Publicada en la Revista Época Negocios, núm. 6, del 1o. de agosto de 2007.
Engineering Carlos Slim Helu’s interview performed by Estela Caparelli, published by Epoca Negócios magazine, number 6, August 1th, 2007.
THE RICHEST MAN IN THE WORLD: WHO HE IS, HOW HE LIVES AND WHAT HE THINKS.
We interviewed Carlos Slim, the Mexican businessman that displaced Bill Gates in the billionaire ranking. With one foot in old economics and the other one in new economics, he doesn’t use computers but makes money as no one does in the global age. His advisor is futurologist and friend Alvin Toffler.
Estela Caparelli, in Mexico City
www.epocanegocios.com.br
As the taxicab enters the Lomas De Chapultepec neighborhood, I’m thinking that there is no better place in Mexico City for the house and office of the new richest man in the world, the Mexican of Lebanese descent Carlos Slim Helú. In “Las Lomas”, as the area is commonly known, great homes and buildings were built in the most expensive land in the country by renowned Mexican architects like Luis Barragán and Ricardo Legorreta. Driving along the Paseo de Las Palmas, through the car window I can see well-dressed, young executives who work in companies neighboring Carlos Slim: the J.P.Morgan and Tokio-Mitsubishi banks. “There’s 736”, says the cab driver, pointing to the three-story building, headquarters of Grupo Financiero Inbursa which houses the businessman’s office. The building itself is nothing special. The small main hall has marble floors and walls. I cross the reception area, walk up two flights of stairs and sit down in a leather couch waiting for a sign from the secretary to get to Mexico’s most powerful man, whose fortune and influence causes heated conversations among Mexicans of all social levels. The austere taste suggests that decorators have no influence in this place, but at the same time, that sense of simplicity dilutes when you get a view of the paintings and sculptures of Slim’s personal art collection distributed all around. They constitute one of the personal glories of the businessman and occupy every wall and corner. Works by painters such as Van Gogh, Renoir, Diego Rivera share the space with The Eternal Spring, one of the hundreds of works by sculptor Auguste Rodin, acquired by his most important private collector, Slim himself.
“THAT (BEING THE RICHEST) IS IRRELEVANT; I’M NOT IN A GAME OF FOOTBALL”
I’m called out for the interview and I discover that the man that controls Claro and Embratel in Brazil, works in a large and austere 80-square-meter office. The place exudes his presence. In the right corner there is a rectangular table full of papers and with no computer. The businessman does not and has never used such equipment. He does not read on-screen documents, nor does he receive or send out e-mail. Slim usually says that all the information necessary to make a business decision has to fit in one sheet of paper. Up against the wall, next to the main door, is a group of green leather couches and a crystal ash tray with a lighter on it, signaling the presence of an aficionado of Cohiba cigars, of which he smokes at least two a day. Close to the couches, on a pedestal is the sculpture The Last Days of Napoleon by the Swiss sculptor Vicenio Vela (“It’s there as a reminder that it is always necessary to keep one’s feet on the ground”, says a source close to the entrepreneur.) In the left corner, there’s a wall filled with books about history, economics and his favorite sport: baseball. Next to it is an oval meeting table, full of papers too. Surrounding the place are paintings by Mexican artists such as Gerardo Murillo and José María Velasco. The decor reflects in a minimalist way, some of the main principles of the Slim management model: practicality, austerity, adoption of simple structures and investment on profitable assets.
Finally, a man of medium height and affectionate gestures enters the office. He’s 67; wears a white dress shirt with his initials embroidered, a mint-green tie and no jacket. During the conversation, the latin giant talks about his personal recipe for management, globalization and subjects such as Brazil, redistribution of wealth and even happiness. He did not refuse to answer a single question. In a good mood, sitting in front of me with an arm resting on the chair next to him, he barely hardened his tone when addressing the most recent epic event in his biography: having been named last month the richest man in the world, displacing the founder of Microsoft, Bill Gates, who occupied the top position in Forbes Magazine’s list for 13 years. The event, made known by a respected Mexican economics website, Sentido Común (Common Sense), which closely follows the evolution of Slim’s fortune in the stock market, caused all kinds of comments and drew an avalanche of unwelcome attention, opening up again the debate about Telmex’s virtual monopoly, which holds 91% of Mexico’s fixed telephony. The paradox of Slim’s immense wealth in a country of millions of poor was talked about openly, discussing once more the business man’s dedication to philanthropy and comparing him to generous donors such as Gates or Warren Buffet, the third man in Forbes’ list.
