Make Your Groupon or Deal Put More Money in YOUR Pocket

Deal sites like Groupon, Living Social, or Zozi seem like a great idea:  Using the power of Groupon-like sites and their millions and millions of users, your business gets massive exposure, a boatload of new customers, and the coolness factor associated with one of the hottest Internet companies of the today. It doesn't cost you anything upfront, and it can be budgeted as a marketing expense that only occurs when people buy your product or service.  

In fact, Groupon has many satisfied customers, and you could be one of them. Not so fast. There's also the 'other side' of the story, where some businesses say that Groupon sucks - damaging your brand, drawing the wrong customers, destroying profit. There's even a PC World expose on it. There was even a report published (and covered in HuffPo) that most small businesses hate Groupon.

That brings me to a deal I saw on Yahoo Deals from a music studio. For $20, I could get rehearsal studio time for 3 hours. I'm not even sure if I'm good enough to be called a 'real musician', but at that price it's something I would consider and not feel like I was being too indulgent. As with most deals, if I'm interested, I read more and do a little research to see how shady or reputable a firm is. In this case, I clicked through to the website and found a pleasant surprise. I did have to make a decision on the spot to get that $20 deal. The studio was offering the same price on a web-only special.

It may not be a good deal for the deal company, but it was suddenly a better deal for the studio and for me. Sure, I would get the same price, but now I didn't have to pay ahead of time in the hopes that I might use my deal voucher. At the same time, if I had a charge/transaction problem, I could deal directly with the studio - or have my credit card deal directly with them. The studio, on the other hand, no longer had to give away the 50%+ in the reduced fees that it would receive from the deal, it would be paid immediately when the transaction cleared, and it received free advertising from Yahoo and the originating deal company. Now that's leverage.

This particular studio may be banned from future deals with this deal company, but if they believed that they would end up like other small businesses that hate the deal sites and never use them again, then they haven't really lost much. Even better, the deal was favorable to deal site and non-deal site users, unlike the deal that caused user backlash from FTD.

Do you Survive like a Cockroach or Thrive with the Best?

"Survival of the fittest is not the same as survival of the best" was the quote that called to me from a recent article on MyVenturePad. It was such a nice and simple way to rethink the phrase "be a survivor". I've seen many co-workers give that recommendation to team members, telling colleagues to be a survivor and keep their heads low when times get tough. As the article continues "A cockroach is one of the most adaptable creatures on the planet. That's survival of the fittest. Do we want our organizations led by cockroaches?"

Seeing this statement made me think about Charlene Li's latest book, "Open Leadership", where she discusses leaders who, instead of sticking their heads in the sand when times get tough, take risks, innovate, and basically try something new to move their companies forward. While what she discusses makes sense and all employees should advocate for the company good, I'll contrast that attitude with other companies I've worked at.  I've seen senior managers instruct subordinates to "just do your job" and "don't take any risks", when in fact, it was the fear of getting fired and a blind adherence to tradition that insured that the company couldn't keep a leadership position even if it fell into one. One company I know was a leader in small router technology, but the founder had a policy of locking up all source code each night for IP protection. No one stole source code, but no development happened after hours or when the founder wasn't there, and, most importantly, no engineer dared to experiment with new ideas w/o the CEO's express approval. While that company is still in business today with decent technology, it's no longer considered a technology leader and rarely mentioned in discussions in SME router RFPs.


Maybe it's not the individuals at fault who want to survive, maybe it's the culture of the company that ushers employees into that mindset. If the company has a culture of fear stemming from firing anyone who takes risks or suggests products or services that might push the corporate comfort zone, then a culture of risk averse employees will be the ones who are hired and stay at the company - surviving until the a better competitor puts them out of business. On the other hand, if the company is willing to consider risks and learning from potential failings, then employees will feel comfortable pushing envelopes and boundaries where the next great product or service might be found. At one company I worked for, the 3D Avatar with stereo sound technology the company had was held at arms length, with most of the company not acknowledging it or its potential. I had a soft spot for it since it was used by the Klingon Language Institute. Fortunately, my CEO, Larry Samuels, and a customer both saw the value in the technology, which allowed me to manage a business development OEM deal that not only generated $1M+ in revenue, but also led to a $5M+ round of financing.  Some people told me that if we hadn't made that deal, the company would have shut down. I prefer to think of the opportunity, and how taking that risk gave us more opportunities and learning that would never have happened if we had killed the 3D avatar and audio technology.

So you might see some optimism bias in my discussion, and yes I prefer to see the glass half-full. I also prefer to believe that businesses are not built on cockroaches who just survive, but on smart risk takers who find ways to thrive.

Valley Arrogance and the Niche Market Blinders

What? Arrogance in Silicon Valley? Surely you jest.

It's true, and no matter how many times I've seen companies flail and fail, as engineers and marketers insist that they're "right", this phenomenon is alive and well in the SF Bay Area. This is both good and bad, depending on where you sit, and what you do on a day to day basis. At its worst, this phenomenon is typified by the "who uses that technology/service" remarks and the "I've moved on to X, which is much superior". At it's best, the press and investors-types call the technology or service "revolutionary" in hindsight, the 30+ also-rans fall by the wayside, and no one snickers because at least one worked.

While every market shifts, the true value of a technology or service is firmly established when the technology, company, or service makes serious money. The "moved on" comments become justified when the new technology, service, company overshadows the previous generation and a new way of business is established. Why does this matter? From a business perspective, respect typically comes from generating revenue, not just buzz and coolness. In my experience, many, many more people have been fired, reprimanded, and demoted for choosing cool technology that did not do the job at all, did not do the job better - to justify cost incursions, or generate enough added value than those who stuck with established, working products & services.

The saying used to be "nobody gets fired for buying IBM", and versions of that phrase still largely ring true. Here's a few examples the come to mind. Feel free to add better ones in the comments if you have them.
- Apple Newton & General Magic's Magiclink: I loved both of them, as did everyone here in Silicon Valley, but they died a tragic death as the love didn't spread very far
- Windows NT vs XP: While "everyone" was supposedly on XP in 2004, I ran into numerous businesses AND government agencies that still used NT. If you didn't know that your enterprise software may not have sold at all.
- Vadem Clio: Another valley love-fest for this "convertable tablet", very cool, and everyone adored it when they saw it, even years after the company went out of business
- Facebook vs. MySpace: Silicon Valley types seem to pan MySpace while trumpeting Facebook, even though MySpace still makes significant revenue today, and has made more for the past three years while people were cheering the superiority of Facebook
- Twitter vs. Google: Twitter gets a sureal amount of buzz about real-time search, while Google continues to dominate search, besting Cuil, Powerset, A9, and other Google killers over the years

Many will and should argue that "when the main stream gets it, it's too late." It's too late for what? Bragging? No, there are two different forces at work here. Building an innovative, valuable service/business that's disruptive is one thing, while establishing a sustainable trustable business is another. It often takes innovation and value creation to establish a sustainable trusted business, but what you often see is bragging and chest beating by startups who do something differently, because they can. Forget about the successful operating companies that have not been bested by the startup. The user bravado, which accompanies the early adopter myopia, when translated, is basically "I use a cooler service than you, but ignore that it makes less money and appeals to less people than what's out there".

The point here isn't that I favor any of the old or new companies/services/products, but that buzz, coolness, and Silicon Valley boasting can really mean little without the revenue, longevity, and trust of being an established business. Arrogance from believing you are the best is a weaker foundation than pride, accomplishment, and satisfaction of actually being the best and/or dominant market force.