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Negotiating

A few years ago, at a public charity event, a man approached Carlos Slim to make a business proposition: to produce a coffee table book about Mexico City for the tycoon to give away to clients as a Christmas gift. Slim accepted the offer. He asked them to prepare a print run of 1,000 copies to give away to his special clients at Inbursa, the bank he owns, and at his dozens of businesses across twenty countries, which include the largest telecom in Latin America, an electric cables manufacturer, several hospitals, gold mines, oil companies, cigarette factories, the plot of land containing a pre-Hispanic pyramid in Mexico City, Saks Fifth Avenue stores, bicycle factories, cable TV companies in favelas in Brazil, train lines, construction firms, shares in the New York Times and the largest collection of Auguste Rodin plaster molds in the world.

Weeks after talking to the multimillionaire, the Christmas book man made an appointment with Slim. The tycoon received him in his office in Lomas de Chapultepec, the most traditional of the affluent districts in the Mexican capital. That’s the office where Slim has on display a bronze sculpture of Napoleon on his deathbed, a work by the artist Vincenzo Vela, much admired in the late nineteenth century in Paris. According to one of his employees, Slim keeps it there to remind himself that he is a mere mortal.

When the man handed him a copy of the publication, Slim examined it carefully and glowered at the invoice. He said he could not pay that price because he thought it too high. The amateur photographer assured him he would not be making a profit, that his production costs were real. At his desk, where there is no computer or device whatsoever, Slim took a pencil and piece of paper, added and subtracted numbers, and worked out the amount he was willing to pay. The Christmas book man was haggled down to the last cent by the richest Mexican in the world.

During one of our interviews, Slim told me he could not remember the episode narrated by that character, who asked to be kept anonymous out of fear of reprisal. In Mexico, many people know things about Slim, but those willing to speak freely about him do not abound. That’s why it’s easier to find legends than true stories about this man who studied civil engineering using electronic calculators, an object about which the future millionaire wrote his honors thesis, envisioning a bright future.

The Christmas book story is one of the many which, between truth and fiction, are told time and again at business meetings to remind people of the “Slim style” when negotiating. Another funny anecdote that does the rounds among the same circles is that of the time when Slim haggled for hours with a seller in Venice just to get a discount off some souvenir.

“Yes, the Venice thing did happen, but the prices aren’t the point. I went into a shop and got chatting to an old seller, an heir of the Venetian tradition. I believe in having real conversations with real people. First I struck up conversation with the seller’s son, and then the man himself appeared. Then the conversation got a bit long,” Slim clarifies regarding that haggling episode, witnessed by a group of Mexican intellectuals who were with him. “I’m not a souvenir shop owner. I wasn’t in the store buying merchandise to resell it. I’m interested in the costs, the sales schedules, the marketing, the business plan, that kind of thing, but not because I want to buy. When you shop for souvenirs you do so at leisure, but I don’t normally go around buying things.”

For Slim, what he did with that Venetian seller was not haggling, but “to enter in communication with an entrepreneur, people who do business.”

To give a better idea of his negotiation style, Slim himself created a list of guidelines that his employees and some followers I know try to follow to a T. In 2007, when I first requested a formal interview with him, one of his 220,000 staff kindly replied that my request would be considered. Among the documents attached to the message was the one in which the magnate explains the principles of his business conglomerate:

1. Simple structures, organizations with minimum hierarchies, human development and internal training of executive functions. Flexibility and speed in decision-making. Operating with the advantages of a small business, which are what make big businesses great.

2. Maintaining austerity in times of plenty strengthens, capitalizes and accelerates the development of a company; at the same time it avoids bitter, drastic changes during times of crisis.

3. Always active in modernizing, growing, professional development, quality, simplification and tireless improvement of productive processes. Increase productivity, competitiveness, reduce spending and costs, always guided by the highest global standards.

4. The company should never be limited by the status of the owner or the administrator. We should not feel like big fish in little ponds. Minimum investment in non-productive assets.

5. There is no challenge that cannot be overcome when working as a team, with clear objectives and knowledge of the tools available.

6. Any money that goes out of the company evaporates. That’s why we reinvest the profits.

7. Business creativity is not only applicable to business, but also to solving many of our countries’ problems. Which is what we do through the group’s foundations.

8. Firm and patient optimism always bears fruit.

9. Times are always propitious for those who work hard and have the means to do so.

10. Our first premise is and always has been to remain acutely aware that we can take nothing with us when we depart from this world, that we can only do things while we’re alive, and that an entrepreneur is a creator of wealth, which he temporarily administrates.

Slim gives this kind of advice in his speeches. It was not difficult for his media advisers to figure out that herein lies his potential for popularity: in encouraging others to dream of becoming millionaires by following his steps. Thus, the mogul delivers formulae, tips and secrets to the business world, where his holding company, Carso, controls firms dealing in food, car parts, merchandise, detergents and cosmetics, machinery and electric and non-electric equipment, non-iron metals, mining, paper and paper products, rubber products, chemistry and communications. These and other business areas make Carso the industrial group with most shares on the Mexican Stock Exchange.

