The TV show “Breaking Bad” has just concluded in the US. Having read great reviews online I have been watching an episode each day and working my way through the five series.
Firstly, it has been excellent TV.
Secondly, if you haven’t watched everything yet, be warned: Spoiler Alert!
Thirdly, obviously I don’t condone meth as a business product, but the progression for Walter White was interesting and there were business lessons to be learned. Some of those lessons have been written about in other articles, but those articles have been, by definition, brief. I plan to squeeze out as much as I can here, so be warned: This is a long article!
If you have no idea what I am writing about, here is the trailer:
Let’s dig in!
1. We become entrepreneurs when we are ready. For a very few of us, the idea of building our own organisation and running our own show is always on the agenda, but for most people this is not the way. Walter White was a chemistry teacher with a partially disabled son, an unexpectedly pregnant wife and a diagnosis for terminal lung cancer. Backed into a corner financially he decided to use his knowledge and skills in a much more lucrative way.
Without looming medical bills and no fear of prison (terminal cancer kinda limits the impact of a life sentence) would Walter have felt able to enter the meth business? Probably not.
2. Do something you are good at. Throughout the five series, the purity of White’s meth was often praised. “The purest product there is on the market”. This has to be the most important of the business lessons Breaking Bad teaches us.
Great products and services command high prices. Great products and services let you choose your own prices as happened in series 2 when White instructed his sidekick Jesse to put up prices – and he did from $2500 to $4000. That is pricing power!
Great products and services also cause lots of problems for competitors. Being number 2 in a market and competing with a Walter White would be a very difficult proposition.
Great products also provide protection from the market. In this case, early in season 3, two Mexican assassins were called off because White and his skills were too valuable to be killed for a previous indiscretion.
3. Partnerships can be expensive. Choose partners with great care. White partnered with a former student, Jesse, to help him get started. Jesse was his assistant, errand boy and entry into the world of drugs.
However, the harsh reality is that Jesse was never worth a 50% cut of the profits. The brains of the operation should be brave enough to take the lion’s share and hire in the rest of the talent.
A great example of this came in mid season 2. Having been almost killed by a crazed meth dealer named Tuco, White had Jesse stage his own arrest to put him in the clear of any crimes. Jesse had accidentally (it is always an accident for some people) had his $60,000 in cash confiscated by the police. He then begged and pleaded with White that White split his own money with him, “We are 50/50 partners yo!” That, of course, made White only a 25% partner for a time. (Math is important in business).
Another great example came at the end of season 2. White had managed to resurrect their first bulk deal to date after Jesse had accidentally put off the buyer. White was the brains behind the chemistry and cooking. White had to put the deal together and when it came to the handover Jesse was stoned beyond recognition on his “day off”. In this instance White was getting done what was needed, taking risks he didn’t want to, only to have to give $480,000 (50% of the profits) to Jesse.
At the start their 50% partnership seemed real and worthwhile but it became more and more expensive as time went on. White was gradually becoming more professional while Jesse was spiraling out of control. Their skill sets, attitude and work ethic were not even vaguely equal.
As Robert Greene writes in the 48 Laws of Power, “Avoid the unhappy and unlucky”.
In season 3 Jesse even produced his own version of Walt’s meth. It probably wasn’t as good, but was almost certainly many times better than the version he used to make before he partnered with White. These were skills he had learned directly from White. At this point Walter was “out” of the business, so it could be argued that this is not a problem, but still, where there is a lot of money involved, trust will always be an issue.
At the end of season 2 and start of season 3 there were FIVE separate murders that happened essentially because Jesse was out of control, acting up like an eight old child and Walter was trying to protect him. Needless to say, as season 4 opened, it wasn’t even clear that Jesse had learned any lesson. The wrong partner(s) can be a real burden. It wasn’t until the end of season 4 that Jesse had matured enough to really be a productive member of the team.
3a. Choose partners with great care. The harsh reality of life is that there is almost always someone else above you and I on the food chain. In Breaking Bad season 4 we saw the Mexican cartel trying to assert their authority over Gus and Gus asserting his authority over Walter and Jesse.
We saw the Mexican cartel slaughtered, Walter and Jesse turn on each other (more than once) and their fear that Gus was going to have one or both of them killed.
