A Not-Secret Sauce for Investing
You would think that doing business in Brazil would be an above-average risk proposition, right?
Well maybe. But Matthew Wilkens has seen a truly impressive not-so-secret sauce that creates a spectacular exception. Even better, since his “sauce” isn’t really secret, it’s something that others can copy, particularly in countries that have a risk profile similar to Brazil’s.
Large-scale corruption is a factor in many countries and unfortunately, Brazil is no exception. And now we’re getting to the not-so-secret sauce. Wilkens’ employer, Emilio Kallas, figured out 34 years ago that developing a reputation for incorruptibility would be a highly-effective differentiator.
He said to himself words to the effect of, “What if I created an enterprise based on the fact that I’m not going to be a part of that scene? What if I became the go-to company for investors who want to know that their investments aren’t going to fall victim to corrupt officials and third parties? What if I never included investors who would demand that we patronize their own suppliers or that we hire their relatives?”
Kallas had to know going in that developing this kind of reputation would be a decades-long enterprise. After all, you can’t generate a reputation for being incorruptible without developing a long and compelling track record. You also have to be aware that even the slightest stumble can undo a lifetime’s effort.
Kallas’s business is real estate, and he made a conscious decision to put as much effort into studying and vetting his partnerships as another person might put into an investment. Investors’ money wasn’t welcomed if they weren’t able to pass a number of screens.
- Did they have any kind of questionable past?
- Did the money come from a politician trying to get his finger in the pie?
- Did they want to influence the investment process?
The results of this approach have been phenomenal. A reputation for honesty, transparency and fiscal responsibility led Kallas to having one of the strongest non-public deal pipelines in Brazil; to being elected to a senior position with the Housing and Development Association of Sao Paulo; and a decades-long teaching position at the University of Sao Paulo.
More importantly, Kallas’s leadership and that of his son’s, has meant immense family cohesiveness, and the employees feel enormous pride in the company. Turnover is among the lowest in the industry and educational pursuits are supported and encouraged.
All of this translates into higher returns, more profitability and a family environment built on values, teamwork, and trust.