YouSaid · the spoken record

Ken Langone

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77

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2018-11-13

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2018-11-13

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1

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1. “Today, my one third is worth $150 million. One of the most important lessons in my life is this leave more on the table for the other guy than he thinks he should get. And that is where I'm going to leave this story. If you want the full story and you want to read the book and help out this podcast at the same time, go to Founder's podcast forward slash books. And you can see not only this book, but all the other 40 plus books that have been featured on the podcast. And if you go there now, you'll see next week's book early, which will already be up there. It's a great way for you to get something you can learn from, a good read, and it's a great way to support the podcast because Amazon gives me a small percentage of the sale at no additional cost to you. If you do like this podcast, I just presented this entire podcast ad free. I can only do that if you support my work directly.”

   2018-11-13 · Founders · #46 I Love Capitalism: An American Story · IDENTIFIED FROM THE TRANSCRIPT · source

2. “Did you read the contracts? He asked. Uh uh. I didn't read them. I didn't read them, I said. Well, your lawyer fucked up, Tommy said. My lawyer didn't fuck up, Tommy, I told him. Those contracts are exactly as I told him they should be. This is Tommy's response. The way it's written, I'm going to own two-thirds of a company and you're going to only own one-third. Tommy, I said, my one-third is going to be worth a hell of a lot more than if I own two-thirds and you owned one-third. He's really picking up on how important incentives are to human nature. So he says, now, if I'd given Tommy 20% of the company, he would have been happier than a pig in shit. But I knew that with two-thirds of the company in his hands, Tommy was going to work his ass off to make Salem leasing succeed. And I was right. We took the company private for a value of about fifteen million dollars.”

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3. “If there is some way I could get more stock, I'd sure appreciate it. He owned around 8 to 9% of the company at the time. Tommy, leave it to me. At the closing, Tommy and his lawyers were on one side of the table, and my lawyer and I were on the other side. Suddenly I saw Tommy whispering to his lawyer and getting agitated. Finally he blurts out to the lawyer, I'm telling him. Tommy gets up and tells me I've got to talk to you outside, Ken.”

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4. “Like I said before, he's involved in tons of other businesses. Home Depot is what he's best known for and what made him probably the most of his wealth. But he had all kinds of different business partners and investments that he had going on. And this is an explicit lesson that you need to leave more on the table for the other person than he thinks he should get. And this goes back to what I was saying earlier, how he felt that being decent to people earlier in his life paid compounded dividends later in his life. And this is an example. I said back in 1986, Tommy Teague and I decided to take our truck leasing business private to get the benefit of new tax laws. I was putting up the money to buy out the public shareholders. All the company's shares were going to be reallocated to Tommy and me. So he's the investor and the strategist and then Tommy's the operator. And he says, Ken, Tommy said.”

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5. “And this is Ken's takeaway and the lesson, the explicit lesson he talks about from the early days of Home Depot. If there's anything I would take a bow throughout this whole process, it would be this, never giving up when the chips were down and thinking creatively instead of just reactively. It's a style I recommend highly. And just another short story I want to share with you.”

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6. “Customers would walk in and see what appeared to be a prosperous store packed with merchandise. So a little bit of smoke and mirrors there. And then I found this very interesting. How are you going to get people to come into a store? They only have two stores in Atlanta at the time. They were not shy of doing the work themselves. And it says at first Bernie was so worried about attracting customers that he used to shuttle back and forth between the two stores. Standing outside the entrances and handing out dollar bills to anyone who'd go in.”

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7. “Who knows? Like, Bernie's life might be fundamentally different if he never get that advice from another founder. So skipping over a lot of parts of this because we know how that story ends. But I did think it was interesting to just share a couple ideas they had to get traction on the early days of Home Depot. And this is Ken Writing. It says, the Home Depot didn't exactly get off to a flying start. At first, we had so little cash that we could only afford to open two of the four stores we planned to open. And we had nowhere near enough stock to fill those two stores. Miles of empty shells were not going to inspire customer confidence. Pat Farah is one of the co-founders of Home Depot. He went to the vendors and asked them for boxes, just boxes, with a product label on the outside and nothing inside to fill our empty shelves.”

