Are Criminals Better Entrepreneurs?

February 1, 2008

money laundering
Photo by tengtan


Some famous entrepreneurs have committed crime in the past. And the Prison Entrepreneurship Program claims that criminals have many entrepreneurial traits, including management skills, passion and willingness to take risks.

So, do criminals make better entrepreneurs? And do all entrepreneurs have criminal tendencies?

Famous Entrepreneurs Who Have Committed Crime

Richard Branson: Over 30 years ago, Branson owned a handful of record stores. He also owed the bank £15,000. So, to make a bit of cash fast, he illegally imported some records.

He might have got away with it, but like many criminals he got greedy and decided to do it a few more times. And eventually he did get caught. But, Branson was lucky; he avoided going to court after he agreed to pay a fine of £45,000 over three years. And he vowed never to be dishonest in business again.

But, what if he hadn’t been caught? Would he have carried on breaking the law to build his business? And would he have wound up in jail in the end?

Martha Stewart: Stewart spent five months in prison for insider trading, followed by five months home confinement; which was hardly a hardship considering she lives in a 153 acre estate.

Like Branson, although what Stewart did was wrong and illegal, she’d hardly committed crimes on the scale of Enron. But, what if she’d got away with it? How much further would she have been willing to push her luck?

The Prison Entrepreneurship Program

The Prison Entrepreneurship Program in Dallas has provided entrepreneurship schooling and mentoring to 250 inmates. The scheme appears to have been a great success so far and 93% of participants have gained employment within one month of release from prison. Plus, the scheme has helped 32 participants launch businesses.

This is great news. And hopefully the scheme will continue to monitor their progress for another couple of years. It will be interesting to discover whether the participants will have learned their lesson, like Richard Branson. Or will the lure of 90% profit margins from selling crack cocaine prove to be to much of a temptation for some of them?

Aside from entrepreneurial skills, Branson and Stewart share two other traits with these prisoners - a) they were motivated by greed, and b) they got caught.

What do you think? Do you think most entrepreneurs have criminal tendencies, but many just don’t get caught? And do you think the stress of business might push some entrepreneurs into committing crime? Or are most entrepreneurs honest?

Please share your thoughts in the comments section.

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Comments

31 Responses to “Are Criminals Better Entrepreneurs?”

  1. Barbara on February 1st, 2008 8:40 am

    Catherine,

    No, yes, and yes.

    I do think most entrepreneurs are hard working, honest people. However, some get into business thinking they will make “a quick buck” and when that doesn’t happen, they may be tempted to over charge, file fraudulent insurance claims, and/or cheat on their taxes.

    It is rather funny though, both Branson and Stewart went on to become bigger names than they were before their prison stints.

    Some may look at that and decide to “push the envelope”.

    Barbara’s last blog post..A New Reality Show - How Not To Blog?

  2. cathlawson on February 1st, 2008 8:49 am
    Hi Barbara - that is a great point. I wonder whether they got more famous from the publicity surrounding their crime, or whether actually being caught spurred them on to work harder and not cheat?

    I wonder how many others would commit crime just to get publicity? I would hate the idea of going to jail - even if it was just a low security one.

    I’ve pinged Martha’s blog. Maybe she will share her thoughts on this and provide us with some answers.

  3. jsanderz on February 1st, 2008 11:38 am

    Catherine,
    I agree with Barbara, most entrepreneurs are hard working, honest people. But some people will go to any extreme to make money, no matter who or what they hurt.
    Some people are just to greedy, enough is never enough.
    Regards.

    jsanderz’s last blog post..Take that shortcut

  4. deepali on February 1st, 2008 6:03 pm

    Actually, I disagree with the greed motivation. I don’t think Branson or Stewart were any more motivated by greed than most of the rest of us. We all want to make money in a fast and easy way, and some of us find that we can.

    deepali’s last blog post..the design-a-budget challenge

  5. cathlawson on February 1st, 2008 6:14 pm
    Jsanderz - I totally agree. You just need to look at all these people traffickers and drug dealers to see how immoral and greedy some people are.

    Deepali - It is great that you’re happy doing that. I personally would gain no satisfaction from making money quickly or easily. It would be too boring.

  6. deepali on February 1st, 2008 7:45 pm

    Cath - I find that hard to believe. Would you find no satisfaction in a sudden windfall? At the very least, you wouldn’t turn it down! And you might find a certain satisfaction in using it as seed money for future investment (perhaps entrepreneurial). This is the same mentality that leads companies to offer things like referral bonuses. You gain easy money, they gain another customer.

