A Conversation with Nicolas Tamari

I interviewed Nicolas, the CEO of Sucafina, one of the world’s leading coffee trading and roasting companies, for my book on coffee. The interview focused on the coffee business, and we didn’t discuss leadership and the role of a CEO. I contacted Nicolas for this book, and he agreed to contribute. We met at his offices in Geneva, where the building was being renovated, and I ended up on the wrong floor. We eventually found each other and chatted in the company’s kitchen. I asked him how he defined leadership.

“I define leadership as being able to do three things simultaneously,” he answered. “The first is to inspire people. The second is to manage people. The third is to contribute to the bottom line of the company. Vision is also crucial. A leader must define a clear vision and ensure everybody sticks to it.

“Culture, values, and vision make a company, but I would also add purpose. Our purpose at Sucafina is to create opportunities to improve lives. We deal with hundreds of thousands of growers worldwide; we can help improve their lives. It is what links everyone.”

While interviewing people for this book, I often stumbled over the expression, ‘Culture eats strategy for breakfast.’ I was initially confused by what it meant and then sceptical about whether it was true.

“Culture must be in people’s DNA,” Nicolas told me. “At Sucafina, we hire for values and train for skills. If you hire people who share the same values as you and buy into your culture, you can train them to be the best risk manager, IT person, HR person, or whatever. It’s difficult if you don’t have a commonality in the DNA of the culture and the values.”

Sucafina employs 42 nationalities in 49 locations in 36 countries. I was impressed that a CEO could impose, develop, or nourish a common culture across diverse cultures.

“To make a good cup of coffee,” he explained, “You need a blend of different origins, often from various continents. We are lucky at Sucafina to have this diversity; it is one of our strengths.

“We give everyone the freedom to speak to everyone. By sharing best practices, we learn from one another and improve. That’s one crucial thing. Second, we try to adapt to the local communities, mindset, and culture. We are a global company that acts locally. We try to empower local teams while maintaining a common message at the corporate level.”

“How would you define Sucafina’s culture?” I asked.

“In one sentence?” he replied. “I would say it’s what you see is what you get.”

Nicolas took over the responsibility for the company from his brother, who took it over from their father. He told me that his brother and father have a similar leadership style but are more hands-on than he is. He prefers a more delegating type of leadership, but what they do have in common is that they all walk the talk and lead by example.

I was interested in discussing the advantages a family firm might have in the trading world, but I was keen to talk further about leadership. Sucafina has the Sparks program to teach leadership, but I wanted to ask how successful it is. At school, I remember some kids were natural leaders, whether in sports or arts, and others followed them. Before meeting Nicolas, I discussed the issue with a friend, the retired CEO of a pharma company. He firmly believed that leaders are born, not made. What did Nicolas think?

“Some people are born leaders,” he told me. “Others are groomed to become leaders. However, to become a leader, you must have the ingredients of your personality, upbringing, and self-confidence.

“Sucafina’s Sparks program teaches leadership,” he explained. “It is a three-year course. Each year, we have between one and ten participants. So, on average, let’s call it six. As we have three years going on simultaneously, it’s 18 people. Up to now, I guess over 50 people have graduated.

“It is expensive but well worth the investment. In our industry, grooming people from inside the company rather than headhunting them from the outside is essential. By doing so, they truly live the company’s vision, purpose, and culture.”

Sucafina’s website highlights some of the women who have recently completed the Sparks programme. I was curious to learn what Sucafina was doing to promote gender equality.

“Historically,” Nicolas told me, “There have always been more men than women working in our industry, especially on trading desks. I have not yet been able to understand why. On the other hand, there are often more women than men in execution and operations and different departments such as HR or Communications.

“We want a mix of men and women,” he continued. “But we’re a meritocracy-based company. I do not want quotas for men or women. I want the most apt person to get the job. But yes, we want to promote women because we believe there are a lot of amazingly talented ladies out there who can grow and take on more responsibilities.

“For example, in East Africa, if we want something to happen on the ground with local communities, we empower women, and it’s often a big success. When we empower men, I cannot say the same thing. So, we want to empower more women.”

