business

Huge Profits and Their Hidden Costs

~ Paul Phillips ~ 2 Comments

“That old cracked up uke?  Oh, give me a hundred dollars.”  The year was 1999 and I was in a pawn shop in one of the big cities I frequented at least once a month then. My intent was to buy used musical instruments which I could put a little work into and resell for a profit on eBay, the popular online auction website.  The ukulele was an afterthought, discovered hanging on the wall while I was waiting for the clerk to find the case to a nice professional trumpet, for which I had negotiated a fair price.  The old Martin uke was battered, with a crack in the back, and missing a couple of strings, but I thought that it should surely be worth the price and agreed to pay it.

Upon reaching home, I did as I always do, researching the instrument, finding to my gratification that it was a fairly rare, 80 year-old instrument, made of Hawaiian Koa wood.  Not being able to find an authoritative resale price, I started an auction with a reserve price much higher than I actually believed the battered instrument would bring.  To my surprise, the first bid reached the reserve price!  After that, my bewilderment increased each day of the seven day auction, as the bids mounted up, raising the price $1000 per day from the original $1800 bid.  My son’s friends watched the auction each day at school, incredulous that an old beat-up ukulele could actually bring such a price.  At the end of that seven days, the final auction price for this “oh, and I’ll take that too” purchase of mine, stood at an astounding $9000!  Nine thousand dollars!

I had spent a couple hundred dollars more, when it became obvious that the instrument was valuable, to have an appropriate hard case overnighted to me, and the auction site took a fair amount of the proceeds as a commission, so I actually had invested something between five and six hundred dollars in the deal, but I can safely say that this was the highest percentage profit I have ever made on a purchase, either before or after.  The congratulations were flying, from the high school boys, who were in awe of the whole process, to colleagues in the music business, who had also watched the auction with keen interest.  But I actually tell the story almost with shame, because I have never felt so distraught in making a sale.  It just felt wrong!  To this day, people who hear the story assure me that there was nothing to feel guilty about.

Their words remain unconvincing still.  I understand that the auction process allows folks who really desire something, to pay as much as they are willing to spend, regardless of the real value of the item.  The man who purchased the ukulele was beside himself with glee.  He was the new owner of the only Martin Style 3K Tenor ukulele known to be in existence then and it filled out his nearly complete Martin uke collection.  He was more than content.  But, I wasn’t.  It’s funny how events affect your subconscious choices.  Within a year, I had stopped making the monthly trips to big cities to scour the local pawn shops and junk stores.  I explained it to those who asked, that I had found the “Holy Grail” and could never top the experience, so the thrill was gone, but actually, over the intervening years, I have come to realize that the opposite is true.  I’m afraid that it could happen again.  You see, in that week that the auction was in process, I got a good look at the greed that was inside of me.  I actually found myself disappointed when the auction ended at $9000!  Why not $10,000 or $15,000?  There was real money to be made and I wanted more!  I had never known an experience like this and put simply, I was shamed by the desires it awoke in me.  And, I don’t want to experience those feelings again.

I sell items at a reasonable profit every day.  I don’t experience any guilt about that.  It is the system of economics which makes our culture thrive and rise above many others.  I have made a living in providing products which I believe are relevant to our culture and the fact that my business is successful attests to that relevancy.  I have recounted the story of my triumph/shame only to shine the light on how an event that most would view as a huge success, can actually be a huge disappointment to those who see if from a different perspective.

The experience of the Martin uke is just another gauge, a reference point, if you will, that shapes who I am and how I want to live my life.  There is nothing to praise in it, but much to be learned from it.  How I wish I had met the test better, but perhaps, if the opportunity ever arises again, I’ll pass with flying colors.  Where there’s life, there’s hope…

“…Monsters are real, and ghosts are real too.  They live inside us and sometimes, they win.”
(Stephen King)

The print’s just fine, thanks!

~ Paul Phillips ~ Leave a comment

“I don’t read fine print,” were the words I read in the email, the second one from this customer that day.  It was the Monday after Thanksgiving and it seemed that it was going to be one of those Mondays.  I had arrived just before 9:00 a.m. to get the coffee made and pull the orders for the day, only to find an email from an irate customer waiting.  It seems that she had placed an order on Tuesday before Thanksgiving, requesting that the package be shipped to her by 3-day delivery.  Any idiot could count on their fingers and cipher out that three days from Tuesday would be Friday.  Yet, her package wasn’t scheduled to be delivered until Tuesday.  How is that possible?  “PLEASE REFUND MY MONEY!”, screamed the last line in the missive.

