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Before a strategy becomes a success story, it's a judgement call.
Now in its second season, Founder's Mentality: The CEO Sessions gets inside the decisions that defined some of the world's greatest leaders - a bet the market couldn't yet see, a crisis that put the organisation's purpose to the test, and the courage to keep showing up even when you don't have the answer.
How do you stay close to the frontline as the organisation scales?
What does AI mean for the thing you have spent years building?
How do you transform the company without breaking what makes it great?
Hosted by Jimmy Allen, Advisory Partner at Bain & Company, bestselling author and leader of Bain's Global CEO Forum, each episode is a candid, in-depth conversation with leaders from Mars, The Economist Group, Khan Academy, and more.
Each episode is built around one real story, one defining moment, and the lessons that come from living through it. Dense with insight and designed for leaders who listen with a pen in hand, the series explores the outer game of markets, technology and growth, and the inner game of energy, humility and courage, and what it takes to master both.
The question this season isn't just what the CEO should do.
It's who does the CEO need to become?
Join the Conversation:
https://www.bain.com/founders-mentality/
https://www.bain.com/insights/topics/ceo-agenda
Links:
Bain & Company LinkedIn (https://www.linkedin.com/company/bain-and-company/)
Bain & Company X (https://x.com/BainandCompany)
Jimmy Allen LinkedIn (https://www.linkedin.com/in/james-allen-3442b/)
About the Host:
Jimmy Allen is an Advisory Partner at Bain & Company with over 35 years’ experience advising leading organizations. He’s the author of multiple best-selling books on growth and leadership and the host and founder of Bain’s Global CEO Community Forum. Jimmy is a regular speaker at global business events, including the World Economic Forum, and serves on the Botswana Economic Advisory Council. Outside of consulting, Jimmy started his own record label (Abubilla Music) in 2008 and supports Singing Wells, a project dedicated to preserving Kenyan village music.
Bain & Company:
Founder’s Mentality: The CEO Sessions is brought to you by Bain & Company, a global consultancy trusted by the world’s most influential business leaders. With decades of experience guiding organizations through growth, transformation, and leadership development, Bain’s executive insights offer what it takes to lead at scale.
- One of my aspirations
is to build a
hundred-year-old company, right?
And we're 53, so it's for sure
that we have to adapt
and change and navigate
through a lot of volatility
through that period.
(upbeat music)
- We all say it.
We're now in a more
turbulent era of business.
And it's easy to say, but surviving,
let alone thriving in
turbulence, it's hard.
I mean, really hard.
We're gonna have big highs,
we're gonna have big, big lows.
And I don't think there's
a better case study
to bring to you for how
to thrive in turbulence
than this one.
The story of Localiza
and the South American
rental car industry.
(bright lively music)
I'm Jimmy Allen,
and this is "Founder's
Mentality: The CEO Sessions."
(bright lively music)
Bruno Lasansky is CEO
of Localiza & Company,
South America's largest mobility network.
Think rent-a-cars like
Hertz or Enterprise,
fleet management like Element,
online used car sales like
Carvana, but all in one company.
Localiza began in 1973 with
just six secondhand VW Beetles,
and today they have
more than 600,000 cars.
They're the most valuable company
in this space globally by market cap.
And honestly, this is one of
the great founder-led stories
of Latin America.
When Bruno moved from COO to CEO in 2021,
Localiza was negotiating a major merger
and Brazil's interest
rates were at a record low.
Then, a perfect storm.
Interest rates climbed and kept climbing.
Changes in government policy
radically altered the economics
in the rental car business,
and one by one by one, the
conditions turned against them.
Bruno had to act and he had to act fast.
(bright upbeat music)
- So, this is kind of
the 2023-2024 situation,
and it was pretty much a perfect storm.
A number of relevant factors
created some truly big headwinds for us.
Number one, interest
rates went from 2% to 15%
in a capital intensive business.
The second thing is depreciation
that for a car rental company,
it's an important part of expenses,
spiked because of a number of reasons.
New car prices went up,
the spread between new and
old cars, used cars grew.
Government reduced the taxes of new cars,
pushing used cars down.
And third, we were still working through
the integration after
a large scale merger.
So, all of these factors
actually had our cost base quadrupling
over a very short period of time.
- And so, literally when you
looked at your economics,
what were you facing?
What was the total rise in the cost base
of what you were dealing with?
- So in reality, this is 5,000 to 20,000
in just a couple of years, in dollars
in terms of like 1,000 to
4,000 per car per year.
So, this is probably one of
the toughest environments
in the last 20 years for the company.
