8 ms·

How Two Guys Lost God and Found $40M

64 points by finid 11y ago

yownie 11y ago
What a ridiculous story and moral. Grew up poor but religious threw it all out to become rich and predatory. Great job guys.
- thehoff 11y ago
  All empathy right out the door. No second thought for the lives they were ruining for their own self.
  - theworstshill 11y ago
    People need to understand basic math, and around 30% of the population doesn't, at all. I went to public school and I know what kind of people neglected real education, and chose to fuck around instead. Its not the fault of these two guys, banks, or anybody else.
    - TheBranca18 11y ago
      I think you need to understand what empathy is. Nothing in your post actually addresses the post you replied to. Seems like what you're implying, is that it's okay to take advantage of people. And you're basing this implication on some anecdotal experience you had growing up. I just fail to see what that has to do with anything. Do you feel like taking advantage of desperate people is okay? Because that's what I'm getting out of your post.
      - theworstshill 11y ago
        Well hold on a second. How did the two playboys take advantage of the small businesses? The businesses needed money, he lent it to them. Did he physically force them to sign on the dotted line? Did they even bother reading the terms and understanding what it meant? If the business is croaking, taking a high interest loan isn't gonna help. Liquidate now, so at least you got some cash to pull through while you look for a normal job. I mean, what do you have to say? Surely you're more empathetic than I am, so I'm very interested in how people like you think.
        thehoff 11y ago
        From the article: At Second Source, the best customers were the most desperate. Often they were immigrants with poor English. Brokers bragged about their biggest rip-offs. For motivation, Hurwitz would tape $100 bills to the wall. Salesmen who weren’t cutting it would have their chairs taken away. “Why are you sitting on my chair,” Hurwitz would yell, “if you’re not making me any money?” I'm sure those businesses were not physically forced to sign but I'd wager those phone calls were not entirely forthcoming on details as well.
    - nemo 11y ago
      A large segment of the population is bad at math (and it's way more than 30%). You're labeling those people as some kind of moral failure since you didn't like the kids at school who were poor students and are sure all people who are bad at math are just like those classmates. There is a small group of people who recognize that many people are bad at math and deliberately exploit this fact to suck their victim's wealth dry until they're bankrupted or put out of business. You are absolving these people of any moral culpability. Very strange.
forgetsusername 11y ago
You can see where the story is going from that ridiculous opening photograph...
zensavona 11y ago
Good for them, I guess. I don't think there should be a legal limit on interest rates, but I also don't think I'd like to be in their business. At the end of the day, I'm of course envious of their money and lifestyle. I'd just like to get there a different way.
- a8da6b0c91d 11y ago
  The lenders of yore would drag you into a legal status of debt peonage, a form of slavery, if you couldn't make payments. The old loan sharks would break thumbs and legs. As long as it's very easy to declare bankruptcy and walk away from debt I don't get too worked up about it. Look at the irish pub owner discussed in the story. The business was going to go bankrupt anyway, he took a gamble with a loan that might have floated him through, but it turned out not to. The loan wasn't really the problem. The student loan originators are way more immoral than these guys, because student loans can not be discharged in bankruptcy.
cm2012 11y ago
I am surprised they allowed those pictures to be taken.
- thehoff 11y ago
  Judging them on how they are quoted and this article makes them appear doesn't surprise me at all. I'm sure they want others to see how they've made it.
mbarrett 11y ago
there is some truth to this quote. “But a business owner can buy this beer for a dollar, mark it up eight times, and sell it to idiots like us, and no one cares.”
- mschuster91 11y ago
  The mark-up in bars comes from the cost of rents, human resources, some advertising and a mark-up for smashed/lost/stolen glassware. Source: worked in a bar long enough Edit: Also, licensing and inspection fees tend to be ridiculous. And as soon as you serve food in your bar and not just alcohol, you're thrown into yet another pool of regulations, more licenses and more inspections.
  - TeMPOraL 11y ago
    > stolen glassware Oh yes. This happens far too often. It seems to be a common hobby among many college students to snatch anything and everything they find interesting. That very big beer mug? Gone. The decorations you hung for Valentine's day? If they're made of anything stronger than paper, they'll disappear. Hell, I've seen students stealing metal infomation boards from trams as souvenirs.
    - mschuster91 11y ago
      And bartenders are a walking target for criminals. I got robbed three times, a colleague got his cellphone stolen behind the bar while clearing a fight - and next day, he was working again, cops arrested someone and another guy stole his backup cellphone right under the cops' nose and vanished. The amount of times people tried and sometimes succeeded paying me with fake money or blowjobs (okay, I accepted the blowjobs though) cannot be counted even if I had eight hands and twenty fingers. And soccer club banners are a prime target for fans of rival clubs. Hell, I could write a book about my endeavours.
- joosters 11y ago
  Strangely though, not many small bar owners own multi-million dollar mansions in a tax haven. I wonder why that could be?
6stringmerc 11y ago
Following the description of the business model, I was mildly amused to see the name of the buyer: Goldman Sachs. "Doing God's work" indeed, Mr. Blankfein.
- cm2012 11y ago
  Goldman Sachs declined to buy them, some other company did.
  - puranjay 11y ago
    As per the article, Goldman Sachs just looked at their books to understand the business model, then started offering their own version of the service. Doing what GS always does: take someone else's crap, wrap it in gold foil and serve it on a silver platter in the guise of 'legitimacy'
  - ashurov 11y ago
    Goldman Sachs did even worse, they copied their business model and started their own department/company..
  - 6stringmerc 11y ago
    As others noted, it probably would've been more ethical just to buy the company outright, not simply doing "intellectual capital front running" they've frequently been accused of doing with actual capital.
RodericDay 11y ago
