In Defense of the McDojo

[Steve]

With respect, yes, it is. There is no other criteria on which a business can be measured objectively. A business owner may choose to hold other attributes more than money - and that is certainly their choice. But the business is measured only by how much money it earns.

In fact, if it is a consistent money-loser, the IRS can declare that it is a hobby and not a business. Perfectly fine, but no longer a tax-deduction for Schedule C profit and loss or corporate tax filings.

I'm not saying money is all that matters in the world, but it is the only objective measure by which to measure the success of a business. Any other measure is subjective.

With respect, no. It's not. Viability and profitability are two seperate things, and money is not the only metric that a business can use to gauge success. This is particularly true in small business. The only thing that money measures is profit/loss.

Once again, and I'm sorry if I sound repetitive, but it seems that this keeps getting missed, we're talking about businesses that make money. If the business is in the black, making money, it is profitable. However, profitability is not the only measure of success.

Take BJJ school A and BJJ school B (based very loosely on two schools I'm familiar with, but representative of some current trends):

School A makes a pretty good income. The owner makes enough money to live comfortably doing what he loves. The school owner charges the prevailing rate for monthly dues, but has decided not to raise dues for existing students as a reward for loyalty. So, some of his oldest students still pay $50/month dues. He has a core group of dedicated students and no shortage of new students. Attrition is average among the other reputable area schools and the school is always well represented at tournaments.

The school owner is respected among his peers and rivalries are serious but friendly.

School B is cashing in bigtime on the MMA craze. The school owner left the previous school because he was ambitious and wanted to start teaching. He found a guy who could give him his purple belt (the bare minimum to start a school), hooked up with a like minded "boxing" instructor and opened a gym. He charges more than the previous school and uses just about every trick in the McDojo handbook. His students seldom compete and he and his school have a terrible reputation. Attrition is high, although as a result of the contracts, he doesn't care whether they stay or not. He still gets paid for a year (or more).

If you look at the profit sheets, you find that School B makes more money than School A. Both are profitable, but which one would you charactarize as successful?

What I think is a shame is that, out of everything I wrote, you fell back to this one sound byte.

 

[Steve]

Okay, you know, it occurs to me to ask a question I wish I had asked before wasting my time on this thread. Are you simply asserting that a McDojo can make money? If so, what exactly is the point of this thread?

I mean, if profit is your absolute definition of success, then, by your definition, a mcdojo can be wildly successful. And if this is the case, then there's really nothing to discuss. Is there?

 

[celtic_crippler]

The business of business is business. My degree is in business, I work in business, and I can tell you... it's about making money...or operating cash flow if you will. Unless you're a Non-Profit organization that is... but I dare say there ain't too many commercial dojos operating in this manner (though I have actually entertained the thought and even come across one or two...but that's another subject.)

Now, there have been some schools that have found a good balance. They have the kiddie club, but when the parents leave they draw the shades and the real fun begins. This;however, requires a high degree of dedication and time... which is something a lot of us don't have... time that is.

 

[Steve]

Unless you're a Non-Profit organization that is... but I dare say there ain't too many commercial dojos operating in this manner (though I have actually entertained the thought and even come across one or two...but that's another subject.)

Quick aside, it's not uncommon to find Judo schools run as non-profits. Often, as far as bang for one's buck goes, Judo is the best value for quality martial arts training for precisely this reason.

 

[Bill Mattocks]

Okay, you know, it occurs to me to ask a question I wish I had asked before wasting my time on this thread. Are you simply asserting that a McDojo can make money? If so, what exactly is the point of this thread?

I mean, if profit is your absolute definition of success, then, by your definition, a mcdojo can be wildly successful. And if this is the case, then there's really nothing to discuss. Is there?

I stated my point in the first post - that the McDojo has a successful business model, and that some aspects of it could probably be used by traditional dojos. Most of the other issues discussed have been raised by others - that the McDojo provides a poor service, misleads students, and so on. All I've stated is that it is a successful business model.

 

[Blade96]

I'm sorry, you're incorrect. You are referring to a subjective evaluation; the kind that fans make. Investors and stockholders and business owners can only measure the success of a business by the money it makes.

