Stranger in a Strange Land – Entrepreneural edition (1 Viewer)

[msommer]

I've been on these boards for more than a decade and having a blast, particularly in the heady 0's when this forum was wild and crazy and the good shtick had not been practically used up. It used to be every week there would be good yarns from EG72, Tipsy, The Iron Sheikh and many others, not least from a few posters who for mortal reasons are no longer with us.

I've not been a prolific poster, not had any soecific topic t call my own, but inspired by Willie Neslon's plea, and not least the McClure's Barbecue thread, this will be my meager attempt to add a little to the FFA of today. My plan is to make this a sort of blog about the goings on as I am attempting to start a new business in Peru.

I've spent just over 11 of the past 18 years in South America, mostly in Brazil, but the past eight months I have been looking at several projects in Peru, one concerning telecommunications, one commodity trading and the one that I am now attempting to make into my second career.

My background is in logistics and I've worked with that for a quarter of a century, mostly ocean transportation, and while this has an impact in my new venture it is not the core.

My venture will be about beer, and not just beer, good beer!

Peruvians drink a lot of beer, particularly if the meager incomes down here are considered. On average every Peruvian drinks about 45 liters of beer per year (70 here in Lima) compared to 75 liters per Amercan. So the beer market is pretty big for a country with one tenth of the population of the US. Unfortunately craft beer represented 0.05% of that market compared to the US where one in six beers sold is a craft beer – that is more than 300 times the market share in Peru.

Most of you are American and have enjoyed the fruits of the craft beer revolution in the US. My humble venture will attempt to support the infant craft beer scene in Peru, initially with consumables like malt and hops and later branch into other areas of need (one of which seems to be logistics).

So this thread is dedicated to writing about the ups and downs of starting a new business in an uncertain and nascent market, in a country other than my own. Yet while I will likely focus a lot on what we are and have been doing to get the business off the ground I am sure I'll also be writing a bit about living here, the things I find strange, stuff that happened recently or just some anecdotes about life in general and lift in Peru (or Lima) specifically.

I hope some of you might find this interesting.

 

[Hawks64]

Good luck!

 

[Das Boot]

Ditto, good luck!

Looking forward to following your progress and hearing your stories.

 

[Fennis]

En

 

[mr roboto]

Cool!

 

[psychobillies]

Wow. Sounds like a hell of an adventure. You married? Kids?

 

[NCCommish]

Good for you, all the best. Looking forward to keeping up with your success.

 

[msommer]

Wow. Sounds like a hell of an adventure. You married? Kids?

Recently divorced (amicably), two teenage daughters living with their mom in Denmark - so I will be crossing the Atlantic every six to eight weeks to spend just a little time with my kids in this period.

 

[msommer]

So how does one become an entrepreneur in a foreign country?

Pardon me for using that word to describe my modest endeavor, although Bill Gates and Steve Jobs may have started in a garage, and I will too, it's just a fancy word for saying starting a small business, and in no way will this venture propel itself to Apple or Microsoft fame, fortune or importance. It's beer for Christs sake.

Anyway, I'll come back to the garage later.

In my case I worked 22 years in the same company. 22 exciting and mostly happy years. Except for the last three, when I was slowly but inexorably being turned into the grumpy old guy in the corner. I realized what was happening and not wanting to complete the transformation I took the consequence and left the company, confident in my ability to land another career job at the drop of a hat.

I'd like to blame the recession sweeping the world at the time for my inability to carry out that plan, but that is not the whole story. In my previous line of work being internationally mobile is essential and I simply was not at the time. When I shed that restriction I got into doing shorter term projects, sort of consultancy if you like.

Very much a one man band, although in the beginning mostly working inside a corporate structure I grew fond of not having very rigorous reporting lines and of doing a lot of what previously was handled in other departments; it made me learn to learn again.

So this brings me to Peru. An opportunity to check out some joint venture projects led to meeting a passionate and fairly nuts Icelandic guy. Always wears shorts and sandals. And a knife (actually a short bayonet I believe). His passion (other that for his family) is beer. Craft beer. And gin. He'd spent a few years trying to find the right angle to break into the nascent craft beer scene, but lacked the capital to do it.

So this guy had a vision, and I had interest and time on my hands to see if I could shape his thoughts on how to conquer Peru (and the world) into a workable business. I think I have. We'll leave the world alone for now.

Anyway we've scraped the money together to give it a go. If all goes well tomorrow (it probably won't) we'll have started a company as 50/50 partners.

I mentioned a garage above. Well my Icelandic friend recently had to move and he has now rented the back part of a house, including the garage. The garage will be our storage facility for the next six to 12 months. There is a little bit of renovation that needs to be done but it is going to be great.

The sky (or at least Peru) is the limit!

 

[msommer]

Ha, obviously my day did not go according to plan yesterday. I hope to be able to post an update tonight

 

[El Floppo]

beer dot.

eta: and good luck! exciting, inspiring stuff!

 

[msommer]

Ok, I promised an update and I'll deliver on that – delivering on your promises is the basis of sound business management – although this blog doesn't really qualify as that.

Anyway, I'm sitting in front of my laptop with a glass of local rum on the rocks so, now's as good a time as any to tell y'all what has occurred over the past couple of days.

I initially thought I'd be able to start the registry of the company here in Peru yday and I got up early and went to get the papers required from the immigration authorities bright and early, armed with local assistance in the form of my Icelandic business partner and his Peruvian wife. Saturday we had been told that I needed to fill out form 4 to grant me the temporary ability to enter into and sign contracts here in Peru. That would allow me to open a bank account, to which I would be able to transfer the money required to qualify for a work visa as an investor in a Peruvian company.

This money, while not FBG kind of money is still a fairly large sum, enough to buy a luxury SUV in the US, had I been so inclined .

