Classic Deal - Burger King by 3G Capital (EP.384)

30:13As part of setting this bold, ambitious goal, we copied a lot of what Alex did so successfully at the railroad company in terms of the management style to achieve a long-term bold, ambitious goal. It happens one year at a time. So we set goals for the organization around the number of units that we'd want to open, the sales growth that we'd have, the capital returns that we'd have. And we posted those goals all around the organization to give everyone visibility on how we were doing. So behind people's desks, you'd see their goals for the year, red, yellow, and green metrics to create a lot of transparency and visibility within the organization of where it is that we were taking the business and how we were progressing.

30:56And then as Alex said, we felt that there was an opportunity to run the business more efficiently. And so as part of the zero-based budgeting effort, we kind of compartmentalized costs around the organization and made groups accountable for what it is that they were going to spend. We gave people budgets and we tried to benchmark inside and outside. And so if one group was spending X dollars a year on travel per person, then the other group should try to match that. Little things like this. It wasn't overly complicated. But as a result of that, we probably, as a result of that first phase, we ended up owning the business of a price to earnings ratio of five, four.

31:38Yeah, it's like a 25 % free cash flow yield within the first year or so on our equity. Which gave a lot of margin of safety to the investment. What was so great about this business is that it was a mature business in the sense that it had a 50-year history, but there was so much opportunity to make it way, way bigger. And so after making the business more efficient, we really set our sights on how do we make this the fastest growing restaurant company globally. And we noticed in certain countries, the brand was stronger than in other countries, depending on how we'd go to market. And we as a team and board developed a view that we should have large, well-capitalized master franchise partners with great local operating expertise in some of the bigger markets.

32:28So then we set our sights on creating these partnerships around the world. And in the first couple of years, we created partnerships in Brazil, in China, in France. as an anecdote, I mean, when we bought the business in France, there were no Burger King restaurants in France. It's one of our competitors, more profitable markets globally. But I think we crossed 2 billion in France. The biggest market for the Burger King brand other than the United States. Yeah. The seeds that were planted led to a decade plus of growth and it's still compounding. As we talked about earlier, that's really what allowed this to become such a large company.

33:10Can you break down those two aspects of that initial goal setting? So the first is efficiencies and the second is growth. As you describe it, it sounds really simple. Put a bunch of goals in place that are tied to these financial metrics and then it happens. What are the aspects of driving what seems like a very simple way of improving efficiencies and actually making that happen at the company? Daniel's being humble about the zero-based budget that was done there. I mean, there were some real opportunities in the near term to increase EBITDA. There was a lot of money being spent away from the business, meaning on more bureaucratic corporate layers and things that really had little impact on sales and little impact on opening the restaurants.

33:58There were some meaningful dollars there. Nearly 50 % growth in EBITDA. Yeah. What are some examples of those types of expenses that have been in place? One example, many multi-million dollar FedEx budget that 90 % of it converted to email instead. Coming in with a fresh set of eyes and making those hard decisions is easier said than done. On the growth side, I think one interesting thing, I think, is this investment horizon difference that we have. Because do I think we're any smarter than any of the prior owners, for example, of this business? There's no way. I mean, there's some of the smartest people that exist in this industry.

34:35That's not the case. I think we did have a very different time horizon. And then, for example, some of these expansion opportunities that Dan alluded to, we're talking about France. France became a big deal, but that's now 14 years to the making. But you had to spend a lot of money and attention and focus and actions first to source the right master franchisee, then to make sure to organize the capitalization of that franchisee and help them with that. Then local sourcing of ingredients, customization, a menu, then slowly real estate if you want to get quality locations that can be done overnight.

35:10So a lot of actions that do create a lot of value, but on a longer horizon, same thing that I said about France, I could have said about China or Brazil. So I think the horizon was an important enabler of us to make some of the decisions that we made. The other way we got the organization excited about the direction we were taking the company in is frankly through the equity ownership that we brought to the company. Just like you did the railroad, we had this philosophy that for people who acted like owners and really held themselves accountable and cared, we wanted to make them owners in the business.