    Not all of Branson’s or Stewart’s money was made in an illegal fashion, and for the most part, they are hard working entrepreneurs and no different from the rest of us. It’s admirable to want to be 100% law-abiding, but very few of us are (as a drive on the highway quickly shows).
    I’m not saying that skirting SEC regulations is the way to go, but I can’t fault someone for being tempted to try it (and many many people do). If anything, in Stewart’s case, she was mostly trying to avoid losing money.

    deepali’s last blog post..the design-a-budget challenge

  7. Stefanie on February 1st, 2008 8:43 pm

    Awesome article - I never really thought about it that way, but it makes an awful lot of sense! I’ve always wondered if a lot of the mobsters and gang members out there might make even more money if they’d apply their skills to something “legit”.

  8. Hunter Nuttall on February 1st, 2008 9:31 pm

    I’m sure many successful entrepreneurs have traits that would help them be good criminals. It’s like how Harry Potter had traits that could have served him well in Slytherin. But everyone still chooses whether to be honest or not. And sometimes people make a bad choice but learn something from it.

    Hunter Nuttall’s last blog post..Fighting Chain Letters With Common Sense

  9. cathlawson on February 1st, 2008 9:50 pm
    Hi Deepali - Interesting questions. If I was given a windfall for legitimate reasons, I would have no problem investing it in something else. What I meant was - I would gain no satisfaction making money in something I hadn’t worked hard for.

    If it was that easy, I wouldn’t feel as though I’d achieved anything. And I would always be suspicious that there was some kind of catch. 20 years ago, I would probably have felt very differently, as I was always too impatient.

    As for Branson, I don’t think he really felt as if he was doing anything wrong at the time. If you saw some of the things are government wasted money on - you’d understand why. And I do think he’s learned his lesson.

    But, I do wonder what would have happened to him if he’d come from a different background? His mother had to remortgage her house to pay his bail.

    And I do think what Martha Stewart did was wrong. She only saved $48,000, which would have been peanuts to her then; but I bet a few of her shareholders had far less money, and losing it would have affected many of them.

    Did she deserve to go to jail though? Probably not.

    Hi Stefanie - that’s a good point. And would they have done something more legit to begin with if they’d been brought up in a different environment?

  10. cathlawson on February 1st, 2008 9:53 pm
    Hi Hunter - great comparison. And learning from your mistakes is one of the best ways to learn.
  11. Mrs. Micah on February 2nd, 2008 12:29 am

    I think that crime (good, well-executed crime) requires a lot of the same skills as other entrepreneurial startups. The key is to convince people that honesty is just as lucrative, or almost as lucrative and carries the great karmic benefit of doing good and the life benefit of not getting caught!

  12. cathlawson on February 2nd, 2008 12:50 am
    Good point Mrs M - and also, you could show them that crime can mean even more hard work than a regular job, as you did in this post: http://www.mrsmicah.com/2008/01/26/even-counterfeiting-is-work/
  13. RacerX on February 2nd, 2008 2:41 am

    I think the tie-in is risk.

    Both are have a high tolerance for risk…which is the flip side of arrogance.

    RacerX’s last blog post..Personal Finance QuickTake: Microsoft to Buy Yahoo

  14. cathlawson on February 2nd, 2008 3:01 am
    Great point Racer - I guess both entrepreneurs and criminals would need a high risk tolerance.
  15. Ian Denny on February 3rd, 2008 5:54 am

    It’s a bit like taking steroids to win a gold medal.

    Okay you won, but can you sleep at night knowing you won by cheating?

    I agree that criminals have a vision - they can see how an opportunity can be turned into a profit.

    VIctory though, for me, wouldn’t taste sweet if I’d cheated.

    It does interest me that prisoners are taught entrepreurial skills. If greed is their motivation, perhaps enough of them can be turned from the dark side if there’s another way of achieving their goals.

    I also find a comparison in the success of the get rich quick nature of an awful lot of the internet. A short-cut to wealth is another form of greed gone wrong.

    Even if there was a magic formula out there, it doesn’t seem somehow right to win easy. It’s almost like the equation is wrong if success is gained without the proportional effort.

    Ian Denny’s last blog post..Struggling Or Going Bust - Think Big To Get Out Or Even Rise From The Ashes After Your Demise

  16. cathlawson on February 3rd, 2008 9:10 am
    Hi Ian - I don’t really understand the sports people who take drugs to win either. Cheating would really take the shine off winning.

