The Sardine Man of Sao Paulo, Actually It Was Rio

Yesterday I gave the recipe for business success-sell a good or service for more than it takes to produce that good or service and reinvest in the business.  That is true but worth about as much as telling the coach of the Dallas Cowboys that the way to win the Super Bowl is to score more points than the other guy.  Absolutely true but of not much value.  Business success is hard to define but, like pornography, you know it when you see it.  So in the next couple of posts I will talk about successes, and failures, that I have seen.  If you want formulas, go somewhere else.  If you want stories, read on.

"What did I do wrong?"  That thought was soon followed by the realization that my career was finished.  For it surely was.

I was called into the Treasurer's office, the door closed, and I broke into a sweat.  I liked the guy and considered him to be the smartest, best finance guy I ever met, then and now.  But Dick wasn't, what's the right word, smooth.  He had been made Treasurer when he was 33 and basically stayed there as the company brought in three CFO's in the time I was there and Dick outlasted all of them.  Dick didn't really know how to deliver views diplomatically.  Once we were in an Executive Committee meeting and Dick responded to a suggestion from the Chairman.  Dick called the idea stupid.  Ouch.  It wasn't said like, "That's the stupidest thing I've ever heard."  It was more like "we would being making a stupid mistake to go that route."  But the audience heard 'stupid' and Dick's shot at the CFO slot slid another notch.  But when things really got tough, senior management overlooked Dick's shortcomings and he was there making the hard things work.  And Dick was independently wealthy. 

But I was not and I was nervous because Dick said "You've got Latin America."  No, no, no.  I had Europe and the Pacific and I was satisfied, if not happy, dealing with crazy French controllers and a British general manager who didn't like dealing with 'colonists.'  The guys in the Pacific were great except you had to get up at 4 in the morning to talk to them.  So we didn't talk much. 

But somehow, for all those years, I had avoided Latin America for the most part.  And it was a mess.  Falling pesos, coups, strikes, price controls, wars, drug cartels, lousy airplane service, kidnappings.  Not exactly where a kid from the Corn Belt wants to spend his time.  And I didn't speak Spanish, or Portugese.  I was absolutely the worst choice for the job.  And a lot of the guys down there didn't like me because in an earlier job I had to bug them for reports.  And nobody likes reports.

And then there was the topper-Sardines.  For some reason Quaker owned the largest sardine factory(?) in the world and it was smack dab in the middle of Rio de Janeiro, right off the bay.  We had a fleet of fishing boats and then the factory.  I had never seen it, didn't want to see it but I sent it a lot of money because it was bleeding cash.

But the stars were aligning.  The head of Latin America had just resigned to be the second guy at a leveraged buyout which turned out to be a disaster but so was he.  A bit of a bomb thrower.  If you think corporate dealings are all pretty adult, think again.  As a beginning analyst I was in a meeting with this guy and my then boss, a British educated Brahmin Indian, who thought he was pretty smart.  And he was.  The head of Latin America kept insisting that he was making a million dollars in Brazil.  Which was true.  My boss was pointing out, louder and louder, that it was costing the company $100 million in assets to generate the $1 million.  Which was also true.  This was getting to be a pretty hot arguement and I was trying to fade into the wallpaper when the head of Latin America sighed and exclaimed, " You guys are going to give me a heart attack."  My boss shot back, "Can't happen soon enough for us."  Wow.  Latin America was hot.

And I was being thrown right into it.  But so was Pepe.  And Jim.  And Dieter.  A more woeful bunch you will never see as Pepe was now general manager and told to make money.  Jim was international controller and told to clean up the accounting--accounting in hyper inflationary countries is really difficult.  And Dieter was the factory guy--keep them running with no money.  And me--no more money for Latin America.  I had the easy part except telling a general manager from Argentina or Venezuela that he wasn't going to get any money can be physically dangerous.  Pepe had another problem--he was Mexican.  And Latins are the biggest bunch of racists on the planet and the group they love to hate is the Mexicans.          

And off we went to Rio to fix the biggest problem of all-the Sardines.  A bit of background and I'm not an expert here but the Norwegian sardine sets the standard for all sardines.  Go into a grocery store and you will find, if you look hard enough, the sardine section which will consist of flat cans, tins to the Brits, about six inches long, four inches wide.  They will have a little key to take the top off and there will be a nice, quaint, cute picture of a sea captain painted on the can.  Looks like something out of Sergeant Pepper.  And they are expensive.

So we land in Rio, jump in the car and head straight for the sardine factory.  Tour the fishing boats and then the processing sheds.  My idea of hell.  A block long building, corrugated metal roof, no walls, a station every five feet made up of a sink, a table and a knife.  And women standing there in white uniforms, gutting fish.  I would last about five minutes.  But I did notice that our sardines were different than the the Norwegian sardine.  A lot bigger.  Like a foot long and looking more like a trout than a sardine.  The Brazilian sardine is the Barry Bonds of the sardine world.  And we were cutting them up to fit in those little cans.  With the cute little picture of Sergeant Pepper painted on the front.

Why?  Because that's the way we always did it.  Latin Americans, like North Americans, have inferiority complexes and tend to do things the old fashioned way.  Plus in markets with a very large class with no money and a very small class with lots of money, the producers go after the small class with a lot of money.  Which was our strategy.

And the sardines were piling up.  Pepe convened the meeting and the Brazilians started bitching about inflation, currency devaluations, price controls, and so forth.  Pepe listened and then asked something along the lines of "What's next?"  The general manager started talking about inflation, currency devaluations, price controls, and so forth.  Pepe said something along the lines of "I've heard that and we can't control that and I don't want to talk about things we can't control."  Silence.  Brilliant.  Pepe's first rule--facts aren't problems.  They are facts.  Find a way to deal with them.  And quit bitching.

More silence.  And I was falling asleep.  Meetings like these after 13 hour plane rides are no fun.  And more silence because the Brazilian managers had slid for years blaming inflation, currency devaluations, and price controls for their problems. 

Finally, Pepe ended the meeting.  And he ended it like this.  He said, "Somebody in this stupid country (he actually said stupid) is making money.  Find him and do what he is doing."

And we left.  Tomorrow, the can.

 

Comments

[Dr.GreenBack]

Grr... Nice job with the cliff hanger.

Just as I was getting really interested I have to wait for part 2!