Carlos Slim Interview
Financier and Philanthropist
December 2, 2007
Washington, D.C.
MEXICO’S TELECOMMUNICATIOS TYCOON
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A really good entrepreneur knows the power of a good idea. A manager knows how to operate, and an investor, how do they know? You are now an investor in many businesses. How do you distinguish that?
Carlos Slim: Well, I think in the small and middle-size business, the same one is all three things. The same person is the owner, is the investor and is the executive. You can't make a separation in the middle and small business because the entrepreneur has all three characteristics. He is the owner of the business. He is the investor in the business. Sometimes they find partners that invest with them. The investor is one that has confidence in the management and in the economic sector and makes an investment in private companies and in public companies. Mostly, the investor is thinking in middle-term or maybe long-term. He is not selling and buying everything. No? The one who sells and buys all day is like a gambler. He looks for the adrenaline, like kind of a Rambo, an economic Rambo, a business Rambo, financier Rambo. No? They want to feel the adrenaline.
Some very good investors say, "I never buy anything that I wouldn't want to keep forever." Do you agree with that?
Carlos Slim: Forever is too long. When you make an investment, it is because you are not thinking in moves from one day to another, except if you're a gambler or you are playing. When you invest in something, it's because you can become big with this business, like if it were yours. Not forever. Forever is too long. Some investments are not only for your life. They follow in your family, no?
You've been an enormously successful entrepreneur, you've been an enormously successful businessman, and you've been an enormously successful investor. It's a rare talent that can do those three things. Aside from your skill set, the tangibles, what about the intangible skill set such as attitude, the ability to read people, the ability to motivate people? How has that influenced your business life?
Carlos Slim: Well, I began to invest when I was -- not a teenager -- maybe 10 or 12 years old. I learn at those times, how do you call it, when you capitalize interest? Compuesto. Compound interest.
I learned many things when I was very young, maybe 12 or 13 years old. Then I learned how to understand a balance sheet. I didn't learn that in school. When you look at a balance sheet, there is a lot of information. Not only a balance sheet, but also an estado de resultados. That is a report, financial statement in general. I think finances -- to invest, there are some principles that are very clear, but very easy. You invest with basic conditions. You invest when you have confidence in the management, in the sector -- you like the sector -- and the value of the prices are not high, or are low, low value. Buying intrinsic values in good companies, in good markets and in good sectors. No? I think these kind of things are basics and are not complicated.
The problem is when you want to buy and sell and buy and sell, and that is when the investor gets into gambling, or speculation. That is not necessary, not something rational.
The training I have, for one thing, and the other -- to study financial statements during many years, maybe 10 years or 15 years -- and my experience in many areas, and the ability maybe to simplify the variables, take out parameters that are not necessary, or variables that are secondary, and look at the essential issues of the business. I really think that I make things that are not very rational, like I get involved with so many, too many areas, too many sectors, doing so many things, so different things. The reason was, when you don't have an area to grow in one business, you diversify. Thus, I have done really, maybe 50 or 60 different things. I don't know how many, a lot. That doesn't make too much sense. It is not a recommendation to others to do that. We have done paper, candies, tires. We compete with international companies, soft drinks, construction, bicycles, mining, the telecommunications, metals, financial services, insurance, and oil platforms, infrastructure to run roads, (collect) tolls, etcetera, etcetera.
We've done bakery, retail. I think that's dangerous. We were relatively successful, but we have got out of some of these areas.
I think it is important to focus in the areas where you -- the sectors that you look -- with a good potential, that they are part of the dynamic sectors that will grow strongly, where you can do something, where you can do things, and follow world reference. We have competed with many companies. Actually, let's say in paper, we compete with Kimberly Clark and Scott Paper without a partner, a foreign partner. In tires, we compete with Bridgestone, with Michelin, with Goodyear, without the foreign partner, and we were the leaders in the market. In tobacco, we compete with British American Tobacco. We have a foreign partner. I think that it's important not only to separate your activities, like an investor and like an entrepreneur, but also to have more focus. There is a moment where you cannot -- it is not recomendable -- it is not good for others to get involved in so much areas. We have got out of many of these fields. We have sold out many of these sectors because they were too much.
What do you know now about achievement that you didn't know when you were a young person starting out?