“Historia de Grupo Carso” (“History of Grupo Carso”) is the title of a document he wrote to share how his empire evolved. It is dated June 1994, and he gave it to me personally—with some notes he made by hand, in pencil—in spring 2015 to help me understand the way in which his business conglomerate operates. Grupo Carso’s business principles include working without any corporate staff (since the company should always be localized at the production plant, operations and sales, and with minimum operational expenditure). It also specifies that investment should always go into the production plant and the administration and distribution teams, never into corporate assets.

Slim explains:

The aim is to reduce the hierarchy to the minimum, bringing the directors as near as possible to the operations, and having them work for that and not for corporate structures. We try to combine executive activity with the interest of shareholders through a delegate of the president of the committee, who, working in conjunction with the directors, will seek to constantly optimize investments, strategy and expenditure.

Beyond his business profile, Slim also has a political side. Since 2006, that political profile has come under increased scrutiny, although he has never seemed too worried about how drastically he divides opinions, nor does he seem overly concerned with explaining the origin and development of his megafortune directly to the press. However, “How does it feel to be the richest man in the world, in a country where 50 million live in poverty?” is one of the FAQs the businessman answers in a dossier that his PR team gives to journalists when they request an interview. “To me this is not a competition. I don’t think in those terms. When I die I’m not taking anything with me. Creating wealth, and ensuring its distribution, is a legacy that will remain,” writes Slim. Other FAQs are equally deadpan. “Is it true that Carlos Salinas de Gortari sold you Telmex in return for a favor?”

But most of them are indulgent. The last one is: “Why have you not put yourself forward as a presidential candidate?” Slim could have put there a phrase that I’ve heard him say during his speeches: “I believe a businessman can do with one dollar what a politician cannot do with two or more.”

How did this son of a Lebanese merchant get formally involved in the world of business after studying civil engineering at a state university? In 1965 he bought the bottling plant Jarritos del Sur; he then created a brokerage firm, a construction company, a mining company, a real estate operation and property development company that he called Carso, the name he would later use for his entire empire, fusing the first letters of his and Soumaya’s (his late wife’s) names. His first strategic purchase was a graphic arts company called Galas de México, of which he bought 60 percent in 1976:

At the time of purchase, Galas presented very difficult conditions: workers on strike, 1,700 clients and 25 percent of the sales depended on a single one of them, numerous products, obsolete equipment, clients annoyed about the strike, suppliers who would not send goods due to lack of payment, overdue payments to banks and creditors, unpaid tax agreements and social security, in addition to various labor disputes and a lack of industrial experience.

It was with this purchase, and 10 percent of the tobacco factory Cigarrera La Tabacalera Mexicana four years later, that Slim started to garner notoriety in the national business community. Grupo Carso was formally constituted in 1980, and between 1981 and 1984, during a period of financial crisis in Mexico, his consortium made important purchases, a move that Slim defines as the “Mexicanization of companies.” The term reflects the nationalism that tends to feature in his language. The tycoon writes:

During those years, and seeing as many large national and foreign investors did not want to continue their investments, it was viable to acquire a majority in several businesses at prices well below their real value, and even Mexicanize some of them, including Reynolds Aluminio, Sanborns, Nacobre and its subsidiaries. Later we Mexicanized, in terms of equity and operations, Luxus, Euzkadi, General Tire, Aluminio and 30 percent of Condumex. Another way in which we Mexicanized companies was by selling them to other Mexicans, as was the case with Química Perwalt in 1983, and La Moderna in 1985.

The 1980s are considered pivotal in the development of his business conglomerate. Slim enthusiastically tells the story of this growth:

As we all remember the 1980s was a critical period in our country’s history. There was a lack of confidence in Mexico’s future. At the time, while others were refusing to invest, we decided to do so. The reason Grupo Carso made this decision was a combination of self-confidence, confidence in the country, and common sense. Any rational and emotional analysis told us that doing anything other than investing in Mexico would be an atrocity. You cannot bring up and educate your teenage children (or of any age) with fear, lack of confidence, and buying dollars.

Slim equates this period of risky buying with a purchase made by his father: “The conditions in those years reminded me of the decision my father made in March 1914, at the height of the Revolution, when he bought 50 percent of the business off his brother, risking his entire capital and future.”

In actual fact, the conditions differ greatly between these two scenarios. While Slim’s father had lived through the revolutionary chaos, the tycoon made his immense fortune within the framework today’s dominant ideology: neoliberalism. It was during the intensive application of neoliberalism in Mexico, through the so-called Washington Consensus, that Slim amassed a significant share of his capital.

What is the Washington Consensus? It’s a term colloquially given to the economic model imposed by world powers on developing countries. One of the best definitions provided comes from Indian writer Pankaj Mishra, who describes it as “the dominant ideological orthodoxy before the economic crisis of 2008: that no nation can advance without reining in labor unions, eliminating trade barriers, ending subsidies, and, most importantly, minimizing the role of the government.”

More than any other businessman in the region, Slim took advantage of this turning point in history, when economies that until the 1980s had been tightly controlled by political regimes began to open up. He became the most emblematic representative of Latin American capitalism.