“This is a great country to have some drive, because you can pretty much accomplish anything,” says Fernando De Leon, the founder of Leon Capital. “That’s the love I have for this little experiment.”
Fernando De Leon / Leon Capital
Fernando De Leon has one of the more unusual backstories of those on the Billionaires list. His life began with a lucky break: His pregnant mother crossed over from Matamoros, Mexico into Texas to give birth to him in a U.S. hospital, meaning that De Leon was immediately an American thanks to birthright citizenship—a constitutional protection that President Donald Trump is currently attempting to end.
“I happen to have lived a very unique experiment, because nobody else that I grew up with—my siblings, nobody—got that ride,” De Leon, now 46, tells . Though he grew up in Mexico, his status allowed him to attend school in Texas. He crossed the border every morning to get to class. “Constantly pivoting between these two different social systems, seeing the way things do or don’t work in either location,” he tells , “begins to inform your idea of: why do some companies work? Why do some political systems work? It was pretty formative early on.”
His family fell into poverty when his father died, and he kept them afloat by convincing American real estate big wigs doing developments abroad that he could handle important translation jobs even as young as about 13. That early experience in the real estate world proved useful in 2006 when he founded Leon Capital, which started out developing homebuilder lots and then apartment buildings. The company is now a conglomerate that spans 11 industries, including dentistry, mental health and insurance, and generates over $800 million in revenue. De Leon owns at least 70% of each subsidiary and is worth $2.8 billion, per estimates.
De Leon’s remarkable biography was recognized on Tuesday when he was given the Horatio Alger Award, a prestigious prize for Americans who have overcome adversity to become prominent leaders. In recent conversations with , he shared some of the secrets to his success. Read the extended profile of De Leon and his company here.
1. Build businesses that improve lives.
“In America, the people that are rewarded are people that build things or companies that provide utility to others,” says De Leon. “We need to invest in things that make people’s lives better. If we do that, capitalism rewards us.” That alone may breed some success, but he adds that building significant wealth also requires affecting a significant number of lives: “My formula for value creation has always been the utility of something relative to the existing benchmark multiplied by the number of people that benefit from it. If you do something that is good, but for very few people, capitalism kind of doesn’t care.”
2. Remain terrified of being broke.
Because he grew up with scarcity, De Leon says he has “this fear of being broke that’s constantly tugging at me.” It’s helpful, he explains, because complacency is dangerous. “That fear permeates every decision with a sense of prudence. We’re trying to be conservative with everything.” He’s always looking for ways to save money. Recently, while surveying the medical device inventory across his dental companies, he discovered they were spending $20 million annually on new machines and tossing them 3 or 4 years later, even if they still worked. So he had his team start reselling the old machines to buyers in Mexico for whom they were big upgrades.
3. If you want to get rich, own your own business.
Don’t just be an employee; owning a business is one of the best ways to build real wealth, says De Leon. Ownership also incentivizes the hard work that ensures the company’s success—which is one reason why the leaders of Leon Capital’s businesses often have stakes in them (he’ll agree to shared ownership from the start, or, in the case of some of his medical companies, later give physicians the chance to buy in). “One of the biggest BS stories out there,” he says, is that the private equity model involves true ownership. PE firms don’t hold onto their investments: “They just lease them for a few years, charge fees on them and then have to sell them.” He points to the difference between the prominent PE outfit Carlyle’s assets under management ($447 billion) and its market cap ($19 billion). In contrast, De Leon prefers to hold on for the long term, and owns 100% of Leon Capital and 70% to 100% of its subsidiaries.
4. Immerse yourself in multiple cultures.
“If you look at people who have built businesses, I bet you’ll find that they’ve usually traveled to other countries, worked in other countries, seen other things,” he says. “Some of them are immigrants, some of them are second-generation immigrants, some of them lived abroad.” Becoming immersed in different cultures helps people expand their worldview in ways that benefit their businesses, he says, pointing to the example of Steve Jobs, whose trips to India partially inspired him to create Apple. For De Leon, growing up between Mexico and the United States gave him a shrewd understanding of human behavior. And that, in turn, has helped him recruit effectively: “I can size up people more constructively.”
5. Hire people who think unconventionally and have endurance.
Speaking of recruitment, here’s what De Leon looks for when hiring top-level employees: “Tell me how you’re able to solve problems that are not institutionally prescribed,” or “Give me a contrarian viewpoint on an existing problem.” Building a successful business often involves disruptive thinking, he says. He also needs leaders who have “endurance” and can handle the inevitable bumps that arise when starting a new company: “I don’t want to be in the trenches with somebody that, at the first sign of trouble, runs away.”
6. Make sure your managers are experts.
De Leon makes sure his senior managers are subject matter experts who know every detail of their businesses, including relevant costs at all levels. If a manager can’t answer his questions during a meeting—if, for example, he sees them consulting a direct report for the details—he’ll shift capital away from that business, or possibly even kick them out of the room. Accurate data is essential, he says. “We’re making big decisions. We’ve got to be right.”
7. Study the competition.
“There are always little things that incumbents kind of fake,” says De Leon. Those are vulnerabilities that you can exploit. Finding weaknesses requires analyzing everything your competitors seem to do successfully with dogged skepticism—and then having enough audacity to believe you can challenge them. “The incumbents always have some kind of unfair advantage. If you can find a way to replicate or beat that, you can pretty much build a business in any industry.”