A MAN ENTERS THE HALL AND GREETS AFFECTIONATELY. IT’S HIM; SLIM.
During the interview, Slim insisted on disdaining his new position as the richest man in the world. “I didn’t get the news, but it’s irrelevant”, he says with serious demeanor. “It’s not a competition; I’m not playing football”. What worries him, he says, is how much his companies are investing and what’s happening with them. His main challenge, he explains, is using the Carso Foundation and other of his Group’s philanthropic arms to fight marginalization and poverty, investing in health, education and employment. Budget is US$10 billion for the next 4 years. “No one takes anything from this world when he dies”, he says, “Wealth should be administered with efficiency, honesty, effectiveness and sobriety”.
There are shortcuts to understanding the personality of a man that controls the equivalent of 7.5% of Mexico’s GNP (a comparison that he loathes). In the first place, there’s his father, a Lebanese merchant that arrived in the new world close to the political convulsions of the Mexican Revolution at the beginning of the 20th Century. LIke his father, Slim is a family man that lives surrounded by his sons and sons-in-law, in life and in business. As his father was, he is an obstinate business man, heir to a Lebanese tradition that comes from the Phoenicians, the first international salesmen in the world. In contrast to other recent millionaires, Slim is not a modern man in the technological or cosmopolitan sense of the word. He was shaped in the old economics and his entrepreneurial idols are Warren Buffet – with whom he learned to buy low – and Jean Paul Getty, who died in 1976, art collector and American oil tycoon. In 1957, Getty coined the phrase – famous for its melancholy – “A billion dollars isn’t what it used to be”. Slim discovered Getty when he was still young, reading an article in Playboy Magazine.
BASEBALL STATISTICS
Old fashioned, the creator of pre-paid cell phones in Mexico likes old fashioned things like Sofia Loren and boleros. His favorite movies are Charles Chaplin’s Modern Times and Anthony Mann’s El Cid, the historical epic starring Charlton Heston. His personal simplicity is legendary: he wears ties from his own store: Sanborn’s, and he entertains himself by re-working baseball statistics. He doesn’t use computers, even when one of his best friends is American scientist Nicholas Negroponte – father of the $US100 computer, who promised to pay out US$50 million to distribute them among Mexican and Central American students – and Alvin Toffler, the futurologist. The latter is a sort of mentor of the business man and his sons, to whom he usually gives domestic, informal talks. Along the interview, in more than one occasion, Slim explained his own ideas supporting them with Toffler’s ideas, as when defining the new world of services created by technology and education: “The wonderful thing about the new civilization is that it develops and thrives on the welfare of others. Nobody benefits by exploiting someone else, poverty”.
There’s a story told by Arturo Ayub, Slim’s son-in-law, which helps to understand how the lack of technological information is unable to impair the natural shrewdness of the business man. Tells Ayub: “I started Prodigy, an Internet Service Provider. One day, I went into a meeting boasting that we had 90,000 users. Slim asked me: “But, why only 90,000?” I explained that we were having problems growing because there weren’t that many people with computers in Mexico. Then he said: “The problem is that people don’t have computers? Then we’ll sell them the computers in easy installments. Out of nothing he created a scheme for financing computers in 24 monthly payments with no interest and payments charged in the monthly telephone bill. I can now tell you that today Telmex is the largest computer seller in Mexico. Since 1999, we’ve sold over 1.3 million computers. When promotion of the financing plan started, we were selling 3,000 computers a day.”
