The model of extreme concentration involves focusing on just one investment per fund. This approach requires incredible patience and grew from early experiences in Brazil. Exceptional businesses are rare and even less frequently available for purchase. When investing personal capital with the intent to be deeply involved, time and people must be treated as scarce resources.

Great businesses are rare. There are not that many of them to begin with. Secondly, the ones that exist, they are not often actionable. So if you are going to be in the business of putting a lot of your own capital to work and being very involved, the people you need and the time are also a scarce resource.

The difficulty of finding a world-class business is matched by the difficulty of finding world-class leadership. It is nearly impossible to find ten great CEOs at once. By choosing one business at a time, it is possible to send in top-tier operators to improve the company from the inside.

It is so hard for us to find a great business to invest in. How are we going to find ten? And it is so hard to find great people to be great CEOs. So how are we going to find ten? It is great to be able to buy one business every once in a while and send in your A players to get involved.

Concentrated investing creates a healthy pressure that drives a very rigorous investment process. When all your eggs are in one basket, the primary focus becomes capital preservation and understanding the downside. Many potential deals are rejected not because they lack a path to success, but because the team is uncomfortable with the potential for loss. This approach makes it more difficult to price risk compared to a traditional portfolio where idiosyncratic risks can be diversified away.

When you are betting your reputation on something, you want to hold it to the highest possible standard. It definitely makes it harder to price risk. If you have ten businesses and one has some idiosyncratic risk, it is easier. But when it is just one, you take that into consideration.

Over the last twenty years, the criteria for what makes a great business has evolved alongside technology. The risk of disruption is significantly higher today than it was in 2004. Daniel and Alex now place a much higher premium on businesses that own the direct relationship with their end customers. This ownership acts as a shield against disintermediation. For example, large retailers like Amazon or Costco can use private labels like Kirkland to disintermediate brands that do not have that direct customer bond.

By contrast, restaurant brands like Burger King or Popeyes maintain a unique connection. If a customer wants a Whopper, they must go to Burger King. Staying disciplined and sticking to simple, easy to understand businesses is a core part of the strategy. They prefer businesses that have been around for a long time with strong brand franchises rather than chasing high IQ technology plays that are harder to wrap their heads around.

We are not well suited to manage businesses that require high IQ, to be honest with you. We have managed to stay pretty disciplined to stick to good, relatively easy to understand, well molded businesses.

The investment model used by the firm differs significantly from traditional private equity. One major distinction is the high proportion of house capital. The founders and partners are the largest investors in every deal they pursue. This ensures a high level of alignment between the firm and its partners. Their limited partner base is also unique, consisting largely of high net worth individuals and families across the globe, rather than just institutional funds. This structure allows for a much longer investment horizon. They have remained invested in Restaurant Brands International for over fifteen years.

We have devised mechanisms that allow us to be invested for a long period of time. We invested in RBI for fifteen years and counting.

Another core advantage is the blend of investing and operating experience among the partners. Most of the team members have held senior leadership roles. Alex served as the CEO of a major rail and logistics company, while Daniel acted as the CFO and CEO of Burger King and Restaurant Brands International. This dual perspective makes them better investors and allows them to place their own partners into key roles within their portfolio companies. These individuals are incentivized to create value in a way that aligns directly with the firm's long-term goals.

Building meaningful relationships in the investment world can take decades. The acquisition of Hunter Douglas was the result of a fifteen year history with the founding family. Alex first met the patriarch, Rolf, in the mid-2000s in Switzerland. Over time, they became close with the family. Daniel met Rolf's son, David, in 2007. These early connections built a foundation of mutual respect that lasted long before any deal was on the table.

We played the real long game. David evolved Hunter Douglas into a business that we had an even greater appreciation for 15 years after meeting him.

The opportunity finally arrived when Rolf began planning for succession. He wanted a solution that allowed David to stay involved while securing the future of the century-old family business. Because of the long standing trust, they were given a window to present a proposal. This success shows the value of keeping tabs on a business and its leadership for years. David had transformed the company by moving into direct to consumer sales. This evolution made the business even more attractive over time.

