Thursday, October 18 , 2018, 2:27 pm | Fair 76º

 
 
 

Paul Burri: Here’s a Deal You Can’t Refuse — Or Can You?

It pays not to get too greedy when a good opportunity comes your way

If I offered you a money deal that you couldn’t refuse, would you be irritated if you later found out that I made even more than you did? Let me be more specific; here’s my offer. “If you will lend me $2,000, I will pay you back $2,500 in 60 days, guaranteed.”

So you lend me the money, and 60 days later I pay you $2,500. If I figure this correctly using the old formula (I = PRT (Interest = Principal x Rate x Time), that comes to 150 percent interest you just made. Not bad, huh? Got any problem with that?

But then 60 days after that, you learn that I made $2,600 on that deal. I used your $2,000 to somehow (legally) earn a total of $5,100. Then I paid you back your $2,000 plus an extra $500 and still had $2,600 left to keep for myself. (Please don’t ask me how. I’m just trying to make a point here.)

So would you complain to me that it wasn’t fair that I used your money and made more than five times what you did on the deal? I’ll bet you would because I’ve seen it happen more than once. And I still don’t understand how the person who made a really nice 150 percent profit could feel justified to complain that the other guy got so much more.

Where would you have been and how much would you have made on your $2,000 if I hadn’t come along? Did you do the research or figure out that great deal? Did you have any of the risk that I did if it hadn’t worked out? No, of course not. And still you seem to think that it’s not fair.

Better be careful about complaining to me about our deal. You just proved to me that you are greedy and cannot see a great deal when you get one. I won’t come to you the next time I have another opportunity like that last one. I don’t need the hassle.

This whole thing reminds me of many of the episodes I have watched on Shark Tank, a recent television show where would-be entrepreneurs come before a panel of five savvy investors asking them to invest in their “greatest idea since the invention of four-ply toilet paper.” Invariably they expect the panel to invest thousands of dollars in their company for a puny share of the business — usually 15 percent to 20 percent.

Of course, the investors are too smart for that and usually counteroffer to invest; but only if they get a controlling interest in the company. And then the inventor often turns them down because he or she is afraid to lose the controlling interest in his company. What’s wrong with this picture? Bottom line: Without that key investment, the inventor has no company, no chance of success, no nothing. The inventor would rather have 100 percent of nothing than, say, 25 percent of a million-dollar company. Greed (and some stupidity) enters the picture again.

Lesson to be learned? Be sure you don’t get too greedy when a good deal comes your way.

— Paul Burri is an entrepreneur, inventor, columnist, engineer and iconoclast. He has been a counselor with the Santa Barbara chapter of SCORE (Service Corps of Retired Executives) for the past eight years. SCORE offers free business counseling to local businesses. He is also the membership director of the Channel City Camera Club. The opinions and comments in this column are his alone and do not reflect the opinions or policies of any outside organization. He can be reached at .(JavaScript must be enabled to view this email address). Click here for previous Paul Burri columns. Follow Paul Burri on Twitter: @BronxPaul.

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