Carlos Slim Helú has a mathematical mind and simple tastes. For more than 40 years, he has lived in Mexico City in the same house, which he describes as modest. And yet, according to Forbes magazine, Slim is the world’s wealthiest person, having overtaken Bill Gates and Warren Buffett of the United States and Mukesh Ambani of India.
Slim, 70, attributes a large measure of his success to lessons he learned from his father, Julién Slim Haddad, who was born in Lebanon and immigrated to Mexico in 1902, at the age of 14, without money and not knowing Spanish. Slim’s father taught him the importance of self-discipline, education, hard work, good accounting, and risk taking. Slim’s father invested in Mexico during its revolution, which began in 1910, and again in the aftermath of the 1929 stock market crash.
Like Buffett, Slim is an astute investor who quietly pieced together a diverse array of investments in a variety of sectors — printing, mining, minerals, metals, industrial products, insurance, retail shops and restaurants.
In 1990, when Mexico was privatizing its economy, Slim and two partners — Southwestern Bell from the United States, and France Télécom — acquired the state-owned Teléfonos de México (Telmex). Slim paid personal attention to the company’s mobile phone unit, investing in its network, expanding coverage and creating innovations such as prepaid phone cards, which enable an individual to purchase a card and receive a handset along with it. Prepaid phone cards have been responsible for increasing Telmex’s market penetration to 85 percent.
Slim’s telecommunications companies do business throughout North, South and Central America. Under his leadership, these companies have grown organically and through acquisitions. While criticized for charging some of the highest phone fees in the world, Slim’s companies have recently been praised for adjusting their tariffs downward.
Trained as an engineer at the National Autonomous University of Mexico, Slim taught mathematics and linear programming while still a student. An avid reader, art collector and sports enthusiast, Slim recently made a big investment in The New York Times, becoming the largest nonfamily investor in the company.
Slim recently discussed leadership in Mexico City with Gary Burnison, chief executive of Korn/Ferry International; Eduardo Taylor, Korn/Ferry’s regional market leader for Latin America; and Joel Kurtzman, editor in chief of Korn/Ferry Briefings. The following comes from that discussion.
Your success in business has made you the richest man in the world, according the recent rankings in Forbes magazine, ahead of Bill Gates and Warren Buffett. What role does money play in your life? Does it motivate you?
SLIM: The house where I was born was better than the house where I now live. The house in which my wife grew up was a lot better than the house where I now live. So I would say the answer is no. Money does not motivate me. It is my view that when families have money in excess and they are not making investments and building businesses and creating jobs and doing things for society — when they think only materially — then something is wrong. That is the way I was raised, and those are the values that were taught to me. The truth is, when I pass away, I will not take 1 cent with me. I will not take anything. In my opinion, wealth is a responsibility and in some ways a compromise. You must keep it growing and use it to society’s benefit.
Are you suggesting that a wealthy person — a CEO, for example — should be a custodian of the wealth of an organization or a family?
SLIM: No, not at all. The role of a business leader — a CEO — is to create more wealth, not conserve it. A CEO needs to grow the wealth of the company and the country. Wealth is not a privilege, it’s a responsibility. If you are a great doctor, you have a responsibility to use what you know to treat people and to help them. If you are a politician, you have to take responsibility and use that responsibility to build your country. Having a leadership role in business or politics means taking responsibility. To me, the word custodian signifies someone who sells everything and puts the proceeds in the bank. It doesn’t suggest someone who is building.
Some might use the word guardian instead of custodian.
SLIM: Again, I disagree. The point is not to guard or conserve what you have, but to create. It’s like planting a fruit tree. You don’t just guard it or conserve it. You water it. You care for it so it grows. But you must understand there is a difference between wealth and income. Wealth should be created, it should be invested, and it should be used to create more wealth. If you have a fruit tree, the fruit grows down from the branches and you reach for it. You eat the fruit, but you take out the seeds and you plant them because you have to reinvest. That’s where the wealth lies — in producing more trees. You will not necessarily have more income every year, but you will have more wealth if you plant the seeds. And if you do it long enough, you will have enough wealth to create a middle class, which will form the strongest market you can have and the best society. So the responsibility of someone with wealth is to create more wealth.