I'd still argue that just cause some business makes a lot of money doesnt make it 'successful'

The Chicago Cubs are perennial losers. They make a lot of money. As a business, they're successful. What the fans thinks means nada.

but it does matter what fans think because we're the ones who spend the money on the stuff. and I know this because I'm a real NHL hockey fan (so is my dad) Thats how come I know this about them. I know both the DRW and the TML have suffered as a result of so called people you call 'successful' because they knew how to make money but what they really did was hurt people. The Norris family and Harold Ballard, also "Dollar" Bill Wirtz (a money hawk who owned the Chicago Blackhawks for a long time thats why they never won anything since 1961)

you call these 'successful' 'profitable' and you label this, along with McDojo owners, as examples to look up to, to make money? I'm sorry, what?

Also speaking from personally experience because I was one of thes people who was duped by so called 'successful' people. A 'podiatrist' i went to when i was 13 who somehow managed to convince me and my parents that I needed treatment. Was only last year, when i was 30, that I visited a real podiatrist, who knew the first one, who said I was actually fine and the first one was a fraud who made my by offering service that wasnt real and people didnt even need it.

Anther example was a dentist I'd been seeing since i was like six. Call him Dr. No. My father always had a feeling about him as a money hawk. One day I went to him and he said I had a cavity. I had a bad feeling about him too and went to seek a new dentist. This dentist told me both my wisdom teeth were so rotted out totally destroyed and I should have them removed immediately. He did that the same day. I saw my teeth when removed and he was telling the truth. Dr. No made his money by telling you you had a cavity so you'd have to return again and again. when the situation was more serious. He could have caused me to get an infection or worse. He made lots of money. By hurting us.

These, and McDojo owners, are the types of people you would call successful? and that other people might learn something from? An unsuspecting product of a McDojo might get themselves killed because he thinks he can defend himself. I could have ended up with an infection or worse. My family spent who knows how much money on bad treatment I didnt even need. I think that longtime TML captain Mats Sundin eventually quit the organization (and later the NHL altogether) because he finally figured it out he wouldnt get anything with them. Not a SC, not a team built around him so he wouldnt have to carry the load by himself most of it.

I think people make big mistake if they label such businesses and people successful simply because they know how to make a lot of money.

 

[Bill Mattocks]

With respect, no. It's not. Viability and profitability are two seperate things, and money is not the only metric that a business can use to gauge success. This is particularly true in small business. The only thing that money measures is profit/loss.

Once again, and I'm sorry if I sound repetitive, but it seems that this keeps getting missed, we're talking about businesses that make money. If the business is in the black, making money, it is profitable. However, profitability is not the only measure of success.

Take BJJ school A and BJJ school B (based very loosely on two schools I'm familiar with, but representative of some current trends):

School A makes a pretty good income. The owner makes enough money to live comfortably doing what he loves. The school owner charges the prevailing rate for monthly dues, but has decided not to raise dues for existing students as a reward for loyalty. So, some of his oldest students still pay $50/month dues. He has a core group of dedicated students and no shortage of new students. Attrition is average among the other reputable area schools and the school is always well represented at tournaments.

The school owner is respected among his peers and rivalries are serious but friendly.

School B is cashing in bigtime on the MMA craze. The school owner left the previous school because he was ambitious and wanted to start teaching. He found a guy who could give him his purple belt (the bare minimum to start a school), hooked up with a like minded "boxing" instructor and opened a gym. He charges more than the previous school and uses just about every trick in the McDojo handbook. His students seldom compete and he and his school have a terrible reputation. Attrition is high, although as a result of the contracts, he doesn't care whether they stay or not. He still gets paid for a year (or more).

If you look at the profit sheets, you find that School B makes more money than School A. Both are profitable, but which one would you charactarize as successful?

What I think is a shame is that, out of everything I wrote, you fell back to this one sound byte.

I'm trying to cut to the chase here. You're giving a subjective value for success. That's fine but there is no subjective standard for success of a business, that's a personal feeling. Standards are only objective, never subjective. The only objective measurement of the success of a business is profit.

