false precision

25 Years Ago Today – It all came rushing back

As Brian Williams said today, "Do you remember where you were today?"…

I was just watching the NBC national news and it all came rushing back, unexpected and with all the emotion, angst, and possibility that was to come…

25 years ago today I was a new college graduate. I had graduated a semester early so I moved back in with my parents briefly, in order to look for where life would take me. It was all very scary. Consistent with most of my life, at least by years, I was not confident. However, what I learned from my father – a man just does it. My Dad and I didn't always see eye to eye, but he made it clear during my high school years that you –will- do it. On the back side we figured it all out.

Also, 25 years ago today, the shuttle challenger was on the launch pad. The world's first school teacher was on the launch pad along with the other astronauts. The countdown was commencing.

I was fresh off several interviews in the Dayton Ohio area where I was living, now with my parents. Several had gone well - some not. I had actually canceled one interview as I was just too intimidated to do it. That stands in my mind, to this day, as my weakest moment. I hate that feeling – I hate that feeling - and it serves an important milestone in my mind. I will never feel like that again. Never.

So as I pursued my passion of software development (that day), I made my nearly daily pilgrimage to the retail computer store. I remember looking at the Apple computer half of the store and transitioning to the – alternate world – and pursued DEC's current offering of DOS compatible offerings. DEC, while never commercially viable in the PC arena, was attractive for their industrial design and feel.. In the corner was a IBM PCjr and the other IBM offerings. It was wildly exciting to me, it was the passion I needed in my career that ultimately would carry me far.

That day, after visiting the computer store, I walked to the parking lot. I got in my car and started it.

The radio came on and I heard the words that the unthinkable had happened. The Challenger had exploded on launch. I raced home (my parent's home) and turned on the TV. I, like everyone, was glued to the TV all day.

Later that night, I got a call. Totally separate from the day's happenings, I was offered my first professional job. An aerospace contractor for NASA offered me an electrical engineering position supporting flight test at NASA at Edwards Airforce Base in CA (where the shuttle used to land). I took the job, making my $29K a year. I thought I was rich.

It would be at least three years (as I recall) before I ever saw a space shuttle land there, right outside my office.

Groupon Kitty says this deal is too good to be true

This is kinda of a crazy statement, at least to a lot of people I talk to, but I'm not sure Groupon is a long term viable business. I don't have much real data to support this statement, but I think Groupon will be gone in a couple years. Basically, for me it all comes down to if the deal is too good to be true, it probably is.

First, I totally get that consumers love Groupon. It's because Groupon allows consumers to buy things below the cost of the supplier. It's a really good deal. It's like when the clerk rings up the $150 shoes for $50. As a consumer, I love it! But as the business owner the pair of shoes cost me $60 and that's before I pay employees, rent, etc. So, while I could certainly have an endless supply of people who would buy the shoes below my cost it's not really a sustainable business transaction.

Interestingly, I get a lot push back from devoted Groupon disciples. People that love deals, really love Groupon. First they really want to believe that the deal is good for the consumer business that is working with Groupon. Maybe, but Groupon takes half the value of the transaction as payment. So of that $20 worth of goods that the consumer pays $10 for only $5 goes to the business. Few consumer businesses can approach 75% margin so I think it's pretty safe to say that on the surface the actual transaction is bad deal for the business in terms of the stated transaction. The value to the business has to be somewhere else.

So the question about Groupon sustainability really comes down to the possible motivations to sell things at a loss.

The way I think about it, Groupon has a few possible value vectors back to the business..

1. The, you'll be back theory: I will sell you a product where I lose money because you will come into my business, discover it, and come back again.
2. The, you'll bring a friend theory: I will sell you a product where I lose money because you will bring someone else into my business and they will come back.
3. The, I'll sell you more stuff theory: I will sell you a product where I lose money because I am confident that you will buy more goods at the same time, or bring others in that will and create a positive margin on the entire transaction.
4. The, I have your email address now theory: I will sell you a product where I lose money so I can have your email address and market to you later. Most of you will not unsubscribe so it's a good deal for me.

In my mind you have to believe one of these things to engage with Groupon as a business. The problem is so few businesses have the ability to measure any of these things. I agree they should be able to measure same customer sales, or the efficacy of lead generation activities, but I think the vast majority of them simply guess.

So this leads me to the sustainability thing. In a world where no one is really measuring the success of these efforts to generate customers, or convert to larger sales – isn't Groupon really just selling hope to business owners?

It seems to me that we are in the heat of the "try it out phase" where businesses have decided that in world where their lead generation activities generally don't work that well, Groupon gets people in the doors. But, eventually they will figure out if it really works long term for them or not. My bet is that it doesn't work for most businesses.

What do you think?

All the best posts, can’t be written…

Wow, it's been a while since I posted anything.

My blog is kind of a weird thing. I don't write it for money. It's a little bit of a journal, but not for things that are too personal. It's kind of a branding thing as it reveals some things about the way I think. I try to include interesting things I happen upon, or interesting things I believe I have learned because of my unique vantage point on business or startups. I'm almost always interested in people's behavior, especially when it contradicts their motivations.

For several years now I have been trying to reconcile that THE most interesting things I could share on my blog are un-sharable, at least in real-time as they are unfolding. This is because while they are interesting they put you in an awkward situation where you reveal something that no longer gives you the upper-hand, or puts you at a distinct disadvantage, or hurts someone's feelings, or reveals an opinion that is politically unfavorable.

I was talking with someone about the concept of the 'delay-line' post. The concept is you want to write something that is important and interesting, but socially you can't – so instead you write the post then put it away for a while. Then later post it when the situation is different and participants can't bridge the post back to the events that made you write it. The delay-line obfuscates the bridge. I know others who use the old, "my friend told me about" strategy of posting stuff that allows the required level of misdirection.

I find all these strategies most unrewarding. I'm not sure the answer to this problem but until I figure it out I can only write about stuff that is superficial or outside my focus. And, that's why im not writing much.