10 Lessons From History's Greatest Criminal Entrepreneurs
Many criminals are also entrepreneurs. They work in the most competitive companies where the opportunities for profit are immense, but so are the risks. So what can we learn from these bold, unscrupulous individuals who go to extreme lengths to make money? People who are not hindered by moral or legal constraints. In this list, we pick 10 of the greatest criminal entrepreneurs in history and identify a business lesson each of them can offer us.
Charles "Lucky" Luciano - Build a Team
Ever heard of the mafia? Of course you have. Charles Luciano is the man who took it from a Sicily-based crime syndicate to a multinational corporation that had huge influence in the US for years.
How did he do it? He got people to work as part of a team and work together. Instead of many petty criminal activities between disparate groups, he added the hierarchy and structure of the Sicilian mafia to Italian-American gangs in the US. This increased their power and influence and made the mafia arguably the most powerful criminal organization of the 20th century.
Sir Francis Drake - You can't please everyone
Sir Francis Drake ruled the seas during the 16th century and was extremely adept at attacking ships and stealing their cargo. His exploits were legendary and he would regularly share part of his reward with the British government. This made him a hero to the British, but he was regarded by the Spaniards as a dastardly pirate from whose ships he often stole.
In Spain he was known as El Draque and there was a $4 million dollar amount (in today's money) as a reward for his capture. Meanwhile, his popularity in Britain was so great that he was knighted and made mayor of Plymouth. This story just goes to show that you don't have to please everyone to be a success.
Charles Ponzi - Focus on how your customer will benefit...then deliver it!
In the 1920s, Charles Ponzi made people an offer they could hardly refuse... huge investment returns with no real work. The offer Ponzi set up was based on a loophole he had noticed in buying and selling stamps that, if misused, could yield returns of around 400%. The problem was that Ponzi was only able to exploit this loophole on a fairly small scale. But he had much bigger ambitions.
So what did he do? He sold the investment opportunity to thousands of people and used the money he received from new clients to pay off the previous ones. Actually, no legitimate investments have been made. It all worked for a while and at its peak, Ponzi's plan was earning him at least $250,000 a day. But the scam relied on an increasing number of people investing to keep the whole thing from imploding. Eventually it all came crashing down. Ponzi fled and took the huge amounts of money people had invested with him, but was caught and sentenced to prison.
The scam that Ponzi developed was later named after him and still exists to this day. Bernard Madoff, for example, was recently caught committing the largest financial fraud in US history using a Ponzi scheme.
Ponzi had it half right with his company. He focused on creating an attractive offer that customers would find it difficult to refuse and as a result was able to attract thousands of customers. Where he went wrong was that he had no legitimate plan to keep his promises. So the lesson from this story focuses on how your business benefits your customers, but also how you can sustainably deliver on those promises!
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George Parker - The world is full of niche markets.
George Parker, who lived in New York in the late 1800s and early 1900s, found a rather bizarre and daring niche market. He started selling New York landmarks to unwitting tourists! Yes, you read that right... he would develop elaborate stories and fake documents to convince people that landmarks like Brooklyn Bridge were for sale.
Brooklyn Bridge was one of his favorite landmarks to sell because he was able to convince customers that it was a great investment and that they could set up a toll booth on the bridge to start making money. New York officers then had a fairly regular job of stopping people on the bridge as they tried to stop traffic and charge drivers to cross the bridge. The police would explain that they did not own the bridge and had in fact been ripped off.
This is quite a surprising story and an extremely brutal crime they committed. Parker was eventually caught and spent the last 8 years of his life in prison, but one learning point that should really stand out in Parker's story is that the world is full of crazy niche markets. Who would have thought there was a niche business selling New York landmarks to gullible tourists!
Eduardo de Valfierno - Business is all about creating value
Argentine con man Eduardo de Valfierno was a cunning fellow. In the early 1900s, he hired an expert art forger to produce several forgeries of the Mona Lisa with the plan to sell them around the world and make huge profits. But who would be interested in buying these fake paintings and they wouldn't be worth that much anyway? That was where the second part of Valfierno's devious plan came into play. After having some very professional looking counterfeit products made, he then hired several men to steal the original painting from the Louvre in Paris. One of the museum staff accomplished this incredibly daring stunt by simply hiding the painting under a coat and walking out of the building!
In anticipation of the huge furore that would ensue once the Mona Lisa was stolen, Valfierno pre-arranged buyers and shipped his counterfeit products to secret locations around the world. This meant he was able to prevent the counterfeit products from going through customs while everyone else was on the alert. Valfierno then sold all of his counterfeits to wealthy buyers, and every buyer believed they were buying the original.