This wasn't too bad, actually. Starting off with them looking fairly "boss-like", ending up with them looking mediocre with lame post-party fare, and ending with both familial and distant anecdotes of the people they made suffer with shark loans, for plastic pearls. I would hope the average reader sees it as a cautionary tale about how not to become pathetic like this. Then again, my time browsing WallStreetOasis.com showed me that people unironically admired Gordon Gekko, so I'm sure some money hungry dweeb out there just wishes he was in their shoes right now.
ChuckMcM 11y ago
I found three things very sad about that article; these guys were raised to a strict religious code but had no idea about right and wrong, they had no problem rationalizing their behavior to themselves and others, and they ended up with a fat exit because the guardians of sleeze on Wall Street bought them out. Really? Sort of encapsulated the attitudes of some of the worst sorts of people who exploit "perfectly legal" loopholes to prey on people.
- Retric 11y ago
  Depending on what there books looked like they might have gotten similar returns winding down the company, it's not like there going to spend 20 million this year.
- protomyth 11y ago
  That's basically the difference between being raised as a biblical rules lawyer and being raised with a moral compass. I've noticed empathy seems to be the opposite of rules. Its not unique to Christianity or even religion, but you would think people who claim to study the New Testament would see their relation to some of the people mentioned as having conflicts with Jesus. I mean, its not like it doesn't hit you over the head with "don't be like that". They also slip into the "any means to an end" side of the spectrum which I find the true one phrase definition of evil.
  - JesperRavn 11y ago
    The people in the article are Jewish, not Christian, so I'm not why a critique of Christianity is relevant here. What is your opinion on Judaism?
    - protomyth 11y ago
      I have more experience with Christians doing the biblical rules lawyering than Jews, but its not an unknown way to learn codes in any religion. I'm pretty sure empathy is a shared trait from the common books from the Old Testament for both Christians and Jews[1]. 1) On a side note, Catholics and Protestants have different Old Testaments. [edit: folks JesperRavn has a legitimate question - be nice]
Jedd 11y ago
The God reference is perhaps a canard here. (If you think ${religion} provides a useful moral framework, you haven't read enough about ${religion}.) IIRC each of the three major monotheistic religions is fairly clear about the wrongs of lending money and charging interest -- except Judaism, which says it's okay so long as the borrower is not Jewish. Perversely, from a regulatory perspective they'd have been in trouble if they'd vetted their customers based on their faith.
- protomyth 11y ago
  Depending on who does the interpretation of Matthew 25:27, Christians might get a pass. I've read quite enough about my religion and it does provide a moral framework. I also believe in the principles in the US Constitution, but I see the section on slavery and realize it concept best banished to the dustbin of history[1]. The Bible was not only a religious text, but a historical and instructional. It had sections on how to treat slaves, which I ignore. I also have no need to go outside the city and bury my poop[2]. Inspired words are sadly not perfect words. 1) although given some stats, it might be more prevalent now in number (not %) than when that document was written 2) Deuteronomy 23:13
  - Jedd 11y ago
    Acknowledging this is a potentially very touchy subject, and definitely veering way off topic ... I'd still like to ask: If you're selecting which bits of a text to adopt, and interpreting other bits, why do you need the text (which contains things you obviously disagree with) as a 'basis of a moral framework'? Is there anything in your particular preferred version of the text that unambiguously allows the reader flexibility to pick and choose which bits they will agree with (my understanding is that this isn't the case - but my knowledge is not deep in this area).
    - protomyth 11y ago
      Yeah, a bit out of topic and I'm not a Biblical scholar or a learned man. Just another sinner trying to be a good person. Church elders have long sermons on how a religion changes with new discoveries, I just go with the flow and keep the theme. That said, I'll try. Its not so much selecting, as knowing that the context has changed in thousands of years. Burying your poop and what hand to use eating were important things back then, but only really practical on a survival show now. I have plumbing and good soap. How to treat slaves is not something the modern world should care about. Its not about disagreeing with the text, its understanding that whole free will and gaining dominion over it all sometimes discards the old conditions by freeing people. Its was a survival manual after all too. "Thou shalt not murder" and "Thou shalt not bear false witness against thy neighbor" are not something that loses their context. They speak to how to treat others and don't lose any meaning with era. Our changes to the world have not changed such fundamental truths. We are still humans and some things are eternal. The parables are still good lessons.
GlitterBall77 11y ago
What a scummy business. A reminder of the fact that it's not just that you make bank, but how you earn your living. For the shame.
itbeho 11y ago
There have always been loan sharks and a subset of the economy that they feed off of. What is troubling is that the business segment described in the article is so profitable that it has attracted institutional investors at a much bigger scale, which makes me think the number of small businesses in trouble these days must also be higher.
- MC7447a 11y ago
  If the loans are so profitable, why wouldn't more and more competition drive the interest rates lower and lower to "normal" levels?
masterponomo 11y ago
They should have held out for a Michael Lewis interview. They would have sounded a lot more pithy and heroic.
cjrp 11y ago
So they created a less successful Wonga?
smithkl42 11y ago
I couldn't help but be reminded of a passage I was reading just this morning: https://www.biblegateway.com/passage/?search=Psalm%2010&version=NRSVCE https://www.biblegateway.com/passage/?search=Psalm%2010&vers... In part: In arrogance the wicked persecute the poor— let them be caught in the schemes they have devised. 3 For the wicked boast of the desires of their heart, those greedy for gain curse and renounce the Lord. 4 In the pride of their countenance the wicked say, “God will not seek it out”; all their thoughts are, “There is no God.” 5 Their ways prosper at all times; your judgments are on high, out of their sight; as for their foes, they scoff at them. 6 They think in their heart, “We shall not be moved; throughout all generations we shall not meet adversity.”

