(intro)

Welcome to The Gold Collar Investor Podcast, with your host Pancham Gupta. This podcast is dedicated to helping the high-paid professionals to break out of the Wall Street investments and create multiple income streams. Here’s your host Pancham Gupta.

Robert Helm

Hey everybody. It’s Robert Helm, host of the Real Estate Guys Radio Program. Congratulations for getting educated in listening to The Gold Collar Investor.

(interview)

Pancham Gupta

Welcome to The Gold Collar Investor Podcast. This is your host Pancham. I really appreciate you for tuning in today. My guest is Adam Jason. He is a Partner of Legacy Group. Adam joined Legacy Group in 2017 after eight years practicing law in the United States. He specializes in corporate finance, corporate governance and securities regulation, having advised companies and investment banks on IPOs and offerings of debt and equity securities exceeding an aggregate of $10 billion.

After graduating from law school, Adam worked for two international law firms. He has advised the world’s leading investment banks, including, among others, JP Morgan, Morgan Stanley, Citibank and Goldman Sachs. Adam has also served as an outside counsel for some of the world’s most recognizable brands, such as The Sherwin-Williams Company, R.J. Reynolds Tobacco, Procter & Gamble, Macy’s and Yeti Coolers.

(interview)

Pancham Gupta

Adam, welcome to the show.

Adam Jason

Thank you so much. Glad to be here.

Pancham Gupta

I’m glad to be talking to you. You’re out there in Medellin, Colombia. I’m sure the weather is nice. It looks bright and sunny, right?

Adam Jason

It is.

Pancham Gupta

Cool. So, before we get started, are you ready to fire up my listeners breakout of Wall Street investments?

Adam Jason

Yes, sir. Excited for the conversation.

Pancham Gupta

Awesome. Why don’t we start with your background, like how you got started on what you’re doing right now and being in Colombia? Let’s talk about your background.

Adam Jason

Sure. As I mentioned to you before we started the show, tomorrow is my five-year anniversary of moving down to Colombia. I think, like much of your audience, I came from a call it high-paying professional job in the US. I’m a US-trained attorney. I practiced for about 10 years between big law firms in the US, really focused on SEC work, corporate finance, taking companies public, raising a lot of money for companies both in equity and debt markets, advising boards of directors, what have you — really, in the Fortune 500 space, and then in Wall Street investment bank department. I think it’s interesting, very traditional, in terms of my career path. Basically, high school to college, to law school, to the law firm. I never really have any world travel or adventure or anything like that.

Probably about six, seven years into my career, I started getting the itch to do something entrepreneurial and see, really, what the world had to offer in general and that could bring those two worlds together of a professional background and looking to do something entrepreneurial. At the time, I was working for a law firm in Dallas. I had an offer to be moved to another firm down in Houston and had a month between the two positions.

Now, for the first time in my life, I said I want to do some traveling, live outside the US, see what that whole experience is like. I’ve heard some good things about Colombia. Before I came down here, I talked to some folks about some potential investment opportunities down here really focused on real estate. I just started an interesting opportunity overall, and wanted that experience of living someplace else and the challenges and opportunities that come with that. I used that month.

I came down to Medellin — ‘Medejin’ with the Spanish pronunciation on it — and just saw a lot of opportunity here. I saw inefficiencies in the market, but also smart people doing some interesting things down here. I met my now partner at Legacy Group, which is our investment firm. He was starting both the firm and also our flagship business within the firm, which is the Green Coffee Company. I needed some assistance with the initial capital raise for the seed funding round for the business. My background as an FCC attorney fit well within that, that need at the time of how do you structure an offering for primarily a US-based audience that’s focused on diversification into alternative investments, but also alternative markets in getting outside the US. But all the regulation, everything that you have to do if you’re going after a US audience is essentially the same. So, I went back to the US. I started the job in Houston. In my free time, I was helping with the capital raise for the business that we’re starting down here in Colombia. My professional desires at the time really overlapped with the opportunities that I saw in front of me.

