From Backpacker to Internet Entrepreneur

Rootless and jobless, Don Kogen headed off for a backpacking adventure in Asia a decade ago — and ended up becoming, at age 26, Thailand's leading Internet impresario.

His unlikely journey began in the city of Chanthaburi. A three-hour drive from the Thai capital, Bangkok, past banana palms, dragon-topped temples and the occasional water buffalo, this southeastern city is one of the world's leading centers for processing gems.

But Kogen, then a 15-year-old high school dropout, arrived with no lapidary skills. To meet his $60-a-month rent he had to work two jobs, including a night stint in a hip-hop club, where he'd move onto the empty dance floor by himself to inspire shy young Thais to get up and boogie. "I had to meet the ladies," Kogen recalls.

In fact, that's where he met his wife, Nuntiya Sukumpeeranont, who urged him to aim higher. After weeks of cajoling, he talked a local gem trader into paying him a quarter of the dirt-cheap local wage to work hunched over a metal spinning wheel, turning rough-cut Sri Lankan sapphires into finished specimens.

Kogen moved into gem sorting — after chipping off too much from a couple of stones. During weekends he hung out at the city's market, watching traders haggling over stones and learning to speak Thai.

A Booming Business

After three years of observing, Kogen decided to try the business himself, starting small. He purchased low-grade gems from merchants arriving in town on the 8 a.m. bus from northern Thailand, and resold them for pennies more to later-arriving dealers from India and Pakistan.

That grew into a small mail-order operation, thanks to a $24-a-month ad he took out in an American trade magazine, with some 800 customers in the U.S. When fax machines began to arrive in Chanthaburi, Kogen was quick to seize on them: They allowed him to increase orders, lower delivery times and sock away $25,000.

With those funds he bought plane tickets for himself and his wife, and visited the gem districts of New York City, Chicago and San Francisco. Within four years his retained earnings grew to $250,000.

A turning point came in August 1998, when Kogen bought his first PC and, a month later, sold his first gem over the Internet. For years he had suffered the inefficiencies of the age-old business, where seven layers of middlemen can jack up the price of a gem 1,000 percent between original wholesale and final retail prices.

Now he saw a way to cut through it all. For individual buyers, stones offered by Thaigem.com, as Kogen christened his Web company, change hands only once.

Gems Shipped Anywhere

Dealer purchases represent 60 percent of the business; individuals account for the rest. Online sales accounted for 85 percent of Thaigem's $9.8 million in fiscal 2002 revenues, ended June 1, up from $4.3 million a year ago.

A recently opened showroom, on the corner of Silom and Mahesak roads in Bangkok's bustling gem district, generates the remaining 15 percent of the business. At any given time Kogen stocks about $7 million in inventory.

"We cater to everyone, from the guy who needs the $1 pearl to the one who wants the $100,000 ruby," he says. Gems are shipped within 24 hours of their purchase via Federal Express — at $15 a pop to anywhere in the world.

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