Momentum Podcast: 40
Beware Of Easy Money
by Alex Charfen
Last week, I had massive, overwhelming anxiety. Here's why, I was sick. I was actually sick from before the 1st of July, until about Saturday or Sunday, so over seven days.
One of the 10 attributes of the Entrepreneurial Personality Type is ‘Drive for Gained Advantage'.
The ancient voice that keeps evolutionary hunters constantly asking “how do I get ahead?” This is one of the strongest drives we have and can often overrule our better judgement.
I feel lucky that early in my career as a consultant I saw the repercussions of situational ethics and was sufficiently scared to always think twice when money was too easy.
This is a story from my years as a consultant that I have never told publicly before.
Full Audio Transcript
I'm Alex Charfen and this is the Momentum Podcast made for empire builders, game changers, trailblazers, shot takers, record breakers, world makers, and creators of all kinds, those among us who can't turn it off and don't know why anyone would want to. We challenge complacency, destroy apathy, and we are obsessed with creating momentum so we can role over bureaucracy and make our greatest contribution. Sure we pay attention to their rules but only so that we can bend them, break them, then rewrite them around our own will. We don't accept our destiny, we define it, we don't understand defeat because you only use if you stop and we don't know how.
While the rest of the world strives for average and clings desperately to the status quo, we are the minority, the few who are wiling to hallucinate that there could be a better future and instead of just daydreaming what could be we endure the vulnerability and exposure it takes to make it real. We are the evolutionary hunters, clearly the most important people in the world because entrepreneurs are the only source of consistent positive human evolution and we always will be. Thanks for being here.
This is Episode 40 of the Momentum Podcast and this one is called "Beware of Easy Money." I've had this story in mind for about two weeks to share on this podcast from my days as a consultant. It's been so hard to figure out how to share this without sounding like I'm preaching or trying to tell people who they should be but I just want to share this story about situational ethics, and easy money, and just how much it affects people like us when we make short-term decisions that may challenge our long-term business, or our long-term reputation, our long-term ability to stay in business.
Most of you who have been listening to me for a while know that I very young started as a consultant in the computer and consumer electronics industry. The consumer and computer electronics industry is a little weird. It's the show CES that shares a hallways with the adult video, the AVN Awards. It's the industry where there's just a lot of people who are in buyer receipt, they want a lot of special treatment, there's millions of dollars of flying around, there's been this history in consumer electronics. As an example Crazy Eddie's in New York the owner when to jail for eight years. I called on an account in south Florida called BrandsMart USA, it was owned by the Perlman family, Bob Perlman, I can't remember his wife's name, and then his son Michael Perlman. While I was calling on them Bob went to jail and it was an open conversation around BrandsMart that he was in jail for tax evasion.
The consumer electronics industry was just different and I was in a situation where you call on buyers, you call on people within these big accounts, and this is back in the early 90s so things have changed considerably, and a lot of the accounts have cleaned things up, a lot of them have gone out of business. Quite frankly, most of the companies I worked with are no longer in business. Sometimes I think there's a little bit of deserve there, they earned getting out of business because there's so much challenging stuff that happened in that industry.
Here's what happened, early in my career, I just wanted this one incident that just keeps standing out in my mind, early in my career I called on some of the major retailers in the United States. The person who was in the buyer's seat was critically important to me and that was a person that let's be honest, if they wanted to go out to dinner we all took them out to dinner. If they wanted to get extra samples of product they got extra samples of product. Buyers in that day and age got just about anything they wanted when it came to product from a manufacturer. They would go to whatever restaurant they wanted to. They all had favorites that were ridiculously expensive. Often there was entertaining after dinner, all kinds of stuff that went on that for me always towed right up to a line of are we just paying someone off here because we would go out to $1000 dinners and then we would get a huge order the next day.
Over time I realized that's just part of the business. But I never let go of that thought that it was still uncomfortable for me, it still felt weird. I did a lot better with the accounts that didn't have a lot of that going on. Wal-Mart almost none, I never saw it, I heard about it but never saw it. Home Shopping Network was one where the buyers and the entire leadership, everybody, was completely above board at least when I was there never felt it or never saw that. But there was a lot of companies that I did.
