Your Own Turf
The fish market in Palermo is one of the busiest in Italy. The middlemen who sell fish on behalf of the fishermen and take a percentage for it are called mandatari there. When the market was built, the stalls were designed for eleven of them. Until 1968 there were four.
Four middlemen at the biggest fish market of a seafaring country. The Anti-Mafia Commission, which looked into the matter in the sixties, found that in 1964 one of them handled fifty-five per cent of the trade, another thirty-two, and the remaining two split eight and a half and four and a half. Before 1964 the local authorities had never issued a single licence. The mandatari, as Gambetta writes, had simply settled in. One of them declared seven million seven hundred thousand lire of income for 1958–1964 and earned twenty times that. In 1969, while the inquiry was still going on, a fifth middleman suddenly appeared at the market. The Commission was not impressed: he was one of theirs too.
Twenty years later a journalist asked again why there were so few middlemen. The president of the chamber of commerce explained that a mandatario’s place passes from father to son, and that a stall goes only to those with a solid turnover: half a billion lire a year. How you build that turnover without a stall, he did not explain. The market director complained about a shortage of entrepreneurial talent. In the photograph that ran with the article he was sitting indoors in dark glasses.
The traders in town put it more simply. They said of the fish market that anyone who tried to muscle in would go the way of the fish, only in the opposite direction. And that reputation was enough for years. Not a single act of violence connected with the market was ever recorded. The Commission called this state of affairs a pax mafiosa—a Mafia peace.
The Best Wall Is the One Nobody Attacks
I’m not telling you this because I love fish. Look at how that barrier works. It never had to be used. Nobody came, and nobody was thrown out. The wall stood in the heads of the people who might have come.
In an honest business you build your wall from different bricks, but the principle is the same. A barrier to competition is anything that makes your turf a bad bet for an outsider. The best ones nobody even notices. Ties with suppliers that money can’t buy. Knowledge of your clients that isn’t in any book. A buying habit that holds people tighter than a contract. A reputation a newcomer will need years to earn.
Don Vincenzo held his turf in olive oil for twenty years, and nobody tried very hard to take it from him. Not because they were afraid. Because once they did the sums, they understood: to push us aside they would have to win over the olive mill that had worked only with us for twenty years and called us first in a bad year; get to know forty cooks who had learned their trade at our frying-pan evenings; and survive November, when the whole town waits for “This year’s oil is in.” It was easier for a competitor to try the next district over.
What the Don never allowed himself was to believe in the wall. The most dangerous moment for anyone holding turf is when he stops looking around. Victory spoils you in two ways: you relax, and the man you beat gets angry. The one who relaxes stops improving the business, and in a couple of years the competitor no longer needs to break the wall—he just walks round it with a better product. And the angry loser looks for a way to get even, and often finds one. So every year the Don drove out to the mill again, drank coffee with the cooks and tasted the neighbours’ oil himself. You repair the wall while you don’t need it.
The Partner Rule
Some barriers are written not in the law but in the house rules.
Pistone describes a rule that held among the men he lived with. If a mafioso put money into a club or some other business, he became a partner, and other mafiosi no longer had the right to poke their noses in. The rule was invented so they wouldn’t get in each other’s way when making money. Once Lefty offered a club owner who had no partners a partnership on paper, and coached him on what to say: if anyone asked, he was to tell them Lefty had put in fifteen grand. Fifteen grand that nobody had put in protected the club better than any fence.
At the office this is called an exclusivity agreement, a long-term contract, a right of first refusal. Rules of this kind work as long as everyone in the market respects them. Just remember that a rule held up by fear ends when the fear ends, and a rule that pays everyone holds up by itself.
The Multiplier
Now for the force that multiplies your work.
A coffee wholesaler from Catania decided to increase his share of the market and hired a sales agent. The agent was a man with a past: at the maxi-trial in Palermo he had been sentenced to six years, and Antonino Calderone had named him as a mafioso. The agent, whose name was Carletto, diligently made the rounds of the city’s bars and restaurants, and the results were wonderful: two hundred and eighty establishments out of four hundred and twenty-six began selling that brand of coffee. The police asked the wholesaler how this had come about. He was indignant: what was wrong with it—wasn’t there a law on helping former prisoners return to normal life? Carletto was behaving himself. Carletto took offence too: when he had no job, he told the commissioner, the police leaned on him; now he had a job, and they still wouldn’t leave him in peace. The bar owners explained that Carletto’s coffee was the best, and that there were fewer robberies and life was quieter. All the commissioner could do was throw up his hands: everything was legal.
Carletto didn’t threaten anyone. He just turned up. His name did the work of an entire sales department. This is the dark version of what’s called a force multiplier: a tool that multiplies effort. A hammer multiplies the strength of your arm, a lorry the strength of your back, a good name the strength of your word.
In an honest business the multipliers are legitimate: a machine instead of manual labour, a good tool, a bookkeeping system, and above all your reputation and the people who vouch for you. Put your money into what multiplies, not into what merely adds. A new loader adds one pair of hands. A lorry with a tail lift replaces three. A cook you trained brings you the next restaurant. Look for levers like that and don’t be stingy with them.
Order on Paper
One last thing—putting it into a system. A business you can’t write down as a sequence of steps is a business you don’t understand. You just do it, for as long as your luck holds.
Even the darkest dealings can have rules of procedure. For closed public works tenders in Italy, the contracting authority had to invite at least thirty firms. The list of invitees could be sold to a cartel. In 1969 in Palermo several mafiosi were killed in what became known as the viale Lazio massacre. On the body of one of the dead men, Francesco Tumminello, the police found several copies of a list of thirty names divided into four groups. Each group contained contractors and the mafioso who kept an eye on them. The ring had its own books and its own queue.
How much this system was costing the city became clear later. In September 1985 the mayor of Palermo, Leoluca Orlando, after a long political fight, brought in open tenders with no restrictions. Until then the city had saved on average sixteen and a half per cent of the starting price on its contracts. By the end of 1985 the saving had risen to twenty-six. In 1986, almost thirty-two per cent. In the first two months of 1987, almost thirty-seven. That is what the price of a cartel looks like, written into someone else’s books.
Write your system down, and you’ll be able to improve it, hand it on to new people and see where it breaks. A system that lives only in your head can’t be checked, handed on or sold. It dies with the head. And in the end, turf is held not by the man with the loudest voice but by the man with the best order.