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.
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
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 across the United States. They quite literally occupy the low-cost leadership position in that market. So if so, what the business model is and
Yoni Mazor 19:13
How many stores as far as you remember?
James Stein 19:14
When I left it was I think 110, they're probably up to 150 now and I know that they're going into smaller, smaller kinds of footprints as well, their business is killing it. I think the business has killed it through COVID even with the restaurants with one of the problems the restaurants because for their competitors or companies like US foods and SYSCO, Sysco Foods which most people would be familiar with.
Yoni Mazor 19:38
Sysco did you say? How do you spell that?
James Stein 19:40
Sysco? S Y S C O. Sysco is the sort of gorilla in the industry.
Yoni Mazor 19:46
There are two Cisco gorillas, one for hardware. Ai right from San Francisco. I think it's an abbreviation of Francisco they're kept the Sisco part but there's also another Cisco with S Y S C O which is a giant in the, I guess the restaurant business or having, you know, materials for a restaurant or cooking, you know you got tin foil plates, whatever it is. That's your direct competitor as well.
James Stein 20:11
When people hear the name Restaurant Depot, they kind of think that it’s a sort of restaurant suppliers like pots and pans and they do all of that. But what really drives the business’s perishables. So if anyone hasn't seen Restaurant Depot go check it out. It's an amazing business model, like basically big warehouses around the country like Costco has, right? So similar type of thing except for you actually have to have a business to shop with them. So you have to sign up for a membership and prove that you actually have a business to shop with them, they’re typically not open to the public. You have to have a business, although because of COVID, like with everything in the world, COVID just disrupted everything. I know that they did open up to the public during COVID. I don't know if they closed that down now or not. But it's a one-stop-shop for restaurants. So okay, so it's cool, it's actually a cool entrepreneurial story. So sorry. So 25 years ago, if you were a restaurant owner, you were getting your product and you had a rep, called up your rep, you ordered what you wanted to order, the truck would come, drop off the stuff, and you would be alright. The guy who I think still owns the vast majority of this, the guy Natti Kirsch, he has...
Yoni Mazor 21:23
What’s that name again? Natty? How do you spell that?
James Stein 21:24
N A T T I Kirsch
Yoni Mazor 21:27
Kirsch got it.
James Stein 21:27
Nathan is his full name, I think Kirsch. So he's an amazing entrepreneur, he had a lot of success in South Africa with what they call cash and carry businesses, which is basically cash and carry systems basically means retail for business. Right? So, business owners shop as a normal consumer would be shopping in a store. It's just that's just the terminology for him. And, and basically, so he knew of the economic advantages of having restaurants come collect from you versus delivery, the most expensive part of the supply chain is, I think most people know, is the last mile delivery product. That's where all the accidents happen. The parking tickets happen, the breakages happen. Imagine trying to deliver into Manhattan, for example, right? It's an expensive endeavor. So I'm cutting the story short, but the long, and the short of it was is that there was no cash and carry business doing this in any meaningful way in the United States. And so he disrupted and they disrupted the industry by actually bringing things backward in time, like their business models literally go back to medieval times when all of the food vendors and stuff would come in, but all their food in the center of town, and people would come and collect their product, right. And like it's literally hundreds...
Yoni Mazor 22:41
All the produce, especially so you’re saying the big revenue driver is the produce, fresh produce every day comes in, you come in, you grab it and go, but it's extremely affordable because it cut out the most expensive component of the delivery chain.
James Stein 22:53
That's right. So there are two things that they did. So the first is they cut out the last-mile delivery, hey, come get your stuff from us, right? And the second is they don't extend credit to their customers because cash and carry right that's another part of it. The cash is we pay cash and the carry is you carry it out of the store. And so they don't have any overhead of either having to finance accounts receivable, or people or departments having started collecting their debts and all of that prior to that, having that even extreme cost advantage there. They are also arguably, the guys who built the business, like some of the best business operators you will meet. I mean, just really, the really phenomenal business they run from an operational perspective. Yeah.
