This is a guy whose father fled Lebanon with almost nothing and today is worth $120 billion. I examine how he built his fortune buying up distressed businesses during Mexico's economic collapse of the 1980s, and how a controversial privatisation deal for the national phone company turned him into the richest man in the world. I also look at the huge criticism he's faced for monopolistic practices that cost ordinary Mexicans billions and also held back the development of an entire country, and how he's used that fortune combined with this intrinsic and intangible gift for numbers to make savvy investments in everything from Apple to the New York Times. It's a cracking story — enjoy.
Carlos Slim was born on January 28th, 1940 in Mexico City. His father had fled Lebanon to escape Ottoman military conscription and built a significant retail and real estate business — worth at least $20 million in today's money.
Slim's father made each of his children keep an exact weekly ledger of what they earned and spent, and Slim just seemed to have a natural ability for numbers and trading, and by twelve he was buying bank shares and making good money from it.
But then in 1953, his father died suddenly of a heart attack at sixty-five. Slim, who idolised his father, was thirteen and was devastated, and said that after his father's death, he didn't go out to play with friends for two years.
He went to college to study civil engineering, and he was so good at maths that while still a student he was asked to teach his fellow students a subject called linear programming. Now this is basically a type of maths that's for figuring out how to get the maximum output from any set of resources. And that way of thinking — where's the waste, where's the hidden capacity, how do I squeeze every last drop of value out of this — was used by Slim to analyse every single business he ever bought or invested in.
He has always been a numbers man. Journalists who spend time with him describe the same scene almost every time — reams and reams of accounts spread across his desk, and Slim going through them with a highlighter. As Slim explained: "The numbers, they talk to me."
After graduating, he worked briefly as an engineer, but realised he could make much more by playing the markets, and so he did, working fourteen-hour days, and by 1966 — he was 26 years old — he had built up a $40 million fortune, and now he started to put that money to work, first in real estate, and over the next fifteen years buying and building businesses. There was a regional bottling company, equipment leasing, mining, a printing company. But his most profitable and cash-rich business at this stage was Cigatam, which was Mexico's distributor and manufacturer of Marlboro cigarettes.
Also, on a side note, he got married in 1967 and would go on to have six children, although his wife passed away in 1999 from kidney failure.
Now, because Slim had built his business on cash-rich consumer companies and always without borrowing, he had a war chest — and so was perfectly positioned when Mexico hit one of the worst crises in its history.
For context, in 1981, the US increased interest rates to 21%, trying to kill inflation, which was running at 13%. And it worked — inflation came down. But here's the problem for Mexico: the country had spent the 70s borrowing heavily in dollars, because the country was riding an oil boom. Now those debts were suddenly far more expensive to service. Then the oil prices collapsed. So you've got soaring debt costs and collapsing revenue at the same time — a perfect storm. Mexico couldn't pay what it owed. So the government panicked. It nationalised the banks, trying to stop wealthy Mexicans and foreign investors from taking their money out of the country.
But the knock-on impact of this was that multinationals with factories in Mexico were terrified their factories might be nationalised next, so they wanted out, and they were willing to sell at any cost. And Slim was able to swoop in and buy many of them for one or two per cent of their book value. Here's how he put it: "The year 1983 was crazy. These were the best times ever. Nobody wanted to buy anything and everyone wanted to sell."
He bought a paper company with a huge facility for just $1.5 million, shut it down, and over the years redeveloped the site into an upscale shopping centre and free public art museum that sits today on some of the most valuable real estate in Mexico City.
He paid $13 million for Mexico's leading insurance company, restructured it, merged it with other financial assets — and by 2007, that division alone was worth $1.5 billion.
He bought the Mexican operations of Walgreens, Denny's, Hershey's, Sears, Firestone, British American Tobacco. He bought a mining company for $50 million — by 2011 it was valued at just under $12 billion.
So this was very much the strategy of "buy when there's blood in the streets," and Slim did extremely well out of it.
