Lessons From Three Brazilian Billionaires

3G Capital is an investment firm that owns multiple blue-chip companies.

They focus on making big but infrequent investments in high-quality companies. They were behind the consolidation of the brewing market that created the world’s largest brewer, AB InBev. They are also the majority owner of Burger King, Kraft Heinz, and Skechers.

Few people know the firm. Even fewer know its owners, how they amassed billions in personal fortunes, or how they became friends of Warren Buffett, Sam Walton, and Jim Collins (renowned business writer and thinker).

My take on 3G is that their success goes back to people: finding ambitious people, fueling them with a dream, creating the right systems for them to thrive, and compensating them well for outcomes. People are the nucleus behind 3G’s success.

The origins of 3G Capital (A brief history)

The story begins in 1939 in Rio de Janeiro, where Jorge Paulo Lemann was born. Lemann attended Harvard and later worked as a trainee at Credit Suisse in Geneva while competing in tennis tournaments. He subsequently moved back to Brazil to work at a newly established financial institution, Invesco, which later went bankrupt.

In 1971, with capital from a group of investors, Lemann acquired a small brokerage (later turned into a bank) called Garantia. He set about rebuilding it in the image of an American institution he admired, Goldman Sachs. At the time, Goldman’s partnership model rewarded the people who produced results, and attracted (and rewarded) top talent.

Marcel Telles joined the firm young and worked his way up from the trading floor, absorbing Lemann's obsession with meritocracy and cost consciousness. Carlos Alberto "Beto" Sicupira met Lemann through their shared passion for underwater spearfishing, and soon joined Garantia. Together, the three became a trio whose partnership would outlast the bank itself and stretch across five decades (and counting).

What began as a brokerage became a machine for acquiring and transforming companies. The playbook never really changed: buy a good business being run badly, install your own people to run it, align everyone through ownership, cut what doesn't matter, and grow what does.

Garantia took over the retail chain Lojas Americanas in 1982, and Sicupira left the bank to run it. When Garantia bought the brewer Brahma for roughly $50 million in 1989, Telles left to take the helm. Each partner, in turn, stepped out of Garantia to become an operator in an acquired company.

By 1993, the trio had formalized their investing vehicle through GP Investimentos (“GP”), one of Brazil's first private equity firms. In 1996, the trio, in partnership with a consortium of investors, won the auction for the southern Brazilian railway, which subsequently became América Latina Logística (ALL). Alex Behring was placed within the railway to turn it around.

At its peak, Garantia made $1 billion in profit, but the culture that made it great had begun to fray, and in 1998, after trading losses tied to the Asian financial crisis, they sold the bank to Credit Suisse First Boston for $675 million. However, the bank’s portfolio companies were not included in the sale, and the ownership of those companies was retained by the trio and other shareholders.

Brahma merged with its old rival, Antarctica, in 1999 to create AmBev, and then with Belgium's Interbrew in 2004 to form InBev. In 2008, InBev was combined with America's iconic Anheuser-Busch for roughly $52 billion to become the largest brewing company on earth. The story was remarkable: a struggling Rio-based brewery had become the industry’s global leader in under twenty years.

In 2004, 3G Capital launched, with Alex Behring named to run it from New York. Its goal was to apply the Garantia playbook to great American companies. That playbook was first applied to Burger King in 2010. In 2013, 3G acquired Heinz alongside Warren Buffett's Berkshire Hathaway for roughly $23 billion.

In 2014, Tim Hortons merged with Burger King to form Restaurant Brands International, which subsequently acquired Popeyes and other fast food franchises. In 2015, Kraft Foods merged with Heinz to form one of the world's largest packaged food companies. In 2022, 3G acquired the window coverings maker Hunter Douglas for $7.1 billion. Its latest acquisition was the shoe company Skechers, for $9.4 billion.

10 Lessons on building enduring institutions

I’ve broken down the lessons from the book into 10 points, but many of them overlap and reinforce one another. That is another lesson: the trio has built a culture and system that reinforce one another, growing stronger as they grow.

Note that most of the information and references are from the book about the trio, “Dream Big” by Cristiane Correa, which has a foreword by Jim Collins.