 

[Bill Mattocks]

I'd still argue that just cause some business makes a lot of money doesnt make it 'successful'

Yes, it does. Wages are paid with money, bills are paid with money, investments are made with money. A business with no money is not successful.

but it does matter what fans think because we're the ones who spend the money on the stuff. and I know this because I'm a real NHL hockey fan (so is my dad) Thats how come I know this about them. I know both the DRW and the TML have suffered as a result of so called people you call 'successful' because they knew how to make money but what they really did was hurt people. The Norris family and Harold Ballard, also "Dollar" Bill Wirtz (a money hawk who owned the Chicago Blackhawks for a long time thats why they never won anything since 1961)

Let me correct that. You're right, it does matter what the fans think, to the extent that they continue to support the team by spending money on it. However, they can all write letters to the teams creditors explaining that the business is 'successful' by their measurements if the team defaults on their loans, and it won't mean a thing to the bank. Only money matters as an objective measurement of success.

you call these 'successful' 'profitable' and you label this, along with McDojo owners, as examples to look up to, to make money? I'm sorry, what?

I said that McDojos have a successful business model, and they do. I did not say they were nice places, that they did wonderful things, or that anyone should look up to them.

Also speaking from personally experience because I was one of thes people who was duped by so called 'successful' people. A 'podiatrist' i went to when i was 13 who somehow managed to convince me and my parents that I needed treatment. Was only last year, when i was 30, that I visited a real podiatrist, who knew the first one, who said I was actually fine and the first one was a fraud who made my by offering service that wasnt real and people didnt even need it.

Anther example was a dentist I'd been seeing since i was like six. Call him Dr. No. My father always had a feeling about him as a money hawk. One day I went to him and he said I had a cavity. I had a bad feeling about him too and went to seek a new dentist. This dentist told me both my wisdom teeth were so rotted out totally destroyed and I should have them removed immediately. He did that the same day. I saw my teeth when removed and he was telling the truth. Dr. No made his money by telling you you had a cavity so you'd have to return again and again. when the situation was more serious. He could have caused me to get an infection or worse. He made lots of money. By hurting us.

These, and McDojo owners, are the types of people you would call successful? and that other people might learn something from?

Yes on the McDojo, no on your examples of unscrupulous medical practitioners.

An unsuspecting product of a McDojo might get themselves killed because he thinks he can defend himself. I could have ended up with an infection or worse. My family spent who knows how much money on bad treatment I didnt even need. I think that longtime TML captain Mats Sundin eventually quit the organization (and later the NHL altogether) because he finally figured it out he wouldnt get anything with them. Not a SC, not a team built around him so he wouldnt have to carry the load by himself most of it.

As I've stated, I do not believe that all McDojos are worthless in terms of what they teach. Most teach a basic form of martial arts that may be of some use to students, and is probably better than not having any knowledge and/or physical conditioning.

I don't know of any dojo - McDojo or not - that can promise if you master their training, you won't still get the snot beat out of you in a self-defense scenario. In other words, any action a person takes might 'get them killed', no matter how highly trained they are.

I think people make big mistake if they label such businesses and people successful simply because they know how to make a lot of money.

It is the only objective measurement that exists.

 

[Steve]

I stated my point in the first post - that the McDojo has a successful business model, and that some aspects of it could probably be used by traditional dojos. Most of the other issues discussed have been raised by others - that the McDojo provides a poor service, misleads students, and so on. All I've stated is that it is a successful business model.

Right, and you strictly define "successful business model" as maximizing profit. Once again, I have to ask what the point really is? I mean, if your only definition of success in business is maximizing profit, then your conclusion is a no brainer.

I disagree with your fundamental definition of success, though, and while I keep trying to communicate this to you, your response is simply to ignore everything else and say, "Yeah, but I said that success is money."

In other words, you're building your argument upon what I believe is a narrow and questionable premise. And insisting upon returning to this same questionable premise when challenged is circular logic.

 

[Bill Mattocks]

Right, and you strictly define "successful business model" as maximizing profit. Once again, I have to ask what the point really is? I mean, if your only definition of success in business is maximizing profit, then your conclusion is a no brainer.

I disagree with your fundamental definition of success, though, and while I keep trying to communicate this to you, your response is simply to ignore everything else and say, "Yeah, but I said that success is money."

In other words, you're building your argument upon what I believe is a narrow and questionable premise. And insisting upon returning to this same questionable premise when challenged is circular logic.