By 1989, Slim was already one of Mexico's most successful industrialists. But what came next would catapult him up to not just the top spot in Mexico, but in the world — and it started with Telmex, the state-owned phone monopoly.
So for context, by the late 1980s Telmex was a disaster. Eight out of ten Mexican households had no phone line at all. The waiting list to get a phone line was over two and a half years. The maintenance fleet was twenty to twenty-five years old, with the vehicles spending more time in the garage than on the road. A seven-minute call to the US cost ten dollars — just under $30 in today's money.
So in 1988, the government decided to privatise Telmex. While Slim had the money and the political connections, he didn't have the technical know-how to run a modern phone network. So he built a team. He brought in Southwestern Bell from the US for the technical side, France Telecom for the network infrastructure. Together, Slim's consortium bid $1.76 billion for the controlling stake.
There were other serious rivals in the auction, but Slim's group won — by a margin of just 4.1%. And crucially, as part of the deal, Slim was handed a six-year monopoly — meaning no competitor could legally offer the same service, and Slim could set whatever price he wanted.
Now, people have argued he was handed a sweetheart deal because he was close to the president.
And it is worth looking into this. The president at the time, Carlos Salinas, has a lot of skeletons — for example, his brother, who worked as a civil servant, was later found to have a Swiss bank account with $144 million in it. Federal witnesses testified that while he was president, his administration provided high-level protection to the Gulf drug cartel. And Slim, together with two dozen other industrialists, admits to giving Salinas $25 million each, supposedly to fund independent financing of elections.
Dodgy, to say the least. Now Slim's defenders will point out that the Telmex auction was a blind, competitive sealed-bid process, there was serious competition, he won by just 4.1%, a very narrow margin, and he paid a 16% premium over Telmex's market value on the day. They will also say that the reason he needed that six-year monopoly was justified, as the company was in dire straits and required a lot of investment.
And there is some truth to that.
There was a $16 billion pension deficit, so Slim had to divert about $20 billion from operating revenue over the following years just to cover it. On top of that, his consortium spent more than $32 billion modernising the network. There were also seven thousand telephone operators whose jobs had effectively been made redundant by the introduction of direct dialling — and under the terms of the deal, Slim had agreed not to fire anyone.
And Slim's defenders will argue the restructuring did work. By 1993, the waiting list for phone lines was gone, and revenue had climbed from $3.8 billion at privatisation to $7.9 billion.
But where the deal does seem to tip into a sweetheart-type arrangement, and becomes very difficult to defend, is when we look at the total lack of any independent oversight. No serious regulator was set up to keep the company in check, so there was nothing stopping Slim from hiking rates — and he did, to such an extent that comprehensive research shows that Telmex was overcharging Mexican consumers by an estimated $13.4 billion a year.
Then in 1997, Telmex's monopoly period ended, and competitors flooded in. Slim fought it hard. Telmex still controlled all the local infrastructure — the actual copper lines running into almost every home in Mexico, what's known in the industry as "the last mile" — and Slim charged rivals enormous fees just to use them, choking off most competition before it could get started.
Under pressure from its NAFTA partners, who were furious about the monopoly, Mexico eventually created a telecom regulator — but gave it a tiny budget and no real power. And whenever it tried to enforce the rules, Slim's legal team — which was the largest, most highly paid corporate army in Latin America — filed injunctions. With Mexico's courts notoriously slow, each injunction bought years of delay — and the moment one got resolved, Telmex filed another. A former Telmex lawyer was pretty upfront about it: "We obtained more than two hundred injunctions. We created an incredible legal and procedural mess."
And Slim's team even went beyond injunctions — here's a quote from a rival: "I know of at least two executives who had to leave the country for a while to avoid an arrest warrant that Telmex got from a judge. They've created a culture of fear that has paralyzed the industry."
Now all of this was happening at a time when the internet was transforming economies everywhere. Telecom companies were investing heavily in upgrades to meet this demand, but not in Mexico.
