Slum with a view

Ben Maritz - +1 917 340 6014 - Stanford GSB - "Endless Summer"

The view from my hotel room...

Ben Maritz - +1 917 340 6014 - Stanford GSB - "Endless Summer"

Daniela in front of Petrobras

Ben Maritz - +1 917 340 6014 - Stanford GSB - "Endless Summer"

Rio de Janeiro

If there wasn't a city of 8 millions here, it would be a fine spot for a Club Med- it's a thin isthmus seperating a pictaruesqe lagoon from a dazzling, long white sand beach. the whole thing is in a basin framed by one side by a medium sized mountain with the iconic Jesus on the one side, and some odd very large rock formations on the other - the tallest of which is known as the "Sugar Loaf" for its distinctive shape (in portuguese, pao de asucar- literally bread of sugar). From my hotel balcony this morning, facing the beach, the cool sea air and the whole of this scene reminded me how good it was to be alive.

Rio was the capital of the country from imperial days until the 1960's (when it was moved far inland to Brasilia in search of bad arcitecture). As such, it still has the trappings of a colonial capital. There are broad avenues, the odd fine palace, and an overall city plan clearly designed by those who wanted to appreciate their lives and the city. The streets today are more reminiscant of southern Europe than anything else, tho the people, trim and finely manicured, chatting in the bars until long past my 2am bedtime, are unmistakeably Latin American.

We just arrived at Petrobras...
Ben Maritz - +1 917 340 6014 - Stanford GSB - "Endless Summer"

Air Brazil

I'm on out hired bus riding through the pleasant rolling hills of Sao Paulo state, on our way to Rio. Luke, my New Zealander friend sitting next to me says it reminds him of home. "It's green," he says.

We drove from Sao Paulo to Rio to save some budget to match the price of the dinners we've been eating (us$100 last night, us$150 the night before that - the dining options for world class MBA's are very limited!). It worked out well because about halfway between Brazil's business and style capitals lies a small town with a large aircraft plant - the home of Embraer, Brazil's most prized exporter.

For a boy raised in the foothills of Seattle's Boeing, the plant was somewhat quaint, with hangers merely large rather than truly gargantuan. We had a presentation delivered by a grandfatherly engineer (instead of the vitriolic CEO we've been used to), and then lunch in the executie lunchroom followed by a walkthrough of a few of the factories.

what we saw was impressive. Embraer's small jets were being stiched together,  a dozen at a time, from parts shipped in from around the world. Wing assemblies from Japan, tail fins from Spain, and other parts from various destinations as exotic as Florida and Chile. The strategy of assembly fits Embraer because it can leverage the expertise and financing of its foreign partners, but it also defines the segments in which the company can participate- Embraer can't make anything bigger than the regional jets it does because the component parts would be too big to cost-effectively ship to their factory.

The planes themselves were already emblazoned with the colors of the future owners- Chinese, Saudi, American, and Brazillian alike. The company, a leader in its field which emerged from stiffling state ownwership only a dozen years ago, is a pride of every Brazillian. It is always mentioned a sign of Brazil's.ascendancy to a global power. I must agree that the 20,000 people employed at Embraer's facility, all of whom seem to drive in on comfortable roads in comfortable cars, certainly appear to have a first-world existance.

Embraer's growth is a positive for brazil, but it's very global strategy is also a sign of the country's limitations. They hire 300 skilled engineers a year, which out host thought was probably the limit of what Brazil can produce. He spun this postively, saying that Embraer next facility would probably be overseas. The challenge of education in these developing countries has always puzzled me somewhat, since I feel that the entrepeneurial energy they appear to teem with can easily overcome the lack of training, but I guess I should admit that its hard to build jets with spirit alone.


Ben Maritz - +1 917 340 6014 - Stanford GSB - "Endless Summer"

Vivan's people

About half the Google office in Sao Paulo, where I visited yesterday, was Asian. This is a lot like the Google in Mountain View. The difference, of course, is that in California fully half the university graduating classes are asian, where as here perhaps a percent is asian.

