Lemann´s legacy

What you can and shall learn with Jorge Paulo Lemann, the
founder of “Banco Garantia” and his inseparable partners,
Beto Sicupira and Marcel Telles. Together, they built an
empire of R$ 144 billion. In this process, they created a
revolutionary corporative culture
By “Época Negócios”

At the end of the academic year of 1957, as usual at the

American School of Rio de Janeiro, the students got together
to choose the highlights of the year. Always in English, they
elected the friendliest, the most artistic, and the cutest and so
on. In the category "Most likely to succeed" (something like
"with more chances to be well-succeeded"), two names were
remembered. One of them, "Jorge Lemann". Portrayed at the
class album as stylish, gleaned and dressed as a Casanova,
Jorge Paulo Lemann, at the age of 17, is described as one of
the two veterans who studied since kindergarten at the Enterpreneur Jorge Paulo Lemann
American School. "Although it seems he never studies, he can in a 2005 photo . The Garantia´s
always achieve envious report cards - mainly A's'with only a founder created an unique model
pinch B's", says the Book of the Year. Good student without of management  based on
efforts, the young Lemann took groans of his colleagues. meritocracy
"Over the years, Jorge has worked hard to achieve his reputation as seductive - a ladies' man -,
and, as a true Brazilian, his interests (besides tennis and fishing with harpoon) are, going to the
beach and watch people – girls, that is." Lemann was known at the school for his extended
traveling abroad and for his plans to go to college in the United States, preferably in Harvard. At
the end of that year, students also prepared a "Class Prophecy", in which they tried to predict
how their colleagues would be within ten years. It read: "Jorge Paulo Lemann, who recently won
the 1967 World Tennis Championship, is winning headlines in the world of sports. Jorge, who
manages an important factory network of canned goods in Brazil, is presently married to the
1967 Miss Universe “. Rarely a teenager’s game proved so prescient.

Lemann reached the top of the world´s tennis ranking three times, in the veterans category. He
was five times Brazilian Champion and represented not only Brazil but also Switzerland at Davis
Cup. He did not even date the 1967 Miss Universe, the American Sylvia Louise Hitchcock, but
married beautiful and elegant women twice: the psychoanalyst Maria de Santiago Dantas
Quental, dead in April, 2005, and the Swiss Brazilian naturalized educator Susanna Lemann,
owner of “Matueté” travel agency . With each one of them, he had two boys and one girl. He
either owns a cannery, unless the definition of the category is broad enough to cover the billions
of cans of beer and soda coming out annually from the production lines under his control. But
after graduating from Harvard, with an Economics degree, as planned, he reached a high point in
the business world that even his colleagues from the American School did not imagine.

Together with Marcel Telles and Carlos Alberto Sicupira, his business partners for more than
three decades, Lemann holds 25% of the capital from the largest brewery in the world, InBev; he
owns Holding Lasa, which groups “Lojas Americanas” and Blockbuster; the B2W group,
virtual stores “Submarino”, “Americanas.com”, “Ingresso.com”, the teleshopping channel
“Shoptime”; and “São Carlos Empreendimentos Imobiliarios” . The three are among the main
shareholders of South America’s largest transportation and logistics company “ALL” and, since
December, they’ve owned an 8,3% slice of the CSX´s capital, one of the largest US railroads.
The sum is worth R$ 46,35 billion, the equivalent, for instance, to the market value of the
“Companhia Siderúrgica Nacional”. Lemann is today, at the age of 68, the fifth richest person
in Brazil and the 172nd in the world. He also appears in the list of the richest ones in
Switzerland, where he has lived since 1999, in an exclusive suburb of Zurich, right behind the
Greek heiress, Athina Onassis.

The 70’s forged culture
inside “Garantia” arrived
into retail with the purchase
of the “Lojas Americanas”
in 1982, and into the
industry after the  after the acquisition of “Brahma”, in 1989; it influenced virtually all
acquisition of “Brahma”, in
1989
“Telemar”.
More important than his empire and his fortune, for him and for
those who are interested in management and leadership, is his
legacy in the Brazilian business environment. The mid 70’s forged
culture by Lemann inside “Banco Garantia” arrived into retail
through “Lojas Americanas”, bought in 1982; and into the industry,
the Brazilian investment banks and it spread through more than 30
companies bought, until today, by “GP Investmentos”, founded by
Lemann, Sicupira and Telles. From“Gafisa” to “Ig”, passing through

Furthermore, the "Garantia culture", based on a rigid meritocracy of results, in an obsessive

concern with the formation of leaders inside the home and with the transformation of employees
into partners, became a reference for companies which have been away from the area of
influence of legendary banks such as “Suzano” and “Gerdau”. "Jorge Paulo is not only one of the
best business managers of Brazilian companies. He’s one of the best in the world ", says the
industrialist Jorge Gerdau Johannpeter, chairman of “Gerdau”. "The only business school which
arose in Brazil in my generation was Lemann´s one, from Garantia", says Francisco Gros, ex-
president of “BNDES” and current C.E.O. of “OGX”, the oil and gas company owned by Eike
Batista. Antonio Maciel Neto, president of “Suzano”, is used to take a few days a year to attend
intensive business courses at Harvard. In February, when recently arrived from one of these
courses, gave the following testimony: "We have studied 15 cases of the most well- successful
companies in the world. In all management topics discussed, I always remembered Lemann. He
had already done in Brazil everything that the school preached as the most effective
administration techniques".

1. FROM BROKER TO BANKER

Lemann´s entrepreneurial saga begins in 1971, with the purchase of a small brokerage firm
called Garantia, which intermediated transactions of buying and selling financial papers for
clients in Rio de Janeiro. A similar business to the one he knew in previous years, as an
employee of “Invesco” brokerage, which bankrupted in 1966, and “Libra”, where he stayed until
he bought Garantia. In the early years, Lemann established contact with the Goldman Sachs
Bank, which used the brokerage firm to intermediate most of his business in Brazil. Slowly, he
started to send people for trainings and internships in the American bank. Goldman was small at
that time, but had already developed a culture based in attracting good employees, paying well
its staff, performing evaluations and turning them into partners. Exposed to this culture, Jorge
Paulo had foreseen the business model that he believed would give him an advantage in the
Brazilian market.

In 1976, with five well-lived years in the market, Garantia was sought by JP Morgan, the world
largest bank in capitalization at that time. Morgan wanted, in partnership with Lemann, to create
an investment bank in Brazil. However, when were close to conclusion, the Brazilian withdrew.
He chose the promise of a prematurely secured future over the right to remain in the charge of
his business. He injected his own capital in the firm, obtained a patent and created Banco
Garantia. Lemann considers this decision the most important and the most difficult one he has
taken in his long career.

By then, he already had by his side, the men who would become his musketeers in the business
arena, both cariocas like Lemann. Marcel Telles was hired by Garantia in 1972, at the age of 22.
Until then, he had four years of experience in the financial market, some of them dedicated to the
tedious task of checking stock exchange orders for the carioca broker Marcelo Leite Barbosa,
between midnight and 6 a.m. Marcel was referred by friends to Luiz Cezar Fernandes, one of the
founder’s partners of Garantia, who decided to put him to the test. Instead of meeting the
aspirations of the recently graduated economist, who wanted to be an operator in the profitable
open market (where public debt securities were negotiated), Luiz Cezar offered him a position as
liquidator, kind of an office messenger, for the pre-computer brokers, in charge of transporting
receipts and vouchers of done transactions. However, three months of wearing off the sole of his
shoes were enough to grant him access to the so desired operator post.

In 1976, the Garantia Carlos Alberto Sicupira, known only as Beto, arrived to the broker
broker was close to join JP in the following year, 1973, invited by Lemann himself. Months
Morgan. Lemann preferred before, he had sold his participation at Cabral de Menezes broker
to open his bank on his own firm to spend some time in London, at the Marine Midland Bank,
– and considers the hardest today part of HSBC. The purpose of the trip was to learn new
decision he has taken until investment techniques that could be applied in the Brazilian market.
today By implementing what he had learned overseas, Sicupira would be
decisive for the bank's growth in the 70s.

Having the base team ready and having aborted the partnership with JP Morgan, Lemann started
to build his own business culture, but greatly inspired by the Goldman Sachs´ one. Meritocracy
came from there, as well as the intense training and the mechanisms used to give people
opportunities. Jorge Paulo was in love, mainly with the model partnership of the American bank.
In another words, with the process of transforming employees into partners by the distribution of
shares. "The Brazilian capitalist, at that time, wanted basically everything for himself. Lemann is
used to say “The 'Indians were the Indians".

In a study conducted by “Ibmec São Paulo” researchers Fernando Muramoto, Frederico

Pascowitch and Roberto Pasquoloni positively say that "at Goldman Sachs, partners were chosen
every two years", "To be a candidate for partnership, the associate must have been working with
Goldman for at least eight years (under16 to18 working hours a day, with salaries which were
often below the market´s average) and be indicated by one of the current partners of the
executive committee."

Lemann adopted this system. In the beginning, he himself was selling part of his stocks to the
business partners, in order to turn them into partners. According to his belief people exercise
only a portion of their potential at work, but tend to surprise when entering the partnership. In
another words, the individual who considers him self the owner of a business is much better than
that one who is there just because he earns salary. After all, do you treat better your car or a
rented one?

The partners Beto Sicupira (right), Marcel Telles (left) with Victorio
de Marchi, then President of Antarctica , during the AmBev´s
opening, in 2000

The gear started to turn by itself when old partners began to sell their participations to new
partners until they turned themselves completely away from bank. "At Garantia the turnover of
partners was very high. In 1980, there were 17 partners. In 1983, 13 remained and by 1986 only
five”, says the “Ibmec” staff. In its last years, the bank had around 300 employees. Lemann,
Telles and Sicupira themselves, interviewed annually around 800 people in order to hire 10 or
15.

From recruitment to promotions, the preference always fell on "people who like to be an owner",
who "deliver results " and “know how to evaluate what’s important". Lemann often says that all
really significant business men he has met until today, people like Sam Walton, Wal-Mart
owner and investor Warren Buffett (the latest richest man in the world), had as a main
characteristic the ability to quickly see the essential and find a way to get there. In general, in a
simple way.

As Goldman, the salaries at “Garantia” were lower than the market average. Mostly for managers
since the more degrees a person had, the larger the portion of his revenues would tie to the
results. "At each semester, 25% of the bank liquid profit was shared between the associates, in
accordance with their roles and to their performance", says “Ibmec” researchers. The low clerical
staff, which represented 80% of the staff, fought for 11% of profits to be distributed. Candidates
to partners (called commissioned, equivalent to 15% of the staff) and partners (5% of the team)
shared the 89%. Semiannually, the employees were evaluated by the bosses. The good
performance was rewarded with bonuses; the best were invited to join the partnership.