35:50And so we granted sizable stock options to top 150 people in the organization to become owners of the business. We also let folks who received proceeds as part of the Burger King take private transaction. We let them reinvest those proceeds into the company and we levered them. We gave them a multiple times matching. And the other piece that we did each year, we allowed the top couple few hundred people in the business to take a portion of their bonus. And if they wanted to, they could buy stock in what was then private Burger King and we would match them as well. We'd essentially give them leverage.

36:36And so we really created this cultural alignment within the organization that we were all on the same team. We were all shareholders. We were all owners of this business that, yeah, we'll have to make some tough decisions and we're going to have to do certain things differently if we want the next five years or 10 years to look a little bit different than the last five. But I think everyone was aligned. Everyone was in the same boat with respect to where we needed to take the company. As you're working through that and buying the existing company and really starting a more rapid expansion, it's hard to get all those people decisions right.

37:16I'd love to hear how you thought about assessing people along the way. I think this goal system that we have is a great facilitator at that. Evaluating people will never be 100 % objective, but we had at least an objective basis to start from in terms of the goals for the year and how did that person stack up against those goals. And not only if they achieved them or not, but what is it exactly that they did or didn't do. So we had a system to do this quarterly. And at the end of the year, it became apparent, I would say in 80 % of the cases, it was pretty easy to differentiate who was doing more and deserved more responsibility and deserved more equity versus who didn't.

38:02And we were fortunate. There were a lot of great people at the business in 2010. We'd meet with these people. And we'd ask them, say, what do you think we could do better? And there was no shortage of great ideas. And there were a lot of people who were promoted, who really bought into what we were trying to do. And they had both the knowledge and experience in the business and the ambition. I'd say we also spent a lot of time recruiting folks out of business school. I would make regular trips to business schools, get the resume books in advance and cold email folks who I thought had impressive resumes.

38:40And if you get an email from, say, cold email CEO or CFO of this company, I'm on campus and do you want to meet? I got a nice response rate. And for people who seemed really ambitious and wanted to do something big, something maybe different, we would make offers on the spot. And we hired a lot of great people. As a result of that, you look today, our CEO is 37. Our CFO is hired out of HBS. Oh, the semi now. mid-30s. President of International was also hired out of the MBA program. These people have all been with us decade plus. But it goes back to what Alex is saying. I think that speaks to the long-term ownership horizon.

39:18The folks we hired, it's 2024. A lot of these folks we hired, we hired 2012, 2013, 2014. They grew up throughout in the organization, and we knew that a decade in, they had an incredible amount of value. But you have to make a long-term bet on these folks. How far along in the trajectory of changing the business did you start thinking about acquisitions? That's a great question. The first thing that needed to change for us to do that was our balance sheet. We levered what was I seven times, six and a half times off the gates. And we were a few years into this process back to two and change or three or not even three.

39:55So balance sheet first. So that was the first enabler. The second is we felt the first green shoots of what we were doing in terms of international restaurant growth expansion, in terms of turning the corner on the same store sales into the domestic system. So we saw the green shoots on the organic side coming up and we had the balance sheet and we had the people. So we started to have some bandwidth in terms of people to do more. That got us again back on the hunt. And kind of comfortable with the business because we hadn't owned a restaurant company. A few years into the business, we liked it a lot more even than we did at the start.

40:36So where did you turn at that point in time? We ended up going public in 2012, year and a half into this, mid-12. And this was a late 2010 closing. And between the dividend that was paid and the proceeds of selling quarter of the business or whatever that was, we returned 130 % of capital, give or take. Everybody was made whole. And we owned 70 % of the business, which was at the time, I think our IPO valuation implied four or five X multiple, the original emotional investment, which was in and of itself returned. Why did you decide to turn around and go public so quickly after turning it around?

41:20We didn't. We were approached by a SPAC and that was basically run by people that we respected and knew. And they wanted to do a deal with us by virtue of which we would have become a public company. And of course, that was a process in terms of discussing valuation and discussing how to deal with some of the incentives and things that are typically associated with SPACs, for which there was a limited space here, given the size of the deal. But that negotiation went well. The valuation was compelling enough. We respected the people that had the SPAC. We thought there would be good shareholders and good partners.

