Entrepreneur Stephen H. Greer, author of the inspirational and advice filled book Starting from Scrap: An Entrepreneurial Success Story was kind enough to answer a few questions about his book and his career as a business owner. The author describes the triumphs and setbacks of his career as owner of Hartwell Pacific, a scrap metal company he founded in Hong Kong in 1993, and shares some of his business secrets. He sold the company in 2005.
Thanks to Stephen H. Greer for his time and for his interesting and informative answers.
What was the background to writing this book Starting from Scrap: An Entrepreneurial Success Story?
Stephen Greer: It wasn't originally planned to be a book. After selling the company I decided to put pen to paper to create a chronological layout of everything that had happened. Looking back at that time, everything was such a blur. In doing so, as the characters all came back to me, the color of the journey came alive and I realized that I had some pretty unique experiences and that there was great value to be gleaned from them and to be shared.
About the same time, my wife Mei was reading "Mr. China" a cautionary tale about investing in China that is a true story about a bold American and even bolder investors who took an early plunge into China and expeditiously went about losing US $500 million. It's a good read but my wife pressed me: "Steve, you have a Mr. China or Mr. Asia story, but it worked. You should write a book that offers the caution but also the way to success."
That is what I then set out to do but decided rather than making it a dry, “how to” book, I chose to share the color of the journey, and also the life lessons I learned coming of age as a young entrepreneur in Hong Kong.
It was a very cathartic experience that has been of immense value for me in preparing for the next move in my career.
Early in your career, you moved to Asia to seek new business opportunities. How have economic conditions changed in Asia since you first arrived in 1993?
Stephen Greer: Let me add to that. I came to Asia because of a recession and a lousy job market on Wall Street. So in some way, I feel that environment is quite similar to what we are facing today only magnified by a factor of 10 or so.
Understanding Asia was a wise choice in 1993 but today it is essential. Young people ignore the demographic and economic shifts towards globalization and towards Asia’s rise at their peril. China in particular has shifted from a good place for America to source cheap, low-end goods to a global source of growth as those factory workers start to be able to afford all the consumer goods and services and household essentials that we have enjoyed over the past decades in the west. Those high economic growth percentages we see each year are compounding off a higher and higher base. So Asia is a much more significant and developed market than it was when I arrived.
What economic conditions remain the same in Asia, as when you arrived?
Stephen Greer: It is still booming. But on the negative side it is still the wild west or wild east. An immature legal system and lack of legal precedence make business challenging. Government policies are not transparent and predictable and corruption is still a major roadblock to development and the alleviation of the wealth gap. But for all those handicaps, unlike in Russia, the average person is far better off under China’s “social capitalism” and that trend is continuing.
Of fundamental importance to me and for my area of expertise is that China still is the leader in global demand for commodities. That is a mega trend that shows no signs of abating. In fact if its demand reverses, that means growth has slowed and then China will be at serious risk of social instability. That is their Achilles heel and more and more the Achilles heel for the West. Don’t forget who buys all our Treasury Bills. We need China to prosper to finance our debts.
How did you discover so many lucrative opportunities in scrap?
Stephen Greer: Cold call. Cold call. Cold call. And when I was done with that, cold call some more. It’s also important to be willing to waste your time chasing wild geese. One of my mottoes is “When hunting for one thing, you often find something else that is more valuable.”
As mentioned above, there was a large and obvious demand for raw materials and scrap was one I believed I could get my hands on.
What advice would you give to aspiring entrepreneurs in seeking new ventures and opportunities?
Stephen Greer: Be persistent. You read about instant billionaires in Silicon Valley. God bless them but for the rest of us it is most likely going to come down to hard work, determination and persistence.
Be brutally honest with yourself and ask others to be brutally honest with you when evaluating your plans.
Remember that most start-ups fail so do your homework and put yourself in a survivable situation if you fail. Think about your plan B. Know your downside.
You experienced many roadblocks, and went head to head against some unscrupulous competitors. How were you successful in meeting these serious challenges and what lessons did you learn from them?
Stephen Greer: Go local. See how others handle these problems. If you can live with their methods join them or come up with another creative solution. If you can’t, ask yourself if you can survive with that disadvantage. You won’t find a chapter in a business school book that tells you what to do if you get a death threat from your competitor or are being shaken down by the local police.
When you face a problem use it as a valuable learning experience. Make it a company case study so that as a team you can hopefully resolve the problem and set up a system or plan to keep it from recurring.
What were a few of the most effective ideas and strategies that you applied to operating your business and why were they so successful?
Stephen Greer: One of the key reasons for our success in Asia was that we were competing with family businesses that had systems based on trust. We developed systems based on teams and checks and balances, not blind faith in individuals. We lost at least a couple million dollars getting that education and developing those systems but ultimately what we learned and the systems we developed enabled us to grow at a faster pace than our competitors. And in our industry, where volume equals power, growth was critical to having a successful relationship with our customers. In other words a strong system of financial controls based on checks and balances among a team of professionals ultimately allowed us to grow and develop without suffering constant setbacks due to fraud or errors.
You mention in the book that a person should do a common thing uncommonly well. What do you mean by that?
Stephen Greer: It means you don’t have to invent the space shuttle to be successful. Innovation can come from doing something that others are doing but executing it better. Most successful people you meet or listen to will tell you that business is simple. It is about fulfilling a basic need through flawless execution. Even if you are an inventor, the success usually goes to the guy who executed the idea or plan, rather than the guy who discovered it.
I strongly believe that if you care deeply about your customer and his or her problems and also for your employees and their needs, you are half way to success. Everyone can do that but not everyone chooses to do it with passion and integrity.
For any entrepreneur seeking overseas business ventures, what advice would you give a person about learning and overcoming different cultural and business practices?
Stephen Greer: Learn to listen. Learn to understand body language. Find out what makes people tick in their culture. Don’t presume that people appreciate your instinctive or trained way of doing things. Have an open mind and be flexible and above all treat your counterparts with the utmost respect. Because you come from the wealthiest country in the world does not entitle you to preach to others.
Last tip. Learn to eat and enjoy their food! That is the ultimate sign of respect.
If you had one piece of advice for an entrepreneur in these difficult economic times, what would that advice be?
Stephen Greer: Make sure you take into account the possibility of violent down turns in your forecasts. MBA’s call it a sensitivity analysis. Make sure you can survive the bad times so that you can thrive in the eventual good times. The good news is that we are bouncing around on the bottom. The most dangerous shock is probably behind us.
What is next for Stephen Greer?
Stephen Greer: I am currently in negotiations to buy a company utilizing private equity backing or OPM, Other People’s Money, as they say on the street. That is one benefit of a successful track record; People are eager to bet on you. The target acquisition is in the resources business and sells 75% of it’s output to Asia. As mentioned I believe strongly in the long-term mega trend of commodities consumption in the developing world. I am making sure that I factor in price volatility but am very comfortable being in the Asian resources space for the long-term.
I am also looking to invest in companies that are exporters of high-end goods to China. A weakening dollar and strengthening RMB will play nicely to that strategy and I feel strongly that is a one-way bet.
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My book review of Starting from Scrap: An Entrepreneurial Success Story by Stephen H. Greer.
