Ep527: Martyn Terpilowski – Separate Your Investment Risk

Andrew Stotz 00:02
Hello fellow risk takers and welcome to my worst investment ever stories of loss to keep you winning in our community. We know that to win in investing, you must take risk but to win big, you've got to reduce it. Ladies and gentlemen, I'm on a mission to help 1 million people reduce risk in their lives to reduce risk in your life. Go to my worst investment ever.com today and take the risk reduction assessment I created from the lessons I've learned for more than 500 guests, fellow risk takers, this is your worst podcast host Andrew Stotz, from a Stotz Academy, and I'm here with featured guests, Mark Martin terpil AUSkey. Martin, are you ready to join our mission?

Martyn Terpilowski 00:43
Absolutely was Yeah.

Andrew Stotz 00:45
So let me tell you tell the audience a bit about you. Martin has spent over 20 years in Asia, where he lived for the majority in Tokyo and Hong Kong and was working in finance. In 2018. He moved to Indonesia, and was the angel investor and founder of technology company Bhumi Bartra. Technology. The company now has over 150 staff and is growing rapidly. They provide a location analytics and big data platform to help large international and local companies make better data driven decisions. BVT as it's also called, will be one of the leading deep tech companies in Southeast Asia in the next three years, we plans to launch a successful IPO. Martin, that's very exciting. Take a minute and tell us about the value that you bring to the world.

Martyn Terpilowski 01:35
I think what I do is, I've always tried to, I try different things. And I've always I never give up. I mean, I'm doing something that I never thought I'd ever get into. I'm also not a technology expert. But then the sheer like, never give up attitude has driven me to actually start this company when everybody said, you know, you can do technology, but no experience in technology, and actually take it to be one of the fastest growing companies in the country. So I think the Never Say Die attitude. And you know, with the effort that I put in, I think it rubs off on my staff, we have a very good retention rate. We work good together. And I've also done that in my previous jobs where I've turned up in different countries and five different countries altogether. And basically, through real, sheer bloody mindedness. I've absolutely made sure I succeed.

Andrew Stotz 02:27
Never Say Die, ladies and gentlemen, what a great, what a great, what a great thing to be known for. So that's exciting to learn about. And maybe you just tell us a little bit about kind of the applications that the software and the company is performing just so we understand it. So maybe it may applies to something we know.

Martyn Terpilowski 02:47
So basically, yeah, we were in the big data space. But he said, I never was an expert in this kind of thing. But I looked at a few opportunities that were working globally. And it's like Big Data Link to geographical position. So I think in a country like Indonesia, which is logistically challenged, and you have a huge amount of data, but actually it's all over the place in spreadsheets, it's not visualized correctly. So we basically we map big data, all kinds of data, and we put it down to street level, telco data, demographic data, thematic data, any kind of data that can be put into a map, we actually put it there for our companies to make better decisions. We also have algorithms within that system. So it's an end to end system, including GIS technology, geographical information, system technology, and Big Data Spatial. And then also machine learning where basically the big companies like oh, we have Kraft, Heinz as a client, we have bat as a client, local big companies like x xi cinema Janji, do our coffee Bukalapak. And they use those to actually, if they have they know who their target market is, we're not consultants, they basically put their target market in as parameters into our system. And our system then predicts to them where they should build their business. Next, we have more data than any other company in Indonesia. And we by far the biggest in this market. Yeah.

Andrew Stotz 04:12
So it sounds like location, the location aspect of it is super valuable, because you're able to triangulate a lot of data to be able to say, here's a hotspot, here's 10 hotspots throughout the city or whatever that correspond to your needs. That hotspot will be different depending on what a company's, you know, target market,