Carlos Slim: I think I understand better the civilization we're living in. I'm understanding the future better. I have a more clear vision of the future and a more clear vision of the present, and for me that changed many things in life. One of them is a new company that will make efforts to push the development of Latin America. There are many projects, and you need to put them together. That's what we will do. As you grow older, you have other challenges and this is one of the biggest challenges. I feel that I'm just beginning my big challenges now. These other challenges were in the past, but my big challenge is coming just today, in this age, to accelerate the development of our country.
As much as I look not only at the business environment, but also at what is happening in the world, and how the economy is managed, I am more convinced that many things can be adjusted. Governments should be more clear about what this new civilization is, what it means, what are the new paradigms, what things will happen. The terrible risk we have in this transformation is that during this transition there will be a lot of problems, because people fear change, fear something that they don't understand. If we don't manage it very well, it will be very costly socially, economically and to many people it will be terrible.
That's a big challenge, and that's something I didn't know ten years ago, that way of thinking and learning and reading. The last six, eight years I'm looking at it very clearly, and every day I look at it more clearly. Talking with people who were first in these ideas is very important, like Alan Toffler, and other people that have studied that in a very theoretical and pioneering way.
You have a high energy level and a curious mind, so many things to be interested in, and yet time is your most precious resource. How do you manage your time?
Carlos Slim: I'm not sure that I'm very efficient in managing my time, because all these interests and curiosity take me out of focus sometimes, but time is very important.
How do you allocate that time to business, to family, to your other interests?
Carlos Slim: You cannot do it mechanically and methodologically. Family and personal life is not only a problem of quantity, but of quality. We have dinner with my children every Monday. We get together with all my grandchildren a few times a year for a weekend and things like that. Seventeen grandchildren altogether.
People who've known you for years say you're the same today as you've always been. That's not easy to do with so much success. How do you think you've maintained that balance?
Carlos Slim: The real success is not from outside. The real success is not a professional success, a business success, or wealth. The real success is your personal life, your family life, your personal environment. That is your success. The other is not success.
All three of your sons are involved in your business now. How about your daughters?
Carlos Slim: Three of my children are involved in the business. Two of my sons-in-law are also involved. The other is a great architect. For my daughters, two of them are on the board of directors. One is managing the museum. The other was managing a foundation of my wife's, called ASUME (Asociación de Superación por México), for personal superación. How we say? To get better. Human development. That's a very important program, and the other has an institute for children, for early development. They learn to swim very young, two or three years old, as a stimulation for development in physical activities. So two of them are on the board. One has five children.
A lot of times, people who are very successful professionally, fail on a personal level, with their family, with personal relationships. This is not the case with you. You have a wonderful family. You have friends who love you. What is your secret?
Carlos Slim: I think it's a good question. I think there is not a secret.
I believe that family and personal life and business -- professional life -- is not only compatible. It is necessary. You will have a better professional life with a good personal life and family life than if you don't have a good personal life and a family life. I don't understand the contrary. It is very clear that the good personal life makes you stronger. You are stronger for the challenges. You are working. I think I don't believe in working 20 hours or 16 hours or 14 hours. When you work too much, it is because your job is beyond you. You are not controlling the -- you are not doing well at your job. If you need to work 15 hours, 16 hours, this is because you're not organized. You don't have delegation of your responsibility, and I don't believe that in any business, in any activity, you need to work 15 or 16 hours, and you don't have time for yourself or for your family or for anyone.
You've also created a program where fathers and sons from all over Latin America come together for a weekend. Will you talk a little bit about that?
Carlos Slim: We began making it in Mexico, these meetings. We've already had six or seven years of doing that.
They invite many important businessmen from Latin America with their children, with their family, and there are -- we are like 200 that get together, and we have -- it is clear that you live socially also, but we make presentations about different issues and global companies, family companies, social problems, etcetera. It has been very successful. We are very happy with that, and I think one of the main reasons to say that is that we've had seven meetings. In this new meeting, it will be in Central America. The first was in Mexico. We organized that, and we invite there, the second in Dominican Republic, then Brazil, Buenos Aires, Santiago, and Panama. We have some propositions now in Panama. We have talked a lot about that work already in some of these areas. We are thinking to make a confederation of foundations, of Latin American foundations, to get together for some programs, some projects, to have information what one do and the other, to try to work more together, the foundations. That is one interesting point. And I think we will create maybe also a fund, between the businessmen in Latin America, for Central America, to invest in infrastructure, physical infrastructure.
It seems one of the themes of your work is helping the younger generation to understand their responsibility in the world.
