Episode Summary
In this Prime Talk Podcast Video Sponsored by GETIDA, James Stein discusses the forces behind buying Amazon businesses. James is the founder, and COO of RecomBrands, an Amazon brand acquirer, shares his life’s journey into eCommerce.
Knowing if or when to start an e-commerce business takes a lot of soul-searching, self-awareness, and maybe some luck. And one of the goals in owning your business is making that business excitable. You want to be able to sell that business when you’re ready to and make a nice profit to help you with the next station in your life. Yoni Mazor of PrimeTalk discusses strategies and ideas that will help you in your e-commerce path.
In today’s episode, PrimeTalk has teamed up with James Stein, the founder and COO of RecomBrands (now known as Elevate Brands), an Amazon brand acquirer. RecomBrands buys or partners with existing Amazon brands and helps them reach a higher potential, helping some brands achieve 200% or more in growth.
James Stein talks about his journey from South Africa to the United States and his experience in real estate and restaurants and how this all influenced his path to starting RecomBrands. So if you’re passionate about running your own business, or if you have a business you want to sell, then this episode is for you!
Learn more at Elevatebrands.io (formerly recombrands)
Learn about GETIDA’s Amazon FBA reimbursement solutions.
Find the Full Transcript Below
Yoni Mazor 0:06
Hi, everybody, welcome to another episode of PrimeTalk. Today I have a really special guest. I’m having James Stein. James is the founder and CEO of ReComBrands. RecomBrands is an Amazon brand acquirer slash consolidator. He’s going to talk more about it, you know, during this episode, but in the meantime, James, welcome to the show.
James Stein 0:25
Yoni, it is awesome to be here, man. It’s awesome to be here with you. I remember a few years ago sitting in a mutual supplier’s office with very different business models at the time. So it’s, it’s wonderful to be here. Yeah. So…
Yoni Mazor 0:41
Yeah, a lot of history. Indeed. We’re going to touch pretty much all about this episode. So like I mentioned, this episode is gonna be all about you, and you’re going to share with us, you know, who are you? Where are you from? Where’d you grow up? Where’d you go to school? Where do you start with your professional career and so forth? So I guess without further ado, let’s jump right into it.
James Stein 1:01
Well, I’ll, I’m gonna do my best not to bore your audience too much with my story. Okay,
Yoni Mazor 1:06
I’m sure it’s gonna be fascinating. I know about it.
James Stein 1:08
Alright, so as you can hear, I’m definitely not from the United States, I’m South African. Grew up there. I lived in South Africa until I was 23. And then
Yoni Mazor 1:18
So born and raised in South Africa, which part? So Johannesburg is the capital?
James Stein 1:24
Johannesburg is not the capital, it’s the commerce capital of the city.
Yoni Mazor 1:28
So it’s like the New York City of South Africa?
James Stein 1:31
Pretty much. Yeah, it’s the big city. It’s where, you know, most of the economic activity takes place and South Africa is an amazing country. It’s a country with a huge amount of problems, growing up in South Africa, everyone who has the means kind of has immigration on the back of their mind because it’s a pretty dangerous place. Very corrupt. But it’s, it’s a magnificent country. So if anyone gets the chance to go, you know, to visit, I highly recommend it and then yeah, I mean, always wanted to come to America.
Yoni Mazor 2:04
Hold on, you left at 23, which means you went to university there, correct?
James Stein 2:08
I went to university there, I studied accounting and finance, all of them, you know, super interesting things to study at university. But I mean, frankly, South African accounting and finance, like undergrads are awesome as a business foundation. I mean, you really get drilled in your just really good business basics that form a solid foundation. It’s been super helpful, especially in an inventory business, keeping track of everything and checking all the boxes. And then and then yeah, you know, I think I think it was probably one of the only few smart decisions I made in my early 20s, which was, I knew that if I had started a career in South Africa would have been a hell of a lot more difficult to move. So I decided to come and do an MBA in America, it was the easiest way to sort of, sort of getting myself into the country, visas, and whatnot. And
Yoni Mazor 2:56
So when you were 23, that’s when you graduated from university in South Africa?
