Every seasoned and successful businessperson has had plenty of experience with deploying rapid, decisive action. My favorite example of the violence of action principle is the story of what my friend Amit Verma did with his parents’ luxury jewelry company during the Great Recession.
Amit grew up in the jewelry and diamond business; his parents, first-generation Americans, had built a company, East West Jewelers, that was one of the most successful on Long Island.
In 2005, Amit had just graduated from college and started his own wholesale diamond business in Manhattan’s diamond district, which was going fairly well. But his parents’ business was taking on water and sinking fast. Long before the public felt the first major tremors of what was coming, it was already shaking the foundations at East West Jewelers.
“Luxury markets feel the financial crunch before anyone else,” says Amit, “before the housing market, before anything else. By 2007 it was bad, and it got rapidly worse.”
On top of the overall economic slowdown, a sudden explosion in gold prices exacerbated their problems. They might buy gold from an overseas supplier, say from India, at $1,000 an ounce, but gold prices were increasing so rapidly that before they knew it, the numbers might have gone up to $1,500, $1,600, even $1,700. They would take delivery of what they thought was $100,000 worth of merchandise, based on $1,000 an ounce, and take out a loan based on that. But as the price of gold skyrocketed, the price of that merchandise delivery would explode, so that while they thought they owed $100,000 on it, they now owed a great deal more. They would arrive at a figure for what the business owed, but every day it would increase—3 percent, 5 percent, 10 percent. Talk about being kicked when you were already down.
At first, Amit didn’t realize how serious things were. Once he saw the extent of it, how many millions of dollars in debt they were, he and one of his brothers, Gaurav, stopped everything they were doing to jump on board with their business to see if they could help them recover and get back on track. By this time, the family business was close to $6 million in the red. They couldn’t sell their way out of this. They had to do something radical. What they needed was violence of action.
At the time, they were starting to meltdown some of their merchandise and resell it at a loss, just to generate enough income to pay their bills. If they took a piece of jewelry they’d paid $10 for, they might melt it down and get $6 for it. That meant right away they’d lost $4, but if that was the only income they could get, then they’d take the loss. To survive, you do what you have to do.
Then Amit had a thought. Instead of melting down their inventory of luxury goods, they could get their hands on some cheaper merchandise, then melt that down and resell it at a profit. Where could they get cheap merchandise? From the public.
Amit and Gaurav started haunting pawnshops, buying up everything they could. They started advertising: “We buy your gold!” They opened a storefront to sell their budget wares, and the plan was clearly working — but they soon realized that what they could do in this one location wouldn’t be enough to get out of debt. So they opened up more storefronts. At the height of their operation, they would have nearly fifty stores running.
Amit vividly remembers preparing for their first public one-day buying event. He wanted to take out a full-page ad in Newsday, the Long Island newspaper, which cost something like $5,000 for a single day. He saved up for that $5,000 and did his ad: “Come Sell to Us.” In that one-day event, they made back the cost of the ad, plus another five grand on top of that. As tempting as it was to pour that money into the business’s pressing ongoing expenses, he immediately used it to take out two full-page ads for a second event. A few days later, he doubled it again. Before long, he was spending $25,000 in a day.
Of course, the capital investment involved in opening all these storefronts, along with all his advertising costs, was enormously risky. Everything they did was a gamble.
I imagine it felt a lot like jumping out of an airplane in midair at twelve thousand feet.
Practically overnight, Amit and Gaurav had turned the family business completely upside down. From their highly respected, high-end luxury jewelry business, a family business they had built up over decades and were justly proud of, the Verma family was now suddenly the Number One pawnshop and “gold mine” business on Long Island.
Their parents were horrified.
Mr. Verma kept saying, “No, no, I don’t want to do this!” Even as he saw the money starting to flow in, the idea of what they were doing was extremely upsetting to him. He and his wife had been the first to import 22-karat Indian gold jewelry into America; their business had been not only a powerful success but a powerful legacy. And now they were hawkers of we buy your gold! print and TV ads! Because bright yellow seemed like the most glaringly obnoxious color they could come up with, Amit and Gaurav had painted their storefront yellow and plastered across the wall in giant capital letters the words we buy gold. His father was mortified. Customers lined up.
