February 24, 2026 • 40 mins
What does it really take to stay relevant when the world refuses to stand still?
In this episode, Jimmy Allen sits down with Marcos Galperin, Founder and Executive Chairman of Mercado Libre, and Chris Zook, Advisory Partner at Bain & Company and co-author of Profit from the Core and The Founder’s Mentality, to explore what it really takes to keep growing when the rules of strategy are being rewritten.
From a garage in Buenos Aires to a $100B powerhouse, Marcos shares how Mercado Libre became Latin America’s e-commerce titan, outpacing global rivals and thriving through calm and storm alike. He opens up about the personal sacrifices behind building at scale, what it means to lead at 24/7 intensity, and how competition, culture, and constant reinvention have kept Meli’s spirit alive.
Chris brings decades of deep research into what separates companies that sustain profitable growth from those that stall, revealing why most failures don’t come from markets, but from losing touch with the core that made them great. He shows how rediscovering an insurgent mission, a frontline obsession, and an owner’s mindset can reignite growth from the inside out.
Together, they unpack the brutal truth of sustainable success: that strategy alone won’t save you. It takes energy, resilience, and an ability to deliver and develop at once, optimizing today while inventing tomorrow. This conversation is a masterclass in balancing the outer game of performance with the inner game of purpose, and a reminder that the best CEOs don’t just manage complexity. They master it.
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Learn More:
Escaladores - Podcast Series (https://podcasts.apple.com/ar/podcast/escaladores/id1692216304)
The Founder's Mentality Defined (https://www.bain.com/founders-mentality/about/)
Profit from the Core - Book (https://www.bain.com/insights/books/profit-from-the-core/)
Founder's Mentality® and the paths to sustainable growth - Video (https://www.bain.com/insights/what-is-founders-mentality-video/)
Get Your Mojo Back with the Founder's Mentality® - Video (https://www.bain.com/insights/get-your-mojo-back-with-the-founders-mentality-video/)
Barriers and Pathways to Sustainable Growth: Harnessing the Power of the Founder's Mentality - Article (https://www.bain.com/insights/founders-mentality-barriers-and-pathways-to-sustainable-growth/)
Reigniting Growth - Article (https://www.bain.com/insights/strategies-for-corporate-growth/)
The Lost Engines of Growth - Article (https://www.bain.com/insights/the-lost-engines-of-growth-fm-blog/)
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/)
David Haines LinkedIn (https://www.linkedin.com/in/david-j-haines)
Iona Gaskell LinkedIn (https://www.linkedin.com/in/iona-gaskell/)
About Founders Mentality
Founder’s Mentality: The CEO Sessions is a leadership podcast hosted by executive advisor and bestselling author Jimmy Allen.
Each episode features candid conversations with top CEOs, from Audible to Walmart to AWS, as well as artists, comedians, and other unconventional thinkers. Together, they share the lessons that shaped their growth, the “aha” moments that redefined their work, and the surprising ways reinvention happens at every level.
Whether you’re a CEO, an aspiring leader, or simply curious about leadership, influence, and business at scale, this podcast will challenge and inspire you, one story at a time.
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
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Episode Transcript
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(00:00):
- [Marcos] Competition is so healthy.
When you have a a powerful competitor,
it avoids this internal battles.
It's doesn't give you the time.
It's (indistinct)
If you, if you spend toomuch time with that, you die.
It's as simple as that.
- Goddamn, I'm old.
I can't believe I'm saying this,
but strategy has changed dramatically
in the 38 years since I've been at Bain.
(00:22):
When I started, the name ofthe game was anticipation.
If you could predict the future better
than your competitors, you'd win.
It was kind of simple.
And we would build models,low case, high case,
and that just right Goldilocks base case.
And if reality didn't matchthe base case, well, you know,
people lost their job.
(00:44):
It was all about perfect anticipation.
If you could predict the future better
than your competitors, you win.
But today the game andstrategy is very different.
It's not just about predicting the future,
it's about how fast you adaptto changes in the future.
Sure, we think deeply about what's ahead.
Of course, we try to predict,
(01:05):
but we know uncertaintyisn't some freak event.
It's the norm.
And that's why in this podcastseries we keep hammering on
about this idea of deliver and develop.
You've got to anticipate what you've got,
but you then also haveto evolve fast enough
to stay relevant in a changing world.
You know, the winners zig when markets zag
(01:26):
and they're gonna zagwhen those markets zig.
But how do you create
an adaptable strategy and organization?
How do you build a culturethat thrives in uncertainty?
Well, now we're at thefinal episode of the season
and we're gonna explore that question
with someone who's lived it.
This is a founder who's navigated chaos
and competition at the very highest level,
(01:48):
and he's lived to tell the tale.
I'm Jimmy Allen, and thisis "Founder's Mentality,
the CEO Sessions".
And my guest is MarcosGalperin, Founder, former CEO
for almost three decades
and now ExecutiveChairman of Mercado Libre,
also known as MELI.
What started as a garageproject in Bueno Aires
(02:09):
is now Latin America's e-commerce giant.
This is $100 billion ecosystem
spanning across 18 countries.
And Marcos has played
against the absolute best and he's won.
So what I wanted to know wasthis, what's the one thing
that led to MercadoLibre's continued success?
(02:31):
- [Marcos] It's hard for me to pinpoint
perhaps specific things.
I think it's more culture.
It's a cultural thing.
It's something that you can lose.
I see the things that arehappening in Europe, you know,
culture can change.
You have to enjoy the path.
And it, it's a marathon thatha doesn't have a finish line.
The minute that you thinkyou finished, it's the end.
(02:53):
If you look at the brands thathave existed for 150 years,
I don't think they've beaten a competitor
like the one we've beaten in Latin America
for the last 10 years.
They've made it, they, theyfeel like they've made it
and things don't change thatmuch for them in our industry.
On the one hand, it's amazing
because in in other industries,
you cannot create the mostvaluable company in Latin America
out of nothing in 26 years.
(03:14):
So this change and thiscontinuous disruption
is what creates these possibilities.
On the other hand, you cannever feel, okay, we've made it,
now we can, we can enjoy for a while.
But that is also helpful
because I think it's a Darwinian process.
If we wouldn't be the waywe are, we wouldn't be
(03:35):
who we are or what we are.
And probably we wouldn't even exist.
- But a lot of whatfounders often talk about
with their frustrationis, you know, you started
with the pioneeringteam and by definition.
You know, we're not talking about the ones
that didn't make it.
There was a group that madeit with you for two decades.
You then, they recruitedmanagers who saw you working,
(03:56):
saw them working.
But there are also 10,000 people
that have probably never been in a pit
with you working on somethingthere have probably,
you've probably givena town hall 10 times,
but they have a managerfrom another company talk
to them 1,000 times.
And founders often say the frustration
is my core team gets it,
(04:18):
but when I look at the edgesof the business, I start
to see those toxic people entering.
I start to see the bureaucrats coming.
So how do you make surethat's not happening?
- [Marcos] It's many, many, many things.
This culture of trying
to act like an elite sportsteam is key in the sense
that oftentimes you keep some people
because they have the culture,
(04:40):
but maybe they're not performing.
You know what?
Sorry.
Performances has to be there.
Maybe if you have theculture will find you
a different position.
Maybe you know, you, you'reno longer number nine,
you won't score anymore.
But you know what? You willbe the assistant to the coach
or you will be in the manager's office
or you will be helpingus sell more tickets
(05:01):
or you will be helpingus, you know, making sure
that the stadium is in good shape.
But we need in the field, thepeople who are performing.
Now, maybe you have in the field someone
that is a great performer,but he's a pain in the ass
and he's toxic and he'smaking great scores
and we're winning many games,
but we're not going gonna winthe championship with this guy
because he's a, he's toxic or she's toxic,
(05:25):
and sometimes you need to takesome decisions that are tough
because you know, this guy is really good
and he's scoring, you know,
but we won the game,which was a great game,
but we lost the championship
because then we lost against a team
that was inferior to us, butthis guy wasn't motivated
because, you know, itwasn't an important game or,
and you know what, theunimportant games, the points
(05:48):
of those unimportant gamesare as valuable as the point
of the classic, you know?
And so you need someone who performs
when they have the spotlight,
but also have to perform whenthey don't have the spotlight.
So all these things, you know,
in this 26 years there's beenmoments of quiet enjoyment.
You know, since we IPO'din 2007 all the way
(06:09):
to the moment when Amazonlaunched in Latin America,
those were six years ofcontinuous growth and scaling
and we had no competition.
But then you have toknow that this is a calm
before the storm because thestorm always is going to come.
- God, I love this.
The storm is always gonna come.
(06:29):
Marcos's genius, he builtan all-weather company.
Of course MELI's growth story
is an exception, not the rule.
They thrived in the calm andthey thrived in the storm.
For the rest of us meremortals, growth is bloody hard.