Its also a bit odd to hear them chatter away in Portuguese. Although I guess its not really any wierder than asians speaking English. Indeed, as we are continually reminded, Brazil and the US are both countries of immigrants, and up until the second half of the 20th century, the immigration flows of the two countries looked largely the same. To hear the vrazillians tell it, emmigrants from the Europe and Asia often flipped coins to decide between the two destinations.

I'm not sure if this is true or not, but at least for vivian, it quite plausible that instead lattes she might be sipping cafesinos right now, given that her father passed through brazil and probably almost settled there after leaving Taiwan. But, I suppose, its good to know that she might have had the same employer :)

Ben Maritz - +1 917 340 6014 - Stanford GSB - "Endless Summer"

Mortgages and Ethanol

There is little in life so satisfying as not attending something that you do not want to attend. I’m doing that now, tapping away in my air conditioned hotel room as the rest of my study trip shuffles in their seats during another one of our “meetings” – this one with a non-profit foundation set up by the family of a former Brazilian Formula 1 driver, a man who deceased in spectacular crash in Monaco or Monte Carlo or Malaysia or some other country that cares about Formula 1.

It’s the second day of the study trip, and so far things are going great. The purpose of the trip, I should record for posterity, is to educate 30 MBA students about doing business in Brazil. This is done by way of a series of meetings, as many as can be held in 10 days, with the leaders of the country’s businesses and organizations. The trip is similar to the ones that I planned in the United Arab Emirates and in Ghana, with a primary difference being that the leaders of this trip, all classmates and good friends of mine, are actually from the country. They are also kind – Daniela, a former fertility doctor and future fertile consultant gave me leave to skip the current meeting, because I am not feeling well – a condition that may have something to do with my not having slept more than four hours in a night for the last week.

They’ve pulled together an impressive slate of meetings, which combined have already painted a fairly nuanced portrait of the Brazilian business environment. The short answer is that it’s a country riding to prosperity on the back of a major boom in agricultural exports, aided on its way by a government which has decided to try responsible fiscal and monetary management (for a change). The nuance is that the export boom has been driven by the astronomical increases in the prices of certain commodities over the past few years (ten-fold, in some cases). The government’s new found wisdom has similarly been eased by a budget surplus driven largely by rising tax revenues, derived, again, from rising prices. The commodity boom has certainly been good for this happy nation, but it’s too soon to declare the economy a success.

That being said, the place certainly “feels” like a real economy, in a way that Ghana, and even India, certainly did not. We’ve had several meetings with multinational corporations (BCG and Google) without whom one could not take a modern business capital seriously. We met today with our first truly Brazilian company, a major bank called Itau, who managed to floor me with their boardroom alone. The CEO, Mr. Roberto Setubal, received us in a massive chamber staffed with half a dozen uniformed attendants who fed us coconut water and assorted snacks as we surveyed the company’s offices below through massive plate glass windows. The campus itself, through which we had just walked, could have passed for an art museum, with multiple oddly shaped buildings surrounding a central courtyard containing a sculpture garden in a large pond. All 30 of us, seated in high backed chairs listened attentively to the CEO tell the story of how he and his family constructed the bank through a series of takeovers, orchestrated against the backdrop of a economy mismanaged to repeated disaster by a military dictatorship.

The bank, which is the second largest in Brazil, is one of the world’s most profitable. We reflected on their cost-cutting secrets as we dined in the executive lunch room, served on monogrammed china by white-coated waiters. I never quite figured out what the secret was, but it must have something to do with their competition–mostly foreigners. Setubal, the CEO, was one of the few believers in Lula, the left-leaning president whose election was accompanied by many fears of an end to the policies of his market-oriented predecessor (who, incidentally, we are meeting tomorrow). While the foreigners held their breath in anticipation, Setubal rushed forward, snapping up more small competitors and building a network to collect deposits from anyone with money to save. Now, lamented the bank’s financial controller, seated next to me at lunch, the bank is over-capitalized, and needs to find a way to lend out all the money it had acquired. Fortunately, even as the market for home and car financing in the US is falling apart, it’s counterpart in Brazil is just inventing itself. Itau alone is now making 500,000 new car loans a month – that’s 6 Million a year – in a country where a decade ago there may not have been more than 30 Million cars.