I decided January 2018 to come down here to Colombia full time, to take this on as really that entrepreneurial jump that I mentioned. So, I sold everything I had, slept on an air mattress. That was for two weeks. About a week of that, it was deflated. I didn’t bother to get a new one. I brought all my stuff down here in a book bag and a golf travel bag, because I had already sold the clubs. So, I had just a couple of bags on my shoulder and came down here. We’ve been fortunate to have some good wins since the time coming down here. I leave professional America, come to Columbia, start something new. I think it’s a — I hope it’s a good story for your audience.

Pancham Gupta

That’s an amazing story, actually. There is a lot of courage that’s needed to not only quit your W2 job but, at the same time, completely part ways with the life that you have always seen since you were born. Basically, leave behind that life. I’m an immigrant myself to the US, and I know the cultural differences as you move to a new place. It can be challenging sometimes. I’m sure you navigated your own fair share of those when you were in Colombia.

So, let me ask you this, what was your mindset when you actually came down for the first time to Colombia? I know you wanted a break. You were on one month sabbatical, so to speak, and then you came here. You met your friend and now your business partner, and you went back. How hard was it for you to quit the job and actually take the plunge and move down here? Mindset-wise, what was the struggle, if you can speak to that?

Adam Jason

Yeah, I would say, mentally, I was ready for something new. I made up my mind probably before I even took the job in Houston that I was ready for something new. Honestly, I got offered some more money. I said maybe that that’ll fix where I am, from a mental standpoint, with the current work that I’m doing. It doesn’t make that much of a difference at all, I would say, making a little bit more money. I was really ready to do something different. But I also knew and I think people have asked me this question before. I feel like it’s worthwhile advice that I got and worthwhile to give. It has to do, I think, an accurate assessment of where you are and what are you really giving up. If you take this risk, what’s the ultimate downside?

For me, I think it was very little. If I wanted to go back and work in a big law firm in the US, I feel pretty comfortable that I could get a job and go back to it and do what I was doing before. Of course, there’s the consideration of just stemming away from the traditional path in some way or view in the future, if you do want to go back to that. The conversation I have with a lot of people really is, everybody’s so traditional, that if you’re willing to do something a little bit different and make something of it, you have a story to tell that I think shows courage, shows entrepreneurship. There’s no real negative to — especially something that’s so, I guess, within the box of industry, et cetera. If I came down here and opened a bodega, it would probably be different. But if you’re taking chances staying within that investment industry, legal industry, entrepreneurship business, it’s a very easy story to tell and I think, actually, a value-add to the resume.

Pancham Gupta

Got it. Well, great. I’m glad it’s working out. So, let’s talk about what you’re doing today. You started out with helping in the capital raise for the seed round. From that day to now, you said that you have a flagship product, Green Coffee Company, right? Why don’t we talk about that? How did that come about? Was it already in motion before you came or that happened after you came? Tell us about that.

Adam Jason

Sure. I guess my title would be partner at Legacy Group, which is our investment firm. Our focus is on, primarily, US but high-net-worth investors that are looking for some diversification outside obviously of Wall Street, but also outside of the US in general. We look for big opportunities in LATAM. We can build successful businesses because we’re on the ground here. We’re taking the time to understand the culture, the market, how things work, as you mentioned, so we can open up.

I think that’s the issue that we see with a lot of private market investors, alternative market investors, are just the number of opportunities and where those opportunities can come from. There’s plenty of opportunities for the ultra-high-net-worth. There’s chances to go and work with crowdfunding platforms online. You can work with investment banks, and they can put you into their portfolio of funds. But it’s very hard to get direct access to private businesses that have a good upside. So, we’ve tried to create that access and create that access overseas here in LATAM so there’s an opportunity for investors. So, that’s the thesis of the firm.

The flagship business within the firm is the Green Coffee Company. We started that business back in 2017. It was really designed to be an alternative to commercial real estate. We had probably between 50 and 100 investors down here who are already comfortable with Colombia, who are already investing in commercial real estate, things like Airbnb buildings, those kinds of assets, but wanted some diversification into something like agriculture that functions similarly to real estate. It’s backed by hard assets, as cashflow. They weren’t looking for, call it, the next tech opportunity here in Colombia. They wanted something that felt familiar to them from a commercial real estate standpoint.

