From local player to global titan… and why almost nobody makes it
In this post, I want to unpack a question that’s been stuck in my head for years:
Why don’t most commodity trading firms scale?
Why do so many niche trading houses hit a certain size…
then flatline…
then slowly fade…
or shut down altogether?
Is it:
- A lack of skills from the founders?
- Market competition?
- Funding constraints?
- Or is commodity trading just too difficult to scale by nature?
If you follow my YouTube channel, you know I don’t ask this in the abstract.
I own a few small commodity trading companies. I spend a lot of time thinking about how to grow them, talking with other owners, testing strategies, and learning from my failures.
This article is basically a compressed summary of years of thinking and painful experimentation.
From Oil Major to Tiny Niche Shop
At the very beginning of my career, I worked for TotalEnergies (back then still called Total) in their trading arm, alongside university.
Massive organization. Big systems. Big structure.
When I graduated, I jumped to a small commodity trading firm called Gety Trade.
Going from a huge oil major to a niche trading house was a shock.
And it got even more intense: shortly after I joined, the company went through a heavy restructuring.
We ended up… three people.
- My boss – the owner
- The accountant (who was also family)
- Me
By the time I left, 6–7 years later, we were around 12 people.
So I got to see, up close, how a small trading firm grows from micro to “small but real”:
the milestones, the struggles, the near-deaths, the mini-wins.
My boss had been running a trading firm for 30 years.
Her mother had also run a trading company back in the 1950s.
So this wasn’t some rookie operation.
She was impressive: spoke five languages (French, English, German, Polish, plus an Indian language), knew everybody, and I learned basically everything from her.
And there’s one habit she had that, at the time, I thought was totally insane.
The Owner as the Bottleneck (And Why They Choose to Stay That Way)
Every night.
Every. Single. Night.
She would read all the emails that came in or went out of the company.
All of them.
Across all inboxes.
One day, I told her:
“Vanessa, it’s normal that the company can’t grow.
You’re the bottleneck. You read all the emails.
You don’t have 40 hours in a day.”
She looked me dead in the eyes, like I was the dumbest kid alive, and said:
“Damien, but it’s my risk.”
At the time, I didn’t fully get it. I was in my 20s, full of theories.
Now I understand exactly what she meant.
To understand why most niche trading houses don’t scale,
you first need to understand how the owner sees the world.
The Comfortable Plateau: When “Good Enough” Is Actually Very Good
Imagine this:
- You’ve spent 5–10 years building your niche trading firm.
- You’ve dodged legal bullets, bad counterparties, market crashes.
- You finally have a real business.
You’ve:
- Built a team of 5–10 solid people
- Secured recurring contracts
- Found a way to get finance
- Survived market volatility, payment defaults, and a few crooks
- Ironed out your operations so things mostly work
At the end of the year, you can pocket $1–2 million if you want.
Your name has weight in your niche.
You know the flows, the players, the politics.
You’re not a billionaire.
But you’re… good.
Now the question is:
Do you really want to take massive new risks,
increase the complexity of your life and business,
and potentially blow it all up…
just to try and become a “bigger” company?
Most people, when they reach this point, start to hesitate.
And that’s when the scaling problem starts.
Because to grow beyond that comfortable plateau, you hit four brutal challenges:
- Financing growth
- Opening new markets
- Building a real trading team
- Bringing in outside capital (and outside control)
Let’s walk through them.
Challenge 1: You Can’t Self-Finance Growth
This is the cold reality of commodity trading:
It’s almost impossible to self-finance fast expansion.
The math is simple.
Say:
- Your average margin per trade is 7%
- Your cash cycle (from buying to getting paid) is 30 days
If you perfectly recycle that same capital,
it takes almost a full year of flawless execution to double it.
With a 3% margin, you need around 23 cycles to hit 100% return on capital.
That’s 23 trades, zero disaster, zero delay, zero screw-up.
In the real world?
Good luck.
So if you want to grow trade flows, open new lines, or take bigger positions, you need to borrow.
And when you’re ready to expand into new markets, you often don’t have access to cheap bank lines yet.