I asked, “Are there specific leadership challenges in trading companies compared to service, manufacturing, or industrial companies?”

“Humility as a leader of a commodity trading company is crucial,” he answered. “That’s one key difference. The second one is that in a commodity trading company, you start afresh each financial year and have your overheads to cover. Trading companies don’t have a recurrent built-in revenue to cover expenses, which you often find in a service industry like banking.”

Some trading companies have bought industrial assets to even out volatile earnings. I asked Nicolas if he had done the same.

“To reply to your question,” he replied, “I’ll go to our company vision, which is to be the world’s leading sustainable farm-to-roaster coffee company. We want to start at the farm, but we’re not farmers. We’re happy to be roasters but not brand owners.

“About ten years ago, we acquired Beyers Coffee, the largest roaster in Belgium. We also have an instant coffee business. Bayers and our instant coffee business are strategic as we can vertically integrate the supply chain. We will not be brand owners; otherwise, we will have conflicts of interest.

“These industrial assets also give us more predictability in our revenue. They indirectly help us by levelling our revenue and having a recurrent built-in margin.”

“Which is better, growth through acquisitions or internal growth?” I asked.

“Initially, I would say organic growth, but sometimes opportunities arise when you don’t expect them, and that’s where you need to acquire. Culture is critical when you acquire. You need to make sure the company you acquire fits the culture. It’s culture more than anything else.”

I quickly became overwhelmed when running our little analytical company and had to impose a structure to limit the number of people who reported to me directly. I wondered how many of Sucafina’s 1,400 employees reported directly to Nicolas.

“Eight,” he replied. “We use the acronym FIRST. F stands for finance, I stands for information systems technology, R stands for risk, S stands for staff and human resource, and T stands for trading and execution. So those five heads report to me, plus I have three further direct reports.

“Some of our managers only have four direct reports, but the average is about eight. It varies between five and ten, depending on the interaction between the manager and the employee, the level, and his responsibility.”

“How involved are you in the day-to-day operations and trading?” I asked.

“I’m involved in the company’s day-to-day operations, but it can operate quasi-normally without me. I’m aware of the trading positions we hold and the big-picture decisions.”

“If you decided to go and sail around the world for a year, would the company still work as well?” I asked.

“I would say for a couple of months,” he answered. “But not a year.”

I now wanted to return to ownership and whether family companies have an advantage over publicly quoted companies in trading.

“Whether you are family-owned, management-owned, or even private equity-owned,” he said, “I believe that commodity trading companies should not be publicly quoted. Why? Because of the unpredictability of the financial results. Share price volatility is not good.

“I’m not in favour of publicly listed trading companies unless you are an industrialist and have trading as your procurement arm, which enhances or not your profitability. Family businesses think and operate long-term. Commodity trading companies should have the management and the family as shareholders.”

Serge Varsano has instituted a company structure that limits his decision-making power. I wondered whether Nicolas had something similar.

“I have a board of directors, the majority of which are independent,” he said. “They empower me but impose certain limits in VAR, drawdown, counterparty, forex, etc. I navigate within these limits. I believe we’re well structured in terms of corporate governance for a company of our size.

“I’m here to make money but also to have fun. I don’t need to give a return to my shareholders of 30-50% a year. They’re comfortable allowing me to use the profits to grow the business.”

Serge Varsano also mentioned the importance of having fun in business. It made me wonder if I had had fun running my little company. I enjoyed the challenge, but was it fun? I am not sure.

“How do you inspire innovation as the company grows?” I asked.

“Innovation must be bottom-up as well as top-down,” he replied. When people have ideas, we must listen to them, assess whether they are feasible, and not be afraid of trying and failing fast. If you fail fast in innovation, you can fall back on your feet and re-innovate. If you don’t learn from your failure—and if you don’t fail fast—innovation can be a problem.”

I had to think about his answer for a while. It had never occurred to me that innovation could be a problem, but then I thought about the times when companies had introduced new IT systems only to see them fail.

“How involved do you get in recruitment?” I asked.

