Compete, Evolve, Compete Again: Marcos Galperin, Executive Chairman & Founder, Mercado Libre

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- [Marcos] Competition is so healthy.

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When you have a a powerful competitor,

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it avoids this internal battles.

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It's doesn't give you the time.

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It's (indistinct)

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If you, if you spend too
much time with that, you die.

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It's as simple as that.

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- Goddamn, I'm old.

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I can't believe I'm saying this,

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but strategy has changed dramatically

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in the 38 years since I've been at Bain.

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When I started, the name of
the game was anticipation.

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If you could predict the future better

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than your competitors, you'd win.

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It was kind of simple.

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And we would build models,
low case, high case,

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and that just right Goldilocks base case.

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And if reality didn't match
the base case, well, you know,

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people lost their job.

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It was all about perfect anticipation.

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If you could predict the future better

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than your competitors, you win.

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But today the game and
strategy is very different.

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It's not just about predicting the future,

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it's about how fast you adapt
to changes in the future.

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Sure, we think deeply about what's ahead.

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Of course, we try to predict,

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but we know uncertainty
isn't some freak event.

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It's the norm.

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And that's why in this podcast
series we keep hammering on

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about this idea of deliver and develop.

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You've got to anticipate what you've got,

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but you then also have
to evolve fast enough

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to stay relevant in a changing world.

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You know, the winners zig when markets zag

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and they're gonna zag
when those markets zig.

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But how do you create

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an adaptable strategy and organization?

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How do you build a culture
that thrives in uncertainty?

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Well, now we're at the
final episode of the season

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and we're gonna explore that question

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with someone who's lived it.

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This is a founder who's navigated chaos

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and competition at the very highest level,

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and he's lived to tell the tale.

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I'm Jimmy Allen, and this
is "Founder's Mentality,

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the CEO Sessions".

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And my guest is Marcos
Galperin, Founder, former CEO

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for almost three decades

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and now Executive
Chairman of Mercado Libre,

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also known as MELI.

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What started as a garage
project in Bueno Aires

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is now Latin America's e-commerce giant.

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This is $100 billion ecosystem

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spanning across 18 countries.

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And Marcos has played

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against the absolute best and he's won.

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So what I wanted to know was
this, what's the one thing

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that led to Mercado
Libre's continued success?

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- [Marcos] It's hard for me to pinpoint

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perhaps specific things.

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I think it's more culture.

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It's a cultural thing.

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It's something that you can lose.

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I see the things that are
happening in Europe, you know,

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culture can change.

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You have to enjoy the path.

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And it, it's a marathon that
ha doesn't have a finish line.

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The minute that you think
you finished, it's the end.

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If you look at the brands that
have existed for 150 years,

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I don't think they've beaten a competitor

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like the one we've beaten in Latin America

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for the last 10 years.

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They've made it, they, they
feel like they've made it

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and things don't change that
much for them in our industry.

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On the one hand, it's amazing

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because in in other industries,

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you cannot create the most
valuable company in Latin America

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out of nothing in 26 years.

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So this change and this
continuous disruption

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is what creates these possibilities.

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On the other hand, you can
never feel, okay, we've made it,

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now we can, we can enjoy for a while.

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But that is also helpful

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because I think it's a Darwinian process.

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If we wouldn't be the way
we are, we wouldn't be

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who we are or what we are.

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And probably we wouldn't even exist.

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- But a lot of what
founders often talk about

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with their frustration
is, you know, you started

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with the pioneering
team and by definition.

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You know, we're not talking about the ones

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that didn't make it.

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There was a group that made
it with you for two decades.

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You then, they recruited
managers who saw you working,

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saw them working.

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But there are also 10,000 people

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that have probably never been in a pit

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with you working on something
there have probably,

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you've probably given
a town hall 10 times,

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but they have a manager
from another company talk

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to them 1,000 times.

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And founders often say the frustration

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is my core team gets it,

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but when I look at the edges
of the business, I start

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to see those toxic people entering.

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I start to see the bureaucrats coming.

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So how do you make sure
that's not happening?

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- [Marcos] It's many, many, many things.

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This culture of trying

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to act like an elite sports
team is key in the sense

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that oftentimes you keep some people

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because they have the culture,

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but maybe they're not performing.

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You know what?

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Sorry.

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Performances has to be there.

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Maybe if you have the
culture will find you

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a different position.

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Maybe you know, you, you're
no longer number nine,

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you won't score anymore.

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But you know what? You will
be the assistant to the coach

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or you will be in the manager's office

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or you will be helping
us sell more tickets

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or you will be helping
us, you know, making sure

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that the stadium is in good shape.

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But we need in the field, the
people who are performing.

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Now, maybe you have in the field someone

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that is a great performer,
but he's a pain in the ass

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and he's toxic and he's
making great scores

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and we're winning many games,

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but we're not going gonna win
the championship with this guy

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because he's a, he's toxic or she's toxic,

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and sometimes you need to take
some decisions that are tough

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because you know, this guy is really good

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and he's scoring, you know,

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but we won the game,
which was a great game,

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but we lost the championship

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because then we lost against a team

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that was inferior to us, but
this guy wasn't motivated

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because, you know, it
wasn't an important game or,

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and you know what, the
unimportant games, the points

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of those unimportant games
are as valuable as the point

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of the classic, you know?

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And so you need someone who performs

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when they have the spotlight,

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but also have to perform when
they don't have the spotlight.

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So all these things, you know,

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in this 26 years there's been
moments of quiet enjoyment.

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You know, since we IPO'd
in 2007 all the way

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to the moment when Amazon
launched in Latin America,

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those were six years of
continuous growth and scaling

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and we had no competition.

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But then you have to
know that this is a calm

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before the storm because the
storm always is going to come.

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- God, I love this.

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The storm is always gonna come.

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Marcos's genius, he built
an all-weather company.

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Of course MELI's growth story

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is an exception, not the rule.

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They thrived in the calm and
they thrived in the storm.

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For the rest of us mere
mortals, growth is bloody hard.

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Think about it.

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It means every customer
from last year comes back

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buying a little more and
bringing a few friends.

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We've got to win millions
and millions of times.

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So what is it that lets
some companies grow year

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after year while others stumble?

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To find out, we turned
to someone who spent

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his whole career chasing

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that single answer, Chris Zook.

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And I've spent my whole
career being his mentee,

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his bad carry, his lackey, his fanboy.

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I'm proud of every title
you give me, as long

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as Chris Zook's name's up front.

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He actually saved me
from being fired in 1988

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when I was a useless
summer associate at Bain.

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More than once since then, he's
reached across the Atlantic

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to pick me up and set me straight.

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I'll tell you, everyone needs
a Chris Zook in their life.

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Luckily I've had mine for four decades.

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So who is Chris Zook?

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Chris is an Advisory
Partner at Bain & Company

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and one of the world's
leading strategy thinkers

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and my co-author.

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Look, I'm shamelessly
claiming that co-author title,

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but the truth is Chris has
written five books on strategy

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and I've been a big idea contributor.

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The books are his.

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He gave me a width on
"Profit From The Core"

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and two co-author credits

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on "Repeatability and
"The Founder's Mentality".

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That's a generous mentor.

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His body of work, which is five books

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and dozens of articles, is a
master study into the patterns

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of growth, what drives it, what kills it,

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and why ultimately

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"The Founder's Mentality" matters so much.

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And since I've known him,
Chris has been obsessed

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with a single question,
what are the secrets

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to sustainable profitable growth?

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So first, he takes us back
to how that journey began.

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Chris, I would love to just hear you start

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with your own journey on strategy.

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For me it kind of, I think
probably the first phase ends

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with "Profit From The Core",
but you probably have a journey

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that started long before writing that.

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But just tell me how you thought
about strategy at the time

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you wrote the "Profit From The Core".

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- Well, you know, I was
lucky to join Bain & Company

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when it had 70 people,

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and it was part of the leadership team

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that in a great growth story
of its own, grew it now

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to something like 18,000

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with only really one bump in
in the road when the founders

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had a messy transition
to the next generation.

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And so in a way, as an older
guy looking back on my life,

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I realized if there was
one continuous theme,

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it is about the topic of
how to grow a business.

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And we were very lucky to have a focus

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on what really are the lessons learned

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and the laws of gravity

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and the microeconomics of how
trying to find your next wave

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of profitable growth,

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and realizing that that's
really what we decided

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to focus the strategy practice
on, focus the building

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of tools on, ultimately
focus a series of five books

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and 30 articles on, and that
actually took up the rest

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of my life.

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- I think it's a journey of chapters.

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And just let's talk a bit
about the beginning chapter.