Hunter Douglas represents a business model with deep moats and staying power. The company owns its relationships and does not rely on any single customer or supplier. Because window coverings are an infrequent purchase, often tied to home renovations, brand recognition and quality become critical factors. The industry has a massive $70 billion market for interior and exterior coverings. Hunter Douglas stands out by combining large scale manufacturing with a vast distribution network. This setup allows them to deliver custom made products in just a week or two.

We have billions of permutations of styles, colors, patterns, and sizes. We are highly confident about the sun rising and the sun setting. Houses are being built with larger windows because people like natural light. It is a product that is here to stay.

The company faces very little risk of disruption. It is unlikely that a startup in a garage will find a way to replace the need for window coverings. The business also benefits from modern trends like energy efficiency. Their products provide a natural way to keep a house cool, which aligns with growing environmental awareness. The complexity of the installation and service process creates a high barrier to entry for potential competitors.

There is often pressure to diversify, raise larger funds, and buy more businesses. While many firms find success with different models, it is vital to stick with what works for your specific culture and capital. For Alex and his team, a focused approach has allowed them to compound capital effectively for decades. They avoid emulating others and instead double down on their own proven methods.

Most successful firms have their own model that they develop that works for them, for their culture, for their people, for their capital. We should stick to that and not try to emulate other people's models.

A smaller scale helps attract elite talent on the investment side. The firm offers founder like economics and a path to partnership much faster than traditional investment paths. This structure ensures the people driving the business also own it. Both Alex and Daniel began as analysts, proving that the firm provides a clear trajectory for those willing to take on responsibility.

Staying small allows us to attract some of the best people on the investment side here because we could still offer people founder like economics and a path to taking on responsibility much faster than those people might have if they take a traditional investment path.

Operating a Brazilian railway showed the importance of getting close to the front lines. The railroad faced a major operations challenge because the service was not good enough for the customers. Spending time in overalls and driving trains allowed for a better understanding of the engineers who actually ran the business. Small, inexpensive improvements to their daily lives made a massive difference. For example, fixing uncomfortable chairs and sealing cold cabins improved morale significantly.

I was young and athletic and sitting in a locomotive for eight hours in those really old chairs was really tough. The cabins were cold because they were not sealed properly. We did not have the money to buy brand new locomotives, but we could fix that. We also fixed the quarters where people sleep and got them new beds and satellite TV. That drove a lot of support from the engineers.

These changes built support and engagement. By using onboard computers to rank fuel and safety performance, the company saw a 30 percent reduction in fuel costs. The people running the trains already had the solutions to the problems. They just needed to be engaged. This style of management by walking around is often more effective than sitting in an office looking at PowerPoints.

Managing people is more important than managing the business itself. When buying a large company, it is vital to assemble a world class leadership team immediately. A business is nothing more than a group of people doing things. The quality of those people is the most important factor for success.

A business is nothing more than a bunch of people running around doing things. Quality of the people is paramount to the quality of the business. In these businesses, you want to create a culture centered around ownership. Management and shareholders need to be one and the same.

Leaders must act like shareholders rather than just management. When people view the business as their own, they spend money more carefully. They make decisions based on the best interest of the company. Benchmarking expenses through zero based budgeting helps find savings. This process involves looking at every category of spending and comparing performance across different groups. However, it only works if the people at the top have a mindset of ownership and buy in to the process.

Effective leadership involves centralizing the what while decentralizing the how. Leaders should focus the discussion on what the company wants to accomplish. Once the goals are clear, the teams should have the autonomy to figure out the best way to reach them. This pushes decision making closer to the actual problems. High quality people enjoy the freedom to solve problems and make decisions. Making mistakes while trying to solve ambitious problems is an essential part of learning and moving forward.

Daniel tries to keep things even keeled at work. He remembers a basketball coach who said that pressure is something you put in a tire. This mindset helped him stay calm during most of his time as CEO. However, one specific moment in 2014 proved to be exceptionally stressful during the acquisition of Tim Hortons.

