On the Success and Entrepreneurial Spirit of the Latino Community

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Eric Smith: Hi, I'm Eric Smith, Vice Chairman at BMO. Today I have the privilege of introducing our episode with Darrell Hackett, President and CEO of BMO, and Martin Cabrera, CEO of Cabrera Capital Markets. The two gathered at a recent Index 500 event in Chicago to discuss Latino-owned businesses, the opportunities that exist, and much more.

If you haven't already, please be sure to listen to part one and part two of our series. Eduardo Tubone, Latino Segment Head at BMO, and Jorge Ferraez, Publisher of Latino Leaders Magazine take a deeper dive into how the Index 500 was born. And Alan Tannenbaum, CEO of BMO Capital Markets, and Marcelo Clare, globally recognized Entrepreneur, Investor, and Founder and CEO of Clare Group discuss the remarkable achievements of Latino-owned businesses.

Enjoy.

Darrell Hackett: Congratulations again to all the honorees tonight. We are incredibly proud to be here with you today. And you all are making history. We're just partnering with Latino leaders to help document the history, and it is so incredibly important.

So with that, I wanted to ask Martin Cabrera to come up. And Martin needs no introduction.

When I was announced in my new role last year, Martin was one of the first people that reached out and we got together. And we just had conversations around how to help one another, and how to make an impact. He was actually one of the first people to introduce me to Mayor Karen Bass, who has turned out to be an incredible partner for the bank at BMO. So for that, I thank you.

In terms of Martin, everybody knows who you are, but I'm going to remind you a bit, and he's the CEO and Founder of Cabrera Capital Markets, but also Cabrera Capital Partners. And we're just honored for you to be here today.

We also know the significant role that you've played in Chicago, and we know how important the success of the Chicago community is, and all that you've done. And you've been involved with Chicago Community Trust, where BMO, and frankly Harris, was a founding member, the Archbishop's Finance Council and Chairman of the Real Estate Committee for the Archdiocese of Chicago, and many, many other organizations, such as World Business Chicago.

And you are the former Chairman of City Colleges, and I believe education is everything, as well as the former Chairman of Chicago Plant Commission. So that's a lot. So first of all, welcome.

Martin Cabrera: Thank you, Darrel. Thank you.

Darrell Hackett: First Martin, when I think about what we're doing here tonight, a year ago we recognized the Latino Index 200, which I think was momentous. Today, we're recognizing the 500. And when you think about that, and the two years that we've been doing it, and the recognition that everyone is trying to bring to this incredibly important community and Latino segment, I'm just wondering if you could just start us off by just telling us a little bit about the opportunities that you feel exists for business leaders that are focused on the US Latino segment, regardless of the industry that they might be in?

Martin Cabrera: Sure, definitely. First, I just want to say thank you, Darrell, for doing this. I think it's not lost on anyone that you have two Black men at the top that are leading this effort. And you've got Eduardo and the whole team that are really pushing, Jorge, being a partner there.

And it is a business. And it's a great opportunity. I think a lot of banks talk about their initiatives, and how they want to look at the community, invest in the community. But you guys are actually doing it. And when you look across the scale at BMO, the people who are in leadership positions, Latino, Black, women, Asian, it's across the globe that you guys are having impact. So it's a great thing to have.

And I think from when you look at some of the growth that's happening, in the Latino market, there's some great stories here all over the country. And it's amazing, you see the growth that's happening. And we all know the numbers, it's 3.2 trillion in GDP. And when you look at the fastest growing markets in the world, it's China, it's India, and then it's the US Latino cohort, the business folks that are growing.

And it's exciting to see, because you see so much transpiring where more kids are getting educated, they're going on to community college, they're going on to universities, they're graduating, where typically the Latino community was going into service industry areas. Now they're going into professional services, and they have more discretionary income. And they are out there buying more dollars and doing more business.

And I think what I appreciate about BMO is that BMO is looking at the Latino community, not as just consumers, because we are. But you're looking at us as entrepreneurs, and how do you partner with those entrepreneurs for the opportunities? You're a bank and you have to make revenues and profits, which is great, but you're also out there looking to provide some of the capital, some of the debt for them to grow their businesses, which a lot of banks aren't doing.