Then we disagree. I'm not going to ever agree that your definition of success is objective instead of subjective, because it isn't. And I've said repeatedly that if a business owner chooses a subjective meaning of success and decides to pursue that instead of profit, that's their certainly their right to do so. I don't know how else to state it, so I'll stop.

 

[Blade96]

Yes, it does. Wages are paid with money, bills are paid with money, investments are made with money. A business with no money is not successful.

I didnt say it was. But I dont think cause you can pay your bills, wages and stuff that doesnt make you successful either.

I said that McDojos have a successful business model, and they do. I did not say they were nice places, that they did wonderful things, or that anyone should look up to them.

Yes on the McDojo, no on your examples of unscrupulous medical practitioners.

If the McDojo makes its money by NOT doing wonderful thing I still dont call it successful. The medical people I referred to are 'successful' then. They make a lot of money. and they know how to get it.

As I've stated, I do not believe that all McDojos are worthless in terms of what they teach. Most teach a basic form of martial arts that may be of some use to students, and is probably better than not having any knowledge and/or physical conditioning.

One can say the same about sweatshops (another business) They know how to make money too. and could say something like "Well its better than people not having a job at all"

I don't know of any dojo - McDojo or not - that can promise if you master their training, you won't still get the snot beat out of you in a self-defense scenario. In other words, any action a person takes might 'get them killed', no matter how highly trained they are.

still doesnt make their business practices anything good or successful just cause they might not necessarily make those promises.

I suggest you read about Bill Wirtz vs his son, Rocky (now the owner of the blackhawks) Or The Norris family vs the Illitches (Mike and Marion, who bought the Red Wings in the early 1980's and still own them) They could be comparable to McDojo owners. Who was the most successful, in the opinions of fans, players who played for them (when many of them finally woke up and realized what had really been happening to them; for a long time they were duped just like mcdojo users)

It is the only objective measurement that exists.

I dont know what means 'objective/subjective' and so on. But I dont believe that the business with the most money is the most successful one.

 

[Flying Crane]

With respect, yes, it is. There is no other criteria on which a business can be measured objectively. A business owner may choose to hold other attributes more than money - and that is certainly their choice. But the business is measured only by how much money it earns.

this is probably the pravailing attitude, and supports everything that I posted earlier. Good martial arts and business do not mix well.

 

[Steve]

Then we disagree. I'm not going to ever agree that your definition of success is objective instead of subjective, because it isn't. And I've said repeatedly that if a business owner chooses a subjective meaning of success and decides to pursue that instead of profit, that's their certainly their right to do so. I don't know how else to state it, so I'll stop.

So. Would you consider Bjj school a or b to be more successful?

 

[Bill Mattocks]

So. Would you consider Bjj school a or b to be more successful?

It doesn't matter what I would consider more successful. The one that makes more money *is* more successful. My opinion of their business practices doesn't change what is.

 

[Bill Mattocks]

I dont know what means 'objective/subjective' and so on. But I dont believe that the business with the most money is the most successful one.

Objective: Team A was the most successful, because they won the pennant.
Subjective: Team B was the most successful, because their fans really love them.

Objective is what can be proven outside of the realm of personal opinion and feelings. Subjective is how you feel about something.

Objective in my example above cannot be disupted - Team A won the pennant. You can't argue that they didn't win if they did. The world agrees.

Subjective in my example above is true according to me, but it might not be true according to you. The truth cannot be determined in a way that everyone will agree with.

For a business, there is only one model that matters to the landlord and the employees - getting paid. You won't work for a business that loves you to death but can't pay you, and neither would I. The bank won't knock a few dollars off the mortgage because the business really treats its customers well. Stockholders won't rejoice if the value of their stock drops, even if the company lost value because they refused to raise prices or whatever.

Subjectively, you and I might agree that a dojo that treats its students well, teaches great martial arts is a great place. Objectively, if they can't pay the rent, they close the doors. Like it or not, it all comes down to profit when it comes to keeping the doors open.

 

[Touch Of Death]

this is probably the pravailing attitude, and supports everything that I posted earlier. Good martial arts and business do not mix well.

I would have to disagree. I don't think that using a billing agency or any other profit making venture makes your Martial Arts bad.
Sean

 

[AlanE]

Contracts are the stuff of predictable, recurring, income.

