The salesman who had a scheme named after him

Published: Wed, 01/24/24

January 24, 2024

TOGETHER WITH

Good morning. This is the last newsletter of January — actually, wait… it’s not. There’s still a whole ‘nother week left in this never-ending month, which feels even longer if you’re in New England or the Midwest, watching your breath turn to mist. For now, warm up with this week’s issue of The Quota, where we’ll tell you about Charles Ponzi, along with the usual treats.

NUMBER OF THE WEEK

28% of sales pros say the sales process taking too long is the biggest reason prospects back out of deals.

Source: HubSpot

SALES ROUNDUP

Here’s what’s happening in the sales world this week:

Google is once again making cuts to its sales team. After laying off about 1,000 employees two weeks ago, Google is now cutting jobs on its advertising sales team. In a statement to The Verge, Google spokesperson Chris Pappas confirmed that “a few hundred roles globally are being eliminated” as part of the change. Google’s VP of sales hinted the layoffs will primarily affect its Large Customer Sales (LCS) unit, a team that sells ads to large businesses. You can read more about the layoffs here.
According to a car salesman TikToker (is that how you say it?), if you’re in the business of selling cars and want to have a better experience at work, you might want to ditch selling lower-priced vehicles and focus on trying to sell some of the higher-end luxury brands instead. According to the salesman, Keshawn, a month was all he needed to see that luxury car sales is where it's at. You can read more about his reasons here.

FEATURE

Image: The Trustees of the Boston Public Library/Leslie Jones Collection

How Charles Ponzi sold a lie and had a scheme named after him

If you were told there was a famous historical figure who had each of the following jobs in their lifetime, who would you think it was?

Waiter
Nurse
Organ donor
Translator
Macaroni company owner
Airline agent

Oh, and he defrauded people to the tune of $20 million dollars as well. Yup, Charles Ponzi had quite a few jobs before he settled on “professional scammer.” And though he did manage to slip through the fingers of law enforcement for many years, he wasn’t always so clever. In fact, at first, he failed — a lot.

It would be an inspiring story if he had actually led an honest life. Arriving in Boston from Italy with just $2.85 in his pocket in 1903, Ponzi failed multiple times to turn his business schemes into successes, including an advertising company and his own wife’s family fruit company.

It was actually in Montreal that Ponzi first encountered the scheme that would one day bear his name. He became a teller at Banco Zarossi, founded by Luigi Zarossi, who was “robbing Peter to pay Paul” by paying off bank investors with the money from newly opened accounts. And at 6% interest per deposit, double the going rate at the time, there were plenty of willing clients. However, since it was operating at a loss, the bank eventually failed, and Zarossi zipped off to Mexico with most of his investors’ money. Left behind, the penniless Ponzi took note.

It wasn’t until 1919 that Ponzi found a way to create a similar scheme back in Boston. While selling business ideas to contacts in Europe, he encountered the International Reply Coupon, or IRC. Also known as postal reply coupons, these allowed mail senders to pay for their correspondent’s reply with a coupon that could be redeemed for postage in the country of the receiver. The coupons were priced at the postage rate in the country of purchase but could be redeemed at a profit if the postage in the receiving country was more expensive. This was a form of arbitrage, or purchasing a commodity in one market and then immediately selling it in a market where the price is higher. But Ponzi needed starter money to purchase the coupons, so he set up a stock company and asked a few friends to invest, promising to double their investment in 90 days. His friends agreed, and he paid them as promised with the money from newer investors. The Ponzi scheme had begun.

Ponzi set up the Securities Exchange Company to promote his scheme in January of 1920. Six months later, he had garnered $2.5 million in investments, equivalent to about $37 million today. He got everyone to invest, from poor paperboys to Boston’s elite. And as long as new people kept investing, he could keep paying off his older investors. Which was good, because it was actually logistically impossible to legitimately profit from the postal reply coupon model, which would have required about 53,000 of them just to pay back the original 18 investors in the company.

It took an obnoxiously long time for anyone to really investigate Ponzi’s activities. He disarmed everyone from state officials to reporters with his charm and ability to pay off any investors who wanted to withdraw. But a series of articles in the Boston Post questioning the validity of Ponzi’s scheme were the beginning of the end. Soon, investigative journalists, the U.S. Attorney for the District of Massachusetts, and the Massachusetts Bank Commissioner were on his tail in an attempt to uncover how financially solvent he really was. An audit revealed that he was about $7 million dollars in debt. Ponzi surrendered himself to the authorities, but only pled guilty to one of 86 counts of mail fraud. He was sentenced to a light five years in prison.

