Fallout Boy: An interview with Atom Henares

July 7, 2010

With a name like Atom Henares, you can’t expect anything less than explosive

By RJ Ledesma

After working as an SGV management consultant, our favorite unit of matter pursued his MBA at Harvard Business School. He has diverse business interests in the country that include: palm oil, power plants, a pulp and paper, a cable television and radio station, and real estate. He sits through three meetings a day, leaves work at around 7 p.m. to work out for about an hour, then heads out for dinner at half past ten. And then he (as the young ‘uns call it) makes “gimmick.” This building block of matter also scuba dives and races cars, and he does all this while employing his secret identity.

UNO caught up with the Man of the Atom before he donned his nighttime crusader outfit to save young damsels from a night of oppressive boredom.

So what keeps you going aside from Viagra?
May iba diyan, ‘di ba? (Laughs) Someone once said that: “It’s only worth (something) if you’d rather be doing something else.” The simple answer is: I find it interesting, and I like doing all this stuff! I work in these different industries at different levels. It s a lot of fun, but it can sometimes get confusing because you have to change gears (laughs). Sometimes within the same industry, I am working with indirect competitors because I have investments in two different companies. Sometimes, I find myself in meetings where I have to ask myself “Wait which costing is this? What company am I looking at?”

I love it when a plan comes together.
After business school, the First National Bank of Chicago hired me. The bank sent me back to Manila to run their local office and to also to put up a subsidiary for them.

While I was working with them [the bank], their first investment was in a palm oil company, where we put up a refinery. The palm oil business grew to a point that we backward-integrated and bought out both the plantation and the mill that used to supply us. At that time, I was still a silent partner [in the palm oil company] because I was still employed by the bank.

My next company was my radio station. I got into the radio station business because my family [The Henareses] was an entertainment family, and I always wanted to get into media. My siblings, Ronnie and Juno, are in entertainment, and I even used to manage my brother Ronnie when I was younger. To make my access to the radio station more convenient, I put it in the same building as my bank office (laughs). However, the radio station didn’t require my full attention.

Those side jobs weren’t too taxing yet, so I could still keep my bank job (laughs). However, my other partner tried to interest me in getting into the pulp and paper business. I said, “Wow, if I get into that, then there’s too much going on here already ad I might have to leave my bank job.” The timing for this new business was quite serendipitous as my bank job wanted to send me back to the US. So, I decided to stay (and manage all the businesses that I had put up).

One of the later additions to our business portfolio was real estate.

Playing with the big boys
We’re the biggest guy on the block when it comes to palm oil. We started with an 8000-hectare plantation when you need at least 2000 hectares to be a player in the industry. We employ more than 800 people, and this does not yet include the farmers who supply us from our outgrowers of about five to 6000 hectares. Our plant is located in Mindanao so we are also helping an economically disadvantaged area. Pretty soon we will be bringing in another plantation in Sultan Kudarat.

When we got into the radio station business, we wanted to be a niche rock station. I wanted to do rock music because I always thought that rock was cool, always evolving and always new. That’s how we got the name of the station, NU 107. As we were running that station, we realized that there were a lot of great local talents that we could actually promote. So we decided to give airtime to a lot of these local bands. In fact, many of these big name brands were once garage brands that started out getting airtime on NU. That when the local music industry started to grow, and we eventually came up with the rock awards. NU 107 has given me a lot of good feelings.

Our pulp and paper company is specialty pulping—also a niche business. We make pulp—the raw material for paper—from abaca. Abaca is a specialty pulp, and it is the longest fiber pulp in the world. Because it’s long fiber, the pulp is used for specialty applications like the Japanese yen. I don’t know why we’ve never forward-integrated into making the Japanese yen. That would be profitable (laughs). They also use it for teabags because teabags are strong when they’re wet [Writer's note: Insert your joke here].

