October 20, 2009
“When you live for others’ opinions, you are dead. I don’t want to live thinking about how I’ll be remembered.”
– Carlos Slim, 2007
How does it feel to be the world’s richest person? Only a select few have reached that position. And Carlos Slim, Chairman of Grupo Carso is one of them.
Slim was declared the world’s wealthiest man, overtaking Bill Gates in 2007. At that time, his fortune was estimated at $68 billion, equivalent to almost 7% of his home country Mexico’s GDP.
Carlos Slim Helu was born wealthy to Lebanese immigrant parents who came to Mexico and opened a dry-goods store that soon expanded into a flourishing business. Carlos was the fifth in a chain of six children and the only one who showed a great aptitude for numbers. By age 12, he was buying shares in the Bank of Mexico. Carlos studied civil engineering at the Autonomous National University of Mexico (UNAM), and while still studying, began to teach mathematics. Launching his first business venture, a stock brokerage, Inversora Bursátil in 1965, he began, at the age of 25, to acquire industrial companies he deemed a good bargain. Slim would then reinvest the cash from those businesses or use the funds to acquire additional properties. The budding entrepreneur named his holding company Grupo Carso, an amalgam of his first name and that of Soumaya, his wife. Within one year, Carlos Slim had amassed around $400,000 through a series of acquisitions and investments. Over the next two decades, Grupo Carso continued to expand and included major stakes in retails stores and tobacco major Cigatam, in which Philip Morris was a 29% partner.
But it was in 1982 during the Mexican recession that Slim struck gold, marking a turning point for Grupo Carso. The debt crisis and the nationalization of the Mexican banking system were changing the economy and the Mexican government began to divest itself of a number of state-owned companies. Carlos Slim invested diversely, and under the fold of Grupo Carso, acquired heavily for the next seven to eight years, snapping up companies like Hulera el Centenario, Bimex, Hoteles Calinda (today, OSTAR Grupo Hotelero) and Reynolds Aluminio.
In 1990, another milestone was met when the group acquired Telmex in partnership with SBC and France Telecom. A decade later, Telmex started separating its cellular business and most of the international investments to create the new company America Movil, which is today one of the leading wireless service providers in Latin America.
Slim’s strategy has been consistent over his long career – buy companies on the cheap, mold them into thriving ventures and launch intense rivalries with competitors. Today, Grupo Carso is an empire that amasses around $8.5 billion a year and owns retail outlets such as Sanborns and Sears. It also owns T1MSN, the Latin American version of Microsoft’s MSN website, an irony since Slim is known not to use computers at all. A lifetime admirer of the New York Times, he invested $250 million earlier this year to save the newspaper from crippling debt.
Slim’s imposing presence is acutely felt everywhere in Mexico. The average Mexican encounters him when he or she visits an ATM, drives a car, shops for groceries or while making a phone call. Some 90% of the telephone lines in Mexico are today operated by Telmex and America Movil operates in 11 countries including Ecuador and Brazil. Such monopolization has given rise to considerable discussion. Critics point out that the Slim fortune was garnered in a developing country where per capita income barely reaches $14,500 a year and where nearly 17% of the population live in poverty. Professor Celso Garrido, an economist at UNAM, Slim’s alma mater, says his domination of the country’s conglomerates has caused smaller companies to have stunted growth, resulting in a shortage of good jobs.
Now, the economic downturn and a plunging peso have shaved off around $25 billion from Latin America’s richest man. Mr. Slim’s position has slipped a few notches to the third richest man in the world with a net worth of $35 billion. Still, his empire is so vast that a Mexico City restaurant jokes in its menu, “This restaurant is the only place in Mexico not owned by Carlos Slim.” With plans on expanding outside Mexico, Carlos’ portfolio continues to be anything but slim.
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