Eugene Chen's e-commerce coffee platform is enjoying 50 per cent month-to-month growth
A steaming cup of speciality coffee at a popular Melbourne cafe with a longtime friend got a business idea brewing. After a few years of percolating, the idea became reality.
Entrepreneur Eugene Chen says: "We were having coffee in St Ali and the taste was so different from anything I had before, even though I've been a coffee drinker for many years. We started thinking of bringing that taste to Singapore."
It took two years before he and Mr Keyis Ng co-founded Cafebond. com, a speciality coffee bean e-commerce platform, which went live in June this year .
The roasted coffee beans come from 15 well-known Australian cafes and roasteries, including Melbourne favourites St Ali and Market Lane Coffee. A bag of speciality beans can start from $14, depending on the weight.
Mr Chen, 31, has personally invested $50,000 so far and the platform is enjoying 50 per cent month-to-month growth.
With Cafebond.com, he was able to marry his love for coffee with his 12-year experience as a Web and mobile developer, which began from his polytechnic days.
He took over his father's creative business after graduating from the National University of Singapore.
From there, he spun off a Web development called Unicom Interactive in 2011 which has grown into a 12-man team. He also co-founded Unicom Marketing Consultancy.
Mr Chen also invests in crypto- currency Bitcoin and precious metals. On Bitcoin, for instance, he says: "As a developer, I was interested and I wanted to learn the technology so that I could appreciate it.
"After I achieved that, I even tried to set up my own Bitcoin miner in Singapore, but the electricity bill soared. I'd set up a computer at home and placed a lot of graphic cards in it, and the heat generated was 60 to 80 deg C. You'd need a cooling system."
Bitcoin mining refers to a computing process that makes tran- sactions with the cryptocurrency possible, says Bloomberg. But it requires a lot of energy.
Mr Chen says: "The cost of running that was about $150 a month and the amount I earned was less than $100 a month, and it didn't offset the electricity bill.
"When that didn't work, I looked for arbitrage opportunities to buy and sell Bitcoins from different exchanges. I came up with a program to do that and it still looks for trades as and when. I hope the Bitcoin crypto-currency will become more accepted by business in Singapore."
Worst and best bets
Q What has been your biggest investing mistake?
A I started a holding company, reselling good brands of cosmetic products from different brands, such as Shiseido and Laneige, online in 2013.
I set up a website, spent on marketing, but the products just couldn't move.
Consumers are still sceptical about buying from lesser- known companies online.
I put in about $5,000, and I got the products on consignment, so it wasn't a lot of capital. I learnt that I had to do my research on products, and find out if consumers are comfortable with buying them from sources other than places that are already established.
Q And what has been your best investment move?
A The condo. When I bought it, it was about $1,000 psf. Now, it has gone up to $1,200 to $1,300 psf.
But even though the valuation has increased, it doesn't necessarily mean you can sell it at that price. Selling the property is a whole other topic.
He works on different ways to grow his money because of a tough childhood experience, owing to the 1997 Asian financial crisis.
Q Moneywise, what were your growing-up years like?
A I started trading in primary school. A lot of pupils were playing with erasers. My mum was an art teacher so I was able to buy them in bulk at a cheap price and sell them cheaper than the bookshop.
I learnt a lesson there. I'd sell the erasers without getting the money first because they didn't have enough cash and would pay in instalments. I wouldn't chase them and I even forgot how much they owed me. I learnt to always follow up when it comes to payments.
I used to live in St Thomas Walk, near Somerset, but the Asian financial crisis hit us in 1997. My family had no choice but to sell our apartment. I had to move house seven times and we didn't even unpack our things. I learnt the importance of saving for a rainy day.
In polytechnic, I'd always buy textbooks from overseas sources such as Amazon and I would buy the digital copy. I'd save a lot more compared with my peers, even with the shipping costs. I also took up a lot of freelancing projects, where I earned $500 to $800 per project. As that took up a lot of my free time, I hardly spent my money.
Q How did you get interested in investing?
A I was always trying to find ways to grow my money. During national service, I pushed myself and aimed to enter the best vocations, which would allow me to earn more money, with my future in mind.