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8. “What I didn't know at that moment was that Bernie had a friend in San Diego by the name of Saul Price. Saul had come up with this brilliant concept of buying in bulk and selling at very low profit margins in big, clearly organized stores. So that theme right there is what they applied to the home improvement industry, which didn't exist before that point. Okay, Price Cup was similar to what Costco does today. It was charging membership fees to supplement its profits. One day in the mid-1970s, Price invited Bernie down to take a look at how Price Club operated. As they walked through the aisles, Saul said, you see this store, Bernie? Someday, somebody is going to do this in home improvement. And whoever does it is going to change the face of the industry dramatically. And if that somebody isn't you, you're going to be in trouble. Bernie never forgot that. I love that idea of about”

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9. “Get carried away, he says in a low voice. What do you mean carried away? He says, we're very vulnerable to what? I can't tell you. What do you mean you can't tell me? I can't tell you, he says. We could be in trouble even though the store is great, even though all the indications are that it's going to”

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10. “This is one part. I don't know if I talked about it last week, but I thought it was interesting. So sometimes you see the opportunity of what you're going to do way before it exists. So at the time, Bernie and Kenner just partners on Handy Dan. But they're going to have this conversation that Bernie learned from other founders. And if you remember the books on Sam Walton or Jeff Bezos, Jeff, one of the most important meetings he ever had in his life was advice he got from the founder of Costco and Sam Walton. Obviously Jeff learned from Sam as well. Sam Walton would learn from people from JC Penny and all the other retailers as well. And Kmart, there's actually anecdotes in this book about Sam Walton learning from Kmart. But this is how they identified what Home Depot could possibly be by another founder. So Ken's all jumping up. He's like, they're touring a store at the time. He's like, if all the stores be open are like this, we're going to make a fortune. Just then Bernie grabs me by the arm.”

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11. “Realize the scope of the opportunity for handy dan. Remember, he buys handy dan sock anywhere from like three to nine dollars a share, I think, if I remember correctly, and he unloads it at $22.50, if I can remember correctly. So he says, I was starting to get excited. Hell, I was bouncing in my seat. This company was a major steal. And unbelievably, Bernie Marcus owned no stock in it. He had no options. He was strictly a professional hired gun. He was running that company and running it very well just for his salary. So we all need to learn not to make that same mistake if we can avoid it. So he says, I mean, compare that. He's 49 when he starts Home Depot basically broke. He has child support alimony. And within 10 years, he's a billionaire because he owns equity and the company was successful.”

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12. “That guy, I think his name is Gary Erbaum. He is the one that introduces Ken to Bernie. And now we're in the point of the story where we're learning about the opportunity for Home Depot from other founders and some early tactics to get traction to the store. Same thing. There's a lot of in this book that was covered in the last book, so I'm obviously going to skip over that since I already did a podcast about it. He's talking about, well, I want to bring up what I brought up last week because I think it's important for people to understand the importance of equity. Bernie Marcus in his mid-40s at the time, he's got fancy titles, making good money, but it's very hard to get wealthy as just a high paid employee without equity. So he's talking about, this is Ken talking about his feelings when he really...”

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13. “Be awake for like two hours and go to sleep, and then be awake for another two hours and go to sleep. And she was just very, very deeply depressed and troubled And her doctor actually said that you need to channel that into your work. And she found a way to channel her anxiety into her work. And she said it was helpful. That's kind of echoing what Ken is doing in 1975. So I thought that was interesting because I don't know if I've ever heard that advice before. So he winds up building up slowly but surely. One of the guys that he's a personal financial advisor for, we talked about last week. It's the guy that knows Bernie Marcus because he's running a company that Bernie Marcus' handy dam was going to purchase or thought about purchasing, didn't go through.”