I discussed with my fellow CEOs,
friends from retail and other companies,
and they asked me to repeat that
like two or three times
just to understand.
And the way I do it is imagine
you sold a bottle of water for $1
and that you bought it
for 1 and sold it for 2,
and all of a sudden the cost
of that went from 1 to 4.
So, how do you deal with that?
And as the consequence, our
returns compressed dramatically.
When you're a capital-intensive business,
return investment capital
is your key measure
as you think about financial returns.
And of course, this
reflected into our stock
and how the external world
perceived the company.
And also at the same time, it
was not only a sector thing.
It was also that Brazil was undergoing
a reduction of exposure
from foreign investors.
So, we have the second effect of,
given that we are a blue chip company,
international investors represent
the vast majority of our, if we slowed.
So, you have this kind of the
storm within the storm, right?
- As you face this perfect storm,
as you began to put together
the unvarnished truth,
I imagine you had to reset some things.
What was kind of the boldest
decision that you had to take?
- As I was reflecting about this,
I kind of in my mind was like,
what are the typical temptations
why teams normally don't come
out as strong as they can?
And there are basically three things.
The first one is that they typically avoid
facing the facts and the
challenges, the brutal facts.
The second thing, they try
to find someone to play
either internally and that
creates division or externally.
Oh my God, life is very
tough on us and so on.
And as a consequence, they're
attempting to find quick fixes
in short-term answers for deep problems.
And of course, this leads to decline
and many times paralysis.
So in our case, we actually took a hybrid
or the opposite road,
which was first we
really laid out the facts
and understood deeply what was going on.
We're experts in what we do.
We've been doing this
for 30, for 50 years.
We knew that the picture
was not a good one.
We were facing this massive
headwind and you cannot hide.
But the moment of truth was in 2024
where I sat down with my teams
and I told them we need to
put out there a close to,
at the time two billion write-off
to recognize the fact
that the depreciation
was going to be bad for
a longer period of time.
So, it's rather like a very hard moment
or you suffer for a very
long period of time,
disappointing everyone for
a very long period of time.
If I were a CEO short-term
driver and driven by ego,
like, why is he doing this?
I'm in control, et cetera.
But the way we run the business
is we're really long-term oriented.
You put the company first.
(soft bright music)
- Well, that's turbulence
and it needs a strategy.
And all strategy follows a pattern.
Set out the point of departure,
then agree the point of arrival,
and then develop a plan
to get from here to there.
Bruno's point of departure? A write-off.
But I loved his perspective here.
He said, "We're the experts.
We know this industry
and we know that things
are as bad as it gets.
So, let's face the pain and absorb it now.
Let's tell the unvarnished truth
and let's do the hard work
of getting all the stakeholders on board
with how bad it is."
Point of departure.
That's not a strategy.
That's a reality check.
Question is, where do you go from here?
And that's the next
step. Point of arrival.
- Now, what was very concrete.
The first initiative
had to do with working
on rates and pricing so
that we could recompose
the rates to these new challenge.
So the water, as opposed to costing $2,
it would have to grow.
The second, of course,
is being more efficient.
When you have your cost base
of things that you do not
control, then you can focus
on what you can control
in terms of expenses.
And we did that.
Our EBITDA margin back
then was close to 45%
for the rent-a-car business.
Now it's close to 67% in the last quarter.
So a big work on prices, but also on cost.
The third thing has to do
with capital allocation discipline.
We looked our invested capital portfolio
and we decided to exit those areas
where we thought it was
too complex and low return.
And to be honest, that's a
very tough decision to make
because in a way that impacts growth,
but we were sure that that
was the right thing to do.
It wouldn't make sense for us
to stay in certain segments
that didn't offer
long-term great prospects.
Of course, continue to invest
in innovation and in the customer.
We knew already that the companies
that do the right investments
that keep the long-term
orientation come out stronger.
But then we said, "This
is what we have to do.
This is why we have to do it.
This is how we're doing it."
And we were very vocal in saying
that this was going to be a team effort,
that we would all take ownership
and not pointing finger
to area A of the company or area B.
That we would keep, like in Formula One,
we have this concept
of heads down and push.
That we would have the resiliency
of a company that was over 50 years old.
- I love that.
I mean, let me try to playback
just 'cause I find it amazing.
The playbook was your culture
defined by those moments of crisis,
radical transparency, unvarnished truth,
explain, let everybody understand it.
Number two, follow the money,
get back to what you do well,
including being prepared to exit things
that don't make sense.