Telmex kept customers on slow, ageing copper-line connections while charging premium prices — and customers didn't have a choice because there was nowhere else to go. And this had a devastating impact on Mexico's overall development — throughout the 2000s, Mexico ranked last or second-to-last among OECD member states for broadband speed. It took until 2013 for the government to force Telmex to open its network to rivals for free. Only then did Mexican internet speeds start catching up with the rest of the world.
But anyway, I'm jumping ahead a bit, because while the fixed-line telephone business laid the foundation for Slim's massive wealth, it was mobiles that really catapulted him into the big time.
Slim's mobile operation was called Telcel, and it was launched as Mexico's first mobile network back in 1989. But by the mid-90s, growth had completely stalled. The reason was simple — Telcel was copying the mobile business models of western carriers in developed countries, which worked as follows: western carriers gave away phones in exchange for locking customers into contracts — but that contract was also the reason those phones could only ever be sold in outlets where staff had to be trained up, because signing someone up meant a credit check, a bank account for billing, and a trained rep to process the paperwork. And of course, it worked on the basis that every customer had recurring income and a bank account.
However, in Mexico, roughly half the population had no steady income or a bank account — they couldn't pass a credit check, let alone commit to a monthly bill. So getting ordinary people onto mobile phones meant rethinking the entire model. So Slim devised what he called the Amigo System.
He sold handsets at a loss through corner shops and supermarkets, pre-boxed and ready to go, and made his money on prepaid cards instead. No contract, no credit check, no bank account — if you had cash that week, you bought a card; if you didn't, the phone still received calls for free. And corner shops all over the country were involved.
His foreign partners thought it was financial suicide. Within a few years, 90% of his customers were on the Amigo plan, and the model became the blueprint that operators across Africa, India and China copied to bring mobile phones to billions of people.
In early 2001, América Móvil, his parent mobile company, listed on the New York Stock Exchange at a $15 billion valuation. Slim held about 35% of the company but controlled over 50% of the voting power. And he started buying up undercapitalised mobile operators across Latin America. By 2007, América Móvil was operating in 18 countries, with over 300 million customers and $28 billion in revenue.
And while all of this was happening, Slim kept making smart investments. One of the sharpest was Apple — in 1997, when the company was at its weakest, Slim invested $60 million. Months later, Steve Jobs returned as CEO, launched the iMac and the iPod — and the stock took off. When Slim eventually cashed out, he's estimated to have made about $300 million.
Another example: in 2002, during WorldCom's fraud bankruptcy — a great story involving Bernie Ebbers, and I'll definitely be covering that at some point — Slim bought distressed bonds at 10 to 20 cents on the dollar. Three years later he cashed out, making a profit of roughly $584 million.
We don't know exactly why Slim makes these individual investments, other than — as I mentioned earlier — he's a numbers guy, he could see things where others couldn't, the numbers have to make sense, and also, as he said himself: "I invest for the long term, not the short. If you buy something because it's cheap, that's only speculation."
Now, like most people, I hadn't heard of Carlos Slim until August 8th 2007 — because this was the day that Fortune magazine named him the world's richest man, with a $60 billion fortune, overtaking Bill Gates. Suddenly we were all finding out about this guy who owned 200 companies and accounted for 40% of Mexico's entire stock exchange.
To give you a sense of scale, Slim's wealth and footprint in Mexico was the equivalent of Rockefeller, Carnegie, Vanderbilt, and the six other largest industrialists of the Gilded Age — combined.
And while plenty of Mexicans were genuinely proud of Slim's achievement — proof of what their country could produce — the criticism was just as loud. Slim had built the vast majority of his fortune in telecoms, and yet ordinary Mexicans were paying some of the highest phone bills in the developed world, stuck with some of the worst and slowest internet infrastructure anywhere — all in a country where roughly half the population lived below the poverty line.