Coffee is the national product here in Colombia. We saw a lot of opportunities for consolidation within the industry. It’s very fragmented. We saw some opportunities to really innovate on the technological aspects of the business, and saw the chance really based on client demand to build a business that would fill that need for that alternative to commercial real estate. As we got into the business more and we’re able to look under the hood of the industry, we really saw the massive inefficiencies within the market, the under investment that had come in, really, in the last 40 years in the market.

Jumping to the end of the story, since 2017, we’ve built the Green Coffee Company into the largest producer of coffee in the entire country, that for about one and a half times larger than the next largest producer. Great scale, great infrastructure. We’ve got about 8,000 acres right now, a little bit over 8 million trees within the operation. We’ve gone from make this a cashflow play that functions like real estate to really try and build the biggest enterprise we possibly can and get this thing to a sale to private equity, a sale to an industry participant or get it public in the US. Everything is structured out of the US. We have about $50 million of capital that has come into the business since 2017, about 400 high-net-worth investors.

Right now, we’re into our series C funding round for the business. We started at about 25 million of equity capital in September. As I mentioned, we work with high-net-worth-accredited investors. Average check size is about 100,000 to 200,000. As I’m talking to you today, at the end of January, we have right around 7 million of the 25 remaining in the race. Exciting time for the business, big growth year that we had last year. We did about 10x the sales that we had from 2021. Nice profitability. We should finish the year. We’re finalizing our audit right now. We should do about 1.5 million of pure profit. We’re opening some new, exciting channels for the business.

The next step for us is moving into more of the roasted coffee market. We can talk as nitty gritty as you want about actual details around coffee and the market there. But also, doing something extremely innovative in the sector and the industry of using all of the, call it, waste from the coffee production process. Just like you would see in oil where a lot of the value comes from the byproducts, we’re trying to do the same here in coffee. All the byproducts that we take off our farms, we’re turning into vodkas, gins. They have lots of sugar, so you can ferment them just like you would with another kind of fruit. We’re using them to create pure ethanol for energy production, for use in gasoline.

Our goal is to make sure that everything we’re taking off our coffee trees is turning into revenue for the business. So, you can see that how the coffee business itself fits into the overall theme of what we’re trying to do. It’s to find businesses and industries that are important on a macroeconomic basis. As I said, third largest coffee-producing country on Earth is Colombia. It’s the country’s national product. But nobody had really made any substantial investment in the industry for a significant period of time that we could look at with fresh eyes, fresh capital, and really try and do something unique and special.

Pancham Gupta

Great. Let me ask you this. So, when you guys started in 2017, did you guys start to buy land which was already fertile and already producing coffee? Basically, buying this, for the lack of better word, mom-and-pop operators, just buying them out and keeping them on staff, I would assume, or bringing in your own labor force. How did you scale? Did you buy these small, small farms and aggregated them into 8,000 acres?

Adam Jason

Yes, it was an aggregation move. What you see in coffee here is, a typical story would be great grandpa starts coffee farming, acquired some land around him, builds it into a larger operation, passes it down to grandpa. Grandpa runs the operation, continues to add on to the structure, gets to the father. Father added a little bit more, builds a decent size operation and passes it on to the children. A lot of times, the children don’t want to be coffee farmers. Sometimes the business has grown up enough where it actually has some real value and wealth but the entire, call it, family wealth can be tied up in the coffee farm itself. So, there’s a lot of generational liquidation that goes on, so that the kids that don’t want to be in farming can live in Miami or buy a great apartment in the city, whatever it might be.