Martyn Terpilowski 04:34
like? Absolutely. So simply put, like the biggest coffee shop in Indonesia, when they started working with us, they were basically my first client. And I knew the founder and he was very, he took a leap of faith into us where many people didn't believe we do this. And they become there 200 stars at the time, now they have 1000. And the way they've done this is they've just looked at the commonalities of what succeeded in Jakarta, and they've backed that into built into our system, and our algorithms spat out which street should open in secondary cities like Alon solo, that kind of thing. So yeah, it's all about the data. But it's also about visualizing the data to make it like more understandable, because everyone talks about big data, but most of its in spreadsheets in order mean, what we can do is actually make that and we're even working with the Indonesian government to actually visualize their data better, because they have a huge amount of data, but it's not visualized properly. And it's not easy to use, if you can't, our, our software, you can like find any specific place you're looking for in the city in like five minutes. Whereas, you know, that's not possible from spreadsheets, it's just, it doesn't get used properly. So a lot of this data collected is totally pointless. And that's why we're even working with the big boys like bucola pack, and hopefully soon go to a bluebird, all these different companies, they have a lot of data, but it's not visualized in a way we do. Also, we collect all the store data, small store data that Google did not have, for example. And we have a huge survey team 1000 people around Indonesia, collecting the data on the small stores. And we have our own map, we don't use Google Maps. So it's actually a map. And this is very important, because the Indonesian government is very keen on Indonesia, and its own map. And we're working very closely with the government also interesting, can we just put it and the only foreigner in the company, so it's a local company, we are not, we are a PT PMA, I am just basically, originally my idea was to invest in the business and take a seat back. But actually, I realized that it's not that easy. So I basically evolved myself because I have quite a lot of connections through my old job. And that's obviously my like, you know, bloody mindedness as pushing the business forward, even during COVID.

Andrew Stotz 06:44
Fantastic. Well, for our Indonesian listeners, here's an opportunity to check out you know, what you guys are doing and see if we can apply it to your business. Well, now it's time to share your worst investment ever. And since no one goes into their worst investment, thinking it will be tell us a bit about the circumstances leading up to it, then tell us your story.

Martyn Terpilowski 07:03
Just Just quickly, there's three things which stand out two of them to say about investments. But the first two were just sheer rushing into things, and maybe being too young to actually evaluate stuff. And I bought a villa in Koh Samui about when I was very young, my first bonus it work. And it was a total disaster 250 to $250,000, down the toilet. And I invested in a bar in Kuala lumper, which was also a total disaster. And I trusted people who, obviously, when I'm, you know, I was in Tokyo and Hong Kong, and they were just click cleaning me out effectively. But there were, you know, spur of the moment, quick decisions, which are really stupid when I look back. And again, things sound too good to be true, they probably are. That's what I would say. But my biggest investment mistake by far was, was taking a mixed currency loan on property. And I built a property portfolio when I was in Tokyo, and quite substantially, you know, several million dollars. And I had three properties in London. Basically, over 3 million pounds valuation I took, I basically had to pay down quite a substantial amount because I was not living in London, I took a loan through a bank in Singapore paid 30% deposit in the region of a million pounds. And what happened was, I decided a good idea to save myself interests to get myself positive cash flow, I borrowed the money in Swiss franc. Now, I actually reviewed this for 10 years with some very senior people with for 10 years for 10 months with some very senior people. And I wasn't the only person who did it quite a lot of people in the markets did it. We borrowed money in Swiss franc, because the interest rate was about 1%. Back in 2000, and 767 interest rates Sterling was 6%. The interest rate differential was around 100,000 pounds a year saving and that meant you could actually make a substantial revenue from your rental income. So you weren't you it all made sense at the time and Swiss franc Sterling had moved between 215 and 230. For the last 10 years, it seemed a very safe bet. Along came the financial crisis in 2008 2009 Swiss franc strengthened against Sterling 50% and margin call ally won, I suddenly owed the bank and over 3 million pounds I borrowed, and I had to pay to stop losing the properties I had to pay in the region of a billion pounds magical. And so it was a total disaster. I mean, not only that, it lasted mentally took me five years to get out of this because I instead of just biting the bullet in day one, which I probably should have done, I tried to manage my way out of it being 100,000 margin call 100,000 margin call. And he went on and he was you know, it was it mentally quite ridiculous. For example, when euro and the Swiss franc Bitcoin are pegged again, I just lost Couple of 100 grand in about 10 minutes. You know what I mean? So it was something which there was no end to because of the negative leverage kind of thing, I could lose far more than my capital. You know what I mean? So it was a huge mistake, even though I looked at it as like, I can't blame anyone else I was experienced financially. It was just I actually reviewed this for a while it wasn't a quick decision. And well, yeah, it was a risk that was in the end was, was a terrible one. It lost me. In the end, after five years of hustle to get out of it probably lost 1.2 to 1.5 million pounds. So I would call up pretty pretty much a disaster. For a boy from Cumbria who started with nothing, it was as it was emotionally very difficult. Because for my you know, my family and my friends, they knew everybody knows about this way, it's, you know, it's not a secret. I were in the office with my head in my hands. Yeah, it was, it was nasty. And I'm not in there. Now I did. I bought bit the bullet eventually. But it took me five years to try to manage my way out of it before I bit the bullet. And the banks were not particularly helpful based on the fact. No, they love me when I was considered a good customer. Australia's the currency went against me, they didn't want to meet me halfway at all. And even though my salary continued to allow me to make over payments, I just got, I just had, they just told me if you don't pay 200 grand by Friday, you're out of here, man, we've already taken the product, you know, it was a disaster.