64 points by finid 11y ago

What a ridiculous story and moral. Grew up poor but religious threw it all out to become rich and predatory. Great job guys.

thehoff 11y ago
All empathy right out the door. No second thought for the lives they were ruining for their own self.
- theworstshill 11y ago
  People need to understand basic math, and around 30% of the population doesn't, at all. I went to public school and I know what kind of people neglected real education, and chose to fuck around instead. Its not the fault of these two guys, banks, or anybody else.
  - TheBranca18 11y ago
    I think you need to understand what empathy is. Nothing in your post actually addresses the post you replied to. Seems like what you're implying, is that it's okay to take advantage of people. And you're basing this implication on some anecdotal experience you had growing up. I just fail to see what that has to do with anything. Do you feel like taking advantage of desperate people is okay? Because that's what I'm getting out of your post.
    - theworstshill 11y ago
      Well hold on a second. How did the two playboys take advantage of the small businesses? The businesses needed money, he lent it to them. Did he physically force them to sign on the dotted line? Did they even bother reading the terms and understanding what it meant? If the business is croaking, taking a high interest loan isn't gonna help. Liquidate now, so at least you got some cash to pull through while you look for a normal job. I mean, what do you have to say? Surely you're more empathetic than I am, so I'm very interested in how people like you think.
      - thehoff 11y ago
        From the article: At Second Source, the best customers were the most desperate. Often they were immigrants with poor English. Brokers bragged about their biggest rip-offs. For motivation, Hurwitz would tape $100 bills to the wall. Salesmen who weren’t cutting it would have their chairs taken away. “Why are you sitting on my chair,” Hurwitz would yell, “if you’re not making me any money?” I'm sure those businesses were not physically forced to sign but I'd wager those phone calls were not entirely forthcoming on details as well.
  - nemo 11y ago
    A large segment of the population is bad at math (and it's way more than 30%). You're labeling those people as some kind of moral failure since you didn't like the kids at school who were poor students and are sure all people who are bad at math are just like those classmates. There is a small group of people who recognize that many people are bad at math and deliberately exploit this fact to suck their victim's wealth dry until they're bankrupted or put out of business. You are absolving these people of any moral culpability. Very strange.