Since the website published by financial journalist Eduardo García put him at the top of the ranking of the world’s wealthiest men in the world, Slim has tried to downplay the repercussions of that information. Leading the list of billionaires means overexposure and bad press: a dreadful combination at a moment in which his companies are preparing strategic decisions for growth. Those that know him say that if anything can cause “El Ingeniero” (the engineer) to lose his temper, it’s interference with his discreet and efficient business routine. Nevertheless, whether he likes it or not, the list exists, and in it, Slim’s stock market value is US$62.9 billion, more than Gates’ US$56 billion and Buffet’s US$52.4 billion, as published by Forbes Magazine in March, 2007.
SLIM ASKS ME: “IF YOU HAD MONEY, WHAT WOULD YOU DO?”
If measured in assets rather than in numbers, Slim’s fortune is impressive. He controls or participates in more than 200 companies of sectors diverse as telecommunications, mining, food, financial services and restaurants. Mexicans use to say that it is impossible to live a day in the country without buying one of Grupo Carso’s companies’ products or using some of its services. In Brazil, there is no one that comes even close to being as powerful. For example, banker José Safra is the best ranked Brazilian in Forbes’ list; he shares position 119 with eight other billionaires, owner each of a U$S6 billion fortune. Safra’s fortune, however, is equivalent to only 0.3% of Brazil’s US$1.77 trillion GNP. If anyone in Brazil owned 7.5% of the GNP, that hypothetical superbillionaire’s fortune would be US$133 billion, 22 times José Safra’s fortune.
What is Slim’s reaction to this situation? “I’m very pleased that there is a company in Mexico, a developing country, which has created an international company such as America Movil, which creates value for investors and that competes successfully with the big ones of the world”, he says. “It is important that globalization can be done starting from our countries, as (the Brazilian mining company) Vale do Rio Doce is currently showing.”
The story of Slim’s extraordinary build up started in 1966, when at only 26 years of age, he already had the equivalent of US$40 million acquired through investments in stocks and the support of his family’s wealth. At the time, recently married to Soumaya Domit Gemayel, with whom he’d have 6 children, he launched into the business world acquiring companies in the real estate, construction and beverage bottling sector. In the following two decades, his group experienced a gradual growth typical of Mexican companies. In 1982, everything changed. In an open defiance of the “herd spirit”, he started shopping in the midst of one of the most severe crises of modern Mexican economy. While local and foreign investors tried to get rid of their assets at any price, Slim did the opposite: he bought mining companies, retail stores, cable factories and more. Along the crisis, he built the largest economic conglomerate in the nation – Grupo Carso – which sells US$8.5 billion a year. That was the first phase of its economic metamorphosis. “The decisions I made in those years reminded me of the decision my father made in 1914, when during the Mexican Revolution, he bought 50% of the family business from his brother, risking all his capital and future”, recounts Slim’s biographer José Martínez.
The second metamorphosis took place in 1990, when along with France Telecom, Southwestern Bell and other 35 Mexican investors, he entered the privatization bidding and seized control of Telmex, the government’s telecommunications giant. It was through the rise in telephony that he got to the top of the international business world. Together, his two telephone companies, Telmex and América Móvil, are worth 16 times Grupo Carso’s value which has existed for four decades. In 1991, when his name appeared for the first time in Forbes’ list of billionaires, Slim was known by only a few people in the Mexican business world. In those days, he drove a 1989 Thunderbird and had a fortune estimated at US$2.1 billion. Today, 17 years later, he dominates the telecommunications sector in Latin America, his face is well-known in all the world and he has become, much to his chagrin, the richest man in the world.
Engineering Carlos Slim Helu’s interview performed by Estela Caparelli, published by Epoca Negócios magazine, number 6, August 1th, 2007.
THE LAUNCHING OF PRE-PAYMENT IN MEXICO WAS CHRISTENED “PLAN GILLETTE”
Since childhood Slim always had his vocation stimulated by his father, Julián Slim Haddad. He’s the fifth of six children by Julián with the Mexican of Lebanese descent Linda Helú. According to his biographer, of all his siblings, Slim was the heir to his father’s abilities. As a boy, he used to watch his father buy merchandise in other countries and resell it in his store in Mexico City. At age twelve he opened a bank account with US$400. At 16, he bought his first stock from the Banco Nacional de México, nowadays controlled by Citigroup. At his father’s demand, Slim started to take notes in leather-bound notebooks of the value of his financial movements. He still keeps the notebooks. At the end of the 60’s, while other youngsters from wealthy families spent time in Paris, Slim started the construction of Grupo Carso.