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14. “And I want to share a little bit because the whole mental aspect of running your own company, I think, is very hard for everybody has stress and anxiety to deal with, but it's very hard for people that just have normal jobs to understand the highs are going to be higher than you ever felt and the lows could be very, very lower than anything you've ever felt. This is his mental state at the time. By early 1975, we were still struggling. I wasn't afraid, but I was anxious. And my anxiety drove me to be almost maniacal about bringing in business. So this whole idea about turning anxiety into a driving force, I was listening to a podcast with one of the founders of Bumble. And I guess she was talking about she was suffering from crippling anxiety to the point where she...”

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15. “So he goes, I went out and did something I was good at selling equities. Except that in this case, I was selling my own expertise. What he did, he's like, he offers his services as a personal financial advisor. So Ross Perot is going to pay him $60,000 a year. This other guy's going to pay him $35,000 a year. And another person's going to pay him $15,000 a year. So he finds a way. He's like, listen, I have $110,000 a year coming in. The equivalent of about half a million dollars today, of which I would allot myself a salary of $35,000. I was determined to keep overhead as low as possible. And he did this by buying used furniture. He was subleased unused office space. And he's just really trying to scrap for business at this time. And because he's very close to going broke.”

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16. “His shares of what he owned as being a partner for Presbitch, but they were put up as collateral. The firm with then borrow again. And there's no way for him to get the money out. So when he says it's all on paper, like he says explicitly, the partners would never let me get that money out. So I don't even know how you would get yourself in a situation like that. So he's not really worth a million dollars. Now he's basically starting over from nothing. So again, just if you were thinking in your mind, like the timeline here, like you have these vast, vast peaks and now he's in the bottom of a very deep valley. So This is how he gets started.”

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17. “And he's like, I decided it was time to go out on my own. Early in 1974, I told Mr. Brown and the other partners I was going to leave and start an investment in venture capital firm of my own with a focus on the healthcare field. Well, that doesn't actually keep, he doesn't really focus on the healthcare field. He does everything else. They all wish me well, and I know more than a few of them were happy to see me go. The only problem was that I had no money. I was worth almost a million dollars at that point, but it was all on paper, so I don't actually understand this, and he didn't explain in the book. All his wealth was tied up”

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18. “Before I used to love coming to work every day. Now I'd walk through the trading room seeing the glum looks all around me, knowing what everyone else knew. We were wounded, maybe mortally wounded. Every day I'd like the office. Change into old clothes, go out in the garden and weed the garden and cry. So that's quite a swing in his fortune. I love coming to work every day. I'm excited to the point where even today I would pay to do the job I'm doing. Now he's leaving at the first chance he gets and he's going home gardening and crying. So there's basically a proxy war here. The partners want him out. He won't leave. He gets to the point where he's like, I can't work in this environment anymore. And this is when he goes out and starts his own business.”

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19. “He becomes a target. And you can't be a target if people don't know you exist. And so what happens is they're going to destroy him basically is what these people are doing right now. So he said my hubris kicked in and I stupidly thought we could make a stand, that we could support the stock and the others we held by buying up with the short sellers were selling. Mistake. What I didn't realize was that I couldn't play that game if I didn't have unlimited funds and I didn't have unlimited funds. We got wiped out. We didn't go broke, but our capital was gone. It was the biggest defeat of my career and it hit me like a kick in the stomach.”

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20. “Then in April, the roof falls in. Nixon is battling the Vietnam War protesters. Soon the Ohio National Guard will kill four kids at Kent State. The market swings wildly, and suddenly the world is coming to an end. Now there are people on Wall Street, smarter than me and more objective than me, and they decide they're going to put a short on every stock press pitch is trading. So there's a downside. Remember how we always talk about like some people, what's the reason you want to be an entrepreneur? Like, is it for control? You want to set your own path? Is it because you want to get rich? Some people want it like they want to quote unquote be famous or whatever the case is to get attention, whatever, adulation, whatever you want to call that. Well, there's a downside to that adulation. So my thing is like, it's much better if you can to make a lot of money and be anonymous. So you don't have to deal with the downside because now this guy's famous. And well, now.”

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21. “And not only was I prose banker, but I was president of Presbrich. So he got, he negotiated, he said he wanted to be a partner. They have a partner and he's president. I lived in a big house on a hill on Long Island. I was 34 years old and I was pretty full of myself. So, the good times don't last very long at all.”

