ABI Lemann Telles Article

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Lemanns legacyWhat 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 cultureBy poca Negcios 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 Enterpreneur Jorge Paulo Lemann the two veterans who studied since kindergarten at the American School. "Although it seems he never studies, he can in a 2005 photo . The Garantias 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 meritocracy efforts, the young Lemann took groans of his colleagues. "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 teenagers game proved so prescient. Lemann reached the top of the worlds 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 Matuet 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 So Carlos Empreendimentos Imobiliarios . The three are among the main shareholders of South Americas largest transportation and logistics company ALL and, since December, theyve owned an 8,3% slice of the CSXs 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 Siderrgica 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 70s forged culture inside Garantia arrived into retail with the purchase of the Lojas Americanas in 1982, and into the industry after the acquisition of Brahma, in 1989 Telemar. 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. Hes 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 Lemanns one, from Garantia", says Francisco Gros, expresident 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". 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 70s forged culture by Lemann inside Banco Garantia arrived into retail through Lojas Americanas, bought in 1982; and into the industry, after the acquisition of Brahma, in 1989; it influenced virtually all the Brazilian investment banks and it spread through more than 30 companies bought, until today, by GP Investmentos, founded by Lemann, Sicupira and Telles. FromGafisa to Ig, passing through

1. FROM BROKER TO BANKER

Lemanns 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 founders 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. Carlos Alberto Sicupira, known only as Beto, arrived to the broker In 1976, the Garantia 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. By implementing what he had learned overseas, Sicupira would be today 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 So 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 markets 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 AmBevs 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 whats 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. Jos Olympio Pereira, todays 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 wasnt 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 banks door and asked for a job. If they dont charge me to work, Im 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 Andr 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 banks underwriting department (public offers of securities in general, including companies stocks) had been moved to the currency department. Jos 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 banks rules, which subsequently applied to all companies under its management, was that there the iron trio of Garantia, are two certain mistakes to end up into a resignation: to appear complete themselves in in the Caras magazine or buying an imported car. To Lemann, business. The firestone is the strategist ; the second, the one is squandering money or indulge in ostentation are deadly sins. adisciplined 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 Lemanns 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 So 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 childrens breakfast. To this day, when he is at the So Paulo office, sometimes

goes on foot, to the supermarket, to buy cereal bars. In contrast, he doesnt 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 Foundations 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 Garantias 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 Gvea Investimentos. Its 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 Garantias employee, summarize Lemanns human resources ideal: "People must be of highquality. 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. Lemanns 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-Garantias 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 So 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 couldnt 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 werent any calm days. The sentence which summarizes this philosophy is the one that says that one day is 5% of the month. 4. SIMONSENS 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, Mrio 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 - Obrigaes Reajustveis do Tesouro Nacional). Simonesens 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 Cludio 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 Garantias invitation, initially, as an opportunity to supplement his teachers income, pressed by the arrival of his first child. "I wasnt 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 Garantias 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, hes the toughest. But he is a good guy. If he likes you, he defends you to death. If he doesnt, 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 Pas 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. Lemanns 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 doesnt make the company works out. He never had patience for operational details, says Haddad. His interest is in the larger sphere, in the last balances 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 doesnt 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. LEMANNS 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 Garantias 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. Hes 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 trios 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 AmBevs 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 hell 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 Frres & 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 Lemanns 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 Gillettes shareholders and had a seat on the companys Board for five years, part of them during Kiltss 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 Gillettes sale, the Brazilian exchanged his papers for Procters stocks. At the first opportunity, he watched Lafleys 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 Lemanns 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 doesnt know anything about the operation table, says Cludio Haddad. Another one is the intuitive investor who transforms bankrupted business in to gold. "Midas touch does not exist, says Antonio Bonchristiano, Fersen Lambranhos 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 "Garantias 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 "Garantias boys" as Brazilian versions of Wall Street yuppies from the 80s. 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: "Im not a glazed-in-power guy (never have bossed much); I dont care about being the owner (I have always shared and have associated with others, if advantageous); I dont 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 DONT STAND A CHANCE Ideology aside, the fact is that money has always been the fuel of any Jorge Paulo Lemanns company. "The profit sharing is a basic input of this kind of business. He doesnt do that because hes generous", says Fersen. The youngest and determined ones fast forward pace is stimulated. The order is: enjoy while youre 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 GPs partner. If the youngest and the capable ones have space to grow and, in a certain moment, run over the previous generation, in the "Garantias culture" the weak dont stand a chance. "Its a very

Darwinist culture. Its possible to become really very rich working that way, but its not possible to be happy", says an ex-investment banker who came to compete with Garantia in the 90s, 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 Garantias 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.

