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There are many terms in the financial industry that confuse me no end. Terms such as market cap, and “Mission Statement” are particularly galling. Not only don’t I understand what they mean, but I have not yet found anyone who does. In particular, it would seem that the term “mission statement” which will be dealt with in this memo, means some sort of effort that is going to be undertaken that will achieve a particular result if a series of unfortunate events can be avoided such as bankruptcy, marketing problems, theft, production problems and just about everything else that can be conceived of. I am reminded of the “Mission Statement” uttered by the crazed nut job in “man of La Mancha” in which he received a message from above that it had become his duty to attack any windmills in the neighborhood and chop them into tiny pieces. Unbelievably, he was able to captivate a few followers that seem to believe that he had the right idea. What harm these windmills were doing to the native population was never made evident and it only proves that no matter how flawed a “mission statement” may be, it is still a “mission statement.” Most people that under psychiatric care, have been able to weave extremely complex mission statements and on occasion they are able to find others just as delusional as themselves who become followers.

Hitler telegraphed his “Mission Statement” which was contained in the book “Mien Kemp” in which he made clear that if he was ever released from jail and could eventually lead Germany, he would sanitize its entire population of all Jews. Apparently at the time, the majority of the German population felt that this “mission statement” was meritorious and he was soon leading the country on a undertaking far more intricate than the mere assault on inanimate objects that spin merrily in the wind and produce energy.

Throughout the years people have found reason to believe in those that have well thought out “mission statements”. What could have ever been a better plan that that of James Warren Jones, an ordained Christian Minister whose mission in life seemingly was to gather together the homeless, the sick and the mentally deranged, provide for them and then see to it that they all died from a poison overdose in their Kool-aid. Little did these blind followers know when he brought them to Nirvana, (Jonestown, Guyana) a lush plantation of almost 10 square miles where agriculture products were cultivated and animals were raised that were already doomed. Meanwhile Jones wrote his “Mission Statement”” entitled, Translation, which spelled out chapter and verse of what he was planning for his followers. His plan clearly stated that his followers would all die together and then would move to another planet for a life of bliss. Making this an even stranger scenario was the fact that mass suicides were regularly practiced with the entire colony participating by drinking Kool-aid and then pretending to have been poisoned to death. However, eventually, Jones determined that the time had come and In November of 1978, 900 people died from poison, gun shot wounds, lethal injections and a host of other horrors. Jones had indeed carried out his mission to the letter and never once denied that this was his program. .

Over the years, Religious leaders have probably created more chaos over their ill-throughout mission statements than world leaders or anyone else for that matter. Of all the ill-conceived “mission statements” ever devised in the history of mankind, the Children’s Crusades (there were two) of 1212 were the most dismal. Picture the leader of this motley band of children, a 12-year old shepherd, Stephen of Cloyes who could neither read nor write. Cloyes somehow was given an audience with King Philip of France and he told the King that Christ had ordered him to organize the country’s children and that Cloyes would led them in an attack on the Arabs to bring back Jerusalem into the Christian fold. To King Phillip’s credit, he essentially told the prepubescent Cloyes to come back when he had grown up, but that statement did not impede the lad one wit. This child even produced a letter from Jesus stating that the Mediterranean would part so that they didn’t even need vessels to mount their attack. When the sea failed to part, the children commandeered a number of boats and of 30,000 child soldiers that went to war, literally none was ever heard from again. Interestingly enough, the Vatican did not make one attempt to stop this lemming like suicide march.

As luck would have it another lad of about the same age living in Germany named Nicholas came up with the same rotten idea simultaneously. Inconceivably, Nicholas was able to attract 20,000 followers in much the same manner as Cloyes. In this instance the disaster occurred earlier rather than later as the youngsters first determined to travel to Rome from Germany and get a blessing from the Pope himself before they went into battle. This in itself proved suicidal as there was literally no way to get across the Alps and most of the 20,000 died in the snow covered mountains. The few that made it to Rome were told by the Pope to grow up and come back in 20 years. However, there was no way back and the few that were left most probably perished when they again were forced to retrace their steps through the Alps.