And the criticism did have an impact though — right as the global press was crowning him the world's richest man, Slim committed $6 billion to his charitable foundations, but he does have his own take on charities. He doesn't believe that straight-up charity will solve poverty. In his own words: "I don't believe in charities too much. They can make you popular, but you don't solve any problems. Poverty is eliminated by creating jobs, not by doing charity." His foundations build their own programmes — digital training, basic healthcare, trade courses — all run with the same cost discipline as his businesses.
So when you're looking at this sprawling, 200-company empire, the obvious question for me anyway is — how does he actually run it, and what was he like to work for?
Slim has a set of ten operating principles he runs everything by, many of them inherited from his father — I'm not going to go through all of them — one of them is to keep structures simple. To Slim, this means killing corporate bureaucracy before it kills the business — no layers of middle management, no endless committees, none of the corporate fat that slows a company down.
Another principle he lives by is to maintain austerity in good times, and he definitely lives by this rule. He works out of a windowless two-storey office that his staff called "the bunker," with just two secretaries, the office littered with paperwork, and he doesn't use a computer.
He wears off-the-rack suits from Sears. Wears a plastic wristwatch that doubles as a calculator. He lives in a house with six bedrooms and a modest pool — although the contradiction here is that within the house are Van Goghs, Renoirs and Rodin sculptures — Slim is the world's largest private collector of Rodin.
In terms of working with Slim, in a meeting he can be impatient, expecting his executives to memorise all of the key numbers, and when presented with accounts, he is known for spotting even the smallest error in a sub-column within seconds.
On the flip side, he is extremely loyal. Executives who buy into his philosophy rarely leave, and nor does he fire people for making mistakes — here's a quote from someone who knows him well: "He's the only one of the big tycoons who does not behave obnoxiously. He's quiet, not ostentatious. He's a hands-on manager, a worker."
And in terms of strategy, a prominent Mexican economist said the following of Slim: "I think Slim is a world-class strategist and business developer, the shrewdest of anything we know in Mexico." And one of the strategies Slim became most noted for, he borrowed directly from his hero, Genghis Khan — now he isn't an admirer of Khan's brutality, but he did copy Khan's retreat strategy. So in battle, Khan's cavalry would appear to panic and flee, drawing the enemy out of formation and straight into an ambush.
Around 2004, Slim did something similar — he announced that he was formally stepping back from the day-to-day running of his companies, handing operational control to his sons and son-in-law. The markets and other Mexican business people assumed Slim, who at this stage was 64, was winding down. But he blindsided them by moving into and dominating new sectors — like major infrastructure contracts, deepwater oil and gas, geothermal energy.
Anyway, the year after he became the world's richest person, we have the 2008 financial crisis, and while Slim's fortune dropped like almost everyone else's, it didn't slow him down — and what I think is his most intriguing investment happened in the middle of the financial crisis, and this was his investment in the New York Times. And again, I'll definitely be doing a story, maybe a two or three parter, on the NY Times — I just find it such an interesting business.
So for context, by 2008, the paper was in serious trouble. Print advertising was collapsing, $400 million in debt was coming due, and an aggressive hedge fund had built up a nearly 20% stake, and they were demanding cost cuts, layoffs, and asset sales. The Sulzberger family — who'd owned and run the paper since 1896 — needed a white knight, and they got two.
The first was David Geffen, the Hollywood mogul — and again, definitely going to do a story on him. His plan was actually pretty noble — buy the paper, take it private, eventually turn it into a non-profit — but the Sulzbergers were worried that an American owner with strong political views would try to shape the paper's editorial direction.
The second white knight was Slim — and they preferred him because Slim couldn't have cared less about American politics or culture wars. To him, the Times was simply a distressed asset with a world-class brand, and — like all of his investments — he was just looking at the numbers.
He agreed to loan them $250 million at 14% interest, and as part of the deal, he also had warrants that gave him the right to buy 16 million shares at $6.35. To pay him back, the Times had to sell off its headquarters, its stake in the Boston Red Sox, and the Boston Globe newspaper, which they'd bought for $1.1 billion in 1993, and had to sell in 2013 for just $70 million.