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You know, so when you first
said, a asked the question

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of yourself and answered it,
what drives sustainable growth?

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What, what was the answer?

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- You know, I think it was
a very interesting period

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of time in the history
of business in the world

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because it was just before
the internet bubble.

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The internet was obviously on the rise.

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We felt that it was a time
when people were using

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their gut instincts too much
and that there were no tools.

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So we did something

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that at the now would seem pedestrian,

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but at the time was actually quite unique.

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We created a database of all the partners

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of all the public companies
in the world for 20 years.

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No one had ever done that
with full financials.

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And we've used it as the
actuarial tables of business

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to ask questions such as what percent

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of companies actually do achieve 10 years

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of profitable growth, earning
their cost of capital,

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outgrowing their industry and maintaining

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or growing their margins?

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And we found that though every company

254
00:10:51,720 --> 00:10:53,070
in the world aspired to that.

255
00:10:53,070 --> 00:10:55,440
Only one in 10 actually achieved it.

256
00:10:55,440 --> 00:10:57,780
So then we began drilling down further

257
00:10:57,780 --> 00:11:01,080
and we found about three
more insights in the data

258
00:11:01,080 --> 00:11:05,280
that all came together as the sort

259
00:11:05,280 --> 00:11:07,560
of epicenter, intellectual epicenter

260
00:11:07,560 --> 00:11:09,660
or empirical backbone

261
00:11:09,660 --> 00:11:11,520
for what became "Profit From The Core".

262
00:11:11,520 --> 00:11:13,550
Number one, more than 80%

263
00:11:13,550 --> 00:11:16,500
of the variation in company's ability

264
00:11:16,500 --> 00:11:19,470
to achieve profitable
growth was not the choice

265
00:11:19,470 --> 00:11:21,840
of the industry they happened to be in.

266
00:11:21,840 --> 00:11:24,360
That was the cold truth of hot markets.

267
00:11:24,360 --> 00:11:26,880
What we found was that more
than 80% of the variation

268
00:11:26,880 --> 00:11:29,280
was among competitors
in the same industry.

269
00:11:29,280 --> 00:11:31,740
Number two, there were no bad industries.

270
00:11:31,740 --> 00:11:34,560
You could make a lot of money in airlines,

271
00:11:34,560 --> 00:11:36,870
which Southwest was doing,

272
00:11:36,870 --> 00:11:41,520
or in package delivery, which
UPS was beginning to do,

273
00:11:41,520 --> 00:11:44,610
or in rental cars, which
Enterprise was doing,

274
00:11:44,610 --> 00:11:48,330
as you could if you
were in a growth market.

275
00:11:48,330 --> 00:11:50,490
The key was becoming the best

276
00:11:50,490 --> 00:11:52,950
and achieving leadership economics.

277
00:11:52,950 --> 00:11:55,500
And then we looked at the
profile of those companies

278
00:11:55,500 --> 00:11:57,597
that did achieve 10 or
15 years (clears throat)

279
00:11:57,597 --> 00:12:00,870
and we found that about 85 to 90%

280
00:12:00,870 --> 00:12:04,380
of the value growth in
all of those companies

281
00:12:04,380 --> 00:12:07,170
that did achieve was a function of one

282
00:12:07,170 --> 00:12:10,500
or two very strong, dominant

283
00:12:10,500 --> 00:12:13,050
or leading core businesses.

284
00:12:13,050 --> 00:12:15,900
And it was less a function
of diversification.

285
00:12:15,900 --> 00:12:18,645
In fact, we found that two thirds

286
00:12:18,645 --> 00:12:22,110
of the main strategy studies
we did costing $1 million

287
00:12:22,110 --> 00:12:25,890
at the time or more had one common type

288
00:12:25,890 --> 00:12:27,600
of insight, which was amazing

289
00:12:27,600 --> 00:12:28,980
'cause you know, you could have said,

290
00:12:28,980 --> 00:12:31,290
well, you're gonna
discover new hot markets,

291
00:12:31,290 --> 00:12:33,990
you're gonna find acquisitions
to double your industry.

292
00:12:33,990 --> 00:12:36,690
You're gonna use it for international?

293
00:12:36,690 --> 00:12:37,590
No.

294
00:12:37,590 --> 00:12:40,650
What we found was that nearly 70%

295
00:12:40,650 --> 00:12:44,910
of the main insights from
these huge studies of strategy

296
00:12:44,910 --> 00:12:48,377
was that more potential existed
in the core of the core.

297
00:12:48,377 --> 00:12:52,113
That the core of the core
had been underappreciated.

298
00:12:53,100 --> 00:12:56,520
- Look, let's take ourselves
back because context matters.

299
00:12:56,520 --> 00:12:57,840
This was the middle

300
00:12:57,840 --> 00:13:01,950
of the dot-com boom when almost every CEO

301
00:13:01,950 --> 00:13:04,980
was chasing greener digital pastures.

302
00:13:04,980 --> 00:13:07,147
And Chris's message was profound.

303
00:13:07,147 --> 00:13:08,310
"Sustainable growth",

304
00:13:08,310 --> 00:13:11,460
he said, "Demands that you
define your core business,

305
00:13:11,460 --> 00:13:12,990
drive it to full potential

306
00:13:12,990 --> 00:13:16,170
and from full potential,
get leadership economics."

307
00:13:16,170 --> 00:13:17,497
And his warning was clear,

308
00:13:17,497 --> 00:13:19,890
"All your fancy growth strategies,

309
00:13:19,890 --> 00:13:22,560
they're distracting you
from what you do best,

310
00:13:22,560 --> 00:13:25,890
which is the hard execution
in the core business."

311
00:13:25,890 --> 00:13:28,170
I feel like we're exactly here again

312
00:13:28,170 --> 00:13:32,250
with all the discussion about
AI, because defining our core

313
00:13:32,250 --> 00:13:34,500
and a turbulent market is tough.

314
00:13:34,500 --> 00:13:36,420
Market boundaries are shifting,

315
00:13:36,420 --> 00:13:38,580
business definition is evolving,

316
00:13:38,580 --> 00:13:40,470
new competitors are emerging,

317
00:13:40,470 --> 00:13:43,440
often expanding from their core business

318
00:13:43,440 --> 00:13:45,420
into what you thought was your market.

319
00:13:45,420 --> 00:13:48,390
So the real question you have
to ask yourself in the world

320
00:13:48,390 --> 00:13:51,480
of AI is will today's core still be right

321
00:13:51,480 --> 00:13:53,190
for our customers tomorrow?

322
00:13:53,190 --> 00:13:55,050
That strategy 2025,

323
00:13:55,050 --> 00:13:57,300
and that's exactly the challenge

324
00:13:57,300 --> 00:13:59,700
that Marcos was facing at MELI.

325
00:13:59,700 --> 00:14:03,300
As success and e-commerce
grew, he had to ask,

326
00:14:03,300 --> 00:14:06,000
do we double down on that core?

327
00:14:06,000 --> 00:14:08,550
Or as market definitions are shifting,

328
00:14:08,550 --> 00:14:10,890
do we move into financial services?

329
00:14:10,890 --> 00:14:13,920
And the question was, where
are our customers going,

330
00:14:13,920 --> 00:14:16,800
and where must we go to meet their needs?

331
00:14:16,800 --> 00:14:19,320
Do we deliver flawless execution

332
00:14:19,320 --> 00:14:21,600
of known routines in the core business,

333
00:14:21,600 --> 00:14:23,760
or do we develop, i.e. go

334
00:14:23,760 --> 00:14:27,510
after the new businesses that
keep us relevant for tomorrow?

335
00:14:27,510 --> 00:14:31,607
Well, like other great
CEOs, Marcos understood,

336
00:14:31,607 --> 00:14:34,200
this is a false choice.

337
00:14:34,200 --> 00:14:36,330
You've got to do both.

338
00:14:36,330 --> 00:14:40,830
Deliver, optimizing,
develop, staying relevant.

339
00:14:40,830 --> 00:14:42,003
Here's Marcos.

340
00:14:43,110 --> 00:14:44,490
So on one hand you're trying

341
00:14:44,490 --> 00:14:47,850
to run a complex business, which
means professionals come in

342
00:14:47,850 --> 00:14:49,230
and begin to put in measures

343
00:14:49,230 --> 00:14:53,130
and do things in its relentless
execution of known routines,

344
00:14:53,130 --> 00:14:55,245
and on the other hand, you want

345
00:14:55,245 --> 00:14:56,520
to constantly disrupt yourself.

