"And I was getting two educations, one for the street and one from school. That way, I'd be twice as smart as everybody." - C, on the advice Sonny gave him
I always have a chuckle when I get into a heated negotiation, and as I chip away all objections and diffuse uncertainty, the opponent resorts to reciting all the courses he / she took at XYZ Ivy League University involving sales, negotiations, and business strategy; and how none of them have helped with their purpose in the real-world.
Ha.
"Most of these Harvard MBA types don't add up to dogshit. You need guys who are poor, smart, and hungry." - Gordon Gekko
It is arguably impossible to create an artificial scenario that truly engages the traits of a human being when it is selling, negotiating, etc. in the real-world. When you are "fake-selling", say, in a classroom, the trade dynamics do not account for any investment-driven value the seller holds, nor does it account for any investment-consideration risk the buyer has. In layman's terms, the seller hasn't spent any time or money on learning about or buying the product, and he / she is in school, so his / her opportunity cost is arguably $0.00. Also, the results of the sale have no impact on the seller. Make the sale, sit down. Miss the sale, sit down. The buyer hasnt spent any time or money on funding the budget, or getting the cash, needed to make the purchase, and he / she is in school, so his / her opportunity cost is arguably $0.00. Again, the results of the sale have to meaning to the buyer.
There is no sense of risk involved in the transaction. It is impossible for this exercise to benefit either party. Integrate a bit of risk, and the dynamics change. Have you ever had your next meal depend on your next sale?
This is what Sonny wanted to emphasize to C in A Bronx Tale. Having not attended college, Sonny attributed his ability to move money to what he learned on the street. I felt he feared that C would never truly grasp the dynamics of true supply / demand sitting in a classroom, so he made sure C spent time on the street, dealing with real people with real needs and real psychological dynamics controlling their behavior. The street is where people lived, traded, bartered, determined prices, formed entities, and live with a real sense of risk. This is the fundamental condition of all who passed through Ellis Island. They divided, specialized their labor, competed among competitors, and traded with customers. The Italians offered garments, shoes, and food. Every culture chose a path, risked time and money on their products, and traded with others who did the same with different products (you can't specialize in everything). It's pure economics.
Not able to be created in an auditorium.
Nowadays, no one wants to start at the "street" level. People pay hundreds of thousands to learn how to move money and risk in simulated environments, and then try to convince people who learned the same thing on "the street", i.e. with their own money and the psychological risk that comes with moving it, that because they did so in class, perhaps at an astute university, they deserve the six figure salary and the corner office.
Take a walk.
The classroom education is certainly required in today's global economy. Memorizing facts about business, etc. help with filling in the blanks when framing a real-life encounters, and history helps us identify trends, etc. But I chose to get that second education, the one Sonny recommended C get, on the street. And I will openly admit, and am quite passionate about, the fact that what I learned on the street is far more responsible for my ability to move risk and money today than anything I read about or learned in or out of the classroom. I frequently deal with "these Harvard MBA types" with no street-level experience, and, frankly, I often agree with Gordon Gekko.
Doubt it? Comment, and I'll respond.
Can tell us more about your street-level experience, and what you learned.. that wouldn't have been learned in a classroom? i.e. anecdotal and specific.
ReplyDeleteI do apologize for the delay in responding... I did not have my account set to notify me when comments were posted!
ReplyDeleteI started a business, from scratch, while in college. I wrote a business plan, translating a raw idea into words and pictures, complete with market analysis, business model, competitive advantages, etc., for a music label / production company. At first, it was nothing more than something to occupy my time between engineering assignments, a passion project at best. But a number of people with whom I shared the idea raised an eyebrow, validating its potential, so I began researching how to sell stock privately, i.e. how to legally take other people's money in exchange for a non-transferrable security, or one they could not sell on the NYSE if shit got ugly. Make a long story short, I spent 2 years of my life networking and pitching my plan, experiencing real risk that comes with dropping $60 on a lunch in order to meet with a private equity VP, etc., and not closing. You cover 10 of those, and your pitch gets stronger. Every no forces you to decide if it's time to quit or keep moving. That was my time, my money I earned, I was putting up to sell stock in my company. I learned to feel people out, understanding that it was not about MY stock and MY idea, but about THEIR needs as an investor, THEIR comfort level, and where THEIR risk tolerance was at at that moment, that given day, that given second. This is what I was talking about with Sonny; people are just people. Every "rich" guy I met and pitched had to weight thousands of factors in considering buying my stock; personal financial goals, liquid asset base, earning ability relative to age if he lost his investment, kids' college funds, wife's needing new drapes, oil changes due, tax burden from a large gain experienced 8 months prior, etc. etc. I learned how to tailor my message to meet the needs of real people, people who had earned that money that I was asking for, all on my own time and dime. It was an unbelievably frustrating experience, to have a burning passion for something so risky and subjective. But I kept on, and since 2007, I've raised over $200,000 or so for my business. I closed my first stock sale 2 months after my 24th birthday, for $75,000. People forget it's just people out there; some have dump trucks of cash, some just drive a dump truck. But both have the same basic human needs and wants, and as long as you respect them, you can close anyone. You are nothing more than a risk broker & manager when you are an entrepreneur; you see a need, or a potential buyer, of a product or service, and you find a way to meet that need ("market"), hence your business ("company"), so you find sellers, or people who are willing to spend money to meet that unmet need ("investors").
Don't be intimidated when selling to wealthy people... most of them really want someone like you, who is genuine, thoughtful, and transparent. Meet that personal need, demonstrate immaculate risk management with their capital, and you will never be without a customer for your stock.
Getting the market to buy is a different battle!!
I'm the hungry guy with two educations thanks alot for sharing and sonny and gordan was absolutely right.
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