Yoni Mazor 23:34
So what was your component there? Did you land there? Which year did you start there? 2012-13?
James Stein 23:39
2013, beginning of 2013. Basically, they were basically hiring some youngsters to like learn the business and you know, potentially become an executive there one day. So like we were hired, we and a bunch of other youngsters, like younger guys at the time. And we basically was really all that, for me personally was like how I cut my teeth in business, like the real estate stuff was awesome, because I understood, it was great from an investment point of view. But from an operations point of view, this was like a Ph.D. So I like, I rotated basically through all of the core operating divisions of the business. And culminating in an operational side, I ended up running one of their locations in Virginia Beach for like nine months that was like underperforming and stuff. So they send me out there with some support to basically get the place running properly again, which we did.
Yoni Mazor 24:36
So. This is for your kind of twist. It's hardcore operations, right?
James Stein 24:39
Full-on...full operation, yeah.
Yoni Mazor 24:41
Compared to you know, sitting there and being an advisor and real estate deals and structures, stuff like that. It's you on the ground. You know, being in the stores and the operations…
James Stein 24:51
Being in the stores at three o'clock in the morning, opening up, doing audits of all the departments, understanding how you move, I mean, I can't disclose restaurants and gross margins of course, but as You know, they run, they run a very, very high fixed cost infrastructure business, right big warehouse, big refrigeration, you know, 60 to 100 staff members in these in these locations and very, very, very low margins, right. So, it was really a Ph.D. in understanding how to operate a low, low margin hard volume business. And to do that, you just have to be in operation and be superb. And literally, you watch every cent. I mean, I think the president of the company still approves like everybody's wage increases in the company like they are...
Yoni Mazor 25:37
They, they just sound like the Walmart mentality. They're kind of the Walmart of its kind in supplying restaurant owners, and all the supplies that they need around the country. So they stay lean, they stay humble, they stay agile, and their foot on the ground and their head are not in the clouds, or you know, after looking at the pennies, and running a large, you know, fairly large organization. But, you know, they're able to make a good amount of money, even though margins are low. At the end of the year, almost like Costco, much like Walmart, I do believe Costco’s revenue is roughly about 100 billion a year. Their net net net net profit is 1 billion. So 1% of all the noise. So kind of the same, I guess, approach. Great, great training ground for you, like I said, it's a Ph.D. in operations, I find that extremely valuable for anybody in life.
James Stein 26:26
Yes. So I mean, to tie that, basically, their core divisions are their store operations, the logistics, and their buying departments, I kind of got exposure to all of those things. And then they also and then I basically finished my time there, they made me director of their marketing department, which was responsible for getting new restaurants, you know, I had sort of 100 reps around the country that were going out and visiting new restaurants and existing customers trying to get them back into the stores, trying to sign them up a new Restaurant Depot membership. And so that's basically where I ended my time there. And then what happened is...
Yoni Mazor 27:02
How many years were you there?
James Stein 27:07
Nearly three. So I'd say over 2014 to about 2013 to the end, it was like it was at the beginning of 2013 to the end of 2015. So 13.
Yoni Mazor 27:15
Got it so you got a good training ground and you finish it you know, as the higher ranks of the marketing team. And what was the next station for you after that?
James Stein 27:23
And then so what happened is when I was at Restaurant Depot, all of the companies like Instacart, Doordash, Postmates were all getting a whole bunch of traction and stuff, and although Restaurant Depot’s business model’s amazing, to shop their stores can be a massive pain in the butt. I mean, you know think about your as a restaurant owner, right? Firstly, restaurant owners are like the hardest working people in the country. It's insane how difficult their business is. And so these guys would come to a Restaurant Depot at six o'clock in the morning push around a big wagon, that's how you shop, you know, load up the carts and 80-pound boxes of meat, an 80-pound box of potatoes, stand in a line, pack up, pack the stuff in the van, take it back to the restaurant, unload it into the refrigerator, and then they've got to run a restaurant for the next 16 hours. Right? But it was...so with the Postmates, especially with Instacart, like this idea of plugging into existing infrastructure and then just paying, charging people a premium to do the last mile delivery was kind of like an obvious opportunity there. And they were already a whole bunch of like, more and sophisticated what they call jobbers which are like kind of like middlemen between the people that own the supply chain and the end customer. So like you know a guy in the parking lot will say to you Hey, you don't have to come to Restaurant Depot anymore. Pay me 50 bucks and I’ll.