Anyway, paper in hand I went to the bank, only to find out that that despite the advice from the immigration officer Saturday morning (8 am – ungodly hour) it was not actually possible to open an account without an approved visa, essentially the local version of a green card.

I was a little pissed. Anyway, we reached out into the network here and got the rather annoying information that just about everything the immigration officer had said was wrong. Bass Pole.

Also, we got the real procedure worked out and realized that we had to create the company first to get me the visa and all the money I had to invest had to come in from foreign sources, in my name.

Ok, so we proceed to the authorities specifically assigned to assist people open up companies, to move things along. After havingsat around waiting, the first thing we were told was that in addition to the permision to sign contracts, I needed another paper, documenting my coming and goings from the immigration authorities, that obviously in the mean time had closed for the day.



Somewhat discouraged we went our separate ways (my business partner had to move 1.5t of tiles into his new house – by hand – somehow I managed to stay out of that one...)

Later that evening I called him (I knew he would be thirsty ) and suggested we went out to some craft beer bars, owned by people we had not already canvassed – he enthusiastically agreed.

Unfortunately, the two bars we wanted to go to were closed, so – still wanting to have some good beer – we went to a third, already canvassed, place. This turned out to be a real smart move as the association of Peruvian Craft brewers were holding a meeting there and we got to talk to a lot of people after all. What wasn't smart was staying out until 0330 am, getting progressively more able to solve the problems in the world

After a few comatose hours I realized that we were actually running out of time. It turns out that Thursday and Friday this week are public holidays and everything will be closed. Since I am leaving here on Saturday to go see my family again, today then became boom or bust day. Bust being wasting a month before I get back here again to start the company registration process.

So fairly hung over I took a shower at 8 am, and after that started frantically to call my business partner to wake him up so we could get going. Finally, just before 11 am we arrived at the immigration authorities to get the last paper. The delay was not all caused by my tired and hungover friend, I promise in a later post to describe Lima traffic and the taking of taxis here.

Anyway to cut a long story short, by five pm we had successfully hurdled three separate bureaucracies and now we have started the registration process. It should be completed in about ten working days.



After that the company bank account be created, I'll pump in my investment and we are ready to go (knock on wood etc.)

tl;dr – I am now very close to own half of a company in Peru

 

[AnonymousBob]

 

[msommer]

 

[Uruk-Hai]

:sehorn:

Best of luck. I look forward to following along.

 

[msommer]

[SIZE=10pt]So, today is a public holiday and things are a bit slow, I guess it is time for a little non business related content, today's topic is: How to get around in Lima.[/SIZE]

Traffic here is crazy. Not quite Cairo crazy, but "why should I respect the lines that separate the lanes" and "If I change lanes three times in the next 100 ft, I'll get ahead" crazy. There is no discipline, and there is no understanding. Everyone drives completely focused on their own journey.

Public transportation is a maze. While there are many buses, finding out where they go is pretty tricky. There are as far as I can tell no time tables, no scheduled stops, no information you can access remotely about when an where they go. There is a guy at the door shouting something unintelligible as the bus is stopped randomly on the street, and there are what might be street names or maybe names of neighborhoods painted on the side of each bus. These guys drive just as crazy as everyone else in the city, except in a lot more steel (and with what sounds like questionable brakes).

If you are not a stress and adrenalin junkie, or fully immersed in Peruvian (bus-) culture, your only shot is taking a taxi.

Ah, taxis. There are a lot of them. Most are very old and battered. They do not have meters.Except for the Uber like 'safe' taxis that you can order from your smartphone every voyage begins with a negotiation.

"Hello, Do you know where x street crosses y road, in z neighborhood"?

"No" - taxi drives away

Next attempt - a positive reply!

"Yes"

"How much"

"20"

"No, really, it should be 12"

Taxi drives away

"Hello, Do you know where x street crosses y road, in z neighborhood"?

"Yes"

"How much"

"14"

"12"

"Let's go"

Success!!! Now you are inside the public transportation of your choice, it doesn't really matter which way the guy goes (unless you are in a hurry in characteristically gringo style), so you get in, trying to fit your 6'3" body into the back seat of a subsubsub compact. Time to relax, no?

Not quite. Because now the driver turns on the radio to inane local dance tunes, or 80'ies pop no one has ever heard about or the latest talk show about football, and adjusts the volume to be just short of that of a powered jack hammer - the big ones they use to tear up the streets...



And so, a good distance and time later, you give the taxi driver the last instructions to take you from the crossing you agreed, to your real destination, that he never has heard of and likely will forget the second you pay and get out, with your ears ringing.

And you know, on your way home, you get to do it all over again!

 

[Fennis]

good stuff, thanks for the updates.

 

[moleculo]

:dot:

 

[Nick Vermeil]

Chupar

 

[Johnny Rock]

Ok, I promised an update and I'll deliver on that – delivering on your promises is the basis of sound business management – although this blog doesn't really qualify as that.

Anyway, I'm sitting in front of my laptop with a glass of local rum on the rocks so, now's as good a time as any to tell y'all what has occurred over the past couple of days.

I initially thought I'd be able to start the registry of the company here in Peru yday and I got up early and went to get the papers required from the immigration authorities bright and early, armed with local assistance in the form of my Icelandic business partner and his Peruvian wife. Saturday we had been told that I needed to fill out form 4 to grant me the temporary ability to enter into and sign contracts here in Peru. That would allow me to open a bank account, to which I would be able to transfer the money required to qualify for a work visa as an investor in a Peruvian company.

This money, while not FBG kind of money is still a fairly large sum, enough to buy a luxury SUV in the US, had I been so inclined .