And then distribute it?
SLIM: I don’t believe that you need to create wealth and then make a distribution plan for it. I think wealth is created because the market is growing and society is growing and then the overall economy grows. It’s classical economics. But having said that, I can say that the best investment is to fight poverty. Fighting poverty is not just a social issue or an ethical issue. It’s an economic issue, and there is an economic need to fight poverty. It’s best for everyone and everything because if you fight poverty, you create a bigger market, which creates more wealth and with it more stability. If you do that, you create enough wealth to educate people and then they have higher levels of productivity. This means you can create more jobs and employment. And, of course, all of this creates human capital. In my view, prosperity is good. But if only one country is prosperous, it’s still a small market. What do you do with all of the raw materials and production potential that we have? All of the labor? The more prosperity we have, and the more wealth we create, the better it is for everyone.
The American industrialist and philanthropist Andrew Carnegie said, “The man who dies thus rich, dies disgraced.”
SLIM: That’s crazy. In part, of course, because it depends how you make your wealth. If you made it selling arms and killing people, that’s a crime. That’s not true wealth in my opinion. But if you are creating enterprises, creating wealth for your country, your society, creating jobs for people, that’s something honorable.
Who was the biggest influence on you?
SLIM: My father. His examples of values and work were very powerful for me. I have this copybook from when I was 13. It is on the wall in my office. He had me write in it and keep records of all my expenditures. It includes my first balance sheet, which I produced when I was 15 years old. My father passed away when I was 13. My father told me to make my copybook clean and to keep it neat and to do it on time.
What else did you learn from him?
SLIM: My father showed me how to work. He had a big business for that time period. He closed it down — sold it. The circumstances were interesting because he closed it in August 1929, two months before the October 1929 stock market crash. It was a kind of coincidence. And then he invested in new businesses and real estate. Then, later, he opened another business — a merchandise business, a hardware store — when he was much older and sick with diabetes. I was only about 9 years old, maybe 10, but my father sent me to his competitors to look at the prices of the things they sold in their stores, and he had me write down those prices and go over them with him when I got back. I felt like a spy looking at the prices. But I learned a lot.
What were some of the other things he taught you?
SLIM: Well, I like to think about another example of my father. He arrived in Mexico in 1902, with almost no money, when he was 14 years old. He had to learn Spanish. But he made a business with his brother and by the time he was 23, he had capital of $40,000. Then came the Mexican revolution, which started in 1910 and which lasted a long time. During the revolution, my father started investing. He did it during the period of crisis.
Did you learn to invest in periods of crisis from your father?
SLIM: Yes. I learned from him that you invest in times of revolution and crisis. Then I read books and realized there are moments when things that are normally very expensive are valued very low. I learned that in business, the time to invest is when things are not in good shape. When you invest, you want to take a better position than your competitors. When there is a recession, we maintain strong positions. When there is a recession and your competition doesn’t invest, they are giving you the advantage.
Were you a big investor during the recent global financial crisis?
SLIM: Yes. And we would have liked to invest more. At the time, members of the American Chamber of Commerce in Mexico invested $2 billion. That included the investment of the big U.S. companies. At the same time, we invested $3.2 billion. We invested a lot. The U.S. investment in Mexico is not enough.
Why is that?
SLIM: I think the U.S. is being left behind. In Mexico, they are not in the banks; they are not in telecommunications, water or power. They are in traditional industries. They need to invest more in Mexico.
Did you learn any big lessons from the financial crisis?
SLIM: One of the important lessons — especially from the Lehman crisis — is the power of excess. Periods of excess make you ambitious, but not always for the right thing.
Let’s turn to the topic of leadership. How do you define leadership?
SLIM: There are many types of leadership. You can have leadership in your family, between friends, between a team in sports, in business and politics, in religion, and in the professions. So, it’s difficult to define it in three or four words. True, it is linked to achieving some type of target and to a set of mutual responsibilities. But leadership is also about transmitting confidence to people, so they can accomplish their goals. So they can better target their achievements. So, in general, it depends on the type of activity you are engaged in. Some people can be leaders in one type of activity, not in another. But in business, leadership is linked to fulfilling an organization’s objectives, to increasing its efficiency, to coordinating its activities, to fulfilling individual and group responsibilities, to being able to compromise, and to having some measurable achievements. In addition, when people see that a leader or chief executive is working, it doesn’t matter what position that person has. They will benefit because the leader acts as a role model for them
What else do leaders do?
