Guyana Revealed: 7 Lessons from the Heart of South America

Welcome to this issue of The Adventure Capitalist. The last few months have been electric over here. I've been traveling a lot, working on new opportunities, and learning a lot. This email is an update on some of the things going on in my world.

Here’s what you can expect in this issue:

• Guyana Revealed: 7 Lessons From the Heart of South America

• Hang with elephants in the lobby at the #2 hotel in the world

• Is the USD spiraling out of control? An interesting counter-argument

7 Lessons from the Heart of South America

In March, I traveled down to Georgetown Guyana with my friend Cody Shirk. My goal was to discover opportunities to invest in the world's fastest-growing economy and to get a first-hand look at what’s going on down there.

If you haven't followed the Guyana growth story, you can read about it in my previous article "Black Gold: The Guyana Opportunity".

The trip was a massive success, and I have no doubt I'll be returning shortly. Here are a few things I learned from my time down there:

Lesson #1: The Growth Story in Guyana is Complicated

The process of developing a nation isn't pretty. Nobody wants to see how the sausage is made and in Guyana, they're up to their elbows in ground pork.

Everywhere I looked, I was reminded of the contradictions found in developing nations.

When you touchdown at their modern airport it feels as if you could be anywhere in the Western world.

That feeling of being in the Western world stops when you walk out the airport door. The hot, wet tropical air hits your face and you know you're not in Kansas anymore. You're greeted with hundreds of drivers, and people pretending to be drivers – each one of them intent on giving YOU a ride.

The route into Georgetown from the airport is a two-lane road full of potholes and lined with shanties. It reminded me a bit of being in India in 2008. Lots of chaos mixed in with signs of "progress" everywhere. Every few miles there's a giant warehouse selling Chinese or American construction equipment.

Arriving in Georgetown is quite underwhelming. I'll admit, that it takes a strong imagination to picture this city as the next Dubai. There are piles of trash in the ditches, the hotels have razor wire on them, and it feels dangerous. I estimate that rundown buildings and shanties outnumber the new ones 10 to 1.

Yet the more I explored I couldn't help but get excited.

Construction is happening in every direction and there's a slight optimism in the air. Everyone knows this is Guyana's time and they're motivated to take advantage of it. After years of disappointment, there's a new energy of "we'll see" and that feels like progress.

Learning #2: The Money Has Been Made in Oil Exploration

I arrived in Georgetown believing supporting the oil industry was the biggest opportunity. After 5 days there, I can conclude I was wrong.

The oil and gas companies are way further along than I expected. They're pumping millions of barrels out of the earth and their supply chain is already dialed in.

We met with the CFO of ExxonMobil Guyana at a colonial hotel in downtown Georgetown. From what I gathered that evening, most of the money was made supporting the oil and gas industry between 2017 and 2020.

There’s money to be made in oil and gas, but I don't believe it’s the primary opportunity at this point.

Learning #3: Access to Capital is a Problem in Guyana

Development in Guyana is hindered by its conservative banking system. The local banks offer aggressive terms on loans with short payback windows. Many of the banks only accept real estate as collateral.

This puts Guyanese entrepreneurs in a bind. The fastest-growing companies in Guyana could be doubling or tripling each year. Instead, they are constrained by a lack of working capital.

Instead of reinvesting profits in their businesses, many of them are using their profits to buy real estate. This is the only way they can qualify for more working capital.

Providing financing is the biggest opportunity in Guyana. This is not unique to Guyana, as it's a problem across the developing world. While it's the largest opportunity, it's also the most complicated one to pursue.

Learning #4: Eco-tourism is Going to Boom in Guyana

Guyana is a beautiful country with a massive untouched rainforest. Up till now, the lack of infrastructure has made it incredibly challenging to access it. Getting into the interior requires flights or taking boats up the river.

This is going to change. The President of Guyana is highly motivated to support the tourism industry. Before he was elected President, he was the Minister of Tourism. He's passionate about attracting visitors and supporting "eco-tourism" in Guyana is his pet project.

Pros:

• Unparalleled access to the Amazon rainforest.

• Kaieteur Falls, an incredible single-drop waterfall

• Only a 4.5-hour flight from Miami and 6 hours from Houston.

• The only English-speaking country in South America.

• Excellent food.

• Leadership is motivated to support foreign tourism.

Cons:

• Poor roads and general transportation. Access to the jungle often requires flights or boats.

• Georgetown is dangerous and not an appealing city for visitors.

Learning #5: Construction is the "No-Brainer" Opportunity

Rumor has it that Exxon alone is going to move 40K ex-pats to Guyana in the next 5 years. As it stands they currently don't have enough "luxury housing" to support them.

We met with numerous entrepreneurs who are building homes and developments in Guyana. This seems to be a no-brainer opportunity.

Learning #6: Billions Will Be Made Building Roads and Bridges.

The roads in Guyana are a mess and rivers snake through the entire country. They will be building new roads and bridges for the next decade and even that won’t be enough.

The "best" roads in the country currently are two-lane highways, and the main bridge shuts down for half the day to allow boats to go through.

Learning #7: The Price of Power is a Constraint

Cheap energy is key to unlocking the 2nd half of the Guyana growth story.

The current price of electricity in Guyana is higher than in other countries in the region. This makes manufacturing or any energy-intensive projects cost-prohibitive in Guyana.

Fortunately, there's a gas-to-energy power plant coming online in the next 24 months. That power plant will cut the price of electricity in half.

When the power plant comes online, manufacturing in Guyana will be competitive. Local businesses producing finished goods, food, and other energy-intensive products will thrive.

Conclusion:

When oil is discovered, money quickly follows. The more time I spent in Guyana the vision of the future became more clear. Many smart entrepreneurs and investors have bet the farm on Guyana and I understand why.

The train is moving in the right direction and it's only speeding up. There will be hiccups, but the path for Guyana to become a shining star in Latin America is there.

If you're interested in doing business in Guyana, email me: [email protected]

The Lifestyle:

• The Guyanese President recently went viral for his brutal takedown of a BBC journalist who tried to trap him with a “gotcha” question about climate change. Link

• One of my favorite books I’ve read in the last couple of years is Shogun. I don’t think I’ve ever said this about any TV adaptation of a book, but the new series might be better than the book. I binged it in a week. Check it out.

• The “Hardest Geezer” Russ Cook has finally done it. He became the first man to run the entire length of Africa. Along the way, he was robbed multiple times, kidnapped, almost fired his entire team, and became sick as a dog many times. Yet he persisted. Check out this interview where he talks about being driven 7 hours into the jungle by his kidnappers.

• Is the USD going to spiral out of control? Here is an interesting counter-argument as to why it might be less dangerous than we expect.

The Best of the Best:

• Find me a sexier-looking cooler for the summer than the Hemmingway Cooler from Business and Pleasure Co. I’ll wait.

Travel

• Angel Falls is the world’s tallest and might be the most spectacular waterfall on this planet.

• Ever wondered what it would be like to have your morning coffee with an elephant? The Mfuwe Lodge is the #2 ranked hotel in the world and is often frequented by gentle giants in its lobby. Link