Anyway, paper in hand I went to the bank, only to find out that that despite the advice from the immigration officer Saturday morning (8 am – ungodly hour) it was not actually possible to open an account without an approved visa, essentially the local version of a green card.

I was a little pissed. Anyway, we reached out into the network here and got the rather annoying information that just about everything the immigration officer had said was wrong. Bass Pole.

Also, we got the real procedure worked out and realized that we had to create the company first to get me the visa and all the money I had to invest had to come in from foreign sources, in my name.

Ok, so we proceed to the authorities specifically assigned to assist people open up companies, to move things along. After havingsat around waiting, the first thing we were told was that in addition to the permision to sign contracts, I needed another paper, documenting my coming and goings from the immigration authorities, that obviously in the mean time had closed for the day.



Somewhat discouraged we went our separate ways (my business partner had to move 1.5t of tiles into his new house – by hand – somehow I managed to stay out of that one...)

Later that evening I called him (I knew he would be thirsty ) and suggested we went out to some craft beer bars, owned by people we had not already canvassed – he enthusiastically agreed.

Unfortunately, the two bars we wanted to go to were closed, so – still wanting to have some good beer – we went to a third, already canvassed, place. This turned out to be a real smart move as the association of Peruvian Craft brewers were holding a meeting there and we got to talk to a lot of people after all. What wasn't smart was staying out until 0330 am, getting progressively more able to solve the problems in the world

After a few comatose hours I realized that we were actually running out of time. It turns out that Thursday and Friday this week are public holidays and everything will be closed. Since I am leaving here on Saturday to go see my family again, today then became boom or bust day. Bust being wasting a month before I get back here again to start the company registration process.

So fairly hung over I took a shower at 8 am, and after that started frantically to call my business partner to wake him up so we could get going. Finally, just before 11 am we arrived at the immigration authorities to get the last paper. The delay was not all caused by my tired and hungover friend, I promise in a later post to describe Lima traffic and the taking of taxis here.

Anyway to cut a long story short, by five pm we had successfully hurdled three separate bureaucracies and now we have started the registration process. It should be completed in about ten working days.



After that the company bank account be created, I'll pump in my investment and we are ready to go (knock on wood etc.)

tl;dr – I am now very close to own half of a company in Peru

Excited for you. Thanks for sharing. How are your kids?

 

[msommer]

Kids are (at least seem) fine with it. They were at one point worried that I might get a new wife and disappear from their lives but we've laid that one to rest. I've been travelling a lot for the past 18 months so me being away for a month or more at a time is nothing new. When I am home I spend a lot of time with them, talking, doing stuff.

My ex-wife and I are still a team when it come to raising them and I'm not the guy who flies in with a bunch of presents, doing cool stuff, spoiling them rotten before I move on again. I try to speak with them several times a week although the time difference makes it difficult and our gift policy is the same as it alway has been.

The youngest daughter talks and talks when we are on, the older a little less, unless she has something specific she wants my view on. Today that was applying for a job at a cafe or shop (I said, apply to both - see who wants to hire you).

In a way I am privileged not to get the day to day dreary we have to leave now, or we'll be late, your food is getting cold, why didn't you clean your room situations so often, I seem to be getting more quality stuff going when we interact. On the other hand, there is a lot less of the joking, the mutual teasing, the doing stuff together spontaneously.

 

[msommer]

Having spent a few days in tranquil Jersey I realize that there were a few issues with traffic in Lima I forgot to mention.

I mentioned the chaos - but perhaps I should exemplify. My street is a pretty busy two lane (each way) road. It´s got a tree line median with a large path for pedestrians and bicyclists down the middle. Frequently as I walk down the street to the supermarket the following things occur:

1) A taxi spots a potential customer on the sidewalk, whips his car into the inner lane with squealing brakes, now blocking that lane completely while negotiation is underway, only to proceed to make a u turn from the right lane (but at least he´ll cross the median at an approved place - pretty sturdy iron fences on the median). This move is a classic. Bound to close the entire street for at least a minute.

2) A bus decides that moving over to the sidewalk is too much hassle and picks up or drops off passengers from the outer lane.

3) Some doofus decides to make a left turn from the right lane (or right turn from the left lane)

4) All of the above.

The supermarket is just over a block away. Takes a minute and a half to walk there....

The road to and from the airport is a particular white knuckle experience, as there are stretches with six lanes - which in Peruvian means easily room for eight cars across, each moving, grooving and not least swerving to their own beat.

I´ll never drive in Lima

 

[GroveDiesel]

Sounds awesome. Good luck!

 

[msommer]

Just a quick update on what's been going on, which is not much.

I'm hanging out in Denmark with the family while the wheels of bureaucracy in Peru are supposedly turning. We hit a snag last week, now we have to redo some papers (not our fault, someone helping us was not paying attention) and that cost us about ten days.

In the mean time I've been firming up our relations to one supplier and looking for a few more for back ups. Unfortunately my business partner, ostensibly in charge of sales and marketing, has decided to quit smoking. Why is this unfortunately? His health is important after all, right? Well, apparently his cold turkey has rendered him incapable of communicating with another human soul for the past two weeks without wanting to rip their heads off.

The guy is about 6'7", weighs 260 pounds and pretty much always carries a big ### knife on his belt. This, as you can imagine, could pose an issue with some customers.....

Anyway, he seems to be over the worst of it and I have suggested him to start talking to our prospective customers on the phone (politely).

We're moving forward, even if a snail could outpace us right now.

 

[ChiefD]

In.

 

[cstu]

I've spent just over 11 of the past 18 years in South America, mostly in Brazil

Entrepreneurship, yadda, yadda, yadda...how were the Brazilian chicks?

 

[msommer]

I've spent just over 11 of the past 18 years in South America, mostly in Brazil

Entrepreneurship, yadda, yadda, yadda...how were the Brazilian chicks?

