Who Really are the Strip Joint Dirt Bags?

by Tom Allinder

Over the last 12 years or so, I have gotten to know hundreds, maybe over a thousand OTCBB/Pink Sheet CEOs. Back in the day of doing audio interviews, I talked to CEOs formally and informally on a daily basis. I still talk to at least one OTCBB or Pink sheet CEO every day. One thing I have learned over the years is that CEOs of microcap companies are no different than any cross-section of people you could look at anywhere across the country or the world.

CEOs are people too. They are not perfect. Most are college educated; in fact, I have yet to meet a CEO that did not complete at least a couple of years of college. Some even ask me where I “went to school”. I tell them I graduated from the U of H.K… the “University of Hard Knocks”.

“OTCBB CEOs are strip-joint dirt bags,” said my good friend and business partner of many years back in 2000 or 2001. I will never forget that statement he made because I laughed for ten or fifteen minutes and still at least chuckle when I think of it now. It was a broad statement but reflected his experience up to that time.

Back in the late 90s and early 2000’s many deals were “closed” not in conference rooms or corporate offices, but in restaurants, nightclubs and the back rooms of strip joints. One famous promoter who hosted one of these “meetings” showed me the bill for the evening of “entertaining” three microcap CEOs at a strip joint in Ft. Lauderdale. It came to $11,000. It ended up being a “good investment” though… Back in the dot com boom, anyone with a half-assed decent idea could be a CEO. I am not sure how or where deals are closed now between the big promoters and the management teams of small publicly traded companies. Something tells me that they are not done in such expensive venues anymore.

With regard to the CEOs though, they have a hard job to do. Not only are they fully engaged in the business side of their company but also have to be concerned with the marketplace side as well. Stock performance makes or breaks a company regardless of the business. Many microcap companies are awash in debt and investors that demand action and in many cases, force feed promotional programs down the throats of company management. It is a stressful job.

CEOs act differently to this stress. Some are calm and come off as normal people. Others are prone to full, all out meltdowns. One CEO of an OTCBB company told me he had been screwed by so many promoters that he was not going to take it anymore. He was his own worst enemy though because every time a promoter worked for him, he would flood the marketplace with stock. He called me and told me that he was getting on a plane, flying to southeast Florida, was going to stop at a Dicks Sporting Goods, buy a baseball bat and go pay a visit to a promoter that lived there.

This is obviously an extreme case of meltdown but I have witnessed events like this more than once over the years. I have listened to more than one CEO babble nearly incoherently when things were not working out. Some CEOs just simply disappear when times get tough in the marketplace. More often than not it seems that a good dialog with a CEO just evaporates instantaneously at some point. They just stop answering their phone, emails and cut off all forms of communication with everyone.

It is almost amusing to me though, what people write on message boards and on social media platforms about CEOs of microcap companies. As I said before, CEOs and their management teams are most often at the mercy of their investors. These message board and social media posters only consider how decisions affect them and rightly so, but there is a big picture. Most people do not know how these publicly traded companies are run.

The Funders are the ones that actually pull the strings far more than the management teams of the companies. When one of these funders put a significant amount of money into a publicly traded company, they, in effect gain control of decisions regarding the business and the marketplace. The funders decide how the stock will be promoted, how stock will be sold and who will sell it. Lots of management teams do not want to run stock promotional programs but they are forced to hire promoters by the funders.

The company and the management team is in a no-win situation most of the time. If their stock is not trading a lot of volume, they have to go to one of these funders to try and secure some money to run or grow their business. If they don’t go to a funder, they die on the vine, if they do, they lose control of their stock and in many cases, their business.

There are some good funders and many bad ones. The bad ones tend to be the short term funders. As soon as they get their stock, they are looking to run a pump and dump and recoup their investment and reap a big profit. And when it all goes wrong, the blame is heaped on the CEO and the management team of the company.

The longer term funders, of who there are few, are much better. They also tend to fund only companies they believe will succeed longer term. They give the company money and take stock in return but offer lots of help along the way for the company with regard to not only the marketplace but their business as well. These funders have a horizon beyond next week with regard to making money on their investment.

So, the next time you are ready to curse a CEO and their management team, remember, they are often not the ones in control. It would be better to dig and find out who is funding them. More often than not, you will find that the real dirtbags are not really part of the company at all.

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