346
00:14:56,520 --> 00:14:59,850
And oftentimes the, you know what happens

347
00:14:59,850 --> 00:15:03,510
is that running motion,
the status quo motion,

348
00:15:03,510 --> 00:15:06,390
the keep things static,
begins to take over

349
00:15:06,390 --> 00:15:10,020
the founder impulse.

350
00:15:10,020 --> 00:15:13,350
And you seem to have
navigated both of those well.

351
00:15:13,350 --> 00:15:15,930
How did you handle those two motions?

352
00:15:15,930 --> 00:15:18,300
- [Marcos] What happens many
times is you get so focused

353
00:15:18,300 --> 00:15:19,800
in optimizing something,

354
00:15:19,800 --> 00:15:22,920
but we say we're maximizing the minimum.

355
00:15:22,920 --> 00:15:25,350
It's like, yeah, we're
optimizing this process,

356
00:15:25,350 --> 00:15:27,510
but all this processes
irrelevant right now.

357
00:15:27,510 --> 00:15:29,130
We're just talking about AI.

358
00:15:29,130 --> 00:15:32,160
We have 20,000 developers,
this is the first year ever

359
00:15:32,160 --> 00:15:34,080
that we won't grow our developers.

360
00:15:34,080 --> 00:15:35,400
And it's highly likely that five years

361
00:15:35,400 --> 00:15:36,960
we might have 10,000 developers,

362
00:15:36,960 --> 00:15:39,900
not because we fired them,
but we're not hiring anyone.

363
00:15:39,900 --> 00:15:42,000
10 years ago, I would've told
anyone, you need to learn

364
00:15:42,000 --> 00:15:42,873
how to develop.

365
00:15:43,710 --> 00:15:46,110
Today I say, you need to
know mathematics, you need

366
00:15:46,110 --> 00:15:50,190
to understand like the basics
of thinking and numbers,

367
00:15:50,190 --> 00:15:52,200
but you don't need to code.

368
00:15:52,200 --> 00:15:56,790
On one side, we're optimizing
all these things with AI.

369
00:15:56,790 --> 00:15:58,620
And another thing we're
thinking, you know,

370
00:15:58,620 --> 00:16:00,210
maybe all this is gonna
be coming irrelevant.

371
00:16:00,210 --> 00:16:02,285
We have another group saying, you know,

372
00:16:02,285 --> 00:16:03,118
it's gonna be an agentic world.

373
00:16:03,118 --> 00:16:05,095
And then we have a group in the middle

374
00:16:05,095 --> 00:16:06,360
that is gonna optimize the experience.

375
00:16:06,360 --> 00:16:08,400
And what I was telling
them about the agent

376
00:16:08,400 --> 00:16:11,200
being your personal
banker, I am on one hand

377
00:16:12,270 --> 00:16:15,270
still in my role as co-CEO thinking, yo,

378
00:16:15,270 --> 00:16:17,177
how we go from, you know,

379
00:16:17,177 --> 00:16:19,080
20,000 developers up to scaling, scaling,

380
00:16:19,080 --> 00:16:20,250
increasing our margins, you know,

381
00:16:20,250 --> 00:16:22,770
optimizing our minimum all the time.

382
00:16:22,770 --> 00:16:25,260
And I'm also thinking it's highly likely

383
00:16:25,260 --> 00:16:27,570
that this is gonna be irrelevant.

384
00:16:27,570 --> 00:16:29,940
You know, what happens if ChatGPT partners

385
00:16:29,940 --> 00:16:32,165
with I don't know what,

386
00:16:32,165 --> 00:16:34,350
and all of a sudden our
app doesn't show up anymore

387
00:16:34,350 --> 00:16:37,590
and I actually Apple and
the iPhone become irrelevant

388
00:16:37,590 --> 00:16:40,680
because now it's gonna be a
new device that, you know,

389
00:16:40,680 --> 00:16:41,970
OpenAI has partnered with Jony Ive

390
00:16:41,970 --> 00:16:44,850
and they're doing a new thing
that you are gonna talk to it

391
00:16:44,850 --> 00:16:47,430
and maybe our app is
gonna become irrelevant.

392
00:16:47,430 --> 00:16:49,680
So we're working on all those things.

393
00:16:49,680 --> 00:16:51,840
- [Jimmy] What happens in
organizations that fail?

394
00:16:51,840 --> 00:16:54,420
Is the group that are
maximizing the minimum

395
00:16:54,420 --> 00:16:56,700
become the defenders of that status quo?

396
00:16:56,700 --> 00:16:59,280
That they start to say, look
at it, it's gotta be this way,

397
00:16:59,280 --> 00:17:01,380
and if it's not this way, I quit?

398
00:17:01,380 --> 00:17:04,050
And that other team that's
trying to change them,

399
00:17:04,050 --> 00:17:05,730
they become the enemy?

400
00:17:05,730 --> 00:17:07,757
And you've managed somehow to say.

401
00:17:07,757 --> 00:17:10,123
- [Marcos] It has to be the same group

402
00:17:10,123 --> 00:17:10,956
that does both things.

403
00:17:10,956 --> 00:17:13,260
You have to have in the leadership team,

404
00:17:13,260 --> 00:17:16,440
they need to understand that
you need to optimize a minimum,

405
00:17:16,440 --> 00:17:18,900
you need to scale, you
need to improve margins,

406
00:17:18,900 --> 00:17:23,170
actually to use that money to innovate

407
00:17:24,090 --> 00:17:25,680
and disrupt yourself.

408
00:17:25,680 --> 00:17:27,660
- [Jimmy] And you have to
have a culture that makes sure

409
00:17:27,660 --> 00:17:29,910
that the guys in charge of
maximizing the minimum know

410
00:17:29,910 --> 00:17:32,670
they're gonna still have
roles even if that goes away.

411
00:17:32,670 --> 00:17:34,260
- [Marcos] Yeah, it's the
same guy, the same guy

412
00:17:34,260 --> 00:17:36,090
or the same team that
is saying, Hey, we need

413
00:17:36,090 --> 00:17:38,460
to optimize these things and
we need to do all these things,

414
00:17:38,460 --> 00:17:40,020
otherwise we won't survive.

415
00:17:40,020 --> 00:17:43,680
I think that to be honest,
competition is so healthy.

416
00:17:43,680 --> 00:17:47,130
You know, when you have
a powerful competitor,

417
00:17:47,130 --> 00:17:49,710
it avoids these internal battles.

418
00:17:49,710 --> 00:17:52,290
It's doesn't give you the time for that.

419
00:17:52,290 --> 00:17:53,550
It's a (indistinct)

420
00:17:53,550 --> 00:17:55,500
If you, if you, if you spend too much time

421
00:17:55,500 --> 00:17:56,333
with that, you die.

422
00:17:56,333 --> 00:17:57,930
It's as simple as that.

423
00:17:57,930 --> 00:17:59,220
It's so healthy.

424
00:17:59,220 --> 00:18:01,560
It's incredible how competition
has made us a better...

425
00:18:01,560 --> 00:18:04,680
A substantially better company.

426
00:18:04,680 --> 00:18:05,790
There's a lot of thought

427
00:18:05,790 --> 00:18:08,670
and a lot of analysis
behind what we're doing,

428
00:18:08,670 --> 00:18:10,830
and I think it's going to go work great.

429
00:18:10,830 --> 00:18:12,240
I think it's gonna be an example.

430
00:18:12,240 --> 00:18:15,360
And I know it's gonna depend on Ari

431
00:18:15,360 --> 00:18:17,110
because whether you like it

432
00:18:18,027 --> 00:18:20,010
or not, a lot depends
sometimes on a person.

433
00:18:20,010 --> 00:18:22,890
We poached a guy from another
company, which we never do.

434
00:18:22,890 --> 00:18:26,130
I got into a fight with
(indistinct) who someone,

435
00:18:26,130 --> 00:18:29,130
a founder I like a lot, and kind,

436
00:18:29,130 --> 00:18:30,750
we had a kind of a gentleman's agreement

437
00:18:30,750 --> 00:18:32,100
we won't poach from you guys,

438
00:18:32,100 --> 00:18:34,470
and we said, this guy,
this guy, we need him.

439
00:18:34,470 --> 00:18:37,470
From the start, we saw
this guy as this guy

440
00:18:37,470 --> 00:18:39,090
is a different guy.

441
00:18:39,090 --> 00:18:42,180
And the reason why I feel confident

442
00:18:42,180 --> 00:18:44,280
about what we're doing is
because I think we have

443
00:18:44,280 --> 00:18:45,153
the right person,

444
00:18:46,770 --> 00:18:50,860
and that he's gonna be able
to decodify all these things

445
00:18:52,170 --> 00:18:54,150
about which is a moment

446
00:18:54,150 --> 00:18:56,850
and what things are
important for this moment.