1. Dream Big

Author’s note:

Dreaming big won’t cost you much more than dreaming small.

I read similar advice in Stephen Schwarzman’s autobiography. If you plan to start a business, why dream of opening a restaurant or two instead of something that can grow much bigger? You may have to put in two, three, or five times more effort, but the differences in outcomes can be in the hundreds or thousands! (Plus, a restaurant is a tough business to be in).

Executing on a big dream requires many talented people. And big dreams happen to attract ambitious talent. Dreaming big created a flywheel in which big dreams attracted top talent, whose successes laid the foundation for a bigger dream, which in turn attracted more talent. It’s almost as if a big dream is a self-fulfilling prophecy.

2. Focus on hiring and hire PSD’s

Author’s note:

Lemann was clear on what he hunted for when it came to acquiring talent. To him, credentials mattered less than drive. A few Garantia employees started as office boys but proved themselves and became wealthy.

Lemann and his partners and top executives were focused on the recruitment function themselves. To them, hiring was not something that should be outsourced to a salaried employee. People selection was a job for someone with skin in the game, and to do it well they had to pick people who were better than them. Ultimately, it is the firm's employees who will drive results (and make the owners rich).

3. Build a culture of meritocracy

Author’s note:

Garantia engineered meritocracy directly into pay. Of Garantia's earnings, 25% went to profit sharing, 15% to dividends, and 60% was retained and reinvested. This doctrine could not be changed. The design is elegant: two slices reward performance and ownership, while the largest slice funds the growth that keeps the whole system alive.

Systems were created to track the performance of the business (and people) at a granular level. People were then compensated based on concrete results, and not because of favor or charm.

A Garantia alum describes the model precisely. He explained that nowhere else in Brazil could anyone be offered a partnership, an aggressive bonus, a low fixed salary, but a very high variable. Nowhere else would anyone take an inexperienced young man and give him such an opportunity. He adds that he cannot even remember his salary; the bonus was the point.

Since Garantia's founding in 1971, an estimated 200 to 300 people across the partners' businesses have each earned more than US$10 million.

Those who know Lemann said he only became a top-tier billionaire because he made dozens of others rich along the way.

4. Make employees owners

Author’s note:

Ownership was the whole design. Everybody throughout the organization had to feel like owners of the business. That was the only way they would give their best and make the institution grow.

The sense of ownership came first through variable pay tied to performance. Equity ownership came later for the few who earned it.

Marcel Telles himself was a middle-class young man who had never imagined moving from employee to owner. He earned the right to buy a 0.5% stake in Garantia less than two years after joining. It was a small stake at the time, but it led to a fortune that is now measured in billions.

Garantia had a unique and powerful way of making employees into equity partners. Instead of granting them shares or options outright, the bank loaned them the money to buy the shares, with repayment from their future bonuses. According to an Insper Business School case study, around 70% of a partner's earnings went toward paying for the shares over a two- to three-year period.

A conventional stock grant is free money. It pays off if the company does well and simply expires worthless if it doesn't, leaving the recipient no worse off than before. Garantia's structure was the opposite. The partner owed the money regardless, and the only way to clear the debt was for the business to generate enough profit to cover it. Failure was extremely consequential. Ownership came with a downside, and that downside turned employees into people who behaved like true owners and custodians.

5. Learn obsessively and copy the best

Author’s note:

The belief at Garantia, espoused by the founders, was: why start from scratch and figure things out the hard way when you can learn from the best in the world?

To them, innovation was uncertain and slow, while copying what already works is faster and closer to a sure thing.

The pattern shows up throughout the trio's history. Garantia itself was modeled on Goldman Sachs and its partnership meritocracy.

Lojas Americanas was reshaped under the heavy influence of Walmart, a relationship that began when Sicupira wrote to the world's best retailers and Sam Walton was the one who wrote back.

And when Brahma needed to learn about the brewing business, an employee traveled to Argentina, Chile, Germany, the United States, and Japan to study how the market worked before making any changes.

