This post is the second of two posts and is the ying to the yang of my other post, ”The Golden Rule: How To Not Get Fucked In Business”.
In TRP we teach from an amoral stance, as in, anything goes as far as discussion. In my first post I discussed how to play by the rules and protect yourself. In this post i’ll contrast the other perspective of the story. In the moral spectrum, the Golden rule is how to play morally correct. In the Dark rule, this is how you navigate as a machiavellian or immorally.
If you haven’t read ”The Golden Rule: How To Not Get Fucked In Business” then this post will have no context, go read it before continuing.
A year ago I attended a trade show with some business clients. It a great place to network, meet new people, review the latest and greatest technologies in my industry and scout out any new potential business partners or investment ideas. I’ve been the President of my division for 10 years and in the trade for 30. I know a lot of these people and everyone is familiar with me. Quite a few of my vendors and customers are in attendance too.
This is where i met Kevin. Kevin was a young and eager guy brand new to the business. He was working for another company that brought him along. This is his first trade show and only knows the guys in his company. We got to talking about how he isn’t quite satisfied with his current work. He tells me he’s about to graduate college and his plan is to become self sufficient and to start his own company upon graduation. We talk about a lot of things through the day and generally hit it off really well. He tells me about his new wife and that they are expecting soon. He shows me pictures and how she is taking a few years off of her nursing career to raise the kid. They still don’t know the sex yet. I hand Kevin a business card and tell him that I may have a job opportunity that he fits the bill for. It’s still in the works and I can’t give much details at this time but I’ll contact him in a few months to see if he’d be interested in working together. Kevin seems really receptive to the idea.
During this show I also met a guy named Tim. Tim’s seems to have a level head and has been in the trade a few years. He started his own company about a year ago and has been working tirelessly to secure new accounts and build his business. His plan is to cast his net as far and wide as he can. He has a very specific niche in the market and is trying to claim as much work from it as he can before other companies move in to compete. I hand him a card and let him know I might be interested in working with his company on a job. It’s not set in stone but expect to hear something a few months from now.
A few months later I call both men. I give it to them straight and quick. We are projecting to be spending a million a year on this work. Our first order of the year will be 100k purchase order.
Tim already has a lot of work on his plate. He’s opening and closing orders every month. He’s got a good grasp of his income to expense every month and how much money he has back for growth and improvement in the company. He can accurately project how much money this work will take to start this new contract. He analyzes the numbers and realizes that in order to take on a new customer with this amount of work, it would put him in the red. He would have to front the money initially to kickstart the work. on top of that, his yearly sales is already projected at around 1 million. An extra million would put this new work to at roughly 50% of his total sales for the year.
He concludes It’s too much to risk at this time. The money it would take to start is a risk he can’t afford to take. he calls back and lets me know that he will have to regretfully reject my offer as his company isn’t to the point of taking on such a large amount of work. He tells me however, if my company can front the initial cost for the startup, he can pay it back with some interest.
I let him know we will take that under consideration for who we choose to do contract.
Kevin on the other hand has graduated from school and is already lined out a building for purchase and working with the banks on some startup loans. He’s been working with a few others in the industry trying to secure some work so that the banks will finalize his business plan and give him the go ahead on the loan.
He tells me that he is the man for the job and would love for my company to be his first customer. If I’m able to give him a month to finish with the banks. He will need some paperwork from me to finalize for the bank. I let him know I’ll get back to him.
At this point I have two options. I can go with Tim who has proven to be a businessman that knows what he’s doing. But, if i go with Tim my company must front the startup cost. Accounting doesn’t like that. I don’t like that as my bonus is based off of my performance and how much money I can save the company.
On the other hand I have Kevin, a very eager go getter that is willing to start the contract with no up front money required from me. My risk from him isn’t money but a lack of reputation. Kevin may fail or produce subpar results. However I weigh the risks and this particular contract isn’t extremely technical. Kevin seems capable and I don’t question his drive.