447
00:18:56,850 --> 00:18:57,870
It's like raising kids.

448
00:18:57,870 --> 00:19:00,180
You know, I have two boys and a girl.

449
00:19:00,180 --> 00:19:02,220
The two boys are the...

450
00:19:02,220 --> 00:19:06,660
You cannot understand how two
children from the same parents

451
00:19:06,660 --> 00:19:08,550
born in the same socioeconomic conditions

452
00:19:08,550 --> 00:19:09,690
can be so different.

453
00:19:09,690 --> 00:19:12,000
They are so different.

454
00:19:12,000 --> 00:19:16,530
So I cannot say the same things
to them at the same time.

455
00:19:16,530 --> 00:19:19,920
You know, one guy, I, I don't
need to tell him, you know,

456
00:19:19,920 --> 00:19:22,034
you need to do this, this and that,

457
00:19:22,034 --> 00:19:23,600
because he's like a machine.

458
00:19:23,600 --> 00:19:24,775
He's gonna wake up in
the morning, go to study.

459
00:19:24,775 --> 00:19:25,770
I need to tell him, Hey, you know, relax,

460
00:19:25,770 --> 00:19:27,000
you should go out with your friends.

461
00:19:27,000 --> 00:19:28,770
You should do some exercise, it helps you.

462
00:19:28,770 --> 00:19:30,780
And the guy is, hey, you need

463
00:19:30,780 --> 00:19:31,740
to add some structure.

464
00:19:31,740 --> 00:19:33,570
With kids, it's love and limits,

465
00:19:33,570 --> 00:19:34,890
but it's important

466
00:19:34,890 --> 00:19:37,080
to give them love at the
right time and limits.

467
00:19:37,080 --> 00:19:38,490
Even when the guy needs love,

468
00:19:38,490 --> 00:19:42,537
you give you give him punishments
or maybe it's, you know,

469
00:19:42,537 --> 00:19:44,697
and you need to understand those things.

470
00:19:44,697 --> 00:19:47,340
And with the company
it's the same, I think.

471
00:19:47,340 --> 00:19:49,920
- [Jimmy] So you started
the interview, you know,

472
00:19:49,920 --> 00:19:51,990
with a discussion of eBay

473
00:19:51,990 --> 00:19:54,360
and whether they were the
right partner going forward,

474
00:19:54,360 --> 00:19:58,320
and one of the things that we
are beginning to use a word.

475
00:19:58,320 --> 00:20:00,180
- [Marcos] The culture of
Amazon versus a culture

476
00:20:00,180 --> 00:20:01,740
of eBay, it's incredible.

477
00:20:01,740 --> 00:20:04,770
I mean, eBay had everything to win.

478
00:20:04,770 --> 00:20:06,480
eBay made fun of Amazon.

479
00:20:06,480 --> 00:20:08,281
Like when we were partnering

480
00:20:08,281 --> 00:20:11,250
with eBay in 2001, eBay's media
category, which was books,

481
00:20:11,250 --> 00:20:14,400
musics and DVDs, books, CDs,

482
00:20:14,400 --> 00:20:16,713
and DVDs was bigger than all of Amazon,

483
00:20:17,670 --> 00:20:19,020
just its media category.

484
00:20:19,020 --> 00:20:21,960
They were, they made fun of Amazon.

485
00:20:21,960 --> 00:20:25,710
By 2006 when our best
practice deals had expired,

486
00:20:25,710 --> 00:20:27,150
it was like they were in panic mode

487
00:20:27,150 --> 00:20:28,530
and it was already too late.

488
00:20:28,530 --> 00:20:31,410
We always say how much we learned of eBay.

489
00:20:31,410 --> 00:20:33,750
The first three, three
years, it was everything,

490
00:20:33,750 --> 00:20:35,370
because what happened a lot is they had

491
00:20:35,370 --> 00:20:38,010
all these discussions about all
these ideas and we were all,

492
00:20:38,010 --> 00:20:38,940
it's a great idea.

493
00:20:38,940 --> 00:20:41,580
And then we were back and a
year later we had implemented,

494
00:20:41,580 --> 00:20:43,380
I don't know, three out of the 10 ideas

495
00:20:43,380 --> 00:20:45,060
and they hadn't implemented one.

496
00:20:45,060 --> 00:20:46,770
It's not that they didn't
know what they had to do,

497
00:20:46,770 --> 00:20:48,630
they couldn't do it or
they wouldn't do it.

498
00:20:48,630 --> 00:20:51,000
And we were taking their ideas

499
00:20:51,000 --> 00:20:52,020
and then next year, Hey,

500
00:20:52,020 --> 00:20:53,820
you guys did this, you guys are amazing.

501
00:20:53,820 --> 00:20:56,580
No, no, we just did what you guys told us.

502
00:20:56,580 --> 00:20:58,530
You know, we just executed three

503
00:20:58,530 --> 00:21:00,630
of the 10 ideas that you said.

504
00:21:00,630 --> 00:21:03,150
And then the last two
years it was, we need

505
00:21:03,150 --> 00:21:05,460
to make sure we don't
do what eBay is doing.

506
00:21:05,460 --> 00:21:07,710
And I remember one thing that happened

507
00:21:07,710 --> 00:21:10,050
is at a point in time
when, when Google starts

508
00:21:10,050 --> 00:21:12,630
to, you know, become prominent,

509
00:21:12,630 --> 00:21:15,660
eBay's listings were all
sorted using time remaining

510
00:21:15,660 --> 00:21:17,160
because they were an auctions.

511
00:21:17,160 --> 00:21:20,490
We were also auctions, but
we took us like 10 days

512
00:21:20,490 --> 00:21:23,040
to pivot away from the
time remaining algorithm

513
00:21:23,040 --> 00:21:24,660
to a relevant space algorithm.

514
00:21:24,660 --> 00:21:28,020
We said, you know, the more
listings we have, the better.

515
00:21:28,020 --> 00:21:30,240
And even was no, no, no, everybody

516
00:21:30,240 --> 00:21:31,980
has to have at some point in time

517
00:21:31,980 --> 00:21:34,020
the first listing, it was like crazy.

518
00:21:34,020 --> 00:21:35,490
And they wouldn't change that.

519
00:21:35,490 --> 00:21:38,640
It took them years to
change the sorting algorithm

520
00:21:38,640 --> 00:21:39,900
or the search.

521
00:21:39,900 --> 00:21:42,307
It took us 10 days to change that.

522
00:21:42,307 --> 00:21:44,880
- Marcos is proud and paranoid.

523
00:21:44,880 --> 00:21:46,710
He's built a brilliant foundation

524
00:21:46,710 --> 00:21:48,600
for the next generation of leaders,

525
00:21:48,600 --> 00:21:50,760
and he has seen the foundations

526
00:21:50,760 --> 00:21:53,280
of other once great companies crumble.

527
00:21:53,280 --> 00:21:55,710
Companies fail for lack
of focus on the core.

528
00:21:55,710 --> 00:21:59,250
And companies fail because
they optimize the core too much

529
00:21:59,250 --> 00:22:02,580
and became irrelevant as market shifted.

530
00:22:02,580 --> 00:22:05,550
Marcos cares about the
outer game of strategy.

531
00:22:05,550 --> 00:22:08,250
He's obsessed with the world around him,

532
00:22:08,250 --> 00:22:12,570
but he cares just as much
about the inner game, culture,

533
00:22:12,570 --> 00:22:16,110
leadership, turbulence, competitors.

534
00:22:16,110 --> 00:22:18,720
And Chris and I have spent
decades understanding

535
00:22:18,720 --> 00:22:21,390
how great CEOs master both.

536
00:22:21,390 --> 00:22:23,640
If "Profit From The
Core" is a poster child

537
00:22:23,640 --> 00:22:24,997
for the outer game,

538
00:22:24,997 --> 00:22:28,023
"The Founder's Mentality"
is the inner game.

539
00:22:29,587 --> 00:22:32,163
- "Profit From The Core" came out.

540
00:22:33,090 --> 00:22:34,980
We spoke about it around the world.

541
00:22:34,980 --> 00:22:39,980
We had great examples, data,
tools to mind full potential.

542
00:22:40,170 --> 00:22:43,110
It became quite solid.

543
00:22:43,110 --> 00:22:44,610
But people were asking questions

544
00:22:44,610 --> 00:22:48,090
about, well I have extra
cash and I'm near a lot

545
00:22:48,090 --> 00:22:49,560
of growth markets.

