It is said that true wealth is often hidden and unknown, and 3G Capital is a perfect example. 3G Capital is a Brazilian investment firm. It is very low-key, and many people are unaware of it, yet it is the operator behind many world-class companies. It has acquired well-known enterprises such as AB InBev, Burger King, Heinz, Kraft, Tim Hortons, and SABMiller. Together, these companies generate annual revenues of up to $100 billion and a total market value of $350 billion, making 3G Capital the world's largest food group. Image source: Internet How did 3G Capital achieve this? Is there a successful logic behind it? What lessons can we learn from it? The three partners of 3G Capital—Lehmann, Marcel, and Beto—are known as Brazil's "Three Musketeers" , reflecting their high reputation. The trio is very low-key and rarely appears publicly for interviews. Lehmann said: "All we have done is copy a bit from Goldman Sachs and a bit from Walmart, nothing more." If we summarize 3G Capital's business philosophy in one sentence, it is to invest in companies that are poorly managed and whose market value is below intrinsic value, acquire controlling stakes, then implant 3G Capital's management philosophy to improve operations and ultimately increase performance. For example, they initially bought 70% of American Stores for $24 million, and just six months later, someone was willing to pay $20 million for 20% of the company. How exactly do they do it? What management lessons are worth learning? We have summarized five points, let's take a look. Before founding 3G Capital, the trio ran Garantia Investment Bank, where their business philosophy was formed, and 3G Capital later replicated these ideas. Talent Acquisition: Hire poor, smart, and ambitious people Garantia did not value academic credentials; it recruited PSD talents. PSD stands for Poor, Smart, and Deep Desire to Get Rich. These individuals have no background, are eager to change their fate through hard work, and will charge forward desperately to make money, even by any means necessary. Like a hungry wolf, baring its teeth and pouncing on its prey. This philosophy also had a historical context. In the 1970s, there were no computers; stock trading involved physical paper that did not bear names, making transactions completely anonymous, leaving much room for manipulation. Additionally, the Brazilian Securities and Exchange Commission and the Central Bank had just been established, with novice employees and loose regulation. Therefore, the best way to make money in Brazil's financial market at that time was to exploit regulatory loopholes, and PSDs were better suited for that. The selection process was equally rigorous; candidates for Garantia faced over a dozen rounds of tests before being hired. Senior partners conducted interviews with very tricky questions, such as "Are you gay?" and "How many times do you have sex per week?" The company required new hires to have a team spirit and show passion for work in their eyes. Beto and Marcel, two of the trio, were recruited this way. This hiring philosophy gave many poor people a chance to leap over the dragon gate. A man named Antonio was a PSD; he joined Garantia at 16 as a handyman, working during the day and attending night school. He arrived at the company at 7 a.m. every day and stayed until evening. A few months after joining, Antonio earned more than he expected. Seeing the growth opportunity, Antonio went on to study economics at university. Twelve years later, at age 28, he became a partner. In contrast, newcomers at major Wall Street firms might work for decades without rising. But at Garantia, even someone like Antonio, who had only primary school education, had the chance to become a partner, which also attracted young Brazilians who had attended business school. It is precisely these people who are willing to work desperately that allowed Garantia and the companies it later acquired to have excellent talent for management. Meritocratic Management System Even founders can be ousted by employees Every large company has a compensation and promotion system. Garantia paid below industry wages, relying mainly on bonuses to motivate employees, with bonuses often reaching four to five times the salary. As long as employees achieved their goals, they received bonuses, even the cleaners. Garantia roughly divided employees into three levels:

  1. Bonus-earning employees
  2. Commission-earning employees
  3. Partners Bonus-earning employees who met annual goals received rewards of several times their salary. Outstanding performers could be promoted to commission-earning employees, receiving a percentage of the company's total profit, typically 0.1%–0.3%. Promotion to commission-earning status significantly increased income and was a major step forward. Garantia distributed 25% of its annual profit to employees as bonuses. However, commission-earning employees could not relax; they were assessed every six months, incorporating feedback from superiors, peers, and even subordinates. If performance fell below expectations, the commission rate was reduced. The company also capped the total commission pool; if someone's commission increased or a new employee became commission-earning, another person would lose commission eligibility, fostering internal competition. The third level was partners, who received dividends in addition to commissions. Partnership was the pinnacle of the career ladder; in the company's 30-year history, about 40 people reached this level. As long as one delivered outstanding results, there was an opportunity to become a partner. However, the company did not directly pay dividends to new partners; instead, they were required to buy equity. Within two to three years, new partners used 70% of