Everything I needed to know about Business I learned from Comic Books
It was a dingy little hole in the wall comic book shop. It was on Johnson street a little less than a mile from my High School in Hollywood Florida in the mid to late 1980’s. I honestly don’t remember when I first walked in. I’m sure I noticed the place on one of my earliest trips to my new school. I’ve never been the kind of guy who didn’t do something I wanted to do, at least not until much later in life when I learned to let wisdom hold back my hand. But back then, 15 year old Mike Peluso was enamored by the allure of the promise of what would be a crazy interesting place and made it a point to go in. It was years before I finally walked out a completely changed person, although some of those changes took years to sink in.
There was something special about the place. Today you walk into a comic book store and there are more rows of cards, board games, and expensive limited edition statues than comics. Back then collectibles hadn’t really taken hold of the market, so the shop was mostly filled with just comics. The display shelves went floor to ceiling and there were row upon row of boxes filled with them. It had a unique smell of aging paper, cardboard, mylar, and other things you only find in a comic book store.
In short order I became an avid comic book collector, actually avid is a bit of an understatement. I became quite obsessed. This is absolutely not surprising for anyone who knows my personality. No matter if it’s comic books, electronics, my business endeavors or politics: when i’m in, i’m in 200%. When i’m out, my interest level is less than zero. Today my interest in comics is non-existent but at this point in my life the allure of the comic book store was inescapable. There were so many elements about comic books it’s almost hard to identify what was most attractive to me. It’s not just about the fun of collecting old and rare issues. It’s also about investing or the perception of investing. It’s about being part of a community. It’s even about art appreciation. Anyone who’s a real collector has their favorite artists, splash pages, covers, and even original art collections. Original art, for those into the comic scene, takes collecting to a whole new level. There were always endless conversations and debates about which artist was better or what writer was more engaging.
So like I said, in short order I was into the whole thing completely and totally. I would hang out at the shop every chance I got. It helped that the owner had a whole ‘cult of personality’ going on. He was in his 30’s and seemed very much an adult to me. He was into bodybuilding and had a hulking frame. He drove a sports car, I think it was a firebird trans am. He was also married to a former dolphins cheerleader. Let’s not forget he made a good living selling comic books. Could a 14 year old boy imagine a more attractive life? On top of everything I was undeniably an odd child and yet he was very nice to me. I guess it was because everyone who could be counted as his best customers would have personality traits that normal people considered a bit odd. He must have developed a strong tolerance for the unique personality types that get attracted to the comic book collecting life.
Over time I became sort of a tolerated yet annoying mascot of the shop. I got invited to go to after hours events like penny poker nights, pro wrestling shows, and saturday morning tag football games. I was able to really contribute to the latter when the nascent electronics geek in me would record the games with my other prized possession, a two piece portable VHS and video camera and we would watch our adventures on the field afterwards on a little tv set at the shop.
Eventually the young buck of a store owner wanted to expand his business. He opened up a second shop right about the time I got a car. Shockingly, well shockingly looking back on how immature I was at the time, I was asked to watch the store a couple of days a week. I was going to run a comic book store! I don’t know why he asked me to watch it. Maybe it was simply because I was available. Maybe it was because I would work for cheap. I’m thinking the store owner realized that I had an honest character. Even during the days when I would bring one of my girlfriends into the store before hours and let her pick out anything she wanted, I always paid for it no matter if it meant doing without lunch or filling up my car that day. I could go on and on about my experiences and the personalities I encountered during those years of hanging out and eventually working in the shop, but the point of recalling all of this is to focus on the business aspects of what I learned. There were many and the lessons are immutably true, no matter if they are from nearly thirty years ago or if they were from today.
LESSON: Cash is king
One of the unique, to me, aspects about the owner is that he always carried a big wad of cash on him. I recall that we did accept credit cards but most people still used cash at the time. I’m sure part of the heavy use of cash was to keep his taxes down, but the bigger part of it had to do with having cash available when you needed it. Cash was a powerful thing for running a comic store.