2. TALENT PER SQUARE METER

Different from what was seen at Goldman, at Garantia it was possible to become a partner with
only five years with the bank. The average partners’ age was below 35 years old. The youngest
ones arrived there at the age of 24.

José Olympio Pereira, today´s Credit Suisse Bank director in Brazil, entered Garantia in 1985
and left 13 years later, in 1998. When he arrived, he was a recent graduated civil engineer who
knew his future wasn´t in engineering. He had heard that the financial market was a good option.
And that “Garantia” was the best place to work. Once he had a chance, he knocked the bank’s
door and asked for a job.” If they don’t charge me to work, I’m on", he said. What impressed
him the most in the first months at Garantia was the amount of intelligent and ambitious people
per square meter. And the opportunities given to them. One month after his arrival, Arminio
Fraga landed to manage the Business Department. The person in charge of the department, at
that time, was no one other than André Lara Resende, who would soon participate in the
formulation of the Cruzado Plan and, almost a decade later, would become one of the Real Plan
fathers.

Only one year would pass when the responsible person for the bank’s underwriting department
(public offers of securities in general, including companies´ stocks) had been moved to the
currency department. José Olympio, who since the beginning had been interested in the
department, was invited to take over. At the age of 24 he says: "The rule there was to play with
fire and give people the opportunity to prove themselves". Already at that point, according to the
executive, Lemann had a "leadership aura". "Jorge Paulo is seductive. Apparently plain, the type
who wore US Top pants, but infinitely more sophisticated than that."

Lemann, Telles and Sicupira, One of the non-written bank´s rules, which subsequently
the iron trio of Garantia, applied to all companies under its management, was that there
complete themselves in are two certain mistakes to end up into a resignation: to appear
business. The firestone is the   in the “Caras” magazine or buying an imported car. To Lemann,
strategist ; the second, the one is squandering money or indulge in ostentation are deadly sins.
a disciplined administrator, and His three children from the first marriage were a joke among
the third one a tough operator their college friends. While many of them, all with less money
than Lemann´s children, circulated in imported cars, the three
drove shabby Gols and Paratis.

Jorge Paulo is a man of habits, mostly simple ones. When working at the São Paulo office, his
"uniform" is a short-sleeved white shirt, blue pants and comfortable suede shoes. In the past, it
was common to see him riding his bicycle, on the way to the bakery. He was the one who bought
the bread for the children’s breakfast. To this day, when he is at the São Paulo office, sometimes
goes on foot, to the supermarket, to buy cereal bars. In contrast, he doesn´t attend social events,
goes very little to restaurants and rarely entertains at home. He swears to have kept the same
weight since the age of 17. At the expense of a Spartan lifestyle, he wakes up early, usually at
5h30, and goes to bed before 10pm. Breakfast is frugal: fruits and juice, only. For lunch and
dinner, he eats little and drinks only mineral water. His diet favors vegetables, cereals and low
fat meat. No candies, no alcohol (not even beer...) nor soft drinks. In Lemann Foundation´s
council meetings, small soft breads are included in the small buffet. Jorge Paulo is a declared fan
of bread, but never falls into temptation. While his table companions drink coffee, he drinks
mineral water, right from the bottle.

Until today, the pantry of his personal office, only healthy foods are available to employees.
Bread, cheese and cream cheese are served for breakfast. In the afternoons a fruit basket is
delivered. The catering service that attends him, the “Nossa Casa”, is the same one since
Garantia´s time. A weekly menu, all healthy dishes, is offered to the employees that prefer to
have lunch at the office. Individual orders are paid apart. When he has guests, the warm gestures
make more of an impact than the menu. "The only time I met Lemann, he himself set the table,
making a point of serving me and the other guests", says Maciel Neto, from “Suzano”. "I found it
curious and extremely kind.”

3. “OUR PHILOSOPHY”

Arminio Fraga, also a successful financier and of modest habits, has been the economist boss of
Garantia between 1985 and 1988. After that, he worked for George Soros, presided the Banco
Central during FHC (Fernando Henrique Cardoso) second term, and founded Gávea
Investimentos. It’s not for the lack of comparison models, therefore, that he has Lemann and his
bank in high regard. "It was the meritocratic environment, where everybody felt like and aspired
to be a partner, in fact. A high-competence atmosphere, with very clear rules of meritocracy",
says. "Very different from what really existed in Brazil at that time."

Three sentences from a document called Our Philosophy, which was handed to each new
Garantia´s employee, summarize Lemann’s human resources ideal: "People must be of high-
quality. For that, we select the best ones and train them well. All participate in the profits, and
opportunities are available for those who work for Garantia and prove themselves.” The "prove
themselves" is the "notch" of the matter. Reward the best employees and let go of the ones that
cannot handle the job is a corporate Darwinism as old as capitalism. Even in Brazil. Lemann´s
innovation was to introduce benchmarks capable to eliminate subjectivity. Basically, that means
measuring everything. And not being distracted by friendships or seniority while distributing
bonuses. "In this culture there is no space for fat cat,” says an ex-Garantia´s employee, who left
the bank seven years ago, owns his company and, nevertheless, only accepts talking about the
past without being identified. Because his testimony is precious, we will call him Osvaldo, a
fictitious name.

Osvaldo joined Garantia at the age of 22, right after college. And definitely liked what he saw.
"For me, who was very arrogant, meddlesome, it was perfect. Finally was among my peers,” he
says. "The bank (in an apparent contradiction with its vaunted austerity) paid first-class ticket; I
once got to fly with Jack Nicholson. I had dinner at Nobu while in New York. I considered
myself the owner of the world”. The salary was low. It represented a quarter of what McKinsey
and Indosuez Bank had offered him at the same time. "My first bonus was rubbish. The second
enabled me to pay for dinner for my mother at La Tambouille [a French restaurant in São Paulo].
With the third, I bought a Fiat Tipo. So it was, improving year after year. I still live off that
money."

Not everything, however, were joys. Still as a young employee, after losing three girlfriends that
couldn´t stand his “marriage” to the bank, Osvaldo had a serious conversation with his father.
"He asked me: how do you work at a place like that?" “And he was right, because I was missing
my own birthday parties." At Garantia there weren’t any calm days. The sentence which
summarizes this philosophy is the one that says that one day is 5% of the month.

4. SIMONSEN´S RED PEN

For very little Garantia did not thicken the statistic of Brazilian companies that die in their first
year of life. Blame it on a typical episode from many years high inflation and no democracy.
Worried about a surge in prices and salaries, the then Finance Minister, Mário Henrique
Simonsen, purged four percentage points of the restatement. The chigoe almost hurt like death
Lemann and company, because Garantia had big positions in ORTNs (Bonds Readjustable
Treasury - Obrigações Reajustáveis do Tesouro Nacional). Simonesen´s “decisive pen” led
much of the bank's equity to a hole. Suddenly convinced that he needed someone to draw
economic scenarios and, as far as possible, anticipate swings like this, Lemann sought economist
Cláudio Haddad, then professor at FGV, for advice. "I liked him [Lemann] since the first
meeting. The Brazilian businessmen, at that time, did not have much information about what had
happened abroad. But Jorge Paulo had a global vision", says the economist.

Haddad was 30 years old. After a long studying season in the United States, he was back from
Chicago in 1974; he took Garantia´s invitation, initially, as an opportunity to supplement his
teacher’s income, pressed by the arrival of his first child. "I wasn’t expecting, but it was
fascinating", he says. Haddad left FGV and became the economist boss at Garantia in 1979. He
shone in the market that the Banco Central “borrowed” him from 1980 to 1982 to make him the
first director of the public debt in the history of the institution. In 1983, Haddad returned as a
partner, to set up a corporate financing area (financial services for large companies). Ten years
later he reached superintendence, the highest executive position in the organization chart of
Garantia , where he remained until the sale of the bank in 1998.

Few people know Garantia´s story and its main partners better than him. According to him,
regardless the decades of working together, Lemann, Telles, and Sicupira have very different
personalities. Jorge Paulo is the strategist, a naturally born leader. "He has a totally logical way
of thinking", says Haddad. Beto, on the contrary, is like a “truck operator", always overflowing
energy. And Marcel "is the most focused guy.” In dealing with employees, partners and
customers, Jorge Paulo has always been the charismatic figure. And Marcel, the all-around is the
most informal of the trio and also the most talkative. He is humorous, cheerful, likes to challenge
people expecting them to overcome themselves. "We always throw a bone bigger than our
mouth,” he is used to say. "There are people who like that, and people who get really scared.
"Beto is the least smooth one.” From the three of them, he’s the toughest. But he is a good guy.
If he likes you, he defends you to death. If he doesn´t, get out", says Haddad.

Regardless of their differences, in 35 years, Lemann, Telles, and Sicupira became

complementary figures. "Over time, we built confidence on each other. No one will let the boat
sink. Die together, if applicable,” said Marcel, his testimony in the book How to Make a
Company Work Out in an Uncertain Country (Como Fazer uma Empresa Dar Certo em um País
Incerto), published by the “Instituto Empreender Endeavor”. Lemann is quoted in the same book
saying: "I support partners. I had partners all my life and that helped me a lot (...). We three have
done much more than we could have done separated.”

Lemann´s leadership style can be perhaps described as minimalist. It is not a coincidence that he
has never appeared in the chart of any of his companies as an executive president or C.E.O. He
is, as typically as possible, a council president. "Jorge Paulo doesn´t make the company works
out. He never had patience for operational details,” says Haddad. His interest is in the larger
sphere, in the last balance´s line. Reports and presentations that come to his hands are always
read from back to front. He goes right to the numbers, to the conclusion. It suggests that a central
element of the management culture which he helped to create, the focus on results, is also a
strong trait of his personality. The habit to look first at the balance of an initiative reflects a trace
any employee who has been through his companies knows well: "effort is not result.” It doesn´t
matter how much someone has engaged himself in a task or what he did to accomplish it. What
counts, after all, is whether the initial objective was achieved or not. Depending on the numbers
presented at the end of a balance, then yes, he may be interested in knowing details about the
path taken to get there.

If the boss is like that, nothing is more reasonable than his companies’ executives to participate
in trainings to learn how to set up presentations and reports that go right to the point. And they
do participate. Even because being objective in a meeting with him, is a need. Lemann feels
sleepy in long meetings. His eyes close involuntarily and even his head nods. "Then he opens his
eye and summarizes the answer to the problem being discussed at the table,” says Fersen
Lambranho, one of the comptrollers GP Investimento) partners, which had Jorge Paulo as a
founder and counselor between 1993 and 2004. A bit because of hurry, a bit because of
unavailability; much that passes by Lemann is solved by e-mail. Wherever he is, he answers
quickly (and in a few words) to the messages. In 2004, when BlackBerry was little used in
Brazil, he already had his; today an inseparable travel buddy.

