Serendipidade Paulistana

A CBS student decides how much meat he can handle at the opening dinner.

On Sunday, the GIP team arrived in São Paulo: Brazil’s economic powerhouse boasting a 20M population and a cosmopolitan vibe to rival New York’s. We were immediately welcomed with an all-you-can-eat meat festival (churrascaria) and rounds of caipirinhas exploding with lime. After dancing the night away to the Brazilian beats of samba and funk, we woke up bright and early the next day to begin our company visits in the city. We spanned diverse industries, ranging from finance and footwear to the emergent startup ecosystem. As we listened to presenters and volleyed them with questions, we noticed themes about the business landscape in Brazil, which will be covered in the next few posts.

Brazil is a continental country with a vast internal market.

First, Brazil seems to be a self-contained market. Domestic factors such as consumption mostly shape monetary conditions. This partly explains why Brazil was relatively insulated from the global financial crisis in 2008; in fact, their economy was strongest around 2010 only to later fall into recession in 2015. Moreover, while the importance of foreign trade to the Brazilian economy is growing, it is still relatively small compared to the entire economy. In 2018, exports were $239B USD and imports $181B USD versus $2T USD GDP. Where it’s large, it’s mostly in primary products. Finally, many Brazilians never travel out, very few Brazilians speak English, and the country doesn’t share a primary language with the rest of Latin America. Combined with the enormous size of the country (209M), the remaining room for economic development and ensuing market potential, it’s not hard to imagine why the economy is relatively inward-looking.


Professor Singh shows off his wares at the Havaianas store with a cheerful employee.

Companies stay local in Brazil. One impact is that with the large companies we’ve visited, globalizing has either not been on the table or is a complex challenge approached very carefully. Cielo is Brazil’s leading payment processing company (processing 10% of Brazil’s GDP annually) yet faces rapidly eroding market share due to loss of previously held concessions. As they fight to remain the leading player, they’ve chosen to innovate on their core business model rather than consider expanding into other countries. For Havaianas, the iconic Brazilian flip-flop company, domestic sales represented 98% of total, which is remarkable since Havaianas started selling in 1962. But why would they, since 73% of Brazilians touch Havaianas at least once a year? The wildly successful globalization of the brand is a major source of pride for Brazil, since they are one of very few Brazilian companies that has successfully globalized, and Havaianas brand seeks to embody the Brazilian spirit and values. Havaianas accomplished this by moving piecemeal country-by-country and establishing regional offices to accomplish something new.

Another impact seems to manifest in the distribution of sizes and types of businesses we see in Brazil. Many industries exhibit an oligopolistic structure historically dominated by a few large Brazilian companies. While the formal (and informal) MSME market is enormous, the market for start-ups is small and treacherous especially as they try scaling into mid-size companies. We learned from Redpoint Eventures, a formidable player in the nascent venture capital scene here, that lack of available financing is the biggest challenge for scaling: even more so than navigating the Kafka-esque systems required to launch a business. There is a lack of local investors with a VC-level appetite for risk. Even when there is foreign interest in investing, the available check size doesn’t match the real stage of development of the company in a Brazilian context. This makes it very difficult for start-ups to flourish and scale into mid-size companies with potential to disrupt large incumbents. More optimistically however, those start-ups that do survive the brutal incorporation and financing process at the beginning tend to emerge bullet-proof and extremely cash-generative. We were excited to learn how Redpoint Eventures took matters into their own hands by partnering with Itaú, a major bank in the country, to build an incubator and nurture the emerging start-up ecosystem in Brazil.

A sign at Cubo encouraging us all to take a chance on something.

Which brings us to another theme: serendipidade, or serendipity/luck/chance. When we visited Cubo, Redpoint & Itaú’s incubator, we all wondered why a bank and a VC firm would partner to launch such project without taking equity in the businesses there. Among other reasons, they simply want the multiplicative effect of bringing innovators under one roof. Cubo provides entrepreneurs the chance to meet someone and do something. Just like the simple production error that spawned a thousand SKUs at Havaianas, Cubo believes that the unexpected combinations of interactions there will spur growth of the Brazilian start-up ecosystem.


