The Israeli Who Built a $9 Billion Empire in the Jungles of Brazil

Amos Genish is today the manager of a giant, with 18,000 employees, annual turnover of $2.5 billion, deployed in 156 cities across Brazil.

Leo Feltan

In late 2009, history was made in the Israeli high-tech industry: the Israeli company GVT, which operates in Brazil, was sold to the French company Vivendi according to a company value of $4.5 billion. The credit for the deal was attributed to the company’s founder and chairman, Shaul Shani, who made $1.2 billion. Silent in the sidelines: the company’s CEO: Amos Genish.

Five years later Vivendi sold GVT onwards to the Spanish phone company Telefonica at double the price - according to a company value of $9.4 billion. Genish , who’d been cultivating the company from the egg, is today the manager of a giant, with 18,000 employees, annual turnover of $2.5 billion, deployed in 156 cities across Brazil.

“Exits always bring a sense of relief,” says Genish in a telephone interview from Brazil , his first to the Israeli press . “When you’re the CEO, you feel a tremendous obligation to shareholders. It’s like you have two tons of weight on your shoulders – showing shareholders, who believe in you and put money in you, how great things will be in a couple of years, though everyone knows things don’t always work out in real life.” On the other hand it’s immensely gratifying to be able to show returns to the company’s owners, he adds.

His worst time as CEO of GVT was right at the start. In September 1999, the company won a tender to build telephone and broadband infrastructure in 24 cities in Brazil – by year-end 2000. “At the start of the year we had just a few dozen employees. By its end we had 800,” he recalls. “We needed to recruit people with local knowledge, get permits from local governments to bury cables, and create a marketing system, including television campaigns. It was a military operation in every way and that’s how we ran it.”

The challenges ahead were to be of a different kind. “At some point the question was how to build a proper management culture,” he says. “This is a company that evolved from a pinpoint to a vast scale. Within two or three years we had thousands of employees in numerous cities. We had to create a uniform, correct management culture that would suit very tight financial discipline as well as our thinking in respect to innovation, with quality customer service and other things.”

Reuters

Suit and a tie

He wanted to introduce a casualness to the company. “At first everybody would come to work wearing suit and tie, because that’s how it’s done in Brazil,” says Genish. “We had to break that, to achieve a relatively open atmosphere with jeans and t-shirts; to kill the rather bureaucratic mindset among the workers. We wanted everyone in the organization, no matter how junior, to be able to speak up at meetings without fearing retribution. Today the company is recognized in Brazil as one with a completely different business model and cultural model. The workers come with jeans and t-shirts. I wear a suit and tie from time to time, when there’s no choice, but wear jeans to the office.”

He won’t say how much he made on his two exits but is believed to be worth between $50 million to $100 million, by virtue of stock options and bonuses.

Genish is known and respected in the local Brazilian media. The gossip columns, for instance, ran pictures from his second wedding a year ago with a Jewish-Brazilian lawyer 23 years younger than him. (They have a year-old daughter). He’s always written about as “the Israeli manager” and one paper even referred to him as a “former captain in the Israeli army.” Genish is popular and not only because Brazilians like Israel; mainly its because of the technology.

“On the other hand, over the years I became assimilated. It’s also a matter of language. I now speak fluent Portuguese. The moment I decided to learn the language, you could say I became kind of local.” He didn’t just want to chat about the weather: He wanted to learn Portuguese at the level that he could conduct complex business negotiations, make presentations and talk with the workers and management. It took some years but paid off, he says.

Genish , 53 , grew up with 11 brothers in a hardscrabble neighborhood in Netanya. The family lived in a tiny apartment, four to a room. He didn’t have a bed of his own, he says.

His abilities were recognized at age 14, and he was singled out to study at the prestigious Himmelfarb school in Jerusalem. He served in an artillery captain during the First Lebanon War: Even his choice to join a combat unit was related to his origins, he says. “It was clear to me that in order to succeed later on, I had to be an officer in a combat unit. That’s how Israeli society works.”