I had this basketball coach who once said pressure is something you put in a tire. So I always try to keep that in the back of my head.

At the time, Burger King was performing very well. Daniel, Alex, and their CFO were excited about merging with Tim Hortons. Alex was meeting with their CEO regularly to negotiate the deal. While Daniel was touring restaurants in India, a damaging article was published by Bloomberg. It was titled Burger King is run by children and focused on the young ages of the management team.

The timing was terrible because the Tim Hortons side already had some reservations about the merger. Daniel sat in traffic in Mumbai and worried the article would ruin the deal. He feared the Tim Hortons board would use the story as a reason to reject the offer.

I'm reading it and I'm like, this is just the worst article that could have come out at the worst time. How are we going to get ourselves out of this? This is exhibit A for the board to not want to do a deal with us.

It took six months of hard work to fix the situation. Daniel and Alex had to point out factual inaccuracies in the report. They spent a lot of time convincing the other side to be excited about the partnership again. Eventually, they were able to move past the negative press and complete the acquisition.

Securing a deal with Tim Hortons required persistence and a deep understanding of the business's quality. Alex met with the CEO for dinner and hit it off, leading to a proposition to combine companies. When the team consulted Warren Buffett about the potential acquisition, he praised the business within seconds. Although the team already valued the brand, they later realized Warren was right that the business was even better than they initially appreciated.

I remember 10 seconds into the call with Warren, he really praised the quality of the business. We didn't even fully appreciate how good a business it ultimately was, which we do now.

The negotiation process was not smooth. After an initial proposal, the team experienced weeks of radio silence. Alex tried to keep everyone focused by suggesting that long delays were normal, even though he was unsure himself. Eventually, they received a two-line rejection email. A follow-up call provided no further information. When they submitted a revised offer, it was rejected in less than a day. Rather than giving up, the team scrambled to find new ways to engage. They eventually secured a meeting with the CEO and CFO to understand exactly what was needed to reach an agreement.

The final challenge was managing the public announcement. During the legal and due diligence phase, the Wall Street Journal called on a Sunday afternoon. They planned to go live with the news in thirty minutes. This was a delicate moment because Tim Hortons is a ubiquitous and culturally significant brand in Canada. If the information leaked at the wrong time or in the wrong way, it could have destroyed the entire six month effort.

The board at Tim Hortons had intense internal discussions and genuine doubts about the potential deal. Their previous experience as a subsidiary of Wendy's made them hesitant to join another burger brand portfolio. To move forward, Alex and Daniel had to prove that this new partnership would be different. Their plan focused on taking the brand international while keeping its management independent in Canada.

But ultimately, I think we were able to convince them that this was going to be great for everybody, that this was going to be a portfolio of brands that we would take Tim Hortons International and that most importantly, the brand would retain its independence and independent management and focus in Canada.

The commitment to the franchisees was the final piece that sealed the deal. In the case of Tim Hortons, these individuals are called owners. They are the heart of the brand. Reassuring the board that these owners would thrive under new ownership helped demystify concerns about the past. Providing a transparent plan for the future allowed the board to see that history would not repeat itself.

Warren Buffett possesses an uncanny ability to identify high-quality businesses quickly. He maintains deep clarity and an almost encyclopedic knowledge of different companies. While matching that level of expertise is difficult, it is possible to emulate his approach by following specific companies over long periods of time. This requires building deep knowledge and staying focused on a core group of businesses.

Relationships are another pillar of his strategy. He builds connections even when there is no immediate business deal to discuss. He remains consistently respectful and mindful of others. This long-term view on people is just as important as the analysis of the businesses themselves.

Warren never compromises on business quality and takes discipline. And I think what we do here, and we like to think that we emulate him in that capacity, that we will never compromise on business quality, rather do nothing than buy a business we don't think is great.

