STARTING COMPANIES WITH STYLE

The Story of Ray Markman – Part 3

Friday 2:00 pm

Ray MarkmanA boxing match! I promise myself to be there to see Loop Lonagan and Alexander Harbinger PhD settle their differences in a modern-day duel. I know Loop as a tough street fighter but he gives away a tremendous advantage in reach to the tall German and at the Union League Club, the Marquess of Queensberry Rules are enforced—way out of character for Lonagan. No gouging, no rabbit punches, no kicks to the groin. And unlike here in my office, nobody can pull a gun and start blazing away.

Now I need these two to set their differences aside and give me their reports on Ray Markman. Under the circumstances, that’s asking a lot. The atmosphere is way too tense. So I pull a bottle of single malt out of my drawer, produce three heavy tumblers and pour till they’re all half full.

Lonagan and Harbinger are still glaring at one another until the scotch gets their attention. Loop takes a seat and downs his in one gulp then pours another. Harbinger and I sip at ours.

As Lonagan’s color slowly returns to normal, he goes on as if nothing happened: “Like I was sayin’—bottom line, Ray always has two lives happenin’ in parallel. During the day it’s his corporate career, but nights ‘n’ weekends he’s starting companies. So he hedges his risk but pays the price of super-long hours. He puts together a team of five investors. They start a life insurance company, a real estate company, a bank, a wealth management company. Lotsa others. Some of ‘em big-time. He’s part of a group starting a venture capital fund as we speak. Now here’s my point. A guy don’t do that unless he gets a thrill—a real blast outa what he does.”

Harbinger sips his drink—aloof and silent.

Lonagan goes on: “Lemme tell you ‘bout the life insurance company first. Names it Mayflower to give it a feeling of history. And that works real good—people think it’s an old, established firm. Here’s the point I wanna make: He brings in a charismatic leader who lines up all the major agents. Ray’s always forming a team. Yer gonna see a lot o’ that with him. It’s what you might call his modus operandi.

“Anyhow, business just pours in with this insurance company. They take it public. Then private again. Then they sell out. Then buy it back. Then, when things go bad, just when they think they’re broke, somebody comes along and buys it.”

Lonagan leans back in his chair. “Ya gotta understand. Ray’s one o’ them guys that loves the game—any game. He knows where money wants to go. He feels it—it’s a natural talent. He can make it flow and channel it. And he does it with style. If you’re smart, you hitch a ride with ‘im. Used to do that all the time on da trading floor.”

I hold a finger to my lips and think about what I’m hearing so far. It calls to mind a favorite movie—James Garner and Lee Remick in, ‘The Wheeler Dealers.’ Actress, Lee Remick

Lonagan’s ears are red and I see he’s not done. “Ever see the show ‘Mad Men?’” he asks. (I haven’t, but I stay quiet as he goes on.) “I think that’s what it’s like for Ray.”

Harbinger sets his empty tumbler on the desk. “I do not believe an insurance company qualifies for what is referred to as risk capital.” After downing the scotch, he seems calm, his German accent almost disappears. I’ve noticed that about him a lot. When he gets excited, he reverts. When he’s poised, he speaks like an English scholar.

Lonagan seems to be going in the opposite trajectory. He gives Harbinger a quick glance and a derisive expression. “Whadda YOU know about it? Anyhow, summa his best action is in real estate.” Lonagan punctuates his words by thumping his notes on the table with his thick index finger. “This guy is ona da first syndicators. Lemme explain how that works, in simple terms so Alex understands.”

Harbinger shows no reaction to that.

Lonagan thumps the table again. “The company puts together a capital structure. General partners ‘n’ limited partners. The generals are the risk takers. The limited ones want a return and a tax write-off. Clear so far?” He thumps again. “Then they buy land. Naples Florida on the Gulf right on Vanderbilt beach. And they get it cheap. It’s one o’ dem early Florida deals.” Another thump. “They put up eight apartment buildings—on spec. Sell ‘em to people in the northern states.” Lonagan closes his hand into a dramatic fist. “So then they take it public and sell it.” He looks at each of us before going on. “Just like the insurance company, the thing works because he finds a smart guy to run the show. Ray knows howta pick talent and howta delegate power. That’s always key. Get the ball rollin’. Ask lotsa questions. Ya don’t hafta know everthing yerself—always remember that.”

