There are aspects of running a family-owned business in Las Vegas that are like taking a graduate-level crash course in local politics. When we lost our lease on the space we rented for our secondhand store on Fremont Street, we had to go before the Las Vegas City Council to get approval to move into a new building on Las Vegas Boulevard. We expected it to be little more than a rubber stamp, since it was a commercial neighborhood and not an area where a secondhand store would be out of place.
However, there was one particular council member who was determined to become our nemesis. At the council meeting the night we were on the agenda, he went on a twenty-minute tirade why we shouldn’t be allowed to move to Las Vegas Boulevard. He thought we’d be bad for the neighborhood—if you’ve been there, you know that’s comical—and he went on from there. By the time he was finished, anyone listening would have believed that we stood for the worst of everything.
We were taken aback by this guy. We’d never met him, but he was vehement in his dislike for us. Old Man and I were looking at each other during the council meeting, thinking, What is with this guy? We started out in 1981 in a three-hundred-square-foot space—more like a room—on Las Vegas Boulevard South. We spent five years there before moving to a bigger space on Fremont Street. We were there for two years before losing our lease. We’d never had any problems at either location, so this was coming out of the blue.
The councilman’s argument apparently swayed one voter, because we squeaked by 3–2 and got the go-ahead to move into the building we occupy today.
We were happy to move, no matter what our nemesis believed, and we didn’t give him a second thought. (That’s probably not entirely true, since I’m sure Old Man and I threw around some curse words in reference to him for a few weeks afterward.)
People like him represented minor setbacks, just more proof that we had to develop a tough hide to make it in this business in this city. From the beginning, my dad and I always had our eyes on a lucrative prize: one of Vegas’s rare—and infrequently distributed—pawn licenses. It was the logical progression from coin shop to secondhand store to pawn shop. If we could get that license, there’d be no stopping us. The problem was, dreaming of owning a pawn shop in Vegas was the easy part. Getting a pawn license and actually setting up shop was the hard part.
I got on the phone to the city to see what it would take to get a license, and that’s when I learned about an arcane 1955 law in the city of Las Vegas that called for pawn licenses to be sold based on the city’s population. More specifically, one pawn license would be issued for every fifty thousand residents in the city.
Since the population at the time of my call was over two hundred thousand but below two hundred and fifty thousand, two-fifty became the number the city had to reach before we could get a license.
Clearly, we wouldn’t be the only ones keeping tabs on that number. The big corporations would be fighting for the chance to add another store. There could be other independent pawnbrokers like us looking to get their hands on a license that figured to be as lucrative as this one.
My plan was simple: I would call the city statistician every single week to get an update on the population. Every Friday I’d make the call, and every Friday the same guy would give me the number. This was 1988, and Vegas was growing like crazy. One week it would be two hundred twenty nine thousand, the next week two thirty. I won’t bore you with the details—it was just a guy calling another guy every Friday and getting a number for an answer, thanking him, and hanging up. Not exactly riveting dialogue.
Around this time, we had a surprise visitor walk through the door of the Gold & Silver Pawn Shop. It was none other than the honorable council member who’d run us down at the meeting.
Asking for a campaign contribution.
This is the guy who thought we were the worst thing that could ever happen to Las Vegas Boulevard, and probably Las Vegas itself. All smiles, he came in and shook my hand, looked me straight in the eye, and asked for money.
I was a smart-ass kid at the time, and I wasn’t always the most tactful guy in the world. This time, though, I knew we had to swallow our pride—and our anger. This wasn’t easy; I could feel Old Man breathing fire behind me. He was mumbling something. I was afraid he was going to come out of his chair and lunge at this guy’s throat.
I tried to smile at the guy (it probably came out as a grimace), and I walked back to talk to my dad. He was staring me down, and I said, “You bite your fucking tongue. Give him some fucking money.”
Old Man didn’t want to hear this, but he knew it was the way the game was played. By this time, I had already started calling the city statistician for weekly updates on the population, with an eye on two hundred and fifty thousand and a pawn license. If we threw our council friend out of the shop by his ear, he’d make sure we never had a chance of realizing our dream and getting the city’s next pawn license.
Worse still, he knew that, too. That’s why he was in there.
I think we wrote him a check for a thousand bucks at a time when a thousand bucks meant a lot to us. He smiled and shook my hand again, thanked us for our contribution, and said he looked forward to doing business with us in the future.
I was still calling every week, and as the population got closer to two-fifty, I started calling every day. I had a picture of a meter running in my head, with the numbers rolling up like an odometer. I wanted to make sure I was on the phone with the statistician the second that thing rolled over from 249,999 to 250,000.
Then one day in early 1989, it happened.
Two-fifty.
I got off the phone and said, “Dad, he says it’s two-fifty.”
My dad didn’t even look up.
“Then get your ass down there and get me my license.”
Well, I did and I didn’t. I got my ass down to the city business license office, ready to pay the $200 fee for the license, and said, “We’ve been told the city population is two hundred and fifty thousand, and I’d like to get the license.”
Their answer was straightforward and stunning:
“No, we’re not accepting those.”
