On an excellent podcast between Loius Theroux and Jon Ronson, Jon said something that really resonated with me. He sums it up in this tweet:
I have been worrying about all sorts of unknown things for years and now one has finally happened I am weirdly calm and reassured. I am ready for this!
I worked harder in March and April than I think I have ever worked before. And I have also been happier than I have been for a long time. Which doesn’t make sense logically. But there we go. Proof that I am irrational.
That was true in March when my businesses were grinding to a halt, my investments were being ravished and my cushy always-on-holiday life was cancelled. And it is true now almost two months later when that hard work is starting to pay off. April was a very profitable month. But more importantly, a lot was built and put in place that is going to pay off for a long time to come.
How Has My Planning Gone?
In March I laid out my plans for reacting to the virus in a series of blog posts and podcasts:
Some worked out, some didn’t.
- Reduce Risk
- Stay in central London in an Airbnb and cancel all travel plans. Tick.
- Withdraw all my money from P2P lending. Not Tick.
- Keep a 1-year cash reserve. Tick.
- Audit my businesses to reduce risk and costs. Tick.
- Earn More
- Stop spending time on my hobby (video game making) and make some money. Tick.
- Earn more from the blog – advertising, partnerships, create more content etc. Not Tick.
- Push my consultancy. Not Tick.
- Pivot my businesses to do better in these times. Tick.
- Start a spreadsheet of every person I have ever done business with and would like to do business with again and get in touch. Kind of tick.
- Try and get a good deal on a property. Not Tick.
- Buy into the stock market. Tick.
- Buy bitcoin. Tick.
- Look out for other opportunities. Still ongoing.
Too much has happened in April to talk about everything. So let’s focus on the big stuff!
My biggest business by a long way is a table tennis brand. It sells all round the world, mostly through Amazon FBA. We are in our 8th year now and April 2020 was our best ever non-December month for sales! It even beat 5 out of 7 Christmases.
To make it even better we had stopped all our marketing spend so our profit margin was higher than normal.
A crazy good result! But why?
Amazon FBA put in severe restrictions on sellers. In most countries, they slowed or completely stopped deliveries of non-essential items. In India, for instance, Amazon stopped shipping out non-essential items altogether. We sold 0 products in India in April when normally it makes up between 5-10% of our sales.
In UK, USA and the rest of Europe there were sometimes 1 month delivery times. To make it even worse Amazon stopped allowing you to send in new stock so we were limited to just what we already had sitting in their warehouse.
Sounds terrible right? Yes. But with a dollop of luck and a bit of planning we were able to turn it to our advantage.
We had a lot of stock stockpiled both in Amazon and in a private storage facility. That meant we didn’t run out of stock in Amazon and could fulfil orders separately from Amazon FBA (called FBM or fulfilled by merchant) when delivery times were too long.
Two things our competition couldn’t do. Meaning we were basically left with hardly any competition as demand for indoor sports equipment rose.
But this success does mean we will most likely have stock problems later in the year. Hopefully our logistics lines will be working well enough to keep us stocked up.
Suggested Post: How to start an Amazon FBA business
Pipehouse Gin is another one of my businesses and the one we labelled as most likely to fail because of the virus.
Most of our sales are to businesses where they pay in arrears. ie they get the stock and then we send them an invoice afterwards.
When all restaurants and bars closed that not only wiped out all our trade orders, but left some outstanding invoices owed by businesses that may not survive long enough to pay.
But towards the end of April things started to pick up. Our online sales to customers soared and some of our business customers pivoted and started online shops.
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Are you still supporting local during lockdown? We love this TW biz, @hattonsofroyaltunbridgewells & @thewineroomstw, that despite being closed is continuing to keep us going with the Hattons home experience delivering little luxuries right to your door (contactless of course!) . . . . . #pinkgrapefruit #gingarnish #garnishgame #drinklocal #supportsmallbusiness #supportlocal #springgin #kentlife #tunbridgewells #tunbridgewellslife #kent #englishgin #newgin #gingin #ginoclock #prettycocktails #pinkgin #pink #styleonmytable #pastelsquares #pinkcocktail #perfectcocktails #drinklocal #kentgin #prettygin #gincocktail #weekendcocktails #botanicalgin #ginbotanicals
We have also seen some of our customers make an extra big effort to pay promptly which is greatly appreciated.