Incredibly sexy. And as one of my friends once said, if you can't get laid in Brazil, you are doing it incredibly wrong.

ETA: In other words: Ready, Willing, Able

 

[msommer]

It's been quiet mostly for the past month:

Positives:

- The company is finally registered and the bank account created. We may have won the first battle in a long war over bureaucracy. May because somehow my partner's wife has been written in as commercial Director of the company although she is not in any way part of it. We probably have to pay the lawyers to get that changed, but for now it is not a deal breaker in any way.

- I've unearthed a couple of suppliers that may be key to a better offering of hops - working on developing a distributor deal with one and just resell from the other

Negatives:

- My plan to get my supposed sales and marketing guy to reach out to customers on the phone failed miserably (he's not the talk over the phone type I guess) and I seriously need to rethink how we go about this.

- It looks like we have to find a new warehouse since our current plan seems unlikely to come to fruition'

- The website is still not up and running. For crying out loud, WTF!

- My current landlord is throwing me out at the end of the month - so I have about four days to find a new place to stay in Lima that will not bankrupt me. I'm not sleeping on someone's couch. That ain't happening.

Outstanding:

- Placing the first order of hops will now likely only happen at the end of the year

- Placing the first order for malt will have to wait until we have a viable warehouse set up

- Getting a visa+work permit is also on the to do list

 

[msommer]

The other day I took a taxi to my new apartment, negotiated a fair price and got in. It was not to be a quiet ride. Much to my surprise the taxi driver was actively watching tv on a small screen while driving.

WATCHING!!!!!

Commenting, too, violently disagreeing with one commentator, loudly exclaiming agreement with another.

The topic? Apparently someone is building what is supposedly a copy of Noah's Ark in Florida and one husband was pressuring his wife to spend her life savings (some $35k) in supporting this endeavor....

The discussion turned to whether the story of Noah's Ark was literally true or a parable/myth, apparently the taxi driver was a devout type so when one commentator mentioned the wooden remains found on Mount Ararat (at about 13,000 ft altitude no less) he concurred loudly, practically nodding with his whole body. Once I surpassed my immediate fear of early, likley fiery death by taxi driver (unsurprisingly no working seat belts in the back seat) it got me thinking about the story.

How much water is in the oceans and how much water does it take to propel a large, heavily laden wooden boat to to 13,000 ft, but depositing it so gently that disembarkation is not impeded.

I reasoned that this would likely rule out a tsunami type situation where a boat is carried at high speed into the cliffside, so a lot of water would be required.

How much water is in the ocean, and how much water can the atosphere hold (and release in 40 days – that vessel would have to have some very effective scuppers, but I digress)?

Anyway, there is no evidence discovered by archaeologists for even a moderate regional flooding event.

It seems to me that this story does not pass even the most rudimentary of logic tests (let alone the two of each animal, and everything else drowned – God must have upped the biodiversity after the flood, yet somehow the bible does not mention that second creation day...)

Obviously, the mountain coud have grown instead, but the mechanisms for that are extremely violent and one would suppose that evidence for that would be available – no such luck.

Another argument against the absolute veracity of the account brought such violent headshakes from the driver that the admittedly old and decrepit taxi shook, was that the Sumerians that predate Noah by some thousands of years apparently have exactly the same myth during the times of Gilgamesh, so either God was repeating himself or something fishy is going on

It seems to me though, that God is becoming more tolerant with age. He rained sulphur and brimstone on Sodom and Gomorrah for backdooring and bestiality (at least in the case of Sodom, I'm a little unclear on the specific transgressions of Gomorrah), but these days anyone familiar with internet pr0n can attest to backdooring not being a local phenomenon anymore, yet somehow God's wrath is not invoked even on a local basis.

Anyway, I survived the trip (thank God) and now know another thing to look out for when choosing taxis in Peru – tv screen that are on is a no go.

Oh and I need to know the Spanish for “would you mind paying attention to the traffic, please” and “Turn that thing off before we have an accident”

Phrases that absolutely need to go into the language section of the next Lonely Planet edition for Peru.

Oh and today I went to a pre arranged meeting to discuss business with to brewers. We had agreed 9 am. When I arrived none of the two people I should meet were there. One had travelled to a city about 500 miles south (the girl in the office was unclear on when he would be back, maybe tomorrow), the other has still not shown up at his office as I write this at 1 pm...

None of them are Peruvians but they seem to have assimilated well.

PS My business partner just returned from his first trip to Iceland in about fifteen years. He spent two weeks including several days of snow storms with only sandals on his feet.

And he showed me pictures of himself dressed only in boxershorts making snow angels. I'm not sure what I have gotten myself into anymore.

At the very least I'll have a few scotches tonight to purge that image from my mind.

PPS I managed to find a new apartment in the nick of time. I have now exchanged a less than two feet wide balcony with a 1000 sqft roof terrace. Grilling season is officially open!

 

[msommer]

It's been six months since I've updated this, so quite a lot has happened, some good, some bad. Mostly good.

At the end of December we bought our first hops, but the logistics of getting it into Peru was a frigging nightmare. All sorts of going back and forth with the logistics provider, it took almost a month to get the cargo on a plane. When it then got here, it sat in customs for almost two weeks, while we obviously were paying storage. Unbelievable, although I have to admit it was partly our inexperience that led to that outcome. We learned, and one of the things we learned was to not use that forwarding agent ever again.

Next shipment came a month later - different hops to increase the range on offer, and this time from the US. That was an even worse experience. I spent a month and more than 100 e-mails to coordinate something so simple as moving the goods to an airport and fly it to Peru.

This time it 'only' took ten days in customs – mostly because the forwarding agent refused to issue the correct paperwork... Again a learning experience and one of the things learned was never to use that company again.