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22. “Okay, so this is now we've gotten to the point where he names this chapter hubris and redemption. And this is a tale as old as time. It's just the same as we've seen. Like history doesn't repeat, but human nature does. And so we're seeing the same mistakes over and over again done by different people in different countries, different environments, different time periods, but the same behavior happens over and over again. So what's going to happen? Well, he took Ross Perot Republic. Ross Pro is super, super famous, and everybody wants to do business with Ross Perot's banker. And he said, just like that, Wall Street took notice. One day I was an unknown salesman at a small Wall Street firm. The next day, I was Ross Perot's banker, the guy who had made him a millionaire.”

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23. “And this is the important part. Ross, I said, your deal is going to get done because you've got a great company and investors are going to want it. An idiot could do your deal. I've got a bigger risk in this than you do. If I mess up your deal, my one chance of success is gone. But if I do a great job for you, my reputation is enhanced. I have every incentive, and I promise you I will handle every detail of the deal personally.”

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24. “So, this is a conversation with him and Ross Peru, and Ross Pro is deciding which company is going to do their IPO. He says, hey, Ken, do me a favor. When you come down, bring the prospectuses of all the offerings you've done. Yes, sir, I said, but the fact was I didn't have any because we hadn't done any. I had never done an IPO, and I was hoping he'd just forget about the prospectuses. I hope I'm pronouncing that word correctly. I'm probably not. Then Perot drove me to the airport. By the way, Kenny says, do you have those prospectuses? I said, no, sir, I don't. Did you forget them? No, sir, I didn't forget them. What do you mean? Well, there aren't any. You're it. What do you mean I'm it? Well, you'll be the first one I'll do. He gave me a long look, and this is how he sells Ross on this.”

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25. “He takes Ross Perot's company, EDS, public. And the moral of this quick story, I'm not going to share all of it, is just it's sometimes you want to analyze who wants it the most. Who is actually going to do the best job for you, not based on who has the most experience, but who needs it the most.”

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26. “It's not, this is his takeaway. It's not the kind of bet I would make today. And here's why. I can name too many people who were wealthy, very wealthy, even enormously wealthy, and wound up literally going broke. So now you can see my note that getting rich is one skill and staying rich is a different skill altogether. So he knows a bunch of people that were able to get rich, but not so many that were able to stay rich. Okay, so Even though he's most well known for being the co-founder of Home Depot, a lot of the Home Depot stories I covered last week, so I'm not going to I'm not going to rehash those here, but I do want to talk a little bit his second big break. That's obviously Before he found Home Depot,”

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27. “$77,000 house six or seven years before he was living in a rented apartment in Queens for $128 a month. So he says, I took the guy's like, I'll get back to you. I took a deep breath while I waited for his response $77,000 was a lot of money for a house in 1965, and it was a lot of money for me. So he winds up getting the house. I was thrilled. But the truth is that buying that house for $77,000 was a big risk for me relative to my net worth at the time. Any number of things could have gone wrong. I could have wound up not being able to swing the payments.”

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28. “And there's a whole like human nature biological imperative thing going on there. But I guess it's outside the scope of what we're talking about. So I just want to share this one story that illustrates he understands at a very young age. Or no, actually he's not understanding this at a young age because his actions are saying otherwise. Well, let me just read this and you'll see what I mean by what his assumption is. So he says by the spring of 1965, it was earning $100,000 a year on commissions alone. The equivalent of about three quarters of a million, so $750,000 today. So I went to a real estate broker in town. He saw a house and he says, what's this house worth? And the guy says, I think it's around $75,000 to $80,000. The house is in the person that owned it died. The bank is handling the estate. So he calls out the bank. He says, I called the trust manager at Chase Bank, and I said, I'd like to buy that house. And I was prepared to bid $77,000 for it. Remember, he's buying.”

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29. “Obvious, but is not internalized because, well, the punchline is getting rich is one skill and staying rich is a different skill altogether. And so he's going to talk about, you know, there's many examples in the book where he's getting, he's very confident now. He's having success. He gets hubristic and he makes decisions that he now at 80 he wouldn't have done. But that's the whole point. Right, going to experience and learning. And so we want to distill.”