42:04And then we decided to proceed. So we weren't thinking about it. So now you're accidentally a public company. We were a year or two away from it. And then Daniel said, so that plays out first, and then you start looking at expansion. Yeah, that helped the balance sheet. We were in a$5 billion market cap company, and we continued to grow quite nicely. We continued to grow our system-wide sales at attractive rates. We continued to grow our EBITDA, our cash flow. I think we probably reached around a$10 billion or so market cap company. And as Alex said, we liked the industry, we liked the franchise business model even more than we did prior to becoming owners and operators of the company.

42:47And we looked around the world, around different franchised restaurant concepts. And I think at some point we came across Tim Hortons and felt that it was one of the most special businesses and brands in any market, in any category we've seen anywhere. And Josh Cobbs are now CEO, led the work on that together with me and Alex and the team here at 3G. And we pursued the acquisition or combination together of Burger King and Tim Hortons. This would have been 2014, 2015 timeframe. The more we learned about the Tim Hortons business, the more excited we were. Tim Hortons was a franchisor of excellence, an incredible franchisee community.

43:37It had most of the real estate in these deals. It manufactured and distributed the products. It was an incredible business. It has an unparalleled brand. And I was able, through a common friend, to schedule a dinner with the CEO of the business. in Toronto. We really hit it off and he was amitable to a proposal from us. Then as we looked through the numbers, we needed financing, not just that financing, but to make the numbers work properly in the right risk adjusted basis, we needed a few billion of preferred equity. At that point, we had developed a good relationship with Warren Buffett. He was good friends with one of my co-founders, George Lemma, for many years, had teamed up with us on the Heinz deal that happened in 2013.

44:26And we were able to approach Warren, show him the deal. He liked the brand. He liked the Tim Hortons brand. He was very enthusiastic to participate financing. So we had all the financing lined up. And then the challenge really became one of reaching agreement with Tim Hortons, a process that took several months and back and forths of proposals. I think the first proposal that we sent them took six weeks to get a response with absolute radio silence. Respond had half a paragraph where it politely wished us luck, future endeavors. And then in each case, we presented a second proposal, which was responded in three hours with the exact same half paragraph letter.

45:11We later learned of the boardroom dynamics there where there were people in favor, people against. but ultimately were able to navigate that successfully to an announcement. I think we started in March and I think by late August, we were announcing a deal. It was quite an interesting thing because Tim Hortons in Canada is a gigantic thing. I don't know that there is a consumer brand in this country that has the same amount of equity and weight. So it was something you had to talk to the prime minister about. It had to undergo a government review process. and make a variety of commitments, it was quite the process.

45:49For context, this was at the time for us already a home run of a deal. We had returned 130 % of the capital. It was paying a nice dividend. I think it was 10-ish billion dollar companies. It was a home run in all respects. And again, I think it comes back to the long-term nature of how we operate. And even we said to ourselves at the time, most rational private equity firms would have sold. Versus relevering. And betting everything. Re-levering and re-betting, re-upping everything. I remember this is summer I'd called you. I was the CEO at the time. And I said to Alex, I really feel strongly we should bet the firm.

46:26We should bet the business on this. To Alex's credit, I mean, he believed in it. He was willing to make the bet on the team running the combined business at that point, which in hindsight, it's like, oh, it was really obvious that Tim Horton's EBITDA is now 80 % higher or whatever it is. And the cash flow doubled. We've expanded it globally. It was such a good business that even us and our team, we couldn't mess it up. When a company twice has said, no thanks, and they tell you next to nothing in a small paragraph, how do you take it from there to a few months later getting a deal done? So we found that we spoke to a lot, try to find channels into the board.

