Dream Big – Author Cris Correa inspirational book on Buffett’s pals, Brazil’s 3G Capital

Brazil’s 3G Capital has become to the business world what its athletes have long been to football – virtually unbeatable. Brazilian business journalist Cristiane Correa, who has for decades been following the three entrepreneurs from her homeland, turned their story into the global bestselling book Dream Big whose admirers range from investment guru Warren Buffett through to thought leader Jim Collins (who wrote the foreword).In this fascinating half hour, Cris takes us behind the journey of these three billionaire entrepreneurs who today dominate the world’s beer industry and recently acquired South Africa’s SAB Miller. With Buffett as their partner, 3G are well on the way to doing the same to another sector through their Kraft Heinz combine. Correa’s book is inspirational, containing many lessons for entrepreneurs everywhere. And a reminder that it takes as much effort to Dream Big as small. – Alec Hogg

At a Berkshire Hathaway Annual General Meeting some years ago, Charlie Munger (the Vice-Chairman of the company) mentioned that we should read a book called “Dream Big” by Cristiane Correa’ and it’s my great privilege to have Cris on the line now from Sao Paulo in Brazil. Cris, we’ll get into the book in some detail. It talks about three great entrepreneurs out of Brazil who’ve really changed the world in many ways, but what got you into thinking about doing a book on these fellows in the first place?

First of all, I’m so glad to talk to you. Well, I’ve been thinking about the book for a long time before I actually started that. I first started thinking about the book in 2007 and that’s why they were acquiring so many companies in Latin America and also, in Europe and it was beginning to get clear to me that they had a very particular management style. Not a management style that is suitable for everyone because it’s very aggressive and very focused on meritocracy, but they were getting pretty good results. For four years, I tried to convince them to collaborate with the book. They really hate to be in the spotlight so they never agreed. At the end of the day, I decided to do that by myself and I started writing the book in 2011 and two years later, I published the book.

Without any help from them?

Yes. I interviewed many people that have worked with them (and still work with them), family members, and also, I got to know them during the time I was trying to convince them but they never agreed to give any interviews.

Warren Buffett

Well, it seems that they would approve of your research and what you put together because otherwise, Warren Buffett wouldn’t be recommending to people that they read this book – on his partners.

Well, some people agreed on giving me interviews. Some people didn’t agree – people who are very close to them. Also, you have to understand that I had been writing many articles about their companies. I don’t know, for ten years, before I tried to start the book, so I actually knew the companies very well and I knew many people who have worked at the companies, so I was really into the story. It was pretty hard for them to block me because I already knew a lot.

Cris, just going back a little bit, did you know when you first started following this business and when you came across Jorge Lemann for the first time, that or did you have a feeling that this guy was something special?

I definitely had. Here in Brazil, most of the companies are pretty much based on a very paternalistic way and their culture was different and also Jorge Paulo is a very simple person and I was used to work entrepreneurs that were very high profile, that had big offices, great stuff and all that and Jorge Paulo was pretty simple. So, when I first talked to him, I was impressed by his simplicity and his objectivity and also he has so much discipline. In Brazil it’s not often that – when meetings are scheduled for a certain time, they begin at that time, and they are pretty disciplined. They really follow the rules, they really follow the clock. It’s very, very disciplined, different from everything that I was used to seeing in Brazil because as you know, I was a business reporter and I worked for the largest business magazine in Brazil, so I had access to most of Brazilian entrepreneurs and businessmen and they were quite different.

Brazil at the moment is in – or front and centre because of the Operation Car Wash, because of Dilma Rousseff etc. and many businessmen were pulled into that corruption. These three guys presumably not.

Well, there is nothing so far.

That doesn’t sound so good. Do you mean like -?

No, it’s that so many people are getting in trouble because of that, but you cannot really say that anyone’s 100% safe. So, I’m not their lawyer, so I cannot say that they’re 100% safe, but they never had anything remotely similar to, you know, whatever problems some of the entrepreneurs in Brazil are having. You know, when I started writing about that, the richest businessman in Brazil was Eike Batista. I’m not sure you know him. Many people asked me why I wasn’t writing a book about him, since he was the richest one and I said, “Well, I’m not sure about the way he operates” and he’s in jail now, so I never had this kind of doubt about them. This is one of the reasons I decided to write about them because I truly believed that their growth is based on hard work, discipline, strategy, and all that, not in any kind of favours with the government or something like that.