You would think the story ends there, but no. After only three and a half years, Ponzi was released, but was immediately indicted on an additional 22 larceny charges. While being charged on the first 10 counts, he acted as his own attorney and convinced the jury to acquit him. The second trial for 5 counts of larceny was deadlocked, and he wasn’t found guilty until the third trial, where he was sentenced to an additional seven to nine years in prison.

However, Ponzi escaped on bail and started yet another company called Charpon (an amalgamation of his own name) that scammed people by selling them swampland in Florida with promises of 200% returns. He was then indicted for that crime and eventually sentenced to one year in prison, but he appealed and posted bail. He used this opportunity to attempt to flee the country like his old friend Zarossi, but he couldn’t pull it off. He was caught and served the remainder of his seven-year prison sentence.

After his release from prison seven years later, Ponzi was deported back to Italy, but he ended up in Brazil working for an Italian airline. In his very last interview with an American reporter, he said: "Even if they never got anything for it, it was cheap at that price. Without malice aforethought I had given them the best show that was ever staged in their territory since the landing of the Pilgrims!... It was easily worth fifteen million bucks to watch me put the thing over!"

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How long you can get away with being “new” until you’re held accountable
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Organizing your calendar while leaving time to cry
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MEME OF THE WEEK

Source: Instagram -- Sales Humor

QUIZ

What is the world record for longest career as a car salesperson?

A. 54 years
B. 118 years
C. 61 years
D. 57 years

SALES FAILS

Each week, we bring you the most cringe-worthy sales moments from across the web. To submit your sales fail story for consideration, click here. (Don't worry, you'll remain completely anonymous).

This happened to me early in my career. I was an AE at a small company providing agency services to startups. I handled the sales and account management for clients. I just landed a new customer, a CEO of a new startup. The first month went great, everyone was happy. I had the client's credit card to run monthly payments for the retainer. The end of the second month came around so I went ahead and charged his credit card like I had the month before. It was business as usual — the invoice was due so I ran the card.

Later that night, around 9pm, I got a call from my client. He was PISSED. Apparently he was out at a business dinner with a big prospective client (he was calling from the bathroom at the restaurant). He went to pay with his card, the same one that I ran earlier that day, and it got declined for hitting the credit limit. He was yelling about how embarrassed he was, how he had to put the whole bill on his personal card, and how unprofessional it was that I didn't let him know I would be charging the card.

I did my best to diffuse the situation and apologized profusely. I talked to my boss in the morning because I was worried he was going to leave, so we agreed to give him 25% off his next bill. He ended up staying with us and the relationship was great from there on but it was still a close call.

Anonymous Location withheld

GRAPH OF THE WEEK

Source: LinkedIn Poll -- January 2024

WORTH A PEEK

Do you go to conventions to generate leads? It can be a great way to connect with prospects, as well as a great way to ruin your marriage, but if you go in without a strategy, you might not be making full use of your time. There’s a short Reddit thread on generating new leads at conventions. Check it out here.

ASK THE QUOTA

Want to submit a question and be featured in our advice column? Click here. (Don't worry, you'll remain completely anonymous).

Dear Quota Team

I used to work at one of the largest tech companies out there. I was a BDR for a year out of college and then got promoted to SMB AE. I was let go due to random layoffs after only 3 months in the AE role. Shortly after, I joined a smaller company (150 employees). The company does software consulting and I’ve been here for about 9 months now. I’m selling at the enterprise level with a 2 mil quota.

Everyone is really nice and the job is remote with occasional travel to random conferences that I believe are a waste of time/money. I’m losing motivation and sometimes don’t know what to do. Any tips/advice on selling in this environment would be appreciated. Do I leave? Do I try something new? I used to be very motivated but that has recently dwindled. I’m not sure if sales is for me anymore…

Uninspired in Florida

Dear Uninspired,

What you’re doing isn’t working, so you need a paradigm shift. This might mean finding another sales job, or leaving sales entirely. But before you do anything drastic, you need to change the channel in your mind.

One of the best ways to do this is to go on a trip (a non-work trip to be exact). Take a week off and go somewhere. Try not to overschedule yourself so you have some time to think. Think on the plane or in the car. Think when you get there. What do you want? What’s missing?

Chances are, you already know the answer to your question, you just need to flesh it out. And try to take the pressure off yourself a bit. You’re still young (24, according to your submission form), and you can change careers and change back a dozen more times. But before you quit, make sure you know whether it’s the job, the profession, or something else. Good luck.

Quiz Answer: A. the world record for longest career as a car salesperson is 54 years — (you can read the source article here)

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How did you like today's story?

Today's email was written by Ken Kupchik, Erica Furgiuele, Steve Rado, and Emily Hill.

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