In a recent interview with Steve Kroft of CBS News (60 Minutes), Barry Minkow, the founder of ZZZZ Best Carpet Cleaning Company said "I started with the best of intentions, really I can say that. And when economic pressure reared its ugly head and I couldn't make payroll, I lied and stole and cheated." Prior to declaring bankruptcy, ZZZZ Best was one of the hottest stocks on Wall Street and Barry Minkow was known as the boy wonder of Wall Street. As the youngest CEO of a $300 million company Barry Minkow was the American Dream come true: a self-made teenage millionaire, the subject of flattering magazine profiles and a guest on Oprah Winfrey Show. At its peak, ZZZZ Best had 1400 employees at 23 locations in three states. What went wrong?
In 1981, Barry Minkow started the ZZZZ Best at the age of 15 while he was a sophomore in high school in his parent's garage. He was introduced to the carpet cleaning industry at the age of twelve by his mother, who worked as a telephone solicitor for a small carpet cleaning firm. Due to the lack of barriers to entry in this industry (no licensing requirements, no apprenticeships to be served and only minimal start-up capital needed), it is not hard for anyone to start a carpet cleaning company. But at the same time, no barriers to entry meant that there was a cutthroat competition within the industry and it was not that easy to run a profitable company. In the early months, Minkow realized that though it was not easy to start a carpet cleaning company, it was even harder maintaining the business due to customer complains, collections, bad checks and impatient vendors demanding payment. At that point Minkow knew that if he wanted to survive in the industry, he would need work ...