I had a friend named Steve (not his real name). He was originally my financial adviser, and at one time we got to the point where we started looking at opportunities to go into business together. Steve became disillusioned with the financial advice business which he saw as being over regulated. The role of a financial adviser, as he saw it, had become one of trying to keep up with the ever-increasing mass of regulations, and picking one of an ever-diminishing selection of investment options which the regulations prescribed according to the client’s circumstances. Worse than that, he perceived a widening disconnect between actions that were in the client’s best interests and those that were in the adviser's best interests.
Steve was an archetypical sales guy. The CEO of a
company I once worked for told me that there were two types of sales
guys, which he called Hunter-Killers and Gardeners. The Hunter-Killer
is always on the lookout to close a deal, and if he doesn’t see any kind
of a deal in the offing he won’t hesitate to cut bait and go look
elsewhere. The Gardener, on the other hand, knows that it is often
necessary to cultivate a client over the long term, and to gradually
build him up to the point where a deal is ready to be harvested. The
Hunter-Killer is in his element with smaller deals, the Gardener with
bigger ones. The Hunter-Killer is a big, energetic, bouncy dog, ready
to hurtle off at full pace in pursuit of a stick. The Gardener is a
cat, hopping up onto your lap, taking its time to get comfortable, and
settling down for a long nap accompanied by a loud and satisfied purr.
Depending on the kind of business you are in, you need one type of
salesman or the other. And often you need both.
Steve was your
typical Hunter-Killer. Me, I’m not any kind of salesman. Its not in
my makeup. If pushed I could function better as a Gardener than a
Hunter-Killer, but that’s just how it is. I am more of a strategist.
So Steve and I potentially made for a good team. Steve, the big,
energetic, bouncy dog, would hustle off in the direction of a potential
business opportunity, and drop it in my lap. I would figure out what
was necessary to turn that opportunity into a functioning business.
Usually, the opportunity would be flawed, and Steve would immediately
hurtle off after another one. The trouble was that to make an
opportunity work for Steve, we would have to start up the business on
Monday, and Steve would head out on Tuesday and start selling. By
Friday I would tell him how much money we had made. Businesses rarely,
if ever, work like that, so naturally we never got anything off the
ground. But it was an endless source of fascination to examine the
surprising variety of opportunities he unearthed, something I look back
on with some fondness.
One thing Steve wanted more than
anything else was to own a BMW dealership. Actually, he wanted to own a
BMW, but projecting that ambition further led him to covet a whole
dealership. So he left the financial services company and went to the
local BMW dealer to get a job as a salesman. This would be an ideal
position, he figured, from which to learn what it would take to acquire a
dealership. Unfortunately, BMW are very selective in whom they employ,
and salesmen with no experience whatsoever selling cars are not
generally welcome. Steve was advised to go get some experience
elsewhere. So he got a job with a local GM dealer, who were less picky.
By the end of his second month he was their second-highest performing
salesman, and from the third month onward became their top performer.
Within less than a year he went back to the BMW dealer and was hired on
the spot. He became an effective salesman very quickly. But the deal
he really wanted to close was to own a dealership. He cozied up to the
owner, and the more he learned about how the business worked, the more
he realized that it wasn’t going to happen for him. For a start, the
buy-in cost alone was so much more that he ever imagined. Why, he asked
me with his financial adviser's hat on, if you had that kind of money,
would you ever spend it on a BMW dealership?
Steve had one
client in his role as financial adviser, who was raking in a lot of
money in the used car business. Steve was anxious to know how he did
it. The client was equally anxious not to tell him, but Steve is
nothing if not persistent, and so he managed to extract an outline of
how this man’s business worked. Basically, as he described it, he
bought certain specific models of used GM vehicles at auction in Canada
and exported them to the southern States where their resale value was a
lot higher. Steve and I got together to try and figure out how a
business model like that could rake in the amount of money his client
was clearing, but the one thing we couldn’t get a handle on was how the
business of buying cars at auction worked.
