Bacardi. The Long Fight for Cuba

by Tom Gjelten

A couple of paragraphs into the Preface, I knew this would be one of those books you get glued and know you will feel sad because you reached the end. An exquisite and entertaining story where family, business, politics, and nationalism blend. It is a journey through Cuban history, from a Spanish colony, successive failed revolutionary fights for independence, a few decades of a fledgling democracy that ended with the Batista and Castro dictatorships.

It is a textbook case on the issues all large family business face as they grow and transition through generations. Somehow, a great leader emerges each generation that steers the business and the family through key challenges, keeping the family (reasonably) united and adjusting the governance structure. You get a vivid flavor of the role played by in-laws, trusted managers, deeply loyal employees, and some behind-the-scenes roles played by female family members.

Like all business success stories, a small set of visionary decisions make the family and business thrive to the next generation. Case in point was the decision to develop business outside Cuba. It allowed them to survive the Castro expropriation, finance expensive global court battles, and survive some business flops. Bacardi is now one of the World’s most sophisticated Marketing machines running World class operations, fiscally and legally smart.

What happened to their Cuban identity? As decades passed, you get that vivid feeling of the eroding link between family and their national identity. Political divisions within the family grow as more members are born and raised in exile. In the Bacardi case, it is a tearing feeling, after having fought revolutions for independence, supported liberal labor causes, all to end up betrayed and expropriated by Castro after having supported Fidel’s uprising.

Deliberate or not, the author surfaces a less explicit, though successful family transition: that of the Castro brothers. Fidel’s charisma and political smarts allowed him to hold a stiff grip on the army, a powerful secret service trained by the USSR, and counted on a steady flow of subsidies to keep the economy afloat. When the USSR collapsed, he was lucky to find the Venezuelan oil tap from Hugo Chavez. When Venezuela also succumbed, it seems China may be providing the lifeline.

The author describes how Fidel’s deteriorating health led him to pass the baton to his brother, thus keeping it “all in the family”. The author hypothesizes that the USA may have misread the fact that Cuba had been transitioning from a family business to a truly single party dictatorship. It is another example where we experience the fact that a socialist system can only sustain itself when it is the only party in town, controls the armed forces, and has a steady flow of subsidies - “until you run out of everyone’s else money”, as Margaret Thatcher famously said.

As we cruise through Cuba’s history, I was struck by the fact that Latin America was mostly independent from Spain by the late 1820s, but Cuba just managed to gain its own by the turn of Century. The fledgling democracy that followed, plagued by corruption lasted a few decades just to end up falling to the corrupt murderous regimes of Batista and Fidel Castro. We just wonder how long it will take for Cuba to be free again and live as a thriving democracy.

A must read for those of us who have lived and loved advising family businesses.