And then number three, how you do it,
that you do it with care,
that you do with
innovation with customers,
with care with employees
means that you come out of it
more resilient and stronger.
- Yes, and I would like to say something
that you probably don't
get everything right.
What we've noticed is
that it's better for you
to be very quickly at adapting yourself,
and speed is more important than ever.
Having the right feedback
channels, both with employees,
with customers, with of course, investors,
it's very important so that
you have the right data
and the right feedback to
adjust your initiatives
and your strategy as you go
because it's very volatile.
And you don't always get it right,
but if you're able to adjust quickly,
you're able to navigate in
a much more successful way
when things get challenging.
And by the way, in today's world,
scale is no longer sufficient.
Localiza has this massive scale advantage,
but we know that in order
to continue to be relevant in the future,
it needs to be scale and the speed
at which we adjust and improve.
So, this is of course something
that today is very relevant for us.
- I've had another CEO say
that the most powerful weapon
when you're facing crisis
is the unvarnished truth.
The dilemma always is
will our organization
respond to that with energy
or will they respond
to it with depression?
You're a high performing team
that's suddenly facing
this unvarnished truth.
You hadn't been tested together.
Were you confident that
laying it out as it was,
the team was gonna
respond in the right way?
'Cause it coulda gone anyway.
It coulda gone to avoid the
facts, find someone to blame.
How were you sure we
wouldn't end up there?
- Well, so two things.
One, as a company that has
been around for a certain time,
it doesn't happen very often,
but it did happen in '95.
It did happen in 2015.
We had some things in our context
relative to taxing of new
cars in 2009 and so on.
So, you definitely wanna draw
lessons from prior context
where the company had to navigate through
more turbulent or volatile scenarios.
By the way, I'm the third
CEO of a company in 53 years.
I'm the first one
that is not part of the
original founding team.
I had the privilege to
speak to our founders
about how they manage those situations
and to discuss about
the lessons with them.
- Even though this team had
never faced a perfect storm,
the company had.
In those conversations,
what playbook did they tell
you that you could bring?
- Jimmy, actually, in general,
the big stories are the ones
that shape the culture and
the principles of the company.
So, as you think about our
culture and our principles,
those were definitely shaped
through those stories,
and most of the time when
building or facing adversity.
So number one, this
thing about transparency
is very core to our company.
I mean, we know that in
order for you to have trust,
both with employees, customers, investors,
and the community in general,
in order to earn their trust,
you have to be transparent
and you have to be consistent.
So, there's no point in not sharing
what's going on in a transparent way.
And then in hindsight,
actually reflecting on
what happened and saying,
"This is what we've learned.
This is what we would do differently
if this happened again,"
and making sure that the
company's more resilient
as you come out of this process.
And in particular,
I wanna point out how strong it is to say,
"We're exiting this particular segment."
Because you get a lot of hits.
Oh, you will grow less and so forth.
But if we're not seeing in
that particular segment,
something that is good in the long term,
we had to divest those segments.
And there were people internally
also working in those segments.
So, it's a challenge both
externally and also internally.
The second thing about the discipline,
I think it's something we learned
throughout decades with our founders.
And third, I would say
it's very easy to forget about customers
and forget about team
members in those moments.
It's very easy to do things
such as stop serving certain customers
because the profitability
in the short term
is not that great, or not
treating fairly employees
with care even in the toughest times.
So, we've learned over time
that if you nurture those,
actually when the cycle changes,
you have an even stronger situation.
And today, we just record
the highest engagement level
as measured with, we use
this Korn Ferry metric
to measure engagement.
It's the highest ever
of 90 percentage points.
And we are one of the 10 best companies
to work for in Brazil
for the last four years.
That of course, has to do
with what we're doing now,
but particularly how we navigated together
in the tougher times.
And as you go for customers,
we never stopped
innovating on their behalf.
Even if we didn't have all
the resources that we wanted,
we were more focused in choosing exactly
what was going to make the difference
in one, two, three, five years.
So, all of these things are a consequence
of deliberate decisions that
are anchored in our culture
that was shaped by those
stories of our founders
and the people that build the
company throughout decades.
- But it must also be
true that your culture
and the way that culture was configured
helped you survive this crisis.
Can you talk a little bit about that?
- Yeah, probably the core reasons
why you're able to navigate effectively,
and sometimes even thrive
through a cycle like this,
there's probably two components.
One is less romantic, but very important,
which is a very strong
balance sheet, okay?
So, as you wanna think about
the different scenarios
that can happen in a
volatile world like today,
making sure that you have
the right pile of cash
to navigate changing scenarios,
it's a cost, but it's an insurance
and that has helped us
over time, many times.