Of all the people on earth that ever issued a “Mission Statement”, the most calamitous was Joseph Stalin. He became the the general secretary of the Soviet Communist Party in 1922 and eventually triumphed over his political rival, Leon Trotsky and took command of the country. Stalin had a wildly heralded mission statement which included a succession of what were called five-year plans. The purpose of these five year plans was to transform Russia from a third world country into an industrial power. Stalin was not a great communicator and the people never really bought into his project. His collective farms were a catastrophe and millions of people starved to death under the ill-conceived program. Moreover, the pathetic theory of people sharing the fruits of their labor failed miserably and the populace found little or no incentive to produce anything other than vodka from their rotten potatoes.

More electrifying was the fact that Stalin viewed everyone as a potential executioner and shortly before Russia entered World War II, Stalin executed the majority of his generals fearing a coup d'tat. When Russia was attacked by Germany, their army was literally leaderless and it was only the fierceness of the Russian Winters that saved the day. Stalin eventually became directly responsible for over 20 million deaths, most of which could have easily been prevented.

Mission Statements are usually created by the foolhardy that can’t wait to inform their competition exactly what they are going to do and how they are going to do it. Tipping off your competitors or potential competitors as to your strategy makes about as much sense as a three headed frog. We are aware of no truly rich person or great world leader that was really willing to share their strategies with potential competitors. Is it even conceivable that Cornelius Vanderbilt would share his plans for the New York, New Haven and Hartford Railroad with his arch enemies, Fiske and Gould with whom he was at war? Keep in mind the famous saying, “Money may be a curse, but you can always find someone to take the curse from you.” Or better yet, picture the U.S. Special Forces going into battle behind enemy lines and telling anyone who would be willing to listen what their plan of attack is going to be. Mission Statements are for the most part, a form of self-gratification where you tell the world how great you are, how wonderful your staff is, how marvelous your ideas are and how financially successful you are going to be and yet you don’t a clue as to how you are going to get from here to there. Mission Statements are egocentric self aggrandizements meant to irritate the reader and inflame the economists.

Technology is moving along at a frightening rapid pace and before the ink is even dry on a “mission statement”, the entire concept has been trashed by someone that instead of standing around composing rancid prose about how great they are going to do, actually went ahead and did it. People with truly great ideas for the most part do not share them with their competitors and if they do, it becomes somewhat akin to economic suicide. Take for example the odd couple of Thomas Edison and Nicholas Tesla. Tesla had an IQ about 50 points higher than Edison and from the point of view of physics and chemistry, Edison was just a just a hack while Tesla was world class inventor. However, Edison knew the score and he also knew how to protect intellectual property even if it belonged to someone else. He allowed Tesla to believe that he was Tesla’s best friend and while pretending to be helping him, stole literally everything he invented and worse yet, took credit for all of it. Tesla naturally died broke.

Thus, “mission statements” are self serving and suck as meaningful documents. They are usually outdated the day they are completed, they pander to what they believe their readers would like to hear and they follow outmoded outlines of what others have written before them. I can not remember ever reading a “mission statement” that didn’t create an urge in me to run to the bathroom. Instead of pretty words, specific references would be more in order. As an alternative of stating what you are going to do, maybe; what you should concentrate on what you have already accomplished and what your thought process was. Instead of using a mission statement that comes on a software program that thousands have used before you, talk about the facts. Discuss, why you idea will not become outmoded in the next two weeks. Discuss how you are going to sell your unique product and why on earth anyone would even be interested in buying it. Chat about, how you are going to protect your product from others, such as the filing for patents, copyrights and trademarks. Don’t ever tell us that your best friend said you didn’t need to protect your product because no one would be able to reverse engineer it and please don’t bring your wife or girl friend into a serious meeting.

One of the most deceiving mission statements in history was the one prepared by former senior General Motors Executive, John DeLorean who with his elegant executive summaries, business plans and mission statements. With striking good looks, John  was able to literally deceive almost anyone that he came in contact with. DeLorean probably had probably created the most corrupt mission statement of all time.