Kevin gets the contract
Halfway through my vacation in the Rockies I get a call from my purchasing office. ”Mr. Redwood, Misogynist Inc. has just filed bankruptcy. They were 58 million dollar in sales for us and our most profitable account.”
”Fuck. Fuck. Fuck. FUCK.”
“I’m going to have to downsize somewhere. I need to call accounting, how much money do we have back to weather this setback? How far out are out payables? Who do we owe the most to right now and how far out are they? Shit, they are already past net 45. We are going to tighten up and hold a few checks from our other customers. We can’t afford to lose our second biggest customer and we can’t let our main vendor freeze our account or we are dead in the water.”
I get back to the office and my secretary tells me Kevin has finished the work and I need to inspect it to approve of the check. I don’t have time for this shit, we just lost our biggest customer. Send my nephew Gronk over to check it out. Don’t send the check though.
A week later my secretary gets a call from Kevin. Shit, he’s wanting his money. I like the guy but I’m looking at losing my job and so is the 2,500 employees if I don’t handle this lose of 58 million in work. ”What are the chances of him taking us to court over this and it’s impact on my company's reputation?” Let's see, he just graduated college, he’s got debt from that. His wife just had a baby and is unemployed, he obviously has a bit of money or he couldn’t have started the business and fronted the money for materials. Whether he took a mortgage out or had money saved doesn’t really matter. I know for a fact that I’m his only customer right now. Since he is a brand new start up and been in the industry less than a year he will have very few contacts so the hit on our reputation will be minimal.
On the opposite end of the spectrum I owe my second biggest vendor around 5 million in payables and am out 45 day on the last PO to them. They’ve been in business for 30 years and have their own legal team, netting around 120 million a year. If I don’t pay them they will freeze my account and sell me no materials for any of the other contracts I have. My company will effectively be rendered useless.
Hmm, which company do I pay?
I bet you thought this was going to be a story of some scumbag CEO that fucked over a little guy. Sometimes that can be the case. I have seen just generally shitty people take advantage of the naive. But that’s a narrative everyone and their mother has heard. The Evil corporation fucks over the little guy.
That tried and true scenario of Good Vs. Evil is great for movies like Star Wars but business is rarely that black and white. As an owner, you will have to make tough decisions. You will have to do thing you don’t want to do. You will have to decide who gets to take home a check and provide for their family and who has to get fired. In this case an employee didn’t get fired, some guy that started a business and failed got fired.
If you are a good businessman, you can foresee these thing before they happen and take measures to avoid risks like this. Tim saw it. Kevin and I didn’t. I was too busy having fun in the Rockies and didn’t realize one of our biggest customers was in trouble nor did I take any action to prevent them from becoming a large chunk of our sales. Subsequently my company suffered and in Kevin’s case, he got his first taste of capitalism.
But I promised you a machiavellian analysis of this situations. A dark triad review, so here it is.
you can use this knowledge for immoral purposes. If you have the wealth, power or influence, you can fuck guys like Kevin over all day every day and there is little to nothing they could do. The more in debt they are, the more you own them. The more money you dangle in front of them, the more you entice them to spend and invest more on you, the more you own them. The less revenue streams they have, the more you own them.
I’ve seen guys like this. They jump from job to job conning guys out of their money. Hell, some of them are so good they can cross industries and still make a killing. But, once you burn a bridge in this manner, you knock over the tanker truck that was driving across it. Producing an oil spill that lights and floats down river.
You should know the consequences of taking the immoral path though. Not just the legal ones, that’s obvious, prison and fines out the ass if you get caught.
The Consequences of The Dark Path
The oil spill is word of mouth. People talk. Industries and business owners know each other. Just like you know you’re coworkers, businessmen know businessmen. If someone fucks over one of my customer or vendors, I know about it in less than a week usually.
When a new customer comes looking to do business with my company i ask them, ”Who have you worked with before?” Then I call that company, a lot of times i know the company. I ask about their quality of work, their business practices, and straight up, ”Is this someone you will continue to do business with?” I vet my customer just like i vet bitches. I gather as much knowledge as I can so I understand myself and my enemy.
