ALL Businesses That Do Not Survive Recessions Are Ponzi Schemes
By: Lesang Dikgole
Tags: Insurance, Startup, Recensioni, Banking, Bitcoin

Photo by JESHOOTS.COM on Unsplash

Here is the thing: businesses are supposed to be based on products or services that do solve problems. These problems, usually, do not ‘magically’ disappear during an economic recession. In fact, their true nature of ‘necessity’ becomes apparent during such situations.

Forget about ‘social entrepreneurship’ and non-profits, businesses are meant to address problems or inconveniences that communities face.

We invented those other lame categories of ‘organisation’ (outside of traditional for-profit business) because most businesses, especially those related to banking and insurance were not, and never have, done a good job!

Ponzi Schemes galore

A ponzi scheme is when 1) the ‘winners’/beneficiaries/customers that are mostly rewarded are the ones who came first (taken to the mathematical limit, this would mean the founders), 2) the customers or beneficiaries who came last are not only the most ‘critical’ to the success of the Ponzi, but are the ones who lose the most!, 3) ‘the lie’ works until a problem is encountered (usually within the business model).

Businesses tend to be founded on a set and/or series of assumptions that have to do with ‘market conditions’ and prevailing consumer interests (or fads!). A ‘good business’ is supposedly one that has made the ‘correct’ assumptions and has managed to execute diligently according to a particular plan or strategy. So far, in this definition, the entire paradigm of ‘a business’ is missing its raison d’etre.

The traditional definition of a business, lacks a clear differentiating factor from that of a Ponzi Scheme. All Ponzi Schemes also start with a series of assumptions about consumer behaviour and ‘market conditions’. The ‘intent’ of a traditional businessman/woman, may very well differ substantially from that of a con-man running a Ponzi Scheme. But the entire system or business model is exactly the same until a problem is encountered either with the business environment/market-conditions or ‘assumptions’ made about consumers.

A ‘business plan’ is just another form of a con: it is usually the investor who is the getting conned by a business plan. An ‘ad’ is also a form of a con: the customer is getting conned!

An Anti-con Business Model

The surest way to avoid turning an honest business into a mirror image of a con, is to once again, focus on solving unique problems. It’s my version of Peter Thiel’s ‘Build a Monopoly’ or the ‘Zero to One’ advice for startups. It is also a version of Richard Cantillon’s ‘demand/supply’ economic model for business assets.

A business founded on solving problems cannot fail when the set of assumptions fail or when the market conditions change. A business founded on a ‘monopoly’ model creates a robust scarcity model that will both survive an economic downturn, and thrive during an economic boom.

F.O.M.O. = Loss Aversion = A Con

For the consumer, NEVER fall for a con! Even if the ‘ad’ or the ‘projected rewards’ are irresistible! DON’T do FOMO!

For the merchant, NEVER ‘scheme’ to make money! If you do, don’t cry when the business collapses during a recession/unpredictable-event(s) and you realise that you lost a lot of your own money and perhaps that of an investor / a bank too!

Don’t con! Don’t be conned! Only ‘necessary’ businesses are anti-cons.

The rest have to be avoided like the plague!

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