LEMANN´S MUSKETEERS
Two partners accompany him for 35 years and a young talent transformed into a successful
C.E.O. are the main business partners of Garantia´s founder
  
“THE MOST FOCUSED GUY”
Marcel Telles was hired by Garantia in 1972, at the age of 22. He is considered an excellent manager
and the most focused of the ex-bank partners. In 1989, left Garantia to run the recently
acquisition of Brahma. Marcel coordinated the fusion with Antarctica that created AmBev in the
year 2000 and its union with the Belgium Interbrew, which led to InBev four years later. Today,
at the age of 58, he is one of the comptrollers of a Belgian-Brazilian multinational.

“THE TRACTOR STYLE”

Carlos Alberto Sicupira, known as Beto, joined Garantia in 1973, invited by Lemann, his underwater
fishing mate. He´s described as “a tractor operator type”, the toughest of the three business
partners. He was the first one to leave the bank to run a company – Lojas Americanas in 1982.
This 59-year-old businessman is, today, engaged in bringing the trio´s management culture to
ONGs and to the public sector.

“THE ESSENTIAL"

The mechanical engineer joined Brahma along with Marcel, in 1989. Right at the first year, he joined
a group of young talents known as “the essentials.” Worked in finance operations and sales,
before reaching AmBev´s presidency, in 2004. In the following year, he took command of InBev.
Today, at the age of 47, he is responsible for the transference of the management culture born in
Garantia to the Belgian headquarters.

5. ON THE ROAD

Jorge Paulo is a globetrotter. Spend two hours by his side and he´ll tell you past episodes in the
Bahamas, China, United States, and New Zealand... The uncountable flight hours are used for
reading. It was on board of his 18-seat jet that he “devoured,” for example, The Last Tycoons:
The Secret History of Lazard Frères & Co., by William Cohan – one of the "2007 books of the
year" from the economy and business list of the magazine The Economist. Or Billions of
Entrepreneurs by Tarun Khanna, Harvard Business School professor who occupies Jorge Paulo
Lemann´s chair at that university. He compares the development models between India and
China.
Lemann liked very much the book Doing What Matters, by Jim Kilts, the executive who fixed
Gillette and prepared it for the sale to Procter & Gamble. It is a subject he knows well. Jorge
Paulo was one of the biggest Gillette’s shareholders and had a seat on the company’s Board for
five years, part of them during Kilts´s administration. When Gillette was sold to Procter &
Gamble, in 2005, Kilts gave the company to A.G. Lafley, CEO of P&G and author of another
trendy launch: The Game Changer. Lemann considers Lafley "too boring". With Gillette´s sale,
the Brazilian exchanged his papers for Procter´s stocks. At the first opportunity, he watched
Lafley´s presentation. He went out convinced that, under his command, nothing too bad would
happen to the company. Nor anything too good. Later on, he sold all his stocks high.

Perhaps due to incomprehension about the Lemann´s virtues and limitations, countless myths
followed him around. One of the most frequent is the financial genius, refuted by the ones who
know him. "Marcel financial head, for example, is much better. Jorge Paulo doesn’t know
anything about the operation table,” says Cláudio Haddad. Another one is the intuitive investor
who transforms bankrupted business in to gold. "Mida´s touch does not exist,” says Antonio
Bonchristiano, Fersen Lambranho´s partner at GP Investimentos. "It is not important how he
decides, but how he guides those who are below to make the right decision." In the "Garantia´s
culture,” a company is not a pyramid, with hierarchical levels that taper to the inexpugnable
cupola. The architecture is of a Roman circus. It means that the leader is at the center, where
everybody can see him. And that practically forces him to lead by setting an example.

"There are businessmen that do business to win power, accumulate estate or prestige. What Jorge
Paulo adores is to do business for the business and earn money with that", says Bonchristiano.
For him and for his associates. Lemann and his partners are proud to be the biggest millionaires’
creators of Brazil. Whoever does not like this culture sees the "Garantia´s boys" as Brazilian
versions of Wall Street yuppies from the 80´s. Personally, Lemann himself does not fit. He
claims he has fun working, he likes what he does and that money is only a way to measure the
performance of a business transaction.

Recently, while doing a reflexion of his essence, Lemann put on paper the following definition:
"I´m not a glazed-in-power guy (never have bossed much); I don´t care about being the owner (I
have always shared and have associated with others, if advantageous); I don´t care for money
(almost do not spend it, except for philanthropy). None of those things are taken with us. What I
really like is to create nice things, shower them and try to ensure durability".

6. WHERE THE WEAK DON´T STAND A CHANCE

Ideology aside, the fact is that money has always been the fuel of any Jorge Paulo Lemann´s
company. "The profit sharing is a basic input of this kind of business. He doesn’t do that because
he´s generous", says Fersen. The youngest and determined ones fast forward pace is stimulated.
The order is: enjoy while you´re at the top of the force, because no one will ease it up for you in
the future. "You must know, while rising up, that your time to leave will come,” says GP´s
partner.

If the youngest and the capable ones have space to grow and, in a certain moment, run over the
previous generation, in the "Garantia´s culture" the weak don´t stand a chance. "It´s a very
Darwinist culture. It´s possible to become really very rich working that way, but it’s not possible
to be happy", says an ex-investment banker who came to compete with Garantia in the 90´s, in
the private equity area.

In a lean structure like an investment bank, the natural selection happens with some level of
comfort. A mark of Garantia´s culture is to instill in people the sense of competition sense.
Sometimes, that was done through games. Sicupira himself, a long time ago, came out dressed as
a hula-hula dancer on Rio Branco Avenue, in Rio de Janeiro, after achieving his goals with
“Americanas,” which he presided. It reminded the famous houla-houla dance performed by Sam
Walton on Wall Street, in 1983, after Wal-Mart achieved an 8% profit margin.

Lemann and his partners are However, when these jokes are transplanted to the large
among the pioneers of the industrial companies, with thousands and thousands of
Brazilian Companies employees, the collateral effects seem to be inevitable. Often,
globalization movement. In 1994, whoever does not adapt to the culture leaves voluntarily or is
Brahma had already bought expelled from the system. Because of that, peculiar labor
breweries in Venezuela and in lawsuits appear. For instance, in 2005 and 2006 AmBev was
Argentina convicted and ordered to pay fines up to R$ 1 million for
alleged moral harassment made by employees that did not
reach the goals in Rio Grande do Sul, Rio Grande do Norte and in Minas Gerais. In the lawsuits,
there are many reported episodes that were taken as humiliation. Episodes such as prohibiting the
employee with low performance to sit down during long meetings, requiring professionals to
dress as a woman and dance on a table in front of the colleagues. AmBev has always paid the
compensations. According to the company, there were isolated cases.

"The story of over competition is told by those who left the Group,” says Fersen. "There are
many people who do not like to tell the truth, and there are many people who do not like to hear
the truth [about their professional performance]." The disagreement on this issue is clearly
uncomfortable for those who adopted the Lemann’s values it as their own, and even their
families. Fersen´s son studied in one in the elite schools of São Paulo, which had a performance
evaluation and rewarding system for the best students of each class. When the school decided to
extinguish the prize awarding, claiming that it encouraged too much competitiveness among
children, Fersen changed the boy to a school where the classes were divided by performance.
"Such is life,” he says.

Claims to the Garantia´s business model, considered intrinsically superior to others, tend to be
received with impatience. Marcel Telles himself, however, has already admitted that this regime
of full dedication to the company, focus on results and expectation of millionaire bonuses is not
for everyone. By the way, he borrows the U.S. Marines´ motto: "Few and Proud". "People love
to say that Natura is the cool company, and that AmBev is the one that sucks the blood", says
Bonchristiano. "But watch what Natura is going through now, because of lack of stronger
financial results [the company´s stocks have been losing value for months and a huge
restructuring was announced in February]. On the other hand, AmBev´s boys are winning the
world."
7. BEYOND THE “COCADA PRETA” [a dessert]

Winning the world is an expensive expression to Jorge Paulo Lemann. He and his partners are
among the pioneers of the Brazilian companies´ globalization movement. The conviction that it
was necessary to internationalize came in 1997, still during Garantia times. At that moment, the
bank saw itself as the "the black cocada´s king". He thought it had nothing to do with the Asian
crisis. But he took a beating when the markets turned abroad. It was a clear sign that the things
were marching to a globalization. Lemann likes to use as an anti example the Mexican company
“Modelo.” It’s an exceptional brewery, profitable and the owner of Corona, a world known
brand. But it´s only in Mexico. Because of that, in the world´s consolidation that begins to occur,
its role will be small. AmBev could also have been content by dominating the Brazilian market.
Lemann and his partners would be, again, the national “kings of the black cocada”. But they
wouldn´t participate in the world’s game of consolidation that´s happening, as they do nowadays
and being able to do what he nicknamed "the big calls."

Already in 1994, six years before the union with Antarctica, Brahma made the first call. It
bought “Cervejaria Nacional” in Venezuela, and initiated operations in Argentina. After
AmBev´s creation, the internationalization boomed. In the first four years, the company invested
US$ 700 million and installed itself in 11 Latin America’s countries.

In 2004, a merging possibility with the Belgian brewery Interbrew began to be evaluated. In a
market that pointed to a global consolidation, becoming multinational was imperative. And the
union with the Belgians proved to be the best option. If they had closed deal with the American
Anheuser-Busch at that time, the Brazilians would have been swallowed. With Heineken, it
wouldn’t have been a merge of equals. But with the South-Africans of SAB Miller it was
possible to chat with, but from there a company composed of Brazil and South Africa would
have been born, an indigestible combination for international investors – or at least it was, five
years ago. Then, the merge with Interbrew stitched up, which then originated InBev. Lemann,
Telles and Sicupira exchanged the 22% of participation in AmBev, which guaranteed them the
company´s control, with 25% of the new business. They also exchanged their unique command,
with Fundação Zerrener (Fahz) on their side about the Brazilian company, for a shared control
with the Belgians over the multinational.

In 1982, a group of directors Besides this market game, the partnership with the Belgians
from Americanas tried to stop reflects a of coincidence interests. For AmBev, which
the reforms initiated in the developed, like no other company, the competence to form
company,  threatening to leave. young talents motivated by given opportunities,
Sicupira didn´t  vacillate: he internationalization is a way to keep the line moving. In a chat
fired all the rebels with Jim Collins, consultant and author of the classic Made to
Last, Marcel was asked: "What´s the company problem today?".
He answered that by maintaining the existing structure, the lack
of internal opportunities would be a risk. AmBev counted on top of the line young executives,
like Carlos Brito, in the best jobs available in Brazil. And below them, a squadron of directors
and managers well trained and ambitious. If the top of the chain did not change, the model of
meritocracy could collapse. Thus, an abroad expansion would be fundamental.
On the other hand, Interbrew saw itself as the owner of a portentous portfolio with more than 200
brands, but its results could be improved. Today, the multinational Belgian-Brazilian is present
in 32 countries of the Americas, Europe, and Asia. Marcel spends half of his time in trips abroad.

