Facing Reality

Capital Thinking  •  Issue #14  •  View online

Back in my ranching days, I learned an important lesson from a cattle buyer friend of mine. He was on the phone with a disgruntled client who was upset about the quality of a few animals in a shipment he received (of several hundred).

After the call was finished, I asked my friend, "What's the deal?"

He replied, "Some people never learn that there is a top and bottom in every load."

Wise man.

Years later, when I was stalking endangered Banks and S&L's, I learned the importance of asking the question properly to take advantage of my friend's insight.

You need to understand that even institutions where Federal Marshal's were at the door (literally) would usually deny, or trivialize the fact that they had REO'S, repo's, defaulting loans, etc. Instead, much like most people facing foreclosure or bankruptcy, they enter a state of partial or complete denial.

And while we can all sit around and wonder how anyone could be so foolish, that still doesn't move us any farther down the road.

What did work was to ask them quietly (and in person) -- "What's the one thing you'd like to see off your books today?"

The fact is that every bank has a "top and bottom in every load". And every banker has something they would like to see gone -- right now, if possible. For whatever reason, this question (or one like it) usually broke the wall of silence and we could move on from there.

That one idea from my friend made me a lot of money (and it still does today).

It bears repeating that variations of this theme occur throughout the business world everyday. Even so, I was advised (by many) early in my career not to bother with large companies or institutions. "They're too impersonal" I was told or "They don't have problems".

Nothing could be further from the truth. Institutions are a reflection of the people that run them; they experience fear, greed, uncertainty, and arrogance just as much as any flesh and blood person. Whether it's Lehman, Bank of America, J.P. Morgan, or the corner grocery store doesn't really matter.

What's the one thing you'd like to change today?

What is the single most painful point in your business model?

If you could make any one of your problems disappear, which would you choose?

Any one of these questions – or something very much like them, will get people talking about real problems, real issues, and what they are truly afraid of.

*First appeared on Capital Thinking December 28, 2011