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30. “I think the only, I don't know if you use the word career, but basically he used the example of this one lady never made a lot of money, but saved it. She dies with middle class secretary or something like that. I don't recall the exact details at the moment, but she dies and she gives away like $7 million to like charity. And there's another guy, like an investment, like he's an investor and he financial advisor and all this other stuff, but he has three houses and he's got tens of thousands of dollars in monthly bills and he winds up going bankrupt and I think dying broke. And he's like, this is the only discipline in which a so-called expert and like a novice could wind up with such large variances. And he obviously says he's a way better writer than I can describe his writing. So he said it a lot more eloquently that. But that's a personal interest to me. And Ken's about to make a really interesting point that I think that is...”

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31. “With people's impressions of wealth. And there's this great guy I've been reading lately. I think his name's like Morgan Housel. I think he blogs at collaborative fund, but he has a bunch of great essays on finance. Sometimes corporate finance a lot of times personal finance. And I'm always fascinated with he has this essay, so it's like, what real wealth is hidden? It's all the stuff you can't see. So we kind of attribute like, oh, they have fancy car or fancy clothes or fancy things. Usually when you describing what you the possessions of somebody you think is rich, you're just listing off liabilities, which is actually the opposite of wealth. So I think his name's Morgan. Morgan makes the point in the essay that, you know, finance is the only...”

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32. “And that goes back to the whole idea of imposter syndrome and his case, you know, growing up really poor. Like he referenced earlier, he's like, I'm doing deals with these really rich guys and I'm some poor Italian kid, the son of a plumber and a cafeteria worker from the wrong side of the tracks. So Bindy was essential in helping him overcome that kind of mindset because that's mindset's not going to help. I mean, I always go back to what Elon Musk said. He's like, I'd rather be optimistic and wrong than pessimistic and right. So if you're ever in a situation like that, just assume that you belong there and act like it. Okay, I love this part because this is something near and dear. I read a lot about in addition to, I guess I read about a lot about everything, but I'm always fascinated with...”

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33. “They're not above making mistakes. And so we shouldn't idolize them. We should take the ideas that we can distill through their experience. And if they're good and it makes sense for your current situation, use them and discard all the rest. Certainly have respect for other people. But idolatry usually is just a bad idea in general. So it says, with that lesson, without that lesson, I would have felt subservient towards these muckety mucks. I don't know what that word means. But with that lesson under my belt, I felt completely equal to anyone I dealt with. And this is what he took away from it. And without Bindi in my life, I don't think I would be as certain of myself as I am and as outspoken as I am.”

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34. “People have now become advertisers for themselves. And they're, of course, just like a company. Well, they're going to highlight the best side of them. And then there's always that great quote, or I guess it would be like an aphorism or maximum is like never meet your idols because you're seriously going to be disappointed. I think it's also important to point out here, like we're trying to learn from the company builders of the past, but I don't think we're under the illusion that these people were perfect by any means. There's tons of personality flaws, mistakes, poor decisions. They're human, just like us. We probably have all the same thing. Like, we're going to make bad mistakes. I'm sure there's parts of who you are that you want to improve. So it's just important to remember.”

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35. “Somebody that's like written about in the papers, shorty Manhattan, he's nervous But he gets over that. And so this is a lesson in confidence. And this comes from his partner that's working in the same department as him. And this guy named Bindy Banker. And the first big lesson Bindi taught me was one that he taught by example. I had begun encountering some of the big guys on Wall Street, legendary guys, men I'd read about in Fortune magazine. These men's men were gods to me, and I saw right away that Bindy simply wasn't in awe of them. In short order, he taught me to understand that a man's public persona usually has very little to do with his private persona. The note I jotted down, left myself as, I bet this is even more true in the age of social media where”

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36. “And that's another thing that he would repeat throughout the entire book. I don't think I'll cover it in the actual podcast. But this idea that the relationships, you never know, like just don't screw people over in the deals you're doing. Don't lie to them because like what Jack is trying to teach them. Once they have trust in you, they'll go back to you repeatedly. And Shorty Manhana does this other guy that winds up becoming like a call him like a whiz kid. I think his name's like Stanley Druckam Miller or something like that Ross Perot, all these people that he does business with that helped Ken become a billionaire because of stuff he did for them years previously. And it's just a lesson to be a good person actually if you really think about it. All right, so this is the lesson in confidence that kind of goes well with the story he was just saying about like, you know, before he's a young kid, this is the first time he's ever meet.”