MEXICO IS NOT CHINA
In contrast to Bill Gates – his partner since 2000 for the Internet Prodigy MSN website – Slim is essentially a business man of the old economy that bought a lucrative piece of the new economy. Besides not using computers, he doesn’t like to speak English in public and doesn’t have an MBA hanging on his wall. What makes this civil engineer different from other businessmen, is his keen smell for finding good businesses and his ability to put them in practice. Slim is a strategist of exceptional talent, sense of opportunity and clarity when dealing with numbers. If it weren’t so, he wouldn’t have managed to build a fortune of the magnitude he’s been able to build. The Mexican economy, even if relevant, is not the most important or the most dynamic in Latin America, a continent that itself is secondary within world economy. Mexico is growing at an annual 3%, without offering the opportunities created by the galloping 9% China is experiencing annually. 49% of its 107 million people is considered statistically poor. It’s not a natural breeding ground for billionaires.
Regardless, Slim is Slim. Why? Partly because of the same help Bill Gates relied on to reign supreme for 13 years in Forbes’ list: monopoly. Gates has Windows, which runs on 90% of all computers in the world. Slim has the Mexican fixed telephony market in the same proportion: exactly 91%. Both Slim and Gates face competitors, but both have managed to maintain a high level of control of their respective markets. The other lever, to the fortune of both, is the stock market. In recent years Slim has been benefited by an almost biblical multiplication of the value of Mexican stock. His personal stock value is equivalent to half the value of the whole Mexican stock market, whose index rose 49% in 2006. That is why his fortune grew US$20 billion in the previous year. Gates also became Gates powered by the winds of the American stock exchange.
Although it is true that the income generated by the Mexican fixed telephony market helped him to expand his empire, it also true that it wasn’t the only reason for the amazing growth of the businessman’s fortune. The major evidence of this is América Móvil, the group’s cell phone company, with 125 million customers and sales of US$22 billion. It started out as a cell phone division of Telmex and gained a life of its own in 2000. Half of the businessman’s fortune comes from 30% of its participation in the company, equivalent to US$32.6 billion. According to the Common Sense agency, the company’s stock rose 26.5% in the second semester, driven by its performance. That was the result of a dead-on hit of the past: the introduction of pre-paid cell phone service.
12 years ago, during a meeting with some of his collaborators, Slim presented a proposal to increase sales of cell phones: “We are launching the Gillette Plan”. His idea was to adopt, in telephony, the logic of the American company who sells the shaver and then keeps the customers captive by selling them razor blades. “He asked me to look for a pre-payment model in the world, but there was nothing like that at the time in the market. We had to develop the technology internally”, says Ayub, who at the time was in charge of the project. With a product accessible to the Mexican consumers, Slim captured the market. In 1990, the division that originated América Móvil had 35,000 customers. Nowadays, it has 43 million users in Mexico, out of which 40 million are pre-paid. With this, Slim holds a 77% share of the Mexican cell phone market, facing, among other competitors, the mighty Telefónica, which is present in Mexico with the Movistar brand name.
His business moves are driven by his own management model, synthesized by himself in a list that contains his ten commandments. In it, the businessman defends simplified structures, austerity of expenses, boldness of ideas and re-investment in one’s own business. In the course of the interview given to Epoca NEGOCIOS, he added an eleventh item to the list: the importance of team spirit and driven executives. “It is people that make things possible, people who are interested, motivated, who wear the team’s jersey proudly, as we say, and who know they are capable of facing every challenge that comes their way”. Slim believes that a company, whatever its size, needs the same agility and flexibility of a small business.
His philosophy is that of clean and flexible companies, with only a minimum of structural hierarchy to drive the business. In them, there is no place for heavy corporate structures, pomposity and formalism, luxurious offices, throngs of advisors and hordes of secretaries, benefits for a group of directors and executives. “We never had a head office”, he says. “A head office often has its operators working for it, instead of working for the operation, for the customer, for the market.” If it is necessary, the businessman talks directly with the lower-level employees. If an employee of a lower hierarchical level calls him up to talk about a serious problem, he answers the call. “He likes to know about things directly from the source”, says someone who knows him well.