So it's something that you see it transform in the whole market and all these great success stories that will just continue. It's like a Latino tsunami taking place around the country, and you can't stop it. And you just see the growth. And it's that strong work ethic, that they're going to get knocked down. All of us as business leaders have been knocked down, but we get back up.

Darrell Hackett: Yeah, so Martin, I appreciate that context. When I took a look at the Latino Index 500, what stood out was 40% of the companies were in the construction and food industries. So wondering if you can give us some context on why you believe that is, and talk about some of the successes there? But as well, you come from the professional services industry. When you think about your firm that you started. Can you just talk to us, both about the concentration in construction and food, but also about the diversity of businesses that you're seeing other Latino community members begin?

Martin Cabrera: I think that segment is still going to be a big segment, construction and food. And you just see it growing. So you're seeing some of these construction companies and manufacturing companies that are great at what they do. And I think you're going to see that continue to happen in the construction industry, where they're moving into development.

And in the food industry, look, we eat a lot as Latinos. We're always cooking. But it's amazing how you see, when our families first came over and crossed the border, they were working in the meatpacking industry, and produce. And then they started grocery stores. These guys here as well, where I know her father had the business right on Blue Island, and it's grown tremendously.

And what you're seeing though, is that now you've got big major companies focusing on buying up Latino grocery stores, or not Latinos that are in Latino markets.

So here it is, this big publicly traded company. They bought out Tony's Fresh Market here in Chicago. They bought Cardenas out in Los Angeles, they bought El Rancho in Texas, and they're one of our clients on the private equity side. So I was like, why are you doing this? She's like, we're doing this huge big roll-up strategy. We're going to continue to buy in Oklahoma, in Kansas.

If there's any others, we're going to buy them. We're going to do a huge roll-up, and do a huge IPO for them. But they see that the margins and the profit margins are there, and that they could run those businesses, and that they're going to continue to go and purchase some of those companies, and invest in those areas, because the growth is there and they see families, just how much they are buying, and how much they're usually cooking at home and they have big families, so it bodes well for them.

But you're seeing, not just in the lower margin business, you're seeing in the professional services. Architects, engineers that are growing and scaling their business. So you do see the professional services starting to get the at traction from some of these major firms that they want to invest in. And some of the banks as well, that they see those are great businesses, great profit margins.

How do we give them the fuel that they need to scale their businesses? So it is exciting. And even for us, in the investment banking side, there's very few Latino firms in the country, but the barriers are high. And that's where you start to create the wealth.

And as Latinos, I don't know why, but it's taboo that we talk about wealth creation. And we can't be shy about it. We have to be unapologetic. It's like, yes, we do want to create wealth, and we've been helpful in helping some of our close friends become multimillionaires and some becoming billionaires.

And that's great. We just want to make sure that they're giving back, and supporting one another, and doing business with one another. And you're starting to see that more, because even though we're 3.2 trillion, we are twice the size of Mexico's GDP. And those multi-billionaires are coming here as well, and saying, "We want to participate. We know how to work with them. We can help and support too."

So you're starting to see all these opportunities really start to come in. And it's not just about the US, it is global.

Darrell Hackett: Maybe you could tell us, for those of you that don't know your story, maybe you can tell us a little bit about you starting your first business, Cabrera Capital? Maybe you can tell us a little bit about how that came about, what inspired you to do it? And your business has evolved. And if you think about the trends in the industry that we're thinking about today, maybe you can tell us a little bit about some of the decisions that you've made to continue to evolve and grow the company?

Martin Cabrera: I started the company in 2001, and I didn't realize that there was going to be other opportunities. But part of that entrepreneurial spirit, you have to go and invest and hire good people. So as we were growing, there were certain areas that I knew I didn't have expertise in, but I was going to go hire some people who did have the expertise, and bring them in, and having to pay them.

