Brazil Conference 2021: Painel Especial (Jorge Paulo Lemann)

Hello everyone, my name is Gustavo, one of the co-presidents of the Brasil Conference. It's an honor to represent this panel on leadership. We have three speakers: Jorge Paulo Lemann, founder and president of the Lemann Foundation, one of the co-founders of 3G Capital, and Fabricio Bloisi, founder and CEO of iFood, and rector of the School of Business from 2010 to 2020. It is my honor now to pass the word.

Thank you, Gustavo. It's truly a privilege to be with all of you at this Brasil Conference, something I admire greatly. And of course, it's a privilege to be in a conversation with two great leaders, Jorge Paulo Lemann and Fabricio Bloisi. I'm going to start the conversation and, for the villains, everyone perhaps knows you from the many things that have been written about you, but I'll try to create a bit of a portrait of who you are, how you think, by asking quick questions. Let's do this for some, and I'll get the answers, perhaps one-word or one-sentence answers. Let's try to keep it to sentences, not paragraphs. The only rule for this first part is to start with Fabricio. Who was the person who had the greatest influence on your life in the early years, when you think about childhood and who you saw as the first person who had a great impact on who you became today?

Hi, good afternoon everyone. Hello, Jorge Paulo. For me, thinking big started with Bill Gates. From the beginning, I always had Jorge Paulo as a reference. My mother was very close to me. My father died very young, so my mother was a very strong personality and had a great influence on my early years.

And Fabricio, for you, when you think about a technological invention that changed your life?

I was fascinated by Star Trek, Star Wars, science fiction. Then the growth of the PC, the MSX, the old personal computer, then PCs. Those two computers made me dream, and it hasn't stopped.

In your adolescence, if your friends were to describe you using three words, what would they be? Fabricio, as an adolescent, what would your friends say? In other words, what was your reputation?

Good with computers, the visionary, thinking about computers. Shy, even today. I'm from Bahia, a 'baiano', shy. I thought that was an impossibility for a 'baiano' to be shy.

Very well. And Jorge Paulo, what were you recognized as? An athlete, tennis player, surfer, the beach guy? That was your reputation.

When you went to college, what was your favorite class? Professor Jorge Paulo.

I was the nerdiest, so programming, physics, things I loved. It seems you got into computer science very early.

Yes, I started programming very early. So, Brazil, when you graduated, did you imagine you would be who you are today?

I didn't imagine, but I still have some years ahead, so I have confidence. I had even bigger visions for myself. What is the right path? I don't look back much regarding what I've achieved. I think it was a very good journey, and I would like to transform the world for the better through technology and innovation. So I think about what's to come, and I'm going to focus on that.

Great. Jorge Paulo, what did you think you would be when you left Harvard?

Interesting. So I dove into this. You both wanted to do big things very early on. Where do you think that came from? Did you have a sense of where this desire to do something big came from?

Interesting. I sometimes think we want young people to win prizes just for playing. But I see the power of competition too. That's good that you mentioned that. Fabricio, where did this vision of doing something big come from?

I read a book that said you have to write down your goals for 20 years, and your friends will say it's impossible. When I was 16 or 17, I started writing down my dreams. And I still write today. What I want for today, next year, the next ten, the next twenty. So today my dream would be to go to the moon, and I want to go there. Always thinking of new and big dreams. And my company has dreams, so it became part of our culture. What we're going to do in 10, 20 years, write it down, and we're all going to work together to get there.

The biggest risk you think you've taken in life, Jorge Paulo. When you look back, was there a moment when you were doing something that seemed very risky, and you felt it wasn't an easy decision, but you took the risk?

And Fabricio, it's hard to compete after that. I would say not many people would take a risk like that. But many people ask me, what is the biggest innovation or the biggest risk?

I always take risks, I change the direction of the business, change the structure, bet on the business. I believe the most important thing in the group is that we change everything every six months. So I think the biggest risk... last week I decided to enter a new business, I get nervous. But for every five things that go wrong, we do one very well. And we've already done many things that went wrong, but one or two times we got it right. So all the time.