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37. “This afternoon, he's going to call up all of his buddies on Wall Street, and he's going to ask them, what do you think of Harbison Walker refractories? And his pals, and if his pals tell him anything negative about the company, he's going to tick it off the list. He'll say, well, Ken told me that, and Ken told me that, and Ken told me that. And your trust is going to go through the roof with him. And sure enough, that's exactly how it happened. Shorty Manhanna bought Harbison Walker through me, and then he bought a lot more lesson learned.”

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38. “It badly, and there was a couple problems with current management. Manhana looked thoughtful. Now I said, let me tell you why I like it. I said that because the economy was picking up, demand for steel looked like it was going to take off. I told him that Harbison Walker was the capital Everybody respected the quality of what they did, and they were also the lowest cost producer of their product. Well, he finally said, Do you like it more than you don't like it? Yeah, a whole lot more, I said. I think this is a great stock. Okay, he said, let me think about it. And Jack and I left. In the cab downtown, I said Jack, why did I just do that? I'm going to tell you why you did it. This afternoon he's going to call, this is the lesson, a very important part to pay attention to.”

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39. “And he says, in the cab on the way uptown, Jack said to me, listen to me, you're going to walk in there, and the first thing you're going to do is tell Shorty all the negatives. All the reasons he shouldn't buy. What's wrong? What could go wrong? What needs to be fixed, but can't be fixed? What the hell are you talking about? I said. I'm going to go up there and tell him to buy it. Jack looked me in the eye. You just remember, he said, give him all the negatives first. Why am I doing this? I asked. You just do it and I'll tell you after we leave. So they go upstairs and it's Ken says, Mr. Manhana, I'm here to sell you a stock, but let me tell you all the reasons why you shouldn't buy it. What do you mean? he said. Well, I said nothing is perfect. As I proceeded to go through a list of every downside, the company had a very limited product line, faced strong competition in a limited market, a recession could impact.”

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40. “And so he told Jack about it. And Jack made an appointment for him and me to go try to sell the stock to a man by the name of Manhana. So I've never heard about this guy before, but in the book, they say he's really famous. His name's Shorty Manhana. And let me just give you a quick background about why this guy is, they call him legendary, but Shorty Manhana was a legendary fund manager. The guy who had bought Xerox at 19 cents a share in 1957, just a couple years before it went through the roof. A meeting with Shorty Manhana was a very high level one, and I was nervous. Remember this part about him being nervous? Because he also learned something from a co-worker of his about just not idolizing other people.”

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41. “And this is a lesson about human nature and how to develop trust. This is what I like about this book. The book is kind of making my job easier this week because it's like these stories come with an explicit lesson. Usually we have to kind of tease that out and talk form of our own opinions about what you could learn from them. He's saying this is exactly what I learned. Jack Kellen once taught me a lesson I will never forget. When one of our analysts came up with a buy recommendation for a company called Harbison Walker Refractories and they make refracting brick with super high heat tolerance. So I guess this is the brick that lines steel furnaces.”

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42. “And he does this through developing relationships and constantly following up and working in areas that other people aren't really paying attention to. Now all during this time, the guy that hired him, Jack Colin, is also becoming kind of like a mentor to Ken and he teaches something a valuable lesson that Ken is now writing about 50 years after the fact.”