Maintaining discipline is essential for long-term success. Alex and Daniel believe that it is better to do nothing at all than to compromise and purchase a business that is not exceptional. True discipline means having the patience to wait for the right opportunity.

The 3G Capital model is known for placing young talent in high-stakes leadership positions. One investor recalls pitching to the Kraft Heinz pension fund and encountering a team of executives, including the CFO and treasurer, who were all in their late twenties. It was a formal bake-off between different firms, yet the decision-makers were surprisingly young.

I remember going to the finals meeting. It was like this formal bake-off between us and others. And thinking at the time, wow, these guys are my age. I was in my late twenties, and they were all in their late twenties. I was like, who are you guys? It was the CFO, the treasurer. It was run by children.

The speaker reflects that if he was qualified to manage a significant amount of money in his late twenties, then these young executives were equally qualified to run the business. This highlights a philosophy where capability and responsibility are prioritized over traditional seniority.

Building a great organization requires becoming a destination for the best talent. One way to attract high performers is by offering them significant responsibility earlier in their careers than any other company would. However, simply making a bet on a young person is not enough. Success requires surrounding that person with experienced mentors and team members who have implemented similar processes elsewhere. When Daniel ran Burger King, Alex supported him as executive chair. They also brought in senior leaders from previous ventures in the brewery and railroad industries to help execute the plan.

Someone is going to make a bet on them early, earlier than probably anywhere else. Then of course, just making a bet on them earlier than anywhere else is not good enough if they don't have a real chance of succeeding. And the real chance of succeeding comes from surrounding them well.

This culture of meritocracy values talent over tenure. Alex became the CEO of a major railroad at age 30 because his co-founders trusted his potential. Because he was given that early shot, he felt comfortable giving Daniel a similar opportunity at Burger King. This philosophy extends down the line. When Daniel became CEO at 32, he promoted Josh to be CFO at age 26. This creates a cycle of trust and empowerment.

Recruiting is the foundation of this model. Instead of looking for people who specifically want to work in a fast food chain, the focus is on finding the best talent from top-tier firms. These individuals are given more responsibility and better economics than they could find in traditional roles. While these promotions involve risk, they are grounded in years of working together. You set people up for success by providing them with the mentorship they need for the things they do not yet know.

Mentorship provides a foundation for leadership style by combining distinct strengths. Giorgi possesses a unique vision to see the potential in people and businesses, charting clear paths forward. Beto excels at relating to and motivating people at every level, demonstrating a fearless approach to leadership. Marcel focused on the operating model, creating a clear process and developing talented people. Together, these elements form a comprehensive framework for running a business.

Success depends largely on execution. It accounts for 90% to 95% of a company success, while strategy makes up only a small fraction. Maintaining a massive sense of urgency is vital because companies naturally tend to move slowly. Alex taught Daniel that if a task can be done this month, it should be done now. This urgency is injected into a company by hiring individuals who are naturally wired to move fast. It requires leaders who never show complacency. Bringing the tech startup mindset of finite cash to a mature business keeps the momentum high.

Transparency and alignment of incentives ensure that everyone understands the mission. Setting ambitious goals and showing everyone how the company tracks against them provides the necessary visibility. Value creation should cascade down through the organization via stock options. However, a common mistake is treating compensation as tenure-based rather than achievement-based.

True meritocracy often conflicts with the traditional concept of being fair. In a meritocratic system, rewards are not allocated equally. Instead, certain individuals receive outsized equity grants based on their current and potential future contributions. Leaders must resist political pressure to give equal awards and instead focus on rewarding performance.

If you genuinely think certain people can contribute more, give them outsized grants or outsized equity awards. Whatever it is that you ultimately do on compensation, you're not going to make everyone happy. So you shouldn't try to do that. You should try to do what you think is fair from a meritocratic standpoint and explain it as well as you can.

Being willing to pay people outside of a normal pay curve allows a company to attract superstar talent. Reserving the right to make exceptions for exceptional people is a key lever for a CEO.