The Slim style is far from pretentious. He works in his shirtsleeves and it is said that he always carries his agenda book under his arm as a reminder that he owns his time. How does he divide the few hours of the day among the various companies and foundations? “I don’t divide the time; I never did”, he says. “Sometimes an activity demands more attention and then I come back to it.” Meaning: he attacks problems head-on, in the moment they appear. The halls and rooms of the company have pictures that remind that time is the most precious asset of people and organizations. About his responsibility as leader of the company, he states: “My job is to think”. Slim works ten hours a day. Early in the morning, he leaves home in the elegant neighborhood of Las Lomas, where he’s lived for the past 30 years and rides in an armored Mercedes to his office, located a few minutes away. He doesn’t have a personal helicopter, but when he needs to fly he uses a 6-seat Cessna aircraft owned by Telmex. When he gets to the office, he usually talks on the phone or personally with his sons or sons-in-law, or with Eduardo Valdés Acra, vicepresident of the Inbursa Financial Group, about the day’s work. He likes to be up-to-date on everything. He usually has breakfast with someone’s he’s invited in the meeting room, next to his office, or in the museum hall in the same floor.
THE FORMULA FAILS
“The engineer” (as he’s called in Mexico) believes in cycles and in being persistent. In times of fat cows, he says, it is necessary to maintain austerity, invest on modernization, and with discretion, anticipate the movements of the competition. No getting comfortable. In moments of crisis, when assets are devaluating, it is time to go shopping. This latter part, he learned from Buffet. “All moments are good for someone who knows how to work and has the means to do it”, says his rule number 9. This formula has proven correct, but is not infallible. In 2000, Slim bought CompUSA, an American chain of computer retail stores that today is dwindling in the face of the competition.
Up to the second half of the 90’s, Slim personally directed all operations of Grupo Carso and Inbursa, the financial arm of his companies. In 1997, he decided to back off from his companies’ day-to-day operation after having to face health problems, in the aftermath of heart surgery. By the end of the following year, he placed his sons and sons-in-law at the helm of the business and became honorary president for life of the group. Today, he presides what is notoriously a family business in its structure. His eldest son, Carlos who is 40, is president of Grupo Carso; Marco Antonio, 38, is general director of Grupo Inbursa; and Patricio, 37, is director of Carso Global Telecom and US Commercial Corp. Slim’s sons-in-law also occupy key positions in the business. Arturo Elías Ayub, is spokesman for Grupo Carso and director of Telmex. Daniel Hajj directs one of the most profitable businesses: América Móvil. Another influential person in the decision-making process is nephew Héctor, Telmex’s general director. The first tier of Slim’s companies is totally controlled by men. Of his three daughters, only one of them, Soumaya, works with the Soumaya Museum, created as a tribute to the businessman’s deceased wife. There are only five women in the group’s first team of executives, none of them from the family.
AS A YOUNG MAN, SLIM DISCOVERED TYCOON PAUL GETTY. HE MADE HIM HIS IDOL.
On Mondays, religiously, Slim gets together with his sons and sons-in-law at his home after 10 pm for dinner. The menu is varied, serving almost always a Mexican dish like Chile Relleno (Poblano pepper stuffed with cheese) or Quesadillas (corn tortillas with cheese filling). The home can be considered austere for the billionaire status of the family: it’s got six bedrooms and a small swimming pool. The only luxury is the works of art. Slim shares the place with his eldest son, Carlos, the only bachelor. He insists on saying that he owns no other homes or foreign bank accounts. In over 40 years of business-making he’s never had his name involved in a scandal or complaint. On weekends, the richest man in the world usually takes refuge in nature. He likes to be among sequoias or contemplate the dawn in Los Cabos, in the northwestern coast of Mexico. “He’s very affectionate, his grandchildren adore him. They jump all over him”, says son-in-law Ayub. Slim has confirmed that he is using his free time to write a book with the history of his family.