I politely replied to her email and after offering a solution which should have been acceptable, suggested that it might have been helpful, had she read the “policy page” as instructed, before selecting expedited shipping for her order.  The policy for the shipping company explained that there would be no deliveries on Thanksgiving or the Friday after, and those days would not count in the days-in-transit count.  It all made perfect sense to me, but the reply you see above was all that was forthcoming.  Don’t read fine print!?  How can you not read the fine print?  Life is precarious enough without encouraging problems.  Surely, there are no ignorant thrill-seekers left in this world who don’t read all the instructions before pushing the “make payment” key.  Don’t they know the tangled mess they make of the orderly systems we have in place to keep the wheels of commerce moving?  Fine print is the lubricant of the whole enterprise!  

Truth be told, the print wasn’t any smaller than that on the rest of the page, but let’s not argue about semantics.  She couldn’t be bothered.  And, it was obvious that the fault lay with us, not with her.  A phone conversation with her later in the day made clear that we were not going to ameliorate the problem to her satisfaction any time in this century.  We offered a full refund, including the purchase price of the product, as well as giving her the item to keep, but still she could not be mollified.  At wit’s end, I finally suggested that possibly we were not the organization with which she should be shopping for her music, since we obviously weren’t capable of performing up to her standards.  As you might imagine, my last suggestion wasn’t made without a fair amount of frustration (and maybe a little sarcasm) on my part, nor was it met with quiescence on her part.  Regardless, we went our separate ways, each certain of the merit of our own position, and each not having achieved our goal.

I hate unfinished business.  I want every customer to feel that she or he has gotten everything they have paid for and then some.  I also want everybody to like me, although by now, I’m convinced that this goal is impossible to meet.  Sometimes, our objectives are unattainable, our sights set just too high.  But still, it’s very difficult for me not to put this one in the loss column, hard not to say that I failed.  I look at the facts and know that I did all I could, but a bad result has to be tallied somehow, so I call it a loss.  Fortunately, as I count them up, the win column is still weighted heavily, but I wish that all of the occurrences which have made their mark in the loss column could be completely erased. 

“Hey, Paul!  This is John in Atlanta.  You know, I got a bad CD last week.”  The cheerful voice belies the words.  John isn’t angry, doesn’t want an apology.  He knows us by now and he’s confident that we’ll get a good product sent right out to him.  As a matter of fact, he wants to order five other items while he’s got me on the phone.  “You guys always treat me right.  Fast delivery and always there to help me when I need it.  Can’t ask for better than that!”  Wouldn’t it be nice if I could get him to call the earlier customer and help her to see what a nice guy I really am?  Oh well, that’s not the way it works, but man, do I appreciate customers who are such an encouragement!

It would be easy to get discouraged about the failures, but we constantly receive reassurance from customers.  A note here about the great service, a phone call there about how fast the product arrived, a new customer who tells me they contacted us because they received a glowing endorsement from a friend; all of these help to give the impetus to keep doing what we do.  The funny thing is, the bad experiences also help us to do that.  We keep plugging away, because we are convinced that we can do better.  We’ll adjust the fine print, maybe even insert great big red arrows to point the way to it, but we’ll try harder and keep as many marks in the win column as we can. 

It would be easy to focus on those marks in the loss column.  When we contemplate them, it does seem that they are written in much darker pencil than the others are.  The truth is, we just need to focus on the goal.  Looking back magnifies the failures, but moving ahead puts them in perspective and motivates us to transcend the past. I like what Tom Krause, a motivational speaker, has to say on the subject.  “There are no failures – just experiences and your reactions to them.”

“Success is falling nine times, and getting up ten.”
(Jon Bon Jovi, American rock musician)

Doesn’t the bad guy wear the black hat?