“Wait a second,” I said. “The city population is two hundred and fifty thousand, and I’m the first one here. Give me my license.”
“No.”
No? Just no?
Apparently that was my answer: Just no.
We’d worked too hard to give up on this, so we got a lawyer right away and sent him down there to file a lawsuit. We eventually got ourselves in front of a judge, who reviewed the material, looked down from the bench, and said, “Mr. Harrison was the first person down there, get him a license.”
That didn’t work either. The city filed an appeal that included a clause that changed the licensing process. The new clause said I was now supposed to pay a $250,000 licensing fee. The judge looked at that and said, “No, you can’t do that. You can’t change the rules in the middle of the game.”
By the third time they sent us back to the judge, he had lost his patience with the city manager and the city attorneys.
“If Mr. Harrison doesn’t have a license by tonight,” he said, “then you or one of your staff is going to be spending the night in jail tonight.”
And that’s how we got our license. It was probably the only way we were going to get the license, because they did not want to give it to us. They wanted to give it to one of the good ol’ boys.
The city never anticipated that a twenty-five-year-old guy from an unimportant family would show up to claim the license. This was a valuable piece of paper, and people with more money and pull than me and Old Man—and that includes almost everyone—were determined to make sure we didn’t get it.
We literally felt like we were fighting for our financial lives. We knew we were up against some powerful forces, but we also knew we were right. The license was rightfully ours. There was nothing in the city codes that said anything other than first-come, first-served when it came to the pawn license. We had completed t
he paperwork and had been approved, so it was our license.
We were working off 1955 laws that nobody had seen the need to change. The city had erupted in population and influence during that time, and the Las Vegas of 1989 was far more of a big city, and even a city with the corrupt origins of Vegas gets more corrupt the bigger it gets. When there’s more at stake, there are more people to claim it. If the current movers and shakers had been able to foresee a scenario where father-and-son store owners would be in position to grab a lucrative pawn license from the hands of a big-time corporation, I’m sure they would have changed the laws long before the city’s population hit two hundred and fifty thousand.
The license wasn’t the final hurdle, though. Once the judge made his ruling, we had to go back before the city council for final zoning approval. On the night of the meeting, we didn’t really know what to expect. We were so blindsided the last time, and this time there could have been another council member—or our friend again—who felt compelled to issue an impassioned tirade against us.
But lo and behold, when they got to our item on the agenda, who stands up and argues in our favor? Our old friend, that’s who. The man who raged against us as being the worst thing that could ever happen to Las Vegas Boulevard spent fifteen minutes telling the city council that we were great ambassadors for Las Vegas and the most wonderful people on the damned planet, and the city would be crazy not to zone us for the pawn shop.
Ah, politics! How I love the civic-minded purity of those who serve the community.
* * * *
We started the shop with around $10,000 and the inventory on hand. The money was the hard part. We needed to have cash on hand to make more cash. If someone came to us with a Rolex and wanted to pawn it for $8,000 and we didn’t have the cash on hand, he would go somewhere else and never come back. That’s a customer you’ll never have, and you don’t know how many other people he might influence by bad-mouthing you and saying you don’t have enough money to do the job.
Appearances matter in this business. (OK, you can laugh about this as you envision the crew of us behind the counter, but it’s true.) We had to give off the impression that we were doing well even if we were struggling. No foreign businessman is going to walk into a pawn shop in Las Vegas with $50,000 worth of brand-new Rolex watches, looking for $25,000 in cash to gamble, and feel good if he looks across the counter and sees someone who looks like he can’t afford his next meal. In fact, he’s probably going to leave before he gets to the counter.
We did what we could to save and put everything back into the business. After we got the pawn license, for the first year Tracy and I lived in a small apartment with Corey and Adam, and I rode my bike to work. Whatever money we had was being loaned out. School clothes came late for a few years. If you start a pawn shop and you don’t have much capital—and we didn’t—there’s a lot of danger.
It was constantly like this for ten years, with another consideration: the IRS. If you run a pawn shop and make $100,000 but loan out every last penny of it, the IRS doesn’t give a damn. It didn’t tell you to loan it out, so it still wants its $34,000. It was a grind. And loans weren’t easy, either. The reputation of the pawn business works against us when we walk into a bank. Since it’s against Small Business Administration rules to borrow money to lend it out to somebody else, we’re out of luck when it comes to acquiring an SBA loan.
Tracy and I had a beat-up Volkswagen bus during the days when I was riding my bicycle to work. Tracy ferried the kids around while I pedaled my way down Las Vegas Boulevard. One day I started off to work but had to come right back because I forgot something. I ran into our apartment and left the bike out front for less than five minutes. When I got back, the bike was gone. If it wasn’t bad enough that I had to ride a bike to work, now I’m staring at an empty spot where my bike stood five minutes earlier. I was pissed.
The next day—the very next day—I’m driving the Volkswagen bus to work and I see a fucking guy riding my bicycle. I said, “Well, you’re fucked” and boom! I steered that bus right into the side of him, knocking him to the pavement.