If Itau is a symbol of Brazil following close on the heels of the US, Cosan, the ethonal produced we met with yesterday in the afternoon, is a sign of its leadership. Brazil is the world’s biggest Ethanol market, a position it won through the former dictatorship’s paranoia about energy dependency. The generals responded to the energy crises of the late 70’s with a decree that a certain portion of the country’s vehicle fuel by supplied by the country’s most abundant crop: sugar cane. The industry foundered in the 90’s when oil prices dropped, and government mandates were cut, but the machinery remained in place for the more recent run-up. For a price equivalent to about $40 a barrel, Brazil can produce a fuel that it 5 times cleaner than gasoline, all in a simple series of factories each not much bigger than a football field. Today it supplies about half of Brazil’s fuel needs.

It’s really a perfectly American solution to the energy problem – it’s market-based, requires no sacrifice on the part of consumers, and results in a reduced need on imports. However, the US has steadfastly refused to accept anything but the most unsustainable form of it. In the US, the Ethanol we produce is made from Corn, which requires a much more complicated process. A process that cost twice as much, and consumes nearly as much energy as the resulting fuel provides, meaning that by most analyses, more carbon, not less, is produced. We don’t use sugar cane because we have so much corn, and because the perverse sugar subsidies our government provides makes it more lucrative to use the crop to fatten our children than to save our planet.

Ethanol is not a panacea – even at their most optimistic, most experts predict that the limits of arable land would allow only at most 20% of the world’s fuel to be supplied by cane – but it is an interesting example of a developing country, known for red tape and idleness, has been more entrepreneurial at an industrial level than the US.

Paradise Done

Ok, now I’m back from the island and in the Salvador airport.

I find myself liking Brazil, despite, of course, my inclination to dislike the things that are conventionally well liked. I appreciate the warmth of its people, the natural beauty, the music, the pretty girls and all else that’s usually cited, but for me what’s really done it is the food. As soon as I wrote that last word, food, a smell wafted over from through the open patio door and across the house of our next meal being prepared… another simple, fragrant, well season concoction of the kind I’ve been spoiled with since my arrival. Peter Robb, in his aforementioned book, described a dish known as Moqueca. It’s essentially a seafood curry of African provenance, cooked in dende palm oil and finished with coconut milk. He praised it, but didn’t do it justice -- think of if a Thai fish curry was made in Africa and rounded out with fresh European herbs such as Oregano and Rosemary. I generally like Asian cooking for its honest and robust flavors, but I do find it lacking in simplicity – the flavors often come individually, dischordant compared to the blended harmonies of slow-cooked, simpler yet more refined European cuisine. I think that the food here in Brazil manages to bridge the gap. I’ve felt both full and satisfied as I’ve pulled away from the table.

It’s the kind of food I’d love to make, and the eating is the kind of eating I love to do- big meals eaten in big groups at hours that show no respect for any activity other than eating. The day is sacrificed to the meal – or to put in another way, the day exists for the meal. I finished, a few days ago a book called Gabriela, Clove and Cinnamon, written by the most famous son of this state of Bahia, Jorge Armado. The book is about life in gun-slinging cocoa town in the 1920’s. As you might imagine, the heroine is Gabriela, a simple cinnamon-colored country girl who smells of cloves and cooks so well as to cause the whole town to fall in love with her, despite it being town apart between political factions fighting for and against progress and the old way of doing things. She doesn’t quite unite them, but rather represents, in the book, a distinct third way of doing things- something simpler, more traditional, than the violent ways of the colonizing colonels, or the austere, pragmatic ways of their civilizing successors.

Gabriela, in the book, is a mulata, a mixed-race woman of unknown provenance, most likely a mix of African and European ancestry. This would place her in good company – some 90% of the state of Bahia, where I now am and where the book takes place, is descended from Africans. It is now and always has been one of the major agricultural regions of the country, and as such received what was probably the majority of Brazil’s 5 Million African slaves. The Africans, in addition to supplying the labor for Brazil’s explosive growth, have also supplied most of its culture. Music, dance, and arts certainly, but also food—the famous dishes I describe are all African in origin, a trait that can be seen in the faint yellow tinge around the edges of all the fried foods – it’s a sign of the use of “dende”, the same palm oil which I ate by the cup-full in West Africa last December.