forgetsusername 11y ago

You can see where the story is going from that ridiculous opening photograph...

zensavona 11y ago

Good for them, I guess. I don't think there should be a legal limit on interest rates, but I also don't think I'd like to be in their business. At the end of the day, I'm of course envious of their money and lifestyle. I'd just like to get there a different way.

a8da6b0c91d 11y ago
The lenders of yore would drag you into a legal status of debt peonage, a form of slavery, if you couldn't make payments. The old loan sharks would break thumbs and legs. As long as it's very easy to declare bankruptcy and walk away from debt I don't get too worked up about it. Look at the irish pub owner discussed in the story. The business was going to go bankrupt anyway, he took a gamble with a loan that might have floated him through, but it turned out not to. The loan wasn't really the problem. The student loan originators are way more immoral than these guys, because student loans can not be discharged in bankruptcy.

cm2012 11y ago

I am surprised they allowed those pictures to be taken.

thehoff 11y ago
Judging them on how they are quoted and this article makes them appear doesn't surprise me at all. I'm sure they want others to see how they've made it.

mbarrett 11y ago

there is some truth to this quote. “But a business owner can buy this beer for a dollar, mark it up eight times, and sell it to idiots like us, and no one cares.”

mschuster91 11y ago
The mark-up in bars comes from the cost of rents, human resources, some advertising and a mark-up for smashed/lost/stolen glassware. Source: worked in a bar long enough Edit: Also, licensing and inspection fees tend to be ridiculous. And as soon as you serve food in your bar and not just alcohol, you're thrown into yet another pool of regulations, more licenses and more inspections.
- TeMPOraL 11y ago
  > stolen glassware Oh yes. This happens far too often. It seems to be a common hobby among many college students to snatch anything and everything they find interesting. That very big beer mug? Gone. The decorations you hung for Valentine's day? If they're made of anything stronger than paper, they'll disappear. Hell, I've seen students stealing metal infomation boards from trams as souvenirs.
  - mschuster91 11y ago
    And bartenders are a walking target for criminals. I got robbed three times, a colleague got his cellphone stolen behind the bar while clearing a fight - and next day, he was working again, cops arrested someone and another guy stole his backup cellphone right under the cops' nose and vanished. The amount of times people tried and sometimes succeeded paying me with fake money or blowjobs (okay, I accepted the blowjobs though) cannot be counted even if I had eight hands and twenty fingers. And soccer club banners are a prime target for fans of rival clubs. Hell, I could write a book about my endeavours.
joosters 11y ago
Strangely though, not many small bar owners own multi-million dollar mansions in a tax haven. I wonder why that could be?

6stringmerc 11y ago

Following the description of the business model, I was mildly amused to see the name of the buyer: Goldman Sachs. "Doing God's work" indeed, Mr. Blankfein.

cm2012 11y ago
Goldman Sachs declined to buy them, some other company did.
- puranjay 11y ago
  As per the article, Goldman Sachs just looked at their books to understand the business model, then started offering their own version of the service. Doing what GS always does: take someone else's crap, wrap it in gold foil and serve it on a silver platter in the guise of 'legitimacy'
- ashurov 11y ago
  Goldman Sachs did even worse, they copied their business model and started their own department/company..
- 6stringmerc 11y ago
  As others noted, it probably would've been more ethical just to buy the company outright, not simply doing "intellectual capital front running" they've frequently been accused of doing with actual capital.

RodericDay 11y ago

This wasn't too bad, actually. Starting off with them looking fairly "boss-like", ending up with them looking mediocre with lame post-party fare, and ending with both familial and distant anecdotes of the people they made suffer with shark loans, for plastic pearls. I would hope the average reader sees it as a cautionary tale about how not to become pathetic like this. Then again, my time browsing WallStreetOasis.com showed me that people unironically admired Gordon Gekko, so I'm sure some money hungry dweeb out there just wishes he was in their shoes right now.

ChuckMcM 11y ago

I found three things very sad about that article; these guys were raised to a strict religious code but had no idea about right and wrong, they had no problem rationalizing their behavior to themselves and others, and they ended up with a fat exit because the guardians of sleeze on Wall Street bought them out. Really? Sort of encapsulated the attitudes of some of the worst sorts of people who exploit "perfectly legal" loopholes to prey on people.