Yoni Mazor 28:32
Hustlers. You come here in the parking lot. You see a hustler. Take it all the way to your fridge. You pay, you go.
James Stein 28:39
Exactly. And, so there was this obvious opportunity, I wanted to start that business. And I found out internally that a company in Silicon Valley had actually already negotiated the API agreement with Restaurant Depot to get access to the database, publish an app, and essentially, you know, employ people to do the picking and delivery. So basically, I called them up and I said, hey, look, you know, I've been developing the same model, I'd love to come help come join you. And so I joined them as a co-founder of the business they had, you know, almost, you know, they had like one van when I arrived in San Francisco.
Yoni Mazor 29:13
And so hold on, we're talking about the end of 2015, the beginning of 2016?
James Stein 29:18
End of 2015.
Yoni Mazor 29:21
End of 2015. You’re at Restaurant Depot, but this opportunity popped out from San Francisco, Silicon Valley, this, this application, right, this mobile app that helps, will be helping the Restaurant Depot set up their last mile.
James Stein 29:32
They didn't even have a mobile app. I just knew I wanted to do the...I was developing a business model in the house. I went to speak to...I went to speak to the executives there.
Yoni Mazor 29:43
So after you left Restaurant Depot you said I want to do my own thing and develop this.
James Stein 29:47
No-no-no. I left Restaurant Depot to start this business or to help get to help grow this business. So what happened is just...it just coincidentally, I'd seen this opportunity obviously it's around and there was another group in Silicon Valley who had also seen this opportunity. And they had already negotiated a contract with Restaurant Depot to get an API into their database and do this last-mile delivery.
Yoni Mazor 30:14
So the moment you discovered that you identified that, you reached out and...
James Stein 30:17
Yeah, I said, Hey, I want to come to join you guys basically. They had no technology when I started with them, it was literally just Chris, the guy, one of the founders of the business. He had a van and two employees. And that was it.
Yoni Mazor 30:29
Got it, just had a big idea.
James Stein 30:30
So I joined as a co-founder. It's a whole long convoluted story, but it was super successful. I mean, I was there when we helped grow the business, I think it was like a 10x. By the time I left, I think we had, I don't know, seven or eight trucks on the road, we were opening up the Los Angeles market. And without going into too much detail, I basically didn't see eye to eye with the controlling shareholders of the business and left at the beginning of 2017.
Yoni Mazor 30:58
Got it, so you’re there for roughly a year?
James Stein 30:59
A year and a half.
Yoni Mazor 31:00
Yeah, and you relocated to the west coast for that?
James Stein 31:04
So funny enough, talk about my long-distance relationship with my wife. So...
Yoni Mazor 31:09
When did you guys get married? Just to bring some context?
James Stein 31:14
Three years ago. Okay? So she loved this, right. So I finished up at Restaurant Depot. And at that, this was in 2015. She had just completed her residency programs with her pharmacy, and she was now moving to New York to be with me full time. And as she's coming to New York to live with me full time, I go, babe, I'm sorry, but there’s this business opportunity in San Francisco. So I moved to San Francisco for like, I was there for like a year. And then it was like 50/50, San Francisco, New York. For the remainder of my time there. Yeah. So that was it.
Yoni Mazor 31:47
Wow, you guys have an amazing, probably an amazingly strong connection. Okay, so you didn’t see eye to eye and you went back to the east coast, to New York City? And what was the next thing for you?
James Stein 31:57
And so I was looking for my next thing to do. And, and I found and here we are, so I found the Amazon world and...
