What the Mob can teach the startup industry
Forty-four-year-old Louis Ferrante hasnât led a life that might naturally lead to business consulting. As a teenager growing up in Queens, New York, he stole car batteries that he âsold for $10 to get a slice of pizza and play video games.â Later, Ferrante moved on to stealing cars for joy rides, then taking orders from body shops looking for cheap parts. From there, it was a short leap to hijacking trucks and selling their contents through a neighborhood âfence.â
Eventually, Ferrante ran his own crew as an associate of the Gambino family. âWhen youâre hijacking trucks on the street in Queens, the Mafia is going to hear about you,â he tells me. âItâs not like they come down and say, âWeâll kill you if you donât pay us.â They take you under their wing.â
In fact, Ferrante might still be a mobster today had state law enforcement and federal agents not taken him down while he was still in his 20s. But even high-powered defense attorneys like Barry Slotnick couldnât save Ferrante from what would eventually be more than eight years in prison, where he says he fell in love with books -â and out of love with the Mob.
Explains Ferrante: âWhen someone was killed, you didnât ask what happened because if you did, theyâd want to know why you asked and youâd be dead, too. But I always assumed the guy deserved to die.â In jail, playing cards with âthe killers of people I knew,â Ferrante says it became apparent that most of the murders were fueled instead by simple greed. He decided that âhowever long I have to do (in jail) I will, but when I get out, I want to be done.â
Luckily for Ferrante, his old cohorts let him go his own way when he was released from prison in 2003. Using his life experiences as fodder, heâs gone on to become a successful writer. His newest book, âMob Rulesâ, offers surprisingly insightful lessons about what the Mafia can teach legitimate businesspeople. I reached Ferrante in New York yesterday to talk about how his advice might be applied to startup founders and VCs.
Q: Your new book offers 88 leadership lessons gleaned from the Mafia. One of them is about how to build trust within an organization. I think venture firms, where partners try outdoing one another, could learn something from this. Whatâs your advice?
A: You have to spend time with people outside of work. You can pull a heist with someone or work on Wall Street with them every day, but to really get more insight into a guy, grab dinner with him; go on vacation together. You have to get to know someone on a more intimate level. I think about the guys who became rats, who became cooperating informants, and there was always something I saw in them but didnât believe or explore at the time â something where I should have said, âWhoa, thatâs a little weird.â
Q: It sounds like your advice includes to trust your instincts.
A: Absolutely. You can also ask his neighbors, if you really want to know somebody. (Laughs.)
Q: You also talk about the importance of avoiding office politics.
A: I learned that through a father figure, Artie the Hairdo, an old-timer who was really from the old school. When Sammy (Gravano) was first appointed the underboss of the (Gambino) family, I asked Artie what he thought. He was eating dinner, and he just paused, gave me a stare and kept eating. He obviously had distaste for Sammy, and he was basically communicating to me not to get too deeply involved with him. But Artie himself pretty much stayed away from Sammy, and unlike a lot of others who took sides and got killed, he died of natural causes.
Q: Speaking of your old friend Artie, you suggest mnemonics as a way to remember things. Can you elaborate?
A: We all did it. It was this untaught, unwritten thing you did. Itâs how you remembered 500 people: Fat Franky and Skinny Franky and Franky Flippers, who goes diving once in a while with his wife. You never forget a name that way.
When I was in the Mob, I could tell you how much 50 people owed me and on what day they owed it. I had to remember it all because I couldnât write it down in case I got pinched. I will tell you that the more you rely on your mind, the more your mind rises to the occasion.
Q: This is a stretch, admittedly, but do you see parallels between the way that VCs and mobsters decide to back businesses?
A: I think in both cases, someone has to vouch for someone else. On the street at least, your verbal resume is everything. To me, if someone brings me a guy (looking for money), heâs somewhat responsible for how that guy behaves. He may be paying alimony; he has child support. But if someone tells me heâs good, that he pays all his bills on time and that heâll pay me (I do the deal). Itâs still a risk, but it was very rare that if somebody vouched for somebody else it turned out bad.
Q: What about knowing when someone is wasting your time? I think a lot of entrepreneurs would accuse VCs of doing exactly that.
A: Itâs so easy. You know if someone has a real interest in what youâre talking about. You just sense it. If I call a guy and I ask, âDid I catch you at a bad time?â and he says, âNo, no, no, Louie, whatâs going on?â I know heâs interested. If I call him and he says, âSorry, you caught me at a bad time,â I donâtâ want to talk with that guy again. Heâs done. Heâs off my Rolodex. On the street, too, you get a sense of a guy in a heartbeat.
It definitely helps to appeal to peopleâs specific interests. If you want to open a nightclub and you know someone who wants to be Don Cheech and heâs dating 25-year-olds, chances are heâs going to listen to you.
Q: You also talk about the importance of having âan inside guy.â Could that be interpreted as advising companies to place a mole at a competing startup?
A: It looks underhanded, but itâs not. Look, itâs a competitive world, and the best tips I had came from inside guys. It was, âIâm working at this place, and every Friday the payroll is so much money and nobody is watching it.â Sometimes, people just wanted to do me a favor. Other guys, Iâd go to and say, âI have an end (a bonus) for you.â
If youâre just willing to listen to people, you can glean a lot of information without having to pointedly ask: âGive me the dirt.â Just go hang out with somebody and listen. Everyone is willing to talk if youâre friendly, especially if youâre in a similar business. They want to be your friend, and theyâll tell you stuff, and that inside information can be crucial, like: âThis is the rock-bottom number our company will take.â
Every company would do it back to you if they could.
Q: OK, last question. You also say in the book that âthree can keep a secret if two are dead.â Iâm sure plenty of entrepreneurs and VCs can relate to wanting to protect trade secrets, but whatâs the best way to do that, practically speaking?
A: We had this rule in the Mob: If you didnât go, you shouldnât know. So whoever the guys were who went on a heist with me were the only people who should know it was happening. You didnât tell your wife or brother or best friend. That rule isnât applied as much in the Mob as it used to be, but it should be.
When John Gotti did the hit on Paul Castellano (head of the Gambino family before Gotti took over), he didnât ask the families. He didnât tell the hit men what they were doing until they were doing it, because all you need is one guy talking, and Johnâs dead by the end of the week. Instead, the night of the hit, he said to them, âPut on these Russian hats and these trench coats. Weâre taking somebody out.â
In a company, whoever has to know should know, but only as much as they need to know. You canât control who knows your information entirely. People just canât keep their mouths shut. Itâs just human nature. But you can limit your vulnerability.