Finding exceptional talent often starts with word of mouth and a willingness to knock on every door. This sometimes involves unconventional methods like cold calling a candidate based on a rumor. Daniel recalls hearing about a star analyst while passing through an investment firm in Hong Kong. He tracked down the analyst's number and cold called him immediately. The candidate was brought to Miami and hired on the spot.

I'd offer people jobs on the spot, which again was unheard of.

Successful recruitment often means looking past traditional timelines and standard processes. When reviewing resumes from top business schools, Daniel looks for individuals who are searching for a project rather than just a job. Offering positions immediately can secure talent that others might miss while they follow a slower, more bureaucratic hiring path.

Alex notes that achievement relative to age is a powerful indicator of future success. Young people who have already accomplished a great deal are typically hardworking and ambitious in a positive way. Looking back at cohorts of analysts over many years, the defining characteristic of the best performers is their level of desire. The most successful individuals are simply the ones who really want it more than anyone else.

When Burger King was originally acquired, the brand was significantly more powerful than the actual business. Daniel recalls growing up in Brazil where everyone knew the brand, even though there were almost no locations in the country at the time. This mismatch created a unique opportunity. It is much easier to open restaurants for a brand people already love than it is to build a brand from scratch.

The financial disparity was striking. While McDonald's was valued at around 90 billion dollars, Burger King required only about one billion dollars in equity capital to acquire. Even people outside of finance guessed the company should be worth 20 or 30 billion dollars based on name recognition alone. This suggested the market had severely undervalued the brand due to poor business operations. Alex and Daniel initially questioned if they had even calculated the share count correctly because the price seemed too low.

It is a good business if you make money long term and your franchisees make money long term. There were some things going on in the US back in the day where there were promotions where sales grew because of a dollar double cheeseburger, but the franchisees were unhappy and losing money.

Several factors contributed to the undervaluation. The company was operating too many of its own restaurants rather than focusing on being a great franchisor. This muddled the organizational structure. There was also a lack of strong partners in key global markets like China and Brazil. In France, the brand had zero presence initially but later became a massive success. By simplifying the business and focusing on efficiency, the new owners turned the business around. Despite headlines at the time claiming they overpaid, the investment eventually returned 25 times the original capital.

The franchise model is an efficient way to grow a business globally. When a brand is large and meaningful, entrepreneurs around the world put their own capital and work into it. These local operators also help finance the marketing needed to keep the brand current. This results in a royalty based model that generates high free cash flow while focusing on iconic brands.

If you own a brand that is large and meaningful enough, you can have entrepreneurs around the world put their capital and their work into growing the business and help finance the marketing. It is a highly free cash flow, generative, royalty based model centered around these iconic brands.

This model aligns the interests of brand owners and operators in over 140 countries. Great operators work to earn their own profits and grow the brand locally. In doing so, they naturally increase the size and reach of the brand for the owners. It is a unique business structure that is difficult to find elsewhere.

Expanding into a major market like France required finding the right local partner. Daniel explains that they found this partner in Olivier Bertrand, who had a strong record of turning around restaurants in Paris. Bertrand possessed the two most critical skills for a franchisee: the ability to find the best locations and the talent to find the best managers.

The best way for us to run the best restaurants, manage the brand in a way that it's going to be great for the guests and grow the brand the fastest would be to have well capitalized local entrepreneurs as our partners.

The strategy relied on a master franchise joint venture model. By partnering with well-capitalized local entrepreneurs, the brand could grow much faster while maintaining high quality for guests. This model was proven in several large markets, including Brazil, China, and India. In France, the growth started with a single airport restaurant that was an overnight success. Through the partnership with Bertrand, this initial success scaled into a business worth over 2 billion euros.

The investment in Heinz yielded strong results, returning nearly three times the initial capital. However, the Kraft merger presented more challenges. Alex notes that the primary lesson learned was the difficulty of accurately assessing business quality beyond historical financials. Many products in the Kraft portfolio were relatively commoditized, leaving them vulnerable to large retailers and private labels. This experience highlighted the danger of customer concentration. In consumer goods, a massive portion of sales often flows through a few major retailers like Walmart or Costco, creating a risk of disintermediation if a brand lacks sufficient pricing power.