Think about it.
It means every customerfrom last year comes back
buying a little more andbringing a few friends.
(06:51):
We've got to win millionsand millions of times.
So what is it that letssome companies grow year
after year while others stumble?
To find out, we turnedto someone who spent
his whole career chasing
that single answer, Chris Zook.
And I've spent my wholecareer being his mentee,
his bad carry, his lackey, his fanboy.
(07:13):
I'm proud of every titleyou give me, as long
as Chris Zook's name's up front.
He actually saved mefrom being fired in 1988
when I was a uselesssummer associate at Bain.
More than once since then, he'sreached across the Atlantic
to pick me up and set me straight.
I'll tell you, everyone needsa Chris Zook in their life.
Luckily I've had mine for four decades.
So who is Chris Zook?
(07:33):
Chris is an AdvisoryPartner at Bain & Company
and one of the world'sleading strategy thinkers
and my co-author.
Look, I'm shamelesslyclaiming that co-author title,
but the truth is Chris haswritten five books on strategy
and I've been a big idea contributor.
The books are his.
He gave me a width on"Profit From The Core"
and two co-author credits
(07:54):
on "Repeatability and"The Founder's Mentality".
That's a generous mentor.
His body of work, which is five books
and dozens of articles, is amaster study into the patterns
of growth, what drives it, what kills it,
and why ultimately
"The Founder's Mentality" matters so much.
And since I've known him,Chris has been obsessed
with a single question,what are the secrets
(08:17):
to sustainable profitable growth?
So first, he takes us backto how that journey began.
Chris, I would love to just hear you start
with your own journey on strategy.
For me it kind of, I thinkprobably the first phase ends
with "Profit From The Core",but you probably have a journey
(08:37):
that started long before writing that.
But just tell me how you thoughtabout strategy at the time
you wrote the "Profit From The Core".
- Well, you know, I waslucky to join Bain & Company
when it had 70 people,
and it was part of the leadership team
that in a great growth storyof its own, grew it now
to something like 18,000
with only really one bump inin the road when the founders
(08:59):
had a messy transitionto the next generation.
And so in a way, as an olderguy looking back on my life,
I realized if there wasone continuous theme,
it is about the topic ofhow to grow a business.
And we were very lucky to have a focus
on what really are the lessons learned
(09:20):
and the laws of gravity
and the microeconomics of howtrying to find your next wave
of profitable growth,
and realizing that that'sreally what we decided
to focus the strategy practiceon, focus the building
of tools on, ultimatelyfocus a series of five books
and 30 articles on, and thatactually took up the rest
(09:44):
of my life.
- I think it's a journey of chapters.
And just let's talk a bitabout the beginning chapter.
You know, so when you firstsaid, a asked the question
of yourself and answered it,what drives sustainable growth?
What, what was the answer?
- You know, I think it wasa very interesting period
of time in the historyof business in the world
(10:04):
because it was just beforethe internet bubble.
The internet was obviously on the rise.
We felt that it was a timewhen people were using
their gut instincts too muchand that there were no tools.
So we did something
that at the now would seem pedestrian,
but at the time was actually quite unique.
(10:25):
We created a database of all the partners
of all the public companiesin the world for 20 years.
No one had ever done thatwith full financials.
And we've used it as theactuarial tables of business
to ask questions such as what percent
of companies actually do achieve 10 years
of profitable growth, earningtheir cost of capital,
outgrowing their industry and maintaining
(10:48):
or growing their margins?
And we found that though every company
in the world aspired to that.
Only one in 10 actually achieved it.
So then we began drilling down further
and we found about threemore insights in the data
that all came together as the sort
of epicenter, intellectual epicenter
or empirical backbone
(11:09):
for what became "Profit From The Core".
Number one, more than 80%
of the variation in company's ability
to achieve profitablegrowth was not the choice
of the industry they happened to be in.
That was the cold truth of hot markets.
What we found was that morethan 80% of the variation
was among competitorsin the same industry.
Number two, there were no bad industries.
(11:31):
You could make a lot of money in airlines,
which Southwest was doing,
or in package delivery, whichUPS was beginning to do,
or in rental cars, whichEnterprise was doing,
as you could if youwere in a growth market.
The key was becoming the best
and achieving leadership economics.
(11:52):
And then we looked at theprofile of those companies
that did achieve 10 or15 years (clears throat)
and we found that about 85 to 90%
of the value growth inall of those companies
that did achieve was a function of one
or two very strong, dominant
or leading core businesses.
(12:13):
And it was less a functionof diversification.
In fact, we found that two thirds
of the main strategy studieswe did costing $1 million
at the time or more had one common type
of insight, which was amazing
'cause you know, you could have said,
well, you're gonnadiscover new hot markets,
you're gonna find acquisitionsto double your industry.
(12:33):
You're gonna use it for international?
No.
What we found was that nearly 70%
of the main insights fromthese huge studies of strategy
was that more potential existedin the core of the core.
That the core of the corehad been underappreciated.
- Look, let's take ourselvesback because context matters.
(12:56):
This was the middle
of the dot-com boom when almost every CEO
was chasing greener digital pastures.
And Chris's message was profound.
"Sustainable growth",
he said, "Demands that youdefine your core business,
drive it to full potential
and from full potential,get leadership economics."
And his warning was clear,
(13:17):
"All your fancy growth strategies,
they're distracting youfrom what you do best,
which is the hard executionin the core business."
I feel like we're exactly here again
with all the discussion aboutAI, because defining our core
and a turbulent market is tough.
Market boundaries are shifting,
business definition is evolving,
(13:38):
new competitors are emerging,
often expanding from their core business
into what you thought was your market.
So the real question you haveto ask yourself in the world
of AI is will today's core still be right
for our customers tomorrow?
That strategy 2025,
and that's exactly the challenge
that Marcos was facing at MELI.
(13:59):
As success and e-commercegrew, he had to ask,
do we double down on that core?
Or as market definitions are shifting,
do we move into financial services?
And the question was, whereare our customers going,
and where must we go to meet their needs?
Do we deliver flawless execution
of known routines in the core business,
(14:21):
or do we develop, i.e. go
after the new businesses thatkeep us relevant for tomorrow?
Well, like other greatCEOs, Marcos understood,
this is a false choice.
You've got to do both.
Deliver, optimizing,develop, staying relevant.
Here's Marcos.
(14:43):
So on one hand you're trying
to run a complex business, whichmeans professionals come in
and begin to put in measures
and do things in its relentlessexecution of known routines,
and on the other hand, you want
to constantly disrupt yourself.
And oftentimes the, you know what happens
is that running motion,the status quo motion,
(15:03):
the keep things static,begins to take over
the founder impulse.
And you seem to havenavigated both of those well.
How did you handle those two motions?
- [Marcos] What happens manytimes is you get so focused
in optimizing something,
but we say we're maximizing the minimum.
It's like, yeah, we'reoptimizing this process,
(15:25):
but all this processesirrelevant right now.
We're just talking about AI.
We have 20,000 developers,this is the first year ever
that we won't grow our developers.
And it's highly likely that five years
we might have 10,000 developers,
not because we fired them,but we're not hiring anyone.
10 years ago, I would've toldanyone, you need to learn
how to develop.
Today I say, you need toknow mathematics, you need
(15:46):
to understand like the basicsof thinking and numbers,
but you don't need to code.
On one side, we're optimizingall these things with AI.
And another thing we'rethinking, you know,
maybe all this is gonnabe coming irrelevant.
We have another group saying, you know,
it's gonna be an agentic world.
And then we have a group in the middle
that is gonna optimize the experience.
(16:06):
And what I was tellingthem about the agent
being your personalbanker, I am on one hand
still in my role as co-CEO thinking, yo,
how we go from, you know,
20,000 developers up to scaling, scaling,
increasing our margins, you know,
optimizing our minimum all the time.
And I'm also thinking it's highly likely
that this is gonna be irrelevant.
(16:27):
You know, what happens if ChatGPT partners
with I don't know what,
and all of a sudden ourapp doesn't show up anymore
and I actually Apple andthe iPhone become irrelevant
because now it's gonna be anew device that, you know,
OpenAI has partnered with Jony Ive
and they're doing a new thingthat you are gonna talk to it
and maybe our app isgonna become irrelevant.
So we're working on all those things.
(16:49):
- [Jimmy] What happens inorganizations that fail?
Is the group that aremaximizing the minimum
become the defenders of that status quo?
That they start to say, lookat it, it's gotta be this way,
and if it's not this way, I quit?
And that other team that'strying to change them,
they become the enemy?
And you've managed somehow to say.
- [Marcos] It has to be the same group
(17:10):
that does both things.
You have to have in the leadership team,
they need to understand thatyou need to optimize a minimum,
you need to scale, youneed to improve margins,
actually to use that money to innovate
and disrupt yourself.