Carlos Slim: We learn from each other, but it's interesting, because in some areas, the old men, the fathers talk, and the others, the "children" talk -- they are 30, 35, 40. Many are in charge of the business, and we learn off each other. It doesn't matter, the generation. It's clear, the energy of the young people, also of the old people, and we compromise, and they are very clear about the social responsibility of the business community.
What's the most important thing you've learned from your children?
Carlos Slim: Oh, it's difficult to answer. The most important? I think the love between them and between the family.
And you see that with them and their children?
Carlos Slim: Sure. Yes.
It must make your heart fill up.
Carlos Slim: Yes, very happy.
Many people are so spoiled by professional success that they lose who they are. You've always been who you are. You're the same as you were 30, 40 years ago. What do you give credit for that?
Carlos Slim: Education, I think. By example. The example of my parents, and of my children also. My father died when I was 13, and our house was very different than the house I have now. I never knew that my father was so successful when he was 20, 25, 30 years old.
You have an inner being that gives you strength about who you are, from your history, tradition.
Carlos Slim: You need to be very strong inside yourself, very convinced about that. When you need others to say good things about you, you will have a problem, because that has no end. If you need others to say, "Oh, that's great!" there is no limit.
You started as a teacher. That suggests you not only value education, but that you enjoy mentoring, teaching. Was it different to mentor your own children?
Carlos Slim: No, I think it's not a difference.
I think when I was 19 or 20 years old, I had the opportunity to be a professor in the national university. In the school where I was studying when I was in third to fourth grade (year), and it was a very important experience. I enjoyed it a lot. The class was algebra. It's nothing that you can make more than academic. Because I believe in academics and in formation, formation of the students and the people. I think for the education of your children, it's very important, the experience you can have. You can remember what you felt, how you thought when you were a child about things while you are talking with them. I believe that it's very important, a good relationship with them, especially if they're going to follow what you are doing. In my case, my children like the entrepreneurial activity and the business activity, because from when they were a child, they weren't incompatible with my family and my life. No? And I'm very impressed that they manage very well this personal life, family life, and the business activity.
You set a good example.
Carlos Slim: I think they are a good example. I believe that sometimes, more than educating our children, we do something like domestication, "Don't do that. Go there. Put that there. Take that out," like we're training them, without any common sense or rationality, without formation.
So in mentoring your children, you tried to help create a good thought process, so they could understand, analyze, come to conclusions.
Carlos Slim: Sure.
I think it's important to leave your children a better country, but it's maybe more important to leave your country better children, first of all. And second, you're looking for the happiness of your children. I think that work is not only social responsibility, but it is an emotional need. You need to work. You need to do things. You need to be active. You cannot be lazy. Without doing anything, it is bad for your emotional health. No? I tried to educate (my children) and that was the lesson from my father also, about responsibility and compromise, because wealth is a responsibility and compromise. When you die, you don't take anything. You are a kind of temporary manager of wealth.
Of all the business endeavors that you have been involved with, do you have a favorite?
Carlos Slim: I don't think so. If I have a favorite it's the challenge in the moment.
My challenge for the next seven years -- first, three years, and then seven, the first step for three years and the second step seven, a challenge is to create the human and physical capital in our countries, in Latin America. That's now my challenge. That is what I am more involved and interested in. Health, nutrition, health education and jobs and physical infrastructure. That means airports, ports, roads, highways, power plants, energy, telecommunications, et cetera, and housing, and that's what I am trying to do within the last years. I left my boards outside Mexico and in Mexico, and I'm concentrating in this challenge, to look how our countries have more human capital and physical capital, trying to help that and to support that, by looking at it through the foundations that I create and through the investment. I believe that poverty is not fought with donation of charity. You cannot fight poverty with debt relief donations and social programs. You fight poverty only with a good education and jobs. Jobs is the way to fight poverty, and in the past, the problem of poverty was an ethical problem, a moral problem, a problem of social justice. Today, in this new civilization, to fight poverty is an economic need. If you don't fight poverty, the country doesn't develop. In the past, you have slaves. You fight for earth, for soil, and people work for nothing. Now you don't need the physical labor. You need mental knowledge, labor that knows training, skilled labor, and that's why you need the education and the human capital. That's what I'm convinced of, and that's what I'm working for. That's what now I am most interested in.
You went from creating businesses that can function on their own, and now you have a larger purpose in the world. Was there a moment when you saw that change in direction?