I started trading penny stocks during national service because I wanted to spend whatever little free time I had learning something to earn more. I bought books and studied technical analysis, but I only managed to break even as it was tough to keep my eye on the stocks and I was uncomfortable with the fluctuation.
Q What's in your portfolio?
A For fast-growing companies such as Cafebond.com and Unicom Interactive, I've invested $300,000. I get higher returns from such companies because I've invested my time and effort in the operations, and this allows me to quickly make changes when I need to.
Even though Cafebond.com is new, coupled with Unicom Interactive which has a six-figure turnover each year, I can expect a higher return of about 25 to 30 per cent on average.
I've also set aside $30,000 for trading, or buying and selling interesting products that I chance upon, as and when. I usually sell them in online marketplaces.
I also bought a two-bedroom condominium in Punggol for $750,000, when I was 27 and still single in 2012, as an investment. But I'm getting married next year so I might live in it instead.
I have $50,000 in precious metals, including gold and silver. If there's uncertainty in the currency market, I'd prefer to invest in tangible products.
I initially bought precious metals to trade. I've bought silver in monster boxes, which usually hold 500 troy ounces of silver coins, from sovereign mints everywhere, and sell them individually.
The risk is the price fluctuation of precious metals. I eventually became a collector because Singaporeans still prefer to put their money into somewhat safer things like property and fixed deposits.
I buy only the physical form and there are different grades of precious metals - some have certificates and some don't.There are two types of precious metal traders: stackers, who do not care about designs or the production years, and collectors.
I'm more of a stacker.
I also have $15,000 in digital currency Bitcoin. Bitcoin cryptography and blockchain technology have been around for quite some time, but people are still speculating about the fluctuation of prices.
Q Describe your investing strategy.
A I follow the fundamental method. When investing in companies, I study their fundamentals because of the long-term nature of the investment. I see it as investing in the resources, systems, processes and the team, which can't be achieved from technical analysis.
I study the growth rate and ask if it's still making profits, instead of constantly watching the news.
I use a mix of growth and income investment strategies, and prefer mid- to long-term investments.
I started to look for other investing opportunities in recent years, such as investing $30,000 in IT outsourcing and hiring, as the clients from my other business require prompt resources. This also lowers costs for clients. We need to hire and train them first, but there's always a risk as we could over-hire.
With property, I feel one point which is important, but people tend to miss, is the developer of the project. A strong developer ensures the property is of high quality.
The floor plan also needs to be efficient, which means the room has to look bigger than it really is, which makes it easier to sell. I also compare the price per square foot with those of surrounding properties.
Property is more of a long-term investment. In Singapore, property prices tend to be dependent on policies, so you need to know them well. For Bitcoin mining, I needed to fully understand the entire ecosystem before putting money into trying out a business in it.
For trading in electronics, for instance, if I think a product is interesting, I buy just one piece from the supplier, market it and see how quickly it can be sold. Always start small and start with an amount you can afford to lose.
I learnt all this along the way by trying out different things.
Q What's the most extravagant thing you have done?
A When I bought my condo, the amount of cash I put in was staggering to me, $130,000 for the downpayment. It was the biggest buy of my life then.
Q What are your immediate investment plans?
A To grow Cafebond.com to a substantial level and to break even as soon as possible, hopefully, in three to six months. It's not so much about sales volume but about improving the sale processes and business model. Once we master that in Singapore, we can replicate it well in other markets.
For instance, in Singapore, we are still trying to fine-tune the logistics process from end to end. This includes bringing the beans into Singapore and finding a faster way to clear the Customs.
Once we break even, the sales volume will be able to sustain the entire business and we can focus on other markets next.
We're also looking at how to lower costs further, to pass on savings to customers, like on shipping fees, which are usually extremely high when it comes to international courier companies.
Q How are you planning for retirement?
A My girlfriend has also been asking me this question, but I'm more focused on the present as I'm always investing in high-growth instruments that require me to manage them closely.
Q Home is now...
A A Housing Board maisonette in Hougang, shared with my parents.
A version of this article appeared in the print edition of The Sunday Times on August 14, 2016, with the headline 'Love of coffee and technology pays off'. Print Edition | Subscribe
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