DREAM BIG: How the Brazilian trio behind 3G Capital acquired Anheuser-Busch, Burger King and Heinz

Category: Business

Reading time: 4.5 hours

Rating: 6/10

This book tells the career stories of the richest man in Brazil, Jorge Paulo Lemann, and his two main partners.

Jorge Paulo graduated early from Harvard University with a degree in Economics and immediately began working in the financial sector of Brazilian banks. After ten years of making numerous connections and some money (about $200,000), he was out of a job, but set out to build his own bank. By copying the same results-oriented, meritocratic business ecosystem as Goldman Sachs, he built his bank into one of the best-known financial institutions in Brazil, making a lot of money in the process. During the next decade of work and development of his firm, Jorge Paulo put two of his best workers (who later became partners) in his firm. When the bank began to decline in results and quality, he sold it and made around $200 million. Jorge Paulo and his two partners then started their own private equity firm, acquiring Anheuser-Busch (the world’s largest brewery at the time), Lojas Americanas and Heinz, all multibillion-dollar companies.

Here are some of JP’s biggest career insights and strategies in running a business:

– Top 10 group lessons:

1) Always invest, especially in people

2) Don’t be afraid to dream big and use it to support your momentum

3) Create a meritocratic culture with appropriate incentives for all

4) You can export a culture to different industries and geographies

5) Concentrate and focus on building something great and lasting; the money will follow

6) Simplicity is gold!

7) Being a fan is good

8) Discipline and patience are key, especially during difficult times

9) A high-level, disciplined management committee with aligned motives and objectives is a powerful tool

10) Seek advisors, consultants and mentors, and also connect them with each other (adding value)

– Jorge Paulo and his associates preached that meritocracy, low costs and a quality team with aligned objectives were the main ingredients for a successful business model

– Finding, training and keeping quality workers is an ongoing effort and a priority

– Everyone’s income must be stimulating, fair and in tune with the interests of the company. Early in his bank’s history, Jorge Paulo wanted to make sure everyone was fairly compensated, but not so much that associates felt satisfied and comfortable with his current situation. His bank’s meritocratic, bonus-based system could see an intern become a partner, provided he proved himself worthy. He puts his 2 main partners like this

– The 20-70-10 rule: Employee evaluation was key to maintaining quality as the company evolved. Each year, JP would promote the top 20% of workers, keep the middle 70%, and fire the bottom 10%. This was the best way to keep talent on the roster and instill a sense of urgency and high-level work at the firm.

– The main objective of a boss is to choose people better than him to continue the legacy of the company.

– Leadership comes from clear ideas and the daily example in minimal details.

– A good company is always trying to improve. There is always room for improvement. Even when he was already a billionaire and well past retirement age, JP was still looking for his next investment. This also says something about how what he does is a part of himself, and money is not the main goal.

– Innovations are great, but copying good models is much easier

– The education and training of associates must be continuous and embedded in daily activities.

– A big, challenging, common, essential goal helps everyone work together

Some other interesting insights and facts:

– JP and his billionaire partners were extremely “ordinary”. They often wore jeans and T-shirts, disliked flashy cars and houses, and avoided press attention. The main reason Banco Garantia failed and was eventually sold was because most of the associates made too much money, became complacent and distracted by material possessions.

– When the bank began to earn huge sums that were not all given out as bonuses (to avoid distractions), the trio was looking for companies in which to invest with their new earnings.

The business trio was not afraid to fire underperformers. Every time they acquired a new business (like Antarctica and Lojas Americanas), a barrage of gunfire usually followed.

– This opened up space for new young talent, but also cut a lot of costs and inefficiencies.

– Before making monster acquisitions, no one really knew much about the industry in question (drinks and beer, or retail). However, the trio sought mentors and experienced people to help and guide them with valuable information. After a few months of intense mentoring and study, they already knew enough to change the course of the business.

– They considered themselves “one trick ponies”, always copying proven models and systems to their new acquisitions (always with excellent results)

– Acquiring Antarctica may not have been the best decision on paper, and they admitted they were lucky to skip their due diligence, which would have prevented them from proceeding with the purchase.

Sometimes being lucky is better than being good.