- [Jimmy] And you have tohave a culture that makes sure
that the guys in charge ofmaximizing the minimum know
they're gonna still haveroles even if that goes away.
(17:32):
- [Marcos] Yeah, it's thesame guy, the same guy
or the same team thatis saying, Hey, we need
to optimize these things andwe need to do all these things,
otherwise we won't survive.
I think that to be honest,competition is so healthy.
You know, when you havea powerful competitor,
it avoids these internal battles.
It's doesn't give you the time for that.
It's a (indistinct)
(17:53):
If you, if you, if you spend too much time
with that, you die.
It's as simple as that.
It's so healthy.
It's incredible how competitionhas made us a better...
A substantially better company.
There's a lot of thought
and a lot of analysisbehind what we're doing,
and I think it's going to go work great.
I think it's gonna be an example.
And I know it's gonna depend on Ari
(18:15):
because whether you like it
or not, a lot dependssometimes on a person.
We poached a guy from anothercompany, which we never do.
I got into a fight with(indistinct) who someone,
a founder I like a lot, and kind,
we had a kind of a gentleman's agreement
we won't poach from you guys,
and we said, this guy,this guy, we need him.
From the start, we sawthis guy as this guy
(18:37):
is a different guy.
And the reason why I feel confident
about what we're doing isbecause I think we have
the right person,
and that he's gonna be ableto decodify all these things
about which is a moment
and what things areimportant for this moment.
It's like raising kids.
(18:57):
You know, I have two boys and a girl.
The two boys are the...
You cannot understand how twochildren from the same parents
born in the same socioeconomic conditions
can be so different.
They are so different.
So I cannot say the same thingsto them at the same time.
You know, one guy, I, I don'tneed to tell him, you know,
(19:19):
you need to do this, this and that,
because he's like a machine.
He's gonna wake up inthe morning, go to study.
I need to tell him, Hey, you know, relax,
you should go out with your friends.
You should do some exercise, it helps you.
And the guy is, hey, you need
to add some structure.
With kids, it's love and limits,
but it's important
to give them love at theright time and limits.
Even when the guy needs love,
you give you give him punishmentsor maybe it's, you know,
(19:42):
and you need to understand those things.
And with the companyit's the same, I think.
- [Jimmy] So you startedthe interview, you know,
with a discussion of eBay
and whether they were theright partner going forward,
and one of the things that weare beginning to use a word.
- [Marcos] The culture ofAmazon versus a culture
of eBay, it's incredible.
I mean, eBay had everything to win.
(20:04):
eBay made fun of Amazon.
Like when we were partnering
with eBay in 2001, eBay's mediacategory, which was books,
musics and DVDs, books, CDs,
and DVDs was bigger than all of Amazon,
just its media category.
They were, they made fun of Amazon.
By 2006 when our bestpractice deals had expired,
(20:25):
it was like they were in panic mode
and it was already too late.
We always say how much we learned of eBay.
The first three, threeyears, it was everything,
because what happened a lot is they had
all these discussions about allthese ideas and we were all,
it's a great idea.
And then we were back and ayear later we had implemented,
I don't know, three out of the 10 ideas
and they hadn't implemented one.
It's not that they didn'tknow what they had to do,
(20:46):
they couldn't do it orthey wouldn't do it.
And we were taking their ideas
and then next year, Hey,
you guys did this, you guys are amazing.
No, no, we just did what you guys told us.
You know, we just executed three
of the 10 ideas that you said.
And then the last twoyears it was, we need
to make sure we don'tdo what eBay is doing.
And I remember one thing that happened
(21:07):
is at a point in timewhen, when Google starts
to, you know, become prominent,
eBay's listings were allsorted using time remaining
because they were an auctions.
We were also auctions, butwe took us like 10 days
to pivot away from thetime remaining algorithm
to a relevant space algorithm.
We said, you know, the morelistings we have, the better.
(21:28):
And even was no, no, no, everybody
has to have at some point in time
the first listing, it was like crazy.
And they wouldn't change that.
It took them years tochange the sorting algorithm
or the search.
It took us 10 days to change that.
- Marcos is proud and paranoid.
He's built a brilliant foundation
for the next generation of leaders,
(21:48):
and he has seen the foundations
of other once great companies crumble.
Companies fail for lackof focus on the core.
And companies fail becausethey optimize the core too much
and became irrelevant as market shifted.
Marcos cares about theouter game of strategy.
He's obsessed with the world around him,
but he cares just as muchabout the inner game, culture,
(22:12):
leadership, turbulence, competitors.
And Chris and I have spentdecades understanding
how great CEOs master both.
If "Profit From TheCore" is a poster child
for the outer game,
"The Founder's Mentality"is the inner game.
- "Profit From The Core" came out.
(22:33):
We spoke about it around the world.
We had great examples, data,tools to mind full potential.
It became quite solid.
But people were asking questions
about, well I have extracash and I'm near a lot
of growth markets.
How do I sort through thosethat are most likely to succeed?
(22:54):
Surely it isn't all justabout taking a single business
and maintaining itshomogeneity (clears throat)
which of course it wasn't.
So the second wave of workwas also quite analytic.
It's said, what's the science
of moving into adjacent areas?
And so we then did another wave of work
that we called unstoppable,which was about the focus,
(23:17):
expand, redefined cycle.
That there was ultimatelya point in most businesses
when redefinition very often happened.
And there are many iconic examples.
IBM was a hardware companythat went into services
and information that rejuvenatedthe hardware business.
And then that led to morequestions about, yes,
(23:39):
but isn't, isn't theremore to, to the strategy?
And so we began looking moreclosely at those companies
that over 15 or even 20years had sustained growth.
And we found somethingcalled a repeatable formula.
Companies like McDonald's, Tetra Pack
that grew into adjacencies,
but in addition to thathad a repeatable model,
(23:59):
that they used to focus their innovation.
It wasn't about roboticallydoing the same thing mindlessly
in a changing world.
No, it was about knowing
that there are certainthings you're very good at.
Then the questions becamea little different.
Like the question that in theinternet period about Enron,
you know, this was a huge darling company,
then it was a huge collapse.
(24:21):
How could this happen?
And so much of it turned out
to be the human factor ofleadership, hubris, dishonesty,
failing to see the world asit was, surrounding yourself
with yes men, broadcasting messages
instead of truth, et cetera.
And that's what led to the question,
isn't there a deeper root cause here?
(24:43):
And so "The Founder'sMentality", the best analogy,
the bestselling sportsbook for the last 30
or 40 years has been the,the inner game of golf
and then the inner game of tennis.
Because so many tennisplayers have similar fitness.
Their strokes are not that different.
They play on the identical court
with the identical balls and rackets.
And what really differentiates the ability
(25:06):
of somebody like Djokovic
to eek out matches against people
over and over and over again.
And, and that comes to downso much to the inner game,
to staying calm, to stayingfocused, to not giving up
to human elements.
And so we began to lookfor deeper root causes
(25:27):
and began asking executives
about whether they thoughtsituations where they fell short
as a company significantlyshort were external.
And they said that inmaybe 70 or 80% of the time
or more, it probably camedown to internal decisions,
hiring the wrong people, fightingthe future like Nokia did,
(25:49):
bureaucracy that slowed them down.
These were probably the deep root causes.
We zeroed in on what we called"The Founder's Mentality",
which were the internalelements of health.
How do you know if a business is healthy
on the inside to achieve growth?
Very hard to know.
How do you know if it'shealthy on the outside?
1 million measures?
- And how do you, you know,if you're asked, you know,
(26:12):
the classic elevatorpitch, what do you say
the magic dust of founders' mentality is?
How, how do you talk about?
- I say that 80
to 82% in our research of root causes
of strategy, shortfalls, breakdowns,
free fall situations, disasters, traced
(26:34):
to internal factors
that could have beenidentified and controllable.
And that when we drove deeper into that,
we found three elementsof health that tended
to reduce the chance ofthose pitfalls engulfing you.
Those three were exactlythe main attributes
(26:59):
that people used todescribe the great founders
who created the great businesses.
Number one, a clear insurgentmission of what you're trying
to achieve that is different
or even revolutionary to the industry,
even waging war on thenorms of the industry.
Think of SpaceX, one 10th, the cost
to get rockets (clears throat) into space.
(27:22):
Number two was a frontline obsession.
The founders had an intellectual curiosity
and a love of the detail,a love of the business
that propelled them to constantly ask,
why is this happening?
How do the customers really feel?
Why is that?
And then the third element wasthe epicenter of the success
of private equity, whichis an owner's mindset,
(27:46):
which relates to lookingfor responsibility
or accepting responsibility,not looking to point blame.
And that therefore the great founders
had a sense of urgency.
They reacted quickly, they acted
as if all their, the money was their own.
So that's a lot longerthan an elevator pitch,
but the elevator pitch would say--
(28:07):
- We were on a very high floor.