People who are into comic books generally tend not to be fairly sophisticated in managing their lives. They used their comic books as their safety nets. I know it’s not nice to say, but it’s the truth. People had problems, they would want to sell their collections to meet what ever need they had. It was then they learned that their investments weren’t much of an investment. The owner would always have cash on hand and offer them an aggressively low offer. He wasn’t being evil, he just knew what kind of markup he had to make to keep the business going. He also knew inventory control, he would only offer pennies on the dollar if he already had stock on hand of the specific books in the collection that was for sale.
It wasn’t just about the books or making a profit. There were a couple of times the cash was used to fix problems that needed to be addressed immediately. One Sunday when I opened the shop I discovered it had been broken into. The thieves made a mess and stole much of our higher end inventory. The owner came in short order and used his cash to send me on errands to get things to repair and re-secure the shop. He also was able to use the extra inventory he he had secured in his dealings to get product back on the shelves within hours. In another instance The owner eventually traded in his sportscar for a van because his business had expanded so much he needed something that could haul lots of books. The van would break down often and he would constantly need to have it repaired. He always had the cash to get it fixed.
LESSON: Always serve your customers as best as you can!
There was a big day every single week in the shop. At the time it was Friday’s but I believe it has changed many times since then. It’s new book day. We all looked forward to new book day. It was a tremendously exciting part of the weekly cycle when we got to see all of the new books and get updates on all of the great storylines we were reading. The owner was Savvy he knew that he could not sit on too much inventory and was very careful about ordering just what he needed to sell out. So the first thing we did as soon as soon as we opened up the boxes with all of the new issues was to pull out issues for all of his subscribers. We made sure that everyone on the pull list had the most pristine issues without any flaws on them. We would hold them back bagged and named for them until they eventually made it in. Some of these customers would only come every once a month or even at longer intervals. When they picked up their subscription it was a big day usually measured in the hundreds of dollars on top of the normal sales. That’s saying something considering the average comic book price at the time was $0.75. They were loyal to our shop because we took care of them. I wouldn’t be surprised if there were still some of the same customers on the pull list even today.
In another example, one that is both entertaining as well as a great example of how you provide exemplary customer service, has to do with the day our little shop was visited by a celebrity. Wil Wheaton, child star of Star Trek the Next Generation, visited the shop. Wil was a teen back then and was apparently an avid comic book collector. He was on a some kind of promotional tour visiting local malls and signing autographs. He and his mom came into the shop to pick up some stuff to read during the down times in his travels. Unfortunately we didn’t have a few of the things that he wanted to buy. Since he had to get to his next appointment and couldn’t wait around the owner offered to get the books from another location and send me to deliver them later that day. I don’t believe there was any extra charge for the delivery but I do know that it was one heck of a commitment. The mall we had to deliver them to was at least an hour’s drive north of where the shop was located. The owner wasn’t doing this because he was star-struck, he would have done it for anybody who is in a situation like this. It didn’t matter if you were a famous TV star or if you were just somebody who had extenuating circumstances we would always do what we could to help you out even if it meant driving all over creation. It was this type of customer service that created a self perpetuating positive cycle. Wil and his mom came in because they heard something good about the shop. The shop treated them well, and they most likely told others about it, well maybe depending on how much the next part of this story affected them.
The entertaining part of this story has to do with when Wil decided to use our restroom. Apparently will was unfamiliar with the south Florida palmetto bug, a roach that can grow as big as the size of an adult hand. Earlier I described the shop as being dingy, that means we didn’t put too much into upkeep beyond what we had to. The back room and the restroom where an unkempt mess most of the time. We never invested in niceties like bug spray. Shortly after Wil went into the restroom we heard a yelp and he came running out of there as fast as he could exclaiming about the monster bug he had seen. He was thoroughly disgusted at the experience. I recall that we calmed him down but had a good laugh at his expense after he left the shop. Sorry, Wil, but your reaction was really funny!
