Not long ago our company made a deal to purchase a significant amount of machinery outside the United States. The deal seemed like a great opportunity, but we thought the sensible thing would be to visit the seller before making any purchase because he was someone who we had never met before.
I traveled a long way to meet him, and we spent several days together looking at machines. He brought his wife along with him for the whole trip. We had dinners together during which they told me about their children. His wife repeatedly acted like a concerned mother when she noticed my runny nose. They seemed like decent people, and they gave us a good price so we made a significant deposit on some machines. In the end, things did not go as planned. The company attempted to pocket the deposit and did not send any machines.
We felt dumb. We asked ourselves, how could we not have realized we were being conned?
I recently finished listening to Malcolm Gladwell’s new book, Talking to Strangers, which sheds some light on our experience. The thesis of Talking to Strangers is that the majority of people are incapable of judging the true character of others based solely on “getting to know” them. The book contains many powerful examples of people who seemed genuine but then turned out to be liars, along with other examples of people who seemed suspicious but turned out to be innocent.
Early in the book, Gladwell tells a story about multiple double agents in the CIA who spied for Cuba for many years before being uncovered. The agents who were supposed to be spying on Cuba were in actuality spies for Cuba! U.S. Intelligence agents who were supposed to have been “experts” on judging the honesty of other people were made to look like complete fools.
Gladwell discusses another example of flawed human character assessment in a passage about judges in New York whose job is to choose which suspects should be released on bail and who is too risky to let out of custody. Several elite computer scientists, a Harvard economist and a bail expert from the University of Chicago created a computer program to research the ability of the judges for discerning which suspects should be released. From 2008 to 2013 550,000 defendants were brought for arraignment to the group of New York judges, and the judges released just over 400,000.
The researchers built an artificial intelligence system and fed it the same information that had been given the judges in the 550,000 arraignment cases, mainly the defendant’s age and criminal record. The artificial intelligence system chose its own 400,000 defendants to be released over that time period to see which 400,000 releasees committed the fewest crimes on bail and made their trial date. The 400,000 released by the computer were 25% less likely to commit a crime than those chosen by the judges. The computer program only had the defendant’s age and rap sheet to make its judgment, while the judges also got to hear the arguments from the lawyers and look the defendants in the eye.
Gladwell also writes about Neville Chamberlain misjudging Hitler after meeting him several times. He writes about the people who misjudged Bernie Madoff and sex offenders such as Jerry Sandusky and Larry Nassar.
Gladwell says that the usual inclination of people is to “default to truth.” People want to trust other people because that trust is what makes society function. If the default opinion of a youth sports team coach is that they are a pedophile nobody would let their child play on a team, and nobody would take a job as a coach.
If my default opinion of every person selling machines is they are trying to cheat me, I will never be able to make any deals. Business must go on, and life goes on because I know most people are relatively honest. Going forward I will try to keep my guard up, and I won’t put as much stock into looking people in the eye.
Do you trust most people you do business with?
Have you ever been conned?
My mother told me never talk to strangers.
I think everybody gets conned at some time or another. We had one where a man front the Ukraine and started up but ran out of cash. Nice guy, but he had no idea what it costs to be in business.
That brings up an interesting point. Even though there is no inflation, why is the price of pretty much every single component in automation and machine tooling about double what it was 10 years ago. Wages are only up 50% over the same period, but insurance is more than 5 times the cost. I don’t think we have a customer left who understands why the price of what we sell is going up as fast as it is, yet the margin is not going up along with it.
I recognize that I am overly optimistic and have to remember that. I have plenty of people around me that are not overly optimistic and that tends to balance things out. I also have a number of stereotypes of people in my head that I hope are proven wrong, but most of the time they are not. I do still try to give people the benefit of the doubt.
You are 100% right when you say “Business must go on, and life goes on because I know most people are relatively honest.”
Thanks for sharing – great reminder.
If you got your money back, how did you do that?
I think trust comes with time. It takes time to get to know someone and build trust. My wife and I dated for 5 years. This year we are celebrating our 35 anniversary. In business I try to build those same relationships. How long have you been with the company? How long have you represented the product? I have customers that have been buying from me for 20 years. Trust is a commitment to do the right thing in difficult situations. You need time to earn trust.
I bought a machine from a company in California, I’m from Minnesota. I found the machine on the internet. I flew out, met the people, I formed a questionable option of them based on the surroundings & dress, but they still seemed sincere. I looked at the machine found out what was wrong with it (very minor) and they would send me the replacement parts & pay to have them installed by a refrig. person. Done deal but felt a little uneasy about the repair stuff, we could still run the machine with out the fix for a while. A month later, parts showed up! As it turns out they were truly as sincere as their word & I will more than likely call them in the future for potential machinery!
I’m sorry you went through that, Noah.
We were sent some bad product once or twice from some new vendors. It was an inconvenience and a small loss, but not catastrophic.
A few more times we were sent some product that didn’t meet specs. Once we emphasized we would not accept that and forced them to remake it, they have ended up being a good vendor.
I think the key when in a risky situation is to keep the project small so a bad deal doesn’t turn into a catastrophe. But there is always some risk. We’ve been in business 30 years so we have had a LOT more good than bad. So, we’re grateful.
Ever see the movie “Catch Me If You Can”? The true story of Frank Abagnale, Jr., a famous con man at ages 17 to 21! When caught, the FBI made him a consultant on scams–a role he still fills to this day (privately).