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3G boss Jorge Paulo Lemann cut his teeth on Wimbledon lesson

Rated 'one of the world’s best businessmen' by Warren Buffett, the Brazilian learnt to cut his losses ... and make massive amounts of money.
Jorge Paulo Lemann during a press conference in the Ministry of Education on 16 January 2013 in Brasilia, Brazil. Gustavo Miranda / Globo via Getty Images
Jorge Paulo Lemann during a press conference in the Ministry of Education on 16 January 2013 in Brasilia, Brazil. Gustavo Miranda / Globo via Getty Images

On a late June day in 1962, a young Swiss-Brazilian man named Jorge Paulo Lemann stepped on to a tennis court at Wimbledon for his first-round match.

A champion in his native Brazil, the 19-year-old would be trounced 6-2, 6-4, 6-1 by the American Donald Dell.

If Mr Lemann learnt a lesson that day, it might have been this: cut your losses. He was not going to be a great tennis player, so another future would have to do.

“Concentrating on his goals is something he has always persistently sought to do since ending his tennis days on realising he would not become a top star,” is how the journalist Cristiane Correa described Mr Lemann in the 2013 biography Sonho grande – Dream Big.

Half a century later, Mr Lemann is a top star of global business. He is a billionaire (net worth is about US$27 billion and counting) whose 3G Capital investment group is blazing a trail of globe-girdling takeovers, most recently teaming up with Warren Buffett’s Berkshire Hathaway to orchestrate the merger of their Heinz with Kraft Foods, creating a culinary colossus with annual revenue of $28bn.

Mr Buffett rates Mr Lemann “one of the world’s best businessmen”.

Last month, in his annual letter to Berkshire shareholders, Mr Buffett said that with the Heinz deal in the books, he expects to join with 3G and Mr Lemann on more takeovers.

“Whatever the structure, we feel good when working with Jorge Paulo,” Mr Buffett wrote.

Praising the Brazilian’s “competence and integrity”, he added that “3G is a perfect partner”.

Over the years Mr Lemann has applied the lesson from his tennis career – cut your losses – but this time, ruthlessly, at the companies that he and his partners acquire. At Heinz, for instance, the new owners limited employees’ use of company printers to 200 pages per month and required staff to print on both sides of a page.

The Brazilians, now applying cost cuts vigorously to American companies, say it is a practice they learnt by studying American thinking on management.

“We are copiers, actually. Most of the stuff we’ve learnt has been from Jack Welch, Jim Collins, from GE, from Wal-Mart. We’ve sort of put it all together,” Mr Lehmann told Fortune magazine in 2013.

Mr Welch, who ran General Electric for 20 years, was nicknamed Neutron Jack for his mass layoffs of employees, particularly managers, at companies under GE’s purview.

Mr Collins is an American consultant best known for his book Built to Last, which studied 18 “visionary” companies, including GE and Hewlett Packard, to find what made them special. Among its conclusions, the author said the best companies stuck to their core mission with an unwavering and almost cultish devotion. Published 21 years ago, the book remains influential but is also criticised as lacking in rigour.

Ms Correa confirms that Mr Lemann and the 3G team have never veered from their dedication to cost cutting – and also to meritocracy, usually through the cultivation of in-house talent.

“They always had those principles. Some companies change their culture over the years. They never have,” she told The New York Times this year.

This idea of business being about having a singular focus over a long run comes through in Mr Lemann’s words from the Fortune interview: “You’re running, you’re always close to a limit, you’re working very hard and being evaluated all the time.”

His choice of sports nowadays is also a case of playing the long game. His diversion is not tennis but deep sea fishing, along with his 3G partners Marcel Telles and Carlos Alberto Sicupira, who are each worth more than $10bn.

The three men founded 3G in 2004. Over the ensuing decade they expanded at a breakneck pace. They combined Latin American brewers, then engineered an $11bn merger with Belgium’s Interbrew in 2004. They followed that up in 2008 with the $52bn union with Anheuser-Busch to form the world’s largest brewer. Last year, 3G-owned Burger King Worldwide purchased the Canadian coffee-and-doughnut chain Tim Hortons.

While Mr Lemann might now seem a stunning success, he also learnt from his mistakes – and again, the lesson was to cut his losses.

The Harvard graduate cut his teeth in the Brazilian business world at Garantia, an investment bank which he cofounded in 1971. But after the bank lost $100 million in the Asian financial crisis of the late 1990s, the partners put it up for auction. It went to Credit Suisse for $675m.

The money attracted unwanted attention in a country of deep inequality. In March 1999, in an apparent kidnap attempt, two armed men unleashed a hail of 20 bullets at the car carrying Mr Lemann’s three children in Sao Paulo. The car’s armour stopped 19 of the bullets and the driver raced to safety. The incident might explain why Mr Lemann has avoided publicity.

A footnote: Mr Lemann was not the only man from that 1962 first-round match at Wimbledon who would go on to greater things. His opponent that day, Donald Dell, became one of the first sports agents and later co-founded the Association of Tennis Professionals (ATP), which represents the sport’s male players. The top-level sponsor of the ATP is Corona, a Mexican beverage brand that, through Anheuser-Busch InBev, is part of Mr Lemann’s 3G empire.

* The National, with additional reporting by agencies

rmckenzie@thenational.ae

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Updated: April 4, 2015 04:00 AM

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