You end up borrowing from specialized funds at 10–14% per year.
If your competitor on the same flow has funding at 5% from their relationship bank…
you’re starting with a massive disadvantage.
Margins are tight enough.
Now your cost of money destroys your competitiveness.
Challenge 2: Opening New Markets Is a Full-Contact Sport
To grow beyond your niche, you need to:
- Open new trade flows
- Enter new geographies
- Work with new counterparties you don’t know yet
On paper, it looks cool: “We’ll expand to Region X, Product Y, Origin Z.”
In reality, for the owner, it means:
- Traveling heavily for years
- Sometimes relocating the family to some second-tier industrial city near a port or free zone
- Investing a lot of money upfront before seeing any return
- Accepting that some of that money will just be… burned
You can’t fully understand a new market from a spreadsheet.
You only see the truth when you’re in it.
The Regulation vs Reality Gap
You can read laws, tax codes, and WTO documents all day.
In many countries, what is written and what is done are two different universes.
Small example from my life:
I had a company in Senegal, importing and distributing cooking oil.
We shipped a few cargos and quickly realized:
Margins were… horrible.
The numbers just didn’t add up.
I knew the CIF prices competitors were paying (I’d seen their contracts).
I knew the selling prices in the market.
Logically, they should be losing money.
They weren’t.
My (not-so-brilliant) business partner eventually said:
“Ah, Damien, it’s normal. They don’t pay the same tax level as us.”
Turned out, big importers were prepaying millions in taxes to the government’s treasury and getting a lower effective tax rate.
Others were using every trick in the book to minimize payable duties.
On top of that, in many countries, there are different tax levels depending on how you declare the goods.
Import wheat flour? Maybe it’s taxed as a primary food product = lower rate.
Import another type of flour? Higher bracket.
What do people do?
They misdeclare the product to pay less tax.
So if you want to compete in that market, you face a hard question:
Are you okay with doing what they do?
Or not?
You need that answer before you invest serious time and money in the new destination.
Brand Recognition: The Invisible Wall
When I was at Gety Trade, I was in charge of developing West Africa.
In that region, nobody knew Gety Trade.
We were known elsewhere, but there… zero brand.
I was trying to penetrate markets where our competitors were names like Al Ghurair, LDC, RefCom, etc. – multi-billion dollar players with long history.
I could often:
- Offer better prices
- For better quality
And I knew that because I had visibility on what others were shipping.
But big local importers preferred to work with the big, known houses.
Even just getting a meeting with the right decision-maker sometimes took months of follow-ups.
You don’t realize how much brand recognition acts like collateral until you try to sell without it.
The Loss of the “Unfair Advantage”
Most niche trading firms start with one unfair advantage:
- Deep family relationships with local farmers
- Control over a specific origin
- A unique logistics setup
- A regulatory quirk
- Insider knowledge about one very specific flow
You wedge yourself into the market via that unfair edge, then grow from there.
But when you open a new market, you don’t have that wedge.
You’re just another foreign company with an email address.
Building a new unfair advantage somewhere else is possible…
but it’s slow, risky, and expensive.
Challenge 3: You Can’t Just “Hire a Trader”
This is the part where most scaling dreams go to die: people.
Let me give you a taste of my own hiring adventures.
At one of my companies, we had five employees.
We ended up firing all five.
Highlights:
- One guy smoked weed every day. We told him: “Stop if you want to stay.” He said: “No.”
- One girl had, let’s say, experimented with crack.
- Another girl had an OnlyFans. She probably made more money than me. I still don’t understand why she wanted the job.
Obviously, that’s on me.
My hiring, my responsibility.
But it shows how messy it can get.
Now, let’s talk about traders.
Senior Traders: Too Big for the House
A real senior trader — someone who:
- Understands the market
- Knows the counterparties
- Has a network
- Can price risk properly
- Can bring you deals
That person is usually:
- Too expensive for a small trading firm (salary + bonus expectations)
- Doing deals that may be too big or too risky for your balance sheet
- Very spoiled by the tools, systems, and brand of their big-house employer
And you have to ask:
If this guy is so successful at a big player…
why does he want to join my small shop?