These Africans also brought Brazil its celebrated diversity – before coming, I had heard it described as the rainbow nation, a utopia to our race-weary American consciences. The reality, I should note, is something different. It’s true that the country is very diverse, with whites, blacks, and everything in between to be seen. I haven’t run into more than a handful of Asians, although more than a few people have had a touch of native Indian blood. But if the race “problem” is not present here, it’s not because it’s been solved, but rather because it has never been raised. I’m in the airport now, waiting for a domestic flight from Salvador back to Sao Paulo, and the travelling class is clearly, clearly white. We saw the same thing virtually everywhere we went – there was plenty of dark skin in the bars, restaurants, and hotels we went to, but it was almost always in serving us. In this sense, the country is more segregated than Africa. I’m very curious to see how this will pan out in my business meetings next week and beyond. I asked Daniela, my Brazilian friend, if there were inter-racial marriages – she said that there were, but couldn’t cite any high-profile examples, save for a few wealthy black football stars who had scandalously married beautiful white women.

Last night, directly upon our return from the island, we went to a “party” in the outskirts of Salvador. It would be more accurately described as a concert, with about 10,000 young people dancing to the music of a succession of local bands. I believe Thiago used to have a hand in organizing such events, and was very pleased to bring us there and secure for us passes to the “VIP” area. The concert was fun for me, in a “cultural experience” sort of way: it was neat to see how the elite youth of a 2^nd tier city in Brazil spend their holiday weekends (it’s Easter today). Of the 10,000 attendees, the majority appeared to be 16-to-20-year-old women, attractive in a range of dress that ran, as seen from my big-brother perspective, from unacceptable to intolerable. Of the 10,000, about 6,000 had, like us, VIP passes, and thus were entitled to enter the large, roped off holding area to the right of the stage. Where there was a DJ to entertain between live sets, and a series of bars serving free drinks to lubricate the revelry. The people were friendly, young women especially, and I’m sure my friends who stayed later than I did were amply rewarded for their patience. One thing I couldn’t help but note was that of the 10,000 attendees, roughly 10,000 were white – and this, recall, in a state which is 90% black.

So if there is no race problem, it’s because the race problem is not seen as a problem – the country has a developed a odd sense of comfort with otherwise repulsive aspects of society. I’m reading now Brazil’s most famous book, The Posthumous Memoirs of Bras Cubas, by Machado de Assis. It’s a fictional account of a well-to-do dandy of the 19^th century, from the years after Brazil won its independence from Portugal but before it rid itself of its own subsequent monarchy. The hero of the book, Bras Cubas, is actually much more of an anti-hero. He steals wealth and wives alike, works little, and in a section describing himself as a child, recounts “cracking open the skull” of one household slave, and riding and whipping another. The book goes on to recount a life filled with revelry but little true happiness, and although the author dies lonely by the end of the book, descending into dementia still a bachelor, one does not get the sense of any sort of moral lesson. The author, interestingly enough, was himself a half-black low-caste resident of the newly independent Rio de Janeiro, who’s occupation was writing titillating society pieces for the literary magazines consumed by the home-bound women of the bourgeoisie. Surely this book was written for the same, and was designed to evoke wonder and disgust at the men with which they kept company (the badness of men being surely as popular a topic for women then as now). But for such an indictment to go on to be one of the most famous must-reads of the nation?

Morro de Sao Paulo

It’s hot in Brazil. A merely warm breeze blows by every minute or two, and it comes as a welcome relief. I have a damp towel which I swab my forehead, neck, and forearms with, and the water drips down over my glasses, blurring my vision and probably my words. On all sides, I’m surrounded by the chatter of games—the house we’re in has every sort of recreation imaginable—a veritable pleasure dome. Off to one side two classmates sweat on the clay tennis court, behind me a group sweats in a sand volley ball pit. Inside the house the girls, Daniela, my doctor classmate and Thiago’s two manly female cousins tap a ping-pong ball back and forth, sweating and chattering. The happiest, no doubt, are the flies of all sizes who free from sweat of their own drink at mine, as I sit on the porch using the oak card table as a computer desk for the time being. There’s one at my neck right now. Clay is twittering around photographing everything, as he has been doing all day and night. Capturing our leisure and indiscretions alike, for posterity, I presume.

