How to Run Your Business Like a Somali Pirate

By Niraj Chokshi

Somalian pirate operations are becoming increasingly sophisticated, according to a March 10 UN Security Council report, with a funding and incentive model that could double as a business school curriculum.

Here is a handy guide to the piracy business plan, based on some of their findings.

Step 1: Round up investors to provide start-up capital.

Step 2: Gather between eight and twelve pirates to form the at-sea team. They will need "a minimum of two attack skiffs, weapons, equipment, provisions, fuel and preferably a supply boat." Each pirate should bring his own firearm in exchange for a class A share of the profits. If a pirate brings a skiff or a particularly heavy-duty firearm like a machine gun or, say, a rocket launcher, throw in another share. One more share to the guy who boards the besieged ship first.

Step 3: Assemble another team of about 12 people. Each class A pirate can contribute a friend or relative to this team. These are the class B investors and they'll provide land-based protection. The B shares are typically set at a fixed amount, currently worth about $15,000.

Step 4: Hijack ship, take hostages.

Step 5: Find someone to front the cost of the siege -- to be repaid with interest -- while the ransom is negotiated.

Step 6: Collect ransom.

Step 7: Distribute profits. The lead investor gets a 30 percent cut, local elders are paid between 5 and 10 percent for anchoring rights and the class B holders receive their fixed-sum payouts. Whatever is left is split among the class A shareholders.

Bonus: You don't want your pirates running off with the loot! Be sure to incentivize your workforce and set compensation levels fairly. Here's a translation of a seized pirate document:

This is to notify all the ship's staff that the company has given out a merit-based reward:

1. Gaanburi (pirate name) has qualified for it and the company has promised him $2000. Likewise, similar awards for Cadiin (pirate name) and Ina Cabdulqaadir Dhuxyaweyn (pirate name) will be announced soon. The company will continue its reward system and it is open to all. As the saying goes 'the parents initially love their children equally but it is the children who make them love some more than the others'. So does the company. It is up to your abilities to qualify this easy-to-earn reward.

Hat tip to UN Dispatch's Mark Leon Goldberg.

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