47:04And then, of course, through those channels, gain insight into what was going on to understand, And was this a unanimous, basically, no, where no and we never would do a deal and everybody agrees? Or is it something where there is some level of discussion and different views and it turned out to be the latter? And we felt that the business was good enough and that we had enough financial wherewithal to make a better offer that potentially would enable that side of the argument to prevail. and then we felt that there were concerns about us and about basically that Tim Hortons in the past had been sold by the founders to Wendy's.

47:58And from Tim Hortons' perspective, they didn't feel that this had been a great development for them. And they were able over time to be spun off of Wendy's and they were independent again. The resistance to the deal was a thought process of do we need to be owned by a U.S. burger chain again? And this burger chain sometimes could be maybe short term, maybe they won't focus on Team Hortons, maybe an afterthought. And we felt all the opposite of that. We felt it was a great business. We wanted to own it and develop long-term. We wanted to take it to the world. And we felt that we could help take Tim's Global.

48:34And so we felt that if we were granted the light of day in terms of going and talking to people at the board, that they would understand that. And hopefully that's what happened. And that helped the board then evolve from a little bit of a situation where this is diverging points of view to a more consensual position. It didn't help that in the summer of 2014. Right in the middle. Right in the middle of this. I'll never forget, I was traveling in India, touring restaurants, that Bloomberg Businessweek had been trying to write a story about us, about our management team at Burger King. It was very, very details.

49:11The title of the story was Burger King is run by children and deep dived into all of our ages and backgrounds. I was a CEO at the time for Josh Cobbs, our now CEO, was our CFO. He was 27. Our head of North America was 39. So it didn't help our cause. But I think, as Alex said, eventually when we all met and we talked to them about the plans that we had for the business and our global growth trajectory, not just for Burger King, but for Tim Hortons, it all worked out. Once you bought that brand, you have these two levers of driving efficiency and growth. How did you think about Tim Hortons? As is in the case with Burger King, there was initial opportunity to run the business more efficiently.

49:58Also, the combination of two distinct public entities always creates synergies. There were real synergies there. But ultimately, what's driven and what's driving the value is the global growth of Tim Hortons. And so now, throughout Europe, Latin America, Asia, you can go to a lot of countries that at the time of the acquisition, you couldn't have and have a cup of Tim's today. And speaking to the long-term nature of our plans and our ownership here, that'll continue to pay dividends and grow for decades. Also, there was a big opportunity on the Tim's business on a consumer CPG level. Tim's went from being at retail, other than the stores where we have a 75 % share of coffee out of home in Canada, but we were not the leading brand on home consumption.

50:47And so that was a big opportunity. Of course, it required agreement with the franchisees on how to go about that. But today, I mean, that business quadrupled in terms of a bit now or something over the years. And we are the number one brand in Canada. As you look at the real estate footprint as you're growing, you've got Burger King internationally, you now have Tim Hortons you're bringing out. Just thinking of the Yum! brands where they've put the Pizza Hut alongside their other brands. How did you think about the real estate footprint of these two? While there would be back-of-the-house synergies in terms of finance, procurement, supply chain, legal, we actually felt it was very important for the brands to maintain their own distinct brand identity and brand management.

51:33Part of that is real estate development and marketing. I think it's very important that each of these brands has their separate management, separate go-to-market. It'd be seen differently in the eyes of the consumers. So once you have these two and you've got them humming the way you want, you continue growth. How do you think about continuing to expand from there? So a couple of years later, I'd say like second half of 2016, we began studying. Well, unless you delivered something. We were delivering and we began studying some of the other categories. And at that point, We were in coffee, in burgers.

52:16One of the fastest growing categories, both in the U.S. and globally is chicken. And we felt that we ought to have a presence in chicken. We identified Popeyes as a natural potential addition to the portfolio. And we did quite a bit of work on that business, understanding it, understanding its growth potential. It would be a very different transaction than Burger King and Tim's because it was much smaller. I think at that point, we're north of a$25,$30 billion company. This was going to be a sub$2 billion acquisition. And I think we felt that there would be a lot of growth potential, both in terms of expanding the unit base domestically and globally.