James Stein 2:59
Yeah, I graduated when I was 22. And then literally, basically had never worked and went straight into business school. As a sort of soft landing into the United States, come to school, meet some people, develop a network.
Yoni Mazor 3:15
And what year was this when you’re basically started studying in the United States?
James Stein 3:20
- So I graduated in..from…I went to a school called the University of Johannesburg, I graduated at the end of 2008. The calendar, the year there runs January to December and then started my MBA in the fall of the following year in Boston. I went to Boston, Boston was my first time in the States.
Yoni Mazor 3:39
Nice. So you went to Boston University or?
James Stein 3:41
Boston College. Yeah.
Yoni Mazor 3:43
Boston College and this was 2009 you say?
James Stein 3:45
Did an MBA, more finance and accounting. It was a wonderful experience. I..and but the biggest value of going to university in Boston had actually nothing to do with the degree. I think I’ve been drilled in accounting and finance enough in my undergrad is that I met my wife. She’s definitely responsible for just about every good thing that I do in my life. So that was worth the price of tuition in and of itself. So spent two years in Boston. Loved Boston, an amazing city, but always wanted to move to New York. Basically got a job…
Yoni Mazor 4:26
Is your wife originally from the Boston area as well?
James Stein 4:28
She’s from upstate New York.
Yoni Mazor 4:30
Upstate, what? The Muncie area? Or Westchester?
James Stein 4:33
Upstate New York. Rochester, New York,
Yoni Mazor 4:36
Rochester got it. Okay, so it made sense for you guys to head a little bit south towards the New York City area or New York State or at least.
James Stein 4:43
Yeah, well, actually, I was in a…we actually…she’s, my wife’s like six years younger than me. So I robbed the cradle a little bit when I met her. She was still like in her second year of undergrad when I was in grad school. And she still had like three…she’s a pharmacist, so she had like three to four years still left. So we, so I moved to New York for work and we did like long-distance Boston, New York until she finished up.
Yoni Mazor 5:03
So I would assume that 2011’s when you migrated to New York, right? You as a bird you flew down south. She stayed up north. So for about what a year or two, she until she finished her degree?
James Stein 5:17
It was actually three years full time. And then like, it was basically four years, she still had a long way to do pharmacy degrees. pharmacy degree, it’s a doctorate degree. So it was like a six-year program beginning to end.
Yoni Mazor 5:27
So three to four years long distance?
James Stein 5:29
Yeah, man, I gotta tell you, it was like, unbelievable for our relationship. It’s tough at the time, but like, you know, absence makes the heart grow fonder. So it was it was good, we go…
Yoni Mazor 5:39
You know, we have a saying, I think in Judaism, that this is the kind of love that’s not dependent on something. So distance is not an issue, you know, in the light, you know, I would love it. That’s true love, you know, it’s not dependent. If you’re close physically. Or
James Stein 5:52
We could have a whole other podcast just about love stories. But, you know, Joe Rogan, on an episode that another day was asked by a guy named Lex Friedman, who’s also someone who’s just becoming very famous, an amazing guy, heads up, I think MIT’s Media Lab, he’s like the head of the artificial intelligence. And so like, he interviewed Joe, at the end of one of their podcasts, and he asked Joe, what he thought the meaning of life was. And Joe’s response, was a wonderful response. But he basically said, You know, I think there are many meanings. But I think there’s basically two things you gotta get right. And the first is love. If you get love, right, if you love people, if you have people that love you, that’s..it’s not, it’s not what will only make you happy or make it more enjoyable, but it’s primary. And it has to be that before anything else takes place. And the second thing, which is more related to this podcast, and what we do for a living is, is you have to have things that you’re interested in, you can’t have your identity tied up in entirely tied up in what you do. If you wake up every day. And it’s difficult, and it’s hard, and it’s challenging, and it gets your blood going, you know, you can tend to navigate what Joe said is, I think there’s a way to navigate life in a way that’s enjoyable. And he thinks if you get those two things right, the love piece and the interesting piece, that’s kind of a way to like thread the needle.