LESSON: Understand as much as you can about your industry and leverage that knowledge
One of the unique elements at this time was that comic books were still being sold in regular retail outfits like drugstores and grocery stores on metal spindles. Really it was only collectors who went into the specialty shops. Because of the distribution logistics local general retailers would get their copies of the books approximately five to six weeks after the comic book store would get them. The only real difference between the books was that the issues at the regular retail stores would have a barcode on them where the comic book shops did not include one. From a collector’s perspective it didn’t matter as they were both from the first run of the book printing and maintained the same value.
This created a unique opportunity every now and again. If the demand for a book was significantly higher than the initial print run then all of the comic book stores would sell out very quickly and that $0.75 comic book would immediately appreciate to $5 or $10 resale value nearly overnight. If you timed it right you could go to all of the local general retail merchants and grab the new issues at face value as soon as they were put out before kids would crease them up. You could bring them back to the shop and mark them up immediately. I distinctly remember spending an entire day driving around looking for Flash number ones and bringing back to the shop. I had 20 or 30 issues that I had collected through my efforts. The Owner probably made a couple hundred bucks on that deal, well worth the money he gave me for gas and my hourly rate.
The owner of the shop realized two opportunities here, the first opportunity was providing a service to his community by making books available that none of the other shops had. The second opportunity was one of profitability. He profited from a situation by having a deep understanding of the greater market, not just how the books are delivered to his shop.
LESSON: It’s better to have 100 customers than 1 customer
One of the most unique elements of the time period that I worked at the comic book shop was that it was the emergence of the premium comic book, a format that would eventually supplant the newsprint format. These were known as graphic novels and the first and most popular of which was The Dark Knight Returns by Frank Miller. Nothing had ever been done like this before, it was sized like a regular comic book but it was on premium paper and had no advertisements to support it. Commensurately its price was about four times as much as a regular comic book cost in order to offset the lack of advertising revenue.
I distinctly remember a conversation with the store owner where I was talking about how much more money he was making with the graphic novels versus the regular comics. He surprised me when he told me he didn’t really like the graphic novel format all that much. His argument was that he can, and would prefer to, sell a lot more $0.75 comic books than $3, $4 or $20 graphic novels. It hurt him a lot more to lose a customer sale of a graphic novel then if he lost a customer sale on a $0.75 comic.
The more direct business analogy in this is that more customers equals less risk. A direct corollary to today’s world can be seen in the smartphone app market. Some of the free to play games only make profit on ‘whales’ who spend hundreds of dollars on an app buying extras for the game. If a game doesn’t attract enough whales it gets shut down very quickly.
LESSON:You have to be creative and put in the effort to find the value
One of the negatives of buying large collections of comic books from people is that sometimes the vast majority of those books in a purchase had little-to-no collectors value. This is when the seller would demand an all-or-nothing sale so the owner would pretty much get all of the garbage books in addition to the books that he was actually willing to pay for. In these types of transactions there was only a small percentage of the books that could be turned over very quickly. To help move the newly acquired slower moving stock, the owner put out long rows of boxes of “quarter comics”. Every comic book in those boxes would be priced at a quarter. this was a great deal for parents who brought in their younger kids and didn’t want to spend a lot of money. It was always much harder to get the hardcore collectors to flip through these boxes and pull out stuff they wanted to buy as they rightfully perceived the selection as low quality. The unique solution was to mix in some really high-end and high value comic books in the quarter comics every few days. This would incentivize the more serious collectors to continually flip through all of the different comic books. The ploy worked as more often than not it wouldn’t just be the high-dollar books they would pull out of the quarter bins. This is because they would spot a low value book by an artist or writer they liked. Maybe a well drawn cover would work it’s magic and they would take a chance, after all it was only a quarter.