However, when these jokes are transplanted to the large industrial companies, with thousands and thousands of employees, the collateral effects seem to be inevitable. Often, whoever does not adapt to the culture leaves voluntarily or is expelled from the system. Because of that, peculiar labor lawsuits appear. For instance, in 2005 and 2006 AmBev was 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. Lemann and his partners are among the pioneers of the Brazilian Companies globalization movement. In 1994, Brahma had already bought breweries in Venezuela and in Argentina "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 Lemanns values it as their own, and even their families. Fersens son studied in one in the elite schools of So 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 Garantias 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 companys stocks have been losing value for months and a huge restructuring was announced in February]. On the other hand, AmBevs 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 cocadas 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. Its an exceptional brewery, profitable and the owner of Corona, a world known brand. But its only in Mexico. Because of that, in the worlds 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 wouldnt participate in the worlds game of consolidation thats 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 AmBevs creation, the internationalization boomed. In the first four years, the company invested US$ 700 million and installed itself in 11 Latin Americas 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 wouldnt 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 companys control, with 25% of the new business. They also exchanged their unique command, with Fundao 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 from Americanas tried to stop the reforms initiated in the company, threatening to leave. Sicupira didnt vacillate: he fired all the rebels Besides this market game, the partnership with the Belgians reflects a of coincidence interests. For AmBev, which developed, like no other company, the competence to form young talents motivated by given opportunities, internationalization is a way to keep the line moving. In a chat with Jim Collins, consultant and author of the classic Made to Last, Marcel was asked: "Whats 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 AmBevs 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 expatriates holding important positions at the Ambev Brazilian branches. The Groups official language is English. Its 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, its easy to conclude that its forming a valuable multicultural active. Motivated by InBevs 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 Chineses 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. GARANTIAS PITBULL Lemann, Telles, and Sicupiras 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 Garantias operation table, the named head trader. Until making a remarkable transition to become the CEO of Brahmas, a large brewer. "A trader is never good guy. In the table of operations, youre the wolf among wolves that want to eat you alive", says Cludio 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 Bovespas history. Common in the United States, the scope previously unheard around here consists in keep buying, little by little, companys 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 dont change, its 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 its necessary to front hit and quickly with the problem. Zero complacency, especially when you are building the companys culture, he stated to Endeavor. In dealing Garantias 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-officers 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 didnt 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, Garantias 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 retailers 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 didnt 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 80s, from 14 thousand to 8 thousand. Thus it began to be established a reputation of job reapers of Garantias 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 WALTONS 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-Marts 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 tecoteco, 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. "Its me, hop in and lets go." Lemann and Sicupira ended up being friends with Wal-Marts 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 retails 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, Garantias culture mark, is owed to the man from Bentonville. Its not possible, however, to comprehend one of its fundamental values without knowing a bit about Lemanns 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 cheeses 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 Paulos 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 youve worked to conquer". His mother, its true, was Brazilian. But also a Swiss daughter, who settled in Bahia to export cocoa. "Everybody was hardline", Lemann likes to say. Jorge Paulos father came to Brazil in the 20s. Here, he found Leco (abbreviation for Lemann & Co.), adairy manufacturer. His biggest legacy, however, was the protestant ethic Those, however, who think of Jorge Paulo as a full-time good boy are surprised with an episode that happened on his first year at Harvard. In innocent times, 40 years before September 11th, he would travel to the United States carrying inside the luggage Brazilian cabea-de-negro (negros head) bombs. He saved them in his accommodations, until the day that students rebellion 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 bedrooms 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, didnt 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, wasnt 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 opponents impatience which makes the opponent miss the point." 10. BASELINE Lemann begin to play tennis at the age of 7, at Rio de Janeiros Country Club, taken by his mother. His first teacher, the Chilean Jos Aguero, was a striking figure, an ex-patriate of Indian features that would reveal an extraordinary influence. Its owed to him the legendary Jorge Paulos resistance to give interviews. Aguero always said: "whoever plays for the audience doesnt 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. Its 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 40s to 50s 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 didnt follow the sports 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 wouldnt be a star", he said in the past, to the magazine Tnis Brasil. But Lemann didnt stop there. He played the 1972s 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 Worlds 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 Lemanns friend. Kirmayr experienced the cold game style and the powerful Lemanns backhand, at the 1971 Brazilians 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 courts 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 70s, Lemann didnt 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 Lemanns partners in projects to support tennis. The first drives a program linked to LOBs Institute of Womens Tennis (Instituto LOB do Tnis 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 businessmans fingerprints are in two programs: the childrens 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 hes one of the main sports 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, its true, he plays tennis whenever hes 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 doesnt waste money, says the tennis player Cssio Motta, another former tennis champion friend of the businessman. Richness for him is having time to do what you like. Right after Garantias sale to Credit Suisse, in 1998, the businessman told the magazine poca 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 Garantias negotiation. I said that I was OK with it and that Id 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 Im 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 Janeiros 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 So Paulos rival. His operational margin, was less than 8%, in comparison to 26% of the competitor. Designated as the brewerys chief executive, Marcel left the banks 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 companys 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 companys size, in a short time a young talent could enter the cupolas 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 factorys management in Agudos, the countryside of So Paulo, until then the largest one among Brahmas 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 InBevs 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 "Garantias culture" to the headquarters, in Belgium. Nowadays, in the counsels meetings at InBev, each person is evaluated for the main commands functions. And substitutes for each position are pointed. "We have 85 thousand employees, but 250 are the ones that really make the difference. Those people are managed in a distinctive way, because we want to be sure that they are excited and will not leave the company", said Carlos 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 Americas countries where the brewery is present. Only at InBevs Board there are four Brazilians, including Brito. Marcel Telles, a talents hunter, says that he would like to be remembered as "a guy who always left a bunch of people better than him at the places he passed through"