I don't know about you two, but I have to admit that when Facebook was launched, if you had told me that Facebook would become one of the most valuable companies in the world, I would have laughed. I couldn't have believed it. And there are moments when I still ask myself why, because it's really a business, right? That type of technology always surprised me. Was there something in life that you underestimated? When you saw it, you thought, my God, this is going to be nothing, and then you were wrong?

I'm laughing here. One thing, people also... the day the iPhone was announced, I was watching it live, it's incredible. But I thought, nobody is going to buy this thing, only the very rich. And today we have billions of smartphones. And I said, even then, it was incredible, right?

Interesting. So I'm going to ask, let's talk briefly about a series of things. So, cryptocurrencies?

Not specifically Bitcoin, but the technology. The technology, I agree. A long-term thing.

Liquid? No. Power? I like it here, there are many things to do here, and I'm not the kind of guy who is tired of getting to my space and taking a trip to space. No.

Tesla?

Here now, it's worth millions and millions, and every day higher. I really think in a year, maybe it will be, but I think it's short-term. I think the competitiveness in electric cars is very big, but the activity will increase, and everyone will have an electric car, for sure.

Good. Short or long term?

Short term. So you think these old companies have a chance? Do you think the shoe is overvalued? I think it's short term. They will have to deliver much better. They will have to start a new market. They will have to start delivering better too. I didn't understand. It's mobile. Short term. I think when you talk about innovation, the future is a lot of green technology, a lot of innovation related to that. Short term.

Short term. Amazon. Excellent company, great company, innovating a lot.

Walmart?

Also. I think it's another, but I think it's a short-term trend because the first deliveries... if there's a big change in delivery in the whole world, new companies have to innovate. I think most of the older companies, I'm more short-term, they have to reinvent, they have to innovate. If they can do it, they will be successful. If not, they have a bad time ahead.

I'm going to ask two more. WeWork?

I bought some shares. It doesn't seem like a very excited answer, but maybe I'm wrong too, because I don't like to bet. But I'm short-term, not because of the model, but because there's a market that's quite heated, everyone investing in everything, and I think we're going to have some changes. A long-term growth that will happen after some changes.

China? Short or long term?

A big benchmark. Mobile, iPhone, Bill Gates, Silicon Valley. It's a challenge, China today, a big challenge in innovation. And I go to China a lot. The level of innovation, I think it's long-term because it's a country that is really innovating, and we have to disregard the ideology, open our minds, and see how they are moving so fast. It's something that should inspire other countries like Brazil.

Now another type of question. Brazil? Short or long term?

Long. I think we have many challenges now, at the moment. I love the theme of this event, which is dialogue, and we need much more dialogue in Brazil at the moment. But after we achieve that and have more efficient companies, we will find a way to grow much more. Long.

Thank you for sharing that. I hope these small questions gave everyone and the public a better idea of who you two leaders are, what you think about many subjects. As you can see, there are some things you agree on and others you don't. I think that's quite interesting and fun. Now I'm going to move on and ask you to do something different with everyone. I'm going to ask you, and I'll speak, and if you're thinking about your company, as Jorge Paulo said, it's a business. If you look at your portfolio, if you were to go to the list, what would you say to him about the weaknesses and strengths of iFood? And Jorge Paulo, I'm going to ask you to do the same thing regarding iFood. Let's talk to you, Fabricio, please. iFood, strengths and weaknesses.

Well, I'll talk about the strengths and weaknesses. Regarding Jorge Paulo, he has always been considered one of the best companies in the world, a benchmark. And Walmart, everyone learns from him. And our company used iFood as a benchmark. I was also a partner of Jorge Paulo and learned a lot about the culture, and we copied many things that he does correctly. Speaking of the strengths, it's a culture that dreams big, and all the big businesses challenge us to be bigger than their dreams. Here too, it's a culture to guide people, to look for the best people and empower those people based on results, not where they come from. So I think our values, empowering the best people, looking for the best people, and we are a results-oriented company. So thank you very much, Jorge, we learned a lot from you. I think one thing that historically I note is that it wasn't so strong, and I'm going to put you in a position here, is that I want to know about innovation. When you look at our company, you will watch our executives here, and then we'll talk. You're a retail partner and say we are open to innovation. We have to look for the result too, do everything new, challenge your own business, bet on a thousand things. This is what Jorge, please, two years ago at this conference, showed us, and he said his biggest goal was to make iFood take more risks. So based on your history, they will be successful with these. Those are the weaknesses, right? So up to the point that you haven't seen what the company did enough to let the pit bull go.

