Excerpt: 'The Wisdom of Ginsu'

Now, back in the 1970s, things were a little different than they are today. Actually, they were a lot different. You see, the credit card and 800-number system we are so accustomed to using today were just in their infancy back then. The use of 800 numbers had just started, and most people didn't believe that the call was really free. How could monopoly AT&T (at that time it was the only telephone company in the country) not charge you for a call? "They must be sneaking it into your phone bill somewhere," said my friends. I must admit that I was suspicious, too, until I found out that the call was paid for by the receiving party. However, a great portion of America was suspicious of 800 numbers and wouldn't call one. What's more, most people felt more comfortable calling a local number to order. It gave them the confidence that they would indeed receive the product and that the offer was legitimate. Life sure would have been easier for us if everyone trusted the phone company, but because they didn't, we had to set up local answering services with local phone numbers in every city that we ran our commercials in.

Furthermore, because there was no method of taking credit card orders over the phone, if a person wanted to order a Miracle Painter, he would either have to mail a check or order it COD. In the beginning about 90 percent of the people ordered COD, so our method of shipping was with UPS. United Parcel would (and so would we) add a fee for handling a COD order and attempt delivery of the product three times. If UPS could not deliver it and get the money, the company would return the product to us. Of course, we had to pay UPS for shipping and COD charges even if UPS didn't deliver the product and collect the money. This occurred about 10 percent of the time with the Miracle Painter. After UPS collected the money it still took about three weeks to forward it to us. You can start to see that a lot of our money was constantly held up in transit. We were getting about 20,000 orders a week, so 18,000 were probably CODs, and after three weeks, UPS owed us about $600,000. That's a lot of money now, but back in the 1970s you could practically buy a new Learjet for that kind of money.

So there we were, shipping 90 percent of our orders through UPS and wham, the drivers go on strike with hundreds of thousands of dollars of our product and money stuck in their system. What was even worse was the fact that we no longer had a method of shipping 90 percent of our orders. If the strike went on too long, we would be in serious trouble, perhaps out of business.

Now, you have to remember there was no low-cost alternative to UPS at that time. There was Railway Express and the post office. Oh yes, I think it was about that time some company named FedEx was starting an overnight delivery service, but it was expensive. FedEx charged more to deliver a letter over night than we did for the whole Miracle Painter. Anyway, we had a serious problem on our hands and it was time to look for a zig.

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