There was this one incident where a buyer left one account I was working with and went to a major, major retail account. I knew him pretty well, he was one of those guys that I was okay being around but he always made me uncomfortable, he was always pressing for something extra. He always had some new restaurant or something where somebody had to take him. Even if he didn't buy from people he still had them give him the royal treatment. This guy he bothered me from the very beginning that I worked with him and here he was transferring in to an account that was probably 100 times more important to me than the account that he was in before.
I'll never forget this, on his second or third day at work he called me and he said, "Hey, I have a really important opportunity for you and I think it could change the future of your business." And I said, "Okay, well I'm all ears." I'm thinking he's in this new account, maybe one of the companies I already work with he wants to talk to them, maybe there's something he's figured out, this is great I'm going to be able to help him. I'm getting acid in my throat just talking to you about it. The next thing he said was, "Hey..." and I'm not going to use real names here but let's just say, "Rachel my girlfriend has decided to leave her job," she worked at the company where he worked at before as well, "And she's going to get into your business, she's going to become a consultant and I think it would be a really good idea for you to talk to her about becoming a partner in your business." I remember thinking this is one of the most blatant things anyone's ever done with me. He's telling me to hire his girlfriend because he's going to steer business to her. That was clearly the implication. That's the feeling that I got. Quite honestly, for a second I was thinking I should probably just do this. Something stopped me and I said, we'll just call him Bobby, I said, "Hey Bobby, can I think about this and call you back? I've spent a few years now building this business. I didn't really expect to have to take on a partner. I just need a minute to think about it, can I have some time to think about it?" I remember him saying, "Yeah but don't take too long," and then click.
I remember thinking this is a huge opportunity because he's going to make it easy on whoever she works with and once things get out whoever she works with is going to be in business, it's going to go nuts. I just couldn't make the decision to move forward on it so I needed some time to think about it, so I took a couple days. I remember at the end of two days I wish I could tell you that I was thinking way I'm not going to do this, but here's what I was really thinking, I don't think there's any way I'm going to do this, I'm going to call him and talk to him for a few minutes, and see if I have that uncomfortable feeling that I had the first time I talked to him and I'm going to tell him, "Hey Bobby, I can't do this. I'm not going to become partners with Rachel, you're going to have to find somebody else," or something like that.
I called him and I didn't even have to make the decision because he had caller ID, he answered he said, "Hey Alex, that conversation we had a few days ago," he didn't say it didn't happen, he said, "It doesn't matter now. Rachel has decided to work with this other company." Then he named what probably was my closest competitor. I remember thinking those guys are going to kill me now, they're going to have this direct line in to one of the most important accounts we all call on and they're going to just crush. I remember I think I babbled something like, "Okay well sorry to bother you," or something like that. Then in the subsequent years the company that hired her did incredibly well with the account. In fact here's how crazy it was. The company that hired Rachel, his girlfriend, did so well that they were actually representing competing companies.
I worked with Fuji in the media sector and in digital cameras, I worked with SanDisk for flash memory. I couldn't represent another digital camera company, I couldn't represent another flash memory company. I couldn't have a conflict working with more than one organization. She was somehow allowed to do this over and over again and for years, I think it was about three years, that company crushed me, crushed everybody who was in our competition at that account. Then in a lot of cases I had things happen where I was hired by someone and then they would find out the arrangement that was present at this account and then they would terminate me for the account but leave me on for everything else. It was that bad. I remember getting off of the call in thinking those guys they're going to crush us and thinking should I have done it.
Just how I felt being on the phone with him in that short period of time for him to tell me what had happened I was so uncomfortable my heart was racing, I was thinking no I should not have done it because maybe there's other guys out there who have the constitution for that but I got uncomfortable just talking about it. Quite frankly in the consumer and computer electronics industry there was a lot of people that probably would have done it. It probably in a lot of people's mind if they knew what I had done, if they knew I had turned it down they would have called me a chump. They would have said, "Hey you should have done that."
Well three years later I spoke to a friend of mine that had just been at the account and I continued to call on the account, I did incredibly well. I was an award winning representative there but I didn't do a lot of business with him oddly enough. A few years later a friend of mine told me he had been at the account and they were cleaning out his office, he was under investigation. Apparently it just got out of control and he was just making the decision based on who his wife was working with and there was all kinds of other things that were going on, and deals being made under the table. Again, I'm in the consumer electronics industry, TigerDirect was one of the accounts I called in south Florida and it's very well-known. One of their VPs recently went to jail for stuff he did back when I called on the account and they've still been prosecuting it all this time. Him being under investigation was this shock but it's almost something that was expected in that industry.