Retric 11y ago
Depending on what there books looked like they might have gotten similar returns winding down the company, it's not like there going to spend 20 million this year.
protomyth 11y ago
That's basically the difference between being raised as a biblical rules lawyer and being raised with a moral compass. I've noticed empathy seems to be the opposite of rules. Its not unique to Christianity or even religion, but you would think people who claim to study the New Testament would see their relation to some of the people mentioned as having conflicts with Jesus. I mean, its not like it doesn't hit you over the head with "don't be like that". They also slip into the "any means to an end" side of the spectrum which I find the true one phrase definition of evil.
- JesperRavn 11y ago
  The people in the article are Jewish, not Christian, so I'm not why a critique of Christianity is relevant here. What is your opinion on Judaism?
  - protomyth 11y ago
    I have more experience with Christians doing the biblical rules lawyering than Jews, but its not an unknown way to learn codes in any religion. I'm pretty sure empathy is a shared trait from the common books from the Old Testament for both Christians and Jews[1]. 1) On a side note, Catholics and Protestants have different Old Testaments. [edit: folks JesperRavn has a legitimate question - be nice]

Jedd 11y ago

The God reference is perhaps a canard here. (If you think ${religion} provides a useful moral framework, you haven't read enough about ${religion}.) IIRC each of the three major monotheistic religions is fairly clear about the wrongs of lending money and charging interest -- except Judaism, which says it's okay so long as the borrower is not Jewish. Perversely, from a regulatory perspective they'd have been in trouble if they'd vetted their customers based on their faith.

protomyth 11y ago
Depending on who does the interpretation of Matthew 25:27, Christians might get a pass. I've read quite enough about my religion and it does provide a moral framework. I also believe in the principles in the US Constitution, but I see the section on slavery and realize it concept best banished to the dustbin of history[1]. The Bible was not only a religious text, but a historical and instructional. It had sections on how to treat slaves, which I ignore. I also have no need to go outside the city and bury my poop[2]. Inspired words are sadly not perfect words. 1) although given some stats, it might be more prevalent now in number (not %) than when that document was written 2) Deuteronomy 23:13
- Jedd 11y ago
  Acknowledging this is a potentially very touchy subject, and definitely veering way off topic ... I'd still like to ask: If you're selecting which bits of a text to adopt, and interpreting other bits, why do you need the text (which contains things you obviously disagree with) as a 'basis of a moral framework'? Is there anything in your particular preferred version of the text that unambiguously allows the reader flexibility to pick and choose which bits they will agree with (my understanding is that this isn't the case - but my knowledge is not deep in this area).
  - protomyth 11y ago
    Yeah, a bit out of topic and I'm not a Biblical scholar or a learned man. Just another sinner trying to be a good person. Church elders have long sermons on how a religion changes with new discoveries, I just go with the flow and keep the theme. That said, I'll try. Its not so much selecting, as knowing that the context has changed in thousands of years. Burying your poop and what hand to use eating were important things back then, but only really practical on a survival show now. I have plumbing and good soap. How to treat slaves is not something the modern world should care about. Its not about disagreeing with the text, its understanding that whole free will and gaining dominion over it all sometimes discards the old conditions by freeing people. Its was a survival manual after all too. "Thou shalt not murder" and "Thou shalt not bear false witness against thy neighbor" are not something that loses their context. They speak to how to treat others and don't lose any meaning with era. Our changes to the world have not changed such fundamental truths. We are still humans and some things are eternal. The parables are still good lessons.

GlitterBall77 11y ago

What a scummy business. A reminder of the fact that it's not just that you make bank, but how you earn your living. For the shame.

itbeho 11y ago

There have always been loan sharks and a subset of the economy that they feed off of. What is troubling is that the business segment described in the article is so profitable that it has attracted institutional investors at a much bigger scale, which makes me think the number of small businesses in trouble these days must also be higher.

MC7447a 11y ago
If the loans are so profitable, why wouldn't more and more competition drive the interest rates lower and lower to "normal" levels?

masterponomo 11y ago

They should have held out for a Michael Lewis interview. They would have sounded a lot more pithy and heroic.

cjrp 11y ago

So they created a less successful Wonga?

smithkl42 11y ago

I couldn't help but be reminded of a passage I was reading just this morning: https://www.biblegateway.com/passage/?search=Psalm%2010&version=NRSVCE https://www.biblegateway.com/passage/?search=Psalm%2010&vers... In part: In arrogance the wicked persecute the poor— let them be caught in the schemes they have devised. 3 For the wicked boast of the desires of their heart, those greedy for gain curse and renounce the Lord. 4 In the pride of their countenance the wicked say, “God will not seek it out”; all their thoughts are, “There is no God.” 5 Their ways prosper at all times; your judgments are on high, out of their sight; as for their foes, they scoff at them. 6 They think in their heart, “We shall not be moved; throughout all generations we shall not meet adversity.”