“I don’t see all candidates,” he replied, “But I often participate in the last round of interviews with key people or departments needing my involvement. I enjoy interviewing people because, as I said before, we hire for values and train for skills. So, through these interviews, I can understand whether a candidate shares our values.

“I always ask a candidate to share with me one experience that happened in their life from the age of five to 20 years old that contributed to the person they are today. I want something profound and sincere, not their exam results. It allows me to understand the person behind the CV.

“Sometimes, candidates reciprocate the question to me. I answer that at the age of seven, my parents put me in a boarding school in Switzerland without me knowing that I would go to a boarding school. I do not remember my parents telling me I was going. I suppose they did, but they didn’t explain the meaning of boarding school. You can imagine the trauma.

“It taught me how to survive in very unusual circumstances. On the other hand, it did not teach me to ask for help. It did not teach me to communicate. So, I often do things by myself. I’ve learned in the last decades how to work more with teams.

“The fantastic thing is that the kids I met at that school – I’m now 54 – are like brothers to me today. I can see them on the other side of the planet, and we can sit and have a meal, and it’s as if we haven’t seen each other for 20 minutes.”

“Last question,” I said. “What advice would you give someone taking up a leadership position for the first time?

“One: Listen and listen. Two: Lead by example. You cannot expect your people to do something you are unwilling to do. Three: Don’t be an asshole. We have an official “no-asshole” rule at Sucafina. It is independent of how much you contribute to the P&L or how great you are.”

I told Nicolas I had recently read Elon Musk’s biography and thought he was in the third category.

“Elon Musk is an exception,” Nicolas said. “I have just finished his biography. Working with him must be difficult and unpleasant, but he is one of the smartest guys on the planet. I give him the credit for being how he is.”

Dave Behrends, Sucafina’s head of trading, also recently read the biography. In a post on LinkedIn, he argued that Elon Musk breaks his four rules of management.

The first is ‘people are your best asset’.  Elon demonstrates that he views people as a tool. They start sharp but get dull over time, and you must ultimately replace them.

The second is ‘creating healthy work/life balance environments helps people thrive’. Musk orchestrates “surge events” that ask for the impossible of staff. It requires them to go from ‘always on’ to working nights, weekends, birthdays, anniversaries, and holidays with complete disregard for the strain it puts on people’s personal lives.

The third is ‘teams that work well together succeed together’. Elon has an ‘algorithm’ which dictates that you must challenge every rule or process. He discourages camaraderie as it limits people’s desire to challenge each other critically.

The fourth is ‘hire people better than yourself, empower them, and trust them to get you where you want to go’. Musk is highly opinionated. His decision-making, which often contradicts his team of experts’ opinions, is stunning. He fires people who challenge or disagree with him too much.

I discussed Dave’s post with a friend, a professor at a local business school, but he disagreed with Dave’s analysis. He told me that his four management rules might work in trading but don’t work in manufacturing, especially not in an innovative area such as space travel or electric cars. “You have to break stuff to succeed,” he told me.

“I’m not sure I don’t agree with your business school friend,” Nicolas told me. “I think it’s more about the ability of being one out of 5 billion and reinventing the industry you are in. Elon Musk has wholly reinvented the ecosystem through both Tesla and SpaceEx. To reinvent an ecosystem is something very bold. It requires out-of-the-box thinking, and you must be just one of a kind.

“Some traders are mercenaries who make money, take part of their money, and then start with the next page. When they lose money, they change companies. You could argue that certain commodity trading companies use people as a tool to generate money. It is what hedge funds do.

“And remember, Elon has a loyal and devoted workforce who love working for him. I would love to work for him for a couple of years,” he continued. “I would learn so much. Elon Musk is one of those people out there who have the courage and who can make the impossible possible. It’s all about leadership and the ability to go the extra mile and working very hard.”

“Elon Musk is the exception where the no-asshole rule does not apply. But I’m happy that Dave Behrends and I are aligned on this. It was not planned.”

© Commodity Conversations®2024

This is an extract from my upcoming book, Agricultural Commodities – The People Behind the Trade

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