As it happened, at
about the same time I was introduced to a guy called Nick (also not his
real name) who was in the used car business. His thing was that you
told him what vehicle you were looking for - being as specific as you
wanted - and he would go out and find one for you, and sell it to you at
a good price. Having learned a thing or two from Steve, I pressed Nick
for more details on where these cars came form, and learned that he
bought them at massive trade-only auctions. I persuaded him to take me
to one of these auctions, where I was formally registered as his
assistant (you can’t get in if you’re not in the trade). What I found
was a facility with thousands upon thousands of used vehicles, virtually
all of which would be sold at the upcoming auction. These auctions
happened every week. The auction itself was staggering. Vehicles
passed through so quickly, and bidding on each one was over in a matter
of seconds. If you knew what you were doing, it was possible to come
away with a surprisingly good deal. In the end, Nick bought two cars
for me this way, which I was pretty happy with.
to negotiate a nice little sideline for himself by bringing clients to
Nick and arranging financing for their purchases. With Steve plugged in
this way, Steve and I were able to glean sufficient information from
Nick to establish that Steve’s client, whatever he was doing, was not
raking in the cash he said he was by exporting used Chevrolets to
Florida! Another business opportunity that fell by the wayside.
But Steve did see an opportunity to acquire for himself the BMW he had
always wanted. Steve was a big guy, so the 7-series was his thing.
He saw that the 740iL and 750iL, particularly the ones with high
mileage, could sometimes be picked up for a song. The value of a
7-series at auction was very mileage dependent, and from his experience
at the BMW dealer he knew two things - how to check a BMW’s service
history and how the company’s warranty system worked. From his
experience in financial services he also knew a third thing - how
private car lease financing worked. Prowling the auctions with Nick he
looked for high mileage 7-Series Bimmers with spotty service records.
He instructed Nick to buy at a particularly low price if the opportunity
came up. It did, and Steve became proud owner of a two-year old BMW
740iL. Steve then had Nick wind its clock back from 120,000km to
60,000km, which meant it still had 20,000km before its warranty expired.
He arranged lease financing with a fixed buy-back based on a book
price which three years down the road would be more than he paid up
front for the car. He took the car to a BMW dealership and had them
inspect the hell out of it and perform a whole bunch of warranty work
including, incredibly enough, a re-spray. Steve apparently had no
qualms about any of this.
Thus, in May of 2000, Steve became the proud owner of
a near-new BMW 740iL in tip-top condition, and was paying less in lease
payments than he was previously paying for the Nissan Maxima that he
sold to make room for it. Steve, for one who negotiated so effectively
with his cards close to his chest, was surprisingly a man who often wore
his heart on his sleeve. We were going for a long drive in the 740iL
one day, when he told me what he thought about the whole affair. He had
wanted a BMW for so long, he said, that he never thought he would be
able to afford one. Now that he had one, and had owned it for several
months, he told me that he realized something important. The long-felt
desire to own such a fabulous vehicle, and the thrill of the chase to
come up with a scheme that actually put one in his garage, were in the
end deeper passions than the actual fact of owning the thing. He was
quite disappointed that the thrill of the chase and the thrill of the
kill were somehow not being satisfied by the subsequent feast. Yes, the
BMW as a vehicle was everything he thought it would be. The sound
system, I can tell you, was fantastic. But in the end it was just
another vehicle that needed to be filled with gas, washed, and driven
from place to place. And the jaws of your friends and neighbors would
only ever drop once. Not a person to let the grass grow under his feet,
he told me he was going to sell it. In fact he had lined up a buyer.
More than that, he had put his house on the market and was going to move
to Florida. Just like that.
Steve did move to Florida, where,
last I heard, he was selling private medical insurance and planning to
take a course to get his Real Estate license. My guess is he won’t have
had the patience to complete it.
Nick, on the other hand,
absconded one day with thousands of dollars of someone’s money, on
deposit for a specific vehicle he was tasked to obtain. He hasn’t been
heard of since. I’m just glad it wasn’t me that recommended him to the
client who got fleeced.