Another factor that favors AmBev´s globalization process is the human capital. Sectors
associated to the old economy, like mining, steel, cement, and brewery itself, will be more and
more, as shown, controlled by companies from emerging countries. The Brazilian “Vale”, the
Indians Tata and Mittal Steel and the Mexican Cemex are examples of this tendency. Young
people from developed countries crave to work in more technologically innovated sectors. On
the other hand, their pairs coming from emerging countries do not ignore opportunities in the
traditional industry. On the contrary, for a Brazilian, an Indian or a Chinese, promoting a
turnaround in a large European brewery can be the opportunity of a lifetime.

Nowadays, the rule is mobility. As there are Brazilians in the Belgian headquarters, there are ex-
patriates holding important positions at the Ambev Brazilian branches. The Group’s official
language is English. It´s in this idiom that the frequent meetings are held in order to exchange the
best practices achieved in each country. To many young Belgians, InBev and its fierce culture
have now become a job option. Because of the lack of companies with this profile, many of the
most ambitious graduates chose to try their luck in England. With all this international
movement of executives, it´s easy to conclude that it´s forming a valuable multicultural active.

Motivated by InBev´s business, which has €1 billion invested out there, Lemann has been going
very often to China. From where he always comes back impressed with the Chinese’s eagerness
of earning money, and moving up in life. Whoever heard him praising the Communist Party, it
makes it hard to believe that he is really the most capitalist of the Brazilian capitalists. China, he
notes, cannot be a democracy, but it is a meritocracy. You only raise in the party if you were a
good mayor of Shanghai, ran well a state-owned company or did something similar to that. Jorge
Paulo compares CP to General Electric, as far as efficiency. And he warns anyone who wants to
hear: "Competing with those guys is not going to be a breeze, no".

Last year, Lemann took five of his six children, some grandchildren and him bike riding around
China. The Brazilian troupe called a lot of attention, because Chinese couples, due to the policy
of birth control, can only have one child. The Chinese asked to take pictures with the little clan
gathered there. Cultural shock aside, the purpose of the trip was to give the children the chance
to start getting familiar with what promises to be the most important country in the future.

8. GARANTIA´S PITBULL

Lemann, Telles, and Sicupira´s different styles proved in vivid colors when they migrated from
the very competitive environment of an investment bank to companies of more traditional
sectors. Marcel was the boss of Garantia´s operation table, the named head trader. Until making a
remarkable transition to become the CEO of Brahma’s, a large brewer. "A trader is never good
guy. In the table of operations, you’re the wolf among wolves that want to eat you alive", says
Cláudio Haddad. At AmBev, Telles learned sheepherding.
Yet Beto showed the claws once he took over Lojas Americanas, bought by him, Marcel and
Lemann in 1982, in the first hostile bid of Bovespa´s history. Common in the United States, the
scope previously unheard around here consists in keep buying, little by little, company´s stocks
until forming a position big enough to challenge comptrollers and force them to give up
commanding. This is how was done at Americanas, and the shock of having a new owner and a
radically different management overnight, convulsed the company. At the first goals contact, the
cost control and the though demands for results, taken from Garantia, a group of directors from
the retailer rebelled. In an unpleasant meeting, at the end of a working morning, the rebels put
the new president against the wall. With a threat summed up by a loud "if you don´t change, it´s
impossible to stay in the company", Beto listened, pondered for a few hours and, after lunch,
fired all the rebel directors. "I have learned that it´s necessary to front hit – and quickly – with
the problem. Zero complacency, especially when you are building the company´s culture,” he
stated to Endeavor.

In dealing Garantia´s pitbull, the outcome should not surprise. Nine years younger than Lemann
and born in Rio de Janeiro like him, Carlos Alberto da Veiga Sicupira is the prototype of the self
made man. Son of a public employee and a housewife, he discovered the business world at the
age of 14, buying and selling cars. The pleasure of negotiating made him give up his initial
dream: to be a sailor. "I wanted something that, if it did work out, I would not know the limits.
[In the Navy] if I did everything right, I knew where I would stop: occupying the flag-officer’s
post", he said.

Beto graduated in Business Administration from Universidade Federal do Rio de Janeiro. But it
was at the sea, practicing underwater fishing, in 1973, that he met the man who would become
his partner for life. Perhaps impressed by the breath holding and aim of the newly acquaintance,
Lemann invited him to work at Garantia. Before that, Sicupira had made career in brokerage
firms and distributors. The first one, was set up from zero by him, at the age of 17, after legally
emancipating. Beto didn´t know anything about brokerage firms. He set up business with selling
it, as indeed he did a year later, created a habit in him that would accompany him throughout his
career.

Until buying Lojas Americanas, Garantia´s motto was "do not let it pass the living room.” In
other words, limit yourself to invest in companies, without getting involved in its day-to-day
operations. Convinced of the potential for retail growth in Brazil, Sicupira began to buy
Americanas´ stocks gradually. While watching the way the company was being managed, he was
sure he needed to get involved in business to make it grow up. Due to retailer´s bad reputation in
the market at those times, he convinced Lemann and Marcel to finally buy its control, and
offered to leave the bank and fix the company. It was a done deal. Beto kept his stocks, but gave
up the salary he earned. "I have always wanted to do things others didn´t do. I have always
wanted to catch some squared balls,” he says in the already mentioned book. Under his
command, the number of employees at Lojas Americanas would have to be reduced, in the 80´s,
from 14 thousand to 8 thousand. Thus it began to be established a reputation of job reapers of
Garantia´s team. At AmBev, the reduction was from 24K to 14K employees. At LL, from 12K to
1.8K. Over the years, the downsizing was reversed. Today, Americanas employees’ 14K
employees, ALL 6.5 K and AmBev, 35K, being 22K in Brazil.
9. SAM WALTON´S PICK-UP

Right after being informed by Sicupira of the general sticking at Lojas Americanas cupola, Jorge
Paulo sent six letters to large world wide retailers, requesting help to meet the sector. Two
answered. One of them was Sam Walton, inviting the Brazilian to meet Wal-Mart´s head Office
in Bentonville –until then a hole in the countryside of Arkansas, with no more than 8K habitants.
After endless hours of flying, starting out in a Boeing and ending in a little plane called “teco-
teco”, Lemann and Sicupira landed at a tiny airport. Right at first, they found a guy sitting in a
battered pickup, equipped with dogs and a hunting rifle. "Do you know Sam Walton?", Jorge
Paulo asked. "It´s me, hop in and let´s go."

Lemann and Sicupira ended up being friends with Wal-Mart’s owner. When he found out what
kind of tennis player was Jorge Paulo, Walton began to invite him to double up and beat up
unsuspected opponents. The retail´s legend returned the visit and, obsessed to see and understand
everything by himself, got into a melee with security guards of a Carrefour store in Rio, when he
got caught measuring the shelf space. The airport episode is an indication of how much
frugality, Garantia´s culture mark, is owed to the man from Bentonville. It’s not possible,
however, to comprehend one of its fundamental values without knowing a bit about Lemann´s
history.

His paternal family is from the small town of Langnau, in the Swiss region of Emmenthal. Or at
least it is there for more than 600 years, since it was expelled from a nearby village for, believe
it, exploding a dynamite factory. During two centuries, the Lemanns’ were hatters. Until they
discovered their true skills in cheese’s trading. In the beginning of the 20th century, literally
without any space in business to house a new generation, the family “exported” three Lemann
brothers to America. One of them went to Argentina. Another one to the United States. The third,
Jorge Paulo´s father, came to Brazil. And here he found the dairy manufacturer Leco,
abbreviation for Lemann & Company. More than business practices, however, what Jorge Paulo
inherited from the family was the protestant ethic of "God gives you what you´ve worked to
conquer". His mother, it´s true, was Brazilian. But also a Swiss daughter, who settled in Bahia to
export cocoa. "Everybody was hardline", Lemann likes to say.

Jorge Paulo´s father came to Those, however, who think of Jorge Paulo as a full-time good boy
Brazil in the 20´s. Here, he are surprised with an episode that happened on his first year at
found Leco ( abbreviation for Harvard. In innocent times, 40 years before September 11th, he
Lemann & Co.),  a dairy would travel to the United States carrying inside the luggage
manufacturer. His biggest Brazilian “cabeça-de-negro” (negro´s head) bombs. He saved
legacy, however, was the them in his accommodations, until the day that student’s rebellion
protestant ethic broke out on campus. Amid the tumult of students shouting,
lighting bonfires, he thought: "Ideal moment to drop the bombs.”
And he started to throw them through the windows. It was a success among the rebels outside.
Suddenly, Lemann lights one more bomb and, at the same time, someone turns on the bedroom´s
light. It was the Principal. And he with the lighted bomb in his hand. The solution was to throw
it. Days after, his mom received a letter, recommending that her son be absent from college for a
year, until he became more mature. For a long time Jorge Paulo agreed with them. He arrived at
the university when he was only 17 years old, left right from Arpoador and, sincerely, didn´t like
Harvard at that time. But as the letter only recommended the suspension, he decided to go back
to classes and finished the course in only two years.

He decided to go back, true, but mostly because of the influence of an American uncle, who told
him Harvard was wonderful place, his greatest life opportunity, etc. When Lemann started to
successed in business, his uncle did not miss the opportunity to tell him: "Do you see how I made
you good?". Revenge came 20 years later, when Bill Gates, famous for abandoning Harvard at
the first year, became the richest man in the world. Jorge Paulo got right back at him: "Do you
see how many billions you cost me?"

Graduated Economist, Lemann went to Switzerland as a trainee at Credit Suisse. But that was
not for him either. "It did not last long. It was sluggish, I licked stamp, answered the phone,
wasn´t learning anything", he once confided. As he was invited to play at the Swiss Tennis´
championship, he asked a week off work at the bank. The result: he won the tournament, and was
invited to represent the country at the Davis Cup and said goodbye to the trainee position.

The best metaphor to describe Lemann in business, to many, is the comparison with his style in
tennis. "Jorge Paulo is a baseline player. He does not adventure himself to come to the net for a
reckless volley,” says Luiz Cezar Fernandes, partner of his first hour at Garantia. "He beats,
controvert with effect, in the corners, leaving the audience tense and the opponent exhausted.
Under control, he waits for the opponent´s impatience which makes the opponent miss the
point."

10. BASELINE

Lemann begin to play tennis at the age of 7, at Rio de Janeiro´s Country Club, taken by his
mother. His first teacher, the Chilean José Aguero, was a striking figure, an ex-patriate of Indian
features that would reveal an extraordinary influence. It´s owed to him the legendary Jorge
Paulo´s resistance to give interviews. Aguero always said: "whoever plays for the audience
doesn’t win the game. And his business is to win the game.” He has never forgotten the warning.
And spent most of his life winning games, furthermore in the business world, without giving
much to the audience.

