it also took aim at some sacred cows.

“I got some heat on the report,” Slattery tells me. “I was calling out some stakeholders. It was not in a critical way. It was a critique. There is a subtle difference.”

There is, according to Avolon, a lack of encouragement of entrepreneurship in Ireland, little focus from the government on entrepreneurship and a lack of ambition from Irish companies.

Furthermore, there is little tax incentive for early stage companies, and despite its huge funding warchest, the report said Enterprise Ireland was unable to provide the sectoral experience required.

Taxes on founders were too high, which forced entrepreneurs abroad, while the state was doing far too little to attract foreign start-ups in.

Avolon proposed a range of remedies and proposals to address the issues, such as measures to alter the mandates of the IDA and government agencies, overhaul the tax status for founders and pension funds and a new scheme to promote angel investing.

Overall, however, the message was clear: Ireland does not possess the right mix of policies required to be a global start-up leader.

“I got some heat on the report,” Slattery tells me. “I was calling out some stakeholders. It was not in a critical way. It was a critique. There is a subtle difference.”

Slattery says he commissioned the report because, for all the talk about Ireland being the best country in the world to do business in, he was unsure Ireland compared favourably to other economies, such as Israel.

“This best in class mindset was bred into us from our days back in GPA,” he says, referring to his years as a young executive within Tony Ryan’s aviation business. “Even though that business failed dramatically, we believed that we could and should be the best and we deserved our seat at the table. There was no playing second fiddle to anyone on any matter. That headset has remained ingrained in me. Intuitively, I am not sure that attitude prevails now.”

The report backed up many of his preconceptions. The first centred on the percentage of GDP being invested in research and development. In Israel, after military related investment was stripped out, the number was 4 per cent. In Ireland, it was a tenth of that number. 

The second issue was the lack of commercialisation of university research. “You work on the assumption that for every 100 ideas you come up with, maybe one or two might work. You need to be coming up with thousands of ideas to have any sense of success,” he says.

“They were two big metrics for me. If you are not putting enough food into the mixer you are just never going to be able to compete on a global scale in innovation.”

Ian Kehoe (IK): A key plank of the report argued that the next generation of global growth will be digital start-ups. Clearly, the nature of innovation is changing. Are we positioned to benefit from this?

Domhnal Slattery (DS):  There are two big funnels as we look out over the next ten years. One is the classic supply chains, which is the universities. The second is within a square mile of here – we have more Internet of Things companies than perhaps anywhere else in the world. There are cohorts of people working down there in their twenties, thirties and forties who are budding entrepreneurs. They are not necessarily Irish; most of them are not. But they are on our doorstep. They live here, they work here, they want to be here.

We need to find a way to accelerate them out of Google, Facebook etc so they can become the next big thing. That takes you to the concept of these accelerators and the physical spaces where they can co-mingle. This is why I really believe that the plan that Trinity has for their space down in Pearse Street feels like a natural champion, an imperative at a strategic level.

“We need to broaden, culturally, the definition of entrepreneur. There are probably lots of people out there who never want to be the founder but would love to work with one.”

IK: One of the key messages from the report was the lack of encouragement for entrepreneurs in Ireland. Many entrepreneurs feel that the apparatus of state, including the taxation regime, is not geared towards entrepreneurship.

DS: Ultimately, that is a cultural issue that has begun to change in the last five to ten years. Certainly, in my generation, those born in the sixties and seventies, the idea of being an entrepreneur was not even on the top 50 things you even thought about. If you were bright, you became a doctor, an accountant or a lawyer. The professions were where your parents drove you. That is fine. It was never in the cultural ethos.

We have, I believe, a massive fear of failure. It is the squinting windows syndrome — ‘look at the eeijit’. Whereas when we talk to venture capitalists in America, the really big ones, they won’t invest in Ian Kehoe or Domhnal Slattery until you have failed at least once. The thesis is, and I have experienced it myself, is that you learn more about life, business, stakeholders, culture in a failing scenario. We have, as a nation, a fear of failure. It is not the academic agenda or the curriculum at schools. To a degree the universities are starting to teach entrepreneurship.

IK: But can it be thought? This is a big area about nature or nurture.

DS: I do think you can teach it. I don’t think you are born an entrepreneur. If you are surrounded with people who have gone on that journey, what you can see you can be. This is a very important aspect for me. In any of my journeys, I have always surrounded myself with people who were not necessarily founder/entrepreneur types but who had the ability to say no, stop. They are as entrepreneurial as I am. There were seven founders of Avolon. Seven. One of them was the classic entrepreneur, the poster boy if you like. But this business would never have thrived without those other six entrepreneurs.