After the army he moved to Tel Aviv and studied economics and accounting at university. Later he worked at the accounting firm of Somekh-Chaikin, then as a vice president at Edunetics, which sold educational software.

Move to Washington

In 1992, as the company geared up to float on Nasdaq, he and family moved to Washington. As the company’s chief financial officer he was involved in its issue on Wall Street. Later, when the CEO left, he took over. He returned to Israel in 1997 after Edunetics was sold.

Just two years later, he found himself back in the land of opportunity because of a Jewish entrepreneur named Joshua Levinberg, among the founders of Gilat Satellite.

Levinberg and Genish had met back in Washington. Their kids went to the same school. When Levinberg learned that Genish had returned to Israel, he called. That was in 1997 when, research showed, 3 billion people around the world had no access to telecommunications.

“We met for coffee and Joshua told me about his idea to found a company called Global Village Telecom – GVT. The idea was to build a satellite-based phone network for remote places in South America,” Genish says.

Investors put up $50 million and the company hit the road. High-tech entrepreneur Shaul Shani, who led the investment group, became company CEO and Genish served as CFO.

During its first two years the company operated in the jungles of Peru, Colombia and Chile. Even now, Genish isn’t past the excitement of the early days. “They were amazing experiences,” he says , “I remember that in the first village we have hooked up in Chile, the first call came from a woman who hadn’t spoken with her sister in 20 years. Their only contact was mail.” The phone was connected to a speaker so everyone could hear. “People were tears. The villages were so remote that even the government didn’t know their names, just their coordinates on the map.”

Undaunted, the company installed its systems in the most difficult places. “In Colombia, for example, there were areas controlled by guerrillas with whom our people had to negotiate, to make sure they could get in.”

In 1999, a business opportunity surfaced in Brazil. The government privatized the telecom company, selling it in four chunks: one for each of the south, center and north and one for calls outside the country. To encourage competition, the government granted licenses to four other companies to compete with the four privatized ones.

‘Great euphoria’

A Brazilian partner suggested that GVT contend for the southern company. He pulled out of the race in the middle, but the Israelis – though short on funds – slogged on. They were taking a huge risk: they had undertaken to build infrastructure costing $650 million to $700 million within a short time and didn’t have the wherewithal. They won.

“It was a time of great euphoria, the peak of the Internet bubble and Nasdaq,” Genish reminisces. Foreign investment started to pour into Brazil and we realized we could tap that source too. We managed to raise $300 million from various investors. We received $400 million worth of equipment from big suppliers.” That was essentially a loan that needed repaying: That’s how things were done then.

In 2002, though, the company found itself in crisis and almost collapsed. The Nasdaq bubble burst and the Brazilian currency, the real, did too, suffering a devaluation of 100%. But the company’s debts to suppliers were denominated in dollars.

After much negotiating with creditors, its debts were rescheduled. Shaul Shani proved to be a gutsy entrepreneur capable of making courageous decisions, says Genish, though he calculated his risks. The company had a rough couple of years but weathered the storm.

Other telecom companies preferred to abandon Brazil – Sprint, ITT, France Telecom and others. “Each had come from its own country as a telecom company with its own rules. We, on the other hand, had no prior experience,” says Genish, explaining why GVT stayed when the others left. “That enabled us to see things from a slightly different perspective, not rigidly. Aside from which, as a small company, we had a lot to lose. The big boys didn’t care if they have to close down activity and lose one or two billion dollars. For us, closing down would have been a hard blow. So we fought, by all means, to survive.”

In 2007, the crisis over, the company floated on the Brazilian stock exchange and raised $500 million. “That was a turning point,” says Genish. The company used the money to reach new areas in Brazil’s center and north.

After the exit in 2009, he had to get used to the new owners, Genish says. With Shaul, decision-making had been simple and easy: “You talk with him and move on. We trusted each other absolutely. It was interesting, fast, really fun. With a holding company like Vivendi, it’s completely different. You work with professional managers, not the founder. The decision-making process is much slower, orderly, with a lot of meetings in Paris or Brazil. There are also a lot of middle men who don’t necessarily add value.”