I hope that Brazil will continue to open up and invite more serendipidade through increased exposure and international exchange. There is a trend: exports have actually doubled since 2005 and imports have nearly tripled. While I was writing this post, Brazil eliminated US visa requirements. In my opinion, the more random combinations, the better. There is even some serendipidade in our own Chazen trip to Brazil. Who knows how the connections we’ve made and the learnings we’ll export back to our own countries will manifest in the future?

GIP Brazil: the experience is in our hands

On a cold March Wednesday night last week, our class met for the last time as a group before we all flew south for winter. Instead of Professor Medini Singh, the class was led by our TA and a program director from the Chazen Institute. Chazen calls these sessions “Pre-Departure Meetings”. They take place shortly before a group departs for their in-country visit. Not only do they provide a crucial information download about logistics and day-to-day realities of life on the ground, but they also require that students come together to author a social contract among themselves.  I helped lead one of these sessions when I organized a Chazen study tour to Indonesia this past January, so I am newly and deeply admiring of the people who led our Brazil GIP session.

“Roberto Burle Marx’s Copacabana Beach Boardwalk in Rio de Janeiro Brazil.” (from ModernDesign.org)

To kick off the social contract process, our TA challenged us to define what kind of expectations we have of each other. How can we co-create an experience that is pleasant for all of us? What are our individual and group goals for the trip? We came up with the following three principles:

  1. Understanding the local culture: by being participative and asking good questions to everyone we meet
  2. Understanding the political and economic context: by engaging with company visits before, during, and after the visit itself
  3. Always being inclusive: demonstrating an open-minded, welcoming attitude, as well as looking out for each other  

Professor Medini Singh said it best when he reminded us later in the session that “what we get out of this experience is in our hands.” I can’t emphasize this strongly enough: study tours with the Chazen Institute at Columbia Business School are incredibly powerful components of a global education. Our GIP class and CBS in general are both internationally very diverse. To dig into the trajectory and complexities of a country that we’ve been studying and discussing for weeks together is a beautifully unique and valuable opportunity to learn about the world.

And there is no better place than Columbia Business School for this. In our professor’s words: “…given our different perspectives, even our background, in the same meeting we see different things. What is our reflection of what has happened? I’m always interested. And that’s where most of my learning comes from.” I could not be more excited to spend a week unraveling the web of a country so beautiful and complicated as Brazil with Professor Singh and my diverse cohort of thoughtful and respectful classmates.

Até a próxima!

-Diana McKeage

The Brazilian ‘ABC’: the best of Brazil, from ‘A’ to ‘Z’

The challenge was ambitious: grasp the fundamentals of Brazil’s culture and economy through an immersive week of meetings and tourism. Have we achieved our goals? Are we able to understand which are the challenges and opportunities Brazil will face in the next few years? As future managers, will we put at productive use our learnings by better handling business in Brazil?

The answer to these questions is not easy nor brief, thus we asked the executives of the companies we visited to provide some insights. Ana Corrêa do Lago, one of our hosts at Natura, defines the main challenge of Brazil as Political stability and reinforcement of the green agenda’, while she highlights as the country main assets ‘People’s warmth and resilience, great modernist architecture (i.e. Brasilia), and outstanding and varied green landscape. Many countries assembled in one!’.

Indeed, Brazil is a multi-faceted country in terms of population, demographic, morphology and even cuisine. To navigate it, you need to understand the ‘Brazilian ABC’: the best of Brazil from ‘A’ to ‘Z’.

 Açai – Now popular all over the world for its nutritional properties, this berry originally from Brazil is at best when eaten frozen, with few slices of banana on top.

Beleza – The cool way of saying ‘Hi’ among the youngest. The perfect start when you want to feel like a local.

Caipirinha – The national drink, made with cahaça and a zest of lemon, to be enjoyed from sunset to sunrise.

