https://www.linkedin.com/in/paulocaputo/ (Paulo Lydijusse Caputo) is pursuing an MBA at https://mcgill.ca/ (McGill University) (Canada) with a concentration in global leadership and strategy. After graduating with a bachelor of economics from https://www.facamp.com.br/ (Faculdades de Campinas) in Brazil, Paulo worked for five years at Cyrela Brazil Realty, the largest real estate company in South America, acting as a regional controller in his last role. Paulo then spent a summer launching Uber’s operations in Belo Horizonte (sixth largest city in Brazil) before co-founding Baanko, a social enterprise with the objective of supporting and scaling social-impact businesses in Brazil. At http://baanko.com/ (Baanko), Paulo developed an in-house business methodology framed around and aligned with the United Nation’s Sustainable Development Goals (SDGs). Paulo is interested in pursuing careers in scalable technologies and impactful industries, with particular focus on AI and entertainment. His personal interests include tennis, outdoor activities, coffee-brewing methods and barbecuing. He is the executive president of McGill’s Desautels Faculty of Management One World One Culture Club and was recently awarded with the Mandri-Muggenburg Family MBA Leadership Award.

“I really believe in giving back and this is something that I learned since the beginning of my career. For me, this is part of it so call on me for whatever you need and whenever you need it.”

Paulo Caputo

Worst investment ever Property insider buys discounted home from his employer real estate firm

Around seven years ago Paulo experienced what he called a “real fail”, meaning in terms of investing, it was not a case in which he could find a way through to recover or minimize his losses. This one was “critical”. While he was working for Cyrela, the largest real estate operator in South America offered staff the opportunity to invest in one of its apartments, under apparently favorable conditions. Cyrela offered to waive all commercial, marketing and transactional fees, which meant a discount on the apartment’s face value of around 17-20% off the face value of each apartment. In Brazil, to buy a residential property, during the construction period, you only need to pay 30% of the price, then you hand over the remaining 70% after the vendor hands over the key. So lenders give you credit and you pay off the mortgage to them.

His focus on all the shiny parts of the deal blinded him to the bigger picture

Paulo liked the idea because he felt he was an industry insider who knew exactly what to do. Also, the apartment was conveniently located, so he felt confident about finding potential buyers. His idea was to sell the unit during its construction period, thereby being both an early investor and an early seller. He also felt confident he was investing in something that was valuable at the time and that it would generate a great return. Somewhat focusing on all the good points and so touched by a fair measure confirmation bias, he was expecting to easily find someone to buy , that he would know exactly the right time to exit the unit, and that he would the right price he wanted for it. But things did not pan out that way. Adding to his early excitement was that he was investing in a product that was part of his life, because he was working for the company that was building and selling it. He admitted that social validation was also component of the decision. He really believed in an operation that he was working for and that nothing could go wrong.

Reality bites as government crisis darkens market

But the political economy of South America, particularly Brazil’s, is always a roller coaster of volatility and Paulo got hit in one of its swings downward, the first episode of declining fortune for the previous government. He explained that investments in real estate involve a very high-end product. So it is high on the chain of products people can buy...