So the third shipment came in, replenishment of stock, mostly, and this time I spent a lot of time getting the customs agent and the forwarding agent on the same page. I made the forwarding agent ensure arrival early in the week to avoid weekends, and we offered a bonus to the custom agent if he could get it done quickly. Net result, we'll be using the same forwarding agent again when it is time to order next time – and the cargo sleared in three days.

We've sold quite a bit, to bunch of different brewers but we need to be moreoutgoing and to ensure we speak to all the brewers, frewuwntly, so we're in their head when they ned to buy supplies. We'll need to add malt and we are working on how to get the capital ready for that endeavour.

The next thing is that we are adding two sales channels for home brewers, selling the hops in 1 oz packs. The first is in a brewery that does courses for home brewers. The idea is that the people taking the courses there will naturally want to buy their supplies there – since that will likely be the only place they know. We've spent a bit of time getting hte right branding strategy and material ready, we go live next weekend when they have the first course. We are looking add more points of sale of this kind, but it is naturally easier when you have an up and running store, so we are patient.

We'll also be adding yeast in small packages and organic clarifying products to our range by July.

Next up is a web shop, and we have been spending some thinking on marketing and delivery, not to mention safe payment options. We think we'll be ready to go live by the end of this month. Clearly the possibility exists that the webshop would cannibalize the sales from the shop but at this point we don't think it will be significant, since there will be a delivery cost attached to buying from the webshop which you don't get from your neighborhood home brew suply guy. We'll keep the same suggested prices, so web shop sales will be much more profitable for us, even after we pay Visa or Paypal their cut. We are also working on getting a deal with a courier to deliver by motorcycle twice a week in Lima – to become more frequent when volumes increases. For the rest of the country we'll use a local package delivery service, and we are busy finding the right envelopes, servcice providers etc.

Next up an update on the life of an expat here, then to some of the issues we face. BRB

 

[johnnycakes]

 

 

[Poke_4_Life]

Looking forward to more updates.

 

[msommer]

It's not been all work:

Well, I've learned that having a roof terrace in the middle of the desert is less nice than it off hand seems. Everything gets filthy very, very quickly, so if you are not big on cleaning (guess if I am) then you are effed. I don't think I have used the terrace for the past three months.

I also learned that cooking on a proper stove is highly underrated, and hooking up a tank to a gas stove is not something to be trifled with. The learning experience was this: As I was in a bit of a hurry to get a new apartment I had to make some compromises, one was renting an apartment without proper equipment in the kitchen. No oven, no stove, just a microwave and a fridge. What the hell, I thought, I can always just fire up the bbq – yeehaa!

It turns out that after abut five weeks of bbq every night I get a powerful hankering for rice, spaghetti, stew – just about anything that you have a hard time cooking on the grill. So, being the miserly ******* that I am, I went out a bought two gas burners, instead of a real stove with an oven.

I then proceeded to connect the burners with a propane/butane/whatever bottle myself cooked happily on it for a couple of weeks. Turns out, though, that you can never have too many fasteners securing the hose to the burners, because one day, as I was cooking some corn, the hose pops off, making a sound like 'SPLAF!' and starts acting like a flamethrower in the corner where I had put the stove, singing one side of my already sparse collection of hairs. I immediately beat a strategic retreat, and as I cross the treshold to the terrace it dawns on me that I am about to set fire to and possibly blow up the apartment. I turn back, stick my arms into the burning inferno and pull the gas bottle out on the floor. I quickly diagnose a solution – if I disconnect the hose from the bottle, the flame thrower will die – do it and all there is left is the distinct smell of burnt hait, a bit of charring on the table where the flames were most intense and a small flame on the gas hose itself. Grabbing a glass of water I put that out easily. Slight adrenaline crash sets in. At this point I notice that I no longer have hairs on my underarms - my eyebrows are strangely knotted here and there and I've managed to step on my glasses. Didn't break - titanium frames rule!

Anyway, I call my buddy and mention my predicament and he comes over with a piece of hose that he had laying around, fastening it with twice as many fasteners, and voila, problem solved.

Not quite, because a few days later, as I just went to bed, I hear a frighteningly familiar sound – 'SPLAF!' - jump up, run to the kitchen, where there is a powerful smell of gas escaping as well as a loud hissing noise. I refrain from turning of the light, disconnect the hose from the gas bottle, open the windows and doors and retire to the terrace for twenty minutes or so. Slight adrenaline crash, less this time, aparently I am getting used to things going 'SPLAF!' in my place. Turns out my buddy's hose has been lying curled up unused for about four years, and it has failed, spectacularly, right in the middle and is now sporting an unplanned opening of about four inches.

The next day I go down to the corner hardware shop, invest a buck fifty for the highest rated hose they carried, secured it with many, many fasteners, and that has lasted me the past four months or so.

Learning experience number two – don't skimp on the gas hose (or the fasteners)

TBC

 

[msommer]

More about the business:

The overarching problem we have is that the sales volumes barely meet our costs, so as alluded to in the previous post, we need a capital infusion to add to the range of products offered – and the bank account it looking a little unhealthy right now. We're working on it.

We have identified several reasons why the sales are not trending as we would like. First off we are up against an incumbent company with more resources than us. They have a fuller range (hops, malts, yeast) were we only currently offer hops. Our hops are sexier, but also more expensive since they have a parent company in Chile with contracts.made before the prices for hops went up 25-30 percent this year (bad harvest both in Europe and in the US). So we can't do a price war and in any case our margins are pretty squeezed.

Second issue is credit facilities. We just can't do it right now. We need the capital churning, so handing out hops and hoping for payment 15 to 30 days down the line is not much different to sitting on the hops and hoping for a sale.