Dulche de leche – Argentinian will refuse to  admit that Brazilians have mastered the recipe of ‘dulche de leche’, but this versatile dessert gets as delicious as it sounds.

Empanada – Forget the diet: bolhino, empanada and churros are only few of the many fried snacks that you will encounter. Totally worth the calories.

Farufa – The local version of ‘couscous’ and an alternative to ‘arroz’ (rice). Often served as a side in typical restaurants.

Gente – Literally translated as ‘People’, it is a popular way of addressing the crowd.

Havaianas – The most famous Brazilian brand: the colorful flip-flops are sold and worn literarily everywhere. Just one warning: it is impossible to restrain from buying them.

Ipanema – One of the most famous beaches of Rio de Janeiro, together with Copacabana and Leme. At Ipanema you can get the best view of the ‘brothers’: two rocks characterizing Rio’s skyline.

Leblond – One of the most beautiful and popular neighborhood of Rio de Janeiro.

MASP – The biggest museum of São Paulo, hosting the largest collection of European arts in the Southern Hemisphere.

Não –  Just to get the basics right, ‘não’ is ‘no’. In case you are wondering, its opposite is ‘Si’.

Obrigado – The first word you will learn and probably the only one you will master by the end of the trip. Works better when accompanied with a smile.

Pão de Açúcar – One of the greatest attractions in Rio de Janeiro. These twin mountains connected by a cable car are a great spot to get a 360 views of the city.

Queijo – … Or better, ‘Pão de Queijo’, are amazing cheese puffs you will be offered from breakfast to dinner.

Rio de Janeiro – No words can explain the beauty of this city: just add it to your bucket list and go check it out!

São Paulo – Paulisti will argue with Carioca on which is the most beautiful city of Brazil. While it is always worth abstaining from such a dispute, São Paulo is for sure the widely recognized business center of the country.

Telenovela – Telenovela and soccer are the favorite forms of entertainment of each Brazilian household. Worth watching one episode to understand why.

Ucuba – A precious seed growing in the Amazon now used in many moisturizers. Not (yet) able to make miracles, but it is as close as you can get.

Villa Madalena – A neighborhood famous for street arts, it is one of the unmissable spots in São Paulo. Mark your map.

Zouk – A traditional dance. Not as popular as the Brazilian ‘Samba’, but danced everywhere from nightclubs to Carnival parties.

~Alice Signori ‘18

São Paulo or Rio de Janeiro: Guess which is our favorite city?

In a country where only 85% of the population has access to basic sanitation, but virtually 100% has access to a TV set, a visit to Globo, the major media company in Brazil, is a mandatory stop.

While strolling into ‘telenovelas’ sets and pretending to be the characters of the Brazilian ‘Game of Thrones,’ our hosts explained the impact that telenovelas, and thus Globo with its ‘100 years of stories,’ have on the local population. Not only sentimental comedies, but often sensitive topics are discussed throughout a whole series, soliciting a real call to action from the audience: for example, when the main character of a telenovela was diagnosed with cancer (luckily only for the sake of the plot), a surge in the blood donation throughout the overall country was suddenly registered.

After such a dense and interesting week of Brazilian immersion, the question seems natural: what’s better, São Paulo or Rio de Janeiro? The class has a clear answer: 63% of the surveyed sample thinks Rio rocks it. Wondering why? The great beaches, the breathtaking views, the presence of one of the ‘Wonders of the World’ (Christ the Redeemer), and the carnival spirits (and parties) pervading the entire city have clearly captured the CBS’s crew. Still, what’s in São Paulo that makes it a though competitor? Its role as an undiscussed business center, being a capital of great food and posh clubs as well as being pervaded by an elegant atmosphere are all elements contributing in making this city a great choice especially for a long-term perspective.

Clearly not ready to face the thermal and emotional shock that going back to the cold New York city and the busy business school’s schedule requires, there is only one thing left to say: ‘Muito Obrigado Brazil’, it has really been a blast.

