Narcos is a new Netflix series about drug kingpin Pablo Escobar and the Medellín Cartel.
\r\nPeter S. Green of The Wall Street Journal describes the Colombian crime organization:
\r\n\r\n\r\n[It’s an] an empire of stunning sweep and unimaginable violence. At its height, it earned as much as $4 billion a year…Pablo Escobar and his partners called their business a cartel, but instead of controlling price and supply, it behaved more like criminal syndicate that pumped an endless supply of cocaine into the market and let the market set the price.
\r\n
That’s why Green (presumably grudgingly) describes the cartel as a brilliant business no different from any Fortune 500 company.
\r\nIndeed, Green quotes Harvard Law School professor and former deputy attorney general Philip Heyman (who brought a number of cases against the drug cartels in the 1990s) as noting, “What the Medellín cartel did is exactly what any global pharmaceutical firm has to do.”
\r\nRelated Article: Local Online Marketing Strategies That Your Business Should Be Doing
\r\nSo what can we learn about running a successful business from a drug kingpin?
\r\nMark Palmer points out that every business starts out by fulfilling a need. Like Steve Jobs, drug dealers offer products their clients
\r\nA successful product, service or brand is something consumers find to be addictive.
\r\nWhether it’s the product features, the distribution system, the customer experience or some combination of all of the above, innovation builds market share. That seems obvious. But many an innovation doesn’t seem that way at first. The trick is to be first.
\r\nFor example, The New York Times coverage of “Cocaine Incorporated” points out that one drug dealer’s “greatest contribution to the evolving tradecraft of drug trafficking was one of those innovations that seem so logical in hindsight it’s a wonder nobody thought of it before: an underground tunnel from Mexico to the United States to avoid border patrols.”
\r\nDon’t fall into the “not invented here” trap. If something your competitors are doing works, don’t be afraid to adopt it and adapt it to your operations and, most importantly, improve upon it. The first underground drug smuggling tunnel between Mexico and the U.S. was built in the 1980s; it was eventually uncovered and shut down. But, as the Times notes:
\r\n\r\n\r\nTwenty years on, the cartels are still burrowing under the border—more than a hundred have been discovered in the years since…They are often ventilated and air-conditioned, and some feature trolley lines stretching up to a half-mile to accommodate the tonnage in transit.”
\r\n
Related article: Embracing Something New: 5 Ways to Make Innovation Part of Your Business Strategy
\r\nKristen Knipp observes that whether you are selling drugs or Starbucks coffee (admittedly also addictive, just legal and considerably less harmful), every sale incorporates the actual costs of the goods sold as well as the cost of making the transaction. But there are different pricing and versioning strategies based on the cost of making the transaction.
\r\nGiven the high, not to mention risky transaction costs in producing and distributing illegal goods, the best pricing strategy is to sell large volume at the lowest price. Availability plus affordability results in extremely loyal customers. Drug lords only need one version of the product to achieve this.
\r\nStarbucks, the inventor of the $4 cup of coffee, in contrast, incurs the same transaction costs (raw materials plus preparation time) regardless of what size you order. This is called versioning. Knit notes:
\r\n\r\n\r\nWhen you go to Starbucks, which size do you buy? I don’t think I’ve ever purchased or rarely seen anyone else buy the short…Although the transaction costs are the same, by selling more of the larger sizes, Starbucks is able to generate more sales across a wider spectrum and likely gets more high-profit sales than if they just sold one version.
\r\n
It goes without saying that drug dealing comes with high risks (imprisonment, death), but it also offers high rewards (tons of cash). Start-ups aren’t nearly as risky by comparison (and many aren’t nearly as profitable). What’s the worst that can happen if you fail? Well, yeah, you could go bankrupt, lose your significant other, get a black eye in your industry and maybe a lot of other things that are just as bad.
\r\nBut it’s not like a bullet to the head. You learn from your mistakes, pick yourself up and move on. If you’re not willing to embrace risk as an entrepreneur, then you should be working for someone else, not running your own business. It comes with the territory.