Lonagan takes in a lungful of air. “Now Ray’s group is playin’ with more money. So what do they do? They invest in a bank. What a sweet deal. And Ray stays on as director fer a long time. They eventually sell that, too. Great investment.”

Harbinger looks somewhat stunned. I don’t know if he’s losing the argument or if he’s worried about the upcoming boxing match. I can only guess. If he doesn’t know how to box, he still has 3-1/2 hours to learn. I top off everybody’s glasses.

Lonagan swallows a healthy slug and keeps rolling. “He starts Salespower—yeah that’s right—the bigtime company, Salespower Inc. Starts it over a disagreement with Manpower Inc., his corporate client. They wanta sell product outa their offices. Ray says ‘Offices don’t sell products. People do.’ So he sets up this separate entity to market stuff. His theory goes like this: You produce the product, we do everything else. And by that, he means everything—marketing, promotion, sales, financials. Beautiful concept. Now you don’t need to operate a business—all you need is a factory and a product. If you’re a manufacturer, you make yer stuff and no worries about the rest. Beautiful settup.”

I have to smile at that. The opportunities. Lonagan swallows his scotch and keeps talking with enthusiasm in his voice.

“At Salespower, Ray gets hold of two hot products right away. One’s a bottled chocolate soft drink. Nothing like it on the market. Then he comes up with the idea fer using it in an ice cream soda. He goes straight to the supermarkets and whips these things up ‘n’ hands ‘em out. Free. Nobody’s doin’ that back then ‘n’ people love it. And he goes to the tough neighborhoods, too. Guys come in—some of ‘em reeking of liquor—this is Saturday morning—and they taste the sodas and buy cases of the stuff. It’s flyin’ out o’ da stores. And get this—it becomes the third largest seller in Chicago next to Coke and Pepsi.

Ray Markman Serves Free Sodas

“So then a bottler comes to him. Wants to own the product ‘n makes a good offer. What does Ray say? ‘Double it.’ Whadaya think happens? The guy doubles it. Now this is important: Ray’s got the moxie to make that deal before he goes to the manufacturer. When he finally does and the guy hears the terms, he’s so excited he starts stuttering. Ray makes him rich. Da guy gets cash up front and gets to keep making his product with a cut on so much per case.”

Harbinger still sits in his chair looking dignified as Lonagan goes on.

“Then there’s another Salespower product called Lifeline Battery. It’s got more power and outlasts any car battery out there. Ray goes straight to car dealers and does demonstrations. A couple dealers take it on and they outsell all the others. Ray gives ‘em a big margin—three times what they’re used to getting. Orders start pouring in over the transom. Now these automobile manufacturers want to own their own battery even if it means buying his. So they make him an offer. He says, ‘Double it.’ And whadaya think? They do. These guys are gonna pay anything.”

I need to understand more. “Does Ray always try to double the offer? When I sold my business, I multiplied the offer by seven.”

“Yeah, well maybe Ray leaves some money on the table on that deal. But he’s still young and he’s learning.”

Harbinger seems to be brooding.

“Something on your mind, Alex?”

He starts, as if his mind is elsewhere, so I repeat the question. “Alex, do you have anything to add?”

He stares at me a moment then composes himself. “Yes. A story I find poignant and highly significant.” He folds his hands on his lap and goes quiet.

“And?”

Harbinger clears his throat and begins.

Continue to Part 4

 

Go back to Part 1

Comment on this article — Name and email optional

Find Chicago Venture Magazine at www.ChicagoVentureMagazine.com Comments and re-posts are welcomed and encouraged. This is not investment advice – do your own due diligence. I cannot guarantee accuracy but I give you my best.

Copyright © 2012 John Jonelis – All Rights Reserved

1 Comment

Filed under Biography, Characters, Conflict, Entrepreneur, Relationships

One response to “STARTING COMPANIES WITH STYLE

  1. Pingback: THE DUEL | The Gamemaker's Father

Please leave a reply. Name and email are optional:

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s