546
00:22:49,560 --> 00:22:54,150
How do I sort through those
that are most likely to succeed?

547
00:22:54,150 --> 00:22:59,010
Surely it isn't all just
about taking a single business

548
00:22:59,010 --> 00:23:01,170
and maintaining its
homogeneity (clears throat)

549
00:23:01,170 --> 00:23:03,180
which of course it wasn't.

550
00:23:03,180 --> 00:23:06,600
So the second wave of work
was also quite analytic.

551
00:23:06,600 --> 00:23:08,040
It's said, what's the science

552
00:23:08,040 --> 00:23:09,930
of moving into adjacent areas?

553
00:23:09,930 --> 00:23:13,323
And so we then did another wave of work

554
00:23:13,323 --> 00:23:17,250
that we called unstoppable,
which was about the focus,

555
00:23:17,250 --> 00:23:19,530
expand, redefined cycle.

556
00:23:19,530 --> 00:23:22,410
That there was ultimately
a point in most businesses

557
00:23:22,410 --> 00:23:24,660
when redefinition very often happened.

558
00:23:24,660 --> 00:23:27,540
And there are many iconic examples.

559
00:23:27,540 --> 00:23:30,780
IBM was a hardware company
that went into services

560
00:23:30,780 --> 00:23:34,830
and information that rejuvenated
the hardware business.

561
00:23:34,830 --> 00:23:39,210
And then that led to more
questions about, yes,

562
00:23:39,210 --> 00:23:42,510
but isn't, isn't there
more to, to the strategy?

563
00:23:42,510 --> 00:23:45,420
And so we began looking more
closely at those companies

564
00:23:45,420 --> 00:23:49,440
that over 15 or even 20
years had sustained growth.

565
00:23:49,440 --> 00:23:52,050
And we found something
called a repeatable formula.

566
00:23:52,050 --> 00:23:54,540
Companies like McDonald's, Tetra Pack

567
00:23:54,540 --> 00:23:56,220
that grew into adjacencies,

568
00:23:56,220 --> 00:23:59,610
but in addition to that
had a repeatable model,

569
00:23:59,610 --> 00:24:02,310
that they used to focus their innovation.

570
00:24:02,310 --> 00:24:05,940
It wasn't about robotically
doing the same thing mindlessly

571
00:24:05,940 --> 00:24:07,500
in a changing world.

572
00:24:07,500 --> 00:24:08,910
No, it was about knowing

573
00:24:08,910 --> 00:24:10,740
that there are certain
things you're very good at.

574
00:24:10,740 --> 00:24:12,840
Then the questions became
a little different.

575
00:24:12,840 --> 00:24:16,920
Like the question that in the
internet period about Enron,

576
00:24:16,920 --> 00:24:19,260
you know, this was a huge darling company,

577
00:24:19,260 --> 00:24:21,060
then it was a huge collapse.

578
00:24:21,060 --> 00:24:22,320
How could this happen?

579
00:24:22,320 --> 00:24:23,610
And so much of it turned out

580
00:24:23,610 --> 00:24:28,590
to be the human factor of
leadership, hubris, dishonesty,

581
00:24:28,590 --> 00:24:31,710
failing to see the world as
it was, surrounding yourself

582
00:24:31,710 --> 00:24:34,380
with yes men, broadcasting messages

583
00:24:34,380 --> 00:24:37,410
instead of truth, et cetera.

584
00:24:37,410 --> 00:24:40,620
And that's what led to the question,

585
00:24:40,620 --> 00:24:43,470
isn't there a deeper root cause here?

586
00:24:43,470 --> 00:24:46,860
And so "The Founder's
Mentality", the best analogy,

587
00:24:46,860 --> 00:24:48,960
the bestselling sports
book for the last 30

588
00:24:48,960 --> 00:24:52,200
or 40 years has been the,
the inner game of golf

589
00:24:52,200 --> 00:24:54,240
and then the inner game of tennis.

590
00:24:54,240 --> 00:24:57,630
Because so many tennis
players have similar fitness.

591
00:24:57,630 --> 00:24:59,280
Their strokes are not that different.

592
00:24:59,280 --> 00:25:00,780
They play on the identical court

593
00:25:00,780 --> 00:25:03,180
with the identical balls and rackets.

594
00:25:03,180 --> 00:25:06,180
And what really differentiates the ability

595
00:25:06,180 --> 00:25:08,280
of somebody like Djokovic

596
00:25:08,280 --> 00:25:12,008
to eek out matches against people

597
00:25:12,008 --> 00:25:14,730
over and over and over again.

598
00:25:14,730 --> 00:25:17,640
And, and that comes to down
so much to the inner game,

599
00:25:17,640 --> 00:25:22,163
to staying calm, to staying
focused, to not giving up

600
00:25:22,163 --> 00:25:24,030
to human elements.

601
00:25:24,030 --> 00:25:27,060
And so we began to look
for deeper root causes

602
00:25:27,060 --> 00:25:29,040
and began asking executives

603
00:25:29,040 --> 00:25:34,040
about whether they thought
situations where they fell short

604
00:25:34,230 --> 00:25:38,040
as a company significantly
short were external.

605
00:25:38,040 --> 00:25:42,090
And they said that in
maybe 70 or 80% of the time

606
00:25:42,090 --> 00:25:46,110
or more, it probably came
down to internal decisions,

607
00:25:46,110 --> 00:25:49,860
hiring the wrong people, fighting
the future like Nokia did,

608
00:25:49,860 --> 00:25:51,720
bureaucracy that slowed them down.

609
00:25:51,720 --> 00:25:54,570
These were probably the deep root causes.

610
00:25:54,570 --> 00:25:57,270
We zeroed in on what we called
"The Founder's Mentality",

611
00:25:57,270 --> 00:25:59,610
which were the internal
elements of health.

612
00:25:59,610 --> 00:26:01,350
How do you know if a business is healthy

613
00:26:01,350 --> 00:26:04,020
on the inside to achieve growth?

614
00:26:04,020 --> 00:26:05,100
Very hard to know.

615
00:26:05,100 --> 00:26:07,230
How do you know if it's
healthy on the outside?

616
00:26:07,230 --> 00:26:08,550
1 million measures?

617
00:26:08,550 --> 00:26:12,090
- And how do you, you know,
if you're asked, you know,

618
00:26:12,090 --> 00:26:14,220
the classic elevator
pitch, what do you say

619
00:26:14,220 --> 00:26:16,170
the magic dust of founders' mentality is?

620
00:26:16,170 --> 00:26:17,910
How, how do you talk about?

621
00:26:17,910 --> 00:26:20,220
- I say that 80

622
00:26:20,220 --> 00:26:25,220
to 82% in our research of root causes

623
00:26:25,380 --> 00:26:28,743
of strategy, shortfalls, breakdowns,

624
00:26:29,670 --> 00:26:34,380
free fall situations, disasters, traced

625
00:26:34,380 --> 00:26:36,150
to internal factors

626
00:26:36,150 --> 00:26:39,633
that could have been
identified and controllable.

627
00:26:40,500 --> 00:26:44,970
And that when we drove deeper into that,

628
00:26:44,970 --> 00:26:48,870
we found three elements
of health that tended

629
00:26:48,870 --> 00:26:53,870
to reduce the chance of
those pitfalls engulfing you.

630
00:26:54,240 --> 00:26:59,040
Those three were exactly
the main attributes

631
00:26:59,040 --> 00:27:02,010
that people used to
describe the great founders

632
00:27:02,010 --> 00:27:03,900
who created the great businesses.

633
00:27:03,900 --> 00:27:08,010
Number one, a clear insurgent
mission of what you're trying

634
00:27:08,010 --> 00:27:09,870
to achieve that is different

635
00:27:09,870 --> 00:27:12,240
or even revolutionary to the industry,

636
00:27:12,240 --> 00:27:14,853
even waging war on the
norms of the industry.

637
00:27:15,720 --> 00:27:18,630
Think of SpaceX, one 10th, the cost

638
00:27:18,630 --> 00:27:22,140
to get rockets (clears throat) into space.

639
00:27:22,140 --> 00:27:25,110
Number two was a frontline obsession.

640
00:27:25,110 --> 00:27:28,410
The founders had an intellectual curiosity

641
00:27:28,410 --> 00:27:31,410
and a love of the detail,
a love of the business

642
00:27:31,410 --> 00:27:34,200
that propelled them to constantly ask,

643
00:27:34,200 --> 00:27:35,640
why is this happening?

644
00:27:35,640 --> 00:27:37,260
How do the customers really feel?

645
00:27:37,260 --> 00:27:38,100
Why is that?