Despite the name, Country Club is very urban. It´s in Ipanema and is traditionally one of the
most exclusive clubs in the country, at that time mostly frequented by “well-born” foreigners.
Jorge Paulo won children championships at the turn of the 40’s to 50’s and became a Brazilian
junior champion at the age of 17. After the brief period in which he shined in Switzerland, he
could have professionalized himself. His explanation of why he didn´t follow the sport´s career
is revealed in an ambitious personality. "For what I played, I realized that I would hardly be
among the top ten players in the world. I decided to quit. I realized I wouldn´t be a star", he said
in the past, to the magazine Tênis Brasil. But Lemann didn’t stop there. He played the 1972´s
Davis Cup, this time, for Brazil, and was five times Brazilian champion. The last finals he won,
in 1975, is his favorite game, the victory over Fernando Gentil in a six-hour match, in which he
started losing by two sets to zero, right at Country Club. Later, at the age of 47, Lemann would
win the World´s Veterans. With the same style always. "Nobody can reach this age and keep
hitting balls for three hours with a boring person like me."
His tennis partners define him as a brain subject, "an ice stone in court", who has, as the main
stroke, a violent left. "He was able to turn a game that the whole gymnasium had already given
as lost, such was his concentration in court,” says the former tennis player and presently a coach
Carlos Alberto Kirmayr, an old Lemann´s friend. Kirmayr experienced the cold game style and
the powerful Lemann´s backhand, at the 1971 Brazilian’s championship final. "I lost 3 sets to 2,
in a five-hours game", he says. "I returned two years later, giving back the 3 to 2 at the 73’
Brazilian championship.”

Another court’s colleague, Nelson Aerts, former Brazilian champion and Pan-American tennis ,
tells an episode which delineates the obsession for results of the future banker. In Rio de Janeiro
in the 70´s, Lemann didn´t find sparring on match to train fundamentals. So, he decided to use
the good old big wall to improve his strokes. "Normal would be two to three, hours hitting at the
big wall, but he spent the whole day stroking the little ball against the wall", says Aerts.

Kirmayr and Aerts are nowadays Lemann´s partners in projects to support tennis. The first drives
a program linked to LOB´s Institute of Women’s Tennis (Instituto LOB do Tênis Feminino),
which main purpose is to place a Brazilian girl among the best 100 tennis players in the world.
At the Tennis Institute, presided by Aerts, the businessman´s fingerprints are in two programs:
the children´s development for tennis´ practice and the sports´ talents improvement of potentials.

Less for his court gifts than for his patronage outside, Lemann has among his fans no one but
Gustavo Kuerten. The biggest Brazilian tennis players from all times never watched Jorge Paulo
playing. But considers him "of an extreme importance" to the modality. "He has been investing
in tennis for many years, and I would say that he´s one of the main sport´s supporters in the
country", says Guga.

In 1994, Lemann had a heart attack. Thereafter, he considerably reduced the rhythm in sports and
at work. Turned mostly to the family. Nowadays he lives in a large house on the outskirts of
Zurich, with his wife, Susanna, and their children. Until today, it´s true, he plays tennis whenever
he´s at home, in Switzerland or in Brazil, usually at 6:30 a.m.. And he only travels carrying his
rackets – always Wilson, usually the model K-Factor, the same used by the Swiss Roger Federer.
Regardless of his fortune of almost US$ 6 billion, Lemann despises the exhibitionist luxury. "He
likes good things, but doesn´t waste money,” says the tennis player Cássio Motta, another former
tennis champion friend of the businessman. Richness for him is having time to do what you like.

Right after Garantia´s sale to Credit Suisse, in 1998, the businessman told the magazine Época
the following story: "About a month ago, I had dinner in Boston with Warren Buffett [the
investor that today is the richest man in the world, with a US$ 62 billion fortune, and at that time
was already the second of the list, behind Bill Gates]. At dinner, he asked me how I felt about
Garantia´s negotiation. I said that I was OK with it and that I´d rather try being more Warren
Buffett and less Sandy Weill, Jon Corzine or John Reed [big shots at Travelers, Goldman Sachs
and Citibank]. Buffett asked me why, and I told him he had more sense of humor, more control
over his own time and was richer. He replied the following: “Then I’m going to show how rich I
am”. He pulled an agenda from his pocket, flipped through some pages, almost all of them blank,
and said: 'See how rich I am. Look how much time I have to do what I want, whenever I want
to.'"
11. THE BIG LABORATORY

The concepts, the practices and the idiosyncrasies made over the years at Garantia found their
truth proof field at Brahma, when the Rio de Janeiro´s brewery was bought by Lemann, Telles
and Sicupira, in November 1989. At that point, Brahma, although a bit larger, was worse
administrated company than Antarctica. Its profits before taxes, for example, were only
10%,when compared to 17% at the São Paulo´s rival. His operational margin, was less than 8%,
in comparison to 26% of the competitor.

Designated as the brewery’s chief executive, Marcel left the bank´s security to face the unknown,
followed by only four employees. Right at the beginning, he has cut the cars given by the
company to the directors. The class differences were over at the company´s restaurant as well as
the individual offices for executives and private secretaries. Every single employee began to be
classified under one of four categories: adequate, competent, superior and excellent. Despite the
company´s size, in a short time a young talent could enter the cupola´s radar, becoming part of
the "indispensable" group.

One of the first to enter this club was an applied and discrete mechanical engineer called Carlos
Brito. He came with Marcel, had few months to get to know the company and quickly was in
charge of the general factory´s management in Agudos, the countryside of São Paulo, until then
the largest one among Brahma´s 23. He was considered excellent in his function and earned eight
salaries as bonus right at the first year. Before getting to the brewery, Brito used to work at Shell
and dreamed of a MBA in Stanford. One day he simply s called Garantia and scheduled a
meeting with Lemann in person. He told him he wanted to take a course and needed US$ 22
thousand. The banker accepted to finance it, took notes of that name at his little copybook and
remembered him when he began to buy non-financial companies. Brito spent two months at
Lojas Americanas before entering Brahma. From where he never left. He worked in finance,
operations and sales, before being designated executive president of what already was AmBev,
in 2004. With InBev´s creation, in that same year, he briefly took over the American subsidiary
control. In 2005, he reached the presidency of the entire group. And then tried to take the
"Garantia´s culture" to the headquarters, in Belgium.

Marcel Telles, a talents Nowadays, in the counsel’s meetings at InBev, each person is
hunter, says that he would evaluated for the main command´s functions. And substitutes for
like to be remembered as "a each position are pointed. "We have 85 thousand employees, but
guy who always left a bunch 250 are the ones that really make the difference. Those people are
of people better than him at managed in a distinctive way, because we want to be sure that
the places he passed they are excited and will not leave the company", said Carlos
through" Brito, in a conference he attended in Stanford in February. "While
some companies prefer hiring employees in the middle of their
careers, InBev looks for recently graduated and shapes them up to leadership", he said in the
same occasion. "Leaders can be graduated, can be trained, and can improve their skills." AmBev
nowadays not only forms but also exports executives. Forty six are in Europe, 16 in North
America, Five in Asia and 42 in Latin America´s countries where the brewery is present. Only at
InBev´s Board there are four Brazilians, including Brito.
Before being trained and improved, future leaders need to be recruited, there’s one of the most
consistent differentials of the HR´s polices inaugurated at Brahma. Every year, FGV hosts the
"Recruitment Week", where several companies introduce themselves to disclose trainee’s
programs. The companies’ representatives´ lectures are formal, many times boring. Directors
dressed in suits and ties and executive with tailleur occupy the seats behind the hardwood bench
of the Noble Hall, projecting presentations and, sometimes, corporate videos. At the end, they
hand out registration forms. Marcel Telles´ forms, in behalf of Brahma, AmBev or InBev, are
very different, and reverberate for days in the college´s halls. To get started, instead of a HR´s
director, the president introduces himself as such and as one of the main investors. With the
audience crowded by students sitting or standing, occupying all free spaces, the entrepreneur
arrives smiling, wearing jeans and a shirt, sits on the table and fires something like: "So , ready
to put yours on the line? That’s what I’m here to talk about. We´re looking for people available
to put on the line". General laughter! Marcel won the audience, who listens carefully to the
shred of numbers he shows in sequence, before explaining the variable remuneration system. The
registration forms are avidly filled out and the company is guaranteed one more year at the top
of the list of companies where students would like to work at.

Whoever is selected, will not loose sight of Marcel, while it shows results. Traditionally at
AmBev and more recently at InBev, every December is marked by a breakfast in which the
company´s counselors receive a group of trainees. The meetings are always at 8am, before the
formal administration council meeting. Lemann, Marcel and Beto attend all. If the meeting is, for
instance, in Toronto (Labatt´s head office, Canadian AmBev´s arm), Jorge Paulo requires six or
seven trainees are brought there. A young recently graduate must have a lot of personality to do
well at an event like that. But Lemann really likes ambitious people. Who already had him as an
interviewer in a professional selection process certainly heard questions like "what´s your
personal goal?" or "where do you intend to go?". He says that, in those occasions, he looks for
the " brightness in their eyes".

Marcel, on the other hand, says that he would like to be remembered "as a guy who always left a
bunch of people better off than him at the places where he has gone thru". He said that to Época
NEGÓCIOS at Brahma´s box during a Sunday Carnival parade in Rio de Janeiro. His style is
embodiment of successful simplicity to Garantia. Blue shorts and the obligatory brewery´s shirt,
running shoes without socks. Besides being tanned, Marcel is thinner than AmBev´s times.
However, his hair and beard are whiter. Watching the samba schools parades with Brazilian from
AmBev the Belgium’s from Interbrew, Marcel is absolutely available to anyone, and he is looked
for mainly by the youngest ones.

Born in Rio like his two main partners, appearing much younger than his 58 years, Marcel
Hermann Telles is the son of an aviation pilot and a housewife. His interest in finance was
awakened when he was studying Economy at Universidade Federal do Rio de Janeiro. "I found
out that my friends who wore nice suit and had a better motorcycle worked at the financial
market", says, at Endeavor´s book. Recruited by Luiz Cezar Fernandes, he found out his métier
as soon as he was offered the first opportunity at a table of operations. Soon after, he took charge
the entire brokerage area, which accounted for half of Garantia while being transformed in to an
investment bank. Trader of a house considered aggressive, he defended that it was necessary to
be audacious and take risky decisions, as long as you deeply knew the market where you were
acting at. To him, losing is part of the game, provided that you learn from the loss .

When he became director of Brahma, Marcel knew nothing about beers. His second in
command, Magim Robinson, former Lacta´s President, was an expert in chocolates, but was not
familiar with malt, hops and bars. Right at the first months, the duo visited the best breweries in
Germany and in the United States, including almost an inspiring internship, at Anheuser-Busch,
its main benchmark. Since then, Marcel professes an almost sick fidelity to the brands he
controls. He does not admit competing products be consumed by his employees neither by his
family. Before AmBev´s creation, he told his children, very young at that time, not to drink
Antarctica’s Guarana because that beverage had piss mixed in it. After the merge with the old
rival, it wasn’t easy to convince the boys that the soft drink was now safe. It is said that more
than one candidate for Brahma´s job opportunity, was invited to a lunch-interview with the
company´s executives, lost the job because of a slip during ordering. The one who inadvertently
order a Coca-Cola, heard the following sentence: your interview ends here.