Third issue is that my business partner, whose Spanish skills are a lot better than mine has been acting as if the phone is poisonous. He's great face to face, but he clearly doesn't like to make cold calls. He'll have to get with the program, and soon. I need Spanish onversation lessons, he needs to hit the phones, and hard. Today I enrolled his 17 yr old daughter (no pics, sorry) to help out. If she can do 15-20 calls during the week in the afternoon after school, that will help a lot. We'll start her on the initial approach calls and then work her up to follow up calls, small script, she'll do just fine.

But we really need to add the malt. That way a brewer can one stop shop with us – unless he is running short of yeast also. We are negotiating with two suppliers to see who will give us the best deal, hopefully a distribution deal with extra goodies attached, favorable prices, credit terms etc, that would really help. But we can't wait too long, because the transit time from the origin is quite substantial, it has to come in by sea. So no matter what our capital will sit around while the malt is being sailed across the equator, so we need to factor that into our calculations, to make sure we do not run out of money until we get the sale.

One of the malters have been on the market off and on so is a more known quantity, another is completely new. The upshot of that is that brewers may need to tweak their malt bill in their recipes when they switch to 'our' malt, and that may be a dalying factor. It may also mean that we would be more attractive to the smaller and newer brewers than the larger and more established brewers. Even more erason to hit the phones.

While we are figuring this out we also have to come up with a way to deliver locally. Inter city is not a big issue, funnily enough. That is fairly easy with many options in place. But inside the city we have to find and vet a logistics company to do it for us, because we simply have neither the capital, nor the time to buy a van and do the deliveries ourselves. We also need to upgrade our storage facility (ie. my business partner's garage), making sure it is impervious to both rodents and insects.

Plenty of things to occupy the day with.

TBC

 

[msommer]

More about the life:

So I'm in the market for a new apartment but pickings in my price range are slim. So I may have to up my price range, which obviously puts the budget under strain. On the other hand, as I alluded to in a previous post, I have learned a bit about what is nice to have and what is need to have.

So later this week I'll be looking at apartments, and the current three that I am considering are all basically the same price. Only one is twice the size (about 2000 sqft) as the other two and has a etter equipped kitchen. It is also in a new building and about 80 feet from one of the other two. WTF?

I seriously don't need all that space, but I suppose I coulduse one of the rooms for my bicicle.

Yeah, that's right, I bought a bike. I'm happy I did although it is a pretty crappy bike. It was cheap though, fresh off the boat from China. Within three weeks I had it to the repair shop three times.

First the pipe holding the saddle literally bent. I've never even considered that as a possibility and I am not that fat. But I guess I did exceed those design specs a bit. It was a pretty smart thing. Instead of being straight and sort of vertical it bent in a bit of an S-shape so I'd have more room for my legs – bikes down here are generally for midgets and I'm 6'3”. My business partner is 6'7” so we tower over most people when we move aout the town. Anyway, that was the first issue.

Second issue came when one of the pedals fell off. Obviously as I was pedalling, I was lucky not to take a spill right there. No real bike paths here, so I bike mostly on the sidewalk, to frigging scary to mix it up with the cars on the main road, so there is a lot of dodging pedestrians going on.

Third issue was that the rear wheel got out of alignment. Basically what happened was the the air slowly left the tire over a few weeks and I stupidly did not notice until I was driving straight on the rim. I had the wheel straightened and the inner tube replaced and I bought a pump that I use once in a while to avoid repeats.

Wait, say you, I sense a pattern here. All of these issues seemingly involve excessive weight?

Not so, say I. The real issues are shoddy worksmanship, cheap materals and higher logal gravity.

It's my story. And I'm sticking to it.

 

[msommer]

Just a quick update:

Heading to Europe next  week to do a bunch of stuff, one of which is to meet with with a malt producer, to start the final round of negotiations concerning a distribution deal, we oibvioulsy want all the usual things, exclusive territory, long credit, large discounts, marketing support, they want the obvious things, large sales, short credit, small discounts, large marketing effort, increased brand value. We'll see where we end up. I hope we can seal the deal by mid July.

My next task in Europe is a more relaxing one, I think. I'm going to the beach house with my two daughters and three of their friends (one brings one, the other two). My job: parental oversight on five pretty normal and easy teenage girls and the provision of food. All know each other well, all get along so I think I have this under control. We'll see.

After about ten days of that the hard work begins. My ex-wife and I have sold our house and while I'm at the beach she'll move her stuff out and I have to empty the house and clean it in time for hand over to the new owners on July 15th. This also frees up a nice chunk of change that I can use to finance further entrepreneural activities.

Our sales have gone up the past two months and as mentioned in an earlier post we believe the addition of malt will boost sales further. Our main competitor has had some delivery hickups lately with stocks running out so the past month we've sold to a lot of brewers we've not dealt with before. That's obviously good. 

We've started to notice one thing though, the brewers that are growing eschew bottling and sell in kegs to bars. in the past four to five at least four new bars with craft beers on tap have been established and they are doing brisk business. These are, with one exception new bars, or old bars with new owners that have refurbished the whole thing from top to bottom. Obviously that requires a lot of capital, not only for the bar equipment (beer on tap is very uncommon here), but also for the refurbishment of rented spaces.

We hear from a lot of the customers that only bottle today that they want to get into the bar business or at the very least expand the keg sales, absolutely and as a ratio of overall sales).

Their principal issues are: 

1) Capital requirement of opening a bar themselves (some are talking about banding together)

2) Lack of bar equipment, such as taps, keg chillers, shortage of kegs etc

3) Lack of bar management experience

4) Lack of knowledge in general about beer on tap

We think we have found a way to assist in untying this knot, once we implement I promise I'll go into more detail on that. Should be by September if things go according to plan. It won't be too capital intensive for us and should net a pretty good ROI. We are also looking at providing a service (leasing) as opposed to a sell in order to lower the customers' cash outlay.