Yoni Mazor 32:05
And discovered Amazon? 2017?
James Stein 32:07
Yeah, you know, I was, and there wasn't, there was no business opportunity that I was sort of inherently like, passionate about, or whatever. And what I really loved about Amazon, as I started learning about is just how much data there is to make business decisions. I mean, it was just like, hold on a second, I can get involved in an industry here that I'm completely green in and I don't know anything about but I've got hard data that I can actually use to kind of guide my decision making. I was like, sign me up, right?
Yoni Mazor 32:31
So right away, you realize how much data was stored in this marketplace, right? Because you're data-driven, you know, by I guess almost profession, you know, the real estate deal deals, a lot of components, a lot of data, a lot of things to crunch together that basically empirically allows you to understand that Oh there's an opportunity here to make a real bargain or real profit or real margin, and then you take action upon it. So that was kind of the mood or the spirit?
James Stein 32:53
That was it. I love how you summed it up perfectly. That's right. So really cool story of how we got started. So I'm living in Manhattan. I mean, I'm going to get this Amazon business up and running and start, you know, researching products and stuff, and a mutual friend. So again, the sort of South African Jewish community, a buddy of ours...
Yoni Mazor 33:15
So let’s touch that for a second. South African Jewish community, what? It's in the New York area or something?
James Stein 33:21
So okay, so at the height of the Jewish community in South Africa, there were about 150,000 Jews, so it's a very, it's like, you know, in the country of 50 million, so it’s a very tight-knit...
Yoni Mazor 33:28
15? Or 50 five, zero?
No, 5 0.
Yoni Mazor 33:32
Wow, I didn't really realize that...
James Stein 33:33
It’s a big country. Yeah. So and you know, you're the Jewish community is just very talk is it there's, there's so few of us there. Yeah. Because of all the crap that's gone on in South Africa over the decades is, you know, I would say 70% of the Jews have immigrated, so you've kind of got this like, dispersed network around the world. And, you know, if you don't, if you don't know someone, you know, someone who knows someone or whatever, and it's kind of, it's really, I feel very fortunate to have been born into that community. It's kind of like, whichever major city you arrive in, in any country in the world, you've kind of got a probably a point...
Yoni Mazor 34:11
The South African Jewish diaspora.
James Stein 34:13
Exactly. That’s right.
Yoni Mazor 34:14
Okay, got it. So you were able to find this diaspora in New York City.
James Stein 34:17
So no, so just...so what happened is I started this business, a buddy of mine, who's an M&A attorney in the city had said, you know, James, I've just been connected with this guy named Ryan Gnesin. He or he just left Glencore. Glencore is the world's largest commodities trading firm. He was running the Southeast Asian office in Indonesia for about 10 years.
Yoni Mazor 34:40
So Glencore, just for context for the audience, Glencore is a giant, and the commodities like, you know, give us a taste of a few commodities they run.
James Stein 34:48
Oh, everything, metals, oil, copper, coal. I mean, just about everything. I mean, I think they're an agro as well. They're...
Yoni Mazor 34:57
So they buy and sell these commodities on a global level. They’re a global giant and Ryan got his business experience in this giant.
James Stein 35:05
Yeah. So I mean, Glencore went public in 2011. It was the largest financial IPO, I believe, I'm sure your audience might attack me, but I think was a large note, it was the largest financial IPO since Goldman Sachs. I mean, like their top 10 executives became billionaires, you know, made many people hundreds of millions. I mean, it's like a very famous, very, very famous RPO. And so Ryan had been with them for about 10 years, he had just had enough of living in Southeast Asia wanted to come, you know, his family's in Australia and was just, you know, just had enough. And he moved to the States, he came here, sort of a blank canvas. Was looking to either start a business or buy a business or whatever. And completely independently of me, he found the Amazon world. But he and he'd started getting his Amazon business going. And so we were connected through a mutual friend. And we hit it off on a personal level very quickly. And this was a crazy thing. We were serendipitous, not only have we started the same business independently of one another, but we were living literally a block apart from one another in Soho. I was on Mulberry Street he was on. I was on Mott St and he was on Mulberry Street. And as we were building our businesses, it was like I called him, you know, like, asked him like, how do I do this?