We need to broaden, culturally, the definition of entrepreneur. There are probably lots of people out there who never want to be the founder but would love to work with one. We are seeing more and more and more of that. The acceleration of people wanting to do that is picking up.

Go to France, which is not a country historically noted for speed and rapid adoption of new thinking. Since Macron came on the scene, the percentage of university graduates who are selecting entrepreneurship or self-employment as their next step forward has dramatically increased from where it was five or ten years ago. You can flip it pretty quickly.

If an Irish person isn’t an entrepreneur at home, you put him or her in any other country in the world and suddenly they are an entrepreneur overnight. Particularly in the US. At its very basic psychological level, it is a fear of failure and a fear of embarrassing yourself in front of your peers.

Then, we have allowed society to get lazy around it. Whether it is the fiscal side – I could sit here for an hour and tell you why our tax code is really anti-entrepreneurship. I think the government knows that. They are smart people and they get it. They are iteratively making changes, but I think they need to leap forward. But the tax code was never designed in Ireland to enable entrepreneurs. It was designed by civil servants who themselves were never entrepreneurs.

IK: Take that point further. There is an argument that the tax system was set up to lure FDI and not develop indigenous business. Is it ingrained in the system?

DS: People make that argument and it is absolutely spot on. But at the same time in the sixties and seventies, Tony Ryan was starting GPA and he was lobbying the government to rapidly expand Ireland’s global network of tax treaties so that leasing aircraft from Ireland from a withholding tax perspective was efficient. There were also very innovative tax thinkers in government and our network of treaties is now the envy of many nations. If we applied the same energy to relaunching a tax code that really turbo-charges the entrepreneur and empowers them fiscally. One of the characteristics we found in Ireland was that entrepreneurs were not really good at scaling; scale was starting, getting it to €20 million and selling.

“When I was 27, when I set up my first company, I was an autocrat, bombastic arsehole. I trusted no one. It was my way or the highway.”

IK: One of the more controversial aspects of the report was the critique of entrepreneurship – you highlighted a lack of ambition in Irish business.

DS: The definition of ambition in America or in the great innovation centres of the world is how do I change the world. It is not monetary. That then happens to multi billion dollars of shareholder value. Unfortunately, in Ireland, we have had a lot of exits in Ireland over the last five or ten years. That is great. But it is the smart money buying them. And then the Irish entrepreneur thinks they have made a fortune and cashes out. What they should be doing is go all the way, and they should be fiscally empowered and supported to that that – as one of multiple elements. it is not the answer to all the problems, but it is part of it.

Project Shield: Building an empire from a one-pager

It began with a one-page document called Project Shield. It listed the industry fundamentals, the opportunity and the fund structure and key parameters. From this one page, Slattery and his team raised €1 billion.

Project Shield was sketched out on a beach in Cap Ferrat in 2008 by Slattery and a handful of executives including John Higgins, an aviation executive from RBS that had come on board and who ultimately became one of the seven founders of Avolon.

The document stressed that the cyclical downturn created a near term window of between two and three years to buy quality aircraft at prices below base values.  The logic was sound, but regardless of its merit, they were asking investors to stump up €1 billion at the height of a global financial crisis.

When Slattery approached CVC Capital Partners in September 2008, the response was clear: “You are looking for us to invest in a cyclical industry, you have no team, no assets, no brand, no financing facilities from a debt point of view – that is why you are coming to us, we understand. But you need to build more of the pieces of the puzzle before we can engage.”

And that is what Slattery and the team did. The next time he returned to CVC in February 2010, he had brought on board Oak Hill and Cinven as co-financiers. All three stumped us €250 million. Avolon was born.

Four years later, in December 2014, it went public on the New York Stock Exchange – the 13.6 million shares offered were priced at $20, below the expected range of $21 – $23 but still the largest ever listing of an Irish company in New York. The float was designed to offer the private equity backers an exit mechanism. A string of Chinese suitors were circling Avolon, but stressed they would be more comfortable if the company was listed.

If Slattery thought it would be plain sailing from then on, he was badly mistaken.

If the initial offer was disappointing, some robust numbers pushed it up by $2 a share. With investors happy with the value, the company again opened negotiations with potential Chinese acquirers. Eventually it was the Chinese conglomerate HNA Group who stepped up through its subsidiary business Bohai Leasing.

The deal, closed in January 2016, was completed at $30 a share, a major coup for the private equity backers and anyone who had bought into the initial public offer – the former landed a 2.2 times return while market investors got a 55 per cent return. By that October, it had completed a €10 billion acquisition of CIT Group, a move that doubled Avolon’s scale and developed its global footprint.