I seriously doubt twenty years of inflation has allowed “quarter comics” to exist today especially when a regular new book is priced at $3-$4 but I wouldn’t be surprised if there are $1 comic boxes that fulfill the same purpose as the old quarter comics. The lesson for the customer if you hunt you may find a deal akin to a diamond in the rough. The business lesson is that there can be value even in everything, you just have to position it properly.
LESSON: The best investments are long term
I spent hundreds of dollars on comic books and related collectables, I’m sure over the years it grew to thousands. I didn’t have much of an income first because I wasn’t working. To get the really high demand status symbol comics I lusted after, like my copy of X-Men #1 I had to get creative. I’m pretty sure my mother would kill me if she found out that I cashed out the savings bonds that were in my name and spent the money on comics. For the record, you know it was a different era when a 14 year old kid can walk into a bank with a school ID and cash out hundreds of dollars in savings bonds without a phone call to the parent or guardian. I have a hard time believing that could happen today.
My brother, who always knew what I was up to better than my parents completely freaked out about how much I was spending. He was right to be. At first I was stuck in the mania of a community and a belief that I was ‘investing’ in something that I thought was sure to appreciate. In some respect I was right. Comics do hold at least part of their value and you could always get lucky with one that was a surprise hit. That being said for the most part the market was being manipulated by the companies that made the comics and by the shop holders. This was the era of the introduction of the ‘new #1’s’ and of the aforementioned graphic novels. It was also the emergence of the business practice of leveraging the name of the celebrity comic book artist to drive book sales. The best analogy I can think of is graduating from B-school and walking into a stock trading job at the beginning of a historical bull market. Your perspective is all skewed to one of excitement and ever present growth.
What tempered this excitement to the point of eventually selling my whole collection at a loss was seeing how the owner was the only person who ever really seemed to make money. It was the transaction that created the income, not the investment. I saw this a little bit hanging out at the shop, I saw it a lot more when I worked there. When I moved away to college and had developed other interests I did what everyone else in the community did. I went to the owner with my then massive collection and tried to sell it back to him. You could tell he didn’t want to buy it because he couldn’t give me what I paid him and still make a profit. I knew this but didn’t care, by that point I was done and ready to move onto new things. He gave me the expected low ball and I took it. The only thing I kept from my collection was some pieces of original art that I really liked.
Interestingly enough it was well over a decade later that I learned the investment lesson from this era. It was when my wife and I were focused on getting completely out of debt. I was following the Dave Ramsey best practice of selling everything I owned that wasn’t nailed down to the floor and applying the money to credit cards. Of course I pulled out those pieces of original comic book art that I hadn’t looked at in years and I put them all on eBay. Several of them that I purchased for $30–50 went for nearly a hundred dollars. I had one piece that was a cover of a firestorm comic book. I was really excited about that one because right before the auction ended it had been bid up to over $300. I was ecstatic and so I went to my email inbox and waited the last few seconds for the email to come in to tell me who I needed to send the invoice to. I was floored when the email came in and in the last 3 seconds the cover bid up to over a thousand dollars. I got lucky and this probably made up for spending all that money from the savings bonds. The lesson ultimately was if your going to invest you have to do it right. Make sure you buy something that is rare, that will always be in demand, and hold it for the long term.
These business lessons reach far beyond comic books. They include the importance of liquidity, serving your customer, and the value of maintaining deep industry knowledge beyond your direct area. They also included the understanding of the right way to structure your business, how to drive value into your efforts, and what makes a real investment. I learned many other lessons in my years at the shop that were more about life than business but were just as valuable. I’m truly thankful for all of my years and for the people I met at that store, especially the owner who took a weird little kid under his wing. He may not know it but he had a profound affect on my future success and the lives of those around me. My parents were always telling me I was wasting my time and money on these comic books and I needed to grow up. I don’t think any of us expected that it was the comic books and community surrounding them that helped me grow into the person I am today. In that respect my investments in comics were absolutely invaluable.
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