\r\nPriceonomics points out that drug dealers are “experts at identifying their customer base. They realize…that if a product is good enough, it doesn’t need to be heavily marketed.” Put another way, you can’t put a pig in a poke for very long and get away with it. All the marketing in the world isn’t going to save a flawed product. It’s so much easier to sell a product that is so good your target consumers won’t be able to do without it.
\r\nRelated Article: Are You Running Your Business Like a Rich Person?
\r\nThe core of any business is to make money. At least it should be. While the idea of starting a business and worrying about making money later isn’t as popular as it once was back in the dot-com heyday, there are still those entrepreneurs who start a company without putting profitability as the chief and overriding goal, according to Sebastian Dillon at NextShark. Angel investor Scott Gerber characterizes this as “the stupidest way to think about business” that isn’t going to attract investment money, let alone result in business longevity.
\n","docType":"article","guid":"articles_7f2f492ec1041c233361fee947dbdc99","lastModified":"2015-12-09T18:00:00.000Z","published":"2015-12-09T18:00:00.000Z","structuredData":null,"subtitle":null,"template":"legacy","title":"A Nod to Narcos: Why You Should Run Your Business Like a Drug Lord","type":"article","author":{"avatar":null,"bio":"The purpose of our community is to connect small business owners with experienced industry experts who can address their questions, offer direction, and share best practices.","name":"business.com editorial staff","image":null,"slug":null,"social":{"facebook":"","linkedin":"https://www.linkedin.com/company/business-com-/","twitter":"https://twitter.com/businessdotcom","website":"https://www.business.com/"},"status":"enabled","title":null,"type":"Old BDC Member","user":{"imagePath":"https://staging.business.com/images/uploads/user/profile/b14a2c1fa0158a2f46854597139a2067ee8ef.jpg","profile":{"company":"","jobTitle":"","website":"https://www.business.com/"}}},"breadcrumbs":null,"channels":{"primary":{"name":"Business Basics","slug":"business-basics"},"sub":{"name":"Entrepreneurship","slug":"entrepreneurship"}},"meta":{"robots":"index, follow","description":"Drug dealers may be criminals, but they are also savvy business people. What legal lessons can you learn from them?","title":"Run Your Business Like a Drug Lord - business.com"},"parsedContent":{"toc":[],"json":[{"component":"p","children":[{"component":"i","children":["Narcos"]}," is a new Netflix series about drug kingpin Pablo Escobar and the Medellín Cartel."]},{"component":"p","children":["Peter S. Green of ",{"component":"i","children":["The Wall Street Journal"]}," describes the Colombian crime organization:"]},{"component":"blockquote","children":[{"component":"p","children":["[It’s an] an empire of stunning sweep and unimaginable violence. At its height, it earned as much as $4 billion a year…Pablo Escobar and his partners called their business a cartel, but instead of controlling price and supply, it behaved more like criminal syndicate that pumped an endless supply of cocaine into the market and let the market set the price."]}]},{"component":"p","children":["That’s why Green (presumably grudgingly) describes the cartel as a brilliant business no different from any Fortune 500 company."]},{"component":"p","children":["Indeed, Green quotes Harvard Law School professor and former deputy attorney general ",{"component":"a","props":{"href":"http://www.wsj.com/ad/cocainenomics","target":"_blank","rel":"nofollow"},"children":["Philip Heyman"]}," (who brought a number of cases against the drug cartels in the 1990s) as noting, “What the Medellín cartel did is exactly what any global pharmaceutical firm has to do.”"]},{"component":"p","children":[{"component":"em","children":["Related Article:"]}," ",{"component":"Link","props":{"href":"http://www.business.com/online-marketing/local-online-marketing-strategies-business/"},"children":["Local Online Marketing Strategies That Your Business Should Be Doing"]}]},{"component":"p","children":["So what can we learn about running a successful business from a drug kingpin?"]