Dating, Madoff, and Supply and Demand

Christine Cardinal and I had adjoining paper routes and when we were finished, we’d invariably meet on the line between her route and mine.

So one day, in tenth grade, I asked her out. Because, of course, I loved her. She said “yes.”

That evening I was so happy I even told my little sister something like, “you are going to have a great life.” Because, of course, if Christine Cardinal was going to say yes to someone like me then all was good in the world and flowers were going to rain down on everyone.

The next day, Lenny Cardinal, her brother, came up to me in the morning. I was like, “brother in law!” And he said, “Listen, Christine really wanted to say no. She was just caught off guard so she said ‘yes.’ But its ‘No’.”

Two years later Lenny was president of the student government, AND valedictorian. But for now he was using all of that latent intelligence and charisma to figure out how to let me down easily. Still, I was crushed. And walked right out of school and walked the 5 miles or so to home.

My life was over.

Twenty years later I was sitting in an office in the famous Lipstick Building on 53rd and Third in Manhattan.

I was trying to raise money for my fund of funds and I had just given my best pitch ever. My fund had been going great, the strategy was right for the times, and I thought this was a no-brainer to the billion dollar hedge fund guy I was pitching.

“Listen,” he said, “here at our firm, reputation is the most important thing. You seem great, but ultimately we don’t know where you are investing the money and the last thing we need is to see the name of the company I started, Bernard Madoff Securities, splashed across the front page of the Wall Street Journal.”

What a disappointment. I had them almost in the “finished deal” column on my spreadsheet.

A few months later I was in Ken Starr’s office. Not THAT Ken Starr but the other one.

He said to me, “I’m returning 20% per year up here. You’re just returning 11%. What do I need you for?” He had pictures of himself with famous athletes all over the room.

Beautiful people were walking in and out of the office dropping things off on his desk. Life was good for him.

A few years later he would be sitting in jail for running a Ponzi scheme but for now I was once again crushed and wondering what sorts of messages life was trying to send me.

People say “no” for many different reasons. Few of those reasons have anything to do with you. (Well, Christine Cardinal’s ‘no’ was directly related to me. But who knows the exact chemistry going through her mind at that time. Maybe she liked someone else! Yeah, maybe that was it.)

Everything we get in life has to do with supply and demand and how our psychology rides that balance between the two.

When I was helping an investor of mine sell his healthcare company, we had to approach 20 potential acquirers, for 5 “second calls,” two actual meetings, and one final “yes” (and then three months of HELL, but that’s another story). But that means 19 “no’s”  before getting to that one yes.

But all of that was the function of creating our own supply and demand.

Create the supply

We created the supply by finding out every  public company in the space, every private company that was acquiring companies in the space, and every private equity firm that was making acquisitions of this size in the hospital space.

Online dating, for better or worse, creates supply in the dating world. Your network of everyone who has ever emailed you, creates supply for all sorts of opportunities.

Get a quick decision

We called the decision maker in each company. We never started at the bottom but went right to the decision maker. (the head of M&A, the COO, the CEO, whatever it took). You can’t waste time on the way to “yes” or “no”.

Try to get at least one ‘yes’

As Barry Ritholz once told me, “you don’t let the whale off the phone until you get something from him.”

At least see our presentation, at least agree to a second call, a meeting, meet the CEO of the company, etc. Something  they can easily say yes to that can move the picture forward.

Cut losses quickly

Know when to give up.

Christine Cardinal really did not want to go out with me. Maybe a year later, maybe ten, conditions would be right. But know when to back off.

A potential customer now is a potential customer later. Unless you are psycho. Too much focus on one potential customer and you’ll ignore the crowd that might truly be interested in your product. (This is really the critical rule, whether its dating, selling, raising money, whatever).

The magic ratio

Understand that the typical ratio is about 30:1.

You need 30 people to come into your store before someone buys a product.

You need to maybe go out with 30 people (and remembering to cut losses quickly so you don’t waste time) before you find the one that really sticks into something long-term.

You need to contact up to 30 people to sell your business, or raise initial money for your fund, or get a job, or whatever (get your books/articles published, get a painting sold, sell your house, etc).

What this also means, is that if the supply in the  market you are aiming for is not 30 (i.e. if you are building a product that ONLY Google would ever want to buy) then you are probably in the wrong market.


Good ideas in your head are ruled by supply and demand.

You need to come up with 30 ideas before the right idea comes along which there might be demand for. And even coming up with 30 halfway decent ideas is not an easy one, hence the need to exercise the idea muscle (see other posts here). (Actually, 30 is too high. Its more like 20, but I think 30 is safe).

Remember the key things, though:

  • There’s going to be lots of NOs
  • Cut losses extremely quickly
  • Use everything you’ve got to increase the supply
  • Try not to get disappointed. Move on as quickly as possible.

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