- Something shorter.
So yeah.
- Is the answer now inner game?
You know, as you tell yourjourney is the beginning
of the journey, it was all outer game,
and now the answer is inner game?
- No, I don't think we've...
I don't think we've repealedthe laws of microeconomics.
(Jimmy and Chris laugh)
I mean, if in fact, ironically,
(28:27):
if anything, the seven companiesthat have propelled 98%
of the value creationin the US stock market
for the last eight years are all leaders,
if not monopolists, near monopolists
or duopolies in their field, right?
So leadership, economics,a well-defined core market,
optimizing your core isstill very important.
(28:49):
But I think what we realizeis that to do that and to go
after the right internalopportunities, say no,
which is very often the mostimportant question to answer.
And so the internalwiring of those businesses
to keep them transparent,
looking for what is reallygoing on, not self delusional,
(29:14):
trying to avoid the very easy
and dangerous trap of hubris,
which ultimately engulfs somany, those are at the core
of all the companiesthat are still proceeding
along with these rules on the outside.
So it really is a higher synthesis
of the two just as it is in anything.
(29:37):
You know, the great musicianshave magical ability execute
detailed things like Eric Clapton,
and yet an amazing intuitionfor what will work to write,
you know, a song like Layla.
- So the outer game iswhat Chris just called
the laws of microeconomics.
To grow sustainably, of course you have
(29:58):
to have a well-definedcore business, drive it
to full potential, achieveleadership economics.
But the inner game matters too,
because your growth will create complexity
and that complexity will kill your growth.
To fight it, you need to maintain,
or in most companies, rediscoveryour founder's mentality.
And this will demand two things.
(30:19):
First, with your people,rediscover the why.
Why the hell do you exist?
Then reorient yourcompany to the frontline
and customers away fromhead office and managers.
Create an owner mindset,
which involves a hatred ofbureaucracy and a bias to action.
Second, you gotta bringback a vertical orientation.
(30:40):
Focus on real customers and win,
then take a winning solution and scale it,
and then figure out how to amplify
what you've discovered across the business
through horizontal moves.
Outer game, focus on the corebalance, deliver and develop.
Inner game (laughs) it startswith just get your mojo back,
(31:01):
start winning again, andthen celebrate the heroes
who make those victories happen.
And it's interesting, as Chrisnotes, in the last decade,
almost all the value in thestock market has been done
by the big tech players, all founder-led,
all playing the outer andinner game with new rules.
(31:22):
One of the things that's coming up more
and more in our work isthis notion of resilience.
And I thought the, I thoughtthe best line you talked about
was when I go out toexternal markets, I'm a hero,
and everybody looks atthe journey I've been on
in the mountain I'm on.
When I talk to a user, I'm asgood as the last transaction.
(31:43):
And, but that energy, Marco--
- [Marcos] So physically happened to me.
- [Jimmy] Well, then you said that, but--
- [Marcos] And I said, you know what?
I need to physically move.
We had an office that I shared
with my two kind ofco-founders (indistinct)
We had the, we, thethree of us sat together
in like, in a place like this.
I said, guys, yes, asof next week I'm going
(32:05):
to sit in the middle of theengineers with (indistinct)
And I did that for three years.
I wanted to physically change everything
because I said, youknow, it's been one era
of building the company.
Now we need to build the product.
The people that you know,
the business people loveus and our users are here.
I want the opposite to happen.
I want our users to have us here
(32:26):
and the external work to be here.
And this is, this is unsustainable,
this is sustainable, you know.
- [Jimmy] And so that, Marcos,takes so much energy, right?
To, to face the gaps in yourbusiness, constantly say,
I'm gonna listen tothe user that hates me,
not the external market that loves me.
You answered, I think foryourself, you, you said,
(32:47):
"I get passion in everything,
from big things to small things."
You talked about your family.
Did you specifically within Mercado Libre talk
to your people about howthey keep energy levels,
how they stay resilient?
Because what we've seen is tired people
do incredible damage to companies.
It takes energy.
- [Marcos] We talking about career
(33:08):
about leading for example.
That for me is the most important thing.
When this guy told me, the,the board director telling me,
"Hey, why are you doing what you're doing?
You know, this is your company,you can do what you love,
you can go and play golf."
You know, I said, "No, no, no.
I don't wanna go and play golf,
because I don't want theCEO of Mercado Libre.
Now I'm gonna be chairman, and now Ariel
(33:29):
and everybody elseknows that I was willing
to leave the thing that I love the most
because I want to be 24/7, 365.
Now, everybody better work 24/7, 365.
I'm giving the example.
I'm giving up my salary,
I'm giving up my job, I'mgiving up the position
(33:50):
because whoever leads thiscompany cannot be focused
on Mercado Libre and other things.
Mercado Libre has to be your life.
- [Jimmy] You say that,but you also talked
about the incredibleimportance of your family.
I know you love rugby with a huge passion.
- [Marcos] I'm not saying
it has to be the only thing you do.
- [Jimmy] Good, okay.
- [Marcos] But I can be with my family
and I am with my family.
(34:11):
I'm thinking of Mercado Libre.
(Jimmy laughs)
- [Jimmy] Don't say that to your wife.
(Jimmy laughs)
- [Marcos] No, no, my wife knows it.
My wife knows it.
My wife thinks aboutMercado Libre 24/7 as well.
I mean, it's our fourth kid.
It's a life project.
It's a life project for me, formy children and for my wife.
We're all trying to understandhow is this gonna work out
in the next few years?
- [Jimmy] But how did you,
(34:32):
where did you replenish your energy?
- [Marcos] I think what happened to me,
it's also with Jeff Bezos,it's also with Mark Zuckerberg,
it's also clearly with Elon Musk,
all these founders, money's irrelevant.
It's never, ever, ever about the money.
So, so it's always about theobjective, about the project,
and the project is sofascinating and it's growing
and it's changing that it,right now, it's as fascinating
(34:55):
as it has ever been.
I get the energy from there,
but it's also certain kindof people that you need
to try and attract.
And clearly Addie is likethat and Danny is like that,
or that's, you know, what I try
to detect when I'm interviewing, you know,
is this guy a manager?
And sometimes we know thisguy's a manager and that's fine.
He's gonna be, I don'tknow, the controller.
(35:16):
It's great.
So you don't need also foundermentality in every role,
in every position in across the company
because it's a problem,
because founders want togrow, create, ambitious,
and if everybody wants to be like that,
you don't have enough positionsto satisfy all those things.
- [Jimmy] But no, no one'sgonna keep the books (laughs)
- [Marcos] Yeah, and youdon't have enough positions
(35:37):
to satisfy all those egos, you know?
But, but that's another thing.
The process of me leaving creates
opportunities which you need.
Because when you have allthese ambitious people,
if you don't create opportunities,you end up losing them.
We saw that one at federal level,
we gave four internal promotions.
It was fantastic.
(35:57):
We have an incredible bench,
but if those people arein the bench forever,
one day they're gonna play ina, you know, in another team.
So I mean, in MercadoLibre it's very clear
that the guys from themarketplace, the guys
from the FinTech and theengineers are the ones
who deliver the value.
(36:20):
Everybody else is supporting role.
And that is very clear.
I mean, in my teammeetings, those are the guys
who start the, let's talk
about (indistinct) and Ari would take us
to (indistinct) and Valdo would take us
to (indistinct) and then Danny
is gonna talk about technology.
And then the CFO talksabout what's going on
and the (indistinct) who's kind
(36:45):
of a COO, he talks aboutlegal and HR and...
But first we talk aboutMercado Libre the business
and then the technologyand then it's the rest.
And everybody knows that, andit's like that, and we don't--
- [Jimmy] When we saymost big bureaucracies,
it's the tyranny of thefunctional excellence programs.
It's all the functionsjust give PowerPoint
(37:05):
in a presentations all day.
- [Marcos] These guys arethere to support the business.
That is very, very clear.
Yeah.
But again, competition is so helpful.
Is so helpful in aligning everybody.
I think Amazon, theseguys are really good,
but they have a discipline, you know.
They're not willing to lose $500 million
(37:25):
per year forever in Brazil.
I don't know how many they've been losing,
but they've been losingsubstantial money in Brazil.
But there's a point where they say, Hey,
maybe this amount of moneyis better spent in Germany
where we make money, or in the UK.
At some point in time,there's some discipline.
So far with the Chinese,we've seen no willingness
(37:46):
to restrain anything,
and their technology is reallygood and they work a lot.
And so we say, it's gonnabe a long and tough battle.
- Look, Marcos doesn'tbeat around the bush.
His job is 24/7.
It demanded relentlessenergy, and he warns us.
If I didn't have that energy,my job was to step aside
(38:09):
because there are four other leaders
that would take my place
because they wanna writetheir own chapters.
We may all wonder, could we do a 24/7 job?