If Slattery thought it would be plain sailing from then on, he was badly mistaken. By late 2017, HNA was bleeding, under pressure over strained liquidity. As The Financial Times put it: “In the space of just 12 months, Chinese airline-to-finance-conglomerate HNA morphed from a symbol of the wealth and ambition of China Inc to a cautionary tale of corporate indebtedness.”

In August 2018, the Japanese financial services group Orix stepped in, acquiring a 30 per cent stake in Avolon for $2.2 billion., the move broadened the shareholder base and increased its credit ratings.

“Aircraft leasing companies generally don’t fail because they bought the wrong airplanes, they fail because the cock up the balance sheet. GPA is the classic example.”

“Orix’s investment will significantly improve investors’ confidence in Avolon’s financial position and future financing capability for its large number of aircraft on order, easing their concerns given the high financial leverage of HNA Group,” said Corrine Png, CEO of transport research firm Crucial Perspective at the time of the deal.

For Slattery, it was the latest in a helter skelter journey that has seen him change the business plan ten times in as many years.

“One of the things we pride ourselves on is being nimble. The business plan for what a private firm wants is completely different from what the public markets want which may be different from what a Chinese shareholder who is in bankruptcy wants to one that you need to build to move to investment grade,” he says.

“We really pride ourselves on our ability to adapt. The core business is the core business, but you can adapt around the liability side – aircraft leasing companies generally don’t fail because they bought the wrong airplanes, they fail because the cock up the balance sheet. GPA is the classic example.

“Through that what I have enjoyed the most in watching Avolon flourish, is the intellectual and psychological development of our people. We have had two psychologists on staff here for years – long before Billions. They sit outside the HR function.

“The thesis is that if I can help Ian Kehoe who is 26 understand what makes him or her tick, that person will be more confident, more relaxed, will take better risks and make better decisions. Who am I and where did I come from? Who are the types of people I should have around? What are the people I should just stay the fuck away from? What is going to allow me to move up a notch in Maslow’s pyramid? Let that be part of the narrative of the firm. The people side of it for me is most intriguing.”

Global concerns, Irish worries

Just as his own personal journey has ebbed and flowed, Domhnal Slattery has followed the vagaries of the Irish economy over the past 15 years, tracing its voyage through boom, bust and recovery. A decade ago, as he toured the boardrooms of global titans all over the world, Ireland was regarded as something of a joke due the nature of the financial meltdown.

Today, Slattery could not be prouder. From the moment Anglo imploded – “our Hiroshima moment,” he says – Slattery believes that the fiscal response to the crash was a masterclass that will be taught  in universities for decades to come.

“Could we have done bits of it better? Absolutely, but unquestionably capital providers all around the world, and it is all about the cost of your debt, they deemed Ireland to be a country that is fiscally sound and rational, albeit at the periphery of Europe,” he says.  

Slattery is, however, worried, and those worries are not stemming from Brexit. On the day we meet, the 10-year Treasury yield had just inverted on the two-year Treasury. The last time this happened, Slattery says, was in 2007.

“A recession in America, without any other crap going on, is bad for us. So, that is a red flag,” he says. “We have a major geopolitical spat going on between China and America, which, in my current view, does not get resolved any time this side of an election.  Trump is trying to create his own type of game theory but only he understands it.”

Slattery on… China and trade wars

“I spent a great deal of time in China. I lived in Hong Kong for a year and a half. The Chinese think in decades, if not centuries. One statistic that I constantly go back to is that the Chinese economy was the biggest economy in the world for 18 of the last 20 centuries. They only lost their way in the mid-1800s when the Opium Wars kicked in. in the Chinese cultural psyche, they are only regaining their rightful place in the world. It is not some Mao revolution and we were in caves. These guys are used to being the largest economy in the world in a multi millennial scenario. Really, America only came into its own in the 20th century with wars. The Chinese will play a long game.”

Slattery is also concerned about the global trade indicators. He says freight containers bookings are way off.

“I talk to the CEOs of all these airlines all over the world. They are at the leading edge, taking bookings at a daily basis. Business is soft. That would be my overarching position.”

“So that is leading indicator on trade. The dollar is strengthening. This is a really bad thing for emerging economies who are the driving force for the world economy for growth. That is not great. It is not a disaster yet but if it continues to get towards parity with the euro, that is really bad for the likes of Indonesia, Russia, Brazil, all of these countries with outsized GDP. You also have the political tensions between the US and Russia,” he says.

Slattery is not the only one making this point. The ESRI recently warned that a slowdown in the growth rates of major economies around the world suggests a weakening of global demand for Irish exports and Irish growth.