~Alice Signori ‘18

For more pictures, follow us on Instagramimage2 (4)

image1 (7)
Christ the Redeemer

image4 (1)
São Paulo

image3 (3)
Rio de Janeiro

From São Paulo to Rio de Janeiro: when Social Responsibility is a way of being

‘Bem estar bem’: at Natura wellbeing is not a buzzword, but the overall company mission. The holding company of ‘Aesop’ who recently acquired also ‘The Body Shop’ showcases right from its tagline the dedication in making a positive impact not only for its clients, but for the overall planet. To pursue this objective, Natura has introduced a number of innovative tools, such as the Environmental P&L, the triple bottom line management of suppliers and various projects aimed at preserving the best of Brazil, such as the effort in teaching local populations in the Amazonia how to exploit what natures has to offer while preserving the native environment.

Customer service is in Brazil’s DNA: Azul, the airline founded in 2008 by David Neeleman (the owner of JetBlue and WestJet), is already the 3rd best airline in the world for 2017 according to TripAdvisor’s ratings. The unconventional approach in the airline industry allows Azul to be the number 1 in 75% of routes served and to achieve customer loyalty through a focus on punctuality and proximity to customers’ needs.

Different city, but same priorities: headquartered in Rio De Janeiro, BNDES in one of the largest development banks in the world. With a net profit of roughly 6 billion reals in 2016, BNDES’ priority is to help Brazil prosper. From micro-enterprises to companies and municipalities, BNDES has issued 5.600 disbursements only in 2016, with the overarching objective of making money while helping Brazil’s advance both at the local and global level. As BNDES teaches during the very first training given to its employees ‘Our name starts with a ‘B’ which stands for ‘Bank,’ and that it’s first. But our name also ends with an ‘S’ which stands for ‘Social,’ and this comes second’.

Helping pursue the priorities of the country is something that many Brazilian businesspeople have at heart: it has for sure been a driving value for Jorge Paulo Lemann, the founder of Gera, a VC focused in investing in early-stage education who wants to make a difference in the lives of many young kids. To touch with hands the impact that this VC is already achieving, our meeting was hosted in one of the main (and most beautiful!) schools in which Gera has invested money and talent. Latest technologies and unconventional teaching methodologies (negotiation and public speaking classes are the bread-and-butter of kids from kindergarten to 12th grade), the ambitious goal of the VC is to close the Brazilian education gap, using a bottom-up approach which should complement the parallel work done by the government itself.

Enough of speaking about business: Rio’s incredible vibe and its break-taking views have not gone unnoticed by our CBS crew. Watching the sunset at the Sugarloaf was worth the trip: the sun slowly dropping into the sea was a natural wonder (and a great Instagram favorite).

Finally, the long beaches which surround Rio’s lagoons are a sweet and irresistible call. With temperatures reaching 93 degrees Fahrenheit these days, we are really looking forward to our Friday afternoon at the beach. After all, that’s not how all Friday should look like?

image1 (6)
Natura’s factory

image2 (3)
Natura’s shop

image3 (2)
Azul Headquarter

image1 (5)
BNDES presentation

image3 (1)
Tour of Eleva School with Gera

image5
Sunset at the Sugarloaf

image4
Farewell Dinner in Rio de Janeiro

~Alice Signori ‘18

For more pictures, follow us on Instagram

‘Brazil is not for amateurs, it’s for professionals’

There is always a key to understand a country. According to Patria, the Brazilian Private Equity firm partially owned by Blackstone, the magic formula is a blend of discipline and long-term investment. While Forex exchange fluctuations and the frequent economic downturns that characterize the Brazilian economy frequently make the international news, the reality is that over the long-term the Brazilian economy has showed a tendency to ‘regress towards the mean’. By investing in resilient sectors and taking a very disciplined approach, it is thus possible to obtain significant returns and long-term profitability even in such a difficult country.

Also at Embraer, one of the major aircraft manufacturers in the world, the forty-eight years old company history is a confirmation of its outstanding success. Still family-owned and now a billion making company, Embraer is characterized by the coexistence of difference business sectors, a strong focus on people and by a very high level of innovation. Particularly inspiring was the (surprise) visit from the CEO, who highlighted how in an industry where a single mistake can cost billions of dollars, it is of crucial importance to acquire talents and to have the best business people on board.