646
00:27:38,100 --> 00:27:41,400
And then the third element was
the epicenter of the success

647
00:27:41,400 --> 00:27:46,170
of private equity, which
is an owner's mindset,

648
00:27:46,170 --> 00:27:49,440
which relates to looking
for responsibility

649
00:27:49,440 --> 00:27:53,790
or accepting responsibility,
not looking to point blame.

650
00:27:53,790 --> 00:27:58,170
And that therefore the great founders

651
00:27:58,170 --> 00:27:59,580
had a sense of urgency.

652
00:27:59,580 --> 00:28:02,160
They reacted quickly, they acted

653
00:28:02,160 --> 00:28:04,050
as if all their, the money was their own.

654
00:28:04,050 --> 00:28:05,910
So that's a lot longer
than an elevator pitch,

655
00:28:05,910 --> 00:28:07,500
but the elevator pitch would say--

656
00:28:07,500 --> 00:28:08,820
- We were on a very high floor.

657
00:28:08,820 --> 00:28:09,840
- Something shorter.

658
00:28:09,840 --> 00:28:10,673
So yeah.

659
00:28:10,673 --> 00:28:12,360
- Is the answer now inner game?

660
00:28:12,360 --> 00:28:14,460
You know, as you tell your
journey is the beginning

661
00:28:14,460 --> 00:28:15,990
of the journey, it was all outer game,

662
00:28:15,990 --> 00:28:17,943
and now the answer is inner game?

663
00:28:19,110 --> 00:28:20,580
- No, I don't think we've...

664
00:28:20,580 --> 00:28:24,482
I don't think we've repealed
the laws of microeconomics.

665
00:28:24,482 --> 00:28:25,315
(Jimmy and Chris laugh)

666
00:28:25,315 --> 00:28:27,780
I mean, if in fact, ironically,

667
00:28:27,780 --> 00:28:31,560
if anything, the seven companies
that have propelled 98%

668
00:28:31,560 --> 00:28:34,200
of the value creation
in the US stock market

669
00:28:34,200 --> 00:28:37,440
for the last eight years are all leaders,

670
00:28:37,440 --> 00:28:40,320
if not monopolists, near monopolists

671
00:28:40,320 --> 00:28:43,260
or duopolies in their field, right?

672
00:28:43,260 --> 00:28:46,860
So leadership, economics,
a well-defined core market,

673
00:28:46,860 --> 00:28:49,950
optimizing your core is
still very important.

674
00:28:49,950 --> 00:28:54,210
But I think what we realize
is that to do that and to go

675
00:28:54,210 --> 00:28:58,410
after the right internal
opportunities, say no,

676
00:28:58,410 --> 00:29:01,680
which is very often the most
important question to answer.

677
00:29:01,680 --> 00:29:05,340
And so the internal
wiring of those businesses

678
00:29:05,340 --> 00:29:07,833
to keep them transparent,

679
00:29:09,330 --> 00:29:14,330
looking for what is really
going on, not self delusional,

680
00:29:14,790 --> 00:29:16,950
trying to avoid the very easy

681
00:29:16,950 --> 00:29:18,690
and dangerous trap of hubris,

682
00:29:18,690 --> 00:29:23,690
which ultimately engulfs so
many, those are at the core

683
00:29:24,330 --> 00:29:28,980
of all the companies
that are still proceeding

684
00:29:28,980 --> 00:29:31,020
along with these rules on the outside.

685
00:29:31,020 --> 00:29:33,960
So it really is a higher synthesis

686
00:29:33,960 --> 00:29:37,710
of the two just as it is in anything.

687
00:29:37,710 --> 00:29:42,120
You know, the great musicians
have magical ability execute

688
00:29:42,120 --> 00:29:44,460
detailed things like Eric Clapton,

689
00:29:44,460 --> 00:29:48,420
and yet an amazing intuition
for what will work to write,

690
00:29:48,420 --> 00:29:49,893
you know, a song like Layla.

691
00:29:51,390 --> 00:29:54,300
- So the outer game is
what Chris just called

692
00:29:54,300 --> 00:29:56,250
the laws of microeconomics.

693
00:29:56,250 --> 00:29:58,860
To grow sustainably, of course you have

694
00:29:58,860 --> 00:30:01,473
to have a well-defined
core business, drive it

695
00:30:01,473 --> 00:30:03,600
to full potential, achieve
leadership economics.

696
00:30:03,600 --> 00:30:06,330
But the inner game matters too,

697
00:30:06,330 --> 00:30:08,460
because your growth will create complexity

698
00:30:08,460 --> 00:30:10,650
and that complexity will kill your growth.

699
00:30:10,650 --> 00:30:13,440
To fight it, you need to maintain,

700
00:30:13,440 --> 00:30:17,670
or in most companies, rediscover
your founder's mentality.

701
00:30:17,670 --> 00:30:19,470
And this will demand two things.

702
00:30:19,470 --> 00:30:23,280
First, with your people,
rediscover the why.

703
00:30:23,280 --> 00:30:25,440
Why the hell do you exist?

704
00:30:25,440 --> 00:30:27,720
Then reorient your
company to the frontline

705
00:30:27,720 --> 00:30:30,930
and customers away from
head office and managers.

706
00:30:30,930 --> 00:30:32,430
Create an owner mindset,

707
00:30:32,430 --> 00:30:36,810
which involves a hatred of
bureaucracy and a bias to action.

708
00:30:36,810 --> 00:30:40,830
Second, you gotta bring
back a vertical orientation.

709
00:30:40,830 --> 00:30:44,280
Focus on real customers and win,

710
00:30:44,280 --> 00:30:46,560
then take a winning solution and scale it,

711
00:30:46,560 --> 00:30:48,840
and then figure out how to amplify

712
00:30:48,840 --> 00:30:51,060
what you've discovered across the business

713
00:30:51,060 --> 00:30:52,920
through horizontal moves.

714
00:30:52,920 --> 00:30:57,510
Outer game, focus on the core
balance, deliver and develop.

715
00:30:57,510 --> 00:31:01,470
Inner game (laughs) it starts
with just get your mojo back,

716
00:31:01,470 --> 00:31:04,770
start winning again, and
then celebrate the heroes

717
00:31:04,770 --> 00:31:06,480
who make those victories happen.

718
00:31:06,480 --> 00:31:09,360
And it's interesting, as Chris
notes, in the last decade,

719
00:31:09,360 --> 00:31:12,510
almost all the value in the
stock market has been done

720
00:31:12,510 --> 00:31:15,630
by the big tech players, all founder-led,

721
00:31:15,630 --> 00:31:20,630
all playing the outer and
inner game with new rules.

722
00:31:22,110 --> 00:31:24,236
One of the things that's coming up more

723
00:31:24,236 --> 00:31:27,210
and more in our work is
this notion of resilience.

724
00:31:27,210 --> 00:31:29,820
And I thought the, I thought
the best line you talked about

725
00:31:29,820 --> 00:31:34,323
was when I go out to
external markets, I'm a hero,

726
00:31:35,250 --> 00:31:37,110
and everybody looks at
the journey I've been on

727
00:31:37,110 --> 00:31:38,610
in the mountain I'm on.

728
00:31:38,610 --> 00:31:42,273
When I talk to a user, I'm as
good as the last transaction.

729
00:31:43,110 --> 00:31:46,701
And, but that energy, Marco--

730
00:31:46,701 --> 00:31:47,534
- [Marcos] So physically happened to me.

731
00:31:47,534 --> 00:31:49,440
- [Jimmy] Well, then you said that, but--

732
00:31:49,440 --> 00:31:50,460
- [Marcos] And I said, you know what?

733
00:31:50,460 --> 00:31:52,950
I need to physically move.

734
00:31:52,950 --> 00:31:54,300
We had an office that I shared

735
00:31:54,300 --> 00:31:57,621
with my two kind of
co-founders (indistinct)

736
00:31:57,621 --> 00:32:01,080
We had the, we, the
three of us sat together

737
00:32:01,080 --> 00:32:02,370
in like, in a place like this.

738
00:32:02,370 --> 00:32:05,370
I said, guys, yes, as
of next week I'm going

739
00:32:05,370 --> 00:32:09,382
to sit in the middle of the
engineers with (indistinct)

740
00:32:09,382 --> 00:32:10,350
And I did that for three years.

741
00:32:10,350 --> 00:32:12,570
I wanted to physically change everything

742
00:32:12,570 --> 00:32:15,390
because I said, you
know, it's been one era

743
00:32:15,390 --> 00:32:16,440
of building the company.

744
00:32:16,440 --> 00:32:18,120
Now we need to build the product.