Before being trained and improved, future leaders need to be recruited, theres one of the most consistent differentials of the HRs polices inaugurated at Brahma. Every year, FGV hosts the "Recruitment Week", where several companies introduce themselves to disclose trainees 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 colleges halls. To get started, instead of a HRs 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? Thats what Im here to talk about. Were 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 companys 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 (Labatts head office, Canadian AmBevs 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 "whats 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 poca NEGCIOS at Brahmas box during a Sunday Carnival parade in Rio de Janeiro. His style is embodiment of successful simplicity to Garantia. Blue shorts and the obligatory brewerys shirt, running shoes without socks. Besides being tanned, Marcel is thinner than AmBevs times. However, his hair and beard are whiter. Watching the samba schools parades with Brazilian from AmBev the Belgiums 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 Endeavors book. Recruited by Luiz Cezar Fernandes, he found out his mtier 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 Lactas 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 AmBevs creation, he told his children, very young at that time, not to drink Antarcticas Guarana because that beverage had piss mixed in it. After the merge with the old rival, it wasnt easy to convince the boys that the soft drink was now safe. It is said that more than one candidate for Brahmas job opportunity, was invited to a lunch-interview with the companys 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 owners culture retrieved from Goldman Sachs, the lessons on the good American marketing, and the German breweries techniques do not explain the entire Brahmas success. What led "Garantias culture" to the next step and made it transplantable to companies from almost any industry, was the Japanese productions 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 So Paulos Hilton Hotel. An engineering graduate from Universidade Federal de Minas Gerais, Falconi received his masters and doctorates degree in the United States in the turn of the 60s to the 70s. 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 didnt 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 Collors government. Marcel was just back from a meeting in Braslia 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 Rios Sheraton Hotel, to the entire Brahmas cupola. Marcel sat in the first role and stayed there all day. From then on, Falconi