On with our company visit, we had the chance to understand the strategies leading Cosan, a huge conglomerate managing businesses as diverse as railroads and gas distribution, and who is convinced that by a strong discipline and a savvy portfolio management it is possible to ‘make a difference in this country’.

Finally, we spent an afternoon wandering around the campus of Itàu, the first bank of Brazil. At Itàu, we had the unique opportunity to take a tour of its proprietary art collection (the 8th largest corporate collection in the world!) and to discuss the future of banking and its digital transformation. Closing the circle right where we started, our guests proudly shared why many foreign companies are not thriving in a country where there is huge space for growth. ‘Brazil is not for amateurs, it’s for professionals’: same recipe, but spelt in different words.

And finally, to understand a country, there is no better way than wandering around the city and making the best out of it. After a walking tour of the city center, a stop at Vila Madalena and Beco de Batman where street art prospers, a visit to the Brazilian’s Central Park (Park Ibirapuera) and a lunch break spent visiting the MASP museum, where the largest collection of European art of the Southern Hemisphere is treasured, we learned a fun fact about São Paulo. Unlike their carioca cousins, Paulisti do not have beaches. How they compensate? Having the best Malls and calling them ‘their beaches’. Hard to miss the resemblance: a part from the long-hours spent there and the warm heat filtering through the large glass windows, Malls display similar therapeutically effects as beaches. For each hour (and dollar) spent, there is a significant surge in mood and relaxation. Money back guarantee.

~Alice Signori ‘18

For more pictures, follow us on Instagram

Embraer
Embraer

image1 (2)
Itàu

image3
Itàu Art collection

image1 (3)
City tour

image1 (4)
Graffiti – Street Art

‘It’s not difficult to disguise in Brazil, it’s unnecessary.’

‘What’s next for Brazil? It has been said about Italy – It’s not difficult to govern Italy, it’s unnecessary –  I would say about Brazil – It’s not difficult to disguise in Brazil, it’s unnecessary.’ Fernando Cardoso, former President of Brazil, concluded his address at Columbia University last November with these provoking words. Why and what is Brazil disguising? What is preventing such a large a powerful nation from growing faster than China or to transition from the developing to the developed world? And, more importantly, which are the businesses and people who are driving the change?

If even Mr. Cardoso struggles in finding the perfect answer, we can be granted some pardon as well. Or at least some of the time. The Fall 2017 Global Immersion Program in Brazil is about to start: not only a week dedicated to the the discovery of Brazil and of immersing in the Brazilian culture, but also a one of a time opportunity to let each student develop a personal perspective on the future of Brazil.

The official kickoff of the GIP Fall 2017 is scheduled for this Sunday, the 14th of January in São Paulo. During the following week, a group of 30 students lead by Professor Medini Singh and his Teaching Assistant Maria Morad will have the unique opportunity to visit some of the best Brazilian companies. The program is packed, with more than 10 visits scattered across São Paulo and Rio de Janeiro, spanning across a pool of diverse industries. From aircraft manufacturing to venture capitalist, from media companies to beer giants, and from wellness to banking, the Global Immersion will hold true to the long-lasting Columbia promise of ‘being at the center of business.’

While company visits will give an unconventional glance on the business side of Brazil, the cultural and social side will not be overlooked: after all, let’s not forget we are still (MBA) students. Afternoon and nights will be dedicated not only to enjoying the warm Brazilian summer (which will hit us up after this extremely cold NY winter), but also to check out of our bucket lists some unmissable sightseeing (such as the ‘Cristo Redentor,’ one of the ‘Beauty of the World’), as well as to enjoy the preparations for the upcoming Carnival in Rio.

Are you already green with envy and wishing to have bid for the coolest Fall GIP? No worries: we will keep you posted. In between one caipirinha and the next.

Até logo!

~Alice Signori ’18