},{"component":"h3","children":[{"component":"em","children":["Create a Need"]}]},{"component":"p","children":[{"component":"a","props":{"href":"https://www.oohology.com/Foundry/10-Things-You-Can-Learn-About-Business-From-a-Drug-Dealer","target":"_blank","rel":"nofollow"},"children":["Mark Palmer"]}," points out that every business starts out by fulfilling a need. Like Steve Jobs, drug dealers offer products their clients"]},{"component":"ol","children":[{"component":"li","children":["Didn’t know they needed"]},{"component":"li","children":["Can’t live without once they discover them"]}]},{"component":"p","children":["A successful product, service or brand is something consumers find to be addictive."]},{"component":"h3","children":[{"component":"em","children":["Innovate"]}]},{"component":"p","children":["Whether it’s the product features, the distribution system, the customer experience or some combination of all of the above, innovation builds market share. That seems obvious. But many an innovation doesn’t seem that way at first. The trick is to be first."]},{"component":"p","children":["For example,",{"component":"i","children":[" The New York Times"]}," coverage of “Cocaine Incorporated” points out that one drug dealer’s “greatest contribution to the evolving tradecraft of drug trafficking was one of those innovations that seem so logical in hindsight it’s a wonder nobody thought of it before: an underground tunnel from Mexico to the United States to avoid border patrols.”"]},{"component":"h3","children":[{"component":"em","children":["Adopt and Improve on the Innovations of Others"]}]},{"component":"p","children":["Don’t fall into the “not invented here” trap. If something your competitors are doing works, don’t be afraid to adopt it and adapt it to your operations and, most importantly, improve upon it. The first underground drug smuggling tunnel between Mexico and the U.S. was built in the 1980s; it was eventually uncovered and shut down. But, as the ",{"component":"a","props":{"href":"http://www.nytimes.com/2012/06/17/magazine/how-a-mexican-drug-cartel-makes-its-billions.html?_r=0","target":"_blank","rel":"nofollow"},"children":["Times"]}," notes:"]},{"component":"blockquote","children":[{"component":"p","children":["Twenty years on, the cartels are still burrowing under the border—more than a hundred have been discovered in the years since…They are often ventilated and air-conditioned, and some feature trolley lines stretching up to a half-mile to accommodate the tonnage in transit.”"]}]},{"component":"p","children":[{"component":"em","children":["Related article: "]},{"component":"Link","props":{"href":"http://www.business.com/entrepreneurship/embracing-something-new-5-essentials-for-making-innovation-part-of-your-business-strategy/"},"children":["Embracing Something New: 5 Ways to Make Innovation Part of Your Business Strategy "]}]},{"component":"h3","children":[{"component":"em","children":["Pricing and Versioning Strategies"]}]},{"component":"p","children":["Kristen Knipp observes that whether you are selling drugs or Starbucks coffee (admittedly also addictive, just legal and considerably less harmful), every sale incorporates the actual costs of the goods sold as well as the cost of making the transaction. But there are different pricing and versioning strategies based on the cost of making the transaction."]},{"component":"p","children":["Given the high, not to mention risky transaction costs in producing and distributing illegal goods, the best pricing strategy is to sell large volume at the lowest price. Availability plus affordability results in extremely loyal customers. Drug lords only need one version of the product to achieve this."]