When I ask him if he is a happy man, he quickly responds: “I think so”. Immediately after, he flirts with philosophy. “However, happiness is not a state, it’s a road with obstacles, problems”, he says. “The road to happiness exists when its main values are clear to you and when you are coherent with them and yourself.” For Carlos Slim, being happy at 67 is synonymous with being with the family, chatting with friends and walking among trees. The interview is reaching its end, the tape recorder has been unplugged, but he asks an aide for a letter he wrote in June 1994 to a group of students. In the letter, he writes about happiness. He reads, then, some parts aloud. “Emotional balance lies in internal life… It is necessary to avoid the feelings that gnaw at the soul, such as envy, jealousy, pride, lust, selfishness, revenge, greed… One cannot live with fear and guilt…” I interrupt and observe that the happiness list does not include anything material: a paradox? Slim responds with a question: “If you had a lot of money, what would you do?” I pause and think about how my life would be with Slim’s fortune, however, before I can answer, he questions again: “If you were married, would you leave your husband, your children?” I answer I wouldn’t. He starts again: “My family, being in harmony with those I love. That is what gives me the most happiness. It is not doing things right or getting the recognition of other people, do you understand?” Absolutely, Mr. Slim.
“I’LL TAKE NOTHING WITH ME WHEN I DIE”
Said by any mortal, such phrase is only a cliché. Said by the richest man in the world, it isn’t. In the exclusive interview given to Epoca NEGOCIOS, Carlos Slim tells us how he manages to deal with the impermanent nature of wealth, what is important in his management model and defines happiness.
What are the key points of your management model? The principles are not new. They are 40 years old and are summarized in a decalogue. These are augmented by something fundamental: the team, the people. It’s the people that make things possible. Interested, motivated people that wear the team jersey, as we say, and who know they can rise to any challenge. It’s necessary to keep harmony in the work team, and make people feel success is everybody’s.
At some point, you said that “Wealth is not important; what’s important is what’s done with it”. What do you intend to do with your wealth in the coming years? No one takes anything with him when he dies. Therefore, I think that wealth should be administered with efficiency, honesty, effectiveness and sobriety to produce more wealth. One of the fruits of wealth is profit and it is necessary to have it redistributed. That exists through fiscal means or salary payment; with an additional job, we can take on things that are not profitable but that constitute a social investment. It is important for example, that people are well-fed, have good health and have a good education. These things are not profitable, but they are a social investment. So, we are strengthening our foundations, which in the case of Carso (the industrial conglomerate that originated Slim’s group), is over 20 years old. The challenge I’ve had for four or five years is trying to fight exclusion and poverty through health, education and employment. That’s my challenge.
How do you divide your time among the philanthropic initiatives and the day-to-day work? I don’t divide time. I never did. When some activity demands more of my time, I tend to it. Company-wise, the one I keep on with is Ideal, whose goal is to promote development and employment in Latin America through productive investment. I also watch the foundations.
Ideal has projects for Brazil? Of course. I don’t have a specific plan for the moment, but we feel that Brazil has extraordinary strength and an enormous potential. I believe that there are many renowned businessmen and governments who have been consistent in their economic policies and that have created an adequate climate for business development.
What is the situation of the Brazilian markets in the plans of the group? It’s of major importance. We have very important investments in Brazil in a sector which also has to do with infrastructure: telephony. That market is growing and will continue to grow. On the other hand, Telmex is working with the best technology to offer more services and more competition in all these areas.
How did you receive the news that you’re the richest man in the world?
I didn’t get the news, that’s irrelevant. It’s not a competition. I’m not playing football. I’m more worried about how much we are investing and what’s happening with our work, than with news like that.
However, the news has provoked – once again – more comments that contend that you have become rich from the telephony monopoly in Mexico.
As you can see, all the companies in the group are facing a strong competition. All of them! We have competed in all sectors, such as paper manufacturing against great companies such as Kimberly-Clark and Scott Paper. In the case of Sanborn’s (important Mexican chain of restaurants that also sells electronics, books and medicines), we face competition from Wal-Mart, from Starbucks and other restaurants. In the case of cigarettes, we face British American Tobacco that you know so well in Brazil. With Telcel, the cell phone area, the competition started before. This means the monopoly was held by them. Telmex, our fixed telephony company, had six years of exclusivity, but only in long distance. The competition really started in 1996. In long distance, we competed with the big ones in the world like MCI and AT&T. In mobile telephony, giants like Verizon, Vodafone and Telefónica arrived. Therefore we’ve been competing for years. In fixed telephony, since we are the only ones that service the C, D, and E markets, we have a 100% share. However, a strong competition exists in markets A and B and it will get stronger in the future.