Valfierno wisely knew that the original painting was best left alone, so let the man who stole it keep it. In the end, the thief tried to sell the original and was caught. The painting was then returned to the Louvre and Valfierno escaped without a hitch, along with a serious profit!
Joaquín Guzmán - Often the simplest ideas are the best
The US Treasury Department recently described Joaquín Guzmán as the most powerful drug trafficker in the world. He has developed innovative management methods such as paying drug traffickers in lieu of cash to help them develop their own business and act like franchisees. He has noticed new emerging trends in drug demand, such as methamphetamine, and has developed cost-saving techniques, such as growing marijuana fields in the US instead of importing it. But his most impressive feat is also one of his simplest. If you want to get large quantities of drugs from Mexico to the US, what do you do? You are building a huge tunnel!
It is this simple idea that has driven much of Guzman's success. He hired an architect and commissioned a tunnel to be dug all the way from a hidden location in Mexico to a warehouse somewhere in the US. What a good idea. And it just goes to show that some of the simplest ideas really are the best!
Frank Lucas - Keep Costs Down
In the 1970s, Frank Lucas was an African-American hustler trying to survive in a criminal underworld dominated by the Italian-American mafia. If he were to make it as a top-class drug trafficker, he needed to be able to keep his costs down and undermine the competition.
At the time Lucas was working on his drug business, the US was waging a long and bloody war with Vietnam. A country, it so happened, where heroin could be bought much cheaper than in the US. Lucas saw an opportunity and took advantage of contacts who fought in the war to buy drugs directly from Southeast Asia and then smuggle them back to the US. Lucas even claims to have used the coffins of dead soldiers as a gruesome yet ingenious way to smuggle his supplies into the US undetected.
By skipping middlemen and buying his supplies straight from the source, Lucas was able to undercut competition and become a major success in the drug world. Lucas made millions of dollars, but it was this very success that ultimately made him a target for jail time and led to his downfall.
The long-term crime doesn't pay off as Lucas spent many years in prison, but his story does show that you can be successful in business by giving yourself a competitive advantage and avoiding the use of middlemen when it comes to buying your product. To relate this point to the more familiar world of online blogging, for example, Lucas' success is akin to creating your own product to sell rather than acting as an affiliate marketer for someone else. If you can make your own high-quality products, you get a bigger share of the profits.
Frank Abagnale - Position yourself as an expert
Abagnale is a fraud expert who spent years living off forged checks and traveling the world for free. He was able to gain people's trust and cooperation by positioning himself as an expert. For example, he got free flights by claiming to be a pilot and would gain people's trust and respect by claiming to be a doctor.
Abagnale was eventually caught and spent 5 years in prison. He then finally started to present himself as an expert in something where he was really an expert in… financial fraud. Abagnale was released from prison in exchange for helping US federal authorities detect fraud. This led Abagnale to set up a multimillion-dollar fraud consultant and he has now used his legitimate profits from this company to repay the people he has defrauded in the past.
Meyer Lansky - Network for Success
The Russian-American Meyer Lansky set up a formidable illegal gambling empire in America from the 1930s and was already a good luck. But he was able to take his earnings to the next level by networking and building close ties with the mafia. His close ties to the mafia gave him access to new business opportunities and he became known as the "Mob's Accountant".
At the time of his death in 1983, the FBI estimated he had hundreds of millions in hidden bank accounts and he was such a compelling criminal that several movie mobsters were said to be based on him, including Michael Corleone in The Godfather. Lansky was a skilled criminal as well as a skilled networker, and it was his networking skills that gave him access to greater opportunities for profit and success.
George Greenhalgh - You're Never Too Old
George Greenhalgh was in charge of selling the "Garden Shed Gang" which consisted of George, his wife and his son. Together, they produce counterfeits of valuable works of art and managed to fool museums and collectors into spending over a million dollars on their work before they were finally caught.
Not bad for an 82 year old who lives in a city flat in Bolton, UK and operates out of a garden shed. This story shows that you are never too old to try something… but maybe just start a blog instead of trying to cheat the art world out of millions of dollars.
So there you have it
10 criminal entrepreneurs and 10 business lessons. Due to their extreme ways of making money, starting a legit business feels like a simple task in comparison. For example, if you start a blog or create an information product, no one will shoot you or lock you up, and you don't have to be a violent mobster or expert scammer. So take the lessons these criminal entrepreneurs have to offer, but maybe it's best if you don't try to become an international scammer, pirate or drug trafficker yourself!