Damien, a former commodity trader from Switzerland, launched his first commodity training company at the age of 24 while working a full-time job. In this video, he shares his story of how he found his first supplier, customer, and funding for his company, as well as the mistakes he made that almost bankrupted him and his company in the beginning.
Despite his passion for commodity trading, Damien hated asking for time off from his full-time job. To overcome this, he decided to start his own company on the side. However, instead of sticking to commodities and a region that he knew, he spent weeks looking for the perfect commodity, which led him to make several mistakes that almost cost him everything.
Key Takeaways
- Stick to what you know and avoid making decisions based on assumptions.
- Share the risk and find partners to come up with the capital to fund your endeavors.
- Due diligence is crucial when dealing with suppliers, and it’s essential to ask for help and advice when needed.
Background and Context
Damien, a former commodity trader born and raised in Switzerland, launched his first commodity training company on the side of his day job at the age of 24. In this video, Damien shares his experience of how he found his first supplier, first customer, and the money to fund his company. He also talks about the massive mistakes he made, which almost bankrupted him and his company right from the beginning.
Damien loved working in the commodity market and was slowly transitioning from an operator role to a trading role in his full-time job. However, he hated asking for time off, which made him feel small and less of a man. His only answer to that feeling was to start his own company, but he made a mistake by not sticking to commodities and a region that he knew. He spent weeks looking for the perfect commodity, which was a mistake number one.
After hitting a wall, Damien switched gears and decided to find a client first and then look for the commodity he wanted. This small idea unlocked everything for him, and he found his first customer in just two weeks. The Chinese factory needed two different products for its garbage bag production, LDPE and HDPE, and Damien found two suppliers that were willing to ship their products to China.
Damien funded the goods for two months by using his credit cards and borrowed 20k to set up the company to do the deal. He took all the liabilities on his name instead of finding a partner to come up with the capital and to fund the operation, which was a math mistake number three.
Damien had to do some kind of due diligence on the suppliers because he was not going to send a lot of money that he didn’t have without even checking them out a little bit. He visited the UK supplier’s recycling yard, but he was getting scammed by his contact, the guy that he spoke to, and he lost a lot of money.
Overall, Damien’s experience teaches us that it’s essential to stick to what we know, share the risk, and do proper due diligence before investing in any business.
Early Challenges
Damien faced several challenges when he launched his commodity training company at the age of 24. One of his biggest mistakes was not sticking to what he knew. He spent weeks looking for the perfect commodity, which was not related to the commodities he worked with in his day job. This led to wasted time and effort.
Another challenge was finding the money to fund his company. He had no money, so he had to find someone to lend him the 20k he needed to set up a limited company. Instead of finding a partner to share the risk and come up with the capital, he took all the liabilities on his name. This was a big mistake, as it set him back years in his financial journey.
Damien also faced challenges when dealing with his suppliers. He had to do some due diligence on them before sending a lot of money that he did not have. He traveled to the UK to visit one of his suppliers, but the supplier became weird and tried to find reasons for Damien not to visit his recycling yard. Damien eventually discovered that he was getting scammed by his contact.
Overall, Damien faced several challenges when launching his commodity training company, but he learned from his mistakes and gained valuable experience. He advises others not to make the same mistakes he did and to share the risk with others when starting a business.
Finding the Perfect Commodity
Damien, a former commodity trader, had a couple of years of experience in the commodity trading industry when he decided to launch his own commodity training company on the side of his day job. However, instead of sticking to the commodities and regions he knew best, he spent weeks looking for the perfect commodity. He made a mistake by not sticking to what he knew, which was a commodity related to his field of expertise.
After months of research, Damien hit a wall and realized that he needed to switch gears. Instead of looking for a commodity first and then trying to find a client, he decided to look for a client first and then look for the commodity that they wanted. This small idea unlocked everything for him.
Damien’s wife’s cousin, Adriano, had a small business importing gloves for construction workers in Brazil from China, and he had a Chinese partner in China that was conducting all the due diligence and sourcing the products. Damien called the Chinese partner, Bruce, and they immediately hit it off. Bruce was willing to sell raw materials to the factories they sourced from, and in two weeks, they found their first customer.
The Chinese factory needed two different products for its garbage bag production: low-density polyethylene (LDPE) and high-density polyethylene (HDPE), which are two types of plastics widely used for everyday items. Damien and Bruce found quite unhealthy price differences between the prices of LDPE and HDPE in mainland China and overseas. They finally found two suppliers that were willing to ship their product to China. One was in the UK, and the other was in Thailand.
With the UK supplier, they would have made 25% gross margin, and with the Thai supplier, they would have made 15% gross margin. However, Damien was too quickly too confident or just too stupid to ask for help, and he couldn’t see the biggest red flag of all. He made a mistake by not realizing that if you do 20% gross margin on a back-to-back deal buying FOB and selling CFR with a commodity like products in a market that you really don’t know, something is up because those margins are not possible.
In hindsight, Damien should have shared the risk with someone who had more experience or capital. There are a lot of people with a lot of capital who can fund your endeavor, so it makes no sense to take all the risk on your name if there are people out there willing to fund you.
Overall, Damien learned that it’s important to stick to what you know, look for a client first, and then look for the commodity they want. Additionally, it’s important to share the risk and not take all the liabilities on your name.
