As I began to work on the Value Creation series, I thought that it should begin with an iconic person who epitomized the very spirit of proposition. So, I decided that an excellent place to start the series was with the entrepreneur Carlos Slim Helu' known by most simply as Carlos Slim.
The prolific growth and subsequent value creation of the companies launched Carlos Slim catapulted him to being named the world's richest man (surpassing Bill Gates) by Forbes (#1) in 2010, 2011, 2012 and 2013. This is an incredible feat as most people had believed surpassing Bill Gates in net worth to be a fantasy, it is all the more notable because Slim is from an developing country, Mexico. Slim although starting from very humble beginnings, began his investing career at the very early age of twelve. He initially made his first fortune in real estate, becoming a millionaire in his early 20's and has since created a net worth of over $73 billion dollars through his companies. Mr. Slim's holdings are diverse and encompass many facets of the economy ranging from securities, banking, insurance and real estate. However, he is the most dynamic in the telecommunications industry and his core holding is his telecom firm, America Movil SAB (AMXL) which operates in 18 countries, takes in revenues of over $59 billion and has over 150,000 employees.
The recent upswing in the telecommunications industry make it an excellent place to outline value creation as it has been a dominant generator of wealth and jobs.The telecom sector is on an all time high so an exploration of his philosophies are ideal. As a point of reference, the telecom sector was up last year over 21% and has a total market capitalization of over $93 billion. This week the FCC started an auction for the H Block spectrum which operates in the mobile broadband space. The capital markets believe the sector has tremendous upside as we saw the largest bond transaction in history completed as Verizon launched and closed a $50 billion bond deal last year. Slim sees more potential opportunities in telecom and for American Movil, he says it will invest over $9 billion over the next 4 years, citing greater speed and services for small business as the particular growth engines.
As a point of note, Dennis O'Brien, a fellow Forbes list (#233) billionaire and the wealthiest man in Ireland obviously sees the same opportunities. He recently decided to increase his telecommunications holdings in what he called a "massive" telecoms push. Mr. O'Brien owns Digicel, a Caribbean and Central American telecom group. Mr. O'Brien sees international markets and products as incredibly valuable due to "world order changing". Clearly, the telecommunications industry is where many are creating value and wealth, potential investors should take note and follow the trend.
When I initially I met with Carlos Slim, he was declared the richest person in the world with over $80B (that has since went down to only $73B), despite his immense wealth, the first most notable thing about the man was his extreme humility. Despite being a multi billionaire, Carlos resides in a relatively modest six-bedroom house, that is less than mile away from his office. He personally doesn't ascribe to the concept of conspicuous consumption and doesn't have a super yacht or multiple mansions around the world. He doesn't have a fleet of high performance, exotic cars and still prefers to actually drive by himself.
As I spoke with him he spoke in a gentle, patrician voice often pausing to allow me time to interject or ask questions. As we talked, it was apparent to me that this very proud Mexican man from a family of (6) six children, whose roots hailed from Lebanon epitomized the American dream of re-invention and value creation. So, I pressed him for what he thought contributed the most to his success and for a formula and set of rules that he lived by. The first thing he noted was that human capital was the best investment and that you should strive to educate and enlighten everyone around you. The following are Carlos Slim's 10 key tenets for success in business:
1. Have a simple organizational structure
2. Maintain austerity
3. Focus on Growth
4. Minimize non-productive things
5. Work together
6. Re-invest profits
7. Be charitable
8. Keep Optimistic
9. Work hard
10. Create wealth
An additional key factor that Carlos Slim defined as critical to success was the control of negative thoughts. He outlined 1) being positive, 2) being present, 3) being contrarian and 4) fast action as key components of success. Please find (4) four of Carlos Slim's operating principles for success in his own words:
1. "Do not allow negative feelings and emotions to control your mind. Emotional harm does not come from others; it is conceived and developed within ourselves."
2. "Live the present intensely and fully, do not let the past be a burden, and let the future be an incentive. Each person forges his or her own destiny."
3. "When there is a crisis, that’s when some are interested in getting out and that’s when we are interested in getting in.
4. "When we decide to do something, we do it quickly."
As a testament to his philosophies it was recently announced that the billionaire was poised to double a $250 million investment from a lending agreement he made with the New York Times in 2009 during the height of the financial crisis—a time when most were frightened to invest and even more wouldn't have invested in old media. Carlos Slim's take on the investment? "Courage taught me no matter how bad a crisis gets… any sound investment will eventually pay off. In business, you invest when things are not in good shape. When you invest at these times, you take a better position than your competitors. When there is a recession and your competition does not invest, they are giving you the advantage."
Each person forges his or her own destiny. For all prospective entrepreneurs take these tenets and Believe in yourself.
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