Brazilian billionaire Jorge Paulo Lemann, co-founder of Fundacao Estudar, speaks during an event for the nonprofit organization’s 25th Anniversary in Sao Paulo, Brazil, on Monday, Aug. 1, 2016. Fundacao Estudar selects promising young Brazilians and supports their education through the program’s scholarship program. Photographer: Dado Galdieri/Bloomberg

Well, your book has gone – clearly it’s all over the world. I’ve had people that I know in business who say that they use it as their business bible and maybe we can just dig a little bit into 3G Capital and the three entrepreneurs themselves. The philosophy of meritocracy above all else, reading in your book, it talks about how they learnt from the best in the world including Jack Welch with a 20/70/10 principle that you’ve explained. Maybe you can unpack that for us.

Yes, until today they really look everywhere where they can find and learn best practices. So, back in the past Jorge Paulo learnt about Goldman stocks, he studied in the United States and he got to learn about Goldman Sachs and this is where he learnt about meritocracy and from that time on, he always had in his mind that whenever he had a company, he would have this kind of policy, meritocracy instead of a more paternalistic way of dealing with employees which is more common in Brazil.

So, they learnt about meritocracy with Goldman Sachs, they learnt about cost cutting with Walmart, they learnt about dealing with their people with Jack Welch and GE. So, they are still nowadays looking for good examples. Nowadays Jorge Paulo, for example, is very interested in tech companies, which is something very new for him, so he’s learning. I mean maybe at some point they incorporate something that is more related to tech companies to the companies they now rung. They are always trying to get to know new things and incorporate it to their style.

Do they still do that 20%, reward at 70%, retained at 10%, gets rid of every year as Jack Welch used to do?

Nowadays it’s’ not that rigid any more, they still get rid of the bad people or the people that won’t accomplish their goals, but it’s not that. The formula, the 20/70/10, it’s not that stiff anymore, but they still get rid of the people do not accomplish their goals. I think it’s important to tell you that as Brazil is dealing with the worst crisis ever, their brewery in Brazil, Ambev, has not accomplished their goals in 2016. Therefore, none of the employees got a bonus which is something very unusual for them. In the last 25 years only five times, they didn’t get a bonus and when the company doesn’t accomplish their goals nobody gets the bonuses. The President doesn’t get it, no one gets it. So what meritocracy is about, if there’s no growth, no one gets their share, when there’s growth everyone is rewarded.

You mentioned the breweries and of course, they’re by far the biggest brewer in the world, started off with Brahma, the acquisition then with Antarctica, i.e. in Brazil, then bought a Belgian, then of course bought Anheuser-Busch and most recently South Africans would be interested in knowing a little bit more about what they would be doing with SABMiller.

I’m not following the specifics about this deal, but I would say that they will do exactly what they have done in the past. Think about what they have done Anheuser-Busch and I think that’s probably what’s going to happen again. They will look for efficiency and cost cutting and trying to get the best people of both companies and combine them. It’s hard for them to invent new things when it comes to mergers and acquisitions. They really follow the same playbook. They always say that they are one trick only, so that’s what they do when they have an acquisition. I mean, if you see what they did with Anheuser-Busch, or Corona, or all of them, probably that’s what’s going to happen in South Africa.

The timing was absolutely brilliant with Anheuser-Busch. Once again with SABMiller you had the triumvirate who departed, Malcolm Wyman, the Financial Director for many years who left, the Chairman, Mason left and then the death of Graham Mackay and in swooped the guys from 3G. Their timing with SABMiller was impeccable. Is this a hallmark of the success of these three entrepreneurs?

Well, you have to understand that they never close those deals overnight. They are very close to the companies they’re interested in for a long time. They are always keeping an eye on these companies and of course they look for the best timing to do the offer. Sometimes they’re not successful. We had a recent example when they tried to acquire Unilever. That didn’t go well, so it’s not a 100% sure thing but they usually follow the company they’re interested in for a long time and try to get the best approach they can.

Carlos Brito, chief executive of Anheuser-Busch InBev, poses for photographer prior to a news conference in Leuven in this file photo from February 26, 2015. REUTERS/Eric Vidal/Files

Brito, the Chief Executive of the Brewing Organisation, I found it fascinating in your book to learn how he got to meet Jorge Paulo Lemann in the first place.

Well, Brito used to work at an oil company in Brazil in the eighties and he was accepted in a school in the United States for an MBA, but he didn’t have the money to pay for the MBA so he looked for Jorge Paulo Lemann, who at the time was known in Brazil, was someone who helped Brazilian students to study abroad. You have to understand that in the eighties studying abroad was really not common for Brazilian professionals. So, although Brito didn’t know him, he tried to schedule a meeting and he succeeded at that and Jorge Paulo liked him, so he financed his studies and when Brito finished the course two years later, he had so many offers.