The lesson for us is again how much more difficult and how much more diligent therefore we need to be in evaluating business quality on the investment process. Even if a business has great historical financials, I think today we likely wouldn't be willing to take big customer concentration risk.

This insight led to a more rigorous evaluation process for later investments like Skechers. While many might be surprised to learn it is the third largest sneaker company globally, its performance is impressive. Skechers generates about nine billion dollars annually in footwear sales, trailing just behind Adidas. Unlike its competitors who rely heavily on apparel, Skechers focuses almost entirely on shoes. Daniel points out that its growth is driven by a massive distribution network of over five thousand stores and a highly loyal customer base that ranks second only to Nike.

One of the most notable aspects of the Skechers model is its lack of reliance on a single iconic product. While other brands might depend on a specific shoe line like Air Jordan or Samba, Skechers maintains a highly diversified product list. This reduces risk because the business is anchored by consistent product development rather than a single fashion trend.

There is no Hero skew. There is no Air Jordan or Yeezy or Samba or equivalent. This growth has basically been anchored by great product development. The product is really good and is developed in such a way that is accessible and provides great value for the consumer.

The decision for a business owner to sell equity often depends on the reputation and long term perspective of the buyer. In the acquisition of Hunter Douglas, the owners valued that 3G Capital manages businesses for decades rather than just a few years. They looked for partners with real operating experience who would not simply flip the company for a quick profit. The original owners chose to remain involved and keep significant equity because they believe in the future of the business.

I think the owner, operator and long term nature of 3G was something they found attractive. And I think given where they were in their life cycle and succession planning, it made sense to explore.

Every transaction requires a unique strategy based on the health of the business. The work at Burger King involved cleaning up operations and creating a growth trajectory that did not exist yet. In contrast, Hunter Douglas is already growing faster than previous ventures. The priority is to maintain that momentum while finding ways to be more efficient. Efficiency should never be pursued if it risks slowing down a successful growth path.

To keep this thing growing is the first and second and third order of business for us because that's what got the company to where it is. There are efficiency opportunities, but never at the expense of altering that trajectory in any way, shape or form.

Investors often evaluate whether a company is purchased specifically for its platform potential. In the case of the footwear brand Hunter, the company has a history of making acquisitions in its space. This strategy will likely continue. However, leading sneaker companies usually stay focused on a single brand rather than managing a multi-brand portfolio. This mono-brand approach is common in the footwear industry and can be very successful.

Well, I'd like to sit here and say the investment memo for Burger King said that it was going to be a platform company and we were great visionaries. There's no such memo. Getting into Burger King, we didn't know that was going to be the case.

The transformation of Burger King into the multi-brand platform known as RBI was not part of the original plan. While an investment memo existed, it did not predict the later acquisitions of brands like Tim Hortons or Popeyes. The idea of a platform company emerged through the evolution of the business rather than being a Day 1 vision.

You can only truly understand a business once you are inside of it and own it. While significant work goes into maximizing the chance that a company will be a forever business, the real learning happens after the acquisition. One common tool used during this process is zero based budgeting. This method requires thinking about a business from the ground up. It is a powerful intellectual exercise that helps owners learn the intricacies of the operation while freeing up capital to invest back into growth.

It is a great way for you to understand a business and to learn a business and to make it more efficient because you basically, as the name indicates, you have to think the business from the grounds up. So you learn a lot. And if you undergo that intellectual exercise, it frees up some expenses and it frees up some margin for you to invest and grow in the business and for you to take it to the next level.

Alex notes that the public often overestimates the role of cost cutting in their investment success. In the case of Restaurant Brands International, the bulk of the value came from massive growth rather than just efficiency. The portfolio expanded from 12,000 restaurants to over 30,000. While zero based budgeting is helpful, it is not the primary engine of success. Daniel adds that the real secret is an ownership mentality. This means ensuring that the people running the business are large shareholders who act like owners instead of managers. This mindset must be applied to both cost management and revenue growth.

