Defenestrating Thoughts from the Bivouac

Usually there’s nothing funny about recessions, but this article about rich men losing their portfolios and “toxic wives” is hilarious.

‘You loser!” screamed Katie, aiming a vase at her husband. “You’ve destroyed my life,” she continued, hurling it. “Just look at my hair, look at my nails! You loser, you jerk, you nobody.”

Katie’s husband, Jack, whose property portfolio disintegrated in the financial crash, had just told his wife that she would have to cut back on her thrice-weekly visits to Nicky Clarke, the nail salon in Harvey Nichols, and the oxygen facials, chemical peels and seaweed wraps at Space NK.

Not only that, but they no longer had the money to pay for an army of bullied Eastern Europeans to wait on her hand and foot.

Worse was to come: the brow-lift would have to be cancelled; her black Amex card would have to be snipped in half …

Such was the aggression and verbal and physical abuse that followed that Jack was left with cut lips and blood streaming from a broken nose.

Their eight-year-old child, not yet at boarding school, sat cowering in a corner and dialing 999. When they arrived, they had to restrain Katie forcibly from attacking her husband.

Wow. The lesson here is to not marry a crazy person.

So, what exactly is a toxic wife? Apparently, it’s just like a trophy wife:

[T]he Toxic Wife is the woman who gives up work as soon as she marries, ostensibly to create a stable home environment for any offspring that might come along, but who then employs large numbers of staff to do all the domestic work she promised to undertake, leaving her with little to do all day except shop, lunch and luxuriate.

And, presumably in most cases, the kids are raised at boarding school.

These women not only spend all your money while you’re with them, they try to take more on the way out.

Another case is Sasha who, for the past few months, had been gloating about the £3.4 million chalet in Verbier her husband was about to exchange on, how she’d managed to hire a high-society interior decorator to do it up for a song (”more an anthem, actually”, she’d giggled) and how much she was looking forward to a white, snowy Christmas there.

At the last minute, Husband pulled out of the deal. Never mind that he had lost his lucrative job in the City, she felt he had deliberately traumatized her and is suing him for divorce on the grounds of mental cruelty. ‘

Divorce on the grounds of mental cruelty? I think the lawyer representing her needs to be shot.

Of course given the economic climate, people will be cutting back on high end items, like organic foods:

I told my wife to stop this organic food malarkey,” said Jeremy, a beleaguered hedge-fund manager, another man who fell for an extremely beautiful yet extravagant woman.

“She went ballistic. Organic Hass avocados cost £1.75 each and she wanted me to buy six of them! In the end, I just peeled off the labels that said they were certified organic and put them on ordinary avocados – she didn’t notice the difference. I did the same with bananas.”

Jeremy’s wife left him. Apparently, buying conventional produce was the last straw:

As soon as the financial wobbles started, she must have joined some upmarket dating agency because somehow she’s found another very rich man pretty damn fast.”

Here’s the clincher: there’s a whole new industry based on training rich men to distinguish between trophy wives and normal women,

These particular women know how to fake love,” adds Ambrose. ”They’re actually very good at it.”

She now has a waiting-list for her life-coaching sessions – a course costs between £10,000-£60,000 – on how to distinguish a gold-digger from a genuine woman.

That’s a lot of money to teach someone on how to spot a trophy wife. Forget working for Detroit or Wall Street, or becoming a gradual student, I’m going to set up my own $120,000 course on how to identify a gold-digger. What a great scam!

Apparently these guys are only good at making money and then losing it to scams, whether it is to a trophy wife or a “life-coaching” to avoid trophy wives.

Continuing on the theme of amusing business ideas, a few friends and I have been joking about starting our own business consulting company. Our promise is that we can triple your company’s revenue in a year, guaranteed!

The strategy is to take advantage of loss leaders. Loss leaders are items sold below cost in the hope of selling a more profitable item later. A famous example, the Gillette model, is how Gillette sells their razors for cheap (or gives them out for free) and makes up the money when people buy the high-margin replacement blades.

It’s also how the Xbox and Playstation business models work. The companies lose money on the console and hope to make it up on the game sales. Nintendo, however, makes a profit on both the console and the games.

A number of companies use the loss leader to brag about “huge revenue growth” during analyst reviews, while remaining quiet about the lack of profit. This gives the impression that the company is doing great while the verdict is still out on whether they can recoup their losses. I had always found it strange that some companies always talked about revenue, but rarely talked about profit. But once I realized that it’s easy to make revenue look good, I figured out what was going on.

So back to the business consulting idea. Basically the recommendation is that you set up a loss leader situation or in other words, “Sell $100 for $20″. Revenue goes up, so the investors are happy, and the stock goes up. :-)

Once you’ve saturated the market with the loss leaders like the video game consoles, people start buying games. Eventually you reach a point, where in a fiscal quarter console sales have slowed and game sales have risen so you actually have a profit. Then you can announce “We’re profitable!”. Never mind, all the losses you took in the previously quarters, this quarter was good! So again, the investors are happy and the stock goes up.

Of course, over time you could earn back all your losses, but sometimes you don’t. Especially in fast moving markets, you may be releasing a new console while still trying to recover costs of the old one.

And yes, loss leaders are a very legitimate business strategy. But notice how similar it is to this stupid idea:

• Give people a $20 bill for 15 $1 bills – Revenue is $20 per transaction.
• Soon you can announce record high revenues and watch the stock go up. Keep going until you spend most of your venture capital funds.
• By now, you’ve cornered the market on $1 bills. And demand on $1 bills goes up since people can’t make change without them.
• Offer change with a 5% service charge – the profit is 5% per transaction.
• Announce your first quarter of profitability and watch the stock go up again.

Sure, there are a few reasons that this won’t work. But substitute “dollar bills” with disposable razors or video games, and it just might. :-)