Would we even want to?
If you can't or won't devotethat much time to your job,
it's important to remember,
you know, we all deserve work
that energizes us, workthat excites us so much
(38:31):
that, you know, it steals a bit
of our discretionary energy.
Work we think about in the shower
or while walking in the park,
because we all deserveto be on noble missions.
All right, so how the hell
are we gonna recap this episode?
First, it's the outer game.
Power of the core, leadership economics.
Chris showed us thatsustainable growth does not come
(38:53):
from chasing hot markets ordiversifying for the sake of it.
It comes from doublingdown on what we do best,
building repeatable models and,well, comes from dominating.
But of course this isthe era of turbulence,
so we have to optimize the core
while also adapting it to stay relevant.
Second, the inner game,the founder's mentality.
(39:15):
Nurture it, rediscover it, and then shift
your orientation more vertically.
Focus on customers in the frontline,
win then scale, then amplify.
Third, of course, it's a balance
between the inner and outer game.
The CEO's job is never just one thing.
It's economics and competition,
(39:37):
but it's also leadership and culture.
The best leaders help their teams win
against external competitors
and help them overcome thoseinternal energy vampires.
It's the outer game against competition.
It's the inner game against complexity.
And the best CEOs know how to win
with both without losing energy,
without losing focus (giggles)
(39:59):
without losing their people.
So that's the final CEOinterview for this season.
(Jimmy giggles)
But guess what?
We're not done with you yet.
In two weeks, we're gonna comeback with a wrap up episode
and we're gonna try topull this all together.
So thanks for sticking with us.
Stay curious.
- [Marcos] Competition is so healthy.
When you have a a powerful competitor,
it avoids this internal battles.
It's doesn't give you the time.
It's (indistinct)
If you, if you spend toomuch time with that, you die.
It's as simple as that.
- Goddamn, I'm old.
I can't believe I'm saying this,
but strategy has changed dramatically
in the 38 years since I've been at Bain.
(00:22):
When I started, the name ofthe game was anticipation.
If you could predict the future better
than your competitors, you'd win.
It was kind of simple.
And we would build models,low case, high case,
and that just right Goldilocks base case.
And if reality didn't matchthe base case, well, you know,
people lost their job.
(00:44):
It was all about perfect anticipation.
If you could predict the future better
than your competitors, you win.
But today the game andstrategy is very different.
It's not just about predicting the future,
it's about how fast you adaptto changes in the future.
Sure, we think deeply about what's ahead.
Of course, we try to predict,
(01:05):
but we know uncertaintyisn't some freak event.
It's the norm.
And that's why in this podcastseries we keep hammering on
about this idea of deliver and develop.
You've got to anticipate what you've got,
but you then also haveto evolve fast enough
to stay relevant in a changing world.
You know, the winners zig when markets zag
(01:26):
and they're gonna zagwhen those markets zig.
But how do you create
an adaptable strategy and organization?
How do you build a culturethat thrives in uncertainty?
Well, now we're at thefinal episode of the season
and we're gonna explore that question
with someone who's lived it.
This is a founder who's navigated chaos
and competition at the very highest level,
(01:48):
and he's lived to tell the tale.
I'm Jimmy Allen, and thisis "Founder's Mentality,
the CEO Sessions".
And my guest is MarcosGalperin, Founder, former CEO
for almost three decades
and now ExecutiveChairman of Mercado Libre,
also known as MELI.
What started as a garageproject in Bueno Aires
(02:09):
is now Latin America's e-commerce giant.
This is $100 billion ecosystem
spanning across 18 countries.
And Marcos has played
against the absolute best and he's won.
So what I wanted to know wasthis, what's the one thing
that led to MercadoLibre's continued success?
(02:31):
- [Marcos] It's hard for me to pinpoint
perhaps specific things.
I think it's more culture.
It's a cultural thing.
It's something that you can lose.
I see the things that arehappening in Europe, you know,
culture can change.
You have to enjoy the path.
And it, it's a marathon thatha doesn't have a finish line.
The minute that you thinkyou finished, it's the end.
(02:53):
If you look at the brands thathave existed for 150 years,
I don't think they've beaten a competitor
like the one we've beaten in Latin America
for the last 10 years.
They've made it, they, theyfeel like they've made it
and things don't change thatmuch for them in our industry.
On the one hand, it's amazing
because in in other industries,
you cannot create the mostvaluable company in Latin America
out of nothing in 26 years.
(03:14):
So this change and thiscontinuous disruption
is what creates these possibilities.
On the other hand, you cannever feel, okay, we've made it,
now we can, we can enjoy for a while.
But that is also helpful
because I think it's a Darwinian process.
If we wouldn't be the waywe are, we wouldn't be
(03:35):
who we are or what we are.
And probably we wouldn't even exist.
- But a lot of whatfounders often talk about
with their frustrationis, you know, you started
with the pioneeringteam and by definition.
You know, we're not talking about the ones
that didn't make it.
There was a group that madeit with you for two decades.
You then, they recruitedmanagers who saw you working,
(03:56):
saw them working.
But there are also 10,000 people
that have probably never been in a pit
with you working on somethingthere have probably,
you've probably givena town hall 10 times,
but they have a managerfrom another company talk
to them 1,000 times.
And founders often say the frustration
is my core team gets it,
(04:18):
but when I look at the edgesof the business, I start
to see those toxic people entering.
I start to see the bureaucrats coming.
So how do you make surethat's not happening?
- [Marcos] It's many, many, many things.
This culture of trying
to act like an elite sportsteam is key in the sense
that oftentimes you keep some people
because they have the culture,
(04:40):
but maybe they're not performing.
You know what?
Sorry.
Performances has to be there.
Maybe if you have theculture will find you
a different position.
Maybe you know, you, you'reno longer number nine,
you won't score anymore.
But you know what? You willbe the assistant to the coach
or you will be in the manager's office
or you will be helpingus sell more tickets
(05:01):
or you will be helpingus, you know, making sure
that the stadium is in good shape.
But we need in the field, thepeople who are performing.
Now, maybe you have in the field someone
that is a great performer,but he's a pain in the ass
and he's toxic and he'smaking great scores
and we're winning many games,
but we're not going gonna winthe championship with this guy
because he's a, he's toxic or she's toxic,
(05:25):
and sometimes you need to takesome decisions that are tough
because you know, this guy is really good
and he's scoring, you know,
but we won the game,which was a great game,
but we lost the championship
because then we lost against a team
that was inferior to us, butthis guy wasn't motivated
because, you know, itwasn't an important game or,
and you know what, theunimportant games, the points
(05:48):
of those unimportant gamesare as valuable as the point
of the classic, you know?
And so you need someone who performs
when they have the spotlight,
but also have to perform whenthey don't have the spotlight.
So all these things, you know,
in this 26 years there's beenmoments of quiet enjoyment.
You know, since we IPO'din 2007 all the way
(06:09):
to the moment when Amazonlaunched in Latin America,
those were six years ofcontinuous growth and scaling
and we had no competition.
But then you have toknow that this is a calm
before the storm because thestorm always is going to come.
- God, I love this.
The storm is always gonna come.
(06:29):
Marcos's genius, he builtan all-weather company.
Of course MELI's growth story
is an exception, not the rule.
They thrived in the calm andthey thrived in the storm.
For the rest of us meremortals, growth is bloody hard.
Think about it.
It means every customerfrom last year comes back
buying a little more andbringing a few friends.
(06:51):
We've got to win millionsand millions of times.
So what is it that letssome companies grow year
after year while others stumble?
To find out, we turnedto someone who spent
his whole career chasing
that single answer, Chris Zook.
And I've spent my wholecareer being his mentee,
his bad carry, his lackey, his fanboy.
(07:13):
I'm proud of every titleyou give me, as long
as Chris Zook's name's up front.
He actually saved mefrom being fired in 1988
when I was a uselesssummer associate at Bain.
More than once since then, he'sreached across the Atlantic
to pick me up and set me straight.
I'll tell you, everyone needsa Chris Zook in their life.
Luckily I've had mine for four decades.
So who is Chris Zook?
(07:33):
Chris is an AdvisoryPartner at Bain & Company
and one of the world'sleading strategy thinkers
and my co-author.
Look, I'm shamelesslyclaiming that co-author title,
but the truth is Chris haswritten five books on strategy
and I've been a big idea contributor.
The books are his.
He gave me a width on"Profit From The Core"
and two co-author credits
(07:54):
on "Repeatability and"The Founder's Mentality".
That's a generous mentor.
His body of work, which is five books
and dozens of articles, is amaster study into the patterns
of growth, what drives it, what kills it,
and why ultimately
"The Founder's Mentality" matters so much.
And since I've known him,Chris has been obsessed
with a single question,what are the secrets
(08:17):
to sustainable profitable growth?
So first, he takes us backto how that journey began.