Yoni Mazor 36:16
Didn’t you just open the window and shout through the window? Yeah, you opened the window. Oh, Ryan, you want to do some business? He opens his window. Yeah, why not? So that close, right?
James Stein 36:27
You know, basically, you know, we developed a friendship, we liked working with one another, we realized that we were both not as we were, we were smarter together because we were definitely a bit dumb apart. And we decided to start a business together. And we started. So both of us kind of started in the private label world. And but you know, like, like, I'm sure, like, what, I've got so much respect for sellers who have built and launched products right up, it's really tough going, especially at the beginning, when you're starting things, things just take time. And we were through another friend of ours, an Amazon community or someone Ryan had met, we were introduced to the world of retail arbitrage. So, you know, he said, Look, you know, why don't you come to check out my business. This was sort of like Christmas time 2017. And he took us into a Nike store in Newark, Nike Outlet Store Newark.
Yoni Mazor 37:17
Newark, New Jersey?
James Stein 37:19
Newark, New Jersey. Yeah. And it was during one of the Nikes-like friends and family sales or whatever. Remember scanning, using inventory labs will scout defies app, I remember scanning a product barcode and looking like Hold on a second. So this Nike shoe is trading at $25 here and it's selling all day long with a strong sales rank at $100 on Amazon. So I can just pick, buy this, send it to Amazon. I was like, I couldn't believe it... Yeah. And the united and this is the thing, like, there's so much divisiveness and whatever in the country. Like, nowhere, like America is just amazing, opportunities are available to you. I mean, they are literally it's quite incredible, right? Like there's actually you actually have the ability to make money by walking into a retail store and buying the product. I mean, it's...
Yoni Mazor 38:07
That's kind of the idea of retail arbitrage. In the Amazon world, there's so much opportunity for branded products out there that have strong demand online, but they're being undersold on the brick and mortar front end because it's pretty much targeted to different markets. So you find the opportunity to take you to know, something that's being undervalued in one market and presenting it to a market that pays you a premium. And that's how you capitalize on your gains.
James Stein 38:31
That's exactly right. Yeah. So I mean, like, it's such a vivid memory for me because just like this light bulb went off, even though I think invariably I would have turned out to be wrong, but like I just spent the last 18 months building out this very, very tough complicated picking and logistics operation for Restaurant Cheetah, now Cheetah Technologies, and I just did the math on the...
Yoni Mazor 38:57
Restaurant Cheetah, the company you worked for in San Francisco correct? Yeah, so it's called Restaurant Cheetah
James Stein 39:02
Yeah, it was called Restaurant Cheetah it's now called Cheetah Technologies.
Yoni Mazor 39:05
Cheetah Technology. Got it. Okay, so you're, so that gave you the experience to deal with complex logistics?
James Stein 39:11
Yep. Yeah. Well, I mean, that's what it was right? So customers would place an order on the app, we would employ pickers who would be routed around the store to pick up the product put it on a cart, check it out, load it in a truck, and deliver it to the customer right?
Yoni Mazor 39:23
Ohhh perfect for you know, retail arbitrage! Unbelievable.
James Stein 39:26
So we thought...so we did the quick math. How many Nike outlet stores are there in the United States? How many Mashall’s stores are there in the United States? Okay, we could hire a bunch of people, teach them how to use the app, probably bolt technology on top of it to make the decision-making process even easier in terms of scanning and seeing images and stuff. Bring everything to a central warehouse, process it, send it to them. That was the original idea. And we, I mean, we did really well on our first I mean this it was Christmas but in our first month in business, I think we did like a quarter-million dollars in sales or something like that. Really really good margins and we were just like, this is amazing. So, off the back of that little bit of traction and success, we pitched a high net worth investor, when he backed us. He gave us a loan that Ryan and I signed personally for because we really believed in the business. And, we got started. And about, it didn't end we hired a whole group of pickers...
