Carlos Slim: The Numbers Genius Who Built an Empire

**Caemin** (0:10)
Morning folks, and welcome to today's episode called Carlos Slim, the numbers genius who built an empire. This is a guy whose father fled Lebanon with almost nothing, and today, Slim is worth $120 billion.
I examine how he built his fortune buying up distressed businesses during Mexico's economic collapse of the 1980s, and how a controversial privatization deal for the national phone company turned him into the richest man in the world. I also look at the huge criticism he's faced for monopolistic practices that cost ordinary Mexicans billions of dollars, and also held back the development of an entire country. And also how he's used his fortune combined with this intrinsic, almost intangible gift for numbers to make some very, very savvy investments in everything from Apple to the New York Times. This is a cracking story. Enjoy.
Carlos Slim was born on January 28th, 1940 in Mexico City. His father had fled Lebanon to escape Ottoman military conscription, and he built a pretty significant retail and real estate business, worth at least $20 million in today's money. And Slim's father made each of his children keep an exact weekly ledger of what they earned and spent. And Slim just seemed to have a natural ability for numbers and trading. By the time he was 12, he was buying bank shares and making good money from it. But then, in 1953, his father died suddenly of a heart attack at age 65 Slim, who idolized his father, was 13 and was devastated, and said that after his father's death, he didn't go out to play with his friends for two years. Now, he went to college to study civil engineering, and he was so good at maths that, while still a student, he was asked to teach his fellow students a subject called linear programming. Now, this is basically a type of maths that's for figuring out how to get the most output from any set of resources. And that way of thinking, you know, where's the waste? Where's the hidden capacity? How do I squeeze every last drop of value out of this? This was used by Slim to analyse every single business he ever bought or invested in throughout his life, because he's always been a numbers guy. Journalists who spent time with him described the same scene every time. Reams and reams of accounts spread across his desk, and Slim going through them with a highlighter. As Slim said, the numbers, they talk to me.
After graduating, he did work briefly as an engineer, but he realised he could make way more money by playing the markets. And that's what he did, working 14 hours a day. And by 1966, when he was just 26 years old, he'd built up a $40 million fortune. And now he started to put that money to work. First, in real estate, and then over the next 15 years, buying and building loads of different types of businesses. There was a regional bottling company, equipment leasing, mining, printing company. But his most profitable and cash-rich business at this stage was Sigatam. This was Mexico's distributor and manufacturer of Marlboro cigarettes.
Also, on a side note, he got married in 1967, and will go on to have six children. Although his wife passed away in 1999 from kidney failure.
Now, because Slim had built his business on cash-rich consumer companies, and all was without borrowing, he had a war chest. And so he was perfectly positioned to take advantage of Mexico's worst financial crisis in its history. So for context, in 1981, the US increased interest rates to 21 percent because they were trying to kill inflation, which at that time in the US was running at 13 percent. And it worked. Inflation came down. But here's the problem for Mexico. The country had spent the 70s borrowing heavily in dollars because the country was riding an oil boom. Now, these debts were suddenly far more expensive to service. Then the oil prices collapsed. So you've got soaring debt costs and collapsing revenue at the same time, a perfect storm. And Mexico basically couldn't pay what it owed. So the government panicked. It nationalized the banks, trying to stop wealthy Mexicans and foreign investors from taking their money out of the country. But the knock-on impact of this was that multinationals with factories in Mexico, they were terrified that their factories might be nationalized next. So they wanted out, and they were willing to sell at any cost. And so Slim was able to swoop in and buy many of them for one or two percent of their book value. And here's what Slim had to say about this. The year 1983 was crazy. These were the best times ever. Nobody wanted to buy anything, and everyone wanted to sell. He bought a paper company with a huge facility for just one. He bought a paper company, which had this huge, huge factory for just $1.5 million. He shut it down and over the years redeveloped the site into an upscale shopping center and this free public art museum that sits today on some of the most valuable real estate in Mexico City. He bought the Mexican operations of Walgreens, Denny's, Hershey's, Sears, Firestone, British American Tobacco. He bought a mining company for $50 million, and by 2011, that company was valued at just under $12 billion.