Colombian Coffee and Investing in Businesses in Emerging Markets with Adam Jason

0:01Boom! Shake the room, Fire Nation. JLD herein. Welcome to Entrepreneurs on Fire. are brought to you by the HubSpot Podcast Network with great shows like My First Million. Today, we'll be breaking down Colombian coffee and investing in businesses in emerging markets. To drop these value bombs, I am brought to Adam Jason into EO Fire Studios. Adam is a partner of Legacy Group and a board member of the Green Coffee Company. Previously, he practiced law in the United States for eight years. He specializes in corporate finance, corporate governance, securities regulation, and international business transactions.

0:37And today, Fire Nation will talk about what it's like to just give it up here in the States, to move down to Columbia, and to make things happen. We'll talk about what it's like to run a company like the Green Coffee Company, what it's like to raise money, specifically a Series C funding round, and so much more. And a big thank you for sponsoring today's episode goes to Adam and our sponsors. Is this your year? Visit Thrivetimeshow.com to see testimonials of how Clay Clark's business coaching has helped over 2 ,000 entrepreneurs to dramatically increase profitability. It's month-to-month and less money than an average minimum wage employee.

1:14Schedule your free consultation today at Thrivetimeshow.com. Outbound Squad, hosted by Jason Bay, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. Tune in for convos with leading sales experts and top performing reps to help you land more meetings with your ideal clients. One of my faves, the monthly ep with Jason and Ethan, where they share hacks, tips, and tricks. Listen to Outbound Squad wherever you get your podcasts. Adam, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with.

1:50John, pleasure to be with you. Hello to your audience. Thanks so much for giving me this opportunity. Yeah, I think for the, we're talking about entrepreneurship here a lot today, obviously title of the podcast, Entrepreneurs on Fire. And I think the entrepreneurs that have been around for some time now know this to be true. But I think there's a popular perception nowadays of the all-knowing visionary that starts a business and basically puts it on its back and carries it through. And I think for success as an entrepreneur, and really, I think life in general, if you're trying to build something lasting and something that kind of extends beyond you, really, it's more about finding and putting yourself in a position to work with the right people.

2:43I think entrepreneurship is really guided more so by setting the right vision, establishing the values for the organization that you have, really working hard to get traction behind it so other people buy into your vision. And that gives you resources. And then you can find, recruit, motivate the best possible people to be around you. So I think, as Warren Buffett says, it's really about finding 400 hitters, giving them the bat, and letting them swing. So I think it's good advice for life, good advice for business, entrepreneurship in general, to make sure you're always putting yourself around the best possible people and doing what you're best at while allowing others to do the same.

3:28Listen, whenever we're starting the episode with a Warren Buffett quote, Fire Nation, you know we're headed in the right direction. I think we are. I think we are. And as Adam shared, we are going to be talking about Entrepreneurs on Fire because that is the name of the podcast. That's what we talk about, specifically Colombian coffee and investing in businesses in emerging markets. And a lot of people, Adam, they dream of moving to some South American country or maybe the Mexican coast and living the good life. But you've actually done it to a degree. So tell us your story of moving to Colombia after being a corporate attorney in the US.

4:09Sure. It's exciting to share. I am talking to you today from Medellin, Colombia. I've been here for the last five years. As you mentioned, my background is pretty corporate. I, out of law school, started working at what, at the time, was the largest law firm in the world, doing IPOs, public, private equity and debt financings for Fortune 500 companies, Wall Street banks, etc. I did that for about 10 years in the US. I was at the kind of point in my career where you decide, do you want to be a partner at the law firm? Do you want to go in-house and work for a client? Or do you want to do something more entrepreneurial?

4:53I didn't have, I'd say, the vision of, oh, I got to do something in South America and leave the U.S. and do something completely different. But I did have that entrepreneurial itch for, I'd say, a pretty extended period of time kind of during the back half of my time at the law firm. You know, as it often does, life circumstances handed me some good luck. I had a job offer from a law firm in Houston. I was in Dallas at the time, and there was a month break between the new job and the old job, and I decided to do some traveling. My background is pretty, I'd say, sequential, what people would, I guess, be used to, high school to college to law school to a career, without really having done any traveling or the year off that a lot of people do or exploring the world, et cetera.