53:02Look at it backwards now, seven years of ownership, and it's a great case in point to illustrate that the system in play. So you initially had a significant gain in EBITDA by virtue of the back-end synergies. Popeyes was, if you would, a subscale public company. So there were a lot of costs that could come out by virtue of being a part of Restaurant Brands International. Maybe just to double click on that, it's 18 times acquisition, buys down to about 12 times. Yeah. Rough math. Just by virtue of doing that. Then you fast forward to today, own a company three times as big in sales than what we bought.

53:40And again, a function of fast international and domestic expansion or restaurant count and basically launching a boneless product, which is a chicken sandwich. The restaurant counts up 70%, AUVs up 30%. You mentioned that the franchise business at the original Burger King you earned was even better than you thought. After doing this now the third time, what is it that makes it such a special business? The franchise business basically is a business where you partner with people that put their own capital and they're entrepreneurs. They're excellent operators in their parts of the world. They have the ability to identify real estate.

54:26They have the ability to attract and train good managers. And then you bring a brand that has great awareness, great preference to the table. and that really enables them to win in such a way that from your standpoint, your P &L is mostly comprised of royalties and franchise fees. So it's very, very capital efficient and has a lot of room for it to naturally grow as long as you don't lose the focus that your business is to make sure that these franchisees make money. That is your business and that they have great returns on capital. So you have to always keep line of sight that that's the goal of the business.

55:05So the other aspect of that is now doing this the third time. It sounds like it works beautifully, but there's always bumps in the road. So what were some of the things you learned from going through it, either at Burger King or then at Tim Hortons and now Popeyes, that you got more efficient that over time? One of the most important avenues for us is making sure that we buy one of these businesses or when we own one of these businesses, that we have great partners developing the brand in their home markets, that they're well-capitalized, great local partners with incredibly strong unit economics.

55:45And naturally, you're not going to have 100 % success or you're going to have bumps along the road. And I think with us, it's always learning from the mistakes that you make along the way with certain partners, making sure you have the right local partner that's well capitalized with the right operating capabilities. Maybe in the early days with certain brands, maybe we went to a country too soon or too quickly, or we picked a partner who had a lot on his or her plate with other businesses or other brands. And I think in any one of those factors can play in, that's when you don't grow as quickly as you can.

56:22It sounds pretty simple, but just making sure that we are delivering a great brand with great unit economics to a partner that is ready to be successful in that market. That's when the magic happens. In the case of India, for instance, we didn't rush in. We jointly developed a localized menu with our partner, I think over the course of a year before we opened our first restaurant. And so making sure you take all the steps necessary, both on the company's side and the franchisee's side to ensure success is probably one of the most important things we can do. I want you to have Popeyes coming. This playbook now is so obvious to just rinse and repeat.

57:04So where did you step in after that? The latest acquisition that we did was a company called Firehouse Subs. This is in the end of 2021. And so that's the fourth leg. We think about that. It's a large category, the subs category, and there are several smaller brands, Firehouse being one of them, that are growing at really, really attractive rates of return. We have an incredible product. The brand stands for something that is incredibly important in the communities in which it operates in terms of giving back. and we see room to grow this business domestically and globally for decades. I think we opened up the first international restaurant.

57:49It was under our ownership in Switzerland and we have ambitions to bring that all around the world. And there's an example of a large sub company that has quite a big global presence. And we think that there's plenty of room to have many, many more firehouse subs. So as you look at all of this today, what are the quantitative metrics of the number of stores or franchises across the brands that are part of RBI. We have 30 ,000 restaurants, north of 40 billion in sales, 50 billion plus or minus total enterprise value. The company recently had put out that it hopes to go to 60 billion in the next five or so years.

58:26We became a real big business. You're 14 years in. Do you start to think about an exit or is this something you're planning to own for another 21 years? We love the business. We, I think, at the moment are so excited, first of all, with the team that we have in place. We have this combination of talent that grew up in the business. We have had the fortune of, finally, because we had conversations with our common friend, Patrick Doyle, for quite some time. Patrick really hit it out of the park in his tenure at Domino's. It's a landmark in this industry, and we're so fortunate to have him as our partner.