},{"component":"p","children":["Starbucks, the inventor of the $4 cup of coffee, in contrast, incurs the same transaction costs (raw materials plus preparation time) regardless of what size you order. This is called versioning.",{"component":"a","props":{"href":"http://blog.hubspot.com/blog/tabid/6307/bid/9482/3-Marketing-Lessons-From-Drug-Dealers.aspx","rel":"nofollow"},"children":[" Knit notes"]},":"]},{"component":"blockquote","children":[{"component":"p","children":["When you go to Starbucks, which size do you buy? I don’t think I’ve ever purchased or rarely seen anyone else buy the short…Although the transaction costs are the same, by selling more of the larger sizes, Starbucks is able to generate more sales across a wider spectrum and likely gets more high-profit sales than if they just sold one version."]}]},{"component":"h3","children":[{"component":"em","children":["Embrace Risk"]}]},{"component":"p","children":["It goes without saying that drug dealing comes with high risks (imprisonment, death), but it also offers high rewards (tons of cash). Start-ups aren’t nearly as risky by comparison (and many aren’t nearly as profitable). What’s the worst that can happen if you fail? Well, yeah, you could go bankrupt, lose your significant other, get a black eye in your industry and maybe a lot of other things that are just as bad."]},{"component":"p","children":["But it’s not like a bullet to the head. You learn from your mistakes, pick yourself up and move on. If you’re not willing to embrace risk as an entrepreneur, then you should be working for someone else, not running your own business. It comes with the territory."]},{"component":"h3","children":[{"component":"em","children":["Marketing is Good, but Making Your Product Good is Better"]}]},{"component":"p","children":[{"component":"a","props":{"href":"http://priceonomics.com/the-san-francisco-drug-economy/","target":"_blank","rel":"nofollow"},"children":["Priceonomics"]}," points out that drug dealers are “experts at identifying their customer base. They realize…that if a product is good enough, it doesn’t need to be heavily marketed.” Put another way, you can’t put a pig in a poke for very long and get away with it. All the marketing in the world isn’t going to save a flawed product. It’s so much easier to sell a product that is so good your target consumers won’t be able to do without it."]},{"component":"p","children":[{"component":"em","children":["Related Article:"]}," ",{"component":"Link","props":{"href":"http://www.business.com/management/are-you-running-your-business-like-a-rich-person/"},"children":["Are You Running Your Business Like a Rich Person?"]}]},{"component":"h3","children":[{"component":"em","children":["Want to Make Money"]}]},{"component":"p","children":["The core of any business is to make money. At least it should be. While the idea of starting a business and worrying about making money later isn’t as popular as it once was back in the dot-com heyday, there are still those entrepreneurs who start a company without putting profitability as the chief and overriding goal, according to Sebastian Dillon at ",{"component":"a","props":{"href":"http://nextshark.com/7-reasons-why-a-drug-dealer-is-a-better-entrepreneur-than-you/","target":"_blank","rel":"nofollow"},"children":["NextShark"]},". Angel investor ",{"component":"a","props":{"href":"http://nextshark.com/serial-entrepreneur-scott-gerber/","target":"_blank","rel":"nofollow"},"children":["Scott Gerber "]},"characterizes this as “the stupidest way to think about business” that isn’t going to attract investment money, let alone result in business longevity."]