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GP 20 September 2006: The Color of Money

Nicola Paone.  There’s a restaurant on 34th Street—Nicola Paone—that’s not on the lips of America, but it has a certain following.  It was the creation of an Italian troubadour of the same name (i.e., the eponym) and of uncertain talents who once wrote a song about Caesar  salad—some 17 verses long.  William Buckley, the father of the New Right and of rampant polarization in America, deems it his favorite, saying:

I can name my favorite restaurant as glibly as I can name my favorite wife, country, religion, and journal of opinion.  It is (I should like to say, “of course,” but Paone’s is not widely known) Nicola Paone; its address is 207 East 34th Street New York, and I suppose I have eaten there a hundred times in the last 10 years, which would certainly account for my being Paone’s favorite customer; but, believe me, in this courtship, I was the suitor.

The food, incidentally, is far from distinguished, but good, sensitive taste has never motivated any ideologue.  We’ve not been there for years, but when we did visit, it had a wonderful atmosphere, generating perfect comity and unforced good cheer among all those in our luncheon party.

The trick there we always thought was the endgame.  The dessert cart was very ample, and it was a sin to exit the restaurant without taking on some creamy delectable that added immeasurably to one’s midriff.  Then too, at the finish, the maitre Franco Alfonso or maybe the waiter presented the check with delicacy and a warm smile.  You felt like paying the bill and, by then, did not even remember what you had eaten.  It was simply a fine experience.

We hope it’s the same.  A well-mannered, well-dressed clientele that did not feel it had to shout to be understood.  Decorousness.

Getting the Money Right.  It’s next to amazing how often restaurants get the money wrong.  The wait staff and even management think they have done it right if they got the order straight and managed to get the entrée on the table when it is reasonably warm (or cold as the case may be).  Follow-ups after the plates are thrust on the table are random and rather mechanical; desserts are either stale or slowly prepared; wine and beer or bottled water are poured too fast with the hope then the patron will buy yet more.  And finally, the check.  It may be an ordeal to get it.  Or it may be slapped down early.  Or it may be incomprehensible.  And so on and so on.  A West Coast businessman just pointed out to us that waiters get their tip as the bill is paid: it behooves them to make paying a good experience, but they don’t.

Paying or getting paid in our society, as often as not, reminds us of The Color of Money.  You will remember that it was a 1988 Scorsese movie with Paul Newman and Tom Cruise.  It’s about hustling—gulling money out of people—at the pool table.  Ego on the loose, young Vincent Lauria (Tom C, the Scientologist) doesn’t even do that very well, because he has to show off.  This hustling is exactly what we want to avoid in business: transactions should not be tawdry, but they so often are.  And this is exactly antagonistic to the behaviors we need in an advanced, high-cost society where we have to embroider each transaction with fine values in order to separate ourselves from the commodity atmosphere of the emerging world.

Paying Right, Too.  It takes two to tango.  It’s not enough for the merchant to present his bill with panache.  The customer, the payer, has to do his part, too.  Year ago when Lone Star Industries decided to purchase a hardware/lumber chain from the Southwest, we heard tales of how James Stewart, the chain’s owner, did business.  When the bonuses were paid to his star employees, he would gather them all at a lumber lot and have a presentation ceremony.  Words of praise were not spared, and the employees were first paid with honor.  That the bonuses were small never mattered.  The events were so emotional, so evangelical, that those who were celebrated and all their fellow workers were said to have shed tears.  They were so moved.

He paid ‘em right.  And it was such a contrast to an investment bank we counseled some years later.  Without any fanfare, without any commendation, the money dribbled out.  One day we saw a few million dollars handed out in blank envelopes to the partners in one department by a clerk.  The pay pack was handsome in each case, but we do not remember seeing any smiles.  Though that investment bank was king of the hill in those days, it no longer exists today as an independent entity.  When you do things wrong, sooner or later you cease to exist.

A Boundless Opportunity.  Money is done so badly—the giving and the taking—that entrepreneurs with a nose for opportunity can drive a Mack truck through the unprotected flanks that large and small enterprises have opened up by their sloppiness in this sphere.   We recently were informed at one of our sites that Verizon was going to disconnect our phones because we had not paid our bills: its people had misapplied funds they had been sent to the wrong account, and the Verizon billing clerks could not cure the problem.  One of our staff went to a Verizon street location where it took no less than 20 minutes to pay the bill: the working poor have similar battles with the phone company every month.

All this, incidentally, would not be a problem if state regulatory commissions mandated that utilities have to accept payment by credit card over the phone.  They don’t have to. And they don’t.

Recently the Financial Times of London has been sending us a barrage of dunning notices for a subscription started two months ago.  That we had already paid the credit card invoice where their charges were reflected was of little interest to the subscription department.  They have lost the money somewhere in the bowels of the company and we continue to get their pesky bills. We have discovered over the years that more than one organization has received or paid out money—with no trail to the payer or the payee.

Banks are just the same.  A month ago a major money center bank took 2 hours of our time and 3 days of its own to do a money transfer which eventually got to New York City—by horseback we think.  Errors abound in bank operations, and the managers are none too embarrassed.  It took Bank of America two months, with a lot of prodding, to correctly record a deposit: that lost it a major corporate depositor.  In contrast, we have moved money in and out of a reasonably up-to-date brokerage house with incredible ease and have advised our clientele to put their assets there.

