The Check to Iraq That I Never Got Back (And Two of the Most Important Business Lessons Ever)
Danny handed me a check for $250. The money came from his Bar mitzvah savings. He wanted to double it and all he had to do was partner up with me.
We were fifteen at the time. I had created a business buying consumer electronics in large quantities from overseas and then reselling them on the internet (and offline) in the United States. I was doing fairly well, considering my age. I wanted to scale my business up. Why sell fifteen iPod’s this week when I can sell thirty? There was one significant problem which was that there was going to be a larger cash outlay, and I didn’t have very much cash.
Danny (who was a pretty good friend at the time) had shown interest in my business before. He was kind of business savvy, smarter than everyone else, and most importantly, he was a poker buddy. I approached him and told him what I had been doing with the business.
I had just recently been in a discussion with a supplier in Iraq. These talks were basically about quantity, pricing, and timing. Most of these chats took place through email, but sometimes we would have to talk on the phone. I was a late bloomer and had a high voice. There were countless times that I would call a supplier and try to talk with a really deep voice, hoping they wouldn’t realize I was fifteen. People don’t do business with fifteen year olds.
Anyway, I found this Iraqi supplier online through a resource that I don’t even remember anymore. They told me they could sell me thirty iPods for $1500. Since it was our first time working together we would do three separate transactions. I would send $500. They would send ten iPods. Then we would do that again two more times. This was a standard method of reducing risk for both parties and something I was used to. $1500 was a chunk of money for a freshman in High School so I was all for it.
I told Danny that I would give him 50% of the profits if he put up half of the money. His job would be done at that point. I would sell to all of my customers and take on that responsibility. (Now that I think about it, it was basically a loan.)At the time, I was able to turn product over very quickly, so we estimated he would have his money back within 3-4 weeks. He liked the terms. We were partners.
I’m sure you can guess the next part. We sent the first payment of $500. Half was mine and half was his. We called the supplier to follow up. They were nowhere to be found. We tried twenty more times in the next day or two. Nothing. I had been ripped off for the first time – and it was my fault.
Danny took it well. He was mature and understood the risk involved. He didn’t take it personally and he didn’t blame me. I was very impressed and really began to respect him after that. But we both learned two very important lessons from that experience.
1. Use Common Sense When You’re Doing Business. We were sending money to Iraq in the middle of the Iraq war. What the hell were we thinking? Sometimes in all of the little details you overlook the most obvious elements of a deal.
2. Make Sure Your Partners Understand The Risks Involved. My partner did. It’s hard to do business with family and friends. It’s personal, no matter what people say. Be upfront about all of the things that can go wrong with someone before getting them involved. It’s your business. You know better than them.
For all of parents out there that have a 15 year kid – put down the credit card. Take the $250 that you were planning to put towards their next Xbox and have them send it to Iraq. This was probably the most well spent $250 that I can remember.
P.S. Please contact me for directions on where to send your $250 check. 😉