We stepped in and try and buy during those generational turnovers. And we try to buy at scale. So, we really don’t look at anything that’s under about 200, 250 acres, which actually limits the amount of acquisitions we have to look at. Because 95% of the farms here in Colombia are about three acres or less. It’s very fragmented which, again, goes to why there’s this historic lack of investment. Somebody with three acres isn’t going to conduct the capital raise in the US or get a lot of support from the banks. It’s basically those who are willing roll cash back into their lands, and maybe they pick up some additional farms over the course of 40, 50 years. But to get to a scale that’s important or that you could turn into a real enterprise is very challenging for most farmers. So, we’ll step in where there’s that generational turnover, look for land that we can aggregate and that’s in strategic locations so that we can leverage the economies of scale of developing infrastructure around those farms.

Pancham Gupta

Got it. Basically — correct me if I’m wrong — when you’re buying these farms, they’re already operating. There’s already decrease over there. It’s not like you’re buying barren land and trying to take care of all those things. You’re just basically adding operational efficiencies under your umbrella and just segregating them.

Let me ask you this. That’s awesome that you’re doing that. You’ve done series A and B already. You’ve deployed 50 million of capital into this business. How are the returns looking like? I know you mentioned 10x in terms of your growth from last year to this year. But as an investor, are they seeing cash flow play? For a person, let’s say, who invested 100,000 two years ago, are they getting returns right now? Or is it more of maturity of this?

Adam Jason

Yeah, we’ve always set the business up in a way where the goal is making profits. It’s not a money-losing business forever like you might see in the tech space, et cetera. But what we’ve told investors is, let us roll the profits back into the business, so we can continue to add value really until the point where I’d say where we’ve got all the low hanging fruit. What I mean by that is, we’ve done all the acquisitions we can do here in Colombia at a reasonable price. We’ve built the infrastructure that we want to, and we don’t have an opportunity to, I guess, redeploy capital back into the business and make more by doing that from a value creation perspective than we would if we just gave you dividends.

All the profit we make this year will roll back into the business. But we’ve shown a history of being able to turn $1 into $1.50. One thing our financials will show this year is, all the acquisitions we did, we did at about three and a half million dollars under market price. Because we’re an audited company, we have to do every year a third-party independent valuation that goes out and looks at the land, everything. That’s their calculation, not just our internal. We’re doing a good job of using capital to create more value and way more so than we would be if we were paying out on a current cash flow perspective.

I think really for, let’s say, you have investors or listeners that are interested in becoming investors, I always tell people it’s really a grow-your-net-worth flight versus a current-cash-flow flight. At the same time, we think we can hit really meaningful returns for people. The numbers tell us. Our target is at 2026 sale or IPO of the business, investors coming in. At this stage of the funding round, now we’re trying to deliver 10, 11x on their money. Sounds lofty, as I understand. But we have served out the fundraising process, really maintained a low valuation on the business so that the investors can get that additional upside.

And we understand that for a lot of people investing in Colombia and looking at alternative assets here, et cetera, it’s a lot different and may take a different mindset than it would be to buy multifamily properties in Miami or Fort Lauderdale. So, there’s got to be enough of a return profile for somebody to say to themselves, “Okay. I should take a shot with this,” versus something that maybe is, at least, in their mind a little bit more of a predictable asset class.

That’s where we’re looking to go. The return potential is potentially huge if we continue to execute. We’re definitely on our path to doing that. As I mentioned, with the KPIs we had for this year, we’ve done excellent from an execution standpoint — growing the revenues, growing the profitability. We got four more years to really hit a home run so we can get to a solid exit.

Pancham Gupta

Got it. How big is your corporate level team, given that you have 8,000 acres and so many different farms?

Adam Jason

Sure. On a full-time employee basis, we have about 300 people. During our harvest period, we get up to about 1,000. You have to have coffee collectors. Most of the collection here in Colombia, because of the fact that coffee grows essentially on the sides of the mountains, it has to be done by hand. There’s no real way to do it with automated processes, machinery. It just doesn’t exist. Also, the way coffee grows, you could have one ripe bean next to a non-ripe bean. It takes a little bit of experience and an eye for it to do that. During the harvest periods, our employee team count increases.

