The boom in IPOs in the furniture sector between 2005 and 2007 made the developer Cyrela () grow. It also taught its founder, Elie Horn, a hard lesson. After seeing its cash flow jump from US$10 million to US$1 billion, it expanded the operation nationally: Porto Alegre, Recife, Natal, Vitória, Salvador. When he realized he was losing control, he went back and closed his business in 74 of the eighty cities where he had set foot. It was expensive and showed the executive: it is necessary to “accept defeat”.
This is one of the stories that run through “Fora da Nova Curva”, where Florian Bartunek, Giuliana Napolitano and Pierre Moreau organize the reports of 13 of the biggest investors and entrepreneurs in Brazil about the changes in the political, economic and social scenario in recent years.
Alex Behring, Andrea Pinheiro, Daniel Goldberg, Elie Horn, Felipe Guerra, Luiz Barsi, Luiz Felipe Dias de Souza, Marcelo Claure, Octávio Magalhães, Paulo Guedes, Ralph Gustavo Rosenberg, Sara Delfim and Tania Sztamfater Chocolat are the names telling stories about their businesses, investments and life.
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O InfoMoney provides below, exclusively, an excerpt from . “Fora da Nova Curva” will be released next Wednesday (5). The book will be sold for R$89.90 in the physical version and for R$39.90 in the digital version through the Portfolio-Penguin label.
Excerpt from Elie Horn’s testimony in “Fora da Nova Curva”
I accepted defeat, and it saved us
It is interesting to remember the time of the IPO boom in the real estate sector, which occurred between 2005 and 2007. Most companies from that period ended up not surviving. What happens is that investors demand constant growth, and this has led many companies to leave São Paulo in search of partners in other regions, to try to expand quickly.
We also follow this trend, influenced by young people in the financial market. We opened operations in around eighty cities, with a heavy cash flow behind us, and started around two hundred projects at the same time — maybe even more than that, I don’t even know for sure. Before the IPO, we had cash that grew from 10 million to 1 billion dollars. I thought I owned the world. Influenced by young people who encouraged me to expand, I opened operations in Porto Alegre, Recife, Natal, Vitória, Salvador, Campinas, Jundiaí, cities in Minas Gerais and in many other places.
But I soon saw that expanding wasn’t that simple. People from São Paulo are different from people from the Northeast, people from the South are different from people from Rio. When I realized I was losing control, I ordered everything to close down. We closed our operations in 74 of the eighty cities. It was very expensive, both opening and closing, but we managed to keep our name clean and protect our cash flow. I knew how to open and I knew how to close, and that was our salvation. The other companies that expanded didn’t know how to close at the right time, didn’t recognize their error and went bankrupt. I, on the other hand, accepted defeat, I said publicly that it was my fault, and I think that’s what saved us.
Succession: “I swallowed hard and let them take over”
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I believe it is possible to create a successful business that is not family-owned, but it is essential to have competent management. Without this, if the company only focuses on profit and greed, it could end up failing, as we have seen happen with some large companies.
I understand the desire to keep companies in the family, and I was lucky and competent to have sons — Efraim and Raphael — who are capable of continuing to run the company. If they weren’t good, I wouldn’t have left the company in their hands.
Before bringing them into the company, I tried outside people, but it didn’t work. In the meantime, I started to develop a Parkinson’s attack, which made me accelerate the transition process. My two sons have complementary skills: one is excellent at human relations and financial management, and the other is very creative. It was as if God divided my qualities between the two, and this has been essential to Cyrela’s continued success.
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At the time of this transition, I was fortunate to have the support of some important people. I hired Sergio Foguel, who was from Odebrecht, and he was a great influence on me. Something I have always practiced is humility. I like talking to everyone and asking the same questions to different people. In the end, you end up learning, not because you are the best, but because you are curious and persistent.
Today, I no longer have much involvement in the company, because my children prefer it that way. 15 years ago, someone gave me advice that I followed to the letter: “Let your children learn to work while you are still alive, because in death there is no way to correct it.” So when I left the presidency, I remained silent, swallowed hard and let them take control. I am a very controlling person, but I understood that, for the good of the company, it was necessary to make this transition.
Service
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“Fora da Nova Curva” – Florian Bartunek, Giuliana Napolitano and Pierre Moreau
Physical book: R$ 89.90 – E-book: R$ 39.90
Selo: Portfolio-Penguin
Launch event
Date: November 5th (Wednesday)
Time: 7pm
Location: Livraria da Travessa – Shopping Iguatemi (Av. Brig Faria Lima, 2232, floor 3)
