Would you want to spend quality time in a room with a totalitarian chef? Or shrieking junkies and alcoholics? Or thunder-thighed brides-to-be? Naturally, no.
But put them on their own TV shows in the form of The Cake Boss, Celebrity Addictsand The Last Ten Pounds Bootcampand suddenly these people are not human dregs but stars.
I hate reality TV, but some of the reality show stars you should spend time with are the owners of Gold and Silver Pawn in Las Vegas, otherwise known as the Pawn Stars.
The show chronicles the real life business dealings of three generations of the Harrison family and the wacky and weird stuff people try to pawn. Naturally, the sleaze factor is very high its actually hard not to be sleazy in a pawnshop in Las Vegas but what fascinates me about Pawn Stars is that it gives stripped down, unpretentious lessons of how the business world works.
Customers bring in their treasures (or otherwise) to the Harrison clan and minute evaluations begin, personalities are sized up and profit margins are squeezed and inflated.
It is a Petri dish of distilled financial behaviour that any business professional (or anyone for that matter) should examine closely. A typical transaction goes like this: a customer comes in off the street and brings in an item they found in their basement or that belonged to grandma. It could be an old coin, an item owned by a celebrity or something totally off the wall like a hand crank corn-shucker. One of the Harrisons begins negotiating and a price is determined and offered.
For instance, in one recent episode a customer came in with what looked liked three medallions he wanted to sell. Right off the top, you deal-makers out there see that the customer is walking into a negotiation with a severe handicap he has no idea what his medallions are worth. Its like hes raising the ante in a poker game without actually looking at his cards.
If you are conducting a business transaction, you have to know the value of the assets you are dealing with pluswhat value the other guy in the room puts on your assets. Whether you are buying a business, selling a home, or entering into any kind of contract, knowledge of the present and future value of your assets is crucial.
Back to the pawn shop. The man with the medallions is met by Rick Harrison whose father founded the family business and whose son, Cory, works with him. Rick is a canny guy. Despite the shop bursting with coins, jewelry, guns, watches and a miscellany of trinkets, Rick is focused on dollar signs. Like his customer, Rick has no idea what the medallions are worth so, instead of guessing, he brings in an expert.
(Note to business leaders: if you dont have expertise in an area, get some. Few of us have the acumen to just wing it and the results could cost you your business. Whether it is an expert in forensic accounting, web design or importing from foreign locales, get an expert on the staff. Damn the expense, get the right person for the right job.)
Rick brings in a coin appraiser who identifies one of the medallions as an inaugural button commemorating George Washington. Suddenly, these dingy bits of metal on the pawn shop counter are important pieces of Americana. The expert pronounces a value of about $10,000 in front of the customer and Rick.
From the customers point of view, the medallions are now worth $10,000 and not a penny less. From the buyers point of view, the value of an asset should always be fluid. The real value of an asset is not what the price tag says or what an expert recommended but is always what the market dictates. (Consider the price of BP sharesnow and three months ago). So never fail to negotiate a price.
Rick Harrison knows this and naturally considers how to make a profit on an item that only niche buyers would be able to afford. He constantly asks himself what kind of profit margin can he make on an item Naturally, few people who wander into his pawn shop are going to fork over $10,000. So Rick offers him $3,000 less than a third of the medallions’ appraised value.
The customer takes it.
The reason? Rick knows who he is dealing with, just as every negotiator must know the personality of their business adversary. Rick understands that the customer is unlikely to find a Sothebys-type auction that will put the medallions in front of the eyes of someone willing to pay $10,000.
Note that the customer had a perception that his bits of medal could have been worth $100 or $150 or maybe nothing when he walked through the pawn shop door. He can either take the $3,000 in cash or go through the effort, possibly fruitless, of finding a better price elsewhere. Who knows, he may have an over-size credit card bill or is behind on his alimony payments. The customer takes the easy way out and accepts the cash. Most other people will, too. Knowing that psychology gives you can edge, especially when you have the specialized knowledge to make the most out of an asset.
So if you are thinking of taking an executive MBA, relax. Instead, sit on the couch tonight and watch Pawn Stars you might pick up all you need to know about the world of business.