Absinthe

Chapter 82 - Use Your Head

I woke up at midday and spent the rest of the day circling the house while Faye watched.

Or rather, while Faye kept shooting me daggers from her eyes as she talked with Minsu and Gunho-hyung on her laptop.

It was around five when they ended their meeting, with Faye looking at me expectantly for an answer.

"Fine," I said. "I'll tell you what I think the solution to their problem is."

Faye's expression turned manic. She didn't bother concealing her excitement as she snapped her laptop shut. "Spill."

"Okay." I said, inhaling deeply. "I've analyzed that investment thoroughly. It's Samsong's first ever bid to enter the Fast Moving Consumer Goods market – shelf stable food market, to be exact."

"Uh huh," Faye said. "Keep going."

"Everything about that transaction was utter stupidity." I reiterated. "From a financial perspective, that is. And from a financial perspective, there's nothing else that I can recommend. I mean, the numbers are just bad. Very bad."

"Yes," Faye said. "Minsu ran the numbers for selling off those inventory assets. We're poised to lose millions there."

We? Faye's already committed in this thing?

"Right," I continued, getting more and more scared by the minute. "And if it's Minsu-hyung, that number is probably conservative. I'd expect at least a couple of millions more."

Faye looked grim for a second, and as if a switch flicked on, she was looking smart and alert in an instant. "Go on."

"So I began thinking, if there's nothing I can recommend from a Financial perspective, is there something I can recommend from a Faye perspective?"

Faye looked confused. "What do you mean a Faye perspective?"

"I mean, what would someone like Faye do if she didn't have a problem with limited resources? What would an entrepreneur, not an analyst, do?"

I could feel Faye getting impatient at all my storytelling, but she kept her cool and waited for my big reveal.

"The answer was pretty much simple from there — control the prices." I said.

Had it been Minsu-hyung or Gunho-hyung, they would have instantly gotten what I meant, but Faye's a newbie when it comes to the not-so-conventional ways of doing business.

"That's easy enough to say," Faye said. "I also studied economics, and I'm familiar with the concept of the invisible hand."

"Yes," I nodded, "so that's exactly what Samsong needs to do — control Adam Smith's invisible hand."
Faye looked more scandalized now than she did when she found out about JM's wife.

"That Cho Hanbi bought the largest chain of OEM food processing companies in Asia. They have six factories in the Philippines, 8 in Indonesia, 4 in Vietnam, 17 in China, 11 absurdly gigantic ones in Thailand, and 2 in South Korea. They also have 2 factories in Papua New Guinea and 7 more in Ecuador. They have enough capacity to produce shelf-stable foods for half of the population of  North America and Europe combined."

"How do you know all these?" Faye was clearly impressed.

"But the key word there is OEM, which, I believe is the wrong term but that's how everyone refers to it — this group of companies produce shelf stable food products for Private Labels across several supermarkets in Europe, and for the big three brands."

Faye's eyes widened and told me she's starting to catch up. I nodded at her encouragingly.

"For the past 50 years, those three brands enjoyed a CAGR of 17.8%, with no signs of decline..."

"CAGR?"

"Compound Annual Growth Rate," I said, which Faye immediately understood.

"On the other hand, OEM companies made a measly 0.3%, with very erratic trends of sudden growth spurts and deep dives."

"Which means that the brands controlled the costs and the pricing." Faye said confidently.

"Bingo," I said, amazed once again at my friend's remarkable business instinct.

"So the answer to Samsong's problem is?" I teased.

"To buy off the brands." Faye said.

"Exactly."

Faye looked grim after I said that. So I immediately continued with the rest of my analysis work.

"WM Brands," I started, "they've been losing market share for the past ten years. They were top 1 until the 90's, turned top 2 early 2000's and is now tied for second place because Vivigo is catching up."

"Are they selling?"

"Who knows?" I said, "But what I do know is their CEO is heavily investing in tech. In fact, the year they lost the No. 1 spot was the same year they opened up their app development team."

"As in smart phone apps?"

"Yeah," I said. "They've launched a few hit games, but that's just about it."

"So if we can convince them to focus on app development and tempt them with capital for that by buying off their brand..." Faye started, thinking deeply. "Holy shit, BJ. You are a genius!"

Faye jumped and hugged me so tight I thought I was going to choke.

"Is this how you worked in Korea before?"

"More or less," I said.

"This is super fun," Faye said. "Please don't tell me you didn't have fun analyzing all that shit."

I didn't answer.

But I did have fun.

Which is why I still did it despite turning down Samsong's offer.

I mean, I enjoy working in the corporate world. I know I'm good at it.

"We're going to have loads more fun now that you're out and proud and you will have nothing but support from all of us who care about you. This is the perfect opportunity for you and me to actually build an empire. We can take over this project and partner up with Samsong. We can win back that No. 1 spot for WM Brands. This is going to change our lives forever!"

I let go and paced the towards the couch. "I don't know, Faye."

"What do you mean?" Faye's pitch shot up dangerously high.

"I don't know," I repeated. "I don't know how to decide."

Faye rolled her eyes so hard I could feel her exasperation and disappointment at me.

"For fuck's sake, BJ, don't let this be another JM. You know you've always made the best decisions when you use your head. So do it this time — use your head!"