So one was balance sheet,
but the other one was in a way
we have the battery full of
charge as we enter this cycle,
and everyone was aligned in the mission.
When it comes to culture, I
think it's more than that.
I think it's people,
culture, and the mission.
Culture, you have many definitions.
And in my mind,
it's like what people do
when no one's watching,
when they're on their
behalf serving customers,
taking care of big responsibility.
Big things, small things.
And it all starts with hiring.
And here we hire for
capability and know-how,
but we definitely hire for cultural fit.
If you bring people that
will make decisions thinking
in the same way, with the same principles,
then it becomes much easier.
And then we ask a lot of questions.
- Give me in a couple sentences,
just what's the acid question?
What is the fit you're talking about?
- So, we have these
questions to ask people
to show us how they think, right?
Tell me a story where you had to face
a tremendous amount of adversity
and what happened and what was your role?
Or tell me a story where you had to build
with a team something that
you thought was spectacular,
and tell me what you did if
someone thought differently.
And by the way, the resiliency one,
you see it's a very important one
because if you wanna build, in my case,
that's why we're very
deliberate in how we hire,
how we assess capability, and
also how we profile for fit.
And also when you let people
go, it's very important
because you might have a very,
very high performing person,
but it's not operating
with the right attitudes.
So, you definitely wanna have a process
where you let that person go, of course,
after feedback and care.
But if - I like this phrase -
it's not what you preach,
it's what you tolerate, right?
So, you have to be very consistent,
particularly when it
comes to trust and ethics.
I mean, you can make any mistake
and we will learn from it
and will become better,
but we do not tolerate.
We do not negotiate ethics, right?
(gentle bright music)
- There's a myth in business.
It goes like this.
You only have the luxury
to invest in culture in the good times.
When things get hard,
you have to focus on hard
things, not soft things.
Well, that's a load of crap.
And the Localiza story
is one of the best
illustrations of this I know.
Localiza survived the
crisis and is thriving today
because as Bruno noted, when
they went into the turbulence,
the battery was full,
and I love that image.
It speaks to the urgent need
to invest now in culture,
in our resilience, do it
in advance of turbulence.
It's not a luxury for good times.
It's the battery that
fuels you in bad times.
It's your stored capacity.
Because they had invested
in all the soft things,
they could navigate the hard things.
Because they had the founder's mentality,
they were prepared to face the
truth about their situation
and take a lot of hard decisions.
A playbook for turbulence is emerging.
Point of departure.
Face the brutal facts,
the unvarnished truth.
Point of arrival.
Act fast to survive, but
build smart to thrive.
Take your people and customers with you.
They're not part of the cuts.
You gotta invest in them
immediately through the downturn
to emerge on the other side.
And by the way, when you do
the right thing for customers,
you're going to inject a lot of energy
into what's gonna become
a very tired organization.
Now, we're at the plan to get there.
The first point is this,
start with a full battery.
And let's be frank.
Few of us are running with
a full battery right now,
and that's a problem.
Many of us will not have the capacity
to endure a perfect storm.
Ha! Listening to Bruno,
you can hear his personal battery is full.
I mean, he's got so much energy
even now after the storm.
And that's because in all of this,
something happened to him as a leader.
(soft percussive music)
You certainly went into this,
I know you well, as an
extremely high performing guy
that has probably met success
in almost everything you've done.
My guess is you were surrounded by people
with a very similar background.
So, you're facing a lot of
this for the first time.
What most happened to you as a leader?
'Cause you had to have been changed.
- It's in the challenging waters
that you actually form the best sailors,
you know, so to speak?
And I think that I've
learned a tremendous amount
through all of these period.
And the core lesson is that adversity
is an extraordinary opportunity
to learn and to perfect yourself.
Then, you need to have this perspective.
It's not about winning,
but about playing, right?
And I like to draw a lot
of inspiration from sports
where you see elite athletes.
The true passion is about
improving and playing the game
and less about what's the
outcome in that particular game,
then you have this mechanism
to continuously improve yourself.
And I've read about this psychologist
that trains really elite professionals,
and he asked this following question,
"Why do you do what you do?"
And when you find either high
performing sports people,
entrepreneurs or business people,
and when they do what they're doing
for the roses and prestige,
wealth, or anything,
then when adversity
happens, they demotivate
and they wanna go afar
from that situation.
On the contrary, when you find athletes
that they do what they do
for the passion of the game,
or business people, entrepreneurs,
because they wanna build
something incredible
with their team, they
wanna shape a culture,
they wanna change their communities.
