Young Galaxy

At 16, it's fair to say that Kody Yates knows more about business than most people twice his age.

The young Fort Myers entrepreneur's company, Galaxy Distributing, posted sales of $350,000 last year. He buys tech gadgets ranging from MP3 players to cell phones directly from Chinese manufacturers and he resells them to wholesalers, pocketing a tidy profit with each sale.

Business is so brisk that Yates has no time for the typical high school foolishness. The straight-A student does have an expensive habit, though: Formula Kart racing.

This is a go-kart on steroids and it can send parents into debt for thousands of dollars. Three sets of tires required for a race can set you back $600. “Look son, I've bought all I can buy,” Don Yates told his son two years ago.

“You're killing me.”

The younger Yates didn't want to give up his budding racing career, so he decided to become an entrepreneur to pay for his expensive toy. Don Yates had recently sold his bus-transport business. “I talked him into funding it,” the younger Yates says, smiling.

But Kody Yates quickly got a lesson in the pitfalls of the import business with his first venture. He decided to import 2,500 remote-control toy helicopters and sell them over the Christmas 2006 holidays. He settled on a Chinese manufacturer, but the $5,000 deposit got lost somewhere between Fort Myers and China. The language barrier didn't help, either. Yates doesn't know how to speak Chinese — yet.

That slip cost Yates time and money. He had to pay more to ship the helicopters by air and lost precious weeks before the holidays. “We spent a lot of days at flea markets and on eBay,” Yates says. In the end, the experience cost the elder Yates half of what he had invested with his son, or about $20,000.

That expensive lesson turned out to be a good one, though, because Kody learned about how to insist on quality, how to make bank transfers to China and learn whom to trust. He used those lessons when he bought his first batch of MP3 players after he finally sold the helicopters at a discount.

He bought the MP3 players for $22 each from a Chinese manufacturer and resold them on eBay for just over $30. He started selling them in lots of six and then sold 500 of them in the first 10 days. “I could sell them cheaper than anyone else,” he says.

Then he started getting phone calls from people who wanted to buy hundreds of MP3 and MP4 devices at a time. That vaulted Yates' business to a new level and he became a “gold power seller” on eBay, a level attained when a seller reaches $10,000 in monthly sales and a high customer satisfaction rating.

Then, mysteriously, eBay cut Yates off without explanation last year. He suspects his competition complained to the online auctioneer that his MP3 players too closely resembled some well-established brands.

So Yates developed his own Web site (mp4playerswholesale.com) and many of his customers moved with him. Few know he's just 16 years old and most who find out don't care. “My voice has deepened quite a bit,” he says.

He also traveled with his father to China last summer. No time for the Olympic games, though. Father and son toured dozens of tech factories in search of good quality and price. Cutting out the middleman saves Yates $3 to $4 more that can go to the bottom line, he says.

Yates' goal is to book $70,000 to $80,000 in monthly sales, but it's getting tough to juggle school and Formula Kart. His mother, Kim Yates, who does her son's accounting using QuickBooks, complains that Kody is always glued to his laptop handling orders. He leaves Riverdale High School in Alva at 1:45 p.m. and is at work in his office in Fort Myers by 2:30 p.m. and doesn't come home until 7 p.m. at the earliest. After dinner, it's time to hit the schoolbooks.

“I've been up until 2 a.m.,” he says.

When things get too overwhelming to handle for him alone, Yates says he might hire someone to help. So far, he's heeded his father's advice to keep his overhead low. His father nods in agreement: “I keep preaching to him: overhead, overhead, overhead.”

The slowdown in the economy isn't getting in the way of growth. Yates says Internet sales are growing internationally. “I've got customers all over the world,” he grins.