Here's what's interesting, that company that competed with me they were banned from the account permanently and when you get banned from one account in our industry back then it was crazy how quickly that ban spread from one account, to another account, to another account, and then went out of business. I remember thinking that could have been me, I made that phone call not having really made up my mind. There was that tiny fraction of a percent that I might have said yes and I remember thinking that could have ended my career because not only was he put under investigation, there was all kinds of other stuff that came out, they banned several different manufacturers from the account, they took companies like mine who same thing they were doing stuff with him they kicked him out of the account for a year, or they took away some of their business. It was insane how much fallout there was around this one individual.
For me the lesson that indelibly imprinted in my mind when I found out that he was under investigation and then watched all of the fallout past that was that when something feels too easy, or when money comes too fast, or when it is too easy and you're not really working for it it's just not worth it. Here's what interesting, today there's a lot of people who are bending the rules, they're looking for shortcuts, there's a lot of situational ethics in our industry, exaggerating or making up experience, doing testimonials for each other and trading them even though you really haven't had their service, all of these things that are now okay in a lot of the industry that I'm in.
By the time he got fired, Bobby, my company was over $100 million. I had spent that same amount of time really working my butt off but I had gotten into Home Shopping Network and done huge numbers on air. We had done a ton of stuff with other accounts, I had actually started calling on the entirety of Latin America and become the Latin American office for several different manufacturers. In that time period where the other company had easy money, because I'm telling you it was easy, I was learning, I was developing, I was growing, I was learning how to build my company to over nine figures. If I had taken the easy money I would have just ended managing that process and having meeting about look at my partner, and not really needing to grow, or needing to push myself. I think that's the biggest take away for me is that even if you get away with it you rob yourself of the ability to grow when you take easy money. Even if nothing happens in the future, when it looks too good to be true, sounds too good to be true, feels too good to be true, it's just not the thing that you should look at, it's not the path you should take. Your body is telling you something, your mentality is telling you something.
I've been around for a while and robbing yourself of the chance to grow, taking away that opportunity you have to learn by putting yourself in a situation where for any period of time you're taking that situationally, unethical shortcut is going to take away from you the experience that you could have used to grow your career, to get to the next level, to get to that full potential that you have as an entrepreneurial personality type. So beware of easy money because when it looks too good to be true, sounds too good to be true it is and it affects you regardless of the outcome but you certainly don't want to end up under investigation or having your reputation permanently tarnished, or losing opportunity that you've build over time. The guys who started that rep firm they thought they won the lottery when they hired Rachel, they thought it was the greatest thing ever.
A couple of times I had conversations with them and they would tell me almost tongue in cheek how great Rachel was and how good she was with accounts, and what a closer she was. It was like a joke because we all knew what was going on. Those guys went out of business. They had spent their lives up until that point creating the experience that put them in business and they made one situationally ethical decision that led to probably 100s of situationally unethical decisions. It eventually led to them not being in business anymore. For all of you, today in our market there are more people` who are bending the rules, looking the other way, exaggerating what they can do, exaggerating what they have done, and making situationally unethical decisions. The way that I would advise you is if it feels uncomfortable, if you don't feel calm, and aware, and present, if it's pushing you out of your body, if you feel fidgety, if it makes your heart accelerate, if you don't feel normal when you're talking about an opportunity, if it's not just excitement but there's that small part of your mind that says is this okay trust that part. Our drive to get ahead will keep us asking how do I get ahead, how do I get ahead and sometimes it will push us into situations where we have to make a call that's going to affect our futures and I want to help you make the right call.
Thanks for listening to the Momentum Podcast for the Entrepreneurial Personality Type. Do me a favor, if this meant something to you, if you think it will help you in your future take a minute now and leave me a review on iTunes if you're listening. Just go to the main page for the podcast, hit the reviews but, let us know how we're doing, I would love to know what you think. Thanks for being a listener and I'll see you tomorrow.