Andrew Stotz 11:33
And can you remember a particular day, when you really just kind of lost it? Or you realized that you know, this was all a loss? Or that, you know, emotionally you're at your bottom? Or maybe with your family? You are your bottom? Like, what was that day?

Martyn Terpilowski 11:50
I can remember very well, we, we it's actually a few years later after that, but I was thinking I was gonna go this slowly getting better. And okay, I'm going to lose five $600, I don't want to think about it makes me cry, but I'm not going to lose what I thought it was. And we were out in I was in Hong Kong with a friend. And there was this, they knew my position. And they came to me and said, Oh, look, Swiss francs moving along the way. Is this good for you? Is this good for you? Is this good for you? And unlike what I looked at, and it was the day that the euro on peg from the Swiss franc, and if my friend is listening to this, they'll know exactly we did. And I'm like, that's not good. No. And basically, it became pegged drops, like another 10%. Overnight when I mean, that, to me was 300 grand, and I've just been waiting months to get out of it, right? I just realized this, it's never gonna get out of this, I'm just gonna have to bite the bullet. It should if I count on like this, I'm going to end up in a mental state. And if I don't have this job, I can't continue to pay this anyway, you know what I mean? I'm lucky, I've got a job that gets me out of this, but I ain't gonna have this job forever, because that whole markets becoming less as well. So yeah, that was the day I just thought I've got to bite the bullet here and get my sanity back. Because this has gone on too long.

Andrew Stotz 13:06
And I think you know, that's the benefit of this podcast. And my goal with it really, is to explore that emotional trauma basically, that can carry over and other parts of your life and all that to help people to avoid that. So let's talk about the lessons. How would you summarize the lessons that you learned from this?

Martyn Terpilowski 13:25
Don't be greedy. I mean, I mean, the two things I mentioned, the Thai villa, and the care bar, that was basic stupidity, it was too good to be true. I didn't do due diligence, I believe people who when you look, if I do anybody, take 10 minutes, you can do background to these people and find out they're not to be trusted. So I'm an idiot for that one. The other one, I think, don't be greedy. I mean, I was sound, you know, substantial assets at a young age, I basically could have quite easily had these properties going up in value in London, my rent mortgage covered and do very, very nicely. Thank you, with, you know, where my mortgage would be getting paid down. And at the end of the day, I'd have all that money, you know, but to make an extra 100,000 a year, I thought there was, I thought, well, I can actually say this an interest, what you don't realize is that 100,000 When you're doing leverage on currencies, and that applies to all these people now doing futures and everything. If you're doing leverage on things like this, you know, you can lose 100,000 pounds in 10 minutes. Yep. So you know, you're saving in a year, but it's just pure greed, because I just didn't need to do it. It was something I didn't need to do. You know, it was quite comfortable. Without that. I only had a 65 to 70% mortgage. I had the properties are in the best parts of London. I just thought it was just greed. Yeah, basically.