SLIM: I believe the leader sets the direction, and even the emotional tone, of an organization. It is about satisfying the emotional needs of people. It’s not just about taking responsibility for things.
What do you mean by setting the emotional tone?
SLIM: People cannot live without doing anything, without having a direction in life, without work. What good organizations do is to set a direction and help develop people. It’s very important for leaders in business to work to create human capital that way, to give a sense of purpose to a team, and to the people in the organization. If leaders do this, then people working in organizations will feel they are doing something important for society and for the people around them. They will have a real sense of achievement. You can see that in construction, in a building, for example. There are some people in charge who have good leadership skills, and you can see they work hard. What they are looking for is purpose to create and do something with quality and to optimize the way they work as much as they can. And they feel very good about the achievements they are making as the building goes up. They feel pride about the things they are doing. We have been talking about the manifestations of leadership, and this is one of them — making people feel a sense of achievement.
Do you get better at leadership over time?
SLIM: Yes, I think you do. Leadership is a combination of things. It’s easy to think something is white or black, that people have the genetics to be a leader, or that other things are in play. And, of course, there are always circumstances. I personally don’t believe so much in luck, but circumstances are important.
What’s the best way to determine who is a leader?
SLIM: The best way to find out is to look at what they have done in the past.
How have you changed as a leader over time?
SLIM: You develop a consciousness about your responsibilities and about the areas in which you must compromise. You look at things differently that you are working on. You develop international references regarding competition because you are competing internationally. You learn over time.
Does competition teach people about being a leader?
SLIM: Yes, but not directly. You see, if you are talking about a football game, competition is very important. If you are talking about education at school, the marks you have — compared with the marks of others — are just qualifications. They are not the same as your knowledge, your way of understanding the world. At the same time, I think competition makes everyone better. It requires you to make more effort. You have to look around more. You have to study more. You have to train more. You have to look at where you need to be better at what you do. So, competition can be valuable. In business, it is necessary to have competition to be your best. It makes you study what’s going on in other places to see what your competitors are doing. And what it shows is that your competitors are always getting better. So, it makes you understand that you always need to improve, too — not just as a leader, as an organization. Competition makes you improve.
Do you develop leaders for your companies from the inside, or do you go outside?
SLIM: Yes, from the inside. First, the people that are inside the group follow our philosophy. We have a philosophy of leadership — some ideas and some concepts. They need to share this. Also, because they are inside the company, we see that they work together and not against each other. We all need to go in the same direction. We are not competing on the inside; we are competing on the outside. What can happen is that people coming from outside — when they are new — have a need to take strong positions to get known. What also happens is that when people come in from the outside, they come in at such a high level that it makes people jealous. And they also come in with other ways to work and with other cultural ideas and values. That’s not good for the organization.
Then how do you deal with acquisitions?
SLIM: That is an important issue. You need to have a culture that is flexible, and that people can adapt to, and that they feel they would like to join with pleasure. In an acquisition, we don’t really move people. We cannot get involved at that level with so many companies. Besides, if you move people, they will run.
Does that mean that the management of a company is one criterion for an acquisition?
SLIM: No. The management of the company is important for investors, since you are going to put your resources into a company. But management is by no means the main reason for an acquisition. The reason is primarily when you are in some activity and you need to expand geographically to increase the value of the company. Then an acquisition is a good idea. And, of course, we think that if the management of the company we are acquiring is good, then they will be happy to work with us. On the other hand, if the management is not good, then we will try to improve it.
Are there some industries where management is more important than others?
SLIM: Yes. There are certain companies where management is very important. This is especially true with technology companies. With some kinds of technologies you really need people with special types of knowledge and understanding. In these sectors, it is very important that people stay in these companies. Management is also important with regard to banks. You need good bankers. In some cases, when you are buying something you know very well — say you’re an international automobile company and you’re buying a local automobile company — you want to have good people there, and you want to give them an opportunity to develop. But people who work with us know that they can go as far as their talent will take them. We don’t just care about doing the job. We also care about doing the job in the right way.
