Why Bain Killed Good Companies and Good Jobs - I Break It Down

[jsmirman]

4. I'll tell you the truth

the reason I immediately understood what Bain does is because I had an old acquaintance proudly explain the basics of the strategy to me when he told me about his new job at a Bain-doppleganger.

The punch line was that although things ended in bankruptcy, they made out like gangbusters on their investment. Their target was publishing companies because guess what those businesses had? Steady revenues. Revenues they could use to support loading them up with debt.

He couldn't understand why I wasn't thrilled with the brilliance of their business model. "I don't think you're getting it," he said. "No," I replied, "I understand what you've described perfectly well. I just think it's a shitty way of doing business."

Incidentally, our grandfathers had done decades of business with each other. My grandfather was an old school pillar of the business community - he was proud to pay his taxes, he always believed in leaving the cream at the top, and the idea of business without ethics was repugnant to him. And this guy's grandfather was someone my grandfather looked up to! Believe me, they would have reacted with the same disgust I expressed over a plan that relied on leaving someone else holding the bag.

"That's not good business" is something that was ingrained in me from the time I spent with my grandfather over a number of years. I'm sure his grandfather, who was a very principled businessman, expressed similar sentiments. Looks like only one of us was listening.