Continuous learning was a core belief the trio personally brought to life, even after acquiring substantial wealth. Both Telles and Sicupira went back to school mid-career when they completed Harvard’s three-year Owner/President Management (OPM) program. Telles himself participated after nearly 18 years at Garantia, right before taking over Brahma, where the book says he began transforming himself from a dealmaker into a businessman with a long-term view. Going back to the classroom, when you have nothing left to prove, is a strong indication of the trio’s belief in continuous learning.

For more than a decade, the trio and their senior people have made a regular pilgrimage to Boulder, Colorado for workshops with Jim Collins, the renowned business writer.

Collins runs the workshops using a Socratic-style approach, pressing the room with questions until the participants reach their own conclusions. It was in these workshops that some of the group's largest decisions took shape.

Warren Buffett, another mentor and friend to Lemann, joined one of these workshops. The idea of acquiring Heinz was discussed on that flight there.

6. Keep it simple

Author’s note:

Lemann liked to think about things simply. Simplicity is scalable and powerful. He also preferred to invest in businesses that were simple to understand and run. He looked at the wealthiest people in Latin America and saw that they were, again and again, brewers. If the same simple business, brewing, creates the richest people in all these countries, then the returns are coming from the quality of the business, not the brilliance of its owners.

That conclusion led him to seek out wonderful businesses that are being run badly, where you can capture the upside without needing to be a genius yourself. His full thesis for Brahma was exactly that. A hot climate, a good brand, a young population and poor management meant stable, sticky and growing demand that could give him a platform to build lasting wealth.

When they bought Burger King, the insight was that the brand was bigger than the business (people didn’t realize how much smaller Burger King was relative to McDonald’s). Burger King was a globally recognized name that had been mismanaged into underperformance, and 3G was buying into a simple, durable franchise whose true value could be unlocked with its culture and operating system.

7. Stay hungry: urgency and cost discipline

Author’s note:

The founding instinct was impatience with bureaucracy. Lemann's early experience at Credit Suisse in Geneva was a perfect example of what he didn’t want. He found the hierarchy and slow pace suffocating.

When Behring interned at Goldman, a director sat him down and laid out his future at the firm, spelling out year by year how his career would develop, when he could expect promotions, how his salary would rise. This experience made him anxious because he thought everything would take too long!

The best people the trio hired were repelled by slowness, and that shared allergy became a design principle.

Urgency was engineered into the culture. When Behring took over the ALL railway, he reinforced the sense of urgency and the need to control costs in a monthly staff letter he wrote himself, and posted the performance of the 300 most senior people on the office walls, his own name included. Discontent was kept deliberately alive so that no one settled.

Cost discipline is not entirely about the money. It’s also about keeping the culture awake; it fights bureaucracy and complacency. Anytime the trio acquired a company, a large part of the cost base would be slashed in the early years, so being obsessed with costs after that point was not necessarily about improving margins but rather about avoiding corporate bloat and keeping people on their toes. A company that stops trimming has usually stopped paying attention to everything else, too.

The trio even popularized a concept called Zero-Based Budgeting (ZBB). ZBB was born at Brahma in 1998, out of a bonus scare rather than a grand cost philosophy. Sales were climbing, but earnings were flat, which put everyone's bonus at risk. An executive reasoned that if the problem wasn't revenue, it had to be expenses. So he ran “a fine-tooth comb” over each line item and was shocked at how much was being spent on transport, travel, and meals. Those numbers had to be cut, urgently.

Telles and his team brought in Brazilian consultants to build an in-house program, adapting cost-cutting models from abroad to Brahma's situation. The result was the Zero-Based Budget: a system requiring every line of spending to be reset to zero each year. If someone wanted that expense back, they would have to justify it all over again, instead of coasting on last year's budget.

The same non-complacency logic governed people. At Garantia, the practice was to cut roughly 10% of the headcount every year, a rule Lemann created partly to stop the firm from bloating and partly because removing the weakest people was the only way to open seats for hungry young talent. The idea of a comfort zone did not exist in the Garantia vocabulary.

Garantia only had 322 employees when it was doing $1 billion at its peak.

8. Take control, then get your hands dirty

Author’s note:

Early on, Garantia took minority stakes in companies like Alpargatas and Lojas Brasileiras and discovered that, as minority holders, they had little say in how the businesses were actually run. The conclusion was that they needed to be controlling owners of businesses.