A lot of small firms get burned hiring one “star” who doesn’t deliver outside his original environment.
So You Hire Juniors Instead…
Reality for most small houses:
They hire junior sales-traders.
Young, hungry, mostly focused on finding buyers.
But here’s the structural problem:
- The owner doesn’t really know the new markets the juniors are exploring
- So the owner sets very tight risk limits to protect the company
- From a giant universe of potential deals, only a tiny circle is allowed
The juniors don’t yet have the experience to:
- Spot which “crazy” deal is actually safe
- Re-structure a borderline deal into an acceptable one
- Push back intelligently on risk perception
So they get stuck.
Two usual outcomes:
- The junior leaves:
“This company is impossible. They don’t take risks. I can’t close anything.” - The owner fires them:
“It’s been 6–12 months, no deals. Sorry, bye.”
Both were kind of set up to fail.
A Real-World Example: The Prepayment Rule
At Gety Trade, when I was developing West Africa, my boss had one hard rule:
For the first shipment, the buyer must prepay 30%.
After that, fine — we could give them credit.
But that first deal: always prepayment.
Now, understand the region:
In many African markets, the seller is the bank for the buyer.
Everyone gives credit.
Importers optimize by maxing out credit lines across all their suppliers.
So I was going to importers saying:
“Hey, I’m new, my company is unknown here, but:
- I want you to send me 30% prepayment
- While my competitor, whom you’ve known for 10 years, gives 90 or 120 days open account.”
You can imagine how fun those meetings were.
I complained a lot.
But in the end… I still managed to pull it off with some clients.
The point is:
The combination of junior traders + ultra-tight risk makes scaling extremely tricky.
Challenge 4: Outside Capital = Outside Control
At some point, if you want to go from “strong niche player” to “global house”, you’ll need equity, not just trade finance.
You’ll need someone to come in with $10–20 million (or more) of equity to:
- Strengthen your balance sheet
- Improve your access to bank lines
- Give you firepower to attack new markets
But then the fun begins.
The Valuation Fight
- You’ve bled for 5–10 years building this business.
- You’ve survived stuff most people can’t even imagine.
- You feel the company is worth a lot.
The investor looks at:
- Low margins
- High operational risk
- Working capital intensity
And says:
“Meh.”
You’re worlds apart on valuation.
The Psychological Clash
Beyond price, there’s a deeper issue: mentality.
The founder of a successful small trading firm is, by definition, ruthless and independent.
You don’t survive this industry without being sharp, decisive, and very comfortable being in charge.
Bringing in a big equity investor means:
- You now have a boss, or at least someone to report to
- You need to do weekly or monthly updates
- You get a board
- You have to justify your decisions to people who’ve never sat in a dusty port warehouse at 3AM arguing about moisture content
For many founders, that’s hell.
So even if the money is needed, even if the maths say “do it”…
psychologically, it’s a massive barrier.
Scaling: High Risk, Low Reward (At Least For a While)
To recap, if you’re at the point where:
- You make €1–2 million a year
- You’re known in your niche
- Your operations run reasonably well
And you want to grow beyond that, you’ll need to:
- Take on more financial risk
- Open new markets (with all the hidden rules, corruption, and quirks)
- Hire and train a real trading team
- Add non-productive layers of control (compliance, risk, accounting)
- Possibly bring in equity investors
And for years, your:
- Team size will grow
- Complexity will grow
- Personal stress will grow
…while your actual profitability may not grow at all, and might even go down.
Each new person is a potential new mistake.
Each new deal is a potential new claim, fraud, or scandal.
Each new system is something else that can break.
So the owner has to answer a simple but brutal question:
“Do I really want to do all this…
when I’m already making very good money?”
For most, the answer is: no.
That’s why:
Commodity trading isn’t a simple “valley of death” you just cross once.
To scale from local player to global titan, you need to cross
a whole continent of despair.
Most people set up camp on the near side, where life is already pretty good.