It’s crazy to think that 6 years ago today, I only started with $2,000 and just a few pairs of shoes. Today I took the effort to go through my old phone photos from years ago to find some pictures of my old storage. Well at the time I didn’t really have a storage, I worked straight out of my parent’s basement.
I do apologize for the grainy pics, but 6 years ago iPhones weren’t the greatest quality. It’s crazy how I used to take all the product photos with my phone. It didn’t take long for me realized I really needed to up my game for better product photos. This also served to be crucial decision that saved me loads of time because too many people were asking for “better” or more “detailed” shots of the shoes I was listing for sale.
I didn’t decide to officially lease an office/storage space until 4 years into the business because that’s when my inventory got out of hand. I kept buying and buying knowing that if I missed my opportunity, I would lose out on a lot of potential profit. But as you can tell this strategy couldn’t last forever as cash soon to be a limiting factor which I would discuss in a future blog. Buying more meant I needed sales to keep up to fund the new purchases. If you ever tried to sell anything, you understand it just isn’t that easy. Getting a dollar out of someone’s pocket is very hard. There will be occasional easy sales that requires minimal effort, but most of the time selling is really the hardest part in any re-selling business. The buying part is literally 100x easier! For those in the business would 100% agree with me on this.
So you may ask, how did I go from $2,000 and a couple of shoes to a company with over 2,500+ pairs of shoes and flipped over 10,000 pairs of sneakers to date? One of the biggest reason of how I got here was I sold my condo investment to generate cash liquidity to buy more shoes. Most would call this a stupid move because we all know how hot the Toronto condo market is, but to me I had so much confidence in sneakers that the rent and capital appreciation will not outperform what I can earn from sneakers. I also sold all my stocks in my investment portfolio and I took every dollar to invest in more inventory. Yeah…no one truly understood me and obviously would have called me crazy by doing that, but little do they know the money I used to invest in sneakers probably has double my total net worth by now. On the flip side, had I kept my condo and my stock portfolio, I’ll probably be up 10%-20% at most? Moreover, I’m paying corporate tax of 15% and not personal tax which is at the highest marginal rate of close to 50% on capital gains. So yeah, my net worth from an after tax made much more sense in sneakers than any other asset class.
Aside from re-allocating cash from other assets I owned, I re-invested EVERY single dollar I earned back into the business. I’ve always learned about the power of compound returns in school from math and business questions on exams that doesn’t relate to anything in my life, but experiencing it first hand is absolutely mind blowing. I could have easily pulled the money back to buy luxury items or even go on lavish vacations all the time, but i decided the money will be better spent on re-investment of sneakers – the very commodity that I know better than most in the market. I wouldn’t say I’m the best, but I do have the experience that allows me to make sound investing choices into sneakers that have the greatest potential. In other words…I make pretty good choices guessing what sneakerheads desire in the future.
It’s very natural for people to take their “winnings” back into your bank account as safe haven to play with house money instead. However, please keep in mind …having money in the bank DOESN’T MAKE YOU MONEY! For the last 6 years I have kept my bank account balance as close to zero as possible and made sure I invested every dollar into products that would have potential in value. Well of course I had to have enough money to pay the mortgage and monthly bills, but often times I just pull from my line of credit when in need. My girlfriend, now wife always nags me about stretching out my liquidity, but it’s hard to explain to someone that doesn’t fully understand the business that it just makes total sense to do so. Yes, i’m paying interest to the bank for dipping into the line for liquidity, but that annual 5% i’m paying I could easily make back over time. For example, if I pulled $50k from the line of credit to drop on Cactus Jack 4s (which I did btw)…over the 1 year I would owe the bank $2,500 in interest, but my net worth would have doubled! This wouldn’t have been possible had I didn’t borrow money to take advantage of the opportunity that doesn’t present itself often. As a result of this decision to drop $50k on the 4s, I now have $100k of buying power compared to $50k a year ago! So yeah, you can imagine how powerful the re-investment compound return can be now that would put some numbers and sneakers into context.
The very power of re-investing simply means you are technically making money every moment of your life EVEN when you’re sleeping! There’s a saying…if you rely on making money solely when you have to put in physical sweat equity hours…you can never be rich. Had I understood this concept earlier in life, Netmag would probably be worth much more because I would have leveraged like crazy from the get go! My track record has been fairly good in terms of re-selling. Of course I have made bad purchases and decisions, but overall I would say 90% of what I bought has made money more or less. Tie this all into the power of re-investing and compound growth…had my initial base of assets been bigger, I just can’t imagine where I would be today. However, I learned to never to let my past hold me back in the future. I should use this to my full advantage to learn from this missed opportunity and make the best of this experience in the future.
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