Days of conglomerates are over; only focus works?

Every generation needs a revolution - an entrepreneurial revolution

In the 70s and 80s, conglomerates were the in thing.    Harold Geneen and Jack Welch excelled in this by the sheer power of their intellect energy and passion.  The thing is when they were gone, the conglomerates fells by the wayside and collapsed.

These though still followed Welch to be number 1 or No 2 in their market.  Niching was very important.

ITT spun off? What ever remained of it?   How about GE of Welch

The winners are Apple Microsoft, JP Morgan

Only focused business grew and even then it was not enough.  Some are still collapsing as in food business. 

San Miguel would still be a big conglomerate:    food, beverage, alcohol,  infrastructure. energy

Summit:  publication, real estate, airlines, food production, petrochem, power gen

LT - airlines, real estate, tobacco, liquor

Ayala - banking real estate, water (divested) electronics and telecon

Lopez -  broadcasting, energy (divested from DUI)

MVP -  only in telecoms and infrastructure

Conglomerates can only succeed if they have excellent CEO

Berkshire (W. Buffet) succeeded because he focused on stock picking and studying companies.  He did not run companies.  He let their managers do their thing

Toyota focusses on ICE cars.  and quality.  No 1 in car manufacturing for several years.  

Creating opportunities and wealth from what one has

Every generation needs a revolution - an entrepreneurial revolution

Rizal Philippines
August 16, 2016

Today I brainstormed with a lady Chairman of a group of companies and former CEO of a huge financing company, chemical company that supplied all the chemical needs of the detergent FMCG in the country. She is 55, he is 73 but still very creative and innovative.

He invited me to be executive director of the group who will form a holding company:

The holding company will gather capital and invest 50%-50% in the following ventures:

            1. Bank (the rural bank which we are working on now)

            2,  Real Estate (horizontal and vertical)

            3. Schools

            4. Health Care (nursing and hospitals

            5. Energy (solar)

            6  Telecom  (e Pole)   from Enersphere  designed to solve telecom congestion, dropped calls and slow internet speed

The various groups will have their own CEO and be profit center, and funds will be raised through ordinary subscriptions and even IPO.  This calls for a hard driving CEO who will kick ass. The elderly CEO thinks I am talented enough to run this complexity and kick ass (or more mildly nudge

This will be a conglomerate approach just like MVP group (energy, telecom/utilities), Aboitiz (power and banking or San Miguel (food energy, and construction) or Phinma which is into schools, real estate and energy (divested from  cement and construction/technology

How will I be compensated, do I have time for this.?  Initially once a week and as a consultant. Or be fee based on projects.  He likes my approach as an academician businessman which is methodical, organized and scientific

 The businesses we talk about amount to:

1.  School   -   100,000,000 million

2.  Solar manufacturing -   100,000,000 million

3.  Bank                         -   100,000,000 million

4.  Real estate               -    400,000,000 million raw land value

We now have a asset for stock swap capitalization for the holding company:  200,000,000 million (conservative appraisal) consisting of 24 hectares of prime land (along the highway) near the Philippine Sports Arena.    Earlier, raising capital for holding company was problem, today, we have a solution

Wow.  Just brainstorming and manipulating the assets and applying innovation can create more wealth and opportunities for many people

Opportunities abound even for a senior businessman/lecturer

Every generation needs a revolution - an entrepreneurial revolution

Rizal Philippines
August 11, 2016

Three weeks ago, I was informed by a secretary of the GS that being 65:   I would not be renewed anymore for teaching load nor attend final defense of students.   It could be the occasion to be sad and start feeling useless.  The teaching job was a no money issue but simply that was love of leaving a legacy

However many things came out and they were opportunities, far better than teaching:

1.  Invitation to be director of a just bought rural bank.  It fits my background well because I worked in a rural bank, I put up a savings and loan association which was successful, it was bought by a govt agency.  I also established 2 financing companies and a lending investor.  I am now helping firm clarify its goals and objectives (write a business plan)

2. The owner of the said RB also invited me to help her develop her properties into subdivision and memorial park.  I had extensive experience in both.

3. Invitation from a member of the board to be their consultant, investor in the business he is organizing:

     1.  manufacturing of solar panels  (RE which includes solar is an advocacy.  I researched hard on solar financing, and this is serendipity.)

     2.  telecom, a solution to the slow internet in the Philippines  (its an advocacy too)

     3.  health care  (my teaching stint for MBAH served me well

Let me quote a portion of his email:

Jorge, I welcome your joining our organization because I feel that there is a lot that you can contribute not only in banking but the other business ventures that we are pursuing. We have for example the Solar Power company. This company I think will do so well that by the second hear I will do a back door listing which will create a value that is 1000% of our investment.

Aside from this I am pursuing a business opportunity  in the telecom industry which is going to be a game changer. I will give you more details once I close the deal. Suffice to say that it will be a partnership with Bill Wrigley whose family once owned Wrigley chewing gum but sold to the  Mars family  a few years ago for $22B. He is considered the 4oth richest man in America and I am meeting with him in Chicago on Sept 15.

He is now getting into the telecom business with a new product which they want to bring into the Philippines. What he has is capable to providing  wifi in the entire country and will also be able to enhance cellphone quality and coverage. No more drop calls. No more slow internet, plus the entire country will have a CCTV in every street where there is an electric pole. Its very exciting and I pray that I can introduce it into this country in partnership with Bill Wrigley.

So I hope that you can join us and together help me build a conglomerate that I once had. Unfortunately the conflict that I had with the family destroyed what we had successfully built over a 45 year period. This time it will not be the case.