Building business, or why (some) Gypsies are smarter than (most) Romanians

028 August 16, 2014 -- (asphalt)

I feel compelled to step into this essay by means of a short digression: I can't help but notice how many inhabitants of the Internet seek to make a living off sensationalistic titles such as "How to \(X\) your \(Y\) business using, or from, or by \(Z\)"; because nothing sells better than "The Best Business ever", like there aren't a zillion definitions for "Best" and like "Building Business" is a piece of cake. Which, of course, it most definitely is not.

Fortunately this is nothing of the sort. But I feel once again compelled to digress, discussing my own background into the matter: I have nil knowledge on the matter of building a business. Which is why the reader, as a young or old, or experienced or, on the contrary, inexperienced entrepreneur, might wonder what lessons have I to teach them. Well, maybe I have none, but then again...

I have been fortunate enough to study a tiny bit of game theory for my computer scientifical diploma thesis. Thus I know that the "Best" business isn't the one that maximizes profit and/or income, or social utility or whatnot. In my opinion, the best business1 is the one from which all or most of the agents can benefit, i.e. extract the most utility, in an otherwise perfectly hostile environment such as product, labor, financial markets, and so on and so forth. It is what physicists would call a closed system, or what biologists would call an ecosystem, or what game theorists would call a nash equilibrium, possibly one attained using mixed strategies.

Facebook, for example, has proven itself to not be an ecosystem upon which entrepreneurs could build their businesses. Sure, it worked for a while for more or less dubious companies2, but in the long term, the whole "reach", "engagement", "click-through" etc. marketingspeak has been nothing but harmful to both companies and clients. This, I theorize, happens because Facebook has in this game a stake which is in direct conflict with either the users' or the companies' utility (or maybe both), which in a zero-sum game does not necessarily lead to what we would call an equilibrium. But as previously stated, I have no background in economy nor finance3, so my theories should at least be taken with a pinch of salt.

I shall, instead of theorizing, share a case study which, I assure you, is perfectly real and has left me thinking for a bit, even though the story might on a first glance seem trivial and uninteresting, but which, I once again assure you, is anything but that.

You see, the capital of Romania4 is split up into six Districts ("Sectoare"). Arguably the least developed of them is the fifth District ("Sectorul 5"), locally governed by a Gypsy mayor, a fact strongly correlated with and also caused by the great number of Rroma people in District 5. If you're not Romanian, or European for that matter, you might be blissfully unaware of the fact that Gypsies are of a way of being that is shockingly different from that of the Romanian ethnics: being held slaves for hundreds of years and freed from slavery at the half of the 19th century, they remain a resilient social group, in that they aren't interested in any way in "integrating" with the other Romanians, either because they're dumb or because they in fact have some kind of culture worth defending; hard to say.

By "shockingly different", I mean that their way of being is what some would call "barbaric": they live in tents, don't in general have a taste for hygiene and their morals are rather harsh. What's more disagreeable in this (sub)urban Bucharestian context is that, save for a few, they are poor and poorly educated, do drugs and are very prone to crime, especially small theft. This is quite unfortunate among others for the Romanian locals, not too wealthy themselves, thus not too fond of having a relationship of any kind with their Gypsy neighbours5.

Until one or two years ago, this social problem also led to others, such as ecological ones. You see, no one likes to live in a neighbourhood that smells like shit, yet sanitation services were for a large period of time, as many other public services, available only on paper, not also in practice. The situation gets more complex, but the general idea is that the streets of Rahova, Ferentari and other neighbourhoods in District 5 were, with few exceptions, not quite devoid of garbage. And while in Berlin this would be the cause of outrage, in Romania no one bothers to cry in public about it, because that's what fifty years of communism has done to people6. And to think about it, the authorities even placed public ecological bins for the locals, only the locals, Gypsies and Romanians alike, have little respect for the establishment, so they misused those however they could.

Now, as all self-regulating systems go, it seems like there was (and is) a way to profit from this otherwise bleak situation. First, a few wealthier Gypsies from the Gypsy mayor's circle of business partners bought some barren, or maybe toxic pieces of land. Then they opened what one would call "ecological trash dumps" for any and every type of bottles, including but not limited to the biodegradable ones.

The first step was, of course, to pay the aforementioned sanitation services a little extra for garbage sorting. I have no idea if this is really profitable, but I wouldn't be surprised if it was, since this most probably uses funds coming from the European Union, District 5 or no District 5. The best part of it, however, is that, with this crisis and all, people with no jobs started gathering bottles off the streets themselves and bringing them to these dumps. So you see, if you walk through Rahova in a summer evening, you'll see a guy off the streets who's gathering cans of beer left behind by some other drunkard, "for free", since he's not really doing it on taxpayers' money. He might not be making much money, but he's learned that something is more than zero and working your ass off beats sitting your ass off at any time in human history.

And this is how, dear reader, we arrive at the whole crux of the story. Building the "Best" business doesn't require "genius", "talent", "innovation" or other such empty words. Building business, not one, not many, but business as a general thing, requires looking around you and solving that problem to help your selfish needs, and only incidentally those of your peers. This matters, while the government not giving senior folk bigger pensions or Facebook not working does not.

That is all.

  1. And you might have remarked that it is my opinion, which is why I'm talking about the best, and not the "Best".

  2. Zynga.

  3. Basically I have no idea what I'm talking about. Or have I?

  4. Bucharest.

  5. And this is what leads to social tensions, but this is a story for another time, maybe.

  6. Also read The mechanics of socialism.