What the Street Wants
The biggest present the American Mafia ever received in its whole history was handed over by Congress. In January 1919 the states ratified the Eighteenth Amendment to the Constitution: from then on, making, selling and transporting liquor was forbidden. A year later the law came into force. Historians who have spent their lives studying our kind agree on one thing: no boss, no meeting and no verdict changed organised crime the way that ban did.
Why? Americans didn’t stop wanting a drink. Plenty of them simply couldn’t see why they suddenly weren’t allowed one. The desire stayed; the lawful seller vanished. And the gangsters, as the historians put it, became the best friends of the drinking public. Joe Bonanno, who later became boss of one of the New York families himself, remembered those years fondly: it was all too good to be true, the police didn’t get in the way, there was work for everybody, and the profits were enormous.
Remember the main thing in this story. The bootleggers didn’t create the demand. They found it. The demand was there before them, and it’ll be there after. A business is worth exactly as much as the market underneath it. You can brew the best beer in Chicago, but if nobody wants beer, you’re just a man with barrels.
What People Want, Full Stop
Where I come from, they liked to say a man wants three things: money, respect and to be left alone. The scholars count more, but then they’re paid by the item.
A man wants to have: money, things, position, power. That’s what banks, shops and everyone who promises to make you richer live on.
He wants to belong: to be loved, valued, asked to the table. That’s what restaurants, weddings, clubs and every bar where the barman remembers your drink live on.
He wants to know: curiosity keeps people up at night. That’s what newspapers, schools and, as you can see, books live on.
He wants to protect himself, his family and what’s his. That’s what locks, insurance, lawyers and—why hide it—our own line of work live on.
And he wants to feel: taste, thrill, music, a drink in him. A Prohibition speakeasy gave you three out of five at once: the drink, the company and a small forbidden thrill you didn’t have to be ashamed of.
The more of these wants your offer touches, and the deeper, the easier it sells. An offer that touches none of them has to be pushed on people. What’s pushed sells badly and gets bought a second time even worse.
Sizing Up a Market Before You Jump In
Don Vincenzo judged a new business not with figures but with questions. Later I wrote them down, and there turned out to be about ten. Let’s run through them on the bootleggers; it’s clearer that way.
How urgently do people need it? Saturday night doesn’t wait. Very urgently.
How many people are already paying for something like it? Half the country. The other half pretended not to drink and paid as well.
What price will they stand? A high one: there’s no alternative, and the risk is built into the price.
What does it cost to find a buyer? Next to nothing. People went looking for a drink on their own.
What does it cost to deliver? Now that’s where it gets expensive. Trucks, warehouses, guards, bribes to police and judges, confiscated loads, shoot-outs with the neighbours. Delivery ate up a huge share of the takings, and any line of it could snap on any given day.
How unique are you? Not at all. Everybody who wasn’t afraid sold liquor, and historians have worked out that in New York half the bootleggers were Jews and only about a quarter Italians.
How fast can you start? Fast, if you have connections with suppliers.
How much do you have to put in up front? A moderate amount: a truck, a warehouse, the first load.
What else can you sell to the same people? Plenty: gambling, music, clubs. Capone, for example, split profits fifty-fifty with the managers of a gambling joint and with the dealer who supplied the trucks.
And how long will it feed you without fresh effort? The buyer comes back every week; it doesn’t get better than that. Until the law changes. In 1933 Prohibition was repealed, and the gold mine turned out to have been leased from Congress.
No single question decides it. A good business scores good answers on most of them, and it knows its weak spot in advance and builds it into the price. The bootleggers’ weak spot was delivery and their dependence on the law. The ones who understood that put money into gambling houses, unions and construction ahead of time. The rest were left with their barrels.
Why You Want a Competitor
Young men often come to me upset: “I’ve thought up a business, and other people already have it.” I’m glad for them. If others have it and they’re still alive, it means people pay for it. You’ve already got rid of the worst risk of all—that there’s no market at all.
When Don Vincenzo was opening his second laundry, the first thing he did was send me to take washing to the competition. For a week I went round other people’s laundries as an ordinary client. Where they take it in quickly, where they lose buttons, where they’re rude, where they charge more and why people still go. In that week I learned more about the market than in a year of my own work. Buying from a competitor is the cheapest way to study him. Three shirts, I admit, never came back; the Don wrote them off as reconnaissance expenses.
Only remember where the likeness to the bootleggers ends. They settled arguments about competition with guns, and the Chicago garages of the twenties never proved that it paid better: there were no fewer buyers afterwards, but noticeably fewer sellers. You have other weapons: price, quality, speed and your word. Measure yourself against your neighbour honestly, and take from him whatever he does better.