We haven't gotten a lot of progress on selling to Home Brewers. But we do have one point of sale and another in the works. We should know by next weekend if they are on board. We are actively trying to find a Peruvian programmer that can build us a webshop, though. Our in-house programmer (my business partner's 17 year old daughter who we pay peanuts) has started studying and have less time on her hands. Also we'd rather use her for telemarketing which she is really good at. So if anyone can recommend a good Peruvian webshop designer (simple at first as we will have to do payments off line - due to stupid Peruvian rules we need to get a handle on before we venture down the online payment road), I'll be happy to take a PM.

Oh and while I am frolicking at the beach, negotiating a distribution deal and emptying my house in Denmark I am also coordinating the logistics of our next two orders in the pipeline...

 

[saintfool]

i was reminded by the keg vs bottle thing you mentioned of my trip to Peru several years ago. we were in Cuzco and went to the only Irish pub in the city proper. it was supposedly the highest elevation for any irish pub in the world. interestingly enough, the elevation played havoc with their draft beer orders. too much foam, IIRC, because of the altitude. that's why they recommended bottle beer instead.

 

[msommer]

Quick update on the life:

I moved into the big apartment I wrote about last time. The living room has an echo, but once I get my furniture down here that'll take care of that. But more important than my furniture - ok, as important as my furniture- is that my home brewing equipment will also be arriving! No more shelling out a buck a bottle for the ####ty beer they have down here, or three bucks for a craft beer (at least half of which are taxes). The apartment has a little area that is dedicated to a live in maid (which I'll never ever have), so that will become my permanent brewing set up (it's great to be single again). Essentially I'll be remodeling the maid's bathroom into a brewing facility. I'll remove the glass partition for the shower, put in a long table for the brewing kettles (electric), install a water filter (because even though the boil should kill any germs, it won't take care of the heavy metals prevalent in the water, mainly lead and zinc). The wort chiller will be a water cooled system which will feed the cooling water straight into the shower drain (possibly I'll instead collect it for cleaning the brewing apparatus, havent decided yet). With the setup I am going to have I should be able to brew either 10-12 gallons of one beer at a time or two separate beers slightly staggered in time so a double brew day won't be completely exhausting.  I promise to post pics of the conversion job due course

Then in the maid's bedroom I'll install my fermenting/conditioning fridge (previously known as a wine refrigerator) to ensure proper temperature control during the fermentation and conditioning of the beer. I'll probably also buy a used beer display fridge (or possibly a freezer) for crashing the temps if I decide to make a pilsner.

I'm as giddy as a little girl at the thought...

 

[msommer]

i was reminded by the keg vs bottle thing you mentioned of my trip to Peru several years ago. we were in Cuzco and went to the only Irish pub in the city proper. it was supposedly the highest elevation for any irish pub in the world. interestingly enough, the elevation played havoc with their draft beer orders. too much foam, IIRC, because of the altitude. that's why they recommended bottle beer instead.

The best craft brewers in Peru have a tap room in the Sacred Valley FB link - they make really, really good beer and they have not mentioned that kind of issues. One of the guys used to work in a US craft brewery and for two years he ran a bottling line - he is very adamant about never bottling again  - and there are two new craft beer on tap places opening in Cusco soon, Nuevo Mundo and Hops. Maybe it was a line of  (could very well be lack of equipment or a logistical issue of getting the kegs there) or could be that nitro beers don't like altitude. I'll definitely ask around.

Lima is at sea level though so that's not an issue at all.

 

[Evilgrin 72]

Can't believe I never saw this thread before. Fascinating. 

:subscribe:

 

[saintfool]

The best craft brewers in Peru have a tap room in the Sacred Valley FB link - they make really, really good beer and they have not mentioned that kind of issues. One of the guys used to work in a US craft brewery and for two years he ran a bottling line - he is very adamant about never bottling again  - and there are two new craft beer on tap places opening in Cusco soon, Nuevo Mundo and Hops. Maybe it was a line of  (could very well be lack of equipment or a logistical issue of getting the kegs there) or could be that nitro beers don't like altitude. I'll definitely ask around.

Lima is at sea level though so that's not an issue at all.

as i recall, it was with Guinness in Cusco. 

 

[msommer]

as i recall, it was with Guinness in Cusco. 

Yeah,Guinness is a nitro i think

 

[DA RAIDERS]

my neighbor is originally from peru and has family there, i'll ask him if any of them are computer savvy.

great thread, i'm stoked to follow along!  and i'll be heading down there, hopefully in the next year or so.  

question, have your girls ever visited?  my daughter is only 9 and i can't imagine being separated from her for any serious length of time 

 

[matuski]

Never saw this thread before.. cool.

 

[msommer]

my neighbor is originally from peru and has family there, i'll ask him if any of them are computer savvy.

great thread, i'm stoked to follow along!  and i'll be heading down there, hopefully in the next year or so.  

question, have your girls ever visited?  my daughter is only 9 and i can't imagine being separated from her for any serious length of time 

I'll take them here for their first visit in October, we'll stop in Miami for some shopping, and then head down here.

As for the separation thing, it is hard, and particularly the youngest feels it, even more so after the divorce. At the same time I spent much of 2014 in Rio on a separate project and most of last year down here so it's not completely new. And they are reasonably mature and very independent for their age, the oldest turns sixteen in September, the youngest 14 in November. The oldest has gotten a job at McD in Denmark that she manages on top of school, friends, drawing and playing guitar, the youngest has developed a business model for a babysitting service that should make her a bit of dough, once she implements in the fall. I was quite impressed with the idea and I've promised to help her with the marketing.