Andrew Stotz 14:51
And let me just ask you, where did the idea originate to do the Swiss franc? Where's it coming from? It just made sense, everybody Talking about it. A lot

Martyn Terpilowski 15:01
of people were doing it. I mean, actually the original thing people were doing in Japan when I was there, mainly in the financial world, but the people doing it. These are not people don't know what to do there. I think that's the reality. A lot of these guys got greedy as well, you know, they had money and they got greedy. The idea was originally people wanted to do like candles, because they were paid in yen Right. And, but the currency was so volatile, the currency was so volatile. So somewhere along the line, somebody decided, well, Swiss francs, not volatile. But yeah, you know, getting paid in Swiss Franc and the assets in sterling. Right. So I mean, it wasn't massively underwritten by banks at the time. And strange traders that went wrong, the banks, particularly the big RBS, and people that couldn't pull the plug on your quickeneth. Even though you were never a high risk customer, because they knew you could always fulfill your payments.

Andrew Stotz 15:51
Yeah. So let me summarize what I take away from this. You know, one of the things is, I like to always think when I'm investing or what I'm doing business is, what business Am I in? So for instance, in my case, with one of my businesses, a coffee business, you know, we're, we need to be in the foreign exchange markets to buy coffee globally. But I'm not in the foreign exchange business. And therefore, I'm very careful not to take a bet on a currency with that company. And what my take away from this is that when you're thinking about what it is that I'm investing in here, while you're investing in London property, let's say UK property, and and don't get confused with some kind of other investment, which in this case, is an investment on the behavior of various currencies.

Martyn Terpilowski 16:47
When you think about it's a major currency bet that you would never, I would never take that currency bet in the FX market. So why am attacking against property? For some reason, you get mixed up thinking like properties, low risk, but that's actually a 3 million to 2 million, or 3 million Swiss franc, currency trade, which you'd never do in your right mind. You know what I mean? So like, yeah,

Andrew Stotz 17:09
you're right, you're right. So separating it out and understanding where you're investing, where you're speculating where you're hedging your position. The other thing that this reminds me of is the concept of, you know, a natural hedge. And a natural hedge is when your assets match your liabilities in that currency. And so that's when you were talking about, you know, okay, if you're Japanese, if you got good Japanese income, and you have Japanese expenses, now you've matched your assets and your liabilities. But here you have a UK acid Sterling asset, let's say that, if you had let's just imagine now, let's go back in time and say you went to Bank C, now I don't need all that Swiss franc stuff. I just need, you know, pounds a pound loan, to then use that to buy a pound, you know, a sterling asset, let's say, how would that have changed the outcome of this?

Martyn Terpilowski 18:02
Just dramatically, I'd be sat on a property portfolio worth 5 million pounds with a law now of around a million pounds. I mean, it would have changed it by a ridiculous amount. I mean, but the property I sold in the interesting out of the whole thing, because I was tired of it. The property is worth a lot of money. It's in central London. Yeah, huge difference. I mean, in the end, I law, I mean, of course, I got some money back, because I put a lot. Not I didn't get much, got some back, but the properties are gonna be valued substantially when I sold. That's the only good thing about this. But I kind of go back what I put in, you know what I mean? So it's a distinct difference. 3 million quid difference, I would say.

Andrew Stotz 18:47
So. So based upon what you learned from this experience, and what you continue to learn what one action, would you recommend all this mistake to avoid suffering the same fate? Let's say that they are right now looking at buying that property, and somebody is coming to them with a currency thing, or they're in the currencies or whatever? What action would you recommend?

Martyn Terpilowski 19:07
Yeah, you're investing in property, which is a low risk investment, which I was quite proud of myself, building up a property portfolio at young age, thinking, you know, this is safe, I'm not going to throw my money away with dodgy advisors or anything like that. I'm going to focus on property. And instead of doing that, I went down the avenue of trying to do something else. So yeah, let's use it. I'm not even though I understand currencies. I'm not watching every day. And when you're doing that, you're not trading. You're using it long term. So things do go into they go against you very quick. It's just It's just where to risk it. So properties should be bricks and mortars. It's a low risk investment. Don't mix that up, because the amounts on properties were more than you would ever do on a currency tree. So why are you You know, if I said to somebody, I've done this kind of currency trip, people would think I'm crazy, but it's exactly the same. I've just been On a date just turning negative after the negative trade, which is a ridiculous amount of money. And I don't know, looking back, I don't know what was going through my mind, because I'm not stupid. I'm not stupid. I understand this. But I guess it was just people saying, Oh, well, it hasn't moved for 10 years can go wrong. Yeah. So what hasn't moved for 10 years? The mortgages for 20 years? You know, I mean, it was it was a stupid idea. It was overall, of course, it could have gone completely the other way. And I could have won. But yeah, that's that's like, you know, that's like going to the horse race, not the casino. And