The mistake was repeated more than once. Through GP, they took a sub-10% stake in the telecoms company Telemar and put a partner on the board, only to find the holding too small to overcome other shareholders' resistance. Telemar never felt like one of their companies, and the returns were disappointing (a fixed-income fund would have returned more).

Their experience produced the rule: no more involvement in businesses where the trio were not free to impose their own culture. Behring explained that one cannot install a culture from a minority position, so they refused to try.

Control bought the right to change everything without asking for permission. That freedom is what let the culture stick. Control meant they could swap executives, rewrite compensation policies, tear down the walls of directors' offices, and set new goals on day one, with no board to win over and no coalition to build.

A minority stake buys you a seat at the table, but control buys you the table.

The best single image is Sicupira walking through a Lojas Americanas store in plain clothes when he was asked by a worker unloading a truck of diapers to lend a hand. Rather than announce who he was, he rolled up his sleeves and helped carry the boxes. An owner doing the lowest task says a lot about how firmly the trio believed in getting into the day-to-day operations.

Getting your hands dirty meant learning the business from the ground up before changing it. What mattered most when operating a company was the determination to get it right, to instill the right culture, and to keep an open mind.

Telles went to Brahma knowing nothing of plants, distribution, or unions and immersed himself anyway. Behring rode an ALL train once a month to see how the railway actually worked. They earned the right to reshape a company by first understanding it at the level of the people doing the work.

When Behring went to Sicupira to tell him he knew nothing about operating railroads, after he was assigned to lead ALL, Sicupira said: "Nobody here knows anything about railroads, so you're in the same position as everybody else. Furthermore, it was your idea to buy the company, so go ahead and sort it out."

Sicupira also left Bhering with parting words about knowing the business before he does anything drastic to the business: "You and your team should do absolutely nothing in the first year that has to do with the business. Only do sensible things while you learn how the company works."

Bhering rode the trains himself and noticed the small, fixable failures that a desk-bound executive would never notice. Freezing rail cars, uncomfortable seats, and no hot water. He also found that the biggest cost, diesel, hinged on how each driver accelerated, braked, and handled every switch. Bhering fixed the rail cars and built the Diesel Cup: onboard computers that logged every trip and ranked drivers on fuel efficiency and safety. Drivers competed and were given badges and prizes (or disqualification for safety violations).

Fuel use dropped 30%, ALL became the safest railway in Brazil, and over seven years margins went from 6% to 40%, making the railway roughly 40 times more valuable.

9. Think in decades

Author's note:

3G's long horizon is structurally embedded into 3G. A typical private equity fund runs on a 7-10-year clock: raise capital, collect fees, sell the companies, and move on.

3G has no such clock.

Each fund holds a single company. The goal is to buy a good business and let compounding run for decades. The long-term horizon pushes 3G to focus on adding operational value rather than just relying on financial engineering. This means that 3G can do things a time-limited fund never could, specifically when it comes to long-term investments.

The structure is also consistent with their approach to acquiring and retaining talent. Almost all partners start as associates and buy into the partnership at book value. So the same people the firm hires, aligns, and turns into owners are the ones who stay and compound alongside the companies for decades.

10. Institutionalize everything

The insight is that individual brilliance is fragile and unreliable, but a system is durable. A great trader, a great CEO, and a great transaction are short-lived assets or successes. What survives is the machine that keeps producing them: how you hire, how you compensate, and which behaviors you accept.

A person who is looking to make a lasting impact in any field or area of life needs to think about ways to instill lessons and behaviors permanently.

Closing thoughts

Not everything the trio did was successful. Their story shows that they made quite a few big mistakes along the way. The early minority investments, the fire sale of Garantia, and the more recent acquisition of Kraft by Heinz performed poorly. Their story is proof that you can become wildly successful if you have the right approach and keep moving forward when you face setbacks.

If you got something out of this, I'd love to hear it.

I'm keen to profile another lesser-known but hugely successful investor or operator next.

So if there's someone you think deserves the write-up, send them my way.