David Harmatz's story: When I graduated from college, friends went to Manhattan to interview for corporate jobs. I found that terrifying -- as did two of my closest buddies, Daniel Saxe and Daniel Smetana. We wanted adventure. So, in July 2004, we traveled to the archipelago of Bocas del Toro, Panama, and rented a single room in a rustic bungalow balanced on stilts over the water. The roads were made of mud. For a few months, we learned the town, the people and the beaches, and we fell in love with the place. We knew the backpacking scene well, and started thinking: Could we run a business here?
We reached out to the owner of the Mondo Taitu hostel -- a ramshackle clapboard house in nearby Isla Colon—and were just in time. He’d decided to leave the island and was looking to sell. Within three weeks, it was ours. The seller promised to give us extensive training, but all we got was a one-hour walk-through. The rest was total trial by fire. Employees, it turned out, were easy to find: Locals mostly worked in the banana industry, a grueling line of work they were happy to leave. But, dealing with customers? When the first guest came to our reception desk, we fumbled the check-in so badly that she turned around and left.
The island was a gritty place -- the power would go out, there’d be floods, toilets would break, you name it. So we learned to ask for help. Our cleaning lady, Huba, knew we were a lost cause, and she became the eyes and ears of our hostel. And what we lacked in experience, we made up for in energy. We knew all our guests’ names, and we had a bar, so we’d hang out all night. Transparency, we learned, was key: If somebody’s bed wasn’t ready when we said it would be, we told them why. If there was a robbery, we’d admit something was stolen and work with the police. Guests are forgiving if they feel you’re being up front.
We also learned Spanish. We saw other expats come here to start businesses but refuse to learn the local language. That didn’t engender much respect. Language is necessary to form bonds and to resolve disputes.
As we grew as businesspeople, we began expanding our business. We opened a second hostel, Heike, in Bocas in 2006 and a third, Luna’s Castle, in Panama City in 2008. Our conversations had to do with occupancy rates and TripAdvisor reviews. We replaced our paper ledger with Excel spreadsheets. As we matured, so did the tourism industry. And in 2009, we sold that first hostel -- for nearly four times what we bought it for.
Secondary markets are amazing places to do business, if you’re willing to chase opportunity. When we heard the Groupon craze was spreading in the States in 2010, we built a similar site for Buenos Aires and Panama City called OfertaSimple; within two weeks of launching, there were 10 competitors. So we scaled back and focused on Panama, the small but healthy market we knew best. Back then, those living in Panama City rarely bought things online using a credit card -- but they were excited to start. They were quickly drawn to the novelty of it. Now OfertaSimple is the most highly trafficked e-commerce site in Panama, and it’s our main business.
Related: Why We Buy Souvenirs
We’ve taken an unexpected path. Most investors aren’t going to look at us and think, This is my next unicorn, but we prefer teaming up with investors willing to take bets on those with colorful pasts. We just wanted to create a strong, well-received business that put smiles on people’s faces. And we did.