Yoni Mazor 7:13
I like it. I like it.
James Stein 7:16
It’s kind of a long-winded way… My wife is gonna love it….my wife thinks that I never talk about her during work, whatever. So she’s going to love the fact that 10 minutes on my, the first podcast I’ve ever done, I’ve spoken talking about her.
Yoni Mazor 7:26
That’s great. That’s a great tribute to marriage, a stamp that says, hey, darling, you know…you know, just you know, when I’m at work, I totally think about you. And now you have evidence. So that’s awesome.
James Stein 7:35
There you go.
Yoni Mazor 7:36
All right, very good. You kind of touch, you kind of give you the bonus towards, this is a great message for entrepreneurs listening out there. And that’s what we’re gonna touch on, what we’re gonna close the episode with.
James Stein 7:44
I completely think I totally…I really, really fundamentally believe that. I think it’s exactly..I think that’s, I think that’s as true as it comes. That’s great.
Yoni Mazor 7:53
So now let’s touch back to 2011. You land in New York City, after the boat or the airplane, it depends on how you got there from Boston. Professional career, that’s when you started, right? That’s when you started…
James Stein 8:04
That’s right. So during business school, I’d actually gotten a job working for a real estate investment fund called KBS Capital Advisors. I like interned there, had no idea what I wanted to do, and kind of, you know, just fell into real estate and investment and went to work for a fund. This was like the tail end of the financial crisis. And it was really super cool. I got to work on an acquisitions team that had raised capital specifically to invest in distressed debt and equity opportunities in real estate. So KBS, anyone who’s interested you can look them up, they’re a publicly held, non traded REIT…
Yoni Mazor 8:40
And you said KBS Capital?
James Stein 8:43
KBS Capital Advisors, yeah.
Yoni Mazor 8:45
Advisors got it.
James Stein 8:46
Yeah, so they, I mean, they raise money from essentially public…
Yoni Mazor 8:50
You mentioned that it’s an RWIT so just for the audience that is not aware of REIT, that’s a real estate investment…
James Stein 8:55
A real estate investment trust.
Yoni Mazor 8:57
REIT real estate investment trusts. So if you don’t want to deal with…let’s say you have some money and you want to invest in real estate, you have kind of two options. Either you buy the asset and deal with all the headache for better or worse, or you just buy a REIT, you know, with with the stock market, there are real estate investment trusts, and they do all the work for you, pretty much and they’re gonna charge a fee, and probably will maybe part of the dividends. But you know, that’s how you can outsource your real estate investments there. They grew, popular in the past decade or so or two even. So this is kind of the angle that James stepped into, you know, fresh out of college.
James Stein 9:30
Yeah, yeah, that’s exactly right. The unique thing about the fund that I was working forward as a non traded REIT, so they raised money from the public, I can’t remember exactly what the mechanism was, but I think through various brokerage houses, but then the shares that they sold to the public and got money in return weren’t tradable on the stock exchange. So they were, it was a more illiquid type of REIT asset. And but I mean, it was great. Basically, as I worked for them, I worked for them in the summer. I was…
Yoni Mazor 9:58
What was their AUG, their assets under management? Uhh AUM I mean.
James Stein 10:03
I think it’s probably on my LinkedIn profile. But multi-billion dollars, I mean…
Yoni Mazor 10:07
So billions of dollars we’re talking about?
James Stein 10:09
Yeah, correct. So I think the fund that I was working on at the time was a couple of 100 million, but their portfolio was, you know, 10 or $20 billion. They’re a massive company.
Yoni Mazor 10:18
And it gave us a taste of a few deals you did or a few assets you guys were involved with?