}]},"resource":null,"sponsorship":null,"thumbnail":{"path":null,"caption":"Fizkes / Getty Images","isBlurred":true},"bestPicks":null},"related":{"relatedArticles":[{"title":"A Nod to Narcos: Why You Should Run Your Business Like a Drug Lord","canonical":"https://www.business.com/articles/why-you-should-run-your-business-like-a-drug-lord/","slug":"why-you-should-run-your-business-like-a-drug-lord","thumbnail":"https://www.business.com/images/channel/business-basics.jpg","dek":"Drug dealers may be criminals, but they are also savvy business people. What legal lessons can you learn from their tactics?","lastModified":"2015-12-09T18:00:00Z","published":"2015-12-09T18:00:00Z","sponsored":false},{"title":"You Can Do It: How to Start a Business on a Shoestring","canonical":"https://staging.business.com/articles/start-a-business-on-a-shoestring/","slug":"start-a-business-on-a-shoestring","thumbnail":"https://staging.business.com/images/content/565/cc3303287b1f86b8b465e/1500-0-","dek":"Starting a business doesn't mean you need deep pockets. Here's how to get your business off the ground on a shoe string budget.","lastModified":"2015-12-03T15:00:00Z","published":"2015-12-03T15:00:00Z","sponsored":null},{"title":"The Brains Behind Y Combinator: Startup Advice From Paul Graham","canonical":"https://staging.business.com/articles/startup-advice-from-paul-graham/","slug":"startup-advice-from-paul-graham","thumbnail":"https://staging.business.com/images/content/566/626253287b14b628b4632/1500-0-","dek":"Paul Graham, a founder of startup incubator Y Combinator, has some no-nonsense advice for startups.","lastModified":"2015-12-10T19:00:00Z","published":"2015-12-10T19:00:00Z","sponsored":null},{"title":"Facts Vs. Emotions: When to Use Each Tactic to Make a Sale","canonical":"https://staging.business.com/articles/facts-vs-emotions-when-to-use-each-tactic-to-make-a-sale/","slug":"facts-vs-emotions-when-to-use-each-tactic-to-make-a-sale","thumbnail":"https://staging.business.com/images/content/564/505ac3087b1cd1d8b4586/1500-0-","dek":"What part do facts and emotions play when it comes to making a sale? Learn when to use logic or emotion when it comes to the consumer.","lastModified":"2017-02-22T23:59:03Z","published":"2015-11-13T21:00:00Z","sponsored":null},{"title":"Facts Vs. Emotions: When to Use Each Tactic to Make a Sale","canonical":"https://www.business.com/articles/facts-vs-emotions-when-to-use-each-tactic-to-make-a-sale/","slug":"facts-vs-emotions-when-to-use-each-tactic-to-make-a-sale","thumbnail":"https://www.business.com/images/channel/marketing.jpg","dek":"What part do facts and emotions play when it comes to making a sale?","lastModified":"2015-11-13T21:00:00Z","published":"2015-11-13T21:00:00Z","sponsored":false},{"title":"Restaurant Wars: Is The Tipping Economy at a Tipping Point?","canonical":"https://staging.business.com/articles/restaurant-wars-is-the-tipping-economy-at-a-tipping-point/","slug":"restaurant-wars-is-the-tipping-economy-at-a-tipping-point","thumbnail":"https://staging.business.com/images/content/568/1c95f3087b162792efe37/1500-0-","dek":"A major NYC chain of eateries is eliminating tipping and raising prices. Is this the future for restaurant businesses?","lastModified":"2016-01-05T15:00:00Z","published":"2016-01-05T15:00:00Z","sponsored":null},{"title":"Emotional Intelligence and Negotiating: Lessons From Harvard Business School","canonical":"https://www.business.com/articles/business-negotiating-tactics-from-harvard-university/","slug":"business-negotiating-tactics-from-harvard-university","thumbnail":"https://www.business.com/images/content/5ee/0f9f87b437499718b457e/1500-0-","dek":"Follow these tips from Harvard Business School professor Michael Wheeler to manage anxiety and emotionally prepare for negotiation.","lastModified":"2020-06-15T19:14:00Z","published":"2015-08-07T13:00:00Z","sponsored":false},{"title":"A Dose of Honesty: Is My Business Idea Stupid?","canonical":"https://staging.business.com/articles/a-dose-of-honesty-is-my-business-idea-stupid/","slug":"a-dose-of-honesty-is-my-business-idea-stupid","thumbnail":"https://staging.business.com/images/content/568/ec4a83187b1807c951e7c/1500-0-","dek":"Have a crazy idea for a business venture? To avoid a shark attack, start by evaluating whether or not you can explain your services clearly.","lastModified":"2017-02-22T23:53:29Z","published":"2016-01-22T20:00:00Z","sponsored":null},{"title":"A Dose of Honesty: Is My Business Idea