Tour Guide Wars.

So it’s weird. Even though I’m retired from having a real job and am just working in my underwear on my laptop everyday, I have still learned a ton about business over here. And it’s come from a weird place; the Berlin guided tours industry. And even weirder, the thing I’ve learned the most, is just how shady and petty and conniving some business people really are. It’s funny, back in SLO, we had competition for our clothing business. We also had online competitors for our condom business. But these rivalries were business related and we left each other alone and even helped each other out from time to time. If we needed some shirt blanks, we ask our competitors for some and they might borrow some from us. We all understood that the pie is big enough for everybody and that market forces would allow the cream to rise. At Chamber of Commerce dinners we might even share a drink and talk about some of the frustrating things about the industry. The tour guiding industry for the whole of Berlin, which I think is smaller than the shirt market of even a small city like San Luis, is nothing like this. The competitors fucking hate each other and go out of their way to actively spy on each other, press lawsuits against each other, and bully and hustle certain hotels and hostels not to carry flyer’s for the other companies. You’d think they’d be fighting for the rights to mine diamonds in South Africa or the right to dig oil wells in Alaska, the way they act; and it’s all for an industry that is paltry in size. I mean, let’s do some math. Say a tour company is cranking and sells 100 tours a day, which would be good; and they sell them for $10. Well that’s only a thousand a day, or about a 1/3 of a million per year. Even if you triple that for things like pubcrawls and private tours, you’re looking at maybe a million Euros per year; which is a tiny business in the big picture. Even if you expand to 10 cities, you’re market cap is maybe $10 million, but by that point you’d be attracting so many competitors because there are zero boundaries to entry that you’d constantly be fighting off new guys coming in and taking your market share. So it’s small industry, not worthy of the tactics these jokers are using. For example, I was giving a tour for a friend a few weeks ago, and the owner of a rival company followed me on my tour taking snapshots of me like a fucking weirdo. He then threatened to have me deported. This is the same guy who tells former employees that he “knows where they live” and to “take care of their families”. He doesn’t pay his current employees for months and months at a time and when he finally does, he shorts them. He makes contracts with employees and breaks them at whim and demands all kinds of payments from his guides if they do something stupid like “take too many people on a tour”. He sued a rival owner because the other guy flipped him off, that’s how petty it is. In fact, I’m pretty sure the whole of the European tour guiding industry is in the state it is because of this one guy. The rest of the owners crazy behavior I think can be attributed to just reacting to this guy, who thinks he has a god given right to the tourists in any city. It also has to do with simple economics. One tour company offers tours for free, while the others charge and it fucks up the equilibrium of the market. Of course they get a ton of tourists, but the model is unsustainable. Offering a product for below the market price is just as dangerous and stupid as charging too much. In the corporeal world known as reality, someone always pays for the product, and in this situation the cost is simply shifted to the tour guides, who have to pay for the people on the tour and then hope to make us the rest on tips. This reduces the payrolls of the company and allows it to hire illegals like me. But like the Weinerei, that place where you drink as much as you want and then leave a tip, it results in an unstable and unbalanced business which cannot support itself. In the case of the weinerei, they glare you down and intimidate you into tipping a ton; and so they survive essentially on force, not violence, but force in the sense that they play on your guilt to get more from you than you would otherwise give. And the same thing happens in the tour business. Because a free tour is under priced, the difference comes from not paying employees for months because cash flows are tight, extorting fines from guides, or making the guides squeeze enough out of the tourists to pay rent for a few months before quitting; which everybody does pretty soon. I have never seen such high turnover in a business. The only long term guides are guess what, the guides who give extra paid tours and don’t rely on tips or an under priced model. The other businesses for example, have had guides who have been there for 10 years, and the quality of the tours is brilliant in comparison. It’s amazing what happens when you charge a fair price and pay somebody a fair wage. Shit just works. It’s weird to have to give “capitalism” lessons here in Berlin when the evidence of it’s effectiveness is all over this town and it’s history. But in the end, and this is what I guess these experiences have reinforced, is that success in business is a long term endeavor. It’s a series of Prisoners Dilemna games played back to back against the same people for years on end. Sure, in the short run, you can cheat your employees, break your word, spy, cheat, intimidate, etc; but once the game is stretched into the long term, people begin to stop cooperating with you and ultimately, to stop playing at all. So in a free market system, where people are free to enter in agreements at will, the long term intelligent strategy is to always operate in an ethical, forthright, and cooperative manner with both your partners, competitors, and employees. This is the truly “selfish” option, the option which maximizes return. And so I guess what I’m saying is that I don’t think any of the guys who operate like this will be in business for too long. Anyway, I actually wasn’t going to write about this at all, if only to say that it has provided a real work example for me to witness and learn from. I studied Econ and Phil in school and it’s funny the way this real life case study has just fallen into my lap. And it appears I’m not the only one to think so. The reputation of this one company is already starting to crack. Heres a video somebody posted YouTube making fun of the same dude.