Chris, I would love to just hear you start
with your own journey on strategy.
For me it kind of, I thinkprobably the first phase ends
with "Profit From The Core",but you probably have a journey
(08:37):
that started long before writing that.
But just tell me how you thoughtabout strategy at the time
you wrote the "Profit From The Core".
- Well, you know, I waslucky to join Bain & Company
when it had 70 people,
and it was part of the leadership team
that in a great growth storyof its own, grew it now
to something like 18,000
with only really one bump inin the road when the founders
(08:59):
had a messy transitionto the next generation.
And so in a way, as an olderguy looking back on my life,
I realized if there wasone continuous theme,
it is about the topic ofhow to grow a business.
And we were very lucky to have a focus
on what really are the lessons learned
(09:20):
and the laws of gravity
and the microeconomics of howtrying to find your next wave
of profitable growth,
and realizing that that'sreally what we decided
to focus the strategy practiceon, focus the building
of tools on, ultimatelyfocus a series of five books
and 30 articles on, and thatactually took up the rest
(09:44):
of my life.
- I think it's a journey of chapters.
And just let's talk a bitabout the beginning chapter.
You know, so when you firstsaid, a asked the question
of yourself and answered it,what drives sustainable growth?
What, what was the answer?
- You know, I think it wasa very interesting period
of time in the historyof business in the world
(10:04):
because it was just beforethe internet bubble.
The internet was obviously on the rise.
We felt that it was a timewhen people were using
their gut instincts too muchand that there were no tools.
So we did something
that at the now would seem pedestrian,
but at the time was actually quite unique.
(10:25):
We created a database of all the partners
of all the public companiesin the world for 20 years.
No one had ever done thatwith full financials.
And we've used it as theactuarial tables of business
to ask questions such as what percent
of companies actually do achieve 10 years
of profitable growth, earningtheir cost of capital,
outgrowing their industry and maintaining
(10:48):
or growing their margins?
And we found that though every company
in the world aspired to that.
Only one in 10 actually achieved it.
So then we began drilling down further
and we found about threemore insights in the data
that all came together as the sort
of epicenter, intellectual epicenter
or empirical backbone
(11:09):
for what became "Profit From The Core".
Number one, more than 80%
of the variation in company's ability
to achieve profitablegrowth was not the choice
of the industry they happened to be in.
That was the cold truth of hot markets.
What we found was that morethan 80% of the variation
was among competitorsin the same industry.
Number two, there were no bad industries.
(11:31):
You could make a lot of money in airlines,
which Southwest was doing,
or in package delivery, whichUPS was beginning to do,
or in rental cars, whichEnterprise was doing,
as you could if youwere in a growth market.
The key was becoming the best
and achieving leadership economics.
(11:52):
And then we looked at theprofile of those companies
that did achieve 10 or15 years (clears throat)
and we found that about 85 to 90%
of the value growth inall of those companies
that did achieve was a function of one
or two very strong, dominant
or leading core businesses.
(12:13):
And it was less a functionof diversification.
In fact, we found that two thirds
of the main strategy studieswe did costing $1 million
at the time or more had one common type
of insight, which was amazing
'cause you know, you could have said,
well, you're gonnadiscover new hot markets,
you're gonna find acquisitionsto double your industry.
(12:33):
You're gonna use it for international?
No.
What we found was that nearly 70%
of the main insights fromthese huge studies of strategy
was that more potential existedin the core of the core.
That the core of the corehad been underappreciated.
- Look, let's take ourselvesback because context matters.
(12:56):
This was the middle
of the dot-com boom when almost every CEO
was chasing greener digital pastures.
And Chris's message was profound.
"Sustainable growth",
he said, "Demands that youdefine your core business,
drive it to full potential
and from full potential,get leadership economics."
And his warning was clear,
(13:17):
"All your fancy growth strategies,
they're distracting youfrom what you do best,
which is the hard executionin the core business."
I feel like we're exactly here again
with all the discussion aboutAI, because defining our core
and a turbulent market is tough.
Market boundaries are shifting,
business definition is evolving,
(13:38):
new competitors are emerging,
often expanding from their core business
into what you thought was your market.
So the real question you haveto ask yourself in the world
of AI is will today's core still be right
for our customers tomorrow?
That strategy 2025,
and that's exactly the challenge
that Marcos was facing at MELI.
(13:59):
As success and e-commercegrew, he had to ask,
do we double down on that core?
Or as market definitions are shifting,
do we move into financial services?
And the question was, whereare our customers going,
and where must we go to meet their needs?
Do we deliver flawless execution
of known routines in the core business,
(14:21):
or do we develop, i.e. go
after the new businesses thatkeep us relevant for tomorrow?
Well, like other greatCEOs, Marcos understood,
this is a false choice.
You've got to do both.
Deliver, optimizing,develop, staying relevant.
Here's Marcos.
(14:43):
So on one hand you're trying
to run a complex business, whichmeans professionals come in
and begin to put in measures
and do things in its relentlessexecution of known routines,
and on the other hand, you want
to constantly disrupt yourself.
And oftentimes the, you know what happens
is that running motion,the status quo motion,
(15:03):
the keep things static,begins to take over
the founder impulse.
And you seem to havenavigated both of those well.
How did you handle those two motions?
- [Marcos] What happens manytimes is you get so focused
in optimizing something,
but we say we're maximizing the minimum.
It's like, yeah, we'reoptimizing this process,
(15:25):
but all this processesirrelevant right now.
We're just talking about AI.
We have 20,000 developers,this is the first year ever
that we won't grow our developers.
And it's highly likely that five years
we might have 10,000 developers,
not because we fired them,but we're not hiring anyone.
10 years ago, I would've toldanyone, you need to learn
how to develop.
Today I say, you need toknow mathematics, you need
(15:46):
to understand like the basicsof thinking and numbers,
but you don't need to code.
On one side, we're optimizingall these things with AI.
And another thing we'rethinking, you know,
maybe all this is gonnabe coming irrelevant.
We have another group saying, you know,
it's gonna be an agentic world.
And then we have a group in the middle
that is gonna optimize the experience.
(16:06):
And what I was tellingthem about the agent
being your personalbanker, I am on one hand
still in my role as co-CEO thinking, yo,
how we go from, you know,
20,000 developers up to scaling, scaling,
increasing our margins, you know,
optimizing our minimum all the time.
And I'm also thinking it's highly likely
that this is gonna be irrelevant.
(16:27):
You know, what happens if ChatGPT partners
with I don't know what,
and all of a sudden ourapp doesn't show up anymore
and I actually Apple andthe iPhone become irrelevant
because now it's gonna be anew device that, you know,
OpenAI has partnered with Jony Ive
and they're doing a new thingthat you are gonna talk to it
and maybe our app isgonna become irrelevant.
So we're working on all those things.
(16:49):
- [Jimmy] What happens inorganizations that fail?
Is the group that aremaximizing the minimum
become the defenders of that status quo?
That they start to say, lookat it, it's gotta be this way,
and if it's not this way, I quit?
And that other team that'strying to change them,
they become the enemy?
And you've managed somehow to say.
- [Marcos] It has to be the same group
(17:10):
that does both things.
You have to have in the leadership team,
they need to understand thatyou need to optimize a minimum,
you need to scale, youneed to improve margins,
actually to use that money to innovate
and disrupt yourself.
- [Jimmy] And you have tohave a culture that makes sure
that the guys in charge ofmaximizing the minimum know
they're gonna still haveroles even if that goes away.
(17:32):
- [Marcos] Yeah, it's thesame guy, the same guy
or the same team thatis saying, Hey, we need
to optimize these things andwe need to do all these things,
otherwise we won't survive.
I think that to be honest,competition is so healthy.
You know, when you havea powerful competitor,
it avoids these internal battles.
It's doesn't give you the time for that.
It's a (indistinct)
(17:53):
If you, if you, if you spend too much time
with that, you die.
It's as simple as that.
It's so healthy.
It's incredible how competitionhas made us a better...
A substantially better company.
There's a lot of thought
and a lot of analysisbehind what we're doing,
and I think it's going to go work great.
I think it's gonna be an example.
And I know it's gonna depend on Ari
(18:15):
because whether you like it
or not, a lot dependssometimes on a person.
We poached a guy from anothercompany, which we never do.
I got into a fight with(indistinct) who someone,
a founder I like a lot, and kind,
we had a kind of a gentleman's agreement
we won't poach from you guys,
and we said, this guy,this guy, we need him.
From the start, we sawthis guy as this guy
(18:37):
is a different guy.
And the reason why I feel confident
about what we're doing isbecause I think we have
the right person,
and that he's gonna be ableto decodify all these things
about which is a moment
and what things areimportant for this moment.
It's like raising kids.
(18:57):
You know, I have two boys and a girl.
The two boys are the...
You cannot understand how twochildren from the same parents
born in the same socioeconomic conditions
can be so different.