Andrew Stotz 20:31
that idea of separating your investment, you know, go on, if you want to bet on that currency, go ahead and separate that and put $10,000 on or whatever that is, you know, that's

Martyn Terpilowski 20:41
exactly right. You basically investing in property, will you turn, you're turning it from a medium low risk investment, to a high very high risk, without actually really realizing it, which is really stupid. Based on the fact my background in finance, I understand this, and I wouldn't advise anyone else to do it. That's even stupid, right? So yeah, it was a risk I took I don't blame anybody else. But stupid.

Andrew Stotz 21:03
It applies to startup too, because you can get seduced into going down a particular avenue that is away from your core business, and all of a sudden, you're taking a whole new

Martyn Terpilowski 21:13
risk. Well, I would say this is one thing where BBT has done well. Yeah, I have learned a lot. So I'm completely focused on what we do. Now. I'm not I've got no VC investors, VC investors want to come in and change my business. You know, them guys are looking using other people's money, then e 21. Results? I absolutely not wanting 10 results or in Yeah, I'm very, in this business. I've got some very good stuff. So very good management. We're very focused on what we do. There's no way I'm not taking on any debt whatsoever. It's all basically my own capital. The few family offices that I know and my friends, close friends who completely know the risk and are very experienced in finance, they hedge fund managers, etc. To invest their own money in BBT. But it's very clear the risk there's not there's no, of course, there's BBT has risk, but no leverage risk. Nothing like that, right? There's enough risk in a startup without borrowing money or chancing your arm. I mean, we've negated a lot of the risks this company may because my last experiences because you know, when people come to me and say, Oh, we can lend you this or debt financing. And I'm like, no frigging no chance. Thanks for the coffee. Gotta go conversation. Yeah, not get financing not interested. Because actually, we fast growth, but we're not growth at all costs. Because, you know, it's a different this is my own money, and like my friends, close friends money, so it ain't gonna go the the we have a lot of these startups, which I just like, you know, growth, all costs, borrow, borrow, borrow, take more money, take my money. But if you take money from a venture capital, you've got to change. You've got to do what they say. And a lot of companies are pivoting from here pivoting to there. But we know we've got a very strong business here. So yeah, certainly I've learned do not mix things up. And yet no debt, I avoid debt now. I used to think it was good to have debt because it was cheap. I'm not really in that anymore.

Andrew Stotz 23:11
It's a good example of kind of bootstrap startup. And I think I think that's exciting. And we look forward to the IPO. Last question. What's your number one goal for the next 12 months?

Martyn Terpilowski 23:22
Continue growth boss. I mean, we grew during COVID. Massively. I mean, we, you know, last year, we grew from 75 to 150 people this year will grow to 250 people. BVT on proper metrics should be a $200 million company by the end of this year, which is pretty amazing considering No, we have no VCs at all. And that's not revenue that's not on the VC potential market size. That's an our growth revenue. So yeah, we plan an IPO, probably not in 12 months, but 24 to 36 months. And that will be an IPO again, not just like investors, startup, like most startups is like the founder dumping their money. And because we are different. The founder and investor is the same BBT. So we obviously more careful over what we do. But when it comes to an IPO, I've been involved with IPOs before, I know a lot of the you know, the potential. The problem with all the IPOs in Southeast Asia, of startups, they collapse because there's no sticky money involved. It's just startups dumping on return. So I will bring up bring all the pension funds in people I know, and actually try to do a real successful one. So that's in the next 36. But the next 12 months is just continued growth. I think now that we're seeing the back end of Corona, it's a massive potential.