But while the ESRI view stems from macroeconomic policy, Slattery’s views stem from real life interactions with global matters of finance.

IK: Where does Ireland and the Irish economy fit into all of this global instability?

DS: Where are we today? We are one of the most open economies in the world. We will always be one of the most open economies in the  world. What else would you expect? It is what it is. We are leveraged on the upside and leveraged on the downside – not by debt but by wings.

When it is going good globally, it is going to go great here. When it is not so good, with the flu and the coughing, that is the unfortunate characteristic of an economy like ours and I can’t see that changing in my lifetime.  On average, most of the time it is a better dynamic than the alternatives, particularly when you have no natural resources. We are in an environment where the world is very, very choppy.

IK: What is the view of your clients?

DS: I have 160 clients in 64 different countries. Every day something bad will go wrong somewhere in the  world that affects one of my clients. The release value is our interest rates. The problem is that interest rates have never been so low going into a recession the problem is what they can do? Negative interest rates? If you look at the quantum of sovereign bonds globally that are now at negative interest rates, there are at a level we have never seen in modern fiscal history.

You put all of that into the hopper and we are in for a rough ride over the next couple of years and Ireland will be in for a leveraged rough ride as a consequence.

What should the policy be for the government? Lock down the spending. Pretend as if it was as bad at 2010 and 2011. Don’t reduce your tax take – either corporate or personal. Build a buffer for the downside. During the recession, double your investment in education and or retraining.

Let’s assume it is a recession that will be six to ten quarters – I can’t see a global financial crisis happening again because the debt levels in Ireland are nowhere near where they were at. It is a different scenario. This is a time to, as Warren Buffett would say, to build the moat. Because we are such an open economy our exposure to the tax take from FDIs is enormous. That is great in the good times and I would prefer to have it as not have it. But you are at risk of losing ten to 25 per cent of it. You won’t lose all of it.

IK: So, you think a recession is definitely coming?

DS: We are already in a recession globally. Are we in a recession in Ireland? No. But it’s only a matter of time.  Ireland does not start global recessions. We are a laggard in that particular area. Whether it is classically defined, we are definitely in an emotional or a confidence recession.

I talk to the CEOs of all these airlines all over the world. They are at the leading edge, taking bookings at a daily basis. Business is soft. That would be my overarching position.

IK: What does all this mean for Avolon?

DS: I am glad you asked me that. Leasing companies thrive in recessions. The really smart ones build up their cash coffers in advance. Avolon has $6.4 billion in liquidity. Think about that. I can write a cheque tomorrow for $6.4 billion if I want to do something.

Our strategy is: bring it on. What happens in a recession is that airlines pivot towards cash preservation, like I just said the government should do. Instead of financing aircraft with cash, they take on more aircraft leasing. One of the reasons when I sold the business to RBS. I said the sweet spot was to be in lending and leasing.

Be brave, be bold: why all companies must think like start-ups

Domhnal Slattery has been thinking a lot about bravery in recent times. As the company continues to grow and scale, Slattery wants to ensure that Avolon retains what he describes its “bravery quotient”.

Without bravery, Slattery is fearful that the company could become mediocre, and mediocre companies die. Instead, he wants the company to continue fighting and scrapping like a young start-up, making brave and daring decisions.

“Start-up companies are really brave. Cynics will see you are an eejit. But you are really brave,” he says. “Ensuring we retain our bravery quotient is the biggest challenge for us over the next ten years. We are an insurgent fighting for every penny every minute of the day. Watching the costs, making sure we are as efficient as we can be. Ahead of the curve and trying to be innovative.”

Bravery is one of five values that Slattery says underpins Avolon. The others are transparency, respect, insightfulness and ebullience. Combined, the handful of values gives the acronym Tribe.

Cynics might call it a slick marketing trick, but Slattery forcefully argues that Avolon lives or dies by the five values of Tribe.

“They are constantly used every single day. We believe in them. We make business decisions by them. We recruit by them. We exit people by them,” he says.

Initially, however, even Slattery’s original backers were suspicious of the concept. INSEAD, the graduate business school, last year published a case study entitled: Avolon: Building a global leaders in the aircraft leasing industry, containing interviews with some of the original private equity firms who wrote the first cheques.

Among those quoted was Caspar Berendsen of Cinven, the finance giant that has raised €37 billion from investors to back private equity deals. Initially, he thought the whole thing was a gimmick:

“Frankly, as a hard-nosed financial investor, I didn’t really buy into it, but you have to pick your battles. If the team wants to do that, then the team wants to do that and that’s perfectly OK with me, doesn’t cost me any money. But I was wrong. It was really important – a strong force for the good within the company to really rally around.

