Navigating the Future: The Udenna Way
(First of two parts)
Whatever you believe to be true about life, one thing is for sure — time passes whether you like it or not. The future cannot be stopped. And since the future is a mystery, many of us want to get a peek, or at least get the best possible guess, at what the future’s going to be like, to see if things will play out the way we hope they will.
Well, we don’t have to try so hard. It’s very easy to predict the future. I can simply say that in 10 years, you’ll be 10 years older. What’s hard is predicting the future correctly.
The future can be intimidating. But come to think of it, today is the future we created yesterday. I’m here now because almost 20 years ago, I could have said that “this is the future.”
In a 21st-century world, which is more global, digitally enabled, with faster speed of information flow, and where nothing big gets done without some kind of a complex matrix, what I’ve discovered is that successfully navigating the future is not so much about intelligent predictions, data analytics, not even technology. It’s about us overcoming every challenge and seizing opportunities, day in and day out.
Sometimes, we have to look back in order for us to look into the future. Eighteen years ago, Udenna Corp. started in Davao. For lack of a better name, I named it Udenna, which is the Greek word for handsome.
So there I was, in my 20s, not sure yet of what to do, but I went on to register Udenna just to explore my own venture after serving the family business for 10 years. With the little savings that I have and some earnings from trading stocks, I thought of what business there is to be made. I looked around for opportunities and since I’m a foodie, I started a small barbeque restaurant.
Eventually, the chain grew into eight branches, which is good, but I saw that there was a better opportunity in oil retailing. I didn’t know anything about petroleum but I had the confidence because there was a real market.
Since oil was deregulated in 1998, there were only a handful of brands, so we could be one of the first 10 brands in the market. Today, there are over 60 brands, as per the Department of Energy, so it was good that we started earlier. I took a leap, went all-out and all-in. But the first challenge came — capital. When you do business, you need financing. In our space, we don’t have venture capitalists to lend a hand. So with my limited capital, I borrowed money and held off the construction of my house. I was newly married, so you can just imagine my wife’s reaction. But I overcame that challenge, and with my wife’s trust and support, I handed the land title to the bank to add to my capital.
Looking back, it wasn’t an easy road. I entered an industry dominated by international players. We were losing money. The joint venture fell apart and my partners walked away. I was left with three tanks in the depot, 2 million liters each. I was forced to trade on my own. It was a huge risk, having invested all my life savings in it. I spoke to some new oil players and offered them to lease the property, but to no avail. We had no regular revenue streams, so the business struggled like any ordinary start-up venture.
It was tempting to quit, but I knew that we stood a chance because I saw back then that the economy in five to 10 years would lean towards the energy sector. So we kept on. I thought that, if all else fails, I can always dismantle the huge storage tanks and sell the metal scrap to make money out of it.
But then a much better opportunity opened when I made a cold call to Cebu Pacific, a then-rising airline. Guess what? They took a chance on us and gave us the break that brought us the confidence to persevere. Davao Oil Terminal Services Corp. became profitable. As Churchill said: Success consists of going from failure to failure without loss of enthusiasm.
Then later on, one of my employees suggested that we can’t keep selling to businesses and distributors, that we should start retailing. I said, “why not?” But to do that, we have to have a strong brand that can compete against the majors. Thanks to the genius of Bai Manginsay, the Phoenix brand was born. Phoenix grew and in 2007, it became the first oil company to list on the Philippine Stock Exchange since the Oil Deregulation Law in 1998. The IPO was 15 times oversubscribed and fueled our expansion from Davao to the rest of the Philippines.
But the growing business faced many challenges.
We needed inter-island shipping services but nobody wanted to serve us because we had little by way of a track record. Demand for fuel storage is increasing, but we had no land.
So what did we do?
Eventually we were forced to buy our own tanker to serve our supply chain. Thus, the birth of Chelsea Logistics and Infrastructure Holdings. Our logistics business has grown from one tanker to 77 ships, and is now a publicly listed company considered as the nation’s largest shipping group.
With the Philippines being the major supplier of maritime laborers globally and our seafarers considered among the best in the world, we see a future where our Filipino seafarers board Filipino-owned ships. Is it easy? No. Is it financially challenging? Yes. But can it be done? Why not?
As for our land challenge, we spotted an opportunity to purchase Calaca Industrial Seaport in Batangas to store our fuel, thus the birth of Udenna Land, formerly UDEVCO. What started as an oil depot in Calaca has now evolved into a property company. Udenna Land is now developing Clark Global City, a 177-hectare master planned mixed-use development in the Clark Freeport Zone in Pampanga, and other projects in the high growth areas of Mega Manila, Batangas, Cebu, and Davao with the aim of decongesting our cities and spreading equal opportunity. Is it easy? No. Is it challenging? Yes. But can it be done? Why not?
Eighteen years ago, we were a petroleum company. Today, we are in the consumer space. Phoenix is now into convenience retailing, QSR, and fin-tech. I went back to my first love — food — to scale up some of the country’s most loved food brands, Conti’s and Wendy’s, despite others saying that the food industry is a saturated market. We’ve always believed that there is still space, that there is always a place for anybody who’s determined to succeed. That’s also why recently, as you all know, we went into telco through DITO Telecommunity.
It is very challenging but it also brings with it a myriad of opportunities not just for our company but for the Filipino. It will level the playing field and provide massive access.
(To be continued.)
This column is based on a speech delivered by the author at the recent The Manila Times 11th Business Forum
Dennis A. Uy is Chair and CEO of Udenna Corp. and of Phoenix Petroleum Philippines Inc.
dennis.uy@phoenixphilippines.com