I mean from investment banks and consultancies and all that, but he decided to come back to Brazil and work with Garantia, which was the bank that Jorge Paulo had at the time. It was not the best salary because they never paid the best salaries. One of their policies is that a salary is not the top in the market, but people can really make a lot of money with bonuses and stuff like that if they reach their goals and then Brito, who started to work with them, with Garantia and pretty soon Garantia acquired the Brewery Brahma, so Brito was one of the first to start to work at Brahma and he never left. He’s been working with them for 30 years now and has worked in so many positions in the breweries and is not the number one at ABI.

What is interesting as well is you mentioned right in the beginning of our discussion that Brazilian business is very chauvinistic. That comes through very strongly in your book as well about this company, but you say they’re not as chauvinistic as most Brazilian companies. I don’t see too many women reaching senior positions within –

Flag map of Brazil

No, they are not. Nowadays there are some VPs. There’s one VP at Kraft Heinz, there’s one VP and AmBev, at ABI, but you never had a woman CEO in any of their companies. I interviewed a few women for the book and I still talked to some of them after the book was published and they said to me that they never felt any kind of prejudice because they were women, but sometimes the level of commitment that the company expects, women cannot deliver. So, if you have a small child, well the company will expect you to give 100% no matter what. It doesn’t matter if you have a small child or something like that. So, sometimes women cannot fit into their culture because of that. The women are interviewed, again, they said they never felt any kind of prejudice, but they felt that sometimes, for some people it was very hard to give the commitment that the company expected from them.

You got Jim Collins to write the foreword to the book. Now you do mention that he knows these guys well, but that’s a coup to get the great business writer to do that. How did you manage?

Well, I’ve been talking to Jim Collins since 2001. I’m very obsessive about a few things, so when I first interviewed Jim Collins in 2001, I was still working at the business magazine; I simply thought he was different from all the management gurus I have ever interviewed, so I kept in touch. He lives in Colorado and it’s really rare for him to leave Colorado. He doesn’t like to fly and travel, so twice I went to Colorado to interview him. I was the only Brazilian journalist that he ever gave an interview in person in his office or anything like that. So, I had a ten-year connection with him before I asked him to help me with the book, so it was not easy but it was a relationship that we had for a long time.

He has a relationship as well for a long time with Jorge Paulo and his colleagues.

Yes, the same, so every year Jorge Paulo and the top management from ABI, they go to Colorado and have kind of a workshop with Jim. Usually it was in December, but this year I think it was in March or something like that, they changed the timing. So they go there and you know, once a year it’s like a refresh and they think about the strategy and what’s going to happen in the future, you know the big questions. Jim is very good at asking good questions and I think that once a year they go there and sit and think about the future with him.

One of the other interesting parts of their strategy is that they like hiring poor people.

Yes, they like to hire ambitious people. It doesn’t matter, you have people who work with them nowadays that come from good families, if you can say that and have studied in good schools and all that, but what they really look for is people who are ambitious and when I mention ambition, it’s not only about the money, but also people who want to take some risks, to assume the risks and to build big things, you know, someone who’s not going to work, you know it’s not a nine to five job, it’s something else. So yes, they like ambitious people. For their system, they are obliged to have ambitious people. Meritocracy only works if you have people who have ambition. If they don’t, I mean they don’t care about the bonuses or anything like that, so things are related.

A Heinz Ketchup bottle sits between a box of Kraft macaroni and cheese and a bottle of Kraft Original Barbecue Sauce on a grocery store shelf in New York March 25, 2015. REUTERS/Brendan McDermid

As you say in your title “Dream Big”, where did that come from, the title?

Jorge Paulo has this mantra that he’s repeated, I don’t know, forever, that “Dreaming big and small requires the same effort”, so the first time I heard that I thought it was something like a self-help thing or something like that, but with time I realised that they really believe in that and that makes a lot of difference. They really want to build big things and they think long-term. For some people it’s quite strange how these three entrepreneurs came from Brazil all of a sudden with this big empire, but it was not all of a sudden. Their story started in the seventies, right. We’re talking 40 years no, but they always operated under the radar because they avoid the press and all that.