Carlos Slim: No. It's a process. Always, always. It's very clear for a long time. The foundation has 20-something years. Fundación Carso is a very old foundation, and that is the way we formally begin to do that. Now, what is clear maybe a little bit more, I believe that the skills, the training of the entrepreneur are very good to solve social and economic problems. Not because you have economic resources, or material resources, but because you know how to manage these resources. You understand how to solve problems. In business, you constantly have problems and problems and problems, and you have a great training for that. When you look at some of the things that are happening in our countries, in all countries, but currently in our countries, you say, "Well, that can be done this way and this way and this way," and if you have the human resources, material resources, a team and the skills and the experience, I think it's a very important and great thing to do.
Entrepreneurs are always looking for innovative ways to do something better, so the entrepreneur's approach to social problems is trying to create better solutions for public problems.
Carlos Slim: That is exactly what I think, but also, it's clear that government is not enough. There are not enough resources. The PPPs, public/private partnerships that involve private investment are getting more popular, as in England not many years ago. All the governments, including the most radical, believe in private investment in some way. You need the combination of private investment and public investment, because public investment is not enough to solve the problems, and the innovation that people with business experience can bring is very important to solve these kinds of problems.
There's another point that I think is very clear. Governments, as much as they can have labor, they can't provide more than ten percent of the labor. The economic activity is like 40 percent of the population. The government will solve only a small part of the employment, and private investment, big business are not solving the problem. You need to develop small business, take down the business mortality, like we kept down the child mortality. You need to take down the business mortality, and promote small and medium business. There are a lot of jobs there. Promote health and promote entertainment and promote education, and you will have a lot of employment there. Finance them, because the problem is overregulation and financing, and we're beginning to create some concepts of financing a small business. Let's say in Telmex, we're going to finance our customers, just because they pay regularly. We are going to finance them for two years or three years, without so many papers and information and documents, more expedito, more easier, more quicker, and carefully.
You know what we're doing now that's very interesting, reconvercion, changing urban areas. Like some old factories, we make them into shopping centers and cultural areas. There is a big area that used to be a garbage area, and now there will be public sport places, universities, hospital, shopping center and a big development there. No?
What about your restoration project in Mexico City?
Carlos Slim: Downtown. Centro Histórico. That was very important. The project was not to restore, but to revitalize. Revitalize means to have life again, more people working, living, studying there, and entertainment. That gives you life again to downtown.
Then it gives new jobs. People make more money. The economy goes up. They invest in education, their home, everything. Exponential.
Carlos Slim: That is a change that can be done very fast. Before that, there were years and years trying to revitalize, to restore downtown, and in three years, we make the change.
The private sector did it better than the government.
Carlos Slim: Yes. And if you make it in combination with the government, it is fabulous.
Isn't it hard sometimes to partner with the government?
Carlos Slim: No. You don't need to partner, but let's say something like México histórico. The government needed to put in security, they needed to train new police. We put in security cameras. We put a place where the cameras were controlled near the place to have immediate action. The city government changed the streets and the drainage and some of the public services, and the federal government brought the Office of Foreign Affairs back to downtown and there are a lot of people working there. That 's what we needed. The university also has a lot of buildings there. They have more activity in downtown. They took some offices there.
Has that model been attempted in other Mexican cities?
Carlos Slim: Other cities have done a good job in the restoration of these historical centers, and we have contact with them. São Paulo (Brazil) also wants to do the revitalization of its downtown. The concept that I have for this future challenge comes from that experience downtown, from Centro Histórico. That was a combination of the foundation to take up the economical and social level of the people living there, and investment. That's why I told you, you need foundations and investment to fight poverty. To give employment, you cannot give employment with the foundations. You need to give employment by investment, companies that invest in roads, in housing, in many areas. No?
How do you want to be remembered?
Carlos Slim: I try not to think about that. What I worry about is the future of my family, my sons, my grandchildren, that they get together, that they love each other, that they can be positive for themselves and for the society. That's my worry. I don't worry about being remembered in one way or the other. I will be remembered very well by my children and my friends.
You know, what I told you about the new civilization is really very important, because things can move and faster than what we're thinking. We can push them to be faster, and an ordinary evolution, and not with crashes and problems and social turmoil or problems.
We seem to have more than our share of turmoil in the world right now.
Carlos Slim: Yes, but this turmoil is bad management. I have an example of this.