First Client and Commodity
Damien, a former commodity trader, started his very first commodity training company on the side of his day job when he was 24 years old. In this video, he shares the entire story of how he found his very first supplier, customer, and the money to fund his company. He emphasizes the massive mistakes he made that almost bankrupted him and his company right from the beginning.
At the time, Damien was working in a commodity trading house in Switzerland and was slowly transitioning from an operator role to a trading role. He was starting to find suppliers, customers, and closing deals, which he loved. However, he hated asking for time off and always waited until the last minute to ask for it. This feeling made him start his own company on the side.
Damien made a mistake by not sticking to commodities and a region he knew. Instead, he spent weeks looking for the perfect commodity-like products that lay in the intersection of those four diagrams, which had no link with Africa, no foodstuff in containers, and not traded on a future exchange. After months of research, he hit a wall and decided to switch gears. He decided to find a client first and then look for the commodity he wanted.
At that time, his wife’s cousin, Adriano, had a small business importing gloves for construction workers in Brazil from China, and he had a Chinese partner in China that was conducting all the due diligence looking for the right factories and sourcing the products. Damien called Bruce, the Chinese partner, and they immediately hit it off. Bruce found their first customer in two weeks.
The Chinese customer needed two different products for its garbage bag production: low-density polyethylene (LDPE) and high-density polyethylene (HDPE). Damien and Bruce found two suppliers that were willing to ship their product to China, one in the UK and the other in Thailand. They found quite unhealthy price differences, and with the UK supplier, they would have made 25% gross margin, and with the Thai supplier, 15% gross margin. Damien funded the goods for two months by using his different credit cards, and he had to find someone to lend him 20k to set up a limited company since he had no money. He took all the liabilities on his name instead of finding a partner to come up with the capital and to fund the operation.
Financial Plan and Challenges
Damien’s financial plan for his commodity training company was simple. The Chinese client had to pay 30% prepayment, and Damien had to pay 100% against the document from the UK supplier. He had to find 15,000 CHF to fund the goods for two months. Between his different credit cards, he was able to fund it. However, he had another problem. In Switzerland, he needed 20,000 CHF to set up a limited company, and he had no money. Therefore, he had to find someone to lend him those 20,000 CHF so he could set up the company to do the deal.
Instead of finding a partner to come up with the capital and fund the operation, Damien took all the liabilities on his name. This was a mistake, as each time he got broke, it set him back years in his financial journey. Therefore, he advises others to share the risk. There are many people with a lot of capital that can fund your endeavor, so it makes no sense to take all the risk on your name if there are people out there willing to fund you.
With the gross margins of 25% and 15% from the UK and Thai suppliers, respectively, Damien was ecstatic. However, he was too quickly too confident or just too stupid to ask for help because any people with a little bit of experience would have told him that something was up. The margins were not possible, and he was dreaming. This was a mistake, and he advises others that when something is too good to be true, it usually is.
Supplier Due Diligence
After finding the two suppliers willing to ship their products to China, Damien knew he had to conduct some due diligence on them before sending a large sum of money. He started with the UK supplier and took a plane ticket from Geneva to London to visit the recycling yard. However, as soon as he announced his visit, the supplier became weird and tried to find excuses not to have Damien visit the yard. Despite this, Damien couldn’t postpone his visit, and he had to see the recycling yard for himself.
When he arrived at the Heathrow airport, Damien waited for the supplier to pick him up, but nobody showed up. He sent messages, tried to call, and send emails, but nobody answered. He then took a taxi to the yard, which was a two-hour drive from the airport. Finally, he arrived at the yard, but it was closed, and nobody was there. Damien had to find a nearby hotel to spend the night and went back in the morning to discover that he was getting scammed.
From this experience, Damien learned that conducting due diligence on suppliers is crucial before conducting any business with them. He advises that one should research the supplier’s background, reputation, and financial stability. Additionally, one should ask for references and verify them to ensure that the supplier is legitimate. It is also essential to check the supplier’s product quality and delivery times to ensure that they meet the required standards and deadlines.
In conclusion, conducting due diligence on suppliers is crucial to avoid getting scammed or conducting business with illegitimate suppliers. Damien’s experience with the UK supplier taught him the importance of conducting due diligence and verifying suppliers’ legitimacy before doing business with them. By following these guidelines, one can ensure that they are working with reliable suppliers who can deliver quality products on time.
Mistakes and Lessons Learned
Damien made several mistakes when he launched his commodity trading company. First, he did not stick to what he knew and spent weeks looking for the perfect commodity, which led to wasted time and effort. He should have stuck to commodities and a region that he knew how it worked and had all the contacts.
Second, Damien was too quickly too confident and did not ask for help when something seemed too good to be true. He should have shared the risk with someone else or found a partner to come up with the capital and fund the operation.
Third, Damien took all the liabilities on his name instead of finding someone to lend him the 20k Swiss francs needed to set up a limited company. This mistake set him back years in his financial journey.
These mistakes taught Damien several lessons. He learned to stick to what he knows, share the risk, and not take all the liabilities on his name. He also learned to ask for help when something seems too good to be true and to do due diligence before sending a lot of money that he did not have.
In conclusion, Damien’s mistakes and lessons learned can help others who want to start their own company. By avoiding these mistakes, they can save time, effort, and money and increase their chances of success.