    I hate the get rich quick schemes on the Internet too. They really know how to take advantage of people’s greed. I saw one the other day that promised a refund and more if the reader didn’t make X amount of cash in a month.

    Then, at the end there was a disclaimer saying that they wouldn’t be held responsible if the reader made no money at all! Talk about contradictory. And the purchase price was around $2500!

  17. Michael Haislip on February 3rd, 2008 8:51 pm

    I question your idea that “illegal” equals “immoral,” as this post indicates. Laws are nothing but the arbitrary whims of people with power, as is the enforcement of those laws. If you can convince me that Branson or Stewart did anything to actually harm another individual, then we have a different story. However, I find it hard to envision an argument that would do so.

    I welcome any replies via e-mail.

  18. cathlawson on February 4th, 2008 4:03 am
    Hi Michael - I didn’t actually say that what they did was immoral - I said they broke the law.

    I totally agree - there are some ridiculous laws - you don’t have to look far on the Internet to find some of them. But, I wouldn’t like to imagine a world without any law and order at all.

    Still - your question on immorality is a good one. I don’t want to go into it too much on here - as it will spoil a future post I have planned on ethics in business.

    In the case of Stewart, she obviously knew the price of stocks would fall the following day anyway. Would they have fallen more because she sold some herself the previous day? Probably. Share prices always fall due to unexplained director selling. Also, i don’t know how big her company was then, but if it was relatively small a reasonable sized sale would have caused the share prices to drop considerably, even without the poor results.

    Could this affect one individual? Maybe.

    Imagine some guy has money invested in some of these shares. A few days before the results are due out, his child is diagnosed with a life threatening disease.

    He needs the cash to pay for treatment, so decides to wait until the day the results are due to cash in the shares. Remember he doesn’t have insider info, so he doesn’t know the results are going to be poor.

    The shares plummet further than they would on poor results alone because Martha has sold, so things must be really bad. The guy does not have enough money left to pay for the treatment - his child dies.

    Obviously - this story is hypothetical but it could have happened.

    As I said though - what Branson and Stewart did couldn’t be considered serious crimes. But, how much further would they have been prepared to go if they’d got away with it?

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  20. Stewart on February 28th, 2008 8:35 pm

    Hi Catherine, Im doing a Dissertation on the extent to which Entrepreneurs break rules and would like to reference what your saying about Branson but i can’t find any news articles or other reference to it anywhere…do you have any links?

  21. cathlawson on February 28th, 2008 8:58 pm
    Stewart - no probs. I’ve not done any academic writing for ages. But I hope this includes everything you need. If not, just drop me an email at: noblecinds at aol dot com.

    Screw It Lets Do It by Richard Branson; Publisher: Virgin Books Ltd; 2006 pages 84-89.

    Good luck with your dissertation.

  22. Stewart on February 29th, 2008 3:50 pm

    Cheers Catherine, thats perfect, thanks a lot

  23. Alex Macdonald on March 8th, 2008 11:59 am

    If we think of entrepreneurship as the pursuit of ideas (good, bad or evil) without regard to controlled resources then one can tragically define 9/11 as the most strikingly entrepreneurial act in living memory.
    All of us are innately creative and driven in our pursuit of what we perceive to be a beneficial outcome. For some that means maintaining the status quo, for others it means survival, for some it means greed. It depends not only on the rules of the game, but the game fate deems you are playing.

  24. cathlawson on March 9th, 2008 2:04 pm
    Hi Alex - interesting point of view. Although I don’t know how you managed to define blowing up a building and murdering innocent people as an act of entrepreneurship. And I don’t believe that everyone would be motivated by negative traits to achieve a beneficial outcome.
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  26. ElaineB on August 17th, 2008 3:06 pm

    I think what defines a crook from the entrepreneur is the ability to have morals and ethics. You can choose to step over people, or help them on the way up. After something similar happened to me, it seemed as if the assailant prospered. They all get caught and laws are in place for this sort of thing.
    But if all else fails I go by this ” When the character of a man is not clear to you, look at his friends.” -Japanese Proverb

    ElaineB’s last blog post..House of Luxe #2 on 2008 Blogs-To-Show AND Share List

  27. cathlawson on August 17th, 2008 5:24 pm

    Good point Elaine. I’ve been a crime victim and I know exactly where you’re coming from.

    I love that proverb. Thanks for sharing.

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