Then when challenges comes,
they see this as an opportunity
to do what they do with their even better.
So, that's Jimmy, you know,
the passion for the game
and not the result of one particular game.
This is probably the
biggest lesson that I drew
through this cycle, if that makes sense.
- I really wanna pause here.
I think it's not what I thought you'd say.
I think it's fascinating,
which is people who
have not faced adversity
probably spend just as
much time talking about
we've gotta win, you've
gotta win with this,
you've gotta win with that,
it's all about winning.
I came into the culture as a leader
and I turned it into a winning culture.
But your point is,
but sometimes stuff is
not in your control.
And the issue is if the only
signpost we use is winning,
how do you keep people
doing the right things
if the macroeconomic
environment turns against them?
And if there's not enough joy in the game,
you can't be resilient enough
to withstand just stuff happening to you.
Bruno, I don't think you
would have given that speech
before that crisis.
Would you be more like the guy
who gives the winning speech?
- There was this day where I sat down
and started reflecting on this
and I came to the conclusion
that I would assess
whether we had the right strategy
and that we executed right
five years down the road.
You need to have that
view and perspective.
And the only way you can
navigate through that
is if you understand that the outcomes
are not 100% in your control.
- Correct.
- If you speak
all the time about winning, what happens
when there's a variable
that you do not control?
Then, you start pointing fingers.
As opposed to focusing
on what you have to do
to exit that situation.
There's this weird thing
that if you consistently do
with passion for the long
term the right thing,
then most likely you will have
a higher likelihood of winning.
But it's not about winning.
Winning is a consequence
and not the main goal.
- Bruno, that's amazing,
but you're a winner.
And if the drive's not
coming from winning,
where's the drive coming from?
- In short, it's what an
extraordinary privilege it is
to carry forward the passion
and the mission of our founders.
I admire them greatly for their principles
and how bold they were.
We started with six financed
Volkswagen Beetles in '73
in the middle of a crisis
and then built the largest
company in its sector
by market cap globally out of Brazil.
And one thing that I find
incredible is that Salim,
one of our founders, father
had this small market
that it was called "serve bem,"
which the literal
translation is serves well,
which means that serving, it's
at the core of what we do.
This in a way transferred
into a servant leadership.
We're here not to be CEOs
or a VP or be a director, et cetera.
We're here to serve the team members
so that they attain their own potential
and they can achieve more, right?
I consider the work at Localiza
not a job, to be honest.
This is kind of a lifestyle
to me because I'm so connected
and engaged, and it's a true honor.
It's a true privilege.
(upbeat music)
- I promised a playbook on how
to lead through turbulence.
You know, the big, big
highs, the big, big lows,
the events out of your control.
So, point of departure.
As the experts in your industry face
the brutal unvarnished truth
of your current situation.
Point of arrival.
As the leaders in your industry
plan not just to survive,
but to thrive, invest
through the downturn,
a plan to get you there.
Take your customers and people
with you on the journey.
This not only makes you
emerge in a better place,
but it energizes your
people along the way.
You need a full battery,
but you also need to change
the organization's view on winning.
And this will be the hardest act
because most CEOs are high performers.
Most leadership teams are
filled with high performers.
It's no wonder the language of winning
permeates all leadership discussions.
Our goal is to win. We are winners.
We prepare, we train, we execute, we win.
And that works in stability. We have refs.
It's a level playing
field. There're rules.
We can control our environment.
And that's exactly what
doesn't work in turbulence.
Sometimes the scoreboard
falls out of your control.
We could do everything
right for our people,
for our customers, and
our cost base goes up 4X.
If you focus only on winning,
what happens if the world
conspires against you and you lose?
Bruno says to thrive in turbulence.
It's better to align
your time on how to play.
On the joy of the game,
on the energy that comes
from doing the right thing.
The scoreboard will light up with numbers,
only some of which you'll control.
But you can control how you
play and what you celebrate.
And that's why I had
to bring you this story
to understand this change Bruno made.
He went in playing to win, but
he came out loving the game.
(bright lively music)
Everything from today's episode
and every episode is at
bain.com/founders-mentality,
and we'll be back in two weeks.
Stay curious.
(bright lively music)
Next time on "Founder's
Mentality: The CEO Sessions."
(bright lively music)
- I said, when you leave now,
you have to think about this
as that you are leaving with me
and the rest of other, like
shooting a rocket to the moon.
And the only thing you don't do
is that you don't try to steer yourself.