5:47But this kind of gave me that that month between positions gave me a chance to do that. I'd heard some good things about Columbia. I wanted to find some place that I could basically go and just live for a month, not jump around to a bunch of places and without really ingraining myself in any one location. I kind of wanted to see what the challenge would look like of actually living in another country, going to the store, getting around and doing those kind of daily things versus an extended kind of sightseeing tour of a lot of different places. Fortunately, I really fell in love with the country, met some outstanding people here who were doing some exciting things from a business perspective, and I saw the market opportunity.

6:30I was here for a month, went back to the U.S. to start the new job in Houston, but really had the itch to think about what was next from a career perspective. My now business partner who I met when I was here on vacation was, as you mentioned, starting our investment firm Legacy Group, but also the flagship company within that firm, which is called the Green Coffee Company. and he needed assistance with the initial capital raise for the business. My background as a SEC corporate finance attorney fit the mold well. So I started helping him with the initial funding round during my free time while I was back in the US and then saw enough potential in everything that was going on here and the team and everything that we could build to say, you know what, I'm going to do it full time.

7:22So back half of 2017, I started selling everything I had, slept on a deflated air mattress for a couple of weeks as I made the transition from moving to Houston to Medellin. And I moved down here with a backpack and I had sold my golf clubs and used the travel golf bag to fill it with clothes and everything I kind of had that I hadn't sold or left behind in the US. And January 2018 came down here full time. I've been here ever since. Five years now, Fire Nation. Five years. That's just one of those things where, hey, it wasn't like he had to go down there and commit to five years up front. He was going down there.

8:04He was like, I'm going to test it out. I'm going to see if I can make my life down here. And here he is five years later. Here I am in Puerto Rico seven years later. It's just one of those things where sometimes you take a chance, sometimes it works, sometimes it doesn't, but at least you know. And you did mention the Legacy Group, and you are a partner, Adam, in the Legacy Group. Tell us more about the vision and values of what this is. Yeah, the basis of our investment firm down here is really built on our ability to find arbitrage by being on the ground in often overlooked markets like Columbia, where there's great opportunity.

8:40So our client base is primarily U.S.-based investors, high net worth investors who are looking for opportunities abroad, but still want the comfort of, I would say, working with U .S.-trained U.S. entrepreneurs who are familiar with the standards and the expectations for a U.S. client base, but that know the market locally enough that they can actually find opportunities based on private investment. that people can actually get some returns and access to industries, et cetera, that they couldn't get, you know, if they were only looking at the U.S. market. So we kicked that off five years ago, started the firm.

9:24As I mentioned, you know, our flagship company within the firm, we either build businesses ourselves or invest a lot of our own capital into them and then open them up to investment to our client base. but the flagship companies, the Green Coffee Company, you know, just kind of for proof of concept and to give some color around what kind of opportunities we see down here. You know, really with some fresh eyes, fresh capital, the world over knows Columbia and they know that it has great coffee. Nobody's really invested substantially in the market here in about 40 years. Just seeing that opportunity and being able to build something within the market in those five years that we discussed, we've gone from really a concept and an idea to becoming the largest coffee producer in the entire country and substantially larger than even the second place participant.

10:20Another portfolio company of ours called Polygonus focused on digital education. You know, they're really doing what the government itself hasn't been able to do in terms of educating youth on how to participate in the digital age, get into computer programming, open up a new market here. We're getting these access to these deals or building businesses and taking them to our investor base at strong valuation so that they can participate in a lot of the upside. and let us use our market knowledge to really build some special businesses for them. Now, I think a lot of people do associate Columbia with coffee as well as a lot of other places for certain things.

11:00But I don't think people ever really think that they could go down to a place that's so established and potentially start a company in one of the major exports. And you have the Green Coffee Company. I want to hear a little bit more about that, why you thought that was something that could be done, the process of it and your experience thus far? Sure. So Colombia is the number three largest coffee producer on earth. Number two, if we're talking about Arabica coffee, there's the Arabica or the Busta coffees that populate the globe. But what we saw in the market was really huge fragmentation. About 95 % of all the farmers here in Colombia own less than three acres.

11:43So the idea of them becoming large suppliers for a Starbucks or Nestle, for example, it's not really possible. The idea of somebody with such a small landholding, raising money, bringing capital in, making investments, consolidating infrastructure, it's just not really realistic. So what we saw was some generational turnover in terms of traditional coffee farms at scale. So you have a grandfather or great-grandfather who built a coffee farm that's 500 acres, 1 ,000 acres a generation ago, and it was a great family business, and it gets passed down to the kids. And now that they have some wealth in the family, they want to live in Miami or go study in Paris and not work in coffee.