59:05and the combination of Patrick and the young team that we have there that came up through the business. I think we feel very, very good about people first. We feel very, very good about the continuation of the opportunity to open restaurants around the world and to grow same store sales in all four brands still. So as a combination of those two things, I think this is as the company has publicly guided. It can grow high single digit same system wide sales for a long time. And the cash conversion of that, given the nature of the fully franchised business, is one in which the company pays a lot of dividends today, by the way.

59:47We receive two thirds of our notional equity check a year. So it's very cash flowing and has a great compounding line of sight ahead of us. Great team. So we're super excited to owned it for many years. How do you think about the competition for your own capital between keeping it in a business that doing nicely and you see a lot of visibility compared to the kind of inflection you've been able to create in a new business? We think that between the liquidity that we have from these different investments over the years, we do have the capital every several years to try to start a new one of these.

1:00:26We're very excited about Hunter Douglas that we started two years ago in partnership with the Sonnenberg family. We think we can do both as long as we don't get out of the discipline of only starting a new thing every several years when we have people and when we have time to focus and so on. Yeah, how often do you get to be a part of a great business led by a great team of people who you've worked with for a long time and have developed trust and respect for over their successful tenure in the business. We had Patrick and Josh and the folks involved there. And so we're excited about the long-term outlook for the business.

1:01:08Alex, you mentioned just a tiny bit at the beginning that you do have another vehicle that you're looking at buying another business. Where are you in that process? I don't know that we at the moment have anything where we are really, really ready to pull the trigger on. I mean, we do have some pretty interesting proprietary situations in which we have been able to get close and get engaged and do work on, although there's nothing that's really mature to pull the trigger on. I'm trying to find the next Burger King, Ted. How do you think about what industries you'd be interested in looking at? Maybe a way to answer that is what industries would we not want to look at?

1:01:59We want to own a fundamentally good, but somewhat reasonably easy to understand business. And so you could think about what that knocks out. And ideally, a business that has a good moat, a long operating history. It's not likely to be disrupted or disintermediated anytime remotely soon. And ideally businesses that aren't overly cyclical. So it's not like we're working so hard to run the business better and we just get the cycle wrong in place for too long. And those are some of the criteria that we look at. And maybe that's why we ended up owning some of these consumer businesses in the past, because they fall into that bucket of somewhat easy to understand, and been around for a long time, most likely not going to get disintermediated or disrupted.

1:02:51Try not to overcomplicate things on our end. Incidentally, that's one of the things that's so great about this fully franchised quick service restaurant businesses, which is they're really not cyclical at all. Meaning on downturns, people trade down, look at what happened to the EBITDA of McDonald's or Burger King or Domino's or all these brands in the great financial crisis. and the answer is not much in most cases it grew so they're very resilient in that way which is a very positive trait of this kind of business what have been your biggest lessons learned from this deal over this 14-year run for me it was my first deal it was my first time running a company and i'll apologize in advance for my lesson not seeming overly insightful but frankly it was just the importance of having a great team, which again, as the 29 year old who was doing the analysis on the deal after we bought the business and Alex came to me and said, we need to assemble the team.

1:03:56Just understanding the overall importance on having A++ people involved in the organization who are fully committed to making it a world-class success until you're part of it. I fully appreciate how important it was to have an incredibly talented team running the business. Everything that has happened that has enabled us 28 times return on our notional capital in this time frame and how much more we expect to achieve with this business. So much of it has to do also with having entered a high quality, great business. There is no substitute for that, particularly if you're going to hold it for a long, long multi-decade period.

1:04:39It needs to be a good business. I don't know that we are one of these people like a Steve Jobs or someone that's really, really smart and a genius that will be able to convert our so-so or a bad business into a great business. So we need to find great businesses. And sometimes the greatness will be obfuscated by everything that's going on short term and the noise associated with those things going on short term. The fact that the business is a great business is no small part of what happened here. What's both your favorite aspect of doing deals and investing? We're not a conventional investment firm.