A recent document by the Organization for Economic Co-operation and Development, the OECD, says that prices of telephony in Mexico are excessive. Our prices are half of those in Europe. In countries like Peru, Chile and Argentina, we’re in third or fourth place (in the market). That’s the reality. It’s something real. I’m not suggesting you believe these facts. However, every time there’s a strong competition, the leader is criticized in an attempt to regulate (the market) asymmetrically, weaken it; tie one of its hands or an arm. That’s something we never ask for when we go into the countries we’re in: a competition with tied hands.
However, there’s a limitation in Mexico: foreigners cannot enter with full force into telephony because they are forbidden from controlling companies of the sector. That’s been interesting, because in spite of the prohibition, they can get around it illegally, operating through trust funds. We think that is irregular and it shouldn’t happen. However, we’re not against liberalization. We haven’t been opposing it in the media.
People watch the evolution of your wealth and the poverty situation of his country and ask themselves: How is it possible that the richest man in the world is in Mexico? It’s not in Mexico, but from Mexico. You and other people say in Mexico, but it’s from Mexico.
From Mexico, then. However, I’d like your answer. Well, I’m very happy that there is a company – I wish there were many others – that starting in Mexico, a developing country, has become a transnational company and is successfully competing globally against the big world companies. I’m also happy that investors have bestowed a great value on this company, for the efficient way in which it has developed. Moreover, instead of absorbing other companies or getting in debt, it has followed a policy that favors investors through buy-backs and dividends. This company, which had zero value 15 years ago and which now has a very important market value, is called América Móvil. That fact that it is done from Mexico or from any other place, is not important. What matters is that wealth is being created. I don’t have personal bank accounts, homes or apartments outside of Mexico. I’ll take nothing with me when I die. Therefore, the fact that one of our countries is generating that wealth is great. There are many things being created in Brazil, local groups are creating companies outside of the country. That’s great! It’s very important that foreign investment not only flows into our countries. It’s important that globalization becomes something that we can do from our countries. It’s great that wealth is being created in our countries. An example is Vale do Río Doce, which is growing. It’s really great. I hope it continues to grow
Engineering Carlos Slim Helu’s interview performed by Estela Caparelli, published by Epoca Negócios magazine, number 6, August 1th, 2007.
ONE FOOT IN BRAZIL
Which are Slim’s companies in Brazil and how they are doing.
By Eduardo Vieira
América Móvil, controlled by Mexican billionaire Carlos Slim, owns only three companies in Brazil, but they are worth billions. Together, cell phone operator Claro, fixed telephony operator Embratel and Pay TV company NET (of which Slim owns 49%) sold R$24.2 billion in the country in 2006 (close to 12 billion US Dollars), according to a study by the Teleco consulting agency, specialized in telecommunications. This is still far from sales by Telmex and América Móvil which in all Latin America amounted to US$36.8 billion. However, Slim’s companies constitute the second largest telecommunications group in Brazil, right behind the Telefónica group. Specialists estimate that Slim must have invested at least US$10 billion in the country. When he started his empire’s branch in Brazil, he chose cellular telephony as a starting point. From 2002 to 2003, he invested US$5 billion – in company acquisitions and infrastructure licenses and investments – to start Claro, born from the purchase of BCP, a telephone company with presence in Sao Paulo. In 2004 Slim bought Embratel; the following year, he bought half of Net.