Yoni Mazor 40:21
So 2018 you’re funded now, personally liable for that funding, and you will go full steam leap of faith into this game.
James Stein 40:29
Yep, that's it. And I mean, look like, you know, there's a lot of platitudes. And I think for the most part they’re right, like people say, you know, never sign personally for a loan or whatever. And trust me the anxiety and stuff, I would, I would suggest you, you don't do it. But it was an educated bet in the sense that we knew we were buying hard assets that were valuable and could generate a return immediately, we weren't, we weren't spending the money on or a tremendous amount of it on stuff that wasn't actually going to generate a real return on you know, on the investment.
Yoni Mazor 41:00
So it was a calculated bet on your end because you're gambling on Nike, which is a fairly strong brand to gamble on.
James Stein 41:04
Yeah. And then my other alternative was finding a job, which I'm not very good at working for people. So.
Yoni Mazor 41:11
Interesting choices, yup.
James Stein 41:13
Anyway, so we got started. And then and then basically, six months in, over the next six months, we hired it, we had hired a whole bunch of pickers, we bought three 2008 Toyota Sienna minivans for like seven grand a pop. We hired a bunch of people, trained them how to use the app, and we, you know, we were hustling and going along with them, hustling into Marshall's Nike outlet stores, finding wherever the sales are, etc. And, like, it happened organically, we basically got introduced to our first supplier who where we could essentially just buy branded inventory wholesale and not have to do the work of going into stores. And we met one supplier, and then we met another supplier, and we know that the supplier and
Yoni Mazor 41:57
So on, so your model changed, right? Your model was, you know, a vacuum the retail stores, but instead you say hey, there's actually, we found a bunch of wholesalers exist. Wholesale, you know, they sell to us in bulk, you know, turnkey, you know, minimizes all the logistical headaches, because you're getting a bulk, you're shipping in bulk, and then you just really focus on spinning it faster, faster.
James Stein 42:17
That's it. That's right. So we ran our own warehouse to start. And we built a really successful trading business, basically.
Yoni Mazor 42:26
And you defined it as a trading business. So, Ryan, he has experienced, you know, trading commodities, with a global giant like Glencore, for yourself, you know, I guess the trading for you, the tastes of trading you got was with Restaurant Depot, right? So you know, there's more of a production. So there's always a sense of agility.
James Stein 42:44
It's more, it's more than Ryan had the, you know, Ryan's affinity to it was the trading side of it. And my affinity was the operations and logistics side of it, especially with the retail stores, you know what I mean?
Yoni Mazor 42:55
Yeah, so the agility of operations and efficiency, especially with the Restaurant Depot, how they did it lean, and strong and highly efficient. So you brought this storm together, and you created a highly successful as you define it, trading business, you know? Many will say arbitrage business or reselling business, I do support your angle on it was trading, you're buying from A you're selling to B, you're doing it on a high level, an efficient level, and it's successful, and it's profitable. And so that, congratulations for that, first of all, and I guess, what was the genesis from that?