DeLorean, Cars, Coke, and Con 

John DeLorean was the heir apparent at General Motors, then the largest company in the world. He was an example of the perfect executive, highly respected, an excellent manager and socially accepted by one and all.  However, as in all scenarios, things didn’t quite work out the way John wanted at General Motors for a number of reasons, and when he realized that the top spot was not going to be his, he determined to open a company that would compete toe to toe with GM’s most profitable line, the Corvette. This was a high end car that had taken the upscale yuppie market by storm and a niche which DeLorean thought could stand a lot more competition.

DeLorean wasn’t much of a historian of the automobile business.  He should have known that the odds were very much against a new, independent automobile company succeeding. It may well be that DeLorean didn’t care a lot one way or the other whether his venture was successful, and may have only been looking for a method of maintaining a lifestyle appropriate to a person of his social charms and upscale aspirations. The fact that Tucker, Crosley, Bricken, Cimarron Corvair, Kaiser-Frazer, American Motors, Studebaker, Edsel and LaSalle had bitten the dust along with a list that is too long to count had nothing to do with Delorean’s decision. Ego and greed were the compelling factors and he was going to make headway in this venture no matter who was in the way.

DeLorean determined to build a gull-winged, stainless steel sports car in Northern Ireland where the British government was more than a little interested in making a substantial investment to alleviate persistent unemployment linked to social unrest. He zeroed in on this market knowing that the desire to attract industry would cause those in charge to jump at any opportunity no matter how bizarre. However, until they went into partners with DeLorean they didn't even have a clue what bizarre really was. The British and Irish were totally taken with Delorean's charisma and shelled out millions of dollars to help him build a factory to produce his imaginary car in a distressed area in Ireland

Many have compared DeLorean to his predecessor Preston Thomas Tucker, who in 1948 built a rear-engine sedan with disc brakes, seat belts and an independent suspension system. What the two had in common is that they were both charismatic, they were both indicted by the United States Government for fraud on numerous counts, they were both ultimately found to be not guilty ([50]) and both were way ahead of their times in terms their visions.  ([51]) They differed in that Tucker was attempting to build a sports car that would appeal to the masses and saves lives whereas DeLorean was attempting to deliver an overpriced automobile that he must have known known, not only couldn’t be properly produced and whose bugs had bugs of their own.

DeLorean raised money from anyone and everyone. His presentations were public relations dreams.  Just as Ponzi had done years earlier, everyone wanted to get in on Delorean’s good thing. DeLorean was well prepared for them and literally skinned his investors alive. He set up a Panamanian Company, which was publicized to be doing work for DeLorean but basically was a complex conduit leading only to a Swiss post office box. It seems that over seventeen million dollars found their way from DeLorean Motors to Panama, then to Switzerland and from there to Swiss and Dutch banks. The next step in this highly sophisticated money laundering operation led right back to DeLorean’ s personal account in the Untied States. A trail that DeLorean carefully laid to evade detection.

DeLorean was a man that went first class in everything he did and in line with that, he hired the prestigious accounting firm of Arthur Anderson to do his books. Anderson, who seemed to attract the bottom of the barrel relative to clientele saw DeLorean as a super-charged customer who would always be in the public view. Because of Anderson's anxiety to please DeLorean, they were not as careful in auditing the books, as they perhaps should have been. Better put, they were just plain sloppy either on purpose or because they were asleep at the switch.

Courts in both Great Britain and the United States legally found that Anderson’s audits overlooked what appeared to be numerous instances of fraud but particularly the Panamanian fiasco which stood out like a dead fish in a jewelry Park Avenue store window. In addition, an Anderson memorandum was discovered that indicated that certain people were already on to DeLorean's scheme and that the whole project was destined to collapse if word got out. Anderson when testifying at the criminal trial attempted to explain away the memo arguing that the memo which clearly had to do with their involvement and an attempted cover-up on their part, involved something else relative to DeLorean that had been solved and had nothing to do with the point in question. If you believe that, pigs can fly. Moreover, whether it was or was not, the memo itself would certainly indicate that in order to protect the public trust, Anderson should have delved more deeply into Delorean's books and they clearly would have found the missing money.   When they didn’t, they ultimately got hammered by the court for their failure to follow “good accounting principals” and to make appropriate public disclosures.