When the civilization began, when the agriculture was discovered, it was because glaciation was finished and there were a lot of paradises. A lot of paradises with a lot of water, a lot of animals, fauna and flora in excess, and people that was nomads get sedentary there, and as they get sedentary they begin to think, but they don't worry that 50 -- from 50, 30 he has no job, or 40 he has no job. That was not unemployment. There were no troubles in the change. They begin go up very soon, to look for sun, to look for housing and look for clothes and to look for organizing other things, et cetera. But now that technology is creating so fast, so well, so much wealth, we don't know how to manage that, and we have unemployment and we have poverty worse, and it's a problem of management, of organizing the production of wealth that is like never before so efficient, so fast, so many goods, so many services, so low cost for do everything. But creating wealth you have the paradox of higher poverty. That's stupid.
Perhaps you need to develop a course on the management of wealth.
Carlos Slim: Management of wealth. That's also important but I think it is more important than that. It is more important. But the other point is that...
In the past, in the agricultural civilization, 200 years ago and more, all the power was in the hands of the monarchy, the pharaoh, the tlatuani, the emperador, no? And as much as it advanced, the power is in the society. Not only in the private sector that has more things to do, but all the society, the non-government organization is every time taking more, the academics, the newspapers, the media is taking more of the area. What should be done is more faster and organized. And the private sector is more efficient -- a businessman and an executive, a private executive -- than a public executive, and the politics by definition. All this shall be changed somehow. But like I said, turmoil is getting worse in many places because of the fear of change, the fundamentalism, the change of the paradigms. They are not clear. The paradigms are different. They put the globalization like the cause of the problems. Globalization is only one of the consequences of technology. Globalization is part of communication. You move from the speed of the horse and steam engine to the speed of light. Technology is what is making the difference. Unemployment doesn't come from globalization. It comes from technology. But technology creates a lot of wealth and a lot of productivity. What you need is to find how you motivate other people to be involved in the economy and in life and unemployment. I think we're doing it very good. Very good is China. China is getting into the new civilization in a way and the timing they like. Doing it very fast, but thinking very long-term.
They've also created a huge gap between rich and poor in China.
Carlos Slim: It doesn't matter about the poor and rich gap. There is a Chinese proverb that says "Bad governments worry about the rich. Good governments worry about the poor." What they're doing is to move from a rural and agricultural society to an industrial society and to a "new civilization" society, but they can't do it from day to night and night to day, day to night. They're doing it with long-term planning, very fast. It may take two generations, but they're doing the right thing. Before, everyone was poor.
When you think of your legacy, will it be one of business or one of philanthropy? By philanthropy, we don't mean just giving money away, we mean creating a new paradigm to address poverty.
Carlos Slim: I think both are important.
Actually, the idea of develop human capital and physical capital needs -- some areas that are not profitable, you need to have the foundations -- but where it is profitable, it is important that physical infrastructure is profitable. It will be investment. I think the combination of both is very important. Both are fundamental to the development of our countries, to fight poverty and to break the barrier of underdevelopment. I think you need to arrive to some kind of income per capita, some level of income per capita that is like a speed to break the barrier of underdevelopment. Like to get out of the air, you need some speed to break the gravitational forces. You need a revenue per capita to break it, and I think many of our countries are near that. I think investment is very important, because employment is made by investment. So you need to invest, and businesses need to invest. Businesses are necessary to give employment, and by the other side, what is not profitable -- or short-term profitable -- should be supported by foundations, like human capital, the health of the people, nutrition. Then they work together I think.
In addition to that, you believe culture and the arts play an important role.
Carlos Slim: It's human capital. Culture and arts is where we are more advanced, but you also need to take care of the environment. Medioambiente, we say. Environment, ecology. Arts, entertainment, sports also. We're also working in sports. That's human capital, human and social capital, to have this kind of support of these activities by the private sector.
It addresses the human spirit.
Carlos Slim: Sure. It addresses it and makes stronger.
Right. You created a museum, named for your beautiful wife. She loved the arts.
Carlos Slim: The collection was owned by me, but she was really, really, very sensitive to the arts. I learned a lot from her. She was really very sensitive and very profound and loved art and the beauty of things.
People say that art fills a spot in the heart where business or other things just can't. We take it art filled that spot for you. Yes?
Carlos Slim: Yes, yes. Art, but also nature, the sea, sunsets, the forest, the rivers, the falls.
This has been a wonderful conversation. Thank you so much.
Thank you.
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