Now sure, if you created Google, there aren’t so many people above you in that food chain, but most of us have not created Google, so there are others we have to please. These might be suppliers, shareholders or others. Walter found out that once he had become a very lucrative profit centre for Gus he simply could not leave the business – until he was forced out.
Gus on the other hand was very careful, hiding in plain sight and being the professional through and through. He acted rationally, strategically and with precision. The real problem he faced – and the source of many of his future problems – revolved around a desire to hire Walter and Walter’s refusal to work without Jesse (or, to put it another way, he didn’t want to see Jesse murdered). As problems built on problems, they became something of a centrifuge of crap.
4. Opportunities will come to you. The purity of their product and opportunity to make lots of money were partial reasons why crooked lawyer Saul Goodman came into their orbit. Smelling opportunity and easy money he helped them to set up bigger deals, think through opportunities and keep themselves out of trouble.
We have all heard trite sayings like, “The harder I work the luckier I get”, but to a certain degree that is quite true. Once you / your product / your service has started to build a reputation for the right qualities, other players in your market will get in touch hoping to make some money too.
I’m not convinced that this is about “being in the right place at the right time”, but more about doing the right things for a long time.
Early in season 3 Gus approached Walter with an offer for $3 million. That was not luck, that was the result of high quality product and professional dealings.
5. Create systems and checklists. In mid season 2 Walter and Jesse head off into the great outdoors in their beaten up camper van to cook for several days. When it comes to the cooking, White was a perfectionist who did everything correctly – hence the quality of his product.
However, for everything else he simply relied upon Jesse to set things up. Accident on top of oversight on top of idiocy left them stranded in the desert for several days when they could not start the van. If only they had a checklist before heading out to cook.
As soon as they parked the van in the middle of nowhere White starts complaining about the crappy food and limited amount of water Jesse has brought with them. Leaving important decisions like that to a mid 20s druggie is not the way to get things done right! Cereals and chips really are his idea of “food” for three days. If you like or need things done a certain way, create a checklist and make it simple for everyone around you. As I have written here, you must read Work The System by Sam Carpenter.
As Tony Robbins says, “If you don’t communicate your standards to people around you, how will they know what those standards are?”
5. Focus on your core skill. When they started out, they were trying to do everything (get the supplies they needed, cook the drugs, sell them to the end users). Over time they searched for ways to expand and reduce their roles (such as building a small team of sellers).
At the start of any bootstrapped business, the entrepreneur and owner does pretty much everything. You need content written? That’s me! You need the dishes washed? That’s me too! You need a driver? Me. Me. Me.
Once Saul was in their world making the connections they needed, their deal size jumped dramatically and they started to earn much more money for much less work and risk. White was the genius cook, not the salesman or enforcer. With that realisation made, they could focus and grow.
6. Be strategic. This could be written in converse. Don’t be emotional when making decisions.
How many times did Jesse make a decision with zero thought that lead to major problems? A great example occurred in season 3 when Walter was taking steps to destroy the RV in which they had previously been cooking, using it as a mobile lab. When he heard the news Jesse charged out of his house and drove to stop him, not realising that he was being followed by a DEA agent. By misinterpreting Walt’s actions and presuming the worst, he put them both into a very sticky situation.
Business and marketing legend Jay Abraham often says that the biggest shift a company can make to improve it’s fortunes and change course is a shift in strategy. Or to put it into words that sound more like Jay Abraham, “The upside leverage from a change in strategy can be infinite”.
This, of course, has a wide range of applications. If you are a drug dealer and being watched by the police, then any minor event or mistake could cause your downfall. Luckily for the rest of us a wrong word at a meeting will not get us shot by the competition or arrested by the police.
Most businesses face longer-term problems that might not be so readily visible or long-lasting but can be just as fatal. If the company strategy is wrong and a firm is losing money every month, then there are things that need to be addressed. The real reasons behind the problems need to be recognised and worked on. For many firms this will probably include project or task execution. Big companies often have problems in simply getting things done – they have become so big that they are political entities and not businesses.
7. You need to keep learning. As times and circumstances change there are new lessons to be learned as situations unfold.
Late in series 3 Gus invites Walter to dinner to offer him some advice. “I made many mistakes when I was starting, more than I care to admit”. That is true for everyone involved in any business or entrepreneurial activity.
Gus continues, “You are a wealthy man now. You must learn how to be wealthy. Being poor, anyone can manage”.