At the executive level, so myself, my business partner at Legacy group, we hold two of the three board seats. Our CEO holds the third. But we’ve built a great team, I’d say, from an international perspective but also an on the ground operational perspective. Our CEO has about 25 years in agriculture here in Colombia. We just added to our advisory board a gentleman by the name of Steve Oakland. Steve is the President and CEO of TreeHouse Foods. That’s a company out of Chicago. They trade on the New York Stock Exchange, $4 billion a year in revenue. They have a 30-million pound per year coffee operation within TreeHouse Foods. He used to run coffee for Smucker’s before he moved to TreeHouse. Somebody with just decades of industry experience.

Myself, I’m more focused on the strategic direction of the business, assisting with the capital raise, obviously, helping check the box from a legal perspective, sit on the board, work in the business every day. I’m talking to you today from a hotel here in Medellin where we’re doing our annual strategy meetings for the year. So, we really sink our teeth into the business. Human talent and human capital is probably what we spend half of the meetings talking about and making sure we’re aligned to hit all the goals that we have.

Pancham Gupta

Great. One last question before we move on to the second part of the show. On the sales side, the Green Coffee Company, are you more selling to the wholesalers, or are you direct to consumer? Or, is it more like you have partnerships with big brands like Starbucks and different companies out there?

Adam Jason

Sure. We’re more focused on the B2B sales. We basically have three pillars to the business. There’s the Green Coffee sales, which for those who aren’t familiar with the industry, it’s essentially the raw coffee before it goes into the roasting process. The roasting process is just cooking the coffee to get it to that kind of brownish color that we’re all familiar with. Companies like Starbucks and other large importers will buy it in green form, and then roast it to their specifications. So, when we sell the green coffee, we’re selling it by 38,000-pound tractor trailer size orders. That’s where we are now, where we want to go. This year, we did about 5 million pounds of coffee. We’re scaling up, as we get into that exit scenario I talked about, to about 30 million pounds. A lot of that has to do with buying more coffee from the farmers who surround us, but also making sure that those 8,000 acres plus we will buy in the future are fully productive.

The other piece of the business is the roasted coffee itself. That, again, is on a B2B sales basis. A company like Whole Foods, for example, would buy sustainable farm-direct coffee in bulk. Then they’d either use the brands that we create or put it into their own branding. We have so much volume, so much coffee we can’t — we could, but it’s not the best, I think, strategy of trying to sell it bag by bag in a direct-to-consumer fashion. We do have that, but it’s primarily built around our investors want to try the coffee. We need to show large buyers that we can create a product and get it from farm to bag, more so than we’re trying to be the largest consumer brand behind coffee. That’s not really our goal. We want to sell a lot of coffee in roasted format at $6.50 a pound, and let somebody else make the extra upside that comes off of that while we move large quantities.

The third pillar of the business is the byproducts business. That’s where you have the vodka creation, the gin creation, the pure ethanol. That’s really our moneymaker. Because you’re talking about taking essentially garbage and turning that into some money. The coffee business essentially just fuels the raw materials we need for the real moneymaker which has, call it, 80% to 90% profit margins. Because we don’t have any additional input costs when we’re making the vodka, et cetera other than bottling, which is fairly cheap.

Pancham Gupta

Great. Well, thanks so much, Adam, for explaining that. I myself am not a coffee expert, but I do know that there are so many different variations. I’ve had my fair share of great smelling and tasting coffee to not so much.

Adam Jason

Yes, I’d say that we’re trying to make — our coffee is designed to be one that you don’t ever have to put milk or sugar into it to make it actually taste like something you’d want to consume. I don’t know about you, but I grew up with the Folgers and the Maxwell Houses. It’s like, that’s not even — that’s not what we’re talking about.

Pancham Gupta

Great. Thanks, Adam, for that. We will be back after this short message.

(break)

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(interview)

Pancham Gupta

Adam, let’s move on to the second part of the show where I ask these four questions to every guest on the show. I call this Taking the Leap Round. My first question for you is, when was the first time you actually invested outside of Wall Street?

Adam Jason

Sure. I started with some single-family homes in the US.

Pancham Gupta

Got it. Do you still have them?