12. TOTAL QUALITY

The owner´s culture retrieved from Goldman Sachs, the lessons on the good American
marketing, and the German breweries´ techniques do not explain the entire Brahma´s success.
What led "Garantia´s culture" to the next step and made it transplantable to companies from
almost any industry, was the Japanese production´s system. Consultant Vicente Falconi, from
Minas Gerais and creator of INDG - Instituto de Desenvolvimento Gerencial explains it during
an informal chat at the lobby of São Paulo´s Hilton Hotel.

An engineering graduate from Universidade Federal de Minas Gerais, Falconi received his
master’s and doctorate’s degree in the United States in the turn of the 60´s to the 70´s. He came
back to Brazil in 1972, with a published thesis about the process´ control and a passion for
mathematical models supposedly able to improve the performance of steel furnaces. Right at his
first practical experience, however, he learned at Acesita that pure mathematical models do not
work because of indiscipline inside the company. "I still didn´t know that discipline is
management", he says. Around 1978, Falconi began to study literature about quality programs, at
that point dominated by Japanese authors. After years fighting for a scientific scholarship, the
future consultant finally set foot in Japan, in 1984. He found factories similar to the Brazilian
ones. But he discovered "other world" in terms of systems. Falconi began a close straight
relationship with Japan. This would lead him to write five books about total quality, between
1989 and 1996.

"One day, at the engineering school in Belo Horizonte, Marcel Telles shows up from nowhere
wearing jeans and t-shirt, looking for me", says Falconi. It was the last days of 1991, time of
prices controlled by Collor´s government. Marcel was just back from a meeting in Brasília with
Dorothea Werneck, coordinator of the Sectorial Chambers who, among other things, managed
the infamous " tabulation". At the meeting, Dorothea conditioned a price increase for beer prices
to the executive and order him to look for Falconi – and tried to learn something about
productivity. Days later, the consultant had a presentation, at Rio´s Sheraton Hotel, to the entire
Brahma´s cupola. Marcel sat in the first role and stayed there all day. From then on, Falconi
began to be Brahma´s adviser. And brought many Japanese’s to teach the Brazilian brewers total
quality techniques. In the beginning of 1997, he was invited by Marcel to join Brahma´s Board.

AmBev added to Garantia´s The embryo of the today´s famous Orçamento Base Zero -Zero
culture total quality systems Base Budget - came about one year later, with the Program Back
of Japanese inspiration, to Origins (Programa Volta às Origens), arranged around a goal
introduced at the company by of cost´s reduction of R$ 100 million. At the end of 1998, at a
Vicente Falconi, from council´s meeting, Lemann wondered what was achieved and
INDG´s group saved with such program. To general astonishment, no one knew
the exact answer. Immediately Marcel triggered Falconi and the
also consultant Gustavo Pierini, former McKinsey, former Garantia and former GP
Investimentos, who would later act in the merging process between Antarctica and Brahma.
Gustavo proposed planning methods to reduce costs of several factories and its headquarters.
Falconi added methods for execution and verifying savings - "without a system which in seven
days shows last month´s result, forget it, there isn´t cost cut", he says. It was created an
operational tool genuinely Brazilian that in ten years would be devoted as model of excellence in
costs controlling.

Traditionally, companies usually inspire themselves upon previous year budget and its
application to reduce index to set up the current year´s one, without knowing whether each
expense´s value corresponds to the moment’s reality. With the Zero Base Budget - Orçamento
Base Zero - (or simply OBZ), comes always from zero, studying expenses one by one in order to
identify possible excesses (or needs) at each item´s spendings. This applies to everything: inputs
purchase, office supplies´ acquisition or outsourced services´ management. Not by chance,
appeared at Brahma´s offices experts in items like transportation, rental, lighting and water. Are
internal consultants highly experts, known until today as Boinas Verdes. "We´re fully paranoid
with management´s control. Even during best times, we´re pressing costs", says Marcel, at the
book How to Make a Company Work Out in an Uncertain Country (Como Fazer uma Empresa
Dar Certo em um País Incerto). "When it becomes bad, I´m sure water will come up, but it will
drown the other, the competitor, before reaching my mouth."

Stiffness on cost control has made Brahma an exceptionally strong in the process company. In
his first years ahead of the brewery, Telles closed loss factories, reduced by almost half the staff,
redirected functions, merged activities, expedited distribution, visited sales points, negotiated
with suppliers and partners and heavily invested in advertising. In 1998, last year before the
beginning of the merging process with Antarctica, Brahma had left its historical competitor
shamefully behind. Its net profit was R$ 329,1 million, faced with R$ 64,2 million in São Paulo.
In 1999, a very complicated year because of Real´s devaluation, Brahma´s profits were twice
Antarctica´s: US$ 7 billion, faced with US$ 3,3 billion. The brewery, which cost Garantia´s team
US$ 60 million ten years before, was then worth R$ 3,7 billion. Antarctica, frozen in time, was
simply knocked down.

Victório de Marchi, Co-President of AmBev´s Counsel since the merging announcement, was
the main Antarctica´s executive in 2000. At that point, he guarantees, the São Paulo´s brewery
had already started its family management methods review. "Brahma, however, started a little
before. And had already traveled twice the distance", says Victorio. For example: at Antarctica
 there was casual Friday, while at Brahma suit and tie were no longer used on any day of the
week.

13. NO TIE, NO WALLS

The executive Magim Rodrigues, who would become the first AmBev´s President, it´s a great
example of what the wardrobe´s change can make for an executive. In his Lacta´s time, he was
only seen in jacket and tie. He was a slightly incurved man. Appeared to be about 20 years older
than when he resurfaced at Brahma, in shirt-sleeves style celebrated by Garantia.

Since the beginning, Lemann imposed at his bank the collective´s predominance over the
individual. The message to be delivered was that results depended equally on everyone: from
him to the less graduated of the rear´s employee. And that´s why he never dressed suit and tie
inside Garantia – unless for meetings with certain clients or partners. It also shouldn´t have at the
bank the inaccessible´s boss figure. For that reason, the bank´s offices were big saloons without
partitions and even the partners-directors didn´t have access to closed rooms. At the already
mentioned document Our Philosophy (Nossa Filosofia), there´s a summary of how the simplicity
was cult at Garantia: "Our organization is objective, simple, informal and communicative. We do
things with a lot of objectivity. What can be done in a simple way is better". More than 30 years
later, Brito approached the issue at his lecture in Stanford: "We don´t have company´s jets. I
don´t have an office. I share my table with my Vice-Presidents. I sit with my marketing´s guy to
my left, my sales´ guy to my right, my finances´ guy in front of me".

THE GARANTIA´S CULTURE

How Sam Walton and Jack Welch´s styles inspired one of the most influential
management model of the country

FROM WHERE IT CAME

GOLDMAN SACHS – From there came the meritocracy and the partnership system, which
transforms executives in partners of the bank

WAL-MART – From the network founder, Sam Walton, Lemann absorbed the frugality´s culture
and the permanent attention to the cost cutting

GENERAL ELECTRIC – GE´s reports were Garantia´s bible. Lemann and his partners read
everything they found about Jack Welch

WHAT IT IS

OWNER´S CULTURE – The Idea that each employee must feel the company´s owner. For that, it
must have autonomy to decide, responsibility for the result and participation in the profits

SIMPLICITY – Rooms without walls, informal clothes and few hierarchical levels. Everything
must be solved simply and quickly

AWARD AND PUNISHMENT - Meritocracy happens by creating goals for everything. There are
no limits for salary bonus for those who overcome them

HUNTING FOR EXPENSES - "Being paranoid about costs and expenses, which are the only
variables under our control, helps ensuring the long-term survival", says one of the 18
commandments of the "Garantia´s culture"

WHERE DID IT GO TO
GP, an investment participations firm created by Lemann, bought more than 30 companies. From
ALL to Submarino. All of them practice the "Garantia´s culture"

Brahma, bought by Garantia in 1989, led to AmBev and brought the bank´s culture to the industry.
Nowadays, its management practices are influents influential at InBev´s Belgian array

The model of a strictly measured and regally paid meritocracy became standard at investments´
Brazilian banks, starting by Pactual, created by a former Garantia´s partner

The focus on the investor´s profit, the variable executive´s salary and the Zero Base Budget
(Orçamento Base Zero) are now present in some of the best national trading companies management
model

14. THE MAN WHO COPIED

Lemann emerged in the Brazilian business at the right moment, the year of pre-market opening.
In other words, in the historical context of late capitalism. Thomaz Wood Jr., business
administration professor at FGV, believes what happened at Brahma´s case was the migration of
a typical management style of the financial sector and the American trading companies to a large
local industrial company. " What characterizes this management style is the focus on short-term
result and a rationalist attitude about management, processes and people", says Wood. In Brazil
during the 90´s, that sounded new.

A point to remember when discussing Lemann´s and his business´ partners´ legacy regards to the
authorship: the ideas aren´t mostly theirs. "Jorge Paulo isn´t a genius at an ivory tower", says
Cláudio Haddad, current Ibmec São Paulo President. One of the most striking features of
"Garantia´s culture" is its unceremonious in copying good examples. "Brazil’s big advantage is
that you can copy what´s being developed somewhere else and do it here. You can copy
everything, you don´t need to keep reinventing the wheel", once said Beto Sicupira. "What we
did all life? Just copied. We didn´t invent anything, nothing. Glad. Inventing things is such a
damned danger."Not by chance, implementing (and not creating or innovating) is the preferred
word at Garantia´s circuit. "It´s worth much more than good logic, a good execution, than any
brilliant innovation", said Lemann, years ago. "You must worry about innovation. But, if there´s
someone doing well, better not spend much time looking for how to make it. Go there, look and
adapt your way, and that´s it."

In Brazil during the 70´s and the 80´s, the benchmarks persuit and replication of other’s good
ideas were not trivial. The controlling family´s culture was enough. At most, operational abroad
elements were brought in, but not governing systems. Transforming employees into
shareholders, for example, was a tremendous innovation. Something that only existed in Law
firms. A new innovation motivates Fersen Lambranho, from GP, to make a dare prediction:
"Hence six centuries, when someone writes a new Raízes do Brasil (Brazil´s roots), Jorge´s name
will show up. In the entire Latin America there isn´t meritocracy. In Brazil, thanks to him, there
is. This will differ us in a brutal way".