Therefore, abroad people were not really familiar with them, but it’s not an overnight thing and I think this is important to say, especially because they have a banking background. Some people in the beginning thought that, “Oh, these guys that are going to acquire a company and you know, improve it a little bit and after, I don’t know, eight or ten years they will sell the company”. That’s not what has been happening so far. All the companies they acquired are still with them, they’re still growing and getting bigger, and bigger with time, so long-term is important for them.

Very similar to someone else that they’re partnering with now, Warren Buffett. How did that come together?

Yes, very right. I mean, I think that’s not by chance. They really believe in the same things. Warren Buffett is also a very, very simple guy. He thinks long-term, which I think is amazing. I mean he’s 86, right, and he’s still thinking long-term, still thinking about doing big things, very focused on work and yes, they have a great relationship, and Warren Buffett’s said more than once that he would like to have more deals with these guys.

The last chapter of your book talks about the philanthropy of the three of them in particular, Jorge Paulo Lemann, reinvesting in education. Is that one of the areas that he actively pursues?

Yes, they really invest in two areas in terms of philanthropy. It’s education and helping others, entrepreneurs to grow. So, they invest in things that they believe in. Jorge Paulo is very active in the education thing. He goes to many events and all that, as he doesn’t even sit in the board of any of his companies, he is giving a lot of time to this kind of thing. Education is quite important to him nowadays, as it is to his partners Marcel and Beth Sicupira, but I think that he’s the one who’s really looking forward to help Brazil give this leap that is so necessary because we really have a problem in terms of education.

Flag map of Switzerland

Talking about Brazil and Lemann, the decision that he made to relocate to Switzerland was quite a story in his life. You write about an attempted kidnapping, did that happen often at the time?

Well, that happened in the nineties and there was a time in Brazil that kidnapping was quite common, I have to say. After I wrote about Jorge Paulo, I wrote about another Brazilian entrepreneur, the name is Abilio Diniz. He’s the biggest retailer in Brazil and he was also kidnapped in the nineties, so that was, I wouldn’t think common, but it happened. Two of Jorge Paolo’s kids had this attempt of kidnapping. Fortunately, nothing happened to the kids and they were safe and all that, but they were traumatised and they moved to Switzerland the following day. The other kids started to study abroad and they built a life abroad, but nowadays some of their kids live in Brazil and Jorge Paulo spends a great part of his time in Brazil as well.

Do Brazilians look at his business story as a role model for them?

Nowadays, yes. I believe that for a long time they were perceived in Brazil as over competitive, overaggressive, but nowadays they are admired. There were no other entrepreneurs in Brazil who got as far as these three got and basically, by their own means with no help from the government or anything like that, so yes, people look at them and they are a model nowadays.

Are they still dreaming big?

Oh, for sure. I mean these recent attempts to acquire Unilever, I think it’s proof of that, don’t you? And I believe that although it didn’t work out for them, pretty soon they will have to try something else, maybe not Unilever again, but some other company. Their management style requires constant growth. If they don’t grow, they will have a problem because the top people, they really want to have challenges all the time and growth is necessary.

So, if I understand correctly, they invest in people, grow the people and those people themselves need to have the challenges and that means you have to expand.

Yes, you’re absolutely right.

And what about you, Cris, are you dreaming big, have you got another book like this and a global best seller in your back pocket?

Well, I have to say that I was pretty lucky. This one was my first book, so it was a big hit in Brazil and abroad as you said. It’s been published in the United States, China, Taiwan, Vietnam, and so hopefully in other countries in the near future, so it was a big hit. After that I wrote about this other Brazilian entrepreneur, it was a bestseller as well, not as big as “Dream Big” and nowadays I’m just finishing my third book. Hopefully, it’s going to become a bestseller as well, we’ll see.

You can’t tell us about that one yet?

No, I can. It’s about a management guru in Brazil named Vicente Falconi. He’s mentioned in “Dream Big” because he’s the guy who helped Jorge Paulo and his partners to learn how to establish goals to the companies and make these goals go to all the employees because nowadays all their employees all over the world, they have their individual goals, which is something very hard to accomplish and one of the things that this management guru did in Brazil was to help them to do that. So, this guy is still on the board of AmBev, their brewery in Brazil and he helped many other companies and the government in Brazil to get some efficiency and I think that efficiency is really what Brazil needs nowadays after this Car Wash thing, we’re going to have to go faster and do better if we don’t want to be left behind.

Falconi, the next one, I will certainly be buying that one too. Cristiane Correa, thank you so much for the chat today about your book “Dream Big”.

Thank you, Alec. It was a pleasure talking to you.

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