humor

how a case of beer saved the u.s. financial system

great businesses are formed by trusting others … even if they need a 24-pack to get there.

by frank stitely
the relentless cpa

you’ve probably heard of the 1929 stock market crash, black monday, the dotcom bubble and the great recession. all of these combined pale in comparison to what almost happened back in 1986. save for a case of miller lite, our financial world, as we know it, would not exist.

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i landed this job not because of my fabulous accounting qualifications. i was a double major in economics/finance in college. i would have taken a job sniffing used toilet paper out of college with those academic credentials. i got the job solely from my relationship with paul karstetter, the second name in what eventually became stitely & karstetter, cpas.

paul is a fraternity brother from the academic powerhouse clarion university in cold and snowy northwestern pennsylvania. my resume randomly crossed his desk, and he finagled an interview for a staff internal audit position. if beer-drinking ability had been a qualification, i would have gotten that job. otherwise, i was woefully unqualified. i didn’t get that job but got hired a few weeks later for the bank reconciliations department.

yes, we had a full department doing bank reconciliations. the mutual fund family had about a half-billion dollars in assets spread out over maybe 10 mutual funds. i reconciled about 60 accounts every month. to this day, i consider myself the world’s foremost authority on bank reconciliation. if there’s ever a hall of fame for bank reconcilers, i’ll be the first inductee.

to say the mutual fund company was a bit of a mess would be like calling u.s. tax law a bit complex. it was a disaster – lots of young employees managed by … basically no one. my boss’s boss was known for always being at the “other branch,” which was code for sleeping off a cocaine-induced hangover. it was the 1980s, after all.

out of this mess came opportunity for me. it was a great place to learn, unmolested by competent bosses wanting to know what i was doing on the new ibm pcs. the company was an early adopter of pc technology and software like lotus 1-2-3.

my boss’s boss’s boss loved creating spreadsheets and databases for the minions to use. as i entered data into a spreadsheet, i noticed everything happening in the spreadsheet cells. i was curious and read a book on lotus 1-2-3, which made me the second most experienced spreadsheet user in the company.

he gave me a 5.25” floppy disk with pc file on it. i’m not really that old, but stay off my damn grass, sonny, and don’t mess with social security. i’m a card-carrying member of aarp.

i created a system for tracking outstanding checks using this primitive database software. there was plenty of opportunity for me to create mischief and plenty of drinking opportunities for a starving, barely-out-of-college newbie.

my cocaine-addicted boss had a rule for happy hours. if you stayed to the end, he paid the entire check. if you left early, you paid your share. i was new to the accounting game, but i understood the debits and credits on this.

i had been on the job for about 18 months in 1986 when the accountant in charge of preparing the mutual fund financial statements and calculating daily share prices resigned to pursue another opportunity. i assume that opportunity included drying out, as she was primarily known for achieving levels of drunkenness at christmas parties previously reserved for the rolling stones.

she gave two weeks’ notice. i can only assume the company executives spent the first week of that playing children’s games to determine who would replace her. after a thrilling game of duck, duck, goose, i was offered the job.

she had one week to teach me the human race’s entire body of accounting knowledge from pacioli down to bernie madoff’s cpa, who was not yet arrested – or dead.

because i knew nothing about accounting, i tried to learn using the monkey-see, monkey-do method.

on her last friday, my predecessor quizzed me on debits and credits. her: “frank, when we want to increase cash, do we debit or credit?” me: “credit – just like the bank does.”

her: “no, we debit. when we want to decrease accounts payable, do we debit or credit?”

at this point, my training in statistics kicked in, and i realized that i had a 50 percent chance of getting this right.

me: “credit.” 

apparently, my understanding of statistics wasn’t much better than my accounting knowledge.

as she left for the final time that friday afternoon, she cashed the money out of her mutual fund accounts there, certain that a financial disaster would ensue monday morning. she was waiting on the subpoena from the securities and exchange commission so that she could explain just how hard she tried to train me.

i was hopeless, and the u.s. financial system was doomed. those bomb shelters left over from the cold war would be useful after all.

that friday night, on the way home, i bought a case of miller lite and pondered the financial collapse of the free world. i was feeling pretty low. think whale droppings on the ocean floor low.

fortunately for me and western civilization, ignorance need not be permanent. saturday morning, i rolled out of bed, found my accounting 101 textbook in a box, and began learning the accounting that i had never really mastered despite getting an a in the course.

miller lite surprisingly increases studying stamina. with the chemical assistance of beer, i studied late into saturday evening and continued all day sunday. by bedtime sunday night, i had mastered the entire universe of accounting knowledge. maybe i wasn’t ready to tackle defined benefit pension accounting yet, but i knew debits and credits. i understood what my predecessor was trying to teach me. the financial world was safe – at least from me. one motivated student and a case of beer saved the entire financial system.

here’s why this story should matter to you:

to grow your firm, you must delegate. that means trusting that people are motivated to do great work for you. i don’t know if my bosses trusted in me or were merely high on drugs. will people disappoint you? i guarantee that. trusting people will cause you pain. but there’s no other way. you must find great people and support them. then you can trust them.

that’s how great businesses are formed.