April ended up being an OK month for Pipehouse Gin. Lower trade sale than normal offset by higher direct-to-consumer sales. As we make more money from direct-to-consumer we actually made more money than normal.
Suggested Post: Starting a Gin Brand Episode 1: Doing The Research
I had lots of plans for the blog in April. Adding adverts, writing lots of content around starting and running businesses during the crisis, and getting more traffic. But then I came across a new opportunity (listed below) and stopped all work on the blog to focus on it.
I think that’s the right move. I need to remember this site is a supplement to my other businesses. If it becomes the main business then I risk becoming one of those people who talk more than do. Loving the smell of my own ideas without actually implementing them.
Revenue is right down and the blog made somewhere between £1,000 and £1,500 in April. The lowest in about 5 years and low enough that I haven’t even bothered logging in to all my affiliate panels to work out the exact amount.
This is because my main income sources come from writing about business opportunities in matched betting and Amazon FBA. There are no sports on at the moment and Amazon FBA is locked down so that revenue has almost completely disapeared.
I have a few articles I am working on and hopefully will have them out in May. It depends if I can find the time.
I also said I was going to push my consultancy business. But I didn’t. Honestly, I much prefer doing the businesses myself than telling other people how to do them.
Suggested Reading: How does this blog make money?
In my plans to make more money I said:
Start a spreadsheet of every person I have done business with and would like to do business with again and get in touch.
Well, I only managed to get about 2% through that list before hitting on my next business. (so if I haven’t reached out to you yet it is because I barely got into the list!)
I contacted someone I used to do Arbing with (we’ll call him Fred). We both made a lot of money from it and while I quit in 2014 to go and play table tennis he continued arbing. That is up until February when all sports events got cancelled. Effectively stopping his business in its tracks.
Fred decided to pivot and move away from sports markets and into cryptocurrency markets. And invited me to join him.
Opportunities in Cryptocurrency
Now I have always been very sceptical of currency or stock market day trading. Where is your edge? Surely every obvious edge is being drained by professional hedge funds. I assume that 99% of people trying to make money trading will lose money. And losing money is worse than not making money.
But Fred is a very smart guy and so are some other people I have met travelling who make a living from it. So I decided to investigate.
It turns out that the environment is not too different from matched betting and sports arbitrage. Two areas I was world-class at.
In the crypto space, there are lots of different competing exchanges and currencies. All doing things a little bit differently from each other and all trying to compete with each other. Including offering promotions (like bookies do in matched betting) to try and get people using their currency or exchange.
For most of April, I have been working hard to find such opportunities. Test them out and implementing them. So far we have one that works and is currently working away making money. And lot of other ideas being tested out.
Where is our edge? Well, the current working strategy only works because of an offer on one of the exchanges. When that offer ends the strategy won’t work anymore so we need to make the most of it while we can. And any other strategy we come up with will likewise be because of an edge.
The majority of work over April has been in creating three bits of software.
A backtesting program. Something we can run ideas over to see if they have merit. Here is a screenshot of the backtester running our first and so far only strategy that works and that is running live with real money. (The strategy is market neutral so long term price changes of the assets doesn’t matter)
A large piece of software that has some quite complex functionality. I’m pretty amazed we’ve built in under a month. I didn’t lie when I said I’ve been working harder than ever before.
An arbitrage finder. Something to programmatically look for opportunities over different exchanges. It is similar to the stuff we would use for arbitrage in betting. But a bit more complicated because the interesting opportunities only really appear if it takes many steps to get from one currency to another.
And a web version:
To be useful I need to be updating multiple times a second. Which turns out to be a pretty difficult computer science problem. How do you price compare hundreds of currencies over many different exchanges when there could be unlimited steps to each one? It’s a recursive nightmare.
In fact, it’s so difficult a problem that I found Google asks a much easier version of it as one of their notoriously difficult interview question. That made me feel pretty smug – even if it took me half a day to work out and not the 40 minutes Google gives their applicants.