their income to purchase company shares, leaving only 30% for themselves. This approach retained talent and prevented partners from having too much money and losing their drive. Lehmann, image source: Internet Under this system, no one had a comfort zone; everyone had to stay vigilant and diligent. The company eliminated about 10% of its workforce annually. When some old partners became wealthy and indulged in luxury, Lehmann gradually bought back their shares and let them go. Lehmann then sold the shares to new partners, bringing fresh blood to contribute to the company. Even the founders were not exempt. After selling Garantia, the trio founded GP private equity fund and managed it the same way. Later, new partners pressured them, forcing the trio to sell their shares and hand over control of GP Investments. Partnership Team: Clear Division of Responsibilities Non-interference, no ego battles Marcel and Beto joined Garantia in the 1970s and maintained unity with Lehmann. The main reason was their clear division of responsibilities: Lehmann handled strategic guidance, Marcel managed the trading department, and Beto developed new businesses. They each focused on their own tasks, exchanged ideas and opinions, but never interfered with each other. The same applied in acquired companies: whoever was responsible for a business made decisions and bore the risks. But this independent work was built on shared values. The relationship between Buffett and Charlie Munger is excellent, which is one reason for Berkshire Hathaway's success. Buffett believes that to maintain good partnerships, the most important thing is to avoid ego battles. The trio excelled in this, sharing a common trait: they did not seek fame or profit. They all preferred simplicity, believed in meritocracy, and were willing to share success with elites. In terms of personality, Beto was "hard," Marcel was "soft," and Lehmann was "soft, soft, soft," making them complementary. "You cannot fight your partners, and you should not resent those who close deals and deserve praise. If one insists on winning, no relationship can last long." Core Value: Frugality Boss and employees share an office In the 1960s and 1970s, luxurious perks were standard for executives at most Brazilian companies, with private dining rooms, large offices, and luxury cars. Garantia bucked the trend, advocating frugality and simplicity. The office was a large open space where bosses and employees sat together; bosses drove Santanas, and executives shared secretaries. There is an interesting story: an executive was near a gas station when he encountered a robber, but the robber saw him driving a beat-up Santana and did not approach him, saving him from the incident. Whenever they acquired a company, they brought these values, immediately saving significant costs. For example, after Garantia acquired Brahma Beer, Marcel eliminated directors' private offices, reduced the number of secretaries, and laid off 2,500 employees within three months, saving $50 million at once. Many might worry that such drastic cuts in employee benefits would cause dissatisfaction, lead to executive departures, and collapse the company. After acquiring American Stores, employees were very dissatisfied with the Garantia model; over 30 people united to protest to Beto, who immediately fired them, so quickly that they could not re-enter the building after lunch. Many were unhappy, but some agreed. A man named Miguel recalled that before the acquisition, he had a 40-square-meter office, three phones, a private secretary, and a comfortable life, but he was not satisfied because orders were not communicated and he could not make money. After Marcel arrived, Miguel was actually happy and became one of Marcel's key aides. Two years after the reform, Brahma was named "Company of the Year" by Exame magazine. Revenue increased by 7.5% in one year, and profits doubled. The company distributed 10% of its 1990 total revenue as bonuses, with 35% of employees receiving bonuses equivalent to 3-9 months' salary. Borrowing Ideas Directly emulating the world's best companies Lehmann said, "Why start from scratch when you can learn from the best companies in the world?" These business philosophies of 3G Capital are not original. For example, the variable compensation system was copied from Goldman Sachs by Lehmann, which became a turning point in his career. American Stores' operations were modeled after Walmart. Before Garantia took control of American Stores, Beto wrote ten letters to the world's ten largest retailers, asking if he could visit and learn how each operated. Through this method, Beto met Walmart founder Sam Walton and learned how to run a retail business. He even adopted Walton's betting style: Beto promised to perform a belly dance if profit margins reached 6%, and he did. The management of Brahma Beer was learned from General Electric. GE had a 20-70-10 rule: the top 20% should be rewarded, the middle 70% retained, and the bottom 10% removed. Marcel adapted this rule for Brahma, laying off many employees and hiring more motivated new ones. The trio did not establish a relationship with GE; they learned by deeply analyzing financial reports. 3G Capital's success comes from managing people, establishing a meritocratic system, selecting the best talent, and identifying worthy investment targets. Without these people to manage the companies, 3G Capital's other strategies could not be implemented. This is the most valuable lesson from "3G Capital Empire"—the emphasis on investing in people. Source: Danjie Entrepreneurship (ID: manjiechuangye) Tips will be paid 400-2000 yuan once adopted. China FMCG + Internet Professional New Media Dedicated to FMCG manufacturer transformation and channel digital solutions