1:05:15My favorite aspect really centers around the people. I had this opportunity to go initially as CFO and then became CEO and ran the company, both from the financial side and CEO side for nearly a decade. My favorite part of the whole process was getting to recruit, develop, train some incredibly talented, special people who are now today running the organization. It's extremely fulfilling. The people cycle from hire to train, to grow, to lead, to be able to be part of this and part of someone else's success, it's extremely fulfilling. And so for me, that's been far and away, no close second, the most fun part of the job.

1:06:04For me, really is creating 3G capital is probably the most important thing I've been able to get involved in, in my career. And I would love this to perpetuate the firm. And I think that my co-founders have been a great inspiration that way their whole lives and careers in giving people opportunity, allowing them to chart their own path, allowing them to have the results and benefits and the wealth creation associated with creating their own path. And I would love that to continue here at 3G Capital. Well, I'd love to ask you both a couple of fun closing questions. What is your favorite hobby or activity outside of work and family?

1:06:48Alex, why don't you go first? I love spearfishing, which is some combination of fishing and freediving. And probably contrary to what we do here, it's probably the most inefficient way of fishing. But it's a lot of fun. You go to nice places. So I spend a lot of time doing that. outside of work and family exercise and probably in order of most frequent, but least enjoy. I'd say I run, play tennis and play basketball in that frequency. And my enjoyment is probably the inverse. Daniel, what's one fact that you find interesting that most people don't know about you? I'd say I'm definitely more introvert than extrovert, which probably isn't so common for former public company CEOs.

1:07:42Alex? I recently got quite involved with philanthropy. It's recent, very few people know about it. Our foundation has only three years. My wife's very involved with me. We were lucky to recruit this gentleman that was an MBA at Stanford, went down to Brazil. It's basically education for young people and mostly digital education, meaning programming, computer engineering, all the way from basic programming to college to master's to PhD programs. I have about 100 scholars now. It's small, but we have big dreams for it. And it's a lot of fun. Hopefully, in time, you'll become better known. What's your biggest pet peeve?

1:08:24I'd say one of the things that probably bothers me is if people aren't working at 110 % or giving something their all. We never really cared if we're the smartest people. I've always at least wanted people who are working at 100 % and giving the project their everything. Being short of that, that always bothered me. Daniel, which two people have had the biggest impact on your professional life? Well, number one, Alex. He gave me a shot at something way, way earlier than I probably deserved. Certainly at a time maybe when others wouldn't give me a shot. And then our three co-founders as well. Alex.

1:09:03Look, my three co-founders, I mean, had a huge impact in my life as well. They found me in this MBA program, our alma mater, and took big bets on me. One of them, particularly, this guy took huge bets on me on the railroad and really believed in me and became a close personal friend. And Marcel, Georgia, they really took huge bets here when it came to build through G Capital. And I'm forever grateful for that. Alex, what's the best advice you ever received? When you get into a new situation or a new business, try to find good common sense things to do and don't make huge business decisions about strategic things before you take the time to understand the business.

1:09:56Well, I think to an extent we apply that at Burger King, and I think it's something that really prevents big mistakes. And usually by focusing on the common sense, things that are opportunities to be harvested while you're learning about the business. Someone once told me, work really hard to put yourself in a position to get lucky. There's a little bit of luck involved in everything, but you up your odds, you up your chances through your controllable lever of hard work. All right, guys, last one. What life lesson have you learned that you wish you knew a lot earlier in life? Daniel, why don't you go ahead?

1:10:33Don't be afraid to make a big bet on someone if you really believe in that person. Even if maybe that person isn't 100 % ready at the time, don't be afraid, make the bet. Alex? Yeah, something that I've come to appreciate in this stage of my career I'm at now is to focus your time on the things that make the most difference. because the amount of noise in your day-to-day, be it on your personal life at times, be it at your work, is high. Alex, Daniel, thanks so much for sharing this incredible story about 3G and Burger King. Thank you for having us. Thanks for having us, Ted. Thanks for listening to the show.

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