Jorge Paulo, now talk about iFood for us. How do you see it? You were quite involved with them for a period.

Hi, hi. I would criticize because I'm from the old school. I love to see a bottom line, and it animates me a lot. And this business of building, building, building... there will be a bottom line, and that bothers me a little. And that's what he's doing, delivering 60 million food deliveries per month. It was 20 million a year ago, something like that. I like to see something more concrete. What worries me is, for example, Amazon changed the world in terms of many years investing, investing in growth, and eventually they can show profit. While other people we are trying to do that to show profit, I don't know. Really, that's my doubt.

Fabricio, we're close here. Let me see. The big question that some people have, especially in the iFood business, is at some point, during a period, it seems there's a transfer from investors to consumers in these businesses because you have to acquire actions. This is very true regarding many companies. They can have a large amount of capital, and the capital goes on the premise that if you have critical mass and the economy continues to improve, you reach profit. But there are people like Jorge Paulo who at some point say, and what are the businesses that prove themselves? Are you vulnerable from the back? Other platforms? Will I worry if iFood in the United States... there are several ways I can compete. How do you answer people who ask that question? Someday you will be profitable? You can say I don't care anymore, I already make a lot of money and I don't care about that.

I don't think about leaving this. I think about continuing to build a beautiful company like Jorge Paulo's, with a lot of room to grow. I'm going to stop talking about growth when I reach the size of Amazon. I'm going to continue focusing on growth. But what you just said is not the only way to make a technology company. There are many companies we have access to that leave the world and a lot of money, investing a lot, destroying money, giving to customers without thinking about efficiency. I think differently. We have to use technology and innovation to deliver efficiency. We have to use artificial intelligence so that delivery costs are lower. We deliver in 27 minutes. We have to use technology to allow people to receive things in 10, 15, 20 minutes at a lower cost. We want to help restaurants. We use technology that helps 300 in the restaurant. But the mania of doing is not to invest and continue growing, but to seek efficiency through technology. The company now has a social objective. During the pandemic, we helped drivers and restaurants. We spent much more money and gave better conditions to drivers. But this company can be profitable, it will be profitable when the right moment comes. We believe that the delivery business, the principle of the journey 100 years ago, we used to sew our own clothes at home. I think in the future we won't prepare our food at home. We will talk to our digital watch, the digital watch will order better food even without us making the order, cheaper and with better quality, and healthier. So we are at the beginning of a destructive trend that will change how the world works. We could be profitable today if that were the biggest goal, but we have innovation opportunities not just to make money, but also to benefit society, with cheaper and healthier food, to allow a goal today that is not profitable, to have a good entry. And you think this is serious, this mark that you are willing to say? Yes, I know that at some point it has to be profitable, but while I can prove it, the only goal now is growth. And the reason for this is that traditional companies, perhaps, are because for them, creativity is very important in the short term, and they can't do better because how do you do it? When we talked about Portugal and others, you said many established companies are inside. Knowing what Jorge Paulo wants to see is what really interferes with companies like these being totally digital. I think that's one of the reasons. I think there's a market to deliver on creativity. It's not the case now, but usually it is. The other reason that Jorge said is that while you are a company, you don't have a correct culture. As the company grows, you have to look more at what I need to deliver and things like that. And it's necessary to do that and be objective and think about the future. You have to have an exponential thinking: how are we going to change the world with the company? And you can do that in 20, 30 years when you are no longer a big company. There's a saying in Hollywood that the 500 biggest companies in 50, 70 years will be different. So I'm looking for the number for the short term and also a lack of thinking long-term. What do you think, Jorge Paulo?

No, I think there are winners, some winners, and many losers. I think the way I see it is, it's hard to see exactly who the winners will be. The winners will be those who, for some reason, attract all this volume, they grow, but they also have an objective that gives them a competitive advantage in some way. Many of these businesses that are being built on volume really don't have an increment. There's always room for a small guy to compete too. So I want to evaluate which of these businesses really have a growth strategy, really have a type of implementation to protect them. And the others, I would say, I wouldn't mention.

