Adam Brown, a modern day trader who helped catapult globally-focused clearance distributor Protempo into the Deloitte Fast 50 three years out of the past four, shares the story behind his success.
In his 1987 book The Art of the Deal, business tycoon and US president Donald J Trump outlines the key elements of deal-making. They include thinking big, knowing your market, using your leverage, delivering the goods, containing costs and, perhaps most importantly, having fun.
Adam Brown, Protempo’s founder and VP of sales and purchasing, may not wish to be compared with the controversial president, but those elements are also evident in how he approaches the big clearance deals he masterminds around the world.
Of course, being the down-to-earth Kiwi that he is, Adam also puts his company’s success down to two attributes Kiwis are known for – transparency and trustworthiness. Two attributes that go down well overseas, particularly with the Americans.
Adam’s skill for negotiating deals helped propel Auckland-based Protempo into the Deloitte Fast 50 for three of the past 4 years, and will generate a turnover well in excess of $100 million in 2017.
But he shares the credit for Protempo’s remarkable performance with “a passionate, dogged team of shareholders and key staff, including the leadership team of Matt Duder (of eBoss fame), Mark Thomson (founder of EFTPOS New Zealand) and GM Mark Priscott.
Protempo has two strings to its bow. The first involves worldwide clearance deals – mostly centred on superseded technology. The company buys ‘trailing edge’ products from parent companies and distributes them in new markets without disrupting established distribution channels. Jawbone and Microsoft are two of the high profile brands they deal with.
The second string involves exclusive distribution rights for new products in New Zealand – such as Amazon’s Kindle and Protempo’s own brand of tablet called Ollee.
They also custom build branded electronic products for clients, such as Te Wananga o Aotearoa.
So how exactly did the Protempo success story get started?
Turns out Adam’s been in the business of deals right from high school, where he traded stuff, such as sweets, at boarding school. “My housemaster and economics teacher made me keep a ledger and issue receipts,” he recalls. “If students complained about pricing, he’d say it’s simple economics. Market forces determine the price.”
Later Adam dropped out of university to write a website for a liquidator to sell excess inventory.
In December 2004, together with his father Colin, he launched FirstIn, New Zealand’s first daily deal site.
“There I learnt a lot of hard lessons,” recalls Adam. “But the key lesson from that whole experience was that there aren’t many good deals in New Zealand. It’s a small market; distributors don’t carry much excess stock and they certainly don’t want to upset retailers.”
In 2006 Mark Thomson invested in the business (the rebranding to Protempo happened in 2015). Adam’s been taking on board “the right people” ever since. Current staff numbers run at 17, with a further half-dozen ‘locals’ in five offshore offices (they connect via regular videoconferencing), and there’re plans to open offices in Asia and the Middle East.
Today, both the ‘distribution’ and ‘clearance’ aspects of the business are core, although Adam personally focuses on clearance deals, such as buying electronic products from manufacturers, primarily in the US, and remarketing them to retailers both in the US (such as Best Buy and GameStop) and internationally. An example is a 2016 deal completed for Jawbone, the fitness tracker brand, which involved $20 million worth of stock across several countries, and selling back into each of those markets.
“We treat product like it’s our own. We’ve re-marketed some great product and great brands as a result of doing what we say we will.”
The biggest single deal so far, says Adam, involved 40,000 speakers for Best Buy.
He says ‘buying seasons’ are rolling around faster than ever, with January/February the busiest time for Protempo.
Most of the company’s deals are through discreet channels, Adam explains; they’re not there to rock the boat and destroy existing relationships. “We treat product like it’s our own. We’ve re-marketed some great product and great brands as a result of doing what we say we will.”
Making a real effort on proposals and presentations also pays dividends, he adds.
As for whether the Trump administration will have an effect on their US business, Adam believes if anything it will improve sales. Market nervousness can lead to stock liquidations, as it did during the GFC of 2008/2009.
The evolution continues
Adam describes the progress of Protempo as “evolutionary” – but it very much hinges on their US connections. He and his wife Alla are moving to Orange County, Southern California in April to further cement those ties, help set-up their own warehouse (a necessity now they’re an official ‘opportunity buy’ vendor for Wal-Mart) and, most importantly, spend more time together. “In 2015 I spent more time in the US than I did in New Zealand,” he admits.
Although growth has been impressive, Adam says they’re looking to ramp up sales capacity even further. There is plenty of room for expansion.
“We’re seeing that already. At the CES Show, for example, we’re getting global contracts with some pretty big brand names. They’re looking for a holistic solution to manage their global excess assets with minimal disruption to their sales channels.”
Using the NetSuite cloud based ERP platform also makes life easier, Adam explains. It’s a global system favoured by many of their multinational clients and makes stock transfers and tracking easy. “It was expensive to deploy but has more than made up for that in efficiencies.”
His team has to think fast in terms of currencies too. For example, post-Brexit, they invested heavily in stock from the UK and Europe, and sold it later in US dollars.
“We have to play those fluctuations as much as possible,” says Adam. “And that’s where our global presence gives us the advantage.”
He’s grateful for the support from ASB. “They’ve helped with secured trade finance when necessary, and when we pivoted from retail to global distribution, they helped us buy stock.”
CFO Andrew Preiss, recruited from the UK, has also played a vital role by transforming Protempo’s financing and banking arrangements.
The business has delivered its highs – such as securing the first deals with Best Buy and Jawbone – and its lows. Adam remembers in the early days losing “hundreds of thousands of dollars” on a European company that went into liquidation. Family and shareholders were forced to put ‘hands in pockets’ to keep the business alive.
Needless to say, trade credit insurance has been a requirement on every deal since.
Despite having Fast 50 status, Adam describes Protempo as a “13 year overnight success”.
Perseverance and following the mantra of “doing good business does good business” will lift them to a $200 million-plus company in five years.