A point to remember  when Lemann´s desire and ability to stand out in the international arena
discussing Lemann´s and his are enthusiastic to his admirers. "Jorge Paulo will be remembered
business partners’ legacy   as one of the entrepreneurs who led Brazil to the rest of world",
regards to the authorship: the says Bonchristiano, from GP. On the other hand, businessmen´s
ideas aren´t mostly theirs. The detachment of those businessmen who now live outside Brazil,
trio´s expertise are copying have their main company´s head office in Belgium and made
good examples history by acquiring and reforming troubled companies,
displeasing their strictest critics. "Lemann is a seller. He´s good at
buying and selling companies. I don´t know whether he knows how to build them", says the
former minister Antônio Delfim Netto. Both, in the academy and in the industrial area, there are
those who defend that Garantia´s men do not deserve to be called entrepreneurs. Because of their
origin in the financial market, they would simply be financists or investors. They are specialists
in making profitable the badly-managed companies, and not in building companies for the future.

José Olympio, from Credit Suisse, disagrees with the label “financist” used to describe Lemann.
"It´s too narrow for him. Jorge Paulo is an organization creator", he says. Also, he disagrees on
the idea that real entrepreneurs are only industrials, like Ermirio de Moraes or Gerdau
Johannpeter, who built from zero solid empires made of cement and steel. "Jorge Gerdau and
Jorge Lemann are the two Brazilian entrepreneurs I admire the most. For me, they´re at the same
level", he says. "The difference is that Lemann is a revolutionary. He promoted a cultural
revolution within Brazilian capitalism".

To José Olympio, Lemann is already a historical figure, maybe comparable to Barão de Mauá.
Nowadays on his level as an entrepreneurship´s example, would only be one businessman: Eike
Batista, owner of EBX and of a fortune even larger than Garantia´s founder, evaluated by Forbes
in US$ 6,6 billion. "Eike today is revolutionary, in the sense of thinking really big and
undertaking in a crazy rhythm", he says. "And in his companies there’s a lot of Garantia´s
culture: society system, attraction for the best ones, betting on very good kid".

Lemann naturally has his preferences, Brazilian by who it measures. Amador Aguiar, Bradesco´s
founder, is the one who excites him the most, for having created a very strong entrepreneurial
culture and a market leader bank, that have been surviving for decades without him. Jorge Paulo
considers him underestimated. He himself sees him as the former of an influent culture for many
companies. And not like most of his pairs in the Brazilian business, judged by their heritage they
built and left to their heirs. But Lemann seems sincere when he says, in close circles, that he
doesn´t consider himself the owner of the "Garantia´s culture". And that his biggest merit would
have been knowing his weaknesses and be surrounded by people better than him in order to
compensate for those deficiencies.
Better, note well. And no descendant, heir or sponsored. Nobody from Lemann´s family has ever
worked at his companies as an executive. Jorge Paulo is convinced that, by the time family enter
meritocracy, the model distorts and corrupts itself.

15. FROM RIO TO MOSCOW

From early days, "Garantia´s culture" spread from the bank to the market. Beto Sicupira made
the first movement, when taking the organization´s model to Lojas Americanas in 1982. In the
following year, Luiz Cezar Fernandes left Garantia after 12 years to create his own bank,
Pactual, through the image and similarity of the institution designed by Lemann. From then on,
all Brazilian investment’s banks emulated, with more or less emphasis, Garantia´s model: Icatu,
Bozano Simonsen, Matrix... Credit Suisse itself, which bought Lemann´s bank in 1998, kept
much of its culture. Folkloric, but true, is the case of Russian bank Renaissance Capital, which
admittedly inspired itself in the Brazilian Garantia, long before the term Bric combined both
countries. A former Garantia employee who was there in the 90´s says that the head office, in
Moscow, was identical to the "headquarters".

In 1989, the same software started circulating at Brahma – and later at AmBev, and finally at
InBev. The cultural Brazilian’s influence at InBev is what the experts call " reverse movement" –
the rarest merging strategy, because it presupposes the buyer´s awareness that the management´s
model is no longer appropriate for the future. Psychologist Betania Tanure, a professor at
Fundação Dom Cabral, studied AmBev closely and takes the risk to say why their culture
predominated. "Interbrew is an absolutely winning organization. Despite understanding the risk
of underperformance", she says, it had a more conservative lifestyle, slower. And the world was
asking for something else."

Now, the world seems to demand more speed and focus on the American Anheuser-Busch,
which little by little is being attracted to InBev´s area of influence. In a report dated last July,
Citigroup analysts for the beverage sector, in New York, estimated a 70% chance of a merge
between the two breweries happening in the next couple of years, creating a colossus with 25%
of the world´s market. "In a union InBev-Anheuser, the new mega brewery would benefit from
the aggressive Brazilian sales and marketing team under the Director/President of InBev, the
Brazilian Carlos Brito", said the American Wall Street Journal.

Marcel Telles has been promoting for a while, an effort to approach the Busch´s family, which,
although having only 4% of Anheuser stocks, still exercises a tremendous influence in the
company. The main Anheuser´s heir, August Busch IV, has already been to Brahma´s box, by
the invitation, to enjoy Rio de Janeiro´s Carnival. It's a promising mating ritual. Interbrew´s
Belgians had also “informally” been to Marquês de Sapucaí in 2002 and 2003 In the following
year, InBev was born. There´s no official confirmation of Lemann´s interest for Anheuser. But
those who knows him bet on a business done deal. "He will settle in if he does not acquire
Budweiser", says Bonchristiano, from GP.

Amador Aguiar, Bradesco´s

founder, is the business
leader most admired by
Lemann. He created an If buying a big American company is Lemann´s "consumption
austere culture that  dispenses dream", an important first step was made at the turn of the year.
him The 3G, a fund formed his, Marcel´s and Sicupira´s resources,
bought 8,3% of the American railroad CSX, established in
Florida, for US$1.5 billion at the end of last year. Their partner in the investment is TCI, The
Children's Investment, an activist fund for the minority´s rights which became worldwide known
for "turning in” the Dutch managers from ABN Amro incompetence and for setting off the
process that culminated the break down of the bank and the sale of its shares. As expected, a
similar questioning was launched against CSX´s administration, a group of US$ 17 billion with
stocks sprayed the New York´s Stock Exchange. If the American cupola of the company falls
down, the administration has good chances to end up in Brazilian hands. Garantia´s trio already
have the name to take over the company: Alexandre Behring, the executive who presided ALL
from 1998 to 2004 and made it the largest railway operator in Latin America.

Part of Lemann’s personal portfolio, Marcel’s and Beto’s, ALL is one of the main cases of
success of GP Investimentos, the private equity´s firm which works as the main spread vector of
"Garantia´s culture". Created in 1993, by the trio and one fourth partners called Roberto
Thompson, GP was Born to replicate in midsize companies the experiences from Lojas
Americanas and from Brahma. The initial group of partners collected half a billion dollars
abroad, with the objective of buying troubled companies, sanitizing them and sell them with
profit. One example of an initial phase was the network supermarkets Sé, bought and sold in
1997.

Like Garantia, GP was shaped according to the partnership´s concept, a society in which
employees could become partners. Over the years, the partners/founders began to reduce their
participation in the firm, until closing it in October, 2004. At that time, the private equity
investments from GP numbered US$ 1,3 billion. They have bought participations in 32
companies, among them ALL, Gafisa, Ig and Telemar, from those they had already sold 18. A
new generation, led by Fersen and Bonchristiano, took control. According to the duo, the
company’s culture has not changed since then. "GP differs from other private equity fund
because it has Garantia´s management technology", says José Olympio, from Credit Suisse. "The
company that sells participation to GP doesn´t want only the money. It wants the
administration´s know-how."

Finally, there´s INDG, from Vicente Falconi, which works as a consulting arm for AmBev. The
institute has nowadays around a thousand consultants, being 250 abroad, which counts for 25%
of its profits. And, admittedly, it does not do anything other than spread around what it calls
"AmBev´s culture". Sadia, which has, not by coincidence, Falconi as a consultant, it is one of
the companies that, under INDG´s guidance, has been working, for more than two years, to set
up similar meritocracy´s systems. Marcel likes the idea and opened AmBev so that Sadia visits
and studies its processes. He and Beto Sicupira are part of the institute Board, with entrepreneurs
like Jorge Gerdau and Walter Fontana himself, from Sadia by their side..
Sicupira and Gerdau lead a group of entrepreneurs engaged in introducing top management
methods to the public sector. "Meritocracy, variable salary, Zero Base Budget, all of it is being
taken to the governments", says Falconi. The state administration of Minas Gerais is earlier at
this process, but the governments of Rio Grande do Sul, São Paulo, Rio de Janeiro, Alagoas,
Sergipe and Pernambuco are working with management, people selection, costs reduction and
collections by systems improvement. In the beginning of February, the federal government hired
INDG to reduce expenses in all the Ministries. Falconi´s institute has 15 months to present
proposals which allow an R$ 600 million save.

16. GIVING BACK TO SOCIETY

Aligning to a very American tradition of big philanthropists, Lemann,

Telles and Sicupira believe that is their role to give back to society, as
individuals, what it had given to them as businessmen. In the past
years, each one of the trio´s component has created foundations to
organize their families’ donations. Marcel was the first one to put the
block on the street. Created, in 1999, the Instituto Social Maria Telles
(Ismart), baptized honoring his mother. Its purpose is to promote
academic development of low-income talented young people. In 2000,
was Sicupira´s family turn to create the Fundação Brava, which invests
in improving projects for public management and ONGs. Among the
beneficiaries are Fundação Pró-Tamar, AACD and the Banco da THE
Providência. Jorge Paulo, on the other hand, has kept, since 2002, the PHILANTHROPIST
Fundação Lemann, which invests mainly in public education Jorge Paulo in a rare
improvement projects. public appearance. The
businessman keeps
The best known philanthropy’s incursion of Garantia´s trio exists since Fundação Lemann since
1991 and it is called Fundação Estudar. It’s objective is to give 2002, to invest in
scholarships to graduation and post graduation to Brazilian students, improving projects for
who attend administration, economics, engineering and international public education in
relationships. Bernardo Hees, the young ALL´s President, was the first Brazil
colleger of Fundação Estudar. After graduating economist from Rio de
Janeiro´s PUC, Bernardo worked in the oil´s field and in the financial market, before leaving for
a master course in England. Back to Brazil, in 1998, he went to work at América Latina Logístic,
where he remained. Now at presidency, he is putting under the same umbrella all the social
responsibility initiatives of the company. In April it will be announced the creation of the
Instituto ALL. . "I’m closing the cycle", he says .

In other extra-business activities, Lemann, Marcel and Beto dedicated to rev up Brazilian
entrepreneurs´ careers. They do this through the Instituto Empreender Endeavor, an American
entity brought to Brazil by Sicupira. "Lemann, Marcel and Beto brought the best of the business
world to the ONGs´s world", says Paulo Veras, the institute coordinator. "Lots of people content
themselves to defend a noble cause. But for them it´s not enough to be doing something positive
for the country". There is accountability for results, for recruiting good people, by raising funds
etc. There´s also a performance evaluation for goals. In Endeavor´s case, for instance, the
market value of supported companies must increase 40% per year.
It´s hard to complain when you know Lemann applies the very same principles at home. Not
only at his personal office but also at his residences, all of his employees have goals, pass
through evaluations and earn variable salary. That goes for maids, drivers, pilots... At his office,
the service´s teams (pantry, cleaning and reception) are evaluated by the employees served by
them every three months.

