Category: Business
Reading time: 4.5 hours
Rating: 6/10

This book tells the stories of the career 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 about building 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 following 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 earned around 200 million dollars. Jorge Paulo and his two partners then started their own private equity firm, acquiring Anheuser-Busch (the world’s largest brewer at the time), Lojas Americanas, and Heinz, all multi-million dollar companies.

Here are some of JP’s most important career insights and strategies when running a company:

– Top 10 Group Lessons:

1) Always invest, especially in people
2) Don’t be afraid to dream big and use it to support your drive
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 big 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 goals is a powerful tool
10) Find 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. At the beginning of his bank’s history, Jorge Paulo wanted to make sure that everyone received fair compensation, but not so much that the associates felt satisfied and comfortable with his current situation. His bank’s meritocratic bonus-based system could make an intern 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 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 part of himself, and money is not the main goal.

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

– Associate education and training must be ongoing and embedded in daily activities.

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

Some other interesting ideas and facts:

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

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

The business trio were not afraid to fire poor performers. Whenever they acquired a new business (such as Antarctica and Lojas Americanas), a barrage of gunfire usually followed.

– This opened up space for new young talent, but also reduced many costs and inefficiencies.

– Before making monster acquisitions, no one really knew much about the industry in question (beer and beverage, or retail). However, the trio looked for 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 turn the tide 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 going ahead with the purchase.

Sometimes being lucky is better than being good.