James Stein 10:22
Well, I mean, I was only there for a year. Okay. So what, it wasn’t actually something that we want, who’s the really interesting bill, they. So it was a government building in Oakland, California, San Francisco area that didn’t have…So it was a government building. Government buildings don’t have windows, well not all of them, but many of them don’t have windows for security purposes or whatever. Right? So I think the asset, the asset like traded hands a few years earlier for like $50 million, or something like that basis, the, oh, this would happen was originally government building, and then they put a call center in, right? Call centers don’t need windows anyway, wasn’t a big deal. This business had traded hands a couple of years previously, for like $50 million. It’s actually funny, it’s actually good. This is actually good to remind me of the deals that we’ll be bidding on and competing with people. And basically, the call center tenants had gone bust during the, during the financial process. And the asset was empty, it was throwing off no income. And so it was, so it was coming to market and the birds were going to be around $5 million.
Yoni Mazor 11:28
So like a $50 million, there’s a bid in for $5 million, because the market is distressed. Plus, the issue is there are no windows, there’s not really, umm…
James Stein 11:34
There are no windows, so you got to do something with it. You gotta do something drastic with the property and there are no tenants in there, right? But at the same time, the building is in the prime Oakland real estate area. And one of the guys that my direct boss was a guy named Keith Hall. He spends his whole career basically in distressed real estate and just sort of knew opportunistically of, you know, of the typical cycles or whatever. And knew that it was a basis play on that asset right that it was like yes, it’s risky because we got to pull this up. But like, the asset just traded for $50 million previously, like things will improve this is a massive opportunity.
Yoni Mazor 12:13
Yeah, took a 90% hit, but he saw the ability to raise it. So after you buy it, you can, you know, raise it a few points, at least at the very least, if not even bring it all the way back.
James Stein 12:23
That’s right. And they lost the bid because the guys who were actually running the bid on behalf of KBS were trying to get a bit cute of paying a little bit less for the asset. I mean, they literally lost the bid because they’re underbid by like a couple of $100,000, or whatever it was, there was a very important lesson to be like, you know, like, why pinch over pennies? If you were going to pay an extra half a million dollars for the asset, if this was going to be an unsuccessful investment, it wasn’t going to be because you paid an extra 10% for the product for the asset right? Like you were going to add value and hit it out of the park or it was just a terrible deal to have done anyway.
Yoni Mazor 12:58
So that was, what, an early lesson for you, huh?
James Stein 13:01
It was an early lesson for me. Yeah.
Yoni Mazor 13:03
So what was the next station after KBS?
James Stein 13:05
So after KBS…This is 2011 so I was in KBS during business school so I worked there as an intern, they were based in LA so I was in LA for a couple of months, went back to Boston I worked, I continued to work for them like piecemeal while I was at Business School, finished up with them and then I actually I then I got a job working for a company called the Solomon Organization. It’s a family-owned, multifamily owner-operator, okay? So now, wow those guys are absolutely killing it. They must have 15 to 20,000 apartments under their management today.
Yoni Mazor 13:45
Departments? Did you say departments? Like subsidiaries?
James Stein 13:51
Apartments. In family real estate, yeah?
Yoni Mazor 13:52
Got it. So this is the Solomon Foundation based out of New York.
James Stein 13:57
Solomon Organization based in Summit, New Jersey. That’s where they are.
Yoni Mazor 13:59
Oh that’s in Summit, New Jersey and this is 2011 when you land there and, you know, begin a position there?
James Stein 14:04
Yeah, exactly. So I came on also just you know, as an investment slash business analyst, helping them you know, just evaluate potential acquisitions and stuff, but they were, they are, you know, full-service shops, they typically raise money from high net worth individuals on the deal by deal basis. They’ve been doing this for 30 years, their business model is unbelievable, and especially during these low-interest-rate environments. I mean, they’ve just done exceptionally well. They buy, you know like I don’t want to be sort of talking about what the strategy is sort of eight years after I’ve left them but basically buying garden apartments in secondary markets in the United States. And, just renovating kitchens and bathrooms and bumping rents by like $100 a month or $200 a month. The type of real estate is sort of class C+, B- in most cases. That they would renovate and improve, bring it up to a B+ kind of apartment, middle of the road, servicing middle-income Americans very, very, very safe business model and like just tremendous, tremendous risk, risk-reward returns for their investors.