There’s a banker, now retired to Walla Walla onion country in the state of Washington, who told us his bank was in the ‘put and take business.’  You put money in or you take money out.  If he could do that for people, correctly and politely, he figured he would have a hell of a business.  His bank, which he sold at a huge profit, outshone all the vaunted giants in his home state of California.  For starters, he had lovely Persian carpets in his lobby, so it was a nice place for the well heeled to visit.

The Long Tail.  Chris Anderson, editor of Wired Magazine who came out of the Economist, penned an article for Wired in 2004.  Now he’s made The Long Tail into a book.  It’s a success, and it’s worth it.  It upsets all our notions about self-serving editors.  First off, we usually say editors should not be able to stuff their prose into their own magazines.  Usually such articles turn into long, boring, insignificant fare like David Remnick’s “The Wanderer,” a poorly written update in the New Yorker about Bill Clinton 2006 (September 18).

Even worse, we have always felt good taste should not permit mere articles to be turned into wordy books.  That’s a version of the academic-racket where professors turn their doctoral theses into a stream of repetitive articles and sometimes books.   There’s another variant of the same scam where profs discover a good article by somebody else and then work up a book around it.  Almost nothing new has been written about “How to Buy/Sell Professional Services” since Warren J. Wittreich scribbled some words on the subject for the March 1996 Harvard Business Review.  But B-School professors have been feeding on his thoughts ever since, turning out turgid books that expand on his ideas.

Anderson’s Long Tail is a bit original and is rather important.  We have previously commented about him in “Rum and the Fancy Food Show.”  To oversimplify, he thinks the Internet turns business upside down.  We have generally been told by business gurus to pay attention to the 20% of a market where all the money is made and to throw the rest off the back of the boat.  But the Internet changes the economics.  We can now make money, maybe more money, fooling around in the 80% territory that everybody else feels they should skip.  The Internet permits us to source and then distribute our product in new ways that changes our cost structure.  We can afford to be high-design craftsmen and focus on small niches.  Though Anderson mostly was thinking about media and entertainment when he wrote his piece, we can speculate that his thoughts apply throughout business.  In theory, we can now do artisan, craft, custom, boutique, special—and make a living.

The Custom Experience.  But that means that everything—the making of the product, the demonstration of the product, the selling of the product, the delivery of the product—has to become a special experience.  We cannot, like Brooks Brothers, pretend to be half in the genteel clothing business and then outsource our credit operations to somebody in Kansas City.  The buying and paying has to be gentlemanly as well.  One Dan Bricklin almost catches hold of this notion in his little essay “Paying for Style.”  People will pay a great deal, he theorizes, for an artistic experience or for interacting with people they care about.  Is it fair to say that they will even pay more for an experience where the paying itself is not a wretched event?  Where the money has not become discolored.  An experience is not custom unless every aspect of it strives to build a warm connection between the maker and the consumer.

P.S.  Dan Bricklin has taken a pretty good look at the ‘long tail.’

P.P.S.  It’s possible that Nicola Paone is to the National Review as the Algonquin was to the New Yorker.  It’s 2/10 of a mile or perhaps one minute away.  We, of course, like tales of the watering hole across from the Times where the reporters were said to be packed in ‘4-shallow.’

P.P.P.S.  Stewart eventually got control of the whole of Lone Star and made a hash of the company.  The lumber king was not made for concrete—Lone Star’s main business.

P.P.P.P.S.  The Onion has done a wonderful satire about Cal Tech scientists splitting the check at a restaurant.  This is another detestable practice that turns something exquisite into a banal porridge.  We would rather that you don’t eat out if you are going to do an accounting exercise at the end of each meal.

P.P.P.P.P.S.   We find a whole host of people think they have ‘paid their dues,’ which roughly means they have shed much blood, sweat, and tears to get where they are.  Rarely, in fact, do we find that those who use that utterance have paid much anything.  Nor, usually, have they gotten anywhere very exalted.  Nonetheless, it’s good to remind ourselves that we each are always earning our way and that the stream of payments by men of character never ends.  In “Paying One’s Dues is How One Earns Self-Respect, and the Respect of Others,” Michael Patrick Cronan, a worthy graphic designer, speaks to this need for us to discharge our obligations and pay rent for our place in the sun.  Whether we are buying or selling, he suggests that we are caught up in a web of obligations that we must discharge with style and conviction.  We suppose this concept is embraced in one rendition of the Lord’s Prayer: “Forgive us our debts, / As we also have forgiven our debtors.”

P.P.P.P.P.P.S.  Martin Scorsese’s output is truly amazing.  Just as remarkable is that this maker of films which are clearly pegged for niche audiences has been able to secure financing and to continue to generate ‘long tail’ masterpieces for little pockets of viewers. “His characters are often torn between the temptations of the material world and the self-betrayal of their own spirits that the material world demands of them,” according to one writer.  Here yet is another reason to ‘get the money right’: done wrong, the money world corrupts our spirit.

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