I wouldn't recommend one of your listeners buy a lousy business with a big zero based budgeting overhead opportunity because you're just going to have a slightly more profitable lousy business. The ownership mentality and linking goals to compensation to results, that applies equally to cost and to revenue.

This ownership approach involves setting strict budgets where exceeding costs has consequences. It also means setting aggressive targets for revenue and franchisee profitability. Ultimately, success comes back to how management views their role in the company and whether they are acting as owners of the business.

Current valuations in capital markets feel stretched compared to previous years. There is a lot of capital looking for opportunities. Debt is still available, but it is no longer as cheap as it once was. This makes the present investment environment more challenging than other periods. However, finding a great business at a fair price has always been a difficult task. It is easy to look back at successful deals from a decade ago and assume they were simple to execute because they seem inexpensive in hindsight. In reality, those deals were just as hard to find and close as the ones being pursued today.

It is easy to look back in hindsight and say it was so easy. It was not. It was always very difficult to buy a great business at a fair price, regardless of what was going on in the world or whatever time period it was.

Alex and Daniel observe that younger partners often suggest earlier deals were easier to complete. This perception stems from a lack of context regarding the struggles faced during those times. The discipline required to maintain high standards for business quality and price remains a constant challenge. Success in this field does not come from being a great macro analyst. It comes from the persistence to find one exceptional opportunity every few years.

Technology is most effective when it improves a business instead of disrupting its core model. Physical businesses that deal with atoms have a natural moat because their products are hard to replace. People will always need to eat food and wear shoes regardless of new software. The key is to use technology to make these traditional experiences better. For instance, Patrick Doyle gained significant market share in the pizza industry by building a superior tech platform. He used this platform to outcompete both large chains and local shops by making the ordering process more efficient.

We like businesses where technology can help improve the business, not disrupt the business. You're going to wear sneakers tomorrow regardless of whatever technology that is. You're going to eat a burger every now and then.

Companies like Skechers and Hunter Douglas provide great examples of this approach. Skechers uses a better e-commerce experience to reach customers directly. Hunter Douglas integrates AI to adjust window blinds automatically based on the weather. Daniel and Alex note that even restaurants are now testing AI-enabled voice systems for drive-thrus. These innovations enhance the existing product without changing its fundamental nature. Embracing tech as a tool for improvement allows physical businesses to stay relevant and gain an edge over competitors.

Outside observers often misunderstand what drives 3G Capital. Many people think the firm is primarily concerned with cutting costs. However, Alex points out that investment discussions focus first on business quality and growth potential. Determining if a business is fundamentally good is the most important part of their process. The opportunity to reduce costs is secondary to the quality of the company.

If you were to participate on investment discussions here, what proportion of those meetings is dedicated to determining whether businesses are really good or not? The bulk of it is dedicated to that, versus talking about what the cost opportunity is. That is secondary to the quality of the business and the growth potential.

Daniel shares a story about a new hire who attended a company off-site. This employee expected to hear constant talk about cost-cutting. Instead, they found that nearly all the strategic planning focused on growth and improving operations. Out of 800 pages of content, only ten pages covered costs. The rest of the material focused on opening new restaurants and making the business better.

Everybody talks about you guys as a bunch of cost cutters. There were like 800 pages of content at this off site. Ten of them covered the costs and the other 790 were related to growth and bettering operations and opening up new restaurants.

A surprising aspect of the organization is the combination of groundedness and humility. Despite the significant success of senior partners and founders like Alex and Daniel, the culture remains focused on intellectual curiosity and a desire to grow. Leaders are not afraid to ask basic questions, and there is no room for arrogance within the team.

Everyone is deeply intellectually curious and wants to grow, wants to learn. And despite some of the success that senior partners and co founders have had here, they are some of the most humble people you will ever be around and they are not afraid to ask anyone basic questions.