12:33and coffee. That created for us some outstanding buying opportunities of scale-based operations that we could really put some infrastructure around. When we kicked off the business, really it was meant to be an alternative to commercial real estate for investors who we knew were already comfortable investing in Colombia. As we saw these market dynamics, as I mentioned, the fragmentation, the lack of investment, et cetera, we really saw the opportunity to build the business into an enterprise, an enterprise that we could scale, that we could sell to one of the big names in the coffee industry, or that we could get to an IPO in the US versus simply running it as a cash flow operation.

13:19So as I mentioned, just in the last year, this time last year, we're the third largest producer of coffee in the country. You know, in about five years, we've become number one. Right now we have about one and a half times the land holdings that the next largest producer in the country has. This year has been incredible from a growth perspective. 2022, we should do just about 10 times the revenue that we had in 2021. We're looking at$4 million in net income. The farms themselves in terms of scale, 7 ,000 acres, 8 million coffee trees. Back to my point from the beginning of the conversation, everything has been built around finding the best possible team to put into the organization.

14:08So, for example, on our board now, we just recently added Steve Oakland, who's currently the president CEO of Treehouse Foods. That's a$4 billion a year publicly traded company on the New York Stock Exchange with a£30 billion per year roasted coffee operation. He used to run coffee for Smuckers, which for those who don't know, is one of the largest coffee companies in the world. They own Folgers, Dunkin' Donuts, putting all these great people in place so that, as I mentioned in the beginning, we can step out of the business, continue to look for more opportunities and grow something special. To date, into the business, we've raised about$47 million.

14:52dollars. That's almost all from U.S.-based investors, high net worth accredited investors. And we've really focused on building a business that we could be proud of. Just as the economics of the business, of the coffee industry in Colombia, didn't make sense here for a long time, nor did the way in which employees were treated, the way in which the environment was treated, A lot of things that from a sustainability perspective were not things that we would be proud to be a part of. So we've extended employee benefits to all the employees we have. The technology we're implementing uses about 140th of the water that is typically used in the coffee process.

15:39just kind of for reference, this year alone, just from the investments we've made in technology, we'll use about 21 million less liters of water than a similar company processing a similar amount of coffee. So the impact that we're trying to have is huge and really goes back to the theme of the businesses we want to build through legacy and the opportunities that we want to take out to our investor base. Fire Nation, we have some really interesting things we'll be talking about in regards to foreign investments and other topics when we get back from thinking our sponsors. Are you ready to grow your business now?

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18:15Get early access to HubSpot AI today at hubspot.com slash artificial dash intelligence. Now, a lot of Americans, they only look within their own borders to invest. Like people who live in the United States are looking within the United States to invest in companies. Why do you think that we should look to invest in foreign markets? Just as one example, if we just look at some of the market dynamics we're seeing right now on a currency basis. So you have a historically strong dollar. You have overpriced U.S. assets by many historical metrics, whether you're looking at real estate or the stock market, which even though we've had a reset here in 2022 going into 2023, still historically trading higher than historical price to earnings ratios.

19:06You know, you're seeing a decrease in the prices for assets abroad, largely to do with the movements from the Fed in the U.S. That they drive up interest rates that has a global impact. Federal Reserve Bank equivalents in other countries drive up interest rates. It makes it more expensive to borrow. Prices naturally come down. The same ripple effect spills over into the competition for those assets. So, you know, basically the theme is folks who are able to invest in dollars can get some great opportunities abroad simply because the currency right now, the dollar versus, you know, whether it's the major currencies of the world or less significant currencies on a global basis in emerging markets.

19:57You know, there's a lot of arbitrage there available for investors. Like if you use Colombia as a reference point, just last year we were seeing an exchange rate of about 3 ,700 Colombian pesos for each U.S. dollar. In the last few weeks, we've seen that go up to 5 ,000 Colombian pesos to one U.S. dollar. So you're seeing a 35 % swing in the currency where, you know, if you're buying Colombian assets now in dollars and you just have a currency correction where things normalize and go back to where they were a year ago, you know, you're looking at the potential for a 35 % appreciation just on a currency basis, not accounting for the actual increase in value of assets or cash flow that might be tied to it, etc.