James Stein 43:25
And so, you know, being a reseller is great, but like, and you know, unless you have the exclusivity of supply chain agreements, or whatever, you're constantly, you'd have to have a diversified supply chain because supply is unreliable. But that's not necessarily too bad. But most importantly, never felt like we were building real equity in the business. And I felt like a cash business that if we wanted to, we love what we do. And so we wouldn't care if we ran a business our whole lives, but we want to have a business that is at least excitable, that if we do want to exit for whatever reason, we have the ability to sell it. And in that business, I think, you know, oscillation in and of itself, on its own as a standalone is a difficult business to sell, especially if you don't have sort of contractual relationships with suppliers or a branded product or whatever the inventory is, you're moving. So we were on the lookout for what the next thing was. And we had we, you know, Ryan's original thing when moving to the United States is he was actually he had actually, he's actually gone on a whole coaching seminar with a very famous guy who basically buys up and turns around businesses. And so Ryan is actually looking to buy businesses as his first thing. And so this idea of buying Amazon businesses was super attracted to him. We met the Thrasio guys in the Prosper Show, like, you know, at the beginning of, what are we now, at the beginning of 2019. Loved the business model, and we acquired our first private label business at the end of last year. And at the end of 2019. Yeah, yeah. And then we acquired the business, it's now that business is doing fantastically, but we got smacked in the face for the first three or four months as we were sort of like optimizing it and whatever. But it's now up like 150%. So that's great. And that's how we, that's how we resolved that was first, what was it? I wouldn't say it's our first foray into private label, because, you know, we were delved in it before, but that was the first business. And then we started a brand ground up as well, that has done also exceptionally well. And we and...so we, we then, basically, at the beginning of this year, decided to really focus on the strategy. And we, long story short, we'll end the year with 10 brands in our portfolio, some of which that we started, some of which that we've acquired. And we have, we've essentially secured like, unbelievable investors to back us in those. We know that like, you know, I don't know how much your audience will know. But there's huge...with Thrasio’s success, there's a huge amount of capital, looking for horses to back in the space. And we found ourselves, I think, at the right place in the right time, in the sense that we have some really good, I think, big company kind of like pedigree and training and, and sophistication. And at the same time, we've been Amazon operators for three years. So we know the ins and outs of Amazon, we understand how to do it, we understand how to operate a business, we have...
Yoni Mazor 46:45
You have survived, you have survived the grunt of operating a large-scale Amazon business efficiently. You know, because if we were reselling, you have to be efficient and stay lean. And of course, if you continue doing that when you own your own private label, and it's in the seven, eight-figures. It's very lucrative, highly lucrative. And because your I guess, mission as a brand acquirer where you basically have a bucket of money that you're just sitting on, you need to convert into buying, you know, these brands, and then making them much more efficient than they are independent because you put, you connected into a very, very agile and efficient infrastructure with your team. And you make it scale and you make it grow even more and fertilize it. So that's the amazing evolution that you guys have experienced throughout these years, in making this happen. And from all these strange reasons, you know, you know, from being a system all the way from South Africa, you know, you came to America, Ryan came from Indonesia, you have experience with the operations he has experience with commodities, and you put the bill this perfect storm, it seems like it is so it's amazing.
James Stein 47:49
So there's another serendipitous thing that happens. So I can't believe I forgot. I forgot to mention the super important part. So that was in about what? So Jeremy, Jeremy Bell, who's the head of our M&A department,
Yoni Mazor 48:03
Jeremy Bell, B E L L?
James Stein 48:04
B E L L. Yeah. I'm sure. Hopefully, hopefully, you'll have in mind, because he can talk about that, you know, the acquisitions and what your audience would need to know about, you know, preparing the business for sale, whatever. But um, so Jer basically spends his whole life in private equity and investment banking, and his wife, but he's Australian, his wife got this amazing opportunity. She is director of tennis marketing at Nike. Yes, she's like the head of tennis marketing. And I hope that's right. I hope I'm not overstepping what she does, but I'm pretty sure that's essentially what she does. And so she got this opportunity to move to Portland from Oz and this is like a once-in-a-lifetime opportunity. No problem. I'll quit my job. I'll come with y'all. So you know, I'll find something.
Yoni Mazor 48:50
So relocating from Australia to Portland, Oregon, where Nike or Beaverton, Oregon, where Nike is based at?
James Stein 48:55
Yeah, exactly. And, so Jeremy is one of Ryan's ex-colleagues twin brother. So they were just, so they were chatting and Rob, Jeremy's brother says Hey, Ryan, Jer’s in, you know, he's in Portland. He's thinking of starting up his own e-commerce business. Why don't you guys connect and see, see what happens, whatever? And this time around is like, I'm really keen on buying businesses, and oh, my God, I've got this unbelievably super-smart PE investment banking guy, he can help do this. I mean, Jer essentially joined as a third partner, you know, last year and so we think we had this really great team, we got the trading, we got the operations, and now we got the deal side of things. And so that's it, man. It’s...this year has been like for most people absolutely crazy...