began to be Brahmas adviser. And brought many Japaneses to teach the Brazilian brewers total quality techniques. In the beginning of 1997, he was invited by Marcel to join Brahmas Board. The embryo of the todays famous Oramento Base Zero -Zero Base Budget - came about one year later, with the Program Back to Origins (Programa Volta s Origens), arranged around a goal of costs reduction of R$ 100 million. At the end of 1998, at a councils meeting, Lemann wondered what was achieved and 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 months result, forget it, there isnt 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. AmBev added to Garantias culture total quality systems of Japanese inspiration, introduced at the company by Vicente Falconi, from INDGs group Traditionally, companies usually inspire themselves upon previous year budget and its application to reduce index to set up the current years one, without knowing whether each expenses value corresponds to the moments reality. With the Zero Base Budget - Oramento Base Zero - (or simply OBZ), comes always from zero, studying expenses one by one in order to identify possible excesses (or needs) at each items spendings. This applies to everything: inputs purchase, office supplies acquisition or outsourced services management. Not by chance, appeared at Brahmas offices experts in items like transportation, rental, lighting and water. Are internal consultants highly experts, known until today as Boinas Verdes. "Were fully paranoid with managements control. Even during best times, were 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 Pas Incerto). "When it becomes bad, Im 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 So Paulo. In 1999, a very complicated year because of Reals devaluation, Brahmas profits were twice Antarcticas: US$ 7 billion, faced with US$ 3,3 billion. The brewery, which cost Garantias team US$ 60 million ten years before, was then worth R$ 3,7 billion. Antarctica, frozen in time, was simply knocked down. Victrio de Marchi, Co-President of AmBevs Counsel since the merging announcement, was the main Antarcticas executive in 2000. At that point, he guarantees, the So Paulos 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 AmBevs President, its a great example of what the wardrobes change can make for an executive. In his Lactas 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 collectives predominance over the individual. The message to be delivered was that results depended equally on everyone: from him to the less graduated of the rears employee. And thats why he never dressed suit and tie inside Garantia unless for meetings with certain clients or partners. It also shouldnt have at the bank the inaccessibles boss figure. For that reason, the banks offices were big saloons without partitions and even the partners-directors didnt have access to closed rooms. At the already mentioned document Our Philosophy (Nossa Filosofia), theres 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 dont have companys jets. I dont have an office. I share my table with my Vice-Presidents. I sit with my marketings guy to my left, my sales guy to my right, my finances guy in front of me". THE GARANTIAS CULTURE How Sam Walton and Jack Welchs 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 frugalitys culture and the permanent attention to the cost cutting GENERAL ELECTRIC GEs reports were Garantias bible. Lemann and his partners read everything they found about Jack Welch WHAT IT IS OWNERS CULTURE The Idea that each employee must feel the companys 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 "Garantias 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 "Garantias culture" Brahma, bought by Garantia in 1989, led to AmBev and brought the banks culture to the industry. Nowadays, its management practices are influents influential at InBevs 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 Garantias partner The focus on the investors profit, the variable executives salary and the Zero Base Budget (Oramento 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 Brahmas 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 90s, that sounded new. A point to remember when discussing Lemanns and his business partners legacy regards to the authorship: the ideas arent mostly theirs. "Jorge Paulo isnt a genius at an ivory tower", says Cludio Haddad, current Ibmec So Paulo President. One of the most striking features of "Garantias culture" is its unceremonious in copying good examples. "Brazils big advantage is that you can copy whats being developed somewhere else and do it here. You can copy everything, you dont need to keep reinventing the wheel", once said Beto Sicupira. "What we did all life? Just copied. We didnt 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 Garantias circuit. "Its worth much more than good logic, a good execution, than any brilliant innovation", said Lemann, years ago. "You must worry about innovation. But, if theres someone doing well, better not spend much time looking for how to make it. Go there, look and adapt your way, and thats it." In Brazil during the 70s and the 80s, the benchmarks persuit and replication of others good ideas were not trivial. The controlling familys 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 Razes do Brasil (Brazils roots), Jorges name will show up. In the entire Latin America there isnt meritocracy. In Brazil, thanks to him, there is. This will differ us in a brutal way". Lemanns desire and ability to stand out in the international arena are enthusiastic to his admirers. "Jorge Paulo will be remembered as one of the entrepreneurs who led Brazil to the rest of world", says Bonchristiano, from GP. On the other hand, businessmens detachment of those businessmen who now live outside Brazil, have their main companys head office in Belgium and made history by acquiring and reforming troubled companies, displeasing their strictest critics. "Lemann is a seller. Hes good at buying and selling companies. I dont know whether he knows how to build them", says the former minister Antnio Delfim Netto. Both, in the academy and in the industrial area, there are those who defend that Garantias 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. A point to remember when discussing Lemanns and his business partners legacy regards to the authorship: the ideas arent mostly theirs. The trios expertise are copying good examples Jos Olympio, from Credit Suisse, disagrees with the label financist used to describe Lemann. "Its 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, theyre at the same level", he says. "The difference is that Lemann is a revolutionary. He promoted a cultural revolution within Brazilian capitalism". To Jos Olympio, Lemann is already a historical figure, maybe comparable to Baro de Mau. Nowadays on his level as an entrepreneurships example, would only be one businessman: Eike Batista, owner of EBX and of a fortune even larger than Garantias 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 theres a lot of Garantias 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, Bradescos 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 doesnt consider himself the owner of the "Garantias 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 Lemanns 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, "Garantias culture" spread from the bank to the market. Beto Sicupira made the first movement, when taking the organizations 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 investments banks emulated, with more or less emphasis, Garantias model: Icatu, Bozano Simonsen, Matrix... Credit Suisse itself, which bought Lemanns 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 90s 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 Brazilians influence at InBev is what the experts call "reverse movement" the rarest merging strategy, because it presupposes the buyers awareness that the managements model is no longer appropriate for the future. Psychologist Betania Tanure, a professor at Fundao 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 InBevs 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 worlds 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 Buschs family, which, although having only 4% of Anheuser stocks, still exercises a tremendous influence in the company. The main Anheusers heir, August Busch IV, has already been to Brahmas box, by the invitation, to enjoy Rio de Janeiros Carnival. It's a promising mating ritual. Interbrews Belgians had also informally been to Marqus de Sapuca in 2002 and 2003 In the following year, InBev was born. Theres no official confirmation of Lemanns 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, Bradescos founder, is the business leader most admired by