~ Paul Phillips ~ 1 Comment

“Eighty dollars for the guitar and twenty for the amplifier.  That sound all right to you?”  Once again, I’m bargaining with a young man for an instrument that I don’t really want, but he needs to sell.  He’s the third person in my store today with something to sell, not because they’ve decided to quit playing music, but because money is tight and they need to come up with the cash to take care of “living expenses”.  The mom with her toddler who was here earlier had a similar problem, but she also brought me a dilemma, along with the guitar case and guitar shaped object (GSO) she carried.  You see, I’ve promised never to put any of that brand of instruments on my rack again, simply because I don’t think they’re quality guitars.  Oh, a few of the specimens are okay, but overall, they seem to have a multitude of inadequacies, which I cannot overlook and will not foist off on my customers.  What to do?

As you might expect, a few dollars lighter in the bank account, the business now owns this cool looking guitar, which sports a facsimile of the semi-semi-noteworthy guitarist/pitchman in his flat black bolero hat, who hawks his inferior wares on your television set.  I’m not a fan.  He claims to play the guitars he sells, but if the secondhand examples which I have seen are any indication, my guess is that most mediocre guitarists wouldn’t keep one of them for long, much less a professional, such as he claims to be.  I’m not surprised to find that his claims to fame (e.g., student of one of the greatest classical guitarists in our time, Andres Segovia and endorsed by the same) are disputed by many  experts in the field.  I’m even appalled by the price people fork out for a barely adequate instrument, only to find that it has plunged in value from the moment it left the warehouse.

But, the absolute affront, in my consideration, is that the man’s real name (first and last) is actually the same as my given name, Stephen Paul.  I might be able to forgive the man for selling a cheap product for too much money, but to have the same name on top of that, well…Words fail me.

Having wandered far afield, I’ll make my way back toward my original subject and say that I’m faced almost daily with judgment calls like this one and many which are more confounding.  One gentleman came in with a similar dilemma (a guitar brand that was taboo) and then added to that by telling me that the tight spot he was in came because of a late night visit to the casino after imbibing a bit too much alcohol.  I’m still ruminating the wisdom of my decision as I also ponder how to market the other GSO that now sits in my back hallway.  If any of you readers have the solution to either problem, I’d love to be let in on the secret.

But, my real target tonight is integrity.  I mention the huckster to set the stage.  This play of life in which we are all acting often surprises me, sometimes in a wonderful, positive way, but often recently, with gloomy and unfortunate situations.  The gentleman I first mentioned who had the guitar and amplifier to sell, quickly agreed to my price.  One hundred dollars was fine with him.  As I prepared to pay him, I happened to think that the wholesale blue-book might show the amplifier to be worth a little more than my offer, so I suggested that I should check the value.  As I started my search, I heard, without it really registering, the muttered words, “Yeah, you wouldn’t want to pay too much.”  Then, I found the amp model in the list and noticed that it recommended paying thirty dollars for this particular unit.  I returned to the customer and told him that I would pay him ten dollars more than originally agreed upon and his reaction was one of complete surprise.  He had expected a reduction in my offer, not an increase.  After he received payment, he shook my hand vigorously, and thanked me profusely for being fair with him.

As he left, I was struck by the incongruity of his muttered statement as I searched for the price, with his effusive praise for my fairness in the transaction.  Why should he expect that I was going to back out of our agreement to his detriment?   Was it just a natural cynicism or was it a reaction programmed by experience?  Isn’t it true that in our society, we expect to be cheated and taken advantage of?  The huckster sitting center stage and strumming the inferior product, that is less in quality than it is touted to be, is the rule (or at least the perceived rule) and not the exception that it should be.

We are pleasantly taken aback by a business or individual who is honest and forthright, while acting almost dispassionate about chicanery.  This ought not to be.  Integrity should be the standard in our dealings with each other.  It’s about time that the players who are center stage in this play should be the heroes and not the villains.

I have a favorite car lot with which I try to do business whenever I’m looking for a vehicle.  The reason?  Several years ago, they sold my father-in-law a car.  No, not a car, a lemon!  For a full year, he paid for repair after repair and finally took the car back to trade in on a different one.  Upon hearing of his experience with the vehicle, the owner of the car lot gave him, in trade, not only the full price he had paid originally, but all of the additional amount he had spent on repairs in the intervening time.  Now that’s integrity!  And that’s the kind of business I want to trade with.

Ten dollars difference.  That’s all it took for me to act with integrity today.  Sometimes honesty costs dearly and other times, it’s as easy as just doing the right thing.  Both of them, the large and small choices, are what make up a life of integrity.  “Choose you this day whom you will serve…”



“No amount of ability is of the slightest avail without honor”
(Andrew Carnegie)