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43. “So, what he means by you he's like 55% of that 30% goes to you. The rest is divided up amongst your partner. So he's in this group called, I think Unit 15 or Section 15. This is a group of salespeople. And he said, my three partners who were strictly salesmen, they wouldn't have known a deal like this if they tripped over it. Each got a nice gift of four and a half grand. This is from him going out. They didn't do anything, obviously. This is him going out and bringing more business from Cincinnati. And he says, I netted $16,500, which was over twice my annual salary. So as you can imagine, he realizes, wait a minute, I can make way more money bringing in business with this new structure than my regular job. So that's what he does over and over. And he becomes kind of like a rainmaker.”

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44. “And he said, Mr. Brown, it's hard enough to sell a deal in the first place. I'm willing to work my ass off, but I don't want to have to sell a deal, then come back and have to sell it to you guys all over again. So he's wanting some autonomy and he's describing the issues he had with this other guy, David G. And this is Mr. Brown. He goes, he took his pipe out of his mouth and got straight to the point. What do you want? 30%, I told him. All right, fella, Mr. Brown said. The firm gets seventy percent and you get 30%”

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45. “Are traits that lead you to become entrepreneurial because you can't stand when guys are getting in the way of business. And his explicit lack of respect for authority in this case. So he says, then this is the important takeaway He says, The way I thought about it then and the way I still think about it today, I had only one boss, the customer. You treat a customer right and you never have to worry. Within thirty days the deal closed and a hundred thousand dollars commission came in. Now Ken jumps over David G's head and he calls a meeting directly with the managing, like the lead. There's like 20 something partners in Presbitch. He winds up becoming one, but that happens later on in his life. And this is the guy that his name's Mr. Brown. He basically runs. He's like the managing partner.”

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46. “And then he goes on to list all the reasons why you couldn't do the deal. And he goes, he says, this is David G. He goes, what about our out-of-pocket expenses? And this is Ken's response. Don't be so damn cheap, I told him. What the hell are my out-of-pocket expenses? I go to Cincinnati anyway. I make a few phone calls. I'm not going to hit them for out-of-pocket expenses. That's nickel and dime shit. I want these guys to trust us. I didn't give a damn that this guy was senior to me. He was the head of the corporate finance department, and I didn't work in that department. Right around this time, he calls, he describes himself, Ken describes himself as a misfit. And we're seeing a lot of his personality here.”

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47. “He has a great, this is how he learns, like, not how he learns, but he's imparting a lesson that was important to him throughout his whole career to us and that is a very valuable lesson on customers. And so he goes, I went over to the investment banking department. Now the fellow who was running it, let's call him David G, was a stiff. When I told him I had this deal, he got all edgy about it. Here I am, this punk kid, 27 years old, stepping out of the bounds of my department and right on his toes. What do you mean you've got this deal? he said. I have an Ohio company that wants me to raise money for them, and I'm going to show the deal to all the Ohio insurance companies I've been selling to. That's who he's going to sell the bonds to. He looks suspicious. This sounds like a lot of work, he said.”

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48. “It's not a normal, like what he's doing is brand new, so the companies working for has no, he's not in the investment department. So there's no way, they have no standard set of procedures how to bring it in. So he has to go and start working with another guy in a department. And these guys, he calls him David G. We don't ever know his real name, but there's always like this friction because there's like this bureaucracy there and then you're stepping on other people's toes. The reason I want to talk about this part because”

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49. “So he asked him why were you trying to IPO? They're like, we want to raise funds. They're building physical products, so they always need more capital. And so he sells them on the idea of letting him sell $5 million of bonds. And if this deal goes through, he would net $100,000 from the deal or the firm he's working for would net $100,000 for the deal. So it's kind of.”

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50. “And these moody, like these big books and the standard and poor manuals, this is what they had to use before there was computers to look up information about these public companies. So he says, I found out that Counter Products had been planning to do an IPO, but then because the market collapsed, the offering was canceled. Okay, so here's his way in. So I dialed information for Cincinnati and got the number for Kenner Products. So he goes to them on his next trip. So he was going to go to Cincinnati no matter what for other business. He says, hey, I'm not going to waste any time. Let's see if I can meet with these guys at the same time. He calls up, can I speak to your CFO? They're like, we don't have a CFO. It's just three brothers running this very nice business out in Cincinnati.”

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