The power industry is composed of three industries: generation, transmission, and distribution. By law, you cannot be in all three. And (unexpectedly taps on the prehistoric tape recorder) “Hello! Hello! Philippines, I love you! (Laughs) RJ say hello to everyone!” Having said that, we are both in power generation and power distribution. In power generation, we have 650 megawatts. The last plant we did cost US$451 million. We aren’t the biggest kid on the block, but we aren’t the small boy either. We also have a water utility. We run the water distribution in Mactan, Cebu, and Tagbilaran, Bohol.

In our real estate business, our original strategy was to land bank with the long-term objective of constructing buildings for Business Process Outsourcing (BPOs) offices. Along the way, we found strategic partners who were involved in Serendra in Bonfacio Global City, which is a condominium development. In hindsight, I believe we made the right decisions in picking the right real estate investments at a time when people were not investing. Just as importantly, we found the right partners to do business with because frankly, I don’t think we have the time to put up the buildings ourselves (laughs).

You win some; you lose some.
I have always wanted to own a television station (laughs). So even while I had the radio station, I was also working on the television station. Similar to NU, I also wanted the TV station to be an alternative station. Since the radio station was called NU, we named the TV station the opposite of NU, which is UN. We got organized, got all the equipment, and developed great alternative programming. Unfortunately, it was on UHF so people weren’t really able to watch the channel, and we didn’t get a good cable TV spot, as we were channel 99.

TV was particularly bloody for me. In the angel financing business, there is what is called “burn rate,” which is basically burning money. In television and radio, you are literally throwing money into the air (laughs). You’re burning money every single minute in production costs. After roughly four years in television, I said that I would have to drop everything else just to do the station really well, and then it still might not do well (laughs). I knew that as long as we had a good signal and good equipment, we would have a fall back: either to lease or sell the station. Eventually, our fall back was to “block time” [Writer's note: A local practice where television stations sell air-time to independently produced television shows]. As a result, we kept some of the airtime but then we “block timed” the rest. The station is mostly block timed now.

Except for your dad’s show, I guess. (Writer’s note: Atom’s dad is commentator Larry Henares who became popular in his daily “Make My Day” columns for the Philippine Daily Inquirer, which he wrote after the EDSA 1 revolt up to the year 2000. Larry Henares has a television program of the same name on UNTV)
Of course! I’m the producer (laughs). My dad told me “Atom, you better do this for me. You owe me your life!” I said, “How can you say I owe you my life? That was a moment of pleasure. I’m sure you weren’t thinking of me when you were creating me (laughs).”

How do you handle all them spinning electrons?
To be honest, it can be hard to keep my hand in everything. Sometimes it can even be frustrating (when you manage several jobs). I see other people doing the single functional job or single business, and they are highly successful, but they’re just doing one thing.

However, the trouble with just doing one thing—especially for large capital-intensive businesses—it goes through booms and busts. There was a time when the real estate market went to hell because of its cyclical business nature. That is why it is essential to get good business partners to smoothen out the boom and bust cycle. But even the best of them have their moments. So it helps to be in businesses that are somewhat unrelated—like my businesses. So you get a lower beta (laughs)!

Nuclear-powered advice
(To succeed in business) You have to do what you are passionate about, but after that, you have to focus. You have to pick on that one thing and totally drive it. Don’t give up until you think you’ve reached your limit with it. I have encountered a lot of young people who are very talented and who look at interesting business opportunities, but they do not take it far enough. You have got to be rigorous. You can’t just say, “You like this business.” You’ve got to look at every detail of the business—you have to look long, look short, look broad, look deep, and then you’ve got to do it. And you don’t do a little of it and then party after. You need to be focused and tutok [watch things very closely]. You have to pay your dues.

And sometimes, you do fail. At least you can say, “What the hell, I did my best!” I looked into the business. I worked on it. I couldn’t handle it. I tried my best, and that’s all I could give. But you have to get to this point.

Then, don’t just stop where you are. There is always someone at your back who is looking at what you are doing, figuring out where you are going, and trying to emulate you. So you can’t stop; you just have to keep on going.

And lastly, always, always have an exit strategy.