745
00:32:18,120 --> 00:32:19,620
The people that you know,

746
00:32:19,620 --> 00:32:23,730
the business people love
us and our users are here.

747
00:32:23,730 --> 00:32:25,050
I want the opposite to happen.

748
00:32:25,050 --> 00:32:26,610
I want our users to have us here

749
00:32:26,610 --> 00:32:28,650
and the external work to be here.

750
00:32:28,650 --> 00:32:30,510
And this is, this is unsustainable,

751
00:32:30,510 --> 00:32:32,550
this is sustainable, you know.

752
00:32:32,550 --> 00:32:36,780
- [Jimmy] And so that, Marcos,
takes so much energy, right?

753
00:32:36,780 --> 00:32:39,870
To, to face the gaps in your
business, constantly say,

754
00:32:39,870 --> 00:32:41,760
I'm gonna listen to
the user that hates me,

755
00:32:41,760 --> 00:32:44,253
not the external market that loves me.

756
00:32:45,330 --> 00:32:47,857
You answered, I think for
yourself, you, you said,

757
00:32:47,857 --> 00:32:49,830
"I get passion in everything,

758
00:32:49,830 --> 00:32:51,300
from big things to small things."

759
00:32:51,300 --> 00:32:53,430
You talked about your family.

760
00:32:53,430 --> 00:32:57,090
Did you specifically with
in Mercado Libre talk

761
00:32:57,090 --> 00:32:59,010
to your people about how
they keep energy levels,

762
00:32:59,010 --> 00:33:01,470
how they stay resilient?

763
00:33:01,470 --> 00:33:03,870
Because what we've seen is tired people

764
00:33:03,870 --> 00:33:05,880
do incredible damage to companies.

765
00:33:05,880 --> 00:33:07,260
It takes energy.

766
00:33:07,260 --> 00:33:08,130
- [Marcos] We talking about career

767
00:33:08,130 --> 00:33:09,720
about leading for example.

768
00:33:09,720 --> 00:33:11,760
That for me is the most important thing.

769
00:33:11,760 --> 00:33:14,437
When this guy told me, the,
the board director telling me,

770
00:33:14,437 --> 00:33:16,354
"Hey, why are you doing what you're doing?

771
00:33:16,354 --> 00:33:19,200
You know, this is your company,
you can do what you love,

772
00:33:19,200 --> 00:33:20,705
you can go and play golf."

773
00:33:20,705 --> 00:33:21,946
You know, I said, "No, no, no.

774
00:33:21,946 --> 00:33:22,779
I don't wanna go and play golf,

775
00:33:22,779 --> 00:33:24,923
because I don't want the
CEO of Mercado Libre.

776
00:33:24,923 --> 00:33:27,820
Now I'm gonna be chairman, and now Ariel

777
00:33:29,040 --> 00:33:32,160
and everybody else
knows that I was willing

778
00:33:32,160 --> 00:33:34,560
to leave the thing that I love the most

779
00:33:34,560 --> 00:33:37,983
because I want to be 24/7, 365.

780
00:33:39,090 --> 00:33:43,530
Now, everybody better work 24/7, 365.

781
00:33:43,530 --> 00:33:44,883
I'm giving the example.

782
00:33:45,870 --> 00:33:47,640
I'm giving up my salary,

783
00:33:47,640 --> 00:33:50,370
I'm giving up my job, I'm
giving up the position

784
00:33:50,370 --> 00:33:53,760
because whoever leads this
company cannot be focused

785
00:33:53,760 --> 00:33:55,683
on Mercado Libre and other things.

786
00:33:56,520 --> 00:33:58,170
Mercado Libre has to be your life.

787
00:33:58,170 --> 00:34:00,600
- [Jimmy] You say that,
but you also talked

788
00:34:00,600 --> 00:34:02,670
about the incredible
importance of your family.

789
00:34:02,670 --> 00:34:04,830
I know you love rugby with a huge passion.

790
00:34:04,830 --> 00:34:06,428
- [Marcos] I'm not saying

791
00:34:06,428 --> 00:34:08,490
it has to be the only thing you do.

792
00:34:08,490 --> 00:34:09,404
- [Jimmy] Good, okay.

793
00:34:09,404 --> 00:34:10,294
- [Marcos] But I can be with my family

794
00:34:10,294 --> 00:34:11,127
and I am with my family.

795
00:34:11,127 --> 00:34:12,579
I'm thinking of Mercado Libre.

796
00:34:12,579 --> 00:34:13,502
(Jimmy laughs)

797
00:34:13,502 --> 00:34:14,398
- [Jimmy] Don't say that to your wife.

798
00:34:14,398 --> 00:34:15,299
(Jimmy laughs)

799
00:34:15,299 --> 00:34:16,648
- [Marcos] No, no, my wife knows it.

800
00:34:16,648 --> 00:34:17,675
My wife knows it.

801
00:34:17,675 --> 00:34:19,767
My wife thinks about
Mercado Libre 24/7 as well.

802
00:34:19,767 --> 00:34:22,290
I mean, it's our fourth kid.

803
00:34:22,290 --> 00:34:23,550
It's a life project.

804
00:34:23,550 --> 00:34:26,670
It's a life project for me, for
my children and for my wife.

805
00:34:26,670 --> 00:34:28,860
We're all trying to understand
how is this gonna work out

806
00:34:28,860 --> 00:34:30,570
in the next few years?

807
00:34:30,570 --> 00:34:32,418
- [Jimmy] But how did you,

808
00:34:32,418 --> 00:34:33,330
where did you replenish your energy?

809
00:34:33,330 --> 00:34:35,082
- [Marcos] I think what happened to me,

810
00:34:35,082 --> 00:34:36,960
it's also with Jeff Bezos,
it's also with Mark Zuckerberg,

811
00:34:36,960 --> 00:34:38,520
it's also clearly with Elon Musk,

812
00:34:38,520 --> 00:34:40,860
all these founders, money's irrelevant.

813
00:34:40,860 --> 00:34:44,340
It's never, ever, ever about the money.

814
00:34:44,340 --> 00:34:48,450
So, so it's always about the
objective, about the project,

815
00:34:48,450 --> 00:34:52,380
and the project is so
fascinating and it's growing

816
00:34:52,380 --> 00:34:55,920
and it's changing that it,
right now, it's as fascinating

817
00:34:55,920 --> 00:34:56,950
as it has ever been.

818
00:34:56,950 --> 00:34:58,560
I get the energy from there,

819
00:34:58,560 --> 00:35:01,020
but it's also certain kind
of people that you need

820
00:35:01,020 --> 00:35:02,250
to try and attract.

821
00:35:02,250 --> 00:35:06,030
And clearly Addie is like
that and Danny is like that,

822
00:35:06,030 --> 00:35:08,040
or that's, you know, what I try

823
00:35:08,040 --> 00:35:10,620
to detect when I'm interviewing, you know,

824
00:35:10,620 --> 00:35:12,480
is this guy a manager?

825
00:35:12,480 --> 00:35:15,270
And sometimes we know this
guy's a manager and that's fine.

826
00:35:15,270 --> 00:35:16,980
He's gonna be, I don't
know, the controller.

827
00:35:16,980 --> 00:35:17,813
It's great.

828
00:35:17,813 --> 00:35:21,870
So you don't need also founder
mentality in every role,

829
00:35:21,870 --> 00:35:24,540
in every position in across the company

830
00:35:24,540 --> 00:35:25,980
because it's a problem,

831
00:35:25,980 --> 00:35:29,225
because founders want to
grow, create, ambitious,

832
00:35:29,225 --> 00:35:31,200
and if everybody wants to be like that,

833
00:35:31,200 --> 00:35:34,080
you don't have enough positions
to satisfy all those things.

834
00:35:34,080 --> 00:35:36,047
- [Jimmy] But no, no one's
gonna keep the books (laughs)

835
00:35:36,047 --> 00:35:37,830
- [Marcos] Yeah, and you
don't have enough positions

836
00:35:37,830 --> 00:35:40,083
to satisfy all those egos, you know?

837
00:35:40,083 --> 00:35:42,510
But, but that's another thing.

838
00:35:42,510 --> 00:35:44,700
The process of me leaving creates

839
00:35:44,700 --> 00:35:46,770
opportunities which you need.

840
00:35:46,770 --> 00:35:49,320
Because when you have all
these ambitious people,

841
00:35:49,320 --> 00:35:52,740
if you don't create opportunities,
you end up losing them.

842
00:35:52,740 --> 00:35:53,940
We saw that one at federal level,

843
00:35:53,940 --> 00:35:56,790
we gave four internal promotions.