They are so different.
So I cannot say the same thingsto them at the same time.
You know, one guy, I, I don'tneed to tell him, you know,
(19:19):
you need to do this, this and that,
because he's like a machine.
He's gonna wake up inthe morning, go to study.
I need to tell him, Hey, you know, relax,
you should go out with your friends.
You should do some exercise, it helps you.
And the guy is, hey, you need
to add some structure.
With kids, it's love and limits,
but it's important
to give them love at theright time and limits.
Even when the guy needs love,
you give you give him punishmentsor maybe it's, you know,
(19:42):
and you need to understand those things.
And with the companyit's the same, I think.
- [Jimmy] So you startedthe interview, you know,
with a discussion of eBay
and whether they were theright partner going forward,
and one of the things that weare beginning to use a word.
- [Marcos] The culture ofAmazon versus a culture
of eBay, it's incredible.
I mean, eBay had everything to win.
(20:04):
eBay made fun of Amazon.
Like when we were partnering
with eBay in 2001, eBay's mediacategory, which was books,
musics and DVDs, books, CDs,
and DVDs was bigger than all of Amazon,
just its media category.
They were, they made fun of Amazon.
By 2006 when our bestpractice deals had expired,
(20:25):
it was like they were in panic mode
and it was already too late.
We always say how much we learned of eBay.
The first three, threeyears, it was everything,
because what happened a lot is they had
all these discussions about allthese ideas and we were all,
it's a great idea.
And then we were back and ayear later we had implemented,
I don't know, three out of the 10 ideas
and they hadn't implemented one.
It's not that they didn'tknow what they had to do,
(20:46):
they couldn't do it orthey wouldn't do it.
And we were taking their ideas
and then next year, Hey,
you guys did this, you guys are amazing.
No, no, we just did what you guys told us.
You know, we just executed three
of the 10 ideas that you said.
And then the last twoyears it was, we need
to make sure we don'tdo what eBay is doing.
And I remember one thing that happened
(21:07):
is at a point in timewhen, when Google starts
to, you know, become prominent,
eBay's listings were allsorted using time remaining
because they were an auctions.
We were also auctions, butwe took us like 10 days
to pivot away from thetime remaining algorithm
to a relevant space algorithm.
We said, you know, the morelistings we have, the better.
(21:28):
And even was no, no, no, everybody
has to have at some point in time
the first listing, it was like crazy.
And they wouldn't change that.
It took them years tochange the sorting algorithm
or the search.
It took us 10 days to change that.
- Marcos is proud and paranoid.
He's built a brilliant foundation
for the next generation of leaders,
(21:48):
and he has seen the foundations
of other once great companies crumble.
Companies fail for lackof focus on the core.
And companies fail becausethey optimize the core too much
and became irrelevant as market shifted.
Marcos cares about theouter game of strategy.
He's obsessed with the world around him,
but he cares just as muchabout the inner game, culture,
(22:12):
leadership, turbulence, competitors.
And Chris and I have spentdecades understanding
how great CEOs master both.
If "Profit From TheCore" is a poster child
for the outer game,
"The Founder's Mentality"is the inner game.
- "Profit From The Core" came out.
(22:33):
We spoke about it around the world.
We had great examples, data,tools to mind full potential.
It became quite solid.
But people were asking questions
about, well I have extracash and I'm near a lot
of growth markets.
How do I sort through thosethat are most likely to succeed?
(22:54):
Surely it isn't all justabout taking a single business
and maintaining itshomogeneity (clears throat)
which of course it wasn't.
So the second wave of workwas also quite analytic.
It's said, what's the science
of moving into adjacent areas?
And so we then did another wave of work
that we called unstoppable,which was about the focus,
(23:17):
expand, redefined cycle.
That there was ultimatelya point in most businesses
when redefinition very often happened.
And there are many iconic examples.
IBM was a hardware companythat went into services
and information that rejuvenatedthe hardware business.
And then that led to morequestions about, yes,
(23:39):
but isn't, isn't theremore to, to the strategy?
And so we began looking moreclosely at those companies
that over 15 or even 20years had sustained growth.
And we found somethingcalled a repeatable formula.
Companies like McDonald's, Tetra Pack
that grew into adjacencies,
but in addition to thathad a repeatable model,
(23:59):
that they used to focus their innovation.
It wasn't about roboticallydoing the same thing mindlessly
in a changing world.
No, it was about knowing
that there are certainthings you're very good at.
Then the questions becamea little different.
Like the question that in theinternet period about Enron,
you know, this was a huge darling company,
then it was a huge collapse.
(24:21):
How could this happen?
And so much of it turned out
to be the human factor ofleadership, hubris, dishonesty,
failing to see the world asit was, surrounding yourself
with yes men, broadcasting messages
instead of truth, et cetera.
And that's what led to the question,
isn't there a deeper root cause here?
(24:43):
And so "The Founder'sMentality", the best analogy,
the bestselling sportsbook for the last 30
or 40 years has been the,the inner game of golf
and then the inner game of tennis.
Because so many tennisplayers have similar fitness.
Their strokes are not that different.
They play on the identical court
with the identical balls and rackets.
And what really differentiates the ability
(25:06):
of somebody like Djokovic
to eek out matches against people
over and over and over again.
And, and that comes to downso much to the inner game,
to staying calm, to stayingfocused, to not giving up
to human elements.
And so we began to lookfor deeper root causes
(25:27):
and began asking executives
about whether they thoughtsituations where they fell short
as a company significantlyshort were external.
And they said that inmaybe 70 or 80% of the time
or more, it probably camedown to internal decisions,
hiring the wrong people, fightingthe future like Nokia did,
(25:49):
bureaucracy that slowed them down.
These were probably the deep root causes.
We zeroed in on what we called"The Founder's Mentality",
which were the internalelements of health.
How do you know if a business is healthy
on the inside to achieve growth?
Very hard to know.
How do you know if it'shealthy on the outside?
1 million measures?
- And how do you, you know,if you're asked, you know,
(26:12):
the classic elevatorpitch, what do you say
the magic dust of founders' mentality is?
How, how do you talk about?
- I say that 80
to 82% in our research of root causes
of strategy, shortfalls, breakdowns,
free fall situations, disasters, traced
(26:34):
to internal factors
that could have beenidentified and controllable.
And that when we drove deeper into that,
we found three elementsof health that tended
to reduce the chance ofthose pitfalls engulfing you.
Those three were exactlythe main attributes
(26:59):
that people used todescribe the great founders
who created the great businesses.
Number one, a clear insurgentmission of what you're trying
to achieve that is different
or even revolutionary to the industry,
even waging war on thenorms of the industry.
Think of SpaceX, one 10th, the cost
to get rockets (clears throat) into space.
(27:22):
Number two was a frontline obsession.
The founders had an intellectual curiosity
and a love of the detail,a love of the business
that propelled them to constantly ask,
why is this happening?
How do the customers really feel?
Why is that?
And then the third element wasthe epicenter of the success
of private equity, whichis an owner's mindset,
(27:46):
which relates to lookingfor responsibility
or accepting responsibility,not looking to point blame.
And that therefore the great founders
had a sense of urgency.
They reacted quickly, they acted
as if all their, the money was their own.
So that's a lot longerthan an elevator pitch,
but the elevator pitch would say--
(28:07):
- We were on a very high floor.
- Something shorter.
So yeah.
- Is the answer now inner game?
You know, as you tell yourjourney is the beginning
of the journey, it was all outer game,
and now the answer is inner game?
- No, I don't think we've...
I don't think we've repealedthe laws of microeconomics.
(Jimmy and Chris laugh)
I mean, if in fact, ironically,
(28:27):
if anything, the seven companiesthat have propelled 98%
of the value creationin the US stock market
for the last eight years are all leaders,
if not monopolists, near monopolists
or duopolies in their field, right?
So leadership, economics,a well-defined core market,
optimizing your core isstill very important.
(28:49):
But I think what we realizeis that to do that and to go
after the right internalopportunities, say no,
which is very often the mostimportant question to answer.
And so the internalwiring of those businesses
to keep them transparent,
looking for what is reallygoing on, not self delusional,
(29:14):
trying to avoid the very easy
and dangerous trap of hubris,
which ultimately engulfs somany, those are at the core
of all the companiesthat are still proceeding
along with these rules on the outside.
So it really is a higher synthesis
of the two just as it is in anything.
(29:37):
You know, the great musicianshave magical ability execute
detailed things like Eric Clapton,
and yet an amazing intuitionfor what will work to write,
you know, a song like Layla.
- So the outer game iswhat Chris just called
the laws of microeconomics.
To grow sustainably, of course you have
(29:58):
to have a well-definedcore business, drive it
to full potential, achieveleadership economics.
But the inner game matters too,
because your growth will create complexity
and that complexity will kill your growth.