“Initially there were only about 25 employees when they started to talk about Tribe. Then they became 50, 100, globally, actors all time zones of the world. The framing together of the culture turned out to be an extremely powerful DNA to glue everyone together.”

I ask Slattery what he made of Berendsen’s comments. After all, it takes a bit of doing to get private equity excited about ebullience and transparency. He responds by saying that Cinven had even asked him to present to their partners last year about values within their own firm.

“By Jesus, if the parish next door goes at you, everyone comes together. That is what we wanted to create.”

Furthermore, he says the world has moved on, with most investors now probing people and culture as well as interrogating the numbers.

“In the early days of Avolon, when we were in scramble mode, we were very much the start-up, very much trying to prove relevance, trying to prove to shareholders they have made a good investment,” he says.

“Private equity firms back then were only ever interested in the numbers, the metrics. I would rock up to board meetings back the talking about people. They would listen but not actively listen. Today, if a private equity firm is doing a buyout, a very large portion of their due diligence will be around the cultural values, the people formula – how they retain, grow train learn and develop.

“It has transformed because the investors in private equity firms have now cottoned on to the fact that cultural values and people are the biggest risk management tool you can have. If you get that right, the numbers will follow. That has all changed in the last five or ten years.”

Until a few years ago, Slattery personally interviewed every single prospective Avolon employee – from senior executives to junior staff. Invariably, he asked them to name the values of the organisation that they were coming from. Invariably, they had not got a clue. A key metric for Slattery is that if someone wants to hire an Avolon staffer, they will be able to articulate those values – and the behaviours associated with it.

“The values ultimately became the acronym Tribe. That came back to this essence of Irish-ism. We were trying to create a concept that aligned with your parish. Everyone in a parish has their role to play – the hierarchy, the support mechanism. By Jesus, if the parish next door goes at you, everyone comes together. That is what we wanted to create.”

The future for Avolon… and Domhnal Slattery

In January, Domhnal Slattery went to the South Pole. He wanted to think about his journey and to consider his future. His company has gone from start-up to IPO within five years, and from IPO to private ownership. Shareholders had come and gone; all had made money. So too had Slattery. Avolon, his “Phoenix from the flames” of the crash had delivered. And then some.

With Orix on board as a shareholder, it would have been an appropriate time to retire for the second time. So, he decamped south to consider both the future of the company and his own future. He came back convinced they were intertwined for some time yet.

“How lucky am I? did I ever think that the top business school in the world work be teaching my company as a case study in their MBA? Seriously?”

Domhnal Slattery

So, what does that future look like? The €10 billion swoop for CIT Group propelled Avolon to third on the list of aviation lessors. Slattery has previously talked about closing the gap on first and second – AerCap and GECAS. Matching either of those however would require another transformative deal. AerCap, for example, has a portfolio of 1,042 owned or managed aircraft, 200 customers and total owned assets on the balance sheet of $43.1 billion. GECAS has an even bigger fleet size.

Is the ambition still to be number one? “We have said publicly that number three is not the summit of our ambition – we want to continue to grow. The problem is that all of our major competitors are growing as well.

 “So, we did the leapfrog when we bought the CIT business – we doubled in size. The next big play will be when the proverbial hits the fan. In the meantime, we are knocking out very serious earnings. The book equity of this business will be heading towards $8 billion at the end of this year. It started at $750 million nine and a half years ago.”

And what about his own future? When I ask if the trip to the South Pole triggered a desire to step back and move on, Slattery merely leans back and smiles.

“This is the best gig I have ever done. You can proudly look back at what we have achieved as a start-up and proudly look forward to the next ten years and imagine in my head what we can do. We have respect globally. Our customers like us. We have a culture that does not allow ego to take over. Because success does breed that kind of carry on and I am as prone to it as anyone.

“How lucky am I? Did I ever think that the top business school in the world work be teaching my company as a case study in their MBA? Seriously?”

Postscript

Shortly after Avolon published the Project i on start-up innovation, Slattery received a call from Enterprise Ireland looking to meet. So, Slattery and his team sat down with Julie Sinnamon, the chief executive of Enterprise Ireland. The outcome of the meeting is Accelerate I, a one-day masterclass for ambitious Irish companies. Avolon is hosting the event, which will feature contributions from established financers, communications gurus and phycologists.

They will hear the Avolon story and learn about the values of Tribe. “What were the ingredients to success there? What were the tangible things that needed to happen, the actually building blocks? What were the cultural values that drove that success?” Slattery says.

And maybe, just maybe, Slattery might ask one of the companies to tell a joke. Hopefully, this time, Slattery will end up laughing.