Stupid?","canonical":"https://www.business.com/articles/a-dose-of-honesty-is-my-business-idea-stupid/","slug":"a-dose-of-honesty-is-my-business-idea-stupid","thumbnail":"https://www.business.com/images/channel/business-basics.jpg","dek":"Have a crazy idea for a business venture? To avoid a shark attack, start by evaluating whether or not you can explain your services clearly.","lastModified":"2016-01-22T20:00:00Z","published":"2016-01-22T20:00:00Z","sponsored":false},{"title":"Emotional Intelligence & Negotiating: Lessons from Harvard Business School","canonical":"https://staging.business.com/articles/business-negotiating-tactics-from-harvard-university/","slug":"business-negotiating-tactics-from-harvard-university","thumbnail":"https://staging.business.com/images/content/55c/3ee472f87b1cb678b458f/1500-0-","dek":"Tips on managing anxiety and emotional preparedness for negotiation from Harvard Business School professor Michael Wheeler.","lastModified":"2019-07-31T20:57:23Z","published":"2015-08-07T13:00:00Z","sponsored":null},{"title":"Are You a Gambler? You Might be a Perfect Entrepreneur","canonical":"https://staging.business.com/articles/are-you-a-gambler-you-might-be-a-perfect-entrepreneur/","slug":"are-you-a-gambler-you-might-be-a-perfect-entrepreneur","thumbnail":"https://staging.business.com/images/content/56b/2904d2f87b15b27fb016e/1500-0-","dek":"If you love the thrill of risk, chances are you'd thrive as a entrepreneur. Here's why gamblers have what it takes to succeed in business.","lastModified":"2019-07-31T20:55:55Z","published":"2016-02-05T22:00:00Z","sponsored":null},{"title":"Are You a Gambler? You Might be a Perfect Entrepreneur","canonical":"https://www.business.com/articles/are-you-a-gambler-you-might-be-a-perfect-entrepreneur/","slug":"are-you-a-gambler-you-might-be-a-perfect-entrepreneur","thumbnail":"https://www.business.com/images/channel/business-basics.jpg","dek":"If you love the thrill of risk, chances are you'd thrive as a entrepreneur. Here's why gamblers have what it takes to succeed in business.","lastModified":"2016-02-05T22:00:00Z","published":"2016-02-05T22:00:00Z","sponsored":false}],"relatedReviews":[{"doc_type":"category","thumbnail":"https://staging.business.com/images/rz/5db752e25a215e277d8b4588/Invoicing_AndreyPopov_BDC.png","canonical":"https://staging.business.com/categories/best-collections-agency-services/","title":"The Best Collection Agency Services of 2021","dek":"We've reviewed the best collection agency services for 2021. See up-to-date comparisons on features and the best prices for the top-rated agencies.","slug":"best-collections-agency-services","lastModified":"2021-03-17T16:34:00Z"},{"doc_type":"category","thumbnail":"https://staging.business.com/images/rz/5e4edd837b437442548b456d/cash_Dutko_getty.jpg","canonical":"https://staging.business.com/categories/small-business-loans-and-financing-options/","title":"The Best Business Loan and Financing Options of 2021","dek":"Many small businesses need funding to get started. Learn about the different financing options to decide which would work best for your small business.","slug":"small-business-loans-and-financing-options","lastModified":"2021-03-11T17:24:00Z"},{"doc_type":"category","thumbnail":"https://staging.business.com/images/rz/5d4c65367b43741a258b4572/Laptop_Sfio_Cracho.png","canonical":"https://staging.business.com/categories/crm-software/","title":"The Best CRM Software of 2021","dek":"Looking for the best CRM software? We have easy-to-read, expert unbiased reviews and feature comparisons of the best and cheapest programs.","slug":"crm-software","lastModified":"2021-02-24T14:09:00Z"}],"relatedSponsoredArticles":null}},"pageContext":{"displayModified":"2015-12-09T18:00:00.000Z","template":"legacy","title":"A Nod to Narcos: Why You Should Run Your Business Like a Drug Lord","meta":{"robots":"index, follow"},"docType":"articles","slug":"why-you-should-run-your-business-like-a-drug-lord","canonical":"https://staging.business.com/articles/why-you-should-run-your-business-like-a-drug-lord/","skipTOC":false}},"staticQueryHashes":[]}