Andrew Stotz 24:38
I mean, now, you know,

Martyn Terpilowski 24:39
this has got me going again, really wasn't my last season. I left my job quite young, and I didn't know what to do. And 38 I basically retired, and then I didn't know what to do. And then I'm into this now and I've never been so motivated. But yeah, certainly don't want to make the same mistakes as before, you know,

Andrew Stotz 24:57
and let me ask you about the IPO for a second because one of the questions I've always dealt with as an analyst here in Southeast Asia for 30 years, he said, there's two problems. You know, one of the One is you're seeing dumping on, you know, the founding shareholders dumping on retail. But another problem is, is not putting enough shares out into the market. So there's not enough volume trading in that particular stock. So how do you balance these two? And what is the you know, the requirements, the minimum requirements in Indonesia, I think, in Thailand, 15%, or something like that. I mean,

Martyn Terpilowski 25:31
even when I appeal, I plan to IPL, and keep some keep substantial stocks myself. So it's, basically, it's likely that we'll be dealing with Japanese institutions. Yep, who I know, have big view, Asian ones who I know, are big North American ones who I knew through my previous job. So most of those guys will not they don't participate in IPOs, when the founders don't sell the stock, right. So that's, that's part of the I agree, we would have to, you know, it has to be 30 to 50% of the business. And the other issue is with DVT, is because we have no VC, all my staff have shares, so they can then decide whether they want to take the money at that stage, or keep the stock right, that stock. So basically, the founders of a staffing BBT, still on around 70% of the company. So we've got a lot of flexibility over what we do. And a lot of the staff will want to get the money out because I've got staff, you've got shares, you know, when we were like a $20 million valuation, so some of them, some of them are young kids, you could change the life on this. So yeah, I think our plan is to do it professionally, with quite a large amount of shares. Me keep substantial shares myself, but it will be more doing proper roadshow sticky money. None of this on retail, or sparks or anything like this, because it's all the same. It just, it's like, I've always been quite cautious about that ridiculous thing I did. You know, when, when people start talking about, you know, this fund makes 12% a year guaranteed. I'm like, that's not possible. You know, straight line graphs I've seen so many people have seen so many straight line graphs blow up. There's so many going back years, when people say you can't lose on crypto, you can't lose, you can't lose anyone. Everyone here is doing futures to retail futures is an experienced investor problem, but they're doing futures here has been sold to like girls in my office investing, like just investing like a million rupees. And then which is only like $80 or something. But the problem is it's a lot of money today. And then they end up owing $100. Because you know, because the way they don't understand the leverage, all they understand is Oh, gold goes up 10% You get paid twice the money. But what they don't understand is the commission is like, based on the leveraged amount, half of the money goes in day one. So it's all linked, right? It is all linked to try to mitigate the risk now. So yeah, proper IPO, proper involvement for people who are not pension funds. So even do our pension funds, but not not to retail, not to, you know,

Andrew Stotz 28:08
different models and the general styles. I want to spin it. Yep. And

Martyn Terpilowski 28:12
different models and general style. Yep. Well, we

Andrew Stotz 28:14
look forward to it. Well, listeners, there you have it another story of loss to keep you winning. If you haven't yet taken the risk reduction assessment, I challenge you to go to my worst investment ever.com Right now, and start building wealth the easy way by reducing risk. As we conclude, Martin, I want to thank you again for joining our mission, and you certainly have contributed to it. And on behalf of eSATA Academy, I hereby award you alumni status for turning your worst investment ever into your best teaching moment. Do you have any parting words for the audience?

Martyn Terpilowski 28:48
No, I mean, just just Yeah, everyone, just be careful. If you do sound too good to be true, it probably is. You know, when you're promised the world, and everyone's doing it and your friends, everyone's making money. And ask yourself, do these people really make money? Because if anything, you're making so much money, why they're trying to sell it to you in a bar. You know what I mean? If I have a great I don't go around telling everyone how BBT succeeding or trying to get money off people pass BBT so why are people always come up to me trying to sell me futures? Or cryptocurrency? It doesn't make sense. You know, what, if it was that good, they wouldn't be having to constantly advertise themselves. So if it sounds too good to be true, it probably is. And it certainly needs certainly proper evaluation, not just agreement.

Andrew Stotz 29:34
Well, that's a wrap on another great story to help us create, grow and protect our well fellow risk takers. This is your worst podcast host Andrew Stotz saying thank you for joining our mission and I'll see you on the upside.