If buying a big American company is Lemanns "consumption Lemann. He created an austere culture that dispenses dream", an important first step was made at the turn of the year. The 3G, a fund formed his, Marcels and Sicupiras resources, him bought 8,3% of the American railroad CSX, established in Florida, for US$1.5 billion at the end of last year. Their partner in the investment is TCI, The Children's Investment, an activist fund for the minoritys rights which became worldwide known for "turning in the Dutch managers from ABN Amro incompetence and for setting off the process that culminated the break down of the bank and the sale of its shares. As expected, a similar questioning was launched against CSXs administration, a group of US$ 17 billion with stocks sprayed the New Yorks Stock Exchange. If the American cupola of the company falls down, the administration has good chances to end up in Brazilian hands. Garantias 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 Lemanns personal portfolio, Marcels and Betos, ALL is one of the main cases of success of GP Investimentos, the private equitys firm which works as the main spread vector of "Garantias 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 S, bought and sold in 1997.

Like Garantia, GP was shaped according to the partnerships 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 companys culture has not changed since then. "GP differs from other private equity fund because it has Garantias management technology", says Jos Olympio, from Credit Suisse. "The company that sells participation to GP doesnt want only the money. It wants the administrations know-how." Finally, theres 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 "AmBevs culture". Sadia, which has, not by coincidence, Falconi as a consultant, it is one of the companies that, under INDGs guidance, has been working, for more than two years, to set up similar meritocracys 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, So 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. Falconis 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 trios 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 Sicupiras family turn to create the Fundao Brava, which invests in improving projects for public management and ONGs. Among the beneficiaries are Fundao Pr-Tamar, AACD and the Banco da Providncia. Jorge Paulo, on the other hand, has kept, since 2002, the Fundao Lemann, which invests mainly in public education improvement projects.