To fight it, you need to maintain,
or in most companies, rediscoveryour founder's mentality.
And this will demand two things.
(30:19):
First, with your people,rediscover the why.
Why the hell do you exist?
Then reorient yourcompany to the frontline
and customers away fromhead office and managers.
Create an owner mindset,
which involves a hatred ofbureaucracy and a bias to action.
Second, you gotta bringback a vertical orientation.
(30:40):
Focus on real customers and win,
then take a winning solution and scale it,
and then figure out how to amplify
what you've discovered across the business
through horizontal moves.
Outer game, focus on the corebalance, deliver and develop.
Inner game (laughs) it startswith just get your mojo back,
(31:01):
start winning again, andthen celebrate the heroes
who make those victories happen.
And it's interesting, as Chrisnotes, in the last decade,
almost all the value in thestock market has been done
by the big tech players, all founder-led,
all playing the outer andinner game with new rules.
(31:22):
One of the things that's coming up more
and more in our work isthis notion of resilience.
And I thought the, I thoughtthe best line you talked about
was when I go out toexternal markets, I'm a hero,
and everybody looks atthe journey I've been on
in the mountain I'm on.
When I talk to a user, I'm asgood as the last transaction.
(31:43):
And, but that energy, Marco--
- [Marcos] So physically happened to me.
- [Jimmy] Well, then you said that, but--
- [Marcos] And I said, you know what?
I need to physically move.
We had an office that I shared
with my two kind ofco-founders (indistinct)
We had the, we, thethree of us sat together
in like, in a place like this.
I said, guys, yes, asof next week I'm going
(32:05):
to sit in the middle of theengineers with (indistinct)
And I did that for three years.
I wanted to physically change everything
because I said, youknow, it's been one era
of building the company.
Now we need to build the product.
The people that you know,
the business people loveus and our users are here.
I want the opposite to happen.
I want our users to have us here
(32:26):
and the external work to be here.
And this is, this is unsustainable,
this is sustainable, you know.
- [Jimmy] And so that, Marcos,takes so much energy, right?
To, to face the gaps in yourbusiness, constantly say,
I'm gonna listen tothe user that hates me,
not the external market that loves me.
You answered, I think foryourself, you, you said,
(32:47):
"I get passion in everything,
from big things to small things."
You talked about your family.
Did you specifically within Mercado Libre talk
to your people about howthey keep energy levels,
how they stay resilient?
Because what we've seen is tired people
do incredible damage to companies.
It takes energy.
- [Marcos] We talking about career
(33:08):
about leading for example.
That for me is the most important thing.
When this guy told me, the,the board director telling me,
"Hey, why are you doing what you're doing?
You know, this is your company,you can do what you love,
you can go and play golf."
You know, I said, "No, no, no.
I don't wanna go and play golf,
because I don't want theCEO of Mercado Libre.
Now I'm gonna be chairman, and now Ariel
(33:29):
and everybody elseknows that I was willing
to leave the thing that I love the most
because I want to be 24/7, 365.
Now, everybody better work 24/7, 365.
I'm giving the example.
I'm giving up my salary,
I'm giving up my job, I'mgiving up the position
(33:50):
because whoever leads thiscompany cannot be focused
on Mercado Libre and other things.
Mercado Libre has to be your life.
- [Jimmy] You say that,but you also talked
about the incredibleimportance of your family.
I know you love rugby with a huge passion.
- [Marcos] I'm not saying
it has to be the only thing you do.
- [Jimmy] Good, okay.
- [Marcos] But I can be with my family
and I am with my family.
(34:11):
I'm thinking of Mercado Libre.
(Jimmy laughs)
- [Jimmy] Don't say that to your wife.
(Jimmy laughs)
- [Marcos] No, no, my wife knows it.
My wife knows it.
My wife thinks aboutMercado Libre 24/7 as well.
I mean, it's our fourth kid.
It's a life project.
It's a life project for me, formy children and for my wife.
We're all trying to understandhow is this gonna work out
in the next few years?
- [Jimmy] But how did you,
(34:32):
where did you replenish your energy?
- [Marcos] I think what happened to me,
it's also with Jeff Bezos,it's also with Mark Zuckerberg,
it's also clearly with Elon Musk,
all these founders, money's irrelevant.
It's never, ever, ever about the money.
So, so it's always about theobjective, about the project,
and the project is sofascinating and it's growing
and it's changing that it,right now, it's as fascinating
(34:55):
as it has ever been.
I get the energy from there,
but it's also certain kindof people that you need
to try and attract.
And clearly Addie is likethat and Danny is like that,
or that's, you know, what I try
to detect when I'm interviewing, you know,
is this guy a manager?
And sometimes we know thisguy's a manager and that's fine.
He's gonna be, I don'tknow, the controller.
(35:16):
It's great.
So you don't need also foundermentality in every role,
in every position in across the company
because it's a problem,
because founders want togrow, create, ambitious,
and if everybody wants to be like that,
you don't have enough positionsto satisfy all those things.
- [Jimmy] But no, no one'sgonna keep the books (laughs)
- [Marcos] Yeah, and youdon't have enough positions
(35:37):
to satisfy all those egos, you know?
But, but that's another thing.
The process of me leaving creates
opportunities which you need.
Because when you have allthese ambitious people,
if you don't create opportunities,you end up losing them.
We saw that one at federal level,
we gave four internal promotions.
It was fantastic.
(35:57):
We have an incredible bench,
but if those people arein the bench forever,
one day they're gonna play ina, you know, in another team.
So I mean, in MercadoLibre it's very clear
that the guys from themarketplace, the guys
from the FinTech and theengineers are the ones
who deliver the value.
(36:20):
Everybody else is supporting role.
And that is very clear.
I mean, in my teammeetings, those are the guys
who start the, let's talk
about (indistinct) and Ari would take us
to (indistinct) and Valdo would take us
to (indistinct) and then Danny
is gonna talk about technology.
And then the CFO talksabout what's going on
and the (indistinct) who's kind
(36:45):
of a COO, he talks aboutlegal and HR and...
But first we talk aboutMercado Libre the business
and then the technologyand then it's the rest.
And everybody knows that, andit's like that, and we don't--
- [Jimmy] When we saymost big bureaucracies,
it's the tyranny of thefunctional excellence programs.
It's all the functionsjust give PowerPoint
(37:05):
in a presentations all day.
- [Marcos] These guys arethere to support the business.
That is very, very clear.
Yeah.
But again, competition is so helpful.
Is so helpful in aligning everybody.
I think Amazon, theseguys are really good,
but they have a discipline, you know.
They're not willing to lose $500 million
(37:25):
per year forever in Brazil.
I don't know how many they've been losing,
but they've been losingsubstantial money in Brazil.
But there's a point where they say, Hey,
maybe this amount of moneyis better spent in Germany
where we make money, or in the UK.
At some point in time,there's some discipline.
So far with the Chinese,we've seen no willingness
(37:46):
to restrain anything,
and their technology is reallygood and they work a lot.
And so we say, it's gonnabe a long and tough battle.
- Look, Marcos doesn'tbeat around the bush.
His job is 24/7.
It demanded relentlessenergy, and he warns us.
If I didn't have that energy,my job was to step aside
(38:09):
because there are four other leaders
that would take my place
because they wanna writetheir own chapters.
We may all wonder, could we do a 24/7 job?
Would we even want to?
If you can't or won't devotethat much time to your job,
it's important to remember,
you know, we all deserve work
that energizes us, workthat excites us so much
(38:31):
that, you know, it steals a bit
of our discretionary energy.
Work we think about in the shower
or while walking in the park,
because we all deserveto be on noble missions.
All right, so how the hell
are we gonna recap this episode?
First, it's the outer game.
Power of the core, leadership economics.
Chris showed us thatsustainable growth does not come
(38:53):
from chasing hot markets ordiversifying for the sake of it.
It comes from doublingdown on what we do best,
building repeatable models and,well, comes from dominating.
But of course this isthe era of turbulence,
so we have to optimize the core
while also adapting it to stay relevant.
Second, the inner game,the founder's mentality.
(39:15):
Nurture it, rediscover it, and then shift
your orientation more vertically.
Focus on customers in the frontline,
win then scale, then amplify.
Third, of course, it's a balance
between the inner and outer game.
The CEO's job is never just one thing.
It's economics and competition,
(39:37):
but it's also leadership and culture.
The best leaders help their teams win
against external competitors
and help them overcome thoseinternal energy vampires.
It's the outer game against competition.
It's the inner game against complexity.
And the best CEOs know how to win
with both without losing energy,
without losing focus (giggles)
(39:59):
without losing their people.
So that's the final CEOinterview for this season.
(Jimmy giggles)
But guess what?
We're not done with you yet.
In two weeks, we're gonna comeback with a wrap up episode
and we're gonna try topull this all together.
So thanks for sticking with us.
Stay curious.
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