If you live and work online, then there is no way around this, the internet is evolving. Fast. A failure to learn and relearn is business suicide. Whether you learn and implement the correct things or not is another matter, but if you keep going then sooner or later things will work out.
8. You will have to do things you don’t want to do. In normal business life, doing things we don’t like very much might involve chasing unpaid invoices, making deliveries, cleaning up after people, making sales presentations or cold calls, firing staff or many other things. In the meth business, for Walt it involved telling many lies, having his wife try and divorce him, not saving the life of a girl choking fatally while on drugs, running over two dealers with his car and then shooting one of them and ordering the killing of another chemist. And that was just season 3!
Below is one of the most famous scenes (from series 4) where Walter’s wife, Skylar, realises just how much he has changed in his new profession:
The point is that we all like to think of ourselves as caring, warm and fuzzy people that are paragons of virtue. Some of us are. Yet as a business gets going, there will be times when crappy jobs need to be done and they need to be done by the leader. If the business is to survive, then the entrepreneur needs to steel him (or her) self to the task and make it happen. As time passes, these crappy jobs are something we learn to deal with and rise to, but they are daunting at first.
Being an entrepreneur takes bravery (or is that stupidity?) and the ability to rise to and overcome challenges often. This is just a part of the job. The reality is that there is no preparation for it. The new challenges will be a surprise virtually every time, so the only option is to deal with them as they come up.
nihil timendum est: fear nothing.
As the years pass, it is possible for the business founder to become more of a manager and recruit staff whose job it is to handle these messy tasks. Until then, they are all yours…
9. Be prepared for anything. In multiple scenes throughout Breaking Bad there are quite evil things done to protect or grow business operations. Since this is a series about the meth business, those evil things mostly involve shooting people.
However, in the normal world where the rest of us live, there are lots of bad things going on from which we can take business lessons.
To your author, some of the most evil words now in existence in the English language are, “Its only business”. Business people use that phrase to justify almost anything they want, no matter the impact on other people.
I believe that in large part business managers and owners justify their actions through pop psychology found in any airport bookstore. A great example is Machiavelli’s phrase, “The ends justifies the means”. Unsurprisingly, Machiavelli did not intend for it to mean that sabotaging someone in accounting so that they won’t be able to get a promotion you desire is acceptable. No. He meant that if a Prince has to do bad things to protect his state from an aggressor, thus saving the lives of his state’s population, then morally questionable acts can be justified.
The bottom line is that in the modern world people do reprehensible things to find an advantage. Avoiding office politics and deceptions might feel better, but it is not a winning strategy.
10. Think big. Once Walter and Jesse are working for Gus their production rises dramatically. Their production target is two hundred pounds per week. Gus has built them a state-of-the-art lab and has access to the chemicals they need, so it is an achievable number.
Gus was thinking very big. When Walter and Jesse discuss the amount of money involved (they are being paid US$1 million per month in cash between them) they admit that his likely gross income is $96 million per month!
Gus was making moves to cut out the cartel from his operation and dominate supply with a superior product so you can’t fault him for ambition! For me, this is one of the best business lessons Breaking Bad can teach us.
As Donald Trump likes to say, “If you are going to bother thinking, you might as well think big!”
As Walter said late in the game, “I am in the empire business”.
11. Money and power corrupts. Sure, this is a series about people turning from good to bad through the drug business, but it was interesting to see how they changed.
For example, Walter’s wife, Skylar, was terrified about her husband’s involvement when she first found out. Only a few episodes later she had hired someone to convince the owner of a car wash that his business was being shut down. The intention was that she wanted to buy the business to help wash their money as well as cars.
A few episodes later and she was hiring goons to force her former employer to settle a debt – with money that she had provided to him via a false inheritance from a crooked lawyer.
Rightly or wrongly, there are very few problems in the modern world that a lot of money cannot solve. Breaking Bad showed some of these problems being solved in ruthless, illegal and immoral ways, but the concept is still the same. Your business has problems? Do you have enough money to hire someone that can fix them? If you do, you don’t really have a problem, do you? In such a circumstance you have an unwillingness to spend money on required products and services.
How many times did we hear Walter tell Saul, “I don’t care, just handle it”? It was a lot. Walter was paying for solutions to problems.
12. Iterate. How many business owners find a way of doing something profitably and then just stick with it, never seeking to improve upon things? I’ll tell you – it is a lot!
