We had rekt the competition. By Year 3, our company had a 40% market share and a couple of our dozen-or-so competitors were already insolvent. Most of the rest were choking on massive unsold inventories and worthless real estate. Even when the economy had soured a couple of years later, we were swimming in free cash flow, kept investing in new products and facilities, and – to crush the spirit of the competition completely – paid out fat dividends. This happened in the simulation game during the final year of my business degree. It was a high-value experience not just because of all the fun my partner and I had while cruising through our final year. There was just so much good teaching in the “International Strategic Management” course that we were taking together (obviously none of it came from the textbook – I’m not even sure there was one). Fraud was the very pinnacle of that good teaching. Just before the final round, our nearest competitor was light years behind, on both financials and game points. But two of the middling teams (and by “middling” I mean “near-bankrupt”) conspired to game the system through classic accounting fraud (which was not prohibited by the rules of the simulation). They sold each other assets at inflated prices, thereby booking enormous profits and reporting gigantic balance sheets on the asset side in the final tally. Despite their fraud, we ended up a very close second. So hard had we rekt the competition, even fraud couldn’t help them. And ultimately the professor figured out what had happened and nullified the fraudulent transactions. Much of the credit for our winning big goes to my partner-in-virtu – a longtime friend, who’s gone on to a great career in finance. She was terrific in handling the … Continue reading Luddic Fraud and Public Savagery