We are not actually using this software yet as the current ideas we’re working on don’t need it. But I will be in the future.
Live trading software. And the final piece of the puzzle was creating the software that actually places the trades. No screenshots to show here as the user interface is very simple.
It’s all very exciting and we’re taking a bit of a scattergun approach. Trying out lots of different ideas, learning as much as possible and thoroughly testing any opportunity. Most ideas have come to nothing but a surprising number are showing potential.
I have also been considering offering some of the software as a subscription service to others. But how do I find the balance between offering something useful that has value without creating competition for myself?
I am also a bit worried about talking too much about it when I know that copycats who don’t understand exactly what is going on will probably lose money. Even though the logic has the same foundation as matched betting or casino bagging, it is nowhere near as simple.
Investments & Peer-2-Peer Lending
At the start of the ciris I had about 30% of my net-worth in peer-2-peer lending. Split between Ratesetter and Assetz Capital. I had the money in there because:
What I am looking for is some sort of easy access investment where I can close out and withdraw very quickly if needed.Sam Priestley – Oct 2018
On the 13th of March, I put in orders to withdraw all my money from both. The time had come to access that easy access investment. By 2nd April I had received about 40% of my funds. The funds in my 5-year lending at Ratesetter and the easy-access funds at Assetz Capital. But since then I have barely received any more.
Not great and defeats the whole point of why I chose P2P lending in the first place. At least my funds are still earning interest. I’m a bit surprised to be honest. I’ll keep you updated when I get paid out.
But where there are issues there is also sometimes a glimmer of an opportunity. I received this in an email from Assetz Capital:
For those who have a more urgent need for cash to be withdrawn we have been working hard to release a new marketplace facility for the Access Accounts. This is intended to hand more control back to you, the investor, to be able to liquidate your investment. The new marketplace will allow you to set an acceptable discount level for some or all of your Access Account holdings and offer them to other investors who may accept your discounted offer.
That sounds like a good opportunity to me! I used to trade loans on Funding Circle’s marketplace as I outline in part 3 and 4 of this post from 2014. I reckon there will be some good opportunities to do the same at Assetz Capital.
When the market dropped I started buying. I bought in three separate lots between 20th March and 12th of April. At which point I stopped. Partly because it feels absurd the market is recovering ( had assumed it would keep dropping). But also because my P2P withdrawals stopped and I wanted to stick my money in my trading fund (see above).
In my last post, I talked about a few individual funds I thought might be good investments. In particular Amazon. Well I decided I didn’t know enough to be confident I could pick well, so left my investments as just buying index funds.
I secured an offer of a mortgage and have placed a few bids on properties at well below asking price. And so far have been turned down by all of them.
The property market has been frozen and there have been a few popular opinion pieces saying that prices will barely change and will even be up by the end of next year.
The analysis I’ve heard cited most often predicts a 3% drop in 2020 and a rise in 2021 and was written by Knight Frank (yeah the estate agency… not biased at all). Nonsense. But it does mean that along with mortgage payment holidays no one is panicking.
I think that there is going to be a price drop. I reckon the biggest three reasons people are forced to sell are: death, divorce and losing your job. All three of which are happening at record rates right now. Add in that credit is getting harder to get and we are in the perfect storm for a crash.
So I am going to wait and watch and buy when an opportunity appears.
What a month! And I have just scratched the surface of all that happened. I could have talked about frantically trying to buy oil as they started giving it away. Or doing my end of year accounting. Or the problems we’ve had trying to get furlough payments. Or whether I still think it was the right decision to move to Covent Garden. Or my business partner catching the virus. But this post is long enough already.
I’ve learnt a lot about myself in the last couple of months. I’ve learned I’m good in a crisis. I like the variance, the uncertainty. The opportunity and excitement in the chaos and unknown. And I’ve learnt that I really enjoy working on challenging problems.
So that begs the question. What will I do after this is all over? Who knows. I’ve been joking with my wife Emma I am going to become a mercenary and head to warzones to keep the thrill. We’ll see!
Be safe out there and please comment if there is any part you want to discuss.