Walter and Jesse were forced into various transitions as they became compromised or people died and that doesn’t happen to most other businesses in the same way. Their comfort zone was very, very small. With each transition their game was upped, some of the previous problems were fixed or improved upon and their profits rose dramatically. By fixing their business model one element at a time they grew their profits and cut their risks. Of course, by the end there was a string of dead bodies and all sorts of gruesome acts taking place, but from a purely profit based perspective, their success grew and grew.
For most normal business owners this act of fixing and improving is a rarity. Offline I never see this amongst my clients and typically if I discuss the idea of running tests within their business they have many reasons why they should not follow the advice. However, I have friends running online businesses and they are changing and experimenting with their copy, sales messages, email gauntlet, images and on and on. There is a very clear difference in mindset to me between new and old entrepreneurs.
Luckily for these offline firms, their competition usually isn’t testing anything either so there are no competitive advantages being taken through the rapid iteration of smart ideas. However, one day if a competitor does do that, they will be in big trouble with no plan about how to respond.
Not only do most offline businesses not test ideas, they do not seem to want to either. This is a mindset issue on the part of the owner I believe. Why? Because they are comfortable as they are. Finding out that there are better and more profitable ways to run their own business suggest that they have been doing things wrong for a long time. Who wants to learn that?
13. Fear the hostile takeover. To my memory there were three different groups of people slaughtered in forms of hostile takeover. Sure, in real life management is not assassinated, but are they? In a very large proportion of takeovers the people at the top will not still be in position in six or more months. They were not killed, but their careers might have been.
It is simply human nature that as power moves from one person or group to another, the old holders of it need to completely give way. In the animal kingdom the old alpha male is usually killed (or seriously wounded) in competition with the younger and stronger challenger.
So it is in business. It would seem wise to have a Plan B just in case.
14. Diversify. Walter and his students stuck to the meth business because they were so good at it. That makes perfect sense. Their product was the best, they were learning the right lessons and it was wildly profitable. In this regard, they followed the age old investment maxim, “Put all your eggs in one basket and watch that basket”.
However, they did the same with their money. For all the creativity shown in earning the money, it was mostly just stored in duffel bags (Jesse), a safe (Saul), a safety deposit box (Mike), offshore accounts (Gus) or a rented space (Walter). At various points in the show large amounts of money were stolen or taken (by the police) simply because it was all together in one place and once someone found some of it, they found it all.
To quote Homer Simpson, “Doh!”
At each stage the main characters were so busy earning the money and being bad guys to each other that they didn’t stop to find a safe location for a shoe box full of money. This meant that when the time came to run and get out, they still had things to do to “get my money”. They were not in a position to leave immediately.
In my old days as a financial advisor I worked for several years in Brussels, dealing with people involved in the EU and politics. A number of my clients started some form of long-term savings plan – their “F U Money”. They knew that at some point in the future they would be asked to do something that they totally disagreed with (this is the nature of politics and policy) and when that day came, they wanted to have a pot of money waiting for them that would make it possible to say no and leave immediately.
Gangsters, politicos, upper management, whoever. It is good advice for anyone making tough decisions.
Bonus tip: Now I’m no gangster, so I might be way off here, but it seems to me that if you wanted to actually get away with a crime like Walter White’s (who am I kidding?? there were many crimes) the trick is to do three things:
1. Quit. If you keep on doing it, the odds of getting caught add up. Quit earlier than you need to, before the net is tightening around you.
2. Create space. Once you have quit, move to a new part of the country, or better yet, a new country. Recommendations like, “leave town” are not very helpful in a world of federal agencies.
3. Add time. Once you have moved, do not restart the activity. Keep your mouth shut. Things look a lot different when they happened ten years ago. Investigations end, people retire or get sick or change jobs and the world moves on. We saw in season 5 Hank’s boss tell him to stop different surveillance efforts because the case “is closed” and there was no available budget to continue.
Something Walter did which insulated him to a certain extent was that he did his best to destroy any evidence of the business when things became compromised. Ok. You got me. He mostly killed people, had vehicles crushed and set fire to things. Still, when you erase the past (such as Gus’ laptop and that giant magnet) you do erase at least some of the past.
And finally… It seems that if you still choose to go into the drug business, it helps to be a paranoid schizophrenic with homicidal tendencies. Good luck with that.