20:48So for markets where investors are comfortable, it's an interesting opportunity to use the strength of the dollar and get some great arbitrage. That can be investing in businesses, or it could be, oh, I've been waiting to buy a vacation home or rental properties, real estate, et cetera, abroad. And now it might be a good opportunity to think about doing something like that. Fire Nation, always be thinking outside the box when you have opportunities because of the things that Adam is sharing. And of course, past guests over the years have just shown that getting out of your comfort zone, that's where the magic happens.

21:25Now, Adam, you're currently raising a Series C funding round for the Green Coffee Company. What does this process look like? Give FireDation kind of an insight into this stage of funding. Sure. I'll hit on some frequently asked questions for where we are. So we kicked off our Series C funding round,$25 million, the back half of September 2022. I'm talking to you now here at the end of December. We're raising the money from high net worth investors. That's our core, as I mentioned, of the$25 million. We've raised$13 million so far. I expect that we'll finish the round in Q1 2023. The capital that we're raising will be used for expanding the coffee operations, you know, pushing further into roasted coffee than we currently are expanding operations there.

22:17And then interestingly enough, and this is kind of something people find fascinating, we're also opening a new vertical with the capital, which is vodka and gin creation. Way different from talking about coffee and what's the connection there. The science behind it is when you pick coffee off of coffee trees about 80 percent of what you take off the tree is an actual cherry so it has pulp mucilage sugars skins etc and what we consume in terms of coffee is just the bean inside which only makes up about 20 percent what we've looked at over the last few years is how do we turn all of that byproducts really the skin etc that i mentioned into a revenue source for the business.

23:04So we've done the clinical research and are building a distillery that we can use to turn all of that extra stuff, which right now for us is garbage and actually a cost, into vodkas, gins, pure ethanol, ethanol that can be sold on an industrial basis, all these additional products where everything that we're taking off the tree is creating income for the business. So capital in this round will be used for that, which I think is something our investors get incredibly excited about and that we're excited to tack on to the business. It is a U.S.-based investment. So everything is structured through a Delaware holding company.

23:45For U.S.-based investors, the tax consequences are the same as if you're investing in Apple. Legally, everything is based out of the U.S. All the banking is done in the U.S. Our goal is for a 2026 sale or exit of the business. Alternative would be, of course, an IPO in the US. The numbers tell us that we can get to an 11x return on investment for investors. So basically, if we're looking at 100 ,000 investment, the idea is return over a million dollars in a relatively short period of time, getting to that 2026 exit. We're taking 100 ,000 plus investments from accredited investors. Really an exciting time to be coming into the business with a good valuation and all these new verticals coming in that I think are going to add a lot of value.

24:43Adam, if Fire Nation wanted to learn more about what you have going on with Legacy Group, with the Green Coffee Company, what's your call to action for our listeners? Where can they go? Sure. specific for the series C for folks who are interested in investing, you can go to legacy dash group dot co if you click the current offerings tab, there you can review all the investment materials and actually make an investment directly through our investment portal. And of course, see all the other things that we're that we're doing here in Columbia and the different businesses we're building and funding and planning to open to our clients and and to all of you.

25:20Fire Nation, you are the average of the five people you spend the most time with. You've been hanging out with AJ and JLD today, so keep up the heat. And if you have any questions for Adam, find this episode on the podcast listening app, Podopolo, post a comment, and of course, eofire.com. Type Adam in the search bar. The show notes page will pop up with links to everything we've been talking about. One more time, Adam, what's that URL? Legacy-group.co. and click the current offerings tab to see specifically for the coffee investment. Adam, thank you for sharing your truth, your knowledge, your value with Fire Nation.

26:02For that, we salute you and we'll catch you on the flip side. Thanks so much, Sean. Hey, Fire Nation, a huge thank you to our sponsors and Adam for sponsoring today's episode. And Fire Nation's successful entrepreneurs accomplish big goals. That's why I created the Freedom Journal to guide you in accomplishing your number one goal in 100 days. And we're talking step by step. Visit thefreedomjournal.com. And I'll catch you there or I'll catch you on the flip side. Is this your year? Visit thrivetimeshow.com to see testimonials of how Clay Clark's business coaching has helped over 2 ,000 entrepreneurs to dramatically increase profitability.

26:39It's month to month and less money than an average minimum wage employee. Schedule your free consultation today at thrivetimeshow.com. Outbound Squad, hosted by Jason Bay, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. Tune in for convos with leading sales experts and top performing reps to help you land more meetings with your ideal clients. One of my faves, the monthly app with Jason and Ethan, where they share hacks, tips, and tricks. Listen to Outbound Squad wherever you get your podcasts.