All of these things became almost secondary when U.S. Government regulators took some pictures of DeLorean making a huge drug buy. If anybody had any doubts before about the fact that something strange was going on with the ex-General Motors honcho, this certainly put the man's mindset into clearer focus.  However, John DeLorean was not just making a drug buy.  He was making a world-class drug buy that probably set the financial record for that era.  Obviously, this spelled the death knoll for DeLorean Motors and certainly didn’t do their accountants any good either.

The DeLorean experience eventually has cost Anderson south of $100 million ([52]), including both the American and British settlements along with a decade of attorneys’ fees and costs.  The courts both here and abroad did not seem even to think twice that there was even a scintilla of doubt relative to Anderson’s dereliction.  When this number is put into perspective, it becomes even larger. Probably $160 million was the total that was raised for DeLorean by all sources. The fact that Anderson paid over sixty percent of the total amount charged by the courts for the benefit of creditors is probably a record even within the world of accounting litigation where conflicts and lawsuits seem to be as normal as a walk in the park. 

DeLorean fought tooth and nail to avoid both jail and bankruptcy. While he was successful in the former because of an entrapment defense, he was declared bankrupt shortly after the incident in a fitting end to the strange tale of John DeLorean, his home of many years is in the process of becoming a golf course and little of his empire remains. John recently passed away at almost 80 years old and was a handsome specimen even his twilight years. However, he was selling snake oil and you can only get away with that for a short time before your plans are uncovered.

There are a number of rules to follow when you a presenting a mission statement which DeLorean was sell of and followed exactly. When you are discussing your plans, do not show any signs of acute paranoia. If you are not willing to share your concepts, don’t go to a meeting, you are only wasting everyone’s time. If you can’t tell your investment banker what you have, then he can’t raise you money and no one wants to deal in this sort of zero minus game. However, DeLorean shared his fantasy with his financiers but never told them that the whole thing was just a criminal plot. They were taken in by his presentation and knowledge of the industry. Who would expect the former number two person at General Motors to be engaged in a fraud?

In Delorean's case it took a while to ferret out fact from fiction but this is not usually the case in our industry. For normal mortals to attempt what DeLorean did what no have one chance in a zillion of passing a financial litmus test. Most importantly then, don't make statements that you can’t back up or where someone has sworn you to secrecy for a mysterious reason that you can't divulge, business is not a game of hop-scotch; it is economic war and the loser can well wind up penniless, thus knowing the size of the stakes, it is not a simple matter to pry money out of lenders. Secrecy ill positioned is poison and once you get a reputation of shopping a transaction without being willing to state critical facts, you are not going to invited back anywhere.

Remember that lawyers are usually poor business men and although they are an important element in a business transaction, don’t even think of asking them how to run a company. If they could have accomplished it with any sort of aplomb, they would not currently be practicing law. Most importantly, position credible people on your board of directors; obviously DeLorean could not have scarred up a nickel without his resume and being surrounded by good people makes lender believe that you are someone special. We believe that if reliable people are willing to risk the litigation dangers of being board members, it speaks volumes about both your integrity and your product. More importantly, do yourself a favor and stay away from making aunt Sadie or your wife your corporate secretary, nepotism is a very poor sales tool and we tend to avoid it like the plague. Hire the best person available that has successfully operated a similar type of company. Successful people do not have to prove themselves over and over again. Once or twice is more than enough. If they have done it right before, they can do it right again.

We would remind our readers of the famous saying that went something like this, “The man who uses yesterday’s methods in today’s work won’t be in business tomorrow.” To be there, think out of the box, not in it.


2005 Chapman, Spira & Carson, LLC
111 Broadway. New York, NY. 10006 Tel: 212.425.6100 - Fax: 212.425.6229

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