844
00:35:56,790 --> 00:35:57,870
It was fantastic.

845
00:35:57,870 --> 00:36:00,030
We have an incredible bench,

846
00:36:00,030 --> 00:36:02,880
but if those people are
in the bench forever,

847
00:36:02,880 --> 00:36:05,940
one day they're gonna play in
a, you know, in another team.

848
00:36:05,940 --> 00:36:08,790
So I mean, in Mercado
Libre it's very clear

849
00:36:08,790 --> 00:36:12,420
that the guys from the
marketplace, the guys

850
00:36:12,420 --> 00:36:16,740
from the FinTech and the
engineers are the ones

851
00:36:16,740 --> 00:36:20,790
who deliver the value.

852
00:36:20,790 --> 00:36:22,590
Everybody else is supporting role.

853
00:36:22,590 --> 00:36:24,030
And that is very clear.

854
00:36:24,030 --> 00:36:27,150
I mean, in my team
meetings, those are the guys

855
00:36:27,150 --> 00:36:29,520
who start the, let's talk

856
00:36:29,520 --> 00:36:33,107
about (indistinct) and Ari would take us

857
00:36:33,107 --> 00:36:34,590
to (indistinct) and Valdo would take us

858
00:36:34,590 --> 00:36:36,630
to (indistinct) and then Danny

859
00:36:36,630 --> 00:36:37,830
is gonna talk about technology.

860
00:36:37,830 --> 00:36:40,650
And then the CFO talks
about what's going on

861
00:36:40,650 --> 00:36:45,030
and the (indistinct) who's kind

862
00:36:45,030 --> 00:36:50,030
of a COO, he talks about
legal and HR and...

863
00:36:50,790 --> 00:36:53,700
But first we talk about
Mercado Libre the business

864
00:36:53,700 --> 00:36:55,740
and then the technology
and then it's the rest.

865
00:36:55,740 --> 00:36:57,633
And everybody knows that, and
it's like that, and we don't--

866
00:36:57,633 --> 00:37:00,090
- [Jimmy] When we say
most big bureaucracies,

867
00:37:00,090 --> 00:37:02,790
it's the tyranny of the
functional excellence programs.

868
00:37:02,790 --> 00:37:05,190
It's all the functions
just give PowerPoint

869
00:37:05,190 --> 00:37:07,560
in a presentations all day.

870
00:37:07,560 --> 00:37:10,050
- [Marcos] These guys are
there to support the business.

871
00:37:10,050 --> 00:37:12,210
That is very, very clear.

872
00:37:12,210 --> 00:37:13,043
Yeah.

873
00:37:13,043 --> 00:37:15,720
But again, competition is so helpful.

874
00:37:15,720 --> 00:37:19,560
Is so helpful in aligning everybody.

875
00:37:19,560 --> 00:37:21,840
I think Amazon, these
guys are really good,

876
00:37:21,840 --> 00:37:23,700
but they have a discipline, you know.

877
00:37:23,700 --> 00:37:25,920
They're not willing to lose $500 million

878
00:37:25,920 --> 00:37:27,633
per year forever in Brazil.

879
00:37:29,130 --> 00:37:30,330
I don't know how many they've been losing,

880
00:37:30,330 --> 00:37:33,180
but they've been losing
substantial money in Brazil.

881
00:37:33,180 --> 00:37:35,460
But there's a point where they say, Hey,

882
00:37:35,460 --> 00:37:37,740
maybe this amount of money
is better spent in Germany

883
00:37:37,740 --> 00:37:40,113
where we make money, or in the UK.

884
00:37:41,100 --> 00:37:43,530
At some point in time,
there's some discipline.

885
00:37:43,530 --> 00:37:46,740
So far with the Chinese,
we've seen no willingness

886
00:37:46,740 --> 00:37:49,950
to restrain anything,

887
00:37:49,950 --> 00:37:52,650
and their technology is really
good and they work a lot.

888
00:37:52,650 --> 00:37:55,773
And so we say, it's gonna
be a long and tough battle.

889
00:37:57,330 --> 00:38:00,240
- Look, Marcos doesn't
beat around the bush.

890
00:38:00,240 --> 00:38:02,580
His job is 24/7.

891
00:38:02,580 --> 00:38:06,690
It demanded relentless
energy, and he warns us.

892
00:38:06,690 --> 00:38:09,990
If I didn't have that energy,
my job was to step aside

893
00:38:09,990 --> 00:38:11,700
because there are four other leaders

894
00:38:11,700 --> 00:38:13,110
that would take my place

895
00:38:13,110 --> 00:38:15,390
because they wanna write
their own chapters.

896
00:38:15,390 --> 00:38:18,420
We may all wonder, could we do a 24/7 job?

897
00:38:18,420 --> 00:38:20,160
Would we even want to?

898
00:38:20,160 --> 00:38:23,040
If you can't or won't devote
that much time to your job,

899
00:38:23,040 --> 00:38:25,410
it's important to remember,

900
00:38:25,410 --> 00:38:27,570
you know, we all deserve work

901
00:38:27,570 --> 00:38:31,860
that energizes us, work
that excites us so much

902
00:38:31,860 --> 00:38:33,420
that, you know, it steals a bit

903
00:38:33,420 --> 00:38:35,250
of our discretionary energy.

904
00:38:35,250 --> 00:38:37,260
Work we think about in the shower

905
00:38:37,260 --> 00:38:39,000
or while walking in the park,

906
00:38:39,000 --> 00:38:42,390
because we all deserve
to be on noble missions.

907
00:38:42,390 --> 00:38:43,395
All right, so how the hell

908
00:38:43,395 --> 00:38:45,818
are we gonna recap this episode?

909
00:38:45,818 --> 00:38:48,420
First, it's the outer game.

910
00:38:48,420 --> 00:38:50,640
Power of the core, leadership economics.

911
00:38:50,640 --> 00:38:53,850
Chris showed us that
sustainable growth does not come

912
00:38:53,850 --> 00:38:58,110
from chasing hot markets or
diversifying for the sake of it.

913
00:38:58,110 --> 00:39:01,230
It comes from doubling
down on what we do best,

914
00:39:01,230 --> 00:39:05,700
building repeatable models and,
well, comes from dominating.

915
00:39:05,700 --> 00:39:07,650
But of course this is
the era of turbulence,

916
00:39:07,650 --> 00:39:10,020
so we have to optimize the core

917
00:39:10,020 --> 00:39:12,660
while also adapting it to stay relevant.

918
00:39:12,660 --> 00:39:15,810
Second, the inner game,
the founder's mentality.

919
00:39:15,810 --> 00:39:18,600
Nurture it, rediscover it, and then shift

920
00:39:18,600 --> 00:39:20,730
your orientation more vertically.

921
00:39:20,730 --> 00:39:23,340
Focus on customers in the frontline,

922
00:39:23,340 --> 00:39:26,850
win then scale, then amplify.

923
00:39:26,850 --> 00:39:29,730
Third, of course, it's a balance

924
00:39:29,730 --> 00:39:31,800
between the inner and outer game.

925
00:39:31,800 --> 00:39:34,680
The CEO's job is never just one thing.

926
00:39:34,680 --> 00:39:37,050
It's economics and competition,

927
00:39:37,050 --> 00:39:39,810
but it's also leadership and culture.

928
00:39:39,810 --> 00:39:42,150
The best leaders help their teams win

929
00:39:42,150 --> 00:39:44,220
against external competitors

930
00:39:44,220 --> 00:39:47,790
and help them overcome those
internal energy vampires.

931
00:39:47,790 --> 00:39:49,920
It's the outer game against competition.

932
00:39:49,920 --> 00:39:52,290
It's the inner game against complexity.

933
00:39:52,290 --> 00:39:54,120
And the best CEOs know how to win

934
00:39:54,120 --> 00:39:56,850
with both without losing energy,

935
00:39:56,850 --> 00:39:59,250
without losing focus (giggles)

936
00:39:59,250 --> 00:40:00,990
without losing their people.

937
00:40:00,990 --> 00:40:04,447
So that's the final CEO
interview for this season.

938
00:40:04,447 --> 00:40:05,349
(Jimmy giggles)

939
00:40:05,349 --> 00:40:06,247
But guess what?

940
00:40:06,247 --> 00:40:07,080
We're not done with you yet.

941
00:40:07,080 --> 00:40:09,990
In two weeks, we're gonna come
back with a wrap up episode

942
00:40:09,990 --> 00:40:12,270
and we're gonna try to
pull this all together.

943
00:40:12,270 --> 00:40:14,370
So thanks for sticking with us.

944
00:40:14,370 --> 00:40:15,483
Stay curious.