And I Skype a lot. But still it's not as good as being there every day obviously

 

[msommer]

First off, How are you, faithful reader

I'd like to apologize for not having posted for six weeks, largely due to vacation with my daughters and selling the house I co-owned with my ex-wife (everything in Denmark).

On the business front quite a bit has been happening. We talked to a malt producer, expecting a deal and they didn't exactly roll out the red carpet for us, then two more, same deal. So I'm thinking the malt biz is going to be tough in the near future (apparently most of the barley used for malt in Europe is produced in France, and for those not following the weather, France has gotten a lot of rain. Rain is good for farming but a lot of rain is not...)

So that's a bit ####ed

Then we've been looking at new suppliers for hops and yeast in Europe mostly and getting somewhere, only the quantities we have to commit to buying are quite large. So we're mulling that stuff over. The price is pretty ggod, but we have to have a lot of money tied up in inventory nonetheless for a long time – so we need storage space.

We are very close to having the first cut of the webshop for home brewers up and running should be ready tomorrow, after that, a few days more and we have a webshop for craft brewers (before you ask, the home brewers shop has more stuff, so it's more complicated and timeconsuming to start there).

We've been looking at ways to improve the customers' business model by providing them with new opportunities as I alluded to in an earlier post and we've made some headway. But it all requires capital. Fortunately selling the house has freed up a good deal of it, but still there is risk in putting all or most of that in one business – what's my back up?

Since my business partner is not exactly brimming over with cash every dollar I invest in the business means a larger ownership share, so I get more of the future profit – if any. But it also means the risk is all mine – from an investment point of view, if not a both time and money point of view.

To complicate matters, my business partner is about to separate from his wife. It's been coming for awhile but it's happening now. The annoying thing is that he has been pretty much unable to perform any non reactive action for the past two months because it has been on his mind so much. The past week I have been trying to engage him to speak about the investment requirements of the next six months,i.e. how do we want to prioritize the capital I have to put in, what is need to have, what is nice to have and what can be postponed a bit.

And this is what inspired me to post today: After most of the day went by with him doing bureaucratic stuff about his moving to another apartment, I finally managed to lay it out straight, that I was pretty unhappy with the lack of proactiveness and that it should not be that hard to engage him in the company's immediate future. His response: He was planning on taking a full time job (an offer he could not tell me about) so he would be able to sustain his family through the separation and beyond and as soon as my visa would go thorugh he would sign over his share of the company to me.



So this is why I am posting tonight, after a third of a bottle of rum on the rocks, I'm a little shaken up.

I can see three ways forward:

1. Cut losses, sell the remainder of the inventory and recuperate 50-60% of my initial expenses (minus the living expenses, obviously). This is assuming that he stays true to his word and does not want half. After that I am looking for a job, somewhere in the world.
   
2. Continue without him. Eseentially double down. Continue with the growth plans – but having to do everything myself. I am not a natural sales person (Lord knows, neither is he, but he chose that responsibility) so it will be hard to get traction but obviously I'll get all of the proceeds. There might be a future visa complication in this.
   
3. A compromise. Leave my business partner with the responsibility for only the things he does well (IT, visual marketing, social media marketing and face to face stuff with potential and existing clients while getting drunk (- this last thing is a feature of the biz, craft brewing)). This is all stuff that can be done while he holds down a day job. Leave him with 10-15% of the ownership of the company and still have his network to lean on a little bit.
   

Currently I am leaning three and more likely to do one than two. Not sure. But then I just got hit by a sucker punch and I am a third of a bottle of rum in the bag. So what do I know.

Your (constructive) comments are welcome

 

[matuski]

 face to face stuff with potential and existing clients while getting drunk (- this last thing is a feature of the biz, craft brewing)).

I would disagree with this.

The simplest variable I credit for rocketing up the alcohol sales career ladder was to not get drunk with customers all the time (or ever, if it could be helped).  

eta - good luck.. you have some balls to go for a dream like this, hope it works out.

 

[msommer]

I would disagree with this.

The simplest variable I credit for rocketing up the alcohol sales career ladder was to not get drunk with customers all the time (or ever, if it could be helped).  

eta - good luck.. you have some balls to go for a dream like this, hope it works out.

well, It takes a LOT to get him drunk, so he functions for a long time after most other people have given up the daylights,.

But  I agree it's not a great thing. 

 

[msommer]

Well, faithful reader, it's time for an update.

Couple of things have happened

1st we are almost in agreement of the way forward, which is a pivot towards the home brewers, meaning less stock, less money invested and less of me in peru. Basically, while my biz partner takes a day job, I pull out as much money as I can (looks like two thirds) and leave just a little bit for him to sell to the home brewers. We recently participated in a brewer's event and the interest from homebrewers was pretty strong. We thought we had our web shop in order but there are still a few kinks to be worked out. Anyway, when that is on, we'll sell down the stock and I'll return to Denmark, either taking a day job or starting a new company there (same industry, different focus) or both. My ownership share will stay the same and we'll reassess the direction mid way next year,

But the second thing, some of you may remember that I have had some bad experiences with the sound "SPLAF!". I thought I was so over that, that I had it in hand, that it was all taken care of. Imagine my surprise when the "SPLAF!" came back this afternoon. New hose, burst. Gas flowing out. I really have no idea what the hell these people are thinking. I bought the sturdiest hose available in the market and it burst after a couple of months of use? That is just ridiculous. At this point I'm just happy that I was home when it blew, imagine coming home in a bit of a alcohol induced daze, turning on the light and KA-BOOM. If I was a cat I'd start to be a bit concerned about my expenditure of lives here.....

 

[Mister CIA]

I think of Leon Russell every time I see this thread get bumped.