So I had to take a big pay cut, just to start my business and pay everyone else, which was difficult. But it really started to translate into other opportunities. And having some of the folks that, even the non Latinos, that helped me out and helped out my business and open up doors for me. And you've got to make sure that you're coming and bringing everything you have, putting your best foot forward, and competing for the business.

And we've been able to grow where we're doing investment banking deals. So we see the growth here in the States, but it's also in Europe and Asia and part of Latin America, that's going to continue to grow. So we've been blessed. It hasn't been a straight shot up. I think you learned some valuable lessons as well. There's been some really tough times that, even me and my business partner, Robert Aguilar, and getting some advice from friends as well to help us during that time, they're like, "Wow, it's looking really tough. It's looking really rough."

But we've been able to get through. And you learn from those lessons as well. And I think one of the things that I learned too, is that, and I always talk about it, it's like as entrepreneurs we need to have who, are those go-to folks? Even like, who is your banker? And your banker should know you, and your family, and your business inside and out. When you're doing well, because that's great, but then there's going to be some tough times, and you want your banker to be there to understand your business, to get you through those difficult times.

And if they know you, they're going to help you. So I think that's something that's really important. I think for me, I always tell folks it's your banker, your doctor, and your lawyer, they should be on your speed dial buttons. But having the right partners that are going to help you succeed, and just having your board or outside board that gives you the advice and guidance that's kind of tough to hear. But really, looking for those opportunities, and knowing that, how do you grow as an entrepreneur, as a business? And even as a CEO, how do you prioritize what you're doing and going to a different level?

Darrell Hackett: Well, when somebody asks you who your banker is, I want you to be able to say, "Darrell Hackett," my friends at BMO. But again, I do think that's a great question for all.

You hit on something earlier as well, in terms of wealth creation. And particularly when you're an entrepreneur, we're really busy. The equity that you have, often is poured into your company. As you said, you had to take a pay cut in order to invest in your business. Do you have any advice for the audience in regards to how to actually begin thinking about that wealth creation side of the equation? Especially when we think about the bigger challenges that we have in this country in terms of wealth gaps?

Martin Cabrera: Yeah, so I think when you look at your business, and we're driving so much, and we have to put so much into our businesses. But really trying to diversify. And you have the options. I could keep putting more money into my business, or I can invest here, or invest in some of these companies. And it's good to not put all of your eggs in one basket, but really diversify some of your investments, definitely in the markets, but also separate from your business.

And how do you look to take a step back from your business, to view it, to say, okay, what happens if my business turns? If you're all in, then you've got limited options. But if you have other revenues, and different lines of business as you grow the business, there's some safety in that. And there's other schools of thought, that you should just be focused in one line of business. But it's a diversification that allows you to be sustainable as well and to grow.

And there's real estate, there's also investments, there's all different ways. And some of those businesses, I invested back with them, and they had a 30 multiple on them, and a 30X. And it's like, it's great. And it's really believing in the individual.

And sometimes, whether it's construction, or development, you know that they're going to be successful. They're not going to take no for an answer. But it is that wealth creation that we need to really talk about, and know that, no, there isn't any limits on what we can do. I remember going into a meeting with one of my bankers. And she was exceptional banker. We're still small at the time.

They're like, "Martin, can you handle this $2.1 billion deal?" It's like, "Yes, we can handle it." And they're like, "Okay, so if we give you the deal, you'll be able to participate?" And it's like, "Yes." And we walked out, she's like, "How are we going to do that?" I'm like, "Look, we're going to get it done. We're going to go out there and sell, and tell everybody on the trading desk, you got to sell your job depends on it, because it does."

Darrell Hackett: Because it does.

Martin Cabrera: But it's that motivation that keeps you up at night and that drives you for competition to be the best. And not to be the best Latino, it's just to be the best. And that's what I see in so many entrepreneurs as well, that excitement, that passion, that energy, nothing's going to stop them.

Darrell Hackett: Thank you. That was incredible. Can I ask everybody to give a round of applause to Mr. Martin Cabrera. Thank you for sharing that knowledge. And Martin, I want to thank you myself as well.

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