THE PHILANTHROPIST Jorge Paulo in a rare public appearance. The businessman keeps The best known philanthropys incursion of Garantias trio exists since Fundao Lemann since 2002, to invest in 1991 and it is called Fundao Estudar. Its objective is to give improving projects for scholarships to graduation and post graduation to Brazilian students, public education in who attend administration, economics, engineering and international relationships. Bernardo Hees, the young ALLs President, was the first Brazil colleger of Fundao Estudar. After graduating economist from Rio de Janeiros PUC, Bernardo worked in the oils field and in the financial market, before leaving for a master course in England. Back to Brazil, in 1998, he went to work at Amrica Latina Logstic, 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. . "Im 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 ONGss world", says Paulo Veras, the institute coordinator. "Lots of people content themselves to defend a noble cause. But for them its not enough to be doing something positive for the country". There is accountability for results, for recruiting good people, by raising funds etc. Theres also a performance evaluation for goals. In Endeavors case, for instance, the market value of supported companies must increase 40% per year.

Its 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 services teams (pantry, cleaning and reception) are evaluated by the employees served by them every three months. Whoever knows Lemanns business endeavors and the implanted management methods at his companies get scared when meeting him in person. Theres no trace of arrogance in his affable and good-tempered way. When in So 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 trios 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 Janeiros accent, with Rs and Ss 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 thats 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 So Paulo, reflects the appreciation for discretion. There is not, in the buildings reception which homes him, a single clue that there is Lemanns headquarters. The employees badges have only one photo, his name and the floor number. Even when the elevator arrives, theres 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 So 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, Marcels 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 ride by bicycle without bigger problems. In Brazil, the family and receive variable salary 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 hell 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, InBevs actual slogan is from biggest to best. At the closing of the letter he published in the 2003 annual report of Fundao 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: "Im always wanting to get there, achieving something else. This is grace. The day I have made my dream come true, I die". Its been a while since trinitys 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 Lemanns 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 firms 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 Lemanns adviser, he is responsible for investing the money donated by Jorge Paulo to the entity and didnt enter the annual budgets called endowment. Those resources have the purpose to garantee work continuity of the foundation after Lemanns 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 1997s bankruptcy, the worlds most influent investments bank ended sold Over two decades of business, Garantias 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 evils bag of the military government. Mrio Henrique Simonsen, then Finances Minister, purged four percentage points of the restatement and almost broke Jorge Paulo Lemanns bank. The last was a slip. Overconfidence.

In the middle of 1997, when the currency crisis burst in Asias Southeast countries, Garantia was affected by the capitals 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 Asias Southeast was contaminated, it was too late to go back. Garantias 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 Lemanns 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. Cludio Haddad thought of doing something with education (which resulted in So Paulos 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 Brahmas 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 Indys, won headlines in and out of Brazil by declaring his loss of half the US$ 3 million which had applied and complaining Garantias managements. "The bank wasnt clear to me about in what they were investing. They didnt 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). Cludio Haddad, Garantias superintendent at that time, says that he remembers Boesels 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 Garantias 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 InBevs capital. Lemann and his partners legally committed themselves not to sell their participation

for 20 years and kept 50% of the new companys control. By determination of the S/As 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 papers owners Interbrews 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 agreements 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 minoritys reaction when he [Jorge Paulo] closed the deal with Interbrew", says Jos Olympio. He calls the investors who rebelled of "investors dressing in vestals and complaining because the microwave they bought couldnt pass the 8-oclock soap opera". Explains himself: "If you bought a preferred stock, you must know that it pays 10% more, but it doesnt have tag along (the right to sell together with the comptroller). If you bought an ordinary one, its the opposite. Whats not possible is wanting that a paper meets whats 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, AmBevs comptroller group was attacked for supposedly selling the companys control to the Belgians. Carlos Lessa, then BNDES President, called Lemann, Telles, and Sicupira of "vendilhes do templo". At that occasion, said: "those three boys (...) are anything but Brazilians". Lemann never answered publicly, but, privately, accused the stroke. "Theyre not recognizing our value", he said. "Speak well of soccer player who will play in Europe and gives us blows, when in reality were much more than just players. Were also owners."