Amit saw an obnoxious television ad in Buffalo, with an announcer’s voice saying, “We buy it, we buy it, we buy it . . .” over and over. It was quite annoying, but it stuck in your head. He contacted the guy who did the commercial and got his help making one for them. They started pouring money into more TV ads.
Friends and those who knew them started buzzing about them on social media: “What’s going on with the Verma family? I hear they’ve gone out of business … they have this weird ugly yellow building… what the heck are they doing?”
But to Amit and Gaurav, this was a simple question of survival. They were living on as little as they possibly could and pouring every penny they made back into the new operation. They didn’t care how they were perceived. They wanted to keep the boat from sinking. Nobody who knew them understood what on earth they were doing or why. But what they were doing was digging themselves out of a six million dollar hole — fast.
By 2009, when the economy tanked and the government was setting up Cash for Clunkers and all kinds of efforts to bail things out, the Verma brothers had lines outside all their stores. Because they’d taken such strong action, so fast, and so early, they were way ahead of the curve. While everyone around them was panicking, they were making money hand over fist.
They decided to take it on the road. They picked a city, made a hotel reservation, and ran an ad ahead of time:
WE HAVE A SPECIALIST WHO BUYS BIG DIAMONDS AND JEWELRY! FOR TWO DAYS ONLY, WE HAVE A MILLION DOLLARS TO SPEND!!
“We always advertised that we had a million dollars to spend,” says Amit. “Even if we didn’t exactly have that much cash on hand, we always partnered with people who did and who could back us up if we needed it. As long as the deal was there, the money would be there, too.”
They would arrive, rent the hotel’s ballroom as their retail front for that one day, and jam. As always, it was a high-stakes gamble. On some trips, there’d be a line out the door. Sometimes it would be a dud. They did hundreds of these open houses, up and down the East Coast, from Jersey to Florida, renting out a hotel room in a different city every night.
“I hit it as hard as I could,” says Amit. “When it’s raining, you need to be out there with as big a bucket as you can find. You need to be out there catching the money while it’s pouring.”
You see what I mean? Violence of action.
Soon the Vermas began noticing that others on Long Island were catching on to what they were doing and jumping on the bandwagon. Competing shops began popping up. By the time the gold rush was at full boom, they had over 150 competitors.
This is where a cool head and a big view come into play. As I said, there are times in business when the smart thing to do is wait and watch. Amit and Gaurav knew these other shops were only there for the short run and that once there was no more big money to be made, they would dry up and blow away.
“We waited them out,” says Amit. “Eventually, they went away.” It took a few years, but by 2013 the family business was out of debt and flush again. So what did Amit do? Changed the model again.
As the economy recovered, Amit and Gaurav went back to their father and said, “Okay, it’s time to go back to our original business model. It’s time to start selling high-end jewelry again.”
Once again, their father balked. By this time, he had completely come around to his sons’ point of view. In fact, he’d gotten to the place where he liked buying from the public, and the last thing he wanted to do was to turn everything upside down again. It took a while to convince him it was time to once again open up a high-end retail store, but eventually, the boys prevailed.
The Vermas had built up an excellent customer base over their twenty-five years in business. All they really had to do was pick up the phone and say, “Hey, we have a shop,” and people started showing up.
Amit says he started seeing kids he’d known as youngsters, children of past customers whom he remembered trailing alongside their parents in the shop, now coming in to buy engagement and wedding rings. Soon he bought one himself.
After taking a break to get his MBA and get married, Amit pulled one more violence-of-action move: he opened his own business combining the best of both worlds — using his buying-from-the-public model but with high-end luxury items. If you’re a jeweler needing to liquidate an entire shop, or an individual wanting to sell a $100,000 watch or a $500,000 stone, the Verma Group will come out, appraise it, and buy it.
Today, Amit is doing the exact same thing he was doing in 2009 in cheap hotel ballrooms up and down the East Coast—only now he’s doing it on a multimillion-dollar scale.
Excerpted from former Navy SEAL sniper Brandon Webb’s book, Total Focus.