Bloomberg Businessweek - USA (2019-07-29)

15

THEBOTTOMLINE ZXVentureshastopped$1billionin revenue
bybettingonpotentialgrowthengines,eitherin-houseorvia
acquisitions,soparentABInBevisn’tcaughtoutbyinsurgents.

BUSINESS

BWTalks ChrisNassetta

It’s a 10-minute cab ride from AB InBev’s Park
Avenue offices to ZX’s digs in Chelsea, but they seem
decades apart. At headquarters, perks are scarce.
In 2010, Chief Executive Officer Carlos Brito out-
lined the company’s culture to students at Stanford
University. “I don’t like the word ‘fun’—fun is too
weak,” he said. “I don’t like people at the company
to have fun. I have fun at the beach with my kids.”
At ZX the reception area is brightened by a Day-Glo
mural of cartoon characters swimming in beer. On
Thursdays the mostly millennial workforce gathers
for happy hour with free beer and pizza. A couple
of floors down there’s a workplace brewery, 24th
St. Hops, which experiments with concoctions such
as a cherrywood-aged stout and an ale infused with
elderflower, Earl Grey, and honey. “With ZX, they’re
creating the space for new ideas,” says Sanford C.
Bernstein & Co. analyst Trevor Stirling.
ZX is working with Minneapolis food technol-
ogy company Zea10 to make protein snacks aimed
at the yoga crowd from spent grain left over after
brewing—a side hustle Earp says could be worth bil-
lions of dollars. (The grain is currently sold as cheap
cattle feed.) Its Cutwater Spirits brand offers pre-
mixed cocktails such as margaritas, bloody marys,
and gin and tonics in single-serve cans. Via invest-
ments in websites such as Britain’s BeerHawk.co.uk
and France’s Saveur-Biere. com, ZX gains insights
into purchasing trends and emerging flavors.
Every summer, about 15 people from across AB
InBev are selected to attend a two-week boot camp
where they learn how to quickly turn an idea into a
product, then spend nine weeks working on their
concept. One team developed Saturday Session, a
low-sugar, low-alcohol wine aimed at casual drink-
ers who don’t like beer but want something with
less alcohol than liquor and fewer calories than
wine. It’s being test-marketed on the U.S. East
Coast. A group in Europe developed OneStopShop,
an e-commerce platform for wholesalers.
Patrick O’Riordan left AB InBev in 2006 because
transformative ventures weren’t on the agenda. But
Earp convinced him to come back in 2015 as a found-
ing member of ZX. Now leading AB InBev’s con-
sumer insights division, he says ZX has challenged
the thinking at the mother ship, and the support
the unit gets indicates that top executives are finally
interested in new models of growth. “It’s the com-
pany saying, ‘What you guys are doing is great,’ ”
O’Riordan says. The key is “recruiting the right peo-
ple to create a legacy that will see a lot more people
like me in the company.” —Thomas Buckley

○ Interviews are edited for clarity and length. Listen to Bloomberg Businessweek With

Carol Massar and Jason Kelly, weekdays from 2 p.m. to 5 p.m. ET on Bloomberg Radio.

tradewars,nowthat

Mexico’sdone.Thisand

otherthingsgoingonaround

theworldprovidea levelof

uncertaintythat’snothealthy

forthemarkets.

Twelveyearsago,thiscompanywasnot

focused.Howdidyougetit focused?

Therewasnoglobalstrategy,

nocommonstrategy.

Theculturehadbecome

supercomplacent.So

wewentaboutbuilding

a world-classculture.

Whydidyoumovetheheadquarters?

Costwascertainlya reason—

BeverlyHillsis expensive,and

NorthernVirginiais cheaper.

Talentbasewasa reason.

Timezonewasa reason.

Accesstoairports.Butthe

corereasonwasa cultural

reboot.I wenttoJohnGray,

ourchairman,andI said,“We

hada greatplay.Wehavea

greatstrategy.Buttoexecute

againstthatstrategywehave

torebuildourculture.”We

hadbeenin BeverlyHillsfor

60 yearsandhaddecades

ofcomplacency.

○ JoinedHiltonWorldwideHoldingsInc.in 2007aspresidentand

CEOafter 10 yearswithHostHotelsandResorts○ OversawHilton’s

movetoVirginia,fromBeverlyHills,in late 2009 ○ The100-year-old

companyhasadded86%moreroomsgloballyduringhistenure

How are U.S.-China trade tensions

affecting your business right now?

We’re not seeing any

dramatic impact. We came

into this year thinking

we were going to have a

reasonably good year from

a same-store-growth point

of view, that economic

growth would be a little

lighter than it was last year

but still positive. I think when

we finish the year, that’s

what we’re going to see. The

nice thing about our model

is the bulk of our growth is

from new-unit growth rather

than same-store growth.

Our new-unit growth is super

resilient. We’re experiencing

the largest net unit growth

numbers we’ve ever

experienced.

The longer these trade spats go on,

do you start to get nervous?

It would be crazy for me

to say we’re not watching

this very carefully. And I live

in Washington, inside the

Beltway, so if you think it’s

bad, try the echo chamber

that I live in, right? Nobody

talks about anything but

The Hilton CEO knew he wanted to work

in hotels early, he tells Carol Massar and

Jason Kelly. Acting on his dad’s advice to

learn a business “from behind the walls,”

his first job was at a Holiday Inn plunging

toilets. “You don’t forget those things.”