I jumped out of the bus and walked up to him just in time to hear him say, “This looks like a lawsuit.”
“Yeah, nice try, asshole.”
I proceeded to let him know precisely why he was about to get a beating, and then I beat the shit out of him. When I felt he’d had enough, I tossed the bike into the back of the bus and drove to a Winchell’s donut shop down the street, where I found a couple of cops having a cup of coffee. Yes, I went right to a Winchell’s, and yes there were cops in there. I started talking a mile a minute.
“Hey, I just caught this guy who stole my bike. He’s lying on the ground over there. Go arrest him.”
The cops followed me there, but the thief wasn’t there. I pointed the cops to the spot where he stole my bike. They looked down at the splotches of blood on the pavement. They looked up at me.
“Trust us,” one of them said. “Looking at that red asphalt there, I don’t think you want us to go pick this guy up.”
I had to be satisfied with getting my bike back.
* * * *
We focused everything on growing the pawn business, and sometimes that meant expanding beyond our core business. Old Man talked me into starting some payday loan shops as a means of diversifying our business. He had some experience with this type of lending back in his navy days, albeit in a less organized manner. Unfortunately, I hated every minute of it, and I felt slimy the whole time. It was a mess, truly predatory, and it felt like our prey consisted of people who were the least equipped to handle it. I know the pawn business has been vilified by Hollywood and elsewhere, but the pawn business is way more legitimate than the payday loan business. If there is a caste system in the underground economy, the payday loan businesses are bottom-dwellers. They provide a service by giving customers cash between paychecks. Their advertisements are geared toward making the consumer believe the stores are there to give them a temporary boost, to pay bills—or to use however—before their next check. The reality, however, is a bit more insidious; the parameters of the loans make it nearly impossible to pay back. Even though the business is legally allowed, morally it never felt right.
I started thinking of a better way of doing business. The interest rates at payday loan stores are as high as 1 to 2 percent per day. It’s insane. People end up borrowing money they can never pay back. They pay the interest, over and over, and never get out from under the debt. It seemed like there had to be a better way of handling this.
So I came up with a business model that would change the rules of the game. The interest rates were still insanely high, roughly 60 percent, but that’s just because it’s an incredibly high-risk business. Instead of the exorbitant payday loan rate that compounds into infinity, I would loan you a hundred bucks with a $25 service fee and put you on a four-month payment plan. Once you’d completed your payments, you were good to go. I would actually work with the people and enable them to get out from under the debt load. My goal was to have them all pay their loans off so they’d come back for more loans, instead of making it nearly impossible for them to pay off their loans so I could continue to collect interest.
Well, some of the big boys in town didn’t like what I was doing. By the time they started putting the screws to me, I had five stores, including one in a town north of Vegas that was managed by the husband of the madam at the local brothel. I was small compared to these corporate loan stores—both in business and cash reserves—so they started suing the hell out of me. They said I was stealing their employees. They said I was stealing their software. They said I was stealing their customer lists.
I went fuming to my lawyer every time. “This is bullshit,” I’d say.
“You’re right,” he’d say. “But this is America, and you can sue anybody about anything at any time.”
In one suit, they wanted copies of every loan I did—two thousand loans, twelve pieces of paper for each loan.
That’s twenty-four thousand pieces of paper, and they wanted certified copies at three bucks apiece. Seventy-two grand for paperwork. You get the idea? So if the guy has more money than you, you’re going to get crushed.
And I got crushed.
In the end, I got out of the alternative-loan business. I sold out to the guy who was suing me—after a quarter million dollars in lawyers’ fees.
I honestly think my business model for alternative loans would have worked better than the current payday-advance model. My ideas aren’t born in a lecture hall in an Ivy League university, but I think some of them are pretty damned good.
Better, in fact, than a lot of the ideas that do come out of business school. From 1991 to 1999, Las Vegas had a used-car saleswoman as mayor. Jan Laverty Jones . . . oh, how I fought with her! She was glamorous, she was brilliant, she went to Stanford! We were all supposed to bow down to her status as the Queen of Las Vegas. Well, if you owned a pawn shop in Vegas, you remember her for one brilliant idea: Pawn Shop Mall. That’s right, she made a proposal to move all the pawn shops in Vegas to a Pawn Shop Mall on Industrial Park Road. This was a good idea because it would be better for all of us, she claimed, and we were supposed to relent in grateful supplication because Jan Laverty Jones went to Stanford and she hawked cars on TV for her husband’s dealership chain. She knew what was best for us.
Pawn Shop Mall.
My response was typically direct: Are you fucking high?
I told the mayor’s office, “OK, I’ll agree to put all the pawn shops in a mall on Industrial Park Road as long as you agree to put all the grocery stores in a Grocery Store Mall right next door, and all the jewelry stores in a Jewelry Store Mall right next to that.”
It was insane. It never became a reality, obviously, but the fact that we were forced to address such an issue was completely unbelievable. How could a proposal that wildly stupid even get past the first advisor before being shot down? Unbelievable.
License to Pawn: Deals, Steals, and My Life at the Gold & Silver Page 5