My experience in life and business is that you have to treat it as an adventure, that way you will manage to stimulate your senses and find the drive to give the best version of yourself to your endeavours.
In a series of articles that begins with the following, I’ll tell you my own version of El Dorado, El Dorado 2.0. The Story of the Cities of Gold in the Amazon rainforest. Consider it a metaphor to my own experience with Alpha Rock Capital and its endeavour, buying and operating Amazon businesses.
Embarking in Business Adventures
There are certain statements that need to be made when it comes to embarking this adventurous way of treating business. In my opinion, no one will find the Cities of Gold in the Amazon rainforest if they don’t take the following points into consideration:
- Adventuring in business makes only sense if you show devotion for it. When you set sail for a new adventure, you have to strive to become the best possible version of yourself. You may have your mind drift somewhere else every now and then, that’s inevitable, but you will make sure you won’t betray yourself when doing so, focus is absolutely necessary or the Amazon rainforest will dispose of you.
- Having others join you in your business adventures only makes sense if you know, and behave as if, they know things you don’t. Complementary skills are a must, and trust takes eons to develop and seconds to burn to the ground. Once it’s burnt, re-establishing that trust takes twice the effort, twice the work.
- The search for spiritual engagement only makes sense if you believe there is a reason for being who you are and that you can break the habit of being yourself. The beauty of the path to enlightenment lies both on the fact that is never-ending and that you learn to treat yourself lighter walking it.
In essence, if you live your work, and work to live, you have to make sure that you do so with devotion, integrity and humility, as the alternatives -complacency, arrogance and demise- would lead you to your doom in the Amazon rainforest.
I feel the need to point this out because there is little separation between work and life in our modern society, and your personal values will show up, no matter how well you try to hide them. If you are not ready for adventure, be true to yourself, and quit before it is too late.
Starting on the Other Side of the World
If you are aware of the location of the Amazon rainforest, it may seem strange to you that this adventure started as I set foot in the Philippines. But disregard geographical logic for once, so you can partake on the series of events that led me to the Cities of Gold.
My mother once told me:
If you cannot stand the heat, get out of the kitchen.
For a long time I thought she just wanted me not to disturb her while she was cooking, but as I grew older, I realised that what she meant to make me aware of, was the fact that there are limits to the environment that surrounds us. At one point, you have to throw the towel in. You have to give up on the path what won’t provide the adventures your soul seeks.
I like to think that this was the reason I moved to the Philippines. I was fed up with the conventional business approach of Western companies and I felt that I needed something new and fresh. A perspective I had yet to see myself. Luckily, serendipity provided what my adventurous soul seeked and, in mid 2018, I was chosen to develop and drive the innovation arm of a well established Filipino multinational conglomerate. I did well in my position, a high-paying job, however, South-Eastside Asia provided plentiful opportunities into the alluring e-commerce environment.
Digital Adventures in the Philippines
I had shaken up my world and started anew, but I had no real clue on whether my new position was going to provide the adventures I was seeking. It would happen to be more a point of who I met than what I did, even if I didn’t know that yet, that would prove essential for my adventure. Every adventurer needs either helpers or, even better, the right partners.
And my soon-to-be adventure partner happened to be sitting across a large table on a Thursday evening of December 2018. It was an expat dinner in Bonifacio Global City, Manila. I was eager to meet new people and decided to accept an invitation to be part of it.
Practically as I sat down on my seat, this guy, from the other end of the party, shouted at me:
- Hey! What do you do?
This didn’t feel like the standard behaviour, I hadn’t even been asked my name. We were in an informal setting where work questions seemed a bit out of place, considering people were strangers to me, and yet there I was, curious eyes pointed at me.
- I work with business development and corporate innovation, but at heart I am on a journey to find business adventures… What do you do? – I said as I loosened my tie while looking at this guy.
He smiled in a way that didn’t seem to relate at all to my answer and said:
- Well, I am on a business adventure myself, selling squeeze bottles!
I couldn’t have possibly heard right. Selling squeeze bottles. Where is the adventure in that? Other than dealing with potentially angry customers if your bottles were not to seal properly. What exactly was this fella up to, I felt like I needed to know. My intuition told me he may not be lying about adventuring, even if my mind couldn’t get over the fact we were talking about simple commerce of plastic goods.
The night went on, and my conversation with this newfound friend continued at a local tavern. He was in fact selling squeeze bottles, but it was far from being the simple commerce I thought it to be.
Besides never having seen the product, the business was wholly digital with no CAPEX commitment and with annual returns of at least 20%. On top of this, the business grew with localized talent development. Training local talent to operate international online companies was not only market competitive it was impact investing.
In collaboration with a team of just two, he was churning a six figure business with little time commitment. Having built a career in working with alternative assets and innovation I realized this was a new asset class in the making. Something completely different, and the timing was now as the world moves with exponential speed into digital as status-quo.
What are the digital Cities of Gold?
In a fitting way these assets inside the Amazon e-commerce jungle were like a small City of Gold wittingly reminding me of the story of El Dorado.
Turns out that these “Cities of Gold” are a key part of the Amazon ecosystem. In fact, they produce 50% of Amazon marketplace’s net sales. Having worked with platform dynamics in finTech and retail earlier in my career, I recognized that Amazon had used the last decade to build up third party sellers using a model called Fulfillment by Amazon (FBA). A method where they subsidize the logistical and warehousing of products leaving quality, price and customer service to the product providers. Now a decade later only the best businesses remain, all profitable, but many underperforming.
Thousands of these “Cities of Gold” have developed their own little governance system, with supplier management, customer relations and logistics facilitation. They sell on Amazon, but are sourcing from all over the globe. What they all have in common is they ride on the back of the giant that Amazon is. As a matter of fact, for every $1 spent on online retail, the Amazon platform takes $0.50. This digital “Amazon river” of customer traffic is the main source of growth for sellers, and every day thousands of new customers are signing up. In 2020 alone near 400,000 customers have already signed up on Amazon.
However, as mentioned earlier, several of these Cities of Gold are unpolished. Despite being run profitably for years all growth has limitations. The knowhow of the Amazon jungle is vast and ever changing, and with lack of working capital and e-commerce expertise, a profitable business can become a stressful experience. Too often owners find themselves operating a business that is too expensive to grow to its next stage and too valuable to let sit idle.
This proves to be a great investment opportunity with a limited window to act. Something that I had never heard of before, but that I was eager to explore further. How could we find a way to acquire these underperforming assets, improve them and grow a portfolio with the expanding e-commerce market?
My new adventure partner, Marc, was doing that from the Philippines, just to make sure he also decreased labor and infrastructure costs too.
Onwards Towards New Adventures
And this is how Marc introduced me to the idea of El Dorado 2.0, taught me about the Cities of Gold, and proved to me I had chosen wisely trying to look for my business adventure in the Philippines.
Having successfully developed business models in a corporate setting, I realized that my skills might be just what was needed to extract the opportunities from an emerging business opportunity within Amazon.
Still there is a long way from words to action. Today we have come a long way from sitting and chatting about the future. With eight brands under management, profitable, turning more that $400,000 a month and with an IRR of 70% since our inception last year, it is hard to understand what happened during our short time of existence. However, over the next two articles I would like to have you by my side as we continue this journey, and to show you why we consider our current time “A New Era”.