Adam Jason

I’ve since sold them all. It was putting W2 income into the properties, but I think what I found was — I sold the last few after COVID and all of the rent moratoriums and everything. It’s similar to what we see here with coffee. You have to get to a certain scale to make it worthwhile and where it’s truly as passive as people make it out to be. Owning a few properties is not passive, because you’re not making enough money to pay people to do the work for you. It’s essentially the theme.

Pancham Gupta

Got it. So, my second question, did you have any fears that you had to overcome when you bought those single-family homes?

Adam Jason

The real benefit of any Wall Street investment is, the liquidity comes from it. You can buy and sell the same day if you want to, whereas you don’t have that with single-family homes or other private market investments. I guess, that’s the benefit or the thing that you might think about. It’s like, oh, man, this is not going the way it should. How am I going to get myself out of it?

Pancham Gupta

Got it. My third question for you, can you share with us one investment that did not go as expected?

Adam Jason

Yeah, I would say when I first came down to Colombia, we’re working stom in a real estate business down here. I would say the business itself didn’t have as strong of the fundamentals as, for example, we’ve built in the coffee business, some of the more recent things that we’ve taken on. We saw that the properties that were within the business were really scattered. It was challenging from a management perspective. I would say, for anybody looking at alternative assets, looking at funds, looking at direct companies, is the business at a sophisticated enough point where your involvement is really not needed and doesn’t have strong fundamentals? How well was the management doing? But I would say everything that I’ve done in the investment side has been a good learning experience, for sure. It helped position for where we are and where we want to go.

Pancham Gupta

Got it. My last question, what is one piece of advice would you give to someone who’s thinking of investing in Main Street or alternative assets as compared to Wall Street?

Adam Jason

I’m sold on private market deals where you can actually pick the direct investment you want to make or not just investing in a fund. They’re going to pick 10 businesses or 100 businesses that results in tons of diversification, limited upside. I think if you’re going to invest in private markets and alternative investments, the potential upside that you really can see happening, not that somebody else has told you, is potentially possible. Meaning, you actually understand the industry, understand the business. You can understand the prospect. I think they have to be meaningfully higher than you could get if you just put money in the stock market and waited. I mean, the numbers really are, over the last 30 years, the S&P 500 — if you just buy an index fund — has returned like 9.5%.

So, if you’re going to be venturing into other assets, don’t do it to make 10.5. Don’t do it to make 12. Try and find something that’s really going to be meaningful for you. Because, really, what is the benefit? You put the money into the stock market. If you’re not actively looking at it or getting worried about volatility or ups and downs in the price, it’s entirely passive. But if you got to put money into a single-family home or a multifamily property, and it becomes a job, and all you’re doing is earning another 1% or 2%, I would say that that is not worth the time or effort.

Pancham Gupta

Got it. Well, thank you for sharing that, Adam. How can people connect with you if they want to find out more about you or Green Coffee Company and what you’re up to? How can they connect?

Adam Jason

Perfect, yep. As I mentioned to you, we’re in the Series C. If there are investors who are interested in participating, you can go to our website and review all the deal information. It’s legacy-group.co — .co instead of .com. You can also sign up for our mailing list if you want to keep up to date on the opportunities that we’re opening up here. Then I’m the most active on LinkedIn. So, if anybody wants to connect directly or with the business, they can find me there. I would love to have some of your audience jump on board with what we’re doing here in Colombia and LATAM.

Pancham Gupta

Awesome. Well, thanks so much, Adam, for your time here today.

Adam Jason

No, thank you to you. Really appreciate it.

Pancham Gupta

Thanks for tuning in today. If you have questions, do not hesitate to email them to me at p@thegoldcollarinvestor.com. That’s p@thegoldcollarinvestor.com. This is Pancham, signing off. Until next time. Take care.

(outro)

Thank you for listening to The Gold Collar Investor Podcast. If you love what you’ve heard and you want more of Pancham Gupta, visit us at www.thegoldcollarinvestor.com and follow us on Facebook @thegoldcollarinvestor. The information on this podcast are opinions. As always, please consult your own financial team before investing.