Looking toward the future, Daniel hopes the firm becomes known as a premier home for iconic founder-led and family-controlled businesses. This strategy mirrors the approach of Warren Buffett. Family businesses are often more successful than their public counterparts because the owners focus on decisions that compound over decades rather than just the next quarter. This long-term perspective allows for better decision-making that benefits the business over the long run.

If you have an owner who really cares about his or her business and will make the right long term decisions as opposed to maybe the public company quarter to quarter, those decisions positively compound on themselves over decades.

Everyone says to think long term, but very few people actually do it. When you commit to a long-term view, your decisions change fundamentally. For example, in the restaurant business, a disproportionate amount of time is spent recruiting and growing young talent. In the first few years, this is a negative payback because you are giving them more than they give you. However, after fifteen years, those same people are the ones running the business.

If you are long term and the decisions that you're making are around long term, you will make different decisions than if you are short term. On people, we spent a disproportionate amount of time recruiting and growing some of this young special talent who, in the first many years, just don't bother if you're in it for a few year flip.

International expansion follows a similar logic. Entering a market like France requires significant upfront investment and time. A short-term owner would see no payback in the first few years and might quit. A long-term owner looks ahead fifteen years to see a business with billions in sales. This style of entrepreneurship requires a lifelong commitment where the exit strategy is not the primary focus.

We knew if we're going to be long term owners of this business, fast forward 10 or 15 years, we'll be well off having this 2 billion plus euro sales business.

Entrepreneurs who build successful companies often have a connection to their work that goes far beyond financial interest. These founders are characterized by how deeply they care about their business. For them, the company is not just an asset. It is an extension of their life, their persona, and their family. Their pride and their aura are tied directly to what they have built.

Businesses borrow their lives, their Persona, their families, their pride, their aura, everything. They really have that relationship with the business that they created and that they developed.

When engaging with these founders, it is essential to understand where they are coming from. They view their development of the business as a life-defining achievement. This passion is a common thread among the most successful creators. Understanding this emotional bond is the key to successfully working with people who have dedicated their lives to their companies.

The strategy at 3G requires a high level of patience. The firm only acquires one business every few years. This pace can be challenging for junior team members who are eager for action. It is essential to over-communicate the benefits of this slow approach. Building real trust is another core pillar. Trust is a scarce asset in the world today. Establishing a reputation as a good partner with everyone from current colleagues to future transaction partners creates long-term value.

There is a lot of patience required here because we are only buying one business every many years. For some of the junior people it is a little bit harder. We definitely have to work with them and over-communicate the benefits of being patient.

Longevity and mentorship drive the motivation to keep working hard. The goal is to build a firm that lasts for a very long time. Alex finds great satisfaction in watching younger partners grow and take on more responsibility. Daniel echoes this sentiment. He found fulfillment in seeing the growth of people within the restaurant business. Now he wants to see the next generation successfully run businesses and eventually lead the firm itself.

One of the most fulfilling parts of this job was seeing the growth of so many of these people throughout the organization. I want to see that continue with this next generation under us successfully running our businesses and then down the road successfully running the firm.

Taking a chance on someone before they have a proven track record is one of the most impactful acts of kindness in a professional career. Alex recalls when his co-founders gave him the opportunity to run a railroad in Brazil. At the time, he was only 30 years old and had never managed more than a few people in an investment office. The decision to let him lead a deep operations turnaround for a company with thousands of employees was a bold move that provided him with the experience needed to eventually start his own firm in New York.

I was 30 years old, hadn't really have more than a couple of people reporting to me in an investment office. Making a bet that I could go and run a company with thousands of people that needed a very deep operations driven turnaround was a big bet and bold bet to make.

Daniel shares a similar sentiment, noting that his experience at Burger King followed a similar path of early trust and responsibility. This pattern is common among successful individuals. The kindest act often involves someone making a bet on a person before there is clear evidence that they should. Alex and Daniel now prioritize this philosophy in their own firm by encouraging people and businesses to invest in potential.

By far the most common answer is someone that made a bet on me before there was evidence that they should.