HR & Management

Business lessons from drug dealers and prison

8 min read

19 February 2016

With one TED talk highlighting that drug dealers use similar business concepts to entrepreneurs and that life in the prison system offered a few lessons bosses should keep in mind, we took a look at the factors that could allegedly create success.

The first time Jeff Smith appeared on the national radar, he was the subject of the critically acclaimed documentary, “Can Mr. Smith Get to Washington Anymore?,” which chronicled his 2004 campaign for the Missouri congressional seat of the retiring Dick Gephardt.

After being elected as a state senator in 2006 and serving until 2009, he pleaded guilty to conspiracy for an election law violation tied to his 2004 campaign. Smith was sentenced to one year and a day in a Kentucky federal prison.

While during a recent TED talk, he explained that he started learning lessons the minute he stepped into prison. Smith shared that he made just $5.25 per month in jail, working in a warehouse. And yet, he had to navigate an underground economy of majorly marked-up goods. In prison, he revealed, a cigarette costs $3, a flip phone goes for $300 and a dirty magazine can fetch around $1,000.

“We learn to hustle,” said Smith of the prison experience. “You can charge another inmate to clean your cell or run a barbershop out of your cell. Then there’s also illegal hustles, such as running a tattoo parlour out of your own cell and smuggling in drugs, pornography, cell phones. And just as in the outer world, there’s a risk-reward tradeoff, so the riskier the enterprise, the more profitable it can potentially be. 

“So as you can probably tell, one of the defining aspects of prison life is ingenuity. Whether it was concocting delicious meals from stolen scraps from the warehouse, sculpting people’s hair with toenail clippers or constructing weights from boulders in laundry bags tied to tree limbs, prisoners learn how to make do with less.”

Similarly, Mansal Denton, the founder of Hyperion Strength, explained the harsh reality of prison could make even the most vetted entrepreneur learn a thing or two.

From age 17 to 20 I stole historical documents and sold them to fund my college education abroad,” he said. “In an ill-fated attempt to follow a woman, my insecurities led me to a prison cell. I was arrested and spent three-and-a-half years free until my conviction. One consequence for my crime was prison. Inside prison I said ‘excuse me’ every time I walked in the personal space of another inmate and I offered my food to others out of respect as the consequence for disrespecting others can be death.

“Those experiences made me more mindful of actions I take in my new business. I’m conscious of the possible repercussions when I choose the formulation, the label design, and every other detail of my product. Laziness and egotistical thinking prevent productive decisions. By seriously considering every action with presence and care, you will avoid many negative repercussions that make your life inconvenient, or even drag down your business.

“Prison sucks. There is nothing good about it, but I made the best of the situation and found some positives. Sometimes I feel like everything is wrong with my business. I invested too heavily, I didn’t test the market enough, the formula is terrible and people hate it. These are pretty typical thoughts for entrepreneurs, but they aren’t helpful. Each failed marketing campaign is a lesson, every customer emergency is an opportunity, and you can make the best out of any situation in your business.”

And while Smith revealing that 95 per cent of those locked up with him were drug dealers, he further explained the “business concepts” they talked about – said merely in different jargon – weren’t unlike those he’d learned in his first year MBA class. This included promotional incentives, the fact that you never charge a first-time user, focus-grouping new product launches as well as territorial expansion.

As such, we looked into the history of drug dealer Rick Ross, who revealed a few tips. He didn’t learn to read or write, so when he was 18, he was kicked out of high school. He was on the street and needed to make money without an education. Ross asked an ex-high school teacher for advice on how he could make money. The teacher suggested he sell drugs.

So he sold drugs. And instead of spending his profits, Ross kept doubling until all the other dealers were buying from him. Here are his main rules on leadership – basically how to lead a billion-dollar organisation where many of the people below you carry guns.

Honesty is key. This sounds strange coming from a drug kingpin, but there aren’t any lawyers or courts to track down liars. Honesty is the law in that game. When everything is based on your word and everyone is carrying guns, honesty is the rule.

“If there was any funny business, I’d rather not deal with them anymore, or be very careful with them in the future,” he said.

Another key factor to running a successful business was only doing the essential. Ross arranged the top-level contacts between his sellers and his buyers. Then he stepped back. Everything else had to be dealt with by the people who worked for him and the people who worked for them.

“Everyone knew what they had to do,” he said. And if they didn’t, they stopped being part of the food chain.

Also, don’t make it about, well, making money. Again: odd advice from a drug dealer. Ross tended to pour his profits back into his neighbourhood. This was not only to contribute, but at the same time, it was strategic. When he went to jail his bail was set at more than a million dollars, the million dollars had to come from legitimate enterprises. So Ross could not supply his own bail. Instead, every household on the block he grew up on put up their own homes as bail in order to get Ross out of jail.

When you make it not about the money, the benefits never stop since money is only a tiny byproduct of the reasons we live, we do things, we strive for success.