In support of your statement, I found this:

http://www.jonathanfields.com/blog/business-strategy-the-recurring-income-trap/

...And one downside that the author of this blog I linked to did not point out - it makes things very difficult for the employees. People look for stability and dependability for the most part. Salespeople live on commissions by choice, but rank-and-file don't want to have to live in fear of losing their jobs any given month because Johnny Wannabe Blackbelt didn't choose to pay his dues that month.

Bill, I accidently viewed your comment initially from the pespective of the student who lost her/his job who has another contract to ruin life further (cell phone, car, house, electricity, health insurance, life insurance, and...dojo contract), rather than being able to downsize/circle the wagons and pay only the most important costs during the down period.

A few moments later I realized exactly what you meant. BTW, more kudos to you for your whole line of reasoning and posts (including wristwatches!).

But it does lead me to mixed feelings, which I already had... Ok I didn't! I don't agree with contracts. Since I participated as a student without contracts, I'm used to that model. I realize it's not a complete picture.

For me, it's "Sound Business Model" meets "Ethical Dilemma."

I wouldn't want students to have one more problem as I try to help their lives. Would I be living outside of good business sense more than a used car salesman who adds only modest (not exorbitant) profit and endures less security? Perhaps I would and I'd fail. I'm inclined not to take from people when I'm not serving them.

Plus there's the enforcement of contracts. They're not quite as important as the student's car insurance. Blood from a turnip, reputation of your school, students' credit ratings affected (for martial arts??), keeping students that don't want to be there sparring with others, property vandalism as retaliation. Optimum business model for a martial arts school?

Yeah, I know, contracts work for fitness centers!

 

[celtic_crippler]

The bottom line is that if you want to have a successful business, and that does mean having more revenue than expense, then you will ultimately have to cater to your customer base.

"Krotty" is a service oriented industry. For the most part, you're selling knowledge and no physical product. That means you really have to cater to the customer base. Why? Because they have to percieve some value in it because they do not possess a physical asset, in thier minds, that can be easily liquidated into readily available funds.

It's not like buying land... something tangible; it's a service industry.

The sad truth is, that parents just want something that JR can do after school that involves excercise and building up their self esteem. There are other benefits for sure, but the perpetuation of the martial arts is the least of their concerns.

You also have those adults that want their self esteem boosted as well as feeling like they're getting excercise and can claim to be active while at the same time putting forth the least amount of effort to feel comfortable making that assertion. How many people do you know that brag about being an overweight couch potatoe?

So, the McDojo serves a purpose.

Even though us die-hard purist may knock it at times, it actully serves us as well by helping to keep martial arts main stream. There are those that don't know any better, join a McDojo, and after some time start doing their homework to find there's a whole great big world of the "good stuff" out their and seek it out. Without the McDojo, these folks may have never gotten involved in the first place.

Do McDojo's overwhelming numbers compared to more hardcore martial arts give a bad perception to the masses? I think it does, but I'm not concerned with the masses as much as teaching that one student that looks for something "more"... and ends up coming to me.

On a personal note: I don't care if the majority have what I call a "Power Ranger Mentality" towards martial arts. They can point and laugh from thier couches all day long. To me, it's an advantage. Why? Because the common perception is "Krotty is a joke & for kids" and that means most anyone who would try to face me down will underestimate what I can do and that is an advantage for me...

...but then, I don't earn a living from teaching.

 

[JWLuiza]

In a business model, success is determined as cash flow, balance sheet, financial robustness, not by idealogy, corporate environment. Businesses can use these subjective things as both an internal motivator for employees and as a branding mechanism in support of the business of ANY business: making money.

BM has not been trying to say anything about the morality or efficacy of their martial arts, just that from a business standpoint, the "McDojos" have done a few things right. And, I mean who HASN'T thought of just working on martial arts 24/7 and living off your income from that endeavor while teaching great martial arts?

The more productive argument/discussion is what practices do not act at cross purposes to teaching a high quality product.

 

[Steve]

It doesn't matter what I would consider more successful. The one that makes more money *is* more successful. My opinion of their business practices doesn't change what is.

So, it's all about the snapshot? I'm glad you're not a financial planner because your bottom line mentality is in no small part to blame for the current economic mess we are in.

So were you to be in a position to become a co-owner in one school or the other, which would you pick?