The Groupon IPO
I haven’t been following their IPO very closely. I don’t use the service. I won’t invest. I long ago decided not to invest in technology firms like this. Heck I am basically just a mutual fund dude at this point in time. So heck I don’t really care. But David Heinemeier Hansson, a partner at 37Signals does:
Groupon has filed its S-1 and hopes to raise $750M in its initial public offering. Given they’re currently losing a staggering $117M per quarter, despite revenues of $644M, they’ll be burning through that cash almost as soon as it hits their account.
At the moment, it’s costing them $1.43 to make $1, and it doesn’t look like it’s getting any cheaper. They’re already projected to make close to three billion dollars in revenues this year. If you can’t figure out how to make money on three billion in revenue, when exactly will the profit magic be found? Ten billion? Fifty billion?
Now clearly the IPO is as much about future performance as anything. But it still makes you wonder doesn’t it.
Now That Is A Motivation Tactic
I don’t recall this and I’ve read Dale Carnegie’s How to Win Friends and Influence People, twice. Darn good story.
Charles Schwab had a mill manager whose people weren’t producing their quota of work.
“How is it,” Schwab asked him, “that a manager as capable as you can’t make this mill turn out what it should?”
“I don’t know,” the manager replied. “I’ve coaxed the men, I’ve pushed them, I’ve sworn and cussed, I’ve threatened them with damnation and being fired. But nothing works. They just won’t produce.”
This conversation took place at the end of the day, just before the night shift came on. Schwab asked the manager for a piece of chalk, then, turning to the nearest man, asked: “How many heats did your shift make today?”
“Six.”
Without another word, Schwab chalked a big figure six on the floor, and walked away.
When the night shift came in, they saw the “6″ and asked what it meant.
“The big boss was in here today,” the day people said.
“He asked us how many heats we made, and we told him six. He chalked it down on the floor.”
The next morning Schwab walked through the mill again. The night shift had rubbed out “6″ and replaced it with a big “7.”
When the day shift reported for work the next morning, they saw a big “7″ chalked on the floor. So the night shift thought they were better than the day shift did they? Well, they would show the night shift a thing or two. The crew pitched in with enthusiasm, and when they quit that night, they left behind them an enormous, swaggering “10.” Things were stepping up.
Shortly this mill, which had been lagging way behind in production, was turning out more work than any other mill in the plant.
The principle?
Let Charles Schwab say it in his own words: “The way to get things done,” says Schwab, “is to stimulate competition. I do not mean in a sordid, money-getting way, but in the desire to excel.”
The desire to excel! The challenge! Throwing down the gauntlet! An infallible way of appealing to people of spirit.
[Found via Kottke]
No One Uses The Phone Anymore
We have so many communications options these days. SMS Email. IM. Therefore, increasingly the phone call is too viewed as an intrusive form of communications for many folks.
“I literally never use the phone,” Jonathan Adler, the interior designer, told me. (Alas, by phone, but it had to be.) “Sometimes I call my mother on the way to work because she’ll be happy to chitty chat. But I just can’t think of anyone else who’d want to talk to me.” Then again, he doesn’t want to be called, either. “I’ve learned not to press ‘ignore’ on my cellphone because then people know that you’re there.”
“I remember when I was growing up, the rule was, ‘Don’t call anyone after 10 p.m.,’” Mr. Adler said. “Now the rule is, ‘Don’t call anyone. Ever.’”
I have never been a huge fan of phone calls. But I just finished a project with a client I only spoke to once on the phone. She would just never return a phone call. Email and text messaging are wonderful communications tools. Don’t get me wrong. But somethings a good old phone call can be more effective and even faster way to communicate.
Advice From Jason Fried Of 37Signals
Inc. cover story on Jason Fried about how to make money:
I got FileMaker Pro (I paid for it with the stash I’d saved up selling stuff to my friends) and started messing around. After a few months, I had solved the problems I had with organizing my music. I knew what music I had, where it was, whom I had loaned it to, how much I paid for it. The solution was elegant and easy to use. I called it Audiofile…Before making it available to other AOL users, I added a limit in the program—people could file 25 CDs for free; after that, it would cost $20 to unlock Audiofile and remove the limit.
I remember my first customer. One day my parents gave me an envelope. It came from Germany and had those airmail stripes at the top. I opened it up, found a screenshot of Audiofile printed on a piece of paper—and a crisp $20 bill. More envelopes rolled in. Over the next few years, Audiofile probably generated $50,000—not bad for a kid in college in the early ‘90s.
The lesson: People are happy to pay for things that work well. Never be afraid to put a price on something. If you pour your heart into something and make it great, sell it. For real money. Even if there are free options, even if the market is flooded with free. People will pay for things they love.
Really a must read, is 37Signal’s blog Signal vs. Noise.
Quote Of The Day
We weren’t making a plan; I’ve never written a business plan. I’ve never written a business plan with any of my start-ups. With Meetup, I sketched, maybe wrote a few FAQs about how it would operate. We built it, went live, and people started using it. Then VCs called. Investors would rather invest in the real thing—with an obvious evolution path—than words.
— Scott Heiferman, Meetup CEO, Wall Street Journal