Yoni Mazor 15:15
And so let me help out a little here for the audience. So I real estate in general, a high level, there’s usually kind of three tiers, right, the ABC tiers. A is prime, B is kind of the middle of the road, C, you know, it’s junkier right at the bottom of the food chain, in terms of real estate. So these guys positioned their business, you know, kind of buying into, you know, the upper C, and then kind of positioning it to the middle B, maybe the upper B along the years, and, you know, earning this way, nice, a nicer yield.
James Stein 15:44
Well, I mean, I can break it down for you a little bit better. So our home run for them is they go to a bank, they use bank financing to finance 80% of the acquisition, and so and so the net income less the debt service, they’re still generating a return for their investors, right? Then when they bought, when they go in, and they put some capex, and then they renovate, they renovate the property, they’re increasing the net income on the property. And so you know, real estate trades not in multiples, as businesses really do, but on cap rates, but it’s basically the same thing. It’s just another methodology of taking however much money you make and times it by a multiple that the market is kind of willing to pay for the asset. So you know, if you can increase how the money is made, is if you can increase the net income on the property by $1, you haven’t just increased it by $1, you’ve increased it by whatever the market is willing to pay on a multiple on that dollar. Right? So a home run for them would be: buy the property, grow the net income, refinance the property at a much higher value, because when they bought it was worth a million dollars, it’s now worth $2 million dollars, they put more debt on, they can take that the equity that’s put into the business, put it in their back pocket, and then they’ve got no more equity and no more cash equity in the property. They’re just collecting the cash that comes off of it. It’s essentially an infinite return.
Yoni Mazor 17:02
Wow, so how long were you there for?
James Stein 17:05
I was there for 18 months, I learned a lot, they’re great guys. They are a full-service shop, right? So they find the deal, source the deals, they then…when they acquire the deals, and they are managing it themselves. They’re their employees, and…
Yoni Mazor 17:20
They perform, they execute, they bring it all the way home.
James Stein 17:22
…data, capital improvements, whatever. And just personally, it’s just the nature of..I like…the deal side of things is very cool and stuff. But the management side of things for me was just super boring. So like, I just, it was…Yeah, it was just not a business, I was very, I was very passionate about this sort of mundane day in day out of property management and stuff, so.
Yoni Mazor 17:43
But they sit on the properties after arranging the whole structure of the whole deal. And then they bring it all the way home, they keep it, they keep it, they operate it. That’s where it comes into the room, basically, for the entrepreneur in your soul. That’s when they know it comes to routine. That’s, that’s when you basically say, you know, I have more passion than that.
James Stein 18:01
Listen, I mean, if I was one of the principals in owning and running, and you know, and owning properties, I might have a very different attitude towards it, right. And their business model is amazing because they know, they are also managing the property. And so they charge management fees for managing the properties, they acquire the property that they invest alongside the investors, they get a carry from their investors, just like private equity, right? So like you as an investor invest in us, but we keep 20% of the upside, basically, because we found the deal and are operating it and adding the value. And then on top of that, they’re also getting management fees. Yeah, I mean, I’ve done exceptionally well over there. And they’re wonderful guys. So.
Yoni Mazor 18:35
And what was the next station? And what was the year?
James Stein 18:36
So it’s a completely different thing. So basically, so I’m a South African Jew. And through my community, basically, I heard about this opportunity with a company called Restaurant Depot. And Restaurant Depot is, for anyone who hasn’t heard of them, they are the low-cost leader in supplying independent restaurants with their food and supplies.
Yoni Mazor 18:59
So all across the United States? Or more across the Tri-State area?
James Stein 19:03
All acr