Yoni Mazor 49:44
For most e-commerce players has been unbelievably a robust year in terms of growth and opportunity. Yes.
James Stein 49:52
Exactly and we're...Yeah, I mean, I'm just like, I'm super grateful for you to have me on. I wasn't expecting to go so in-depth in my story or whatever.
Yoni Mazor 50:01
We try to take you throughout memory lane. So so thank you so much for sharing everything with us thus far.
James Stein 50:04
We were obviously, very keen to get our name out there so that sellers can, you know, sort of put a face to the name and like know that like, you know if they are, if they do want to exit or whatever, that they maybe have some context of who the people are that will be potentially taking over their business. And yeah, I just feel very lucky and very excited about this sort of consolidation dynamic and the marketplaces. I think that there's just a huge opportunity for everybody who's just starting out and just launching products ground up, or guys who are acquiring these businesses. It's great.
Yoni Mazor 50:41
Yeah, awesome. So there you have it if you do sell on Amazon, and you have your own private label brand, and you're thinking about making exit, Recom Brands is definitely an upcoming address to turn to if you want to make sure that your business falls into the right hands, and hopefully get a chance to grow and prosper, and years to come. So thank you so much, James, for sharing the story so far, I want to close off this episode with two components. The first one is if somebody wants to reach out to you and learn more, and interact with you, where can they find you. And the last thing will be, what is your message of hope and inspiration for entrepreneurs listening out there?
James Stein 51:17
I wish you wouldn’t have picked these...Look if you want to get in touch with me, James at recom brands, Jeremy at recom brands as well is good. Visit our website recombrands.com. We're revamping it. So we'll make it look a lot prettier for you. If you're looking to sell your business, we're good guys to talk to. There's like, you guys now have lots of options. We think that we are the most responsive, easiest to deal with, fairest guys out there. And yet we'd be very humbled if you reach out to us. My message of hope...
Yoni Mazor 51:52
James Stein 51:55
Yoni Mazor 51:57
Yeah, for entrepreneurs listening out there, if you're an entrepreneur, you know, what should they take away from you at this point?
James Stein 52:06
You know, cliches become cliches for a reason. But like, you know, I'm really not that fluffy. But like I've been through some pretty dark times, and maybe we'll touch on another episode on my entrepreneurial journey. But like, I really do want to say that like I really have been in a fetal position on a couch before, after getting kicked punched in the face. If running and starting your own business is really what gets you going, stick with it. Even when you feel like you want to jump off a building. Life will surprise you with what is laying around the corner. So I know that's a bit vague and whatever.
Yoni Mazor 52:51
But no, I'll help you with that. So if you can clearly identify that running your own business and being an entrepreneur is really your destiny. That's good. That's where you start. That's where it ends too.
James Stein 53:02
Yep, that I just want to caveat that with make sure you're not delusional because running a business is very hard. And frankly, the reason most businesses fail, I don't think it's because entrepreneurship is so risky. I actually think it's just because the wrong people are starting businesses. So that's something that you have to use your own self-awareness to assess whether you're that kind of person, but if you are, stick with it.
Yoni Mazor 53:22
If you see it, you can see it's not you're not delusional, you can feel it, you can touch it, it's right there in front of you, but there are some hurdles along the way, stick with it, you're probably gonna be able to reach in and get it as long as really, you know, there if it's all the way up in the moon and skies, probably less likely. The ability to identify is really new, the listener, the audience, and the entrepreneur. So James, thank you so much for everything. It's been a pleasure. We wish you guys much tremendous success ahead. Stay safe and healthy. Thank you everybody for watching and listening. Until next time.
James Stein 53:51
Yoni you’re a legend. Thank you.