Even with all this power, Slim’s situation in Brazil is not exuberant. For years Embratel, has been oscillating between discreet profit and slight losses. The greatest problem is Claro. In spite of disputing with TIM the second spot among the major cell phone companies, it was the only one in the sector which lost money in 2006. It was the only one of América Móvil’s 12 companies in the continent which didn’t make a profit. Two are the factors that help explain the difficulties. First: It took a lot of money to get it started. It was necessary to consolidate five different regional companies. Second: Claro was one of the few companies in which Slim had to start a brand from scratch. After losing to Telefónica the battle for TIM, Slim’s got his eye set on Telemig Celular, a Mina Gerais operator that is considered among the healthiest and most strategic national companies.
SOULS THAT ARE NOT MATES
The new leader of the world’s millionaires and his predecessor are very different, from taste to origins.
| Carlos Slim Helú | William Gates III | ||
| Origin | Son of a Lebanese merchant and Mexican mother | His father was a lawyer father and his mother a bank director | |
| Place of Birth | Mexico City, Mexico | Seattle, United States of America | |
| Age | 67 years old | 51 years old | |
| Studies | Civil Engineering by the Universidad Nacional Autónoma de México | Dropped out from Harvard University Law School | |
| Marital Status | Widower | Married | |
| Heirs | Six children | Three children | |
| How he became one of the richest in the world | As leader of the consortium that bought Telmex, state-owned telephone company in 1990. | Due to the popularization of Windows, created by Microsoft, at the beginning of the 1990’s. | |
| Entrepreneurial Achievements | Transformed declining companies and invested in fixed and cellular telephony | Gambled on software at a time when hardware was considered more valuable | |
| Style | He’s considered the world’s most important collector of Rodin sculptures | He’s considered the world’s most important philanthropist, having donated over US$40 billion. | |
| Leisure | He attends good restaurants regularly. Once a week he gathers with his six children and nine grandchildren for dinner. | He reads business-related books; plays golf and bridge. |
PROFILE OF THE EMPIRE
How the largest business conglomerate in Latin America is formed
- América Móvil
The largest cell phone operator in Latin America, with 125 million users. Sales in 2006 were for US$ 21 billion and worth US$ 108 billion. This year (2007), stock market value of the company rose 36.2% - Teléfonos de México
Controls 91% of the fixed telephony market and dominates long distance calls and Internet services. Sales in 2006 were for a total of US$ 16 billion. Its stock market value is US$37.5 billion. - Grupo Carso
Business conglomerate with presence in the retail business, shopping centers, highways, cigarettes, construction, mining and auto parts. Last year sales amounted to US$8.5 billion and it is worth US$9 billion in the stock market. - Grupo Financiero Inbursa
Includes bank services, insurance and retirement funds. In 2006, sales amounted to US$516 million. Its market value is US$7.1 billion. - Ideal
The apple of Slim’s eye. Does work in Latin America. Sales for US$ 206 million and worth US$ 4,5 billion.
SLIM’S DECALOGUE
The billionaire’s golden rules
Carlos Slim’s formula for success is summarized by himself in a list that contains the ten basic principles of his management model. The decalogue was introduced for the first time to businessmen and associates at Grupo Inbursa’s famous 40-year anniversary celebration in December 2005. Slim says that his business philosophy is, to a great extent, product of his father’s influence, Lebanese merchant Julián Slim Haddad. Principle number 10, according to him, reflects his corporate experience: “The businessman is a creator of wealth which he administers temporarily”.
- Prefer simple structures, organizations with a minimum of hierarchical levels and flexibility and quickness in the decision-making. The advantages of the small company are what make larger companies big.
- Maintaining austerity in time of fat cows strengthens, capitalizes and accelerates development of the company. This avoids drastic changes in times of crisis.
- Always remain active and tireless in relation to modernization, simplification and improvement of the productive processes. Seek improvement of productivity and competitivity as well as reduction of costs and expenses with through the guidance of the major world references.
- The company must never be limited to the parameters of the owner or manager. We get big within our own small barnyard.
- There is no goal we cannot reach if we worked united, with clarity of objectives and knowledge of the available tools.
- Money leaving the company, evaporates; therefore, we re-invest profits
- Creativity applies not only to business, but also to the solution of many of the problems in our countries.
- Firm and patient optimism always bear fruit.
- All times are good for those who know how to work and have the means to do it.
- Our premise is that nothing is taken from here. The businessman is a creator of wealth which he manages temporarily.
