Value-Based Fees, 3rd Edition

CHAPTER 11Volatility Opportunity: Value-Based Fees in Times of Turmoil and Crisis

As we've seen on several occasions since the last edition of this book, life has nasty surprises at times: natural disaster, pandemic, social unrest, vituperative elections, recession, technology disasters, and all the rest of Pandora's Box.

But that's also been the way of history. Here's a brief example of firms that have been created in the midst of such volatility:

• Netflix (1997) Dot.com bubble burst
• Airbnb (2008) Recession
• Trader Joe's (1958) Poor economy
• Microsoft (1975) Stagflation
• Sports Illustrated (1954) Recession
• MTV (1981) Poor economy
• GE (1876) Panic of 1873 and recession
• Warby Parker (2010) Recession
• Revlon (1932) Depression
• Disney (1929) Depression

Don't think that the economy dictates your fees.

CASE STUDY: 9/11 AFTERMATH

I had three contracts with firms in lower Manhattan and, in the aftermath of 9/11, I offered all three their money back. I had been paid in full at the outset (you'll read more about this later in the book), but I had as yet done no work.

All three responded in this manner: “We need to get back on our feet, and you can help us. Let's start in about 60 days.”

One firm had two feet of ashes on its balconies, having moved into the space two weeks before. Another would be unable to use its offices for months. The third had much of its data storage destroyed.

In my lifetime, 9/11 was the equivalent of my parents' Pearl Harbor. In any crisis, people need help, ...