How do you make sure your managers and leaders develop?
SLIM: We expanded a great deal in the last few years. In telecommunications, since 1990 for a period of 15 years, we grew at a rate of 66 percent a year. When you grow so fast, you have many problems. So, what we did — years ago, now — was that we told our local and regional managers of the companies we wanted to take international to begin making people available whom we could move outside of the country. I’m not talking about moving 2,000 people outside the country. I’m talking about moving one or two or three at a time. But we began planning it and developing our people early, before we expanded so rapidly.
Do you consider yourself to be the leader of a big group of companies, or do you consider yourself to be an entrepreneur? After all, you built your group from scratch.
SLIM: I guess I think of myself as an entrepreneur. But an entrepreneur who needs to manage people. You see, I think you need to have leadership in business. You need to have leadership in all areas of economic activity, just like you need to have leadership in sports. The same is true in politics. But I believe you don’t just need to have leadership in the CEO. You need to have it in all of the important areas of the business. Sometimes you need leadership in the operations people, too, and not just in the CEO. So, I think of CEOs as leaders of leaders, and not as the leader. But in my case, with regard to my own activities, I really only have two or three people working with me. In my role, I work with the leaders of the companies. That’s my job. In our businesses, we don’t have people who are both the CEO and the chairman. We have the CEO, and we have the chairman who, in some ways, is the person who represents the stockholders. Or, we might have a founder who works with the CEO. But in any case, my job is to work with these people.
Do you work with the leaders in your companies in the same way?
SLIM: In business, I think there are three basic types of leaders, and they are usually very different. There are entrepreneurs, executives and investors. Then there is also the business leader who is concerned with political activities — the president of the Chamber of Commerce, for example. In small and sometimes medium businesses, and in some large private companies, there is some confusion because these roles are often taken on by the same person. In the U.S., in big businesses, the entrepreneur doesn’t exist anymore. These companies are led by people who are executives with institutions holding the stock. In some of these large companies, the entrepreneurial type of person is long gone; maybe that person left 50 years ago. When that’s the case, the entrepreneurial thinking is gone too.
Is it possible for the same person to perform those roles?
SLIM: The truth is that many people can do all of these jobs. All companies start small and grow. And the number of small and medium businesses is far bigger than the number of big companies. But as the businesses grow, sometimes the founder is no longer the best person to run the company. Then, you need to find the best people to run the business. You need to find the best executives — people who do that particular job very well. I say this because the CEO is very important to the success of the organization.
So there are times when you go outside for talent?
SLIM: If we are going to do something very differently from what we have been doing since the beginning, then we may on occasion need to find an executive who can take charge and make those changes happen. But if we are going to be doing what we’ve been doing for years, then we need to have people from inside. What is important is that the executive needs to know the essence of the business. This is especially true so [he or she] can avoid spending too much time managing things that are not important and paying attention to too many variables that are not significant. Leaders need to have enough experience so they can simplify things and can focus on the essentials in order to make the right decisions.
You have talked a lot about the need for enhancing education in Mexico and elsewhere. Is that one of the aims of your foundation?
SLIM: Yes. I think that businesspeople, entrepreneurs especially, have very good training in the management of human capital. We have the potential to solve problems. I think for us it is easier to solve some social problems sometimes than it is for others. One of the biggest problems is to develop human capital. How do you do it? There are many steps. You begin with nutrition for the mother, you pay attention when the child is born, you pay attention to the nutrition of the child, then you pay attention to education — to modern education, quality education. That’s what the foundation does, but it’s also what we do all the time in our companies. We are training people to be the best and to develop their know-how to learn. So, I think that economic and social problems — even national problems, excluding politics — are areas where people in business have expertise. These are areas where private organizations have the ability to help solve problems. You know, in previous societies the state had the power of economics, military, politics and so on. But now, society has evolved. Economics is getting complex and society is getting very complex. The best way to fight poverty is by creating jobs and stimulating employment.
As a leader, are you still learning?
SLIM: Yes, sure. I learn every day.
You are one of the most successful people in the world. Are there words you live by?
SLIM: It sounds better in Spanish, but I will say it in English anyway: “Impose your will against your weakness.” That is what I believe.