Luciano Suassuna
IstoÉ Dinheiro No. 0564
23/7/2008
Translated: C. Brayton
Boi Zebu Editorial Services
The founder of Opportunity has become an item for the police blotter.
The founder of the Garantia fund has made headlines in the business section.
In less than a week, two major events monopolized conversations among the Brazilian elite. First came the temporary imprisonment of Daniel Dantas and investor Naji Nahas. Then came the announcement that InBev, led by Jorge Paulo Lemann, Marcel Telles and Carlos Alberto Sicupira, had put up US$ 52 billion in cash for America's largest brewer, Anheuser-Busch, the maker of Budweiser. The fact is that the two events only go together because of a coincidence of timing. Because as a measure of business practices they are completely contradictory -- examples of the Dantas style of capitalism and the Lemann style of capitalism.
The InBev triumvirate first came to prominence in the 1970s with the creation of the Garantia investment house. Garantia is Brazil's most legendary investment bank -- even if some believe that title belongs to Opportunity, manager of the most profitable investment fund in history. In the origin of the two investment houses, and in the way each approached the market and its own management practices, lies the divide symbolized by this week's events, when one made the crime statistics even as the other made world business headlines.
Daniel Dantas was the latest manifestation of an outworn model of Brazilian capitalism, as intimate with the State as it was tangled up in political interests. In the face of this failed model, eager to privatize strategic sectors and dependent on massive investments, and foreign investment in particular, Dantas presented himself as a fixer, able to bridge the old and the new without the need for major ruptures. He was the face of the Cardoso years, of what came to be called conservative modernization.
His success was immediate and glorious: a fantastic deal for Ecelsa, the state electricty company of Espirito Santo, the creation of Brazil's largest private equity house, hand in hand with Citibank, his association with the state pension funds in the telephony privatization auctions, his deal for the Port of Santos. Daniel Dantas seemed to have the gift of clairvoyance -- he knew where things were heading and where the action was.
In putting together his team, he gave pride of place to his sister and his brother-in-law, despite the high degree of professionalism required for his undertakings. He could not hold on to key executives and earned himself a powerful enemy over a question of bonuses and variable compensation. In his management of the company's cost structure, he kept things lean, even as he ran up costs in the companies he managed. In managing his public image, he seemed to enjoy his reputation as a dark eminence, a behind the scenes operator, the friend that everyone wanted, the enemy everyone feared. Daniel Dantas became a sort of guru, with faithful adepts in every sector of the Brazilian elite.
At Garantia, Lemann took nearly the opposite approach. He preached meritocracy. He offered equity to his executives, all of them market professionals. At Lojas Americanas, he proved that he was a long-term planner. At Ambev, he cut spending and shrank operating costs. He created a foundation to subsidize MBA studies for a lot of people, including Carlos Brito, the former Stanford student who became CEO of InBev. He bet on innovation, marketing, economies of scale, productivity, legal certainty, enduring partnerships -- the keys to globalized capitalism.
An economics genius, Daniel Dantas became one of Brazil's richest men while compiling a history of personal friendships and rivalries, as if he had transplanted the heart of the old political coronelismo into the business world. The problem was that, in the game of global competition, the new economic empires need partners, not rivals, competitors, not enemies. Among other reasons, this is why Dantas will continue to make headlines in the crime pages for some time longer, even as the world awaits Lemann's next gambit somewhere else in the world.