Whoever knows Lemann´s business endeavors and the implanted management methods at his
companies get scared when meeting him in person. There´s no trace of arrogance in his affable
and good-tempered way.

When in São Paulo, Lemann can be seen early at the office where, nowadays, it concentrates all
those foundations´ head offices, besides the team in charge of the trio´s investments. He walks
through the corridors, distributing good-mornings to whoever he meets on the way. Not that
protocol greeting of the business ambient. With his strong voice, Jorge Paulo extends the vowels
in almost-music compliments: "gooooood-morningggg!". Another characteristic is the speech
with Rio de Janeiro´s accent, with R’s and S’s pronounced heavily. He is a man of few words,
extremely objective, who appreciates an equally objective person. But he saves his sense of
humor typically for a more romantic Rio de Janeiro, he is tremendously articulated and the has a
rich vocabulary that once in a while relies on words in English, always with an impeccable
pronunciation, never with pedantry. Careful to individual characteristics and with an exceptional
memory, he plays with some, makes fun with others and that´s how he reduces the distance
between him, the myth, and his employees. As the gourmet employee who was caught one
afternoon by him in the pantry, docked with a dessert that was left intact from lunch, and never
again stopped listening funny comments about candies and delicacies.

His personal office, in the south side São Paulo, reflects the appreciation for discretion. There is
not, in the building’s reception which homes him, a single clue that there is Lemann´s
headquarters. The employee’s badges have only one photo, his name and the floor number. Even
when the elevator arrives, there´s no logo or plaque of any species identifying the office, divided
in two wings, with independent entries. At the right hand of the reception hall, a large corridor,
with light-wooden walls gives access to the meeting rooms. So, the guests never see the
employees working, and those never know who shows up at the office for meetings. Only Jorge
Paulo, Marcel, Beto and the partner Roberto Thompson have individual offices, located in one of
the extreme side of the floor.

Lemann always showed up publicly the least possible, but became invisible after 1999, after a
dramatic kidnapping attempt of his three young children in São Paulo - the armored car that was
driving them was gunned down. It was then, annoyed by it, that he moved with the family from
Brazil to Switzerland. The closest friends must miss the legendary June parties which Jorge
Paulo organized at his house in Jardim Europa. Real parties, with fires, pau-de-sebo, typical
foods and a big square dance event, for he and Susanna dressed up as authentic hillbilly engaged
couple. Until today, Bianka Telles, Marcel´s wife, grown in the south of Bahia, is the only
participant that, attested, reached the top of the pau-de-sebo.

Both in his personal office

and the two of his residences,
 employees have goals, pass Lemann is abroad because of his young children. In Switzerland,
through periodic evaluations they go to school alone, ride on a train, travel through Europe and
and receive variable salary ride by bicycle without bigger problems. In Brazil, the family
would have two options: the irresponsibility of not having
securities or the discomfort of being surrounded by them . The decision was to let the children
grow in Zurich. Later, when they are at the age of going to college, they will have the freedom to
choose where they want to live. Jorge Paulo, then, will come back to Brazil.

Even having accumulated a fortune estimated in US$ 5.8 billion, according to the most recent
billionaires’ global list from Forbes magazine, Lemann takes questions about a possible
retirement almost like an offense. More than once, he admitted that he’ll never consider himself
fully fulfilled. It is not enough, for example, having the world's largest brewer. It is also
necessary to be the best. Not by chance, InBev´s actual slogan is from “biggest to best”. At the
closing of the letter he published in the 2003 annual report of Fundação Lemann, he writes: "I
have the feeling I am in the right way, besides the fact of knowing that I will never get there". In
testimony to the book How to Make a Company Work Out in an Uncertain Country, he says:
"I´m always wanting to get there, achieving something else. This is grace. The day I have made
my dream come true, I die".

It’s been a while since trinity’s families of Garantia are together being prepared to succeed
Lemann, Marcel and Sicupira. Their wives study accounting together; the children take in group
the management training. Jorge Felipe, the youngest Lemann´s first marriage son, best known in
the market as Pipo, is the only heir to attend the Brazilian stock exchange. Since 2003, he has
been the owner of Flow brokerage firm. His father has the minority firm´s partnership, with less
than 10% of the stocks. Paulo, the oldest brother, also has a participation, but his business is a
resource management firm in New York. Besides Lemann´s adviser, he is responsible for
investing the money donated by Jorge Paulo to the entity and didn´t enter the annual budgets –
called endowment. Those resources have the purpose to garantee work continuity of the
foundation after Lemann´s death. Until then, he makes annual donations, according to the
approved budget for every year.

Jorge Paulo Lemann likes to think, according to those who know him well, that his biggest
personal contribution to the Brazilian business would have been the culture "big dream". The
encouragement to business men and women who wish to build something exceptional and who
move through this ideal. If the dream is small, he usually says, you get lost in the middle of the
way with small things. Hence one of the rare effects sentences attributed to this capitalist of
action and few words: "Thinking small and thinking big takes the amount of work. But thinking
big frees you from the insignificant details".

THE END OF GARANTIA, STROKED BY THE CRISIS

Attacked by the Asian 1997´s bankruptcy, the world´s most influent investments´ bank ended
sold

Over two decades of business, Garantia´s Bank only lost money in two years: the first, 1976, and the
last, 1998. The first loss can be credited to an arbitrary taken from the evil´s bag of the military
government. Mário Henrique Simonsen, then Finances Minister, purged four percentage points of the
restatement and almost broke Jorge Paulo Lemann´s bank. The last was a slip. Overconfidence.
In the middle of 1997, when the currency crisis burst in Asia´s Southeast countries, Garantia was
affected by the capital´s escape from the emerging countries, but it took long to understand the extent
of the damage. When Thailand suffered a speculative attack, in July, the bank stood waiting for a
turnaround. In October, when Hong Kong fell down and the entire Asia´s Southeast was
contaminated, it was too late to go back. Garantia´s profit in 2007 fell to one tenth of the amount
recorded in 1996. Its investments funds heritage halved. The bank entered 1998 bleeding and, in
May, was sold for US$ 800 million, very inexpensive by any analyzed criterion, to Credit Suisse.

Garantia, then showed, was very well successful as a money making machine, but it was not to
survive because the bussiness´ culture of its beginning got lost at some point. The forced sale of the
bank is, admittedly, the biggest Lemann´s frustration. His vision about the subject is hard on himself
and, mostly, with the generation that was in command during the crisis. He criticizes himself not
realizing his team had become too focused in bonus and few worried about the construction of
permanent enterprise. Garantia was in the hands of a new generation. Cláudio Haddad thought of
doing something with education (which resulted in São Paulo´s Ibmec). "Other partners closer to the
top of the hierarchy had won a lot of money and preferred selling than continuing construction. In the
selling period, some younger partners resented because they would have liked to continue the jog of
perpetuating Garantia", says Lemann when in small groups. This deviation from the original route
coincides with the period in which Lemann had moved away from the bank day-to-day , after the
heart attack he suffered in 1994. Beto was away for years, running Lojas Americanas. And Marcel,
since 1989, was Brahma´s President.

During the process which culminated with the sale to Credit Suisse, Garantia was criticized by part
of its investments funds unit holders. In the lightest cases, they said they were not informed on the
level of risk to which they were exposed. In the heaviest ones, they accused the bank of pushing its
cash losses in to the investment funds. The pilot Raul Boesel, at that time a racer at Indy’s, won
headlines in and out of Brazil by declaring his loss of half the US$ 3 million which had applied and
complaining Garantia´s managements. "The bank wasn´t clear to me about in what they were
investing. They didn´t explain the risk I was running", says Boesel nowadays. According to him, his
portfolio should be "super conservative". However, when the Asian crisis broke, he found out that
the applications were "leveraged" (the managers’ bets were bigger than the funds´ heritage).

Cláudio Haddad, Garantia´s superintendent at that time, says that he remembers Boesel´s case, but
prefer not to talk about it. "What I can say is the fund gave 30%, 40% per year of profit, year after
year. Of course there was leverage Or do you think money grows in trees?", he says. "Our clients
were qualified investors. They did not have any little widow that took her savings account from
Bradesco and put it at Garantia."

If Garantia´s sale episode was the first to expose Lemann, AmBev merge with the Belgian Interbrew,
announced six years later, is to this day the most used against him. The alliance which originated
InBev was firmed by the exchange of participations among theAmbev comptrollers (Lemann, Telles
and Sicupira) and Interbrew (the three Belgian families that controlled the European brewery).
Brazilian converted their stocks, which represented 22% of the full Ambev capital, in 25% of
InBev´s capital. Lemann and his partners legally committed themselves not to sell their participation
for 20 years and kept 50% of the new company´s control.

By determination of the S/A´s Law, which governs the companies listed at Bovespa, Interbrew had
to make a public offer to buy the last ordinary stocks. It was offered to those paper´s owners
Interbrew´s stocks or the equivalent to 80% of the gains the comptrollers had by selling their
participations. The right, however, is not extended to the ones who held preferred stocks, without the
right for voting, who saw their papers´ prices collapse after the agreement´s disclosure. Ten days
after the announcement of the operation, the preferred accumulated losses of 32%. The pension fund
for Banco do Brasil employees, Previ, held approximately 14% of those stocks and lost over R$
800 million. Later on, the stock prices rose again. From that episode until the March 20th, according
to the company, the papers valued around 200%.

The issue is explosive in the media next to Lemann. "Nothing has revolted me more than the
minority´s reaction when he [Jorge Paulo] closed the deal with Interbrew", says José Olympio. He
calls the investors who rebelled of "investors dressing in vestals and complaining because the
microwave they bought couldn´t pass the 8-o´clock soap opera". Explains himself: "If you bought a
preferred stock, you must know that it pays 10% more, but it doesn’t have tag along (the right to sell
together with the comptroller). If you bought an ordinary one, it´s the opposite. What´s not possible
is wanting that a paper meets what´s expected from the other one ". Privately, Lemann himself is
used to make similar comparison. "The guy bought a Fiat, knowing that it was a Fiat, and later
thought maybe he had a Ferrari in the garage."

At the same time, AmBev´s comptroller group was attacked for supposedly selling the company´s
control to the Belgians. Carlos Lessa, then BNDES´ President, called Lemann, Telles, and Sicupira
of "vendilhões do templo". At that occasion, said: "those three boys (...) are anything but Brazilians".
Lemann never answered publicly, but, privately, accused the stroke. "They´re not recognizing our
value", he said. "Speak well of soccer player who will play in Europe and gives us blows, when in
reality we´re much more than just players. We´re also owners."