But it worked. The Times paid Slim back in full, and he walked away with $90 million in interest from his $250 million loan. But far more impressively, in 2015 he exercised those warrants, and when he eventually sold them in 2020 he made a profit of $414 million.
And that lifeline did more than save the paper — it bought the Times enough breathing room to bet everything on the digital subscription model that is the envy of most traditional media. Today the NY Times has 13 million digital subscribers, zero debt and annual revenue of $2.8 billion, with healthy profits.
Back in Mexico, the politics were changing. In 2013, a new government finally launched a proper independent telecoms regulator — the first with real teeth. América Móvil was declared the dominant player, competitors got free access to Slim's network. But his businesses are still minting it — América Móvil is pulling in $52 billion a year with quarterly profits over a billion dollars, and he still controls 60 to 70% of all mobile lines in Mexico.
He also expanded into Europe in 2014, when he bought a controlling stake in Telekom Austria. And the deal handed him operations across Central and Eastern Europe, with close to 30 million customers.
So today Slim is 85, worth around $120 billion, and three of his sons and a son-in-law run the day-to-day businesses, but Slim remains the strategic brain behind all of it. As he's said himself: "My job is to think. This is my work. This is what makes my life sense, what motivates me to get up. If they take this away from me, I would feel dead."
His businesses include telecoms, banking, construction, retail, energy, financial services, mining, real estate — and the joke in Mexico is that a large percentage of the population live in a house built by Slim, drive on a highway paved by Slim, make a call on a network run by Slim, shop in a centre developed by Slim, eat lunch at a restaurant owned by Slim, and pay for it with a credit card issued by Slim.
I was talking to my brother recently about how certain business people just seem to be able to make money in any sector they turn their hand to. Most of us would be happy to build one big successful business in a lifetime. Slim built dozens across completely different sectors — that's a pretty amazing feat.
And his superpower is this amazing grasp of numbers. This is a guy who doesn't use a computer. He tracks his global empire manually, with pens, paper notebooks and mental arithmetic. When asked why he doesn't use a computer — and I love this — he said a computer tells you what is, but your brain tells you what could be.
Now, for all the criticism directed at Slim — and some of it is entirely justified — he will typically defend his record by pointing to the jobs he created, the tens of thousands of people employed across his businesses, because Slim believes that employment is the foundation of a healthy society — and of course there's a lot of truth in that.
But on the flip side, if you're one of the world's richest men who made his fortune in one of the world's poorer countries, and the evidence shows you overcharged your fellow citizens by an estimated $13 billion a year, and that by not investing in your infrastructure — as evidenced by Mexico's terrible internet service right up until 2013 — you actively held back your country's development, then the criticism is fair. When your business is vital to national infrastructure, I think you carry a different kind of responsibility — it can't just be all about profits. You can't just say the government should have put better checks in place and leave it at that. Slim is a proud Mexican, and he of all people lives by the facts and figures. And the facts say that while he created enormous wealth and employment, he also held the country back.
But at the same time, on a human level, Slim comes across as a remarkably down-to-earth man whose entire being is just about building things. He can be gruff, yes, but also humble, loyal to the people around him, and for the most part completely uninterested in the trappings of wealth — and those are all qualities I admire.
His biographer probably put it best: "It is not the story of a hero or a villain but of a human being with a mountain of contradictions. For some sectors of Mexican society, Slim is an aspirational figure. For another sector, he incarnates the enormous inequality of this country."
Whatever your thoughts on Slim, he makes for a fascinating story, and that brings us to listener emails — and this one comes from Johann, who'd love me to do a story on Marc Rich. And I definitely will, because Marc Rich was one of the biggest commodity traders in the 70s and 80s, and the stories around him are incredible. Thanks so much for the suggestion, Johann, and for listening.
And remember, if you have any comments, any corrections or any story you'd like me to cover, email us at: info@gbspod.com
All the best folks.