Maybe it’s bad form to take business inspiration from a movie about the rise of a drug lord, but, bear with me for a minute here.
I just finished watching American Gangster, which depicts the true story of New York super drug dealer Frank Lucas who — and this is not a typo — amassed over $250 million in wealth from the sale of heroin. I thought the movie was very well done anyway, but they also did a good job of showcasing Frank Lucas’s talents as businessman, even in the world of drugs and organized crime. Some of the business higlights:
- Before Lucas, heroin was imported by a single supplier, diluted to allow for more distribution and resold to a number of dealer-organizations. Essentially, heroin was a commodity.
- Lucas found a way to import directly from his supplier. By controlling the supply, he avoided the dilution and also avoided paying the middle man. He could therefore offer a “better” product at a cheaper price.
- Lucas actually branded his product by stamping every packet of it “Blue Magic”
- The movie even shows Lucas taking charge when he felt that one of his distributors was committing “trademark infringement” by buying the pure heroin wholesale from Lucas, diluting it, and then reselling it in diluted form under the same brand name.
I have a few thoughts from the movie, but before I share those, let’s travel to another “strange place” where you would probably never expect entrepreneurship. I give you For Those I Loved by Martin Gray.
What’s that book about? It’s the memoir of a Holocaust survivor. The book was absolutely fascinating, but what made it even more engrossing for me personally was that Martin — the autobiographer and protagonist — was an entrepreneur at heart. And what was really cool was that I realized he had an entrepreneurial instinct early on in the book, and he later went on to found his own antiques importing company and did quite well.
So what gave away Martin’s entrepreneurial instincts early on? In 1942, Martin and his family were forced to enter the Jewish Ghetto in Warsaw Poland. Among the many reprehensible acts of the Nazis there was to restrict the intake of goods to the Ghetto. Only so many loaves of bread, so much water, so much meat, etc. was allowed into the Ghetto each day. Considering there were 500,000 people, the goods imported were far less than what was needed. Martin and his family were beginning to starve, so Martin innovated.
The Waraw Ghetto was in a central part of Warsaw, and many of the locals living outside needed to pass from one side of the Ghetto to the other. So the Nazis operated a streetcar that passed through multiple times per day. The streetcar was patrolled by both Nazi soldiers and local Polish policemen, known as “The Blues” because of their blue uniforms.
Martin found a way to jump on the streetcar as it passed through the Ghetto in a way that avoided detection. He was then taken straight to the outside, and was free to buy as much food as he could pay for. His next problem was to get back in, and here’s how he describes his solution:
…I waited for the streetcar at the stop before Teatralny Square. I was going back [to the ghetto], willingly, and full of vigor, air, and white bread. At the last stop before the ghetto, the Blue jumped on the platform of the second car. I was there, close by him. He was a plump man, he took no notice of me. I barely glanced at him but I stayed by him: I still had some money. It was a gamble. He tugged at the leather bellpull: the streetcar moved off again. It was a gamble. I touched his hand and without a word slipped him some notes. He crumpled them up and pocketed them, without looking around.
Martin now had a product — food — and plenty of buyers. The rest seems to take care of itself for him:
I went down Gesia Street, clutching my bread, holding my cakes. People were looking at me.
“How much?”
The man placed his hand on my sleeve. He was elderly, wearing a smart hat and coat.
“Don’t stay here, come with me.”
He nudged me into a porch. I was on my guard; a few stairs to the right, up which I could escape, reassured me.
“I’m buying,” he said. “How much?”
“I’m only selling the bread.”
“How much?”
I named a figure which seemed enormous.
“They each weigh two pounds.”
He wasn’t even listening, he pulled out his wallet. Outside was the grayish-black crowd, outside was the sound of footsteps and voices.
“I’m a buyer,” he said. “Every day, if you can.”
So Martin had actually sold his goods for a profit. Here’s Martin’s own summary of his morbidly exhilarating day:
I looked in my hand: it was full of zlotys [the local currency], my zlotys. I’d gambled on the streetcar, gambled on the German, gambled on the Blue, gambled with my life, and I’d won; here were my winnings.
Now, what’s so interesting about that little vignette is that Martin didn’t stop there. He then found a buyer on the outside so that he didn’t have to go to shops and buy the food himself (and risk detection). He paid the buyer a small fee, and simply rode the streetcar in and out to pick up and deliver. He had to pay off the Blue to avoid detection, but that seemed to be okay. And once he had the goods, selling them was a non-issue.
Fascinatingly enough, he scaled his “business”, employed other resources, developed a steady stream of buyers, and actually amassed a decent amount of wealth in this otherwise starving prison.
Now THAT is entrepreneurship.
What do I take away from drug lords and the oppressed? I take away that “business” as we have all become so accustomed to it today is just a modern platform for deeper entrepreneurial instincts. Frank Lucas (the druglord) had a horrific childhood and grew up surrounded by drugs, but he was also enterprising. He applied his business skills in the only forum available to him. Martin did the same.
Richard Branson’s first undertaking was the founding of Student magazine in the 60’s or 70’s. It was the first magazine of its kind and distributed throughout the country. It sure sounds pretty cool, but he actually started that because he had dropped out of secondary school and had nothing else to do.
Before Mark Cuban started his first company — a computer consulting company for small businesses called MicroSolutions — he was working at the equivalent of CompUSA in the 80’s. He became knowledgeable about computers and software and started become a great resource for customers. One day a customer asked him to meet onsite to discuss a large purchase. Cuban chose to show up late at the office so that he could meet with his customer. He was fired on the spot, and then went on to start his own company.
For myself, I think what I’ve always wanted more than anything else is the feeling that I’ve become successful on my own, without handouts or “advantage” or “connections”. I could have gotten higher-paying and more prestigious jobs out of college than hunting for work as an amateur web designer who sucked at graphic design, but in my world with the impulses I had, that was the only real “forum” available to me.
The other takeaway for me from all of this is that there ARE in fact fundamentals of business. Obviously, Frank Lucas never got an MBA. Obviously, Martin Gray, never had formal training in “supply chain management”. But their instincts gravitated to the same principles:
- Determine what service you’re going to offer
- Determine a consistent, scalable way to deliver it
- Sell it at a profit
- Establish a brand name and customer loyalty
- Keep growing
I don’t presume to capture all of business knowledge into 5 little bullet points, but this post is not about the fundamentals, per se, but about the fact that they exist at all…and sometimes in the strangest of places.
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