Peter
The Boy Wonder: Tom Gores
Here’s a must read on how Tom Gores of Platinum Equity started with next to nothing and became one of today’s best examples of a self-made tycoon.
Here are a few excerpts to whet your appetite:
One of the best things about having control of a publicly-traded company is that you can use funny money instead of real money to acquire assets and grow rapidly. The funny money I refer to is the public company’s own stock. If you do a deal to acquire XYZ Company for one million shares, you just create one million shares out of thin air and hand it over. Easy as pie.
However, there’s a problem with doing this too many times. If you keep issuing more stock to others eventually your own position gets diluted. You could even be diluted down to where you lose control of your company.
Yesterday morning I noticed that people were doing searches on “Marcus Lemonis skullduggery” but had no idea that the latter was actually a business appearing in The Profit. So I jumped to the conclusion that a few paranoid types were associating skullduggery with Marcus’s deal-making style. Oftentimes people who don’t understand the rules of business will suspect the worst when they don’t get what they want. Instead of accepting that they are bad negotiators they will attempt to paint the other party as being somehow unscrupulous. It’s rarely the case and certainly doesn’t apply to Marcus.
Then by late afternoon I discovered that these searches were for the latest episode of The Profit.
Skullduggery
After the farce of Worldwide Trailer Sales, I was ready for an episode about a serious business with real potential that Marcus could fix up and make money with. I really do try to start each week with an open mind, folks. Alas, it was not to be. We got Skullduggery instead. Over the years I have met a few toy company owners and/or CEOs and all of them were playful creative types. They have to be in order to understand what their customers will like.
In contrast, the Skullduggery office and owners had more of a Speedy Muffler outlet look and vibe than that of a creative business. Indeed many of the toys were really quite lame as Marcus pointed out early on. And what’s worse, the president really couldn’t relate to kids as demonstrated by his ugly reaction to the young girl at the focus group.
To recap, Skullduggery has been a small family-owned business since 1987 which designs and sells games and toys. It’s currently run by the founder’s two middle-aged sons. Despite being in business almost 30 years it only has $1.6 million in sales and a $50k loss in the most recent fiscal year. On top of all that it is $1.3 million in debt. At the rate it’s going this debt will never be paid off.
Something is clearly very wrong here and it will be interesting to discover why.
Marcus Lemonis Finds Himself in Crazyland: WorldWide Trailer Sales
This one could have been an interesting case study when you recall that our hero is a self-proclaimed “car guy.” Sadly, it falls strictly into the entertainment category. You can rest assured that Marcus’s screening process intentionally selects a few guaranteed train wrecks just to keep the audience happy. The popcorn lady episode was another one of these as well as Maarse florists. I know from my own traffic logs that the train wrecks are the most popular searches even though they tend to offer the least in terms of business lessons.
Marcus must have known going in that WorldWide Trailer Sales was a hopeless situation because of the people involved. You don’t just talk to people once before committing to bring over with a full production unit to tape a one hour show.
This HBR piece gets my “Highly Recommended” …err…recommendation.
The Daily Routines of Geniuses
1. A workspace with minimal distractions.
2. A daily walk.
3. Accountability metrics.
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