If you fuck someone over, don’t plan on it being a career path. Eventually you will build a reputation and no one will work with you. Or you will be in prison, or fuck over the wrong guy and he kills you. You fuck with a man's livelihood or take everything he possesses and he will have nothing to live for. Yes, it does happen.
You may find the odd schmuck to fuck over, you may be able to move locations and start again. But eventually guys like this don’t last.
My personal opinion, if you want a successful business. Be like Tim, it is sustainable, safe and legal. Build your company slow and steady and don’t over reach your capacity. It’s better to take a ton of small risk than one giant one. Tim’s business model isn’t just safe, it’s scalable. As each one of his contracts grows, those customers will give him more and more work, building upon a great business to business relation. It doesn’t matter if a company pays you 32 million a year in work or 30k a year. The only thing that matters is if that 30k is 10% or more of your total sales.
Good and long time customers can still fuck you over though. I knew a customer that got fucked by a company that did work with them for 20 years. The owner was in his 60’s, my customer told me the old guy was a great businessman and well respected. But the old man had other plans. He was close to 70 and was done, he wanted out.
So he contacted all his vendors, ordered as much shit as he could from all of them. Liquidated it all, didn’t pay any of his vendors a dime and moved to South America. I believe he made off with 350k+.
His justification? He said it was his retirement and he earned it for all his years of work.
How’s that for a hamster.
Apparently a lot of you are missing the main point of Post #2. This actually isn't a post on how to go dark triad on some motherfucker. It's actually written exactly to do the opposite, denture you as it isn't a sustainable lifestyle in modern day capitalistic society.
Here was my thought process coming into this second article.
Upon sitting down to write this second article I wanted to take the stance of an evil CEO that's going to fuck over Kevin. As, if you read just the first article, that is exactly what it looks like. I purposefully left the first article open as to the intention of the CEO that fucked Kevin. This is because it's a common belief due to our culture and media(holleywood) that CEO's and corporations are inherently evil. Now for anyone that actually had business experience, you know this isn't reality. A lot of times CEO's and corps aren't evil, they are just protecting themselves and minimizing damage(like the 58mil client filing bankruptcy). But, for movies and holleywood, you need a clear, bad guy vs good guy or evil vs good as it makes a great movie, but it is not how reality is. I was aware of this stigma upon writing.
Through the second article you see that in fact the CEO isn't a shitbag, he's just a guy trying to protect his company and employees. He has a tough decision to make and from this line, "Hmm, which company do I pay?" you as the reader decide the action to take. I purposefully left it open as there is no true right or wrong answer. You just have to decide as the owner which is the greater risk, pay Kevin and try to manage paying your vendors or cut Kevin and hope for the best.
Business is rarely as black and white as you see in movies.
As for the dark triad review. It is actually written to denture you from following that path as in the modern day with online records and reviews, it is rarely a sustainable career choice. I wrote it so you understand that fucking people over in business sounds like a great revenge fantasy or some power trip, but in actuality, you will end up getting burnt or in prison in the long run. I even personally give my opinion and stance on the subject,
"My personal opinion, if you want a successful business. Be like Tim"
I understood coming into this article that a lot of guys won't have any real world experience with business to business relations or they will come with the cultural stigma of an evil CEO/corp. This entire article was written for you and to give you the plot twist and perspective that sometimes it isn't that black and white.
When you learn and understand the multiple perspectives you can have on any aspect in life, you can better understand the game we play. This article was written with the intent to give you multiple perspectives instead of the tried and true "Evil Corp fucks over little guy."
Some of you stated that this sounds like Horrible boss's 2 plot. Haven't seen it but I'm guessing the boss is some shitbag owner or CEO. This article was intended to give you the exact opposite perspective of a shitbag CEO and to understand, sometimes business isn't that black and white. Again, it makes a great movie, but it isn't reality.