Two Warlord Entrepreneurs and One Executive
Breaking bread at the estuary of licit and illicit business
Men and women who knowingly break the law to seek their version of dignified work are what I call criminal entrepreneurs. They don’t see their actions as illegal. Just necessary. Some survive in this life long enough to grow in affiliation and operation with known criminal brands. Those criminal entrepreneurs who live this life long enough become warlords. They are the titans of Latin America’s black markets.
You know some of these titans by name. They are vilified and glorified in music, art and film. You can binge watch a dramatized version of some of their lives – look at Netflix’s latest, Griselda.
But you’ll never know or hear about most of them because they hide in plain sight and operate quietly, mostly. They also operate among the men and women who endeavor to build sustainable businesses in Latin America. Over the past twenty years I have had the privilege and pleasure of working with some of these men and women as a trusted advisor.
“We’ve got to cut a deal with this guy or there will be no project,” an executive heavily leveraged in one of Latin America’s most colorful, violent, and investment friendly countries shared on a recent advisory call with me. He was referring to the second of two criminal warlords he had to manage to ensure the success of the two eleven-figure business operations under his purview. Hundreds of millions of dollars had been invested; not much had yet been returned. Stakes were high.
We had helped him get his footing with his first warlord entrepreneur, who was an old dog learning new tricks. Now it was time to focus on the second, a young, brash and altogether different breed.
At that moment, however, we wrestled with an existential decision: either abandon a multi-million dollar project or cut a deal with a wanted criminal.
There is not a significant business operator in Latin America who hasn’t dealt with some level of criminality or corruption, known and unknown. This is a “when.” Not an “if.” Mexico, Central America, and South America all present enormous opportunity for investment. They also force one to face different types of corruption and criminality. The successful executive in Latin America – foreign or not – understands this truth and faces the challenge. Preventively, ideally. But normally, reactively. Either way, one simply cannot ignore the problem and hope it goes away. It never goes away.
Here’s the other side of it: responsibly managed business operations – especially those endeavors that exist far from urban economic engines – have tremendous potential for positive impact on local economies. As a business operation matures and grows into profitability, the mine, the plantation, and the factory all become major drivers for employment, for healthcare and education, and well being. Profit aside, the upside for significant and sustainable positive impact in the lives of thousands of families is always a heavily-weighted portion of the risk calculation.
Here’s another risk: successful businesses become political actors. It’s simple. Creating jobs is political; the success attracts interest from all aspects of political, social, and criminal communities. The expat executive in Latin America must learn to manage all of these variables to thrive.
A budding warlord entrepreneur with a long rap sheet and established history of violence was the man we discussed that day on the phone. His history, the story of an encounter, and sound boarding scenarios were the content of that day’s session.
For months we had known that the operational footprint for the executive’s project overlapped with criminally controlled turf. But the community relations team, in place to get the operation going prior to breaking ground on the new facility, had played it cool and kept their heads down. There was a sort of unspoken understanding among employees that they would wait for the other side to make the first move. And they did. It felt like a scene from a movie – a modern day Western.
Here’s the scene: picture cobblestone streets and a historic plaza, anchored by the steeple of the local Catholic parish. Aged trees line the plaza. Hues of green and soft browns color the rounded mountain tops and ridges in the backdrop. In the foreground, a donkey pulls an ancient cart driven by a man in boots, breeches, an old fast fashion button down, beard and brimmed hat. He’s hunched forward, not looking around, clicking his tongue at the mule as he passes a row of parked trucks.
Each truck is pockmarked with rust, dents, and character. Bald tires. Latino patina but not trying to be. Just is.
If you sit at a street side table in front of a nearby cafe long enough, you’ll hear children laughing. Someone playing music somewhere. Distant conversation among women discussing a friend. And not much else. It’s a sleepy mountain town run by a young mayor who is just as much a caretaker of local government interests as she is an extension of the criminal underworld that runs the town. And the foreign business operation is on the other side of the nearest ridge, less than 30 minutes away up and back down a winding dirt road.
The mayor, and her public security guy, ran the town. Over a series of meetings, our executive had developed a relationship with the mayor. He had brought the leader of the local community relations team. She had brought her public security guy. He was there to listen for the young warlord entrepreneur. After a few meetings, the mayor agreed to meet with the entire community relations team. The executive decided he didn’t need to be there. This is when it happened.
The meeting location was changed last minute, from a meeting space in town to a secluded restaurant up on a ridge overlooking the town. One way in, one way out. Once everyone was seated, a small caravan of trucks full of armed men arrived – fashionably late. No one spoke or even moved as the armed group filed into the restaurant. The young warlord entrepreneur’s people had arrived, unannounced to the communications team. They would have their say and move on. The spokesman for the grisly group took a seat at the table and calmly presented his boss’ opinion, and demands.
They expected answers – and acquiescence – within the fortnight. We had less than two weeks to get organized and make a plan by the time I took a call from our executive to learn about this encounter. He was staring at a tough decision. Deal with the local warlord, or build somewhere else. But we knew that he’d already cut a deal with one warlord entrepreneur. And it worked. Maybe he could do it again. Maybe.
But our executive didn’t care much for politics. This young warlord probably didn’t either. One had a project to build and a bad guy to manage. The other had a foreign company to extort and a gringo to manage, or so we thought.
When one is negotiating with a team that does not play by the rule of law, economics is the only incentive. But first, you need to figure out if your warlord is crazy or not. Literally. Rational or not. If rational, proceed. If not, run.
Our executive reflected on how he had managed his first warlord. It was mostly with time and wine. Build relational equity slowly. Spend on trust dividends, not deficit. He and two of his direct reports had routinely broken bread with the warlord’s black market operators. They were always dressed as successful politicians, lawyers and businessmen. These entrepreneurs had formed a consortium to manage their interests. They were de facto in business with one another and had formed a symbiotic relationship among one another, led by the warlord. And as a single unit, they did business with our executive through the warlord. Confidence between the two groups grew over long nights and bottles of fermented Spanish grapes.
One time, at a BBQ dinner hosted by one of the local criminal bosses – after the most recent round of elections – a newly elected mayor never had a chance to sit down. He was too busy serving drinks to the men seated around the table, including our executive.
Tearing a sheet out of that playbook, however, was a bit tricky. The first criminal boss was an old school operator. He was profit driven and held absolute power within the local context. The second warlord was still a wild card and was fighting hard to assert his dominance over the broader area surrounding the town and the nascent business operation. Monopoly on the lethal use of force is hard won.
Our executive left the advisory call with a resolute tone and commitment, “well, I guess we’ll just have to sit down with this guy and figure out what he wants.” But first things first. “We gotta figure out if this guy is a psychopath or a rational economic actor.”
Criminal entrepreneurs who live the longest in Latin America’s black market underworld are rational economic actors. They leverage grit, ruthlessness and Fortune 500-CEO level leadership to build global organizations. Men and women knocked off the board almost as soon as they get started are not rational or organized. They’re just more violent and street smart than the last guy they killed.
Determining one from the other is part art, part psychology, part timing, and all driven by economic need. Latin America is a wonderfully complex human terrain. It makes for an enormously challenging and exciting region.
My advisory clients are some of the most successful business operators in Latin America. For close to 20 years now, a large portion of my career has been shaped by helping them understand how to navigate high stakes business decisions with some of the most ruthless, rational economic actors this region has to offer.
Some of them are warlord entrepreneurs.
Let’s discuss conducting Key note at our annual BOD training in August….Best Mark
Brilliant write up. Great read. Just how widespread is this? What is the economic size? Does this tend to happen more in rural or urban areas? Particular types of businesses?