I want to agree with Jorge Paulo a little because I won't say, actually I don't believe it. I brought things like new businesses and old businesses, a lot of money happening. The two-thirds will break, let's see. It's people, companies using the order just by guilt. It's not that the company that grows... it's the company that has to grow and seek efficiency using technological innovation. So, well, many companies will disappear. That's part of it.

I'm going to ask the question differently. Let's imagine there is some financial correction that happens, whether we follow it or not, and that many companies... companies can be sustainable, and we've already seen this happen in the 2000 correction and what happened in the first internet bubble. I think there will be another moment when this correction will happen. But also, in a way, you think if you take the day that is for... let's say this company, the answer in the ranking of the 100 most valuable, I bet they are established, those that have been here for 50 years. For example, we have about four of these companies that have a history, and they are also going through this moment of digital transformation. Do you think the survival rate will also be one in three?

Maybe two in three, because they are bigger and well-established. But look today what you wrote about how they are reinventing themselves and investing in innovation. So some more mature companies are just looking at how to use the new techniques, the new technologies.

Well, so some of these companies will be benchmarks of the future, but they are ready to continue changing, adapting. The smaller ones, as Jorge Paulo says, it's easier to innovate, and the bigger ones, it can be more difficult. But I challenge them, and some will be successful. So I'm going to ask you, more acute, let's say 2030, and we ask the question: the top 100 companies in the world, and the existing companies, will they continue to be the majority on the list, or will the new ones like Fabricio's replace them at a faster rate?

Well, I think the new companies will be the majority, and I think some of the old companies won't survive, they will adapt or they will leave. But I think the majority is already happening. Actually, who are the main companies now? Google, Facebook, the top 10 didn't exist, right? So I think this will continue to happen, sincerely.

The curious thing is that the film wants... well, I'm going to try to answer the call in a bit. These young people who are going to graduate and enter the next phase of their lives are listening to you and learning lessons. But if you had to tell people what leadership capacity should be built now to be successful in the next 10, 15 years of their career, my experience is that the first 10, 15 years will allow you to enter a cycle that will allow you not only to dream big but to be even bigger over time. What would you say are the leadership capacities you look for in young people? You say, 'Ah, I have a young person who demonstrates these characteristics.' Jorge Paulo, how do you see it?

I learned a lot from Jorge Paulo. And when I talk about big dreams, in our case, thinking about a company that is 100 million dollars, but also with a proposal to make people's lives better, the environment, inclusion. We need people with passion who will go to the end, this type of thing, who will make it happen. People obsessed with results, with delivering results, like Jorge Paulo. And innovation is critical, and being open to change. There are people who don't like to change. Sometimes we have to be open to change. Everything will change in your life, you have to be open to change. The only thing that happens is change, and continuing to pretend you forgot. I look for innovation, discipline, and also being ready to make big decisions. And we're not talking much about it, but you have to make big decisions. As an entrepreneur, you have to make decisions, hire better people, you can lose money sometimes with wrong decisions. So people have to be committed and make difficult decisions.

And in a nutshell, what do you expect more from this generation of people who are solving... you two will do what your generation didn't do?

And I'm going to learn from Jorge Paulo too. Making money is important, but I also love the World Economic Forum. That is, we have stakeholder capitalism, and I think that will become normal in this world. And one more thing, the level of disruption and change. Everything is ahead of us. We have cryptocurrencies, we have synthetic biology, carbon credits, the economy of carbon credits, it will change everything. Everything is moving fast. So the new generation, all these kids, opportunities that are already starting, and we're going after them, and we're going to make money. I can't see the same world, but the moment is better.

I want to thank you both. We are reaching the end. I want to thank everyone who watched, and I hope you have been inspired, as I have, listening to these great leaders. And I liked it here. Jorge Paulo proves that you can have an extraordinary passion for doing business all your life and still have the passion. And you, who are in your 20s, pay attention to what Jorge Paulo and Fabricio said. The opportunities you have ahead are endless. We are counting on your leadership to make this world a better place, and you can make money too. So, coherence. Thank you all for being part of this conversation. Thank you.