The house belongs to a lobbyist, a friend of Thiago’s father, the former governor of Bahia, the France-sized state that I’ll be in all week. The house is luxurious, with beds for 15 and a uniformed staff of six or seven, in a way that is ostentatious both to what remains of my American egalitarianism (long since faded) and also to the very nature of the island on which it sits. Morro de Sao Paulo is a weekend getaway for young, well-off residents of the nearby 2^nd-tier city of Salvador and an extended stop for Israelis and Scandinavians on year-long holidays. I’ve seen this kind of place many times before, in Ecuador, in Thailand, India and even Mexico, but I must say that this place stands out for how un-forced it seems – the tourist restaurants and pousadas on the beach effortlessly giving way to the old town plaza with its picturesque church and light house on the hill above. At the nightly parties, young, old, rich and poor dance on the beach in a large square formed by side-by-side Capirinha carts, laden with fruit and staffed by dancing matrons, serving weak, sugary fruit drinks. Only our house, the Casa de Tomazza, with its stand-offish location down the beach and around the point, and its green fence and proprietary tractor for transportation stands apart.

I’m thrilled by the house for its prospects – having read Peter Robb’s brilliant book on the life and times of Brazils ruling elites, I can only imagine what goes on in the playhouse of a well-connect lobbyist. His book, A Death in Brazil, recounts the fabulous excesses perpetrated by the Fernando Collor, Brazil’s first democratically elected president, and his sidekick, the lobbyist PC Farias. Brazilians, or at least those that I know, credit Collor with opening Brazil to the world after decades of a closed dictatorship. With this opening came foreign competition and its discipline, but also foreign ideas such as that of the “lobbyist” –a channel for the elite to maintain their influence in a democratic society and at the same time a bag man for politicians not wanting to answer for their indulgences. I’m sure that Thiago’s family and their friends have lives nowhere near as fantastic as that first generation of national politicians, but even still, as I sit in my bedroom enjoying the view onto the beach and the ocean beyond, I can’t help but think of PC Farias’s untimely demise in a similar room in a similar beach house, under a rain of bullets from his own brother’s hired henchmen. Or was it his wife, as Thiago insists? Daniela says it had to have been the Mello crime family – the relatives of the former first lady who must have viewed the passing of PC Farias as the ultimate washing of the laundry, as she puts it. The world will continue to speculate, whether in their favellas, in the glow of their soap-saturated TV sets, or as they raise their hands for another Capirinha in the comfort of their own deck chairs…

I spend five days on the island, four nights of revelry. Breakfast (eggs, home-baked rolls, fresh coffee, fruit and fruit juice) is served by the attentive staff at a time of our choosing, and lunch at a time mutually amenable to all, usually around sunset, or about 6pm. The lunch meals have been the highlights of my trip so far, with all the regional specialties made from scratch by the small kitchen staff (only 3 people!). The odors of their meals building up to anticipated result over the course of the hours of the day. Dinner is to be eaten standing up, during a break from the dancing at one of the hot dog or pastel carts around the island’s watering holes.

Back to Brazil, Back to Blogging

So, after a break of a few months, I've decided to resurrect this blog, to record some thoughts as I drag myself around the world again. This is the "beyond" part of "to Bukhara and Beyond." Bukhara, though now seen, will remain an important part of me. Seriously -- it was Peter Hopkirk's book, the Great Game, which recounted the story of the British explorers and their quest for Bukhara which gave me my first dose of wanderlust when I read at the ripe age of 19 or 20.

I'm on my way to Brazil now, and will spend about three weeks here -- one vacationing in the northern province of Bahia, and then two on a business school "study trip", meeting with companies and government officials in the great cities of Sao Paulo and Rio de Janeiro.

More reports on the way!