Rick Maher

Today I received an invitation to join Bync, a new deal site that promises to offer deals that I WANT as opposed to deals that retailers are offering (TechCrunch launch article here).

By analyzing my bank and credit card transactions, Bync will determine which stores I have shopped at in the past and therefore, at which stores I want deals. Unfortunately, Bync is doomed to become yet another in a long list of consumer deal startups that are just further poisoning the retail well.

Bync vs Groupon / Living Social

Groupon and Living Social are the big players in the retail deal websites, and there are literally hundreds of others ranging from unique schemes (e.g. Woot) to a long tail of weekend hacker projects that won’t die. Bync’s scheme does have some good logic though – if I have shopped somewhere in the past, there is a higher likelihood that I will want a deal there than the likelihood that I will want a deal on teeth whitening, paint balling, or private massages (the drivel constantly being pushed on Groupon).

But, that is NOT to say that I will want a deal at Target or Kohl’s just because I have patronized those retailers in the past.

Why Deal Sites Are Doomed: They Are Not Serving Their Primary Customer!

Groupon and Living Social made a huge bang in their early days and delivered a serious injection of customers to the retailers which offered deals. Unfortunately those retailers quickly found mixed results with making the customer injection a profitable endeavor.

Retailers find three difficulties in getting good value from deal sites:

1. The discounting required is too drastic, often yielding 75% off normal price (a $100 product is offered for $50. Then the deal site takes half of the $50payment resulting in the retailer receiving $25 for a $100 product).
2. The new customers are too thrifty. Retailers are not always able to wow the deal site customers into more profitable upsells or loyal repeating customers.
3. Deal site offers tend to create a sudden massive spike in customers which sounds great, but often results in the retailer struggling to provide good service levels and even crumbling under the pressure of the demand.

Groupon, Living Social, and most other deal sites do not charge the consumer, but rather charge the retailer (as noted in difficulty #1 above).

Bync may well offer deals to consumers that are more targeted than the deals offered on Groupon and Living Social, but there is no apparent strategy to better service their ultimate paying customer – the retailers. Indeed they do not seem to be addressing any of the three customer problems.

Unfortunately, Bync has another obvious barrier: they expect consumers to hand over access to their bank account and credit card. Mint has been able to convince consumers to hand over access to bank accounts, but very few others have had even slight success in overcoming this barrier.

The Ultimate Deal Site Concept

I have good news for you, Mr. Ryan Bales (Bync CEO and Founder), the following concept is the ultimate deal site! The following concept is better than Bync, Groupon, Living Social, and all other deal sites in the following ways:

• Better solves the general problem of getting retailers more customers
• Comprehensively addresses all three of the problems with current deal sites
• Offers deals to consumers that are explicitly and exclusively deals that consumers want

The ultimate deal site will work as follows:

• Consumers announce the level of discount they would buy (anywhere from 1% – 99% discount) at any retailer in the world
• Consumers can edit / cancel their deal request at any time
• Retailers get a daily email alerting them of groups of customers growing online requesting various levels of discounts
• Retailers decide if / when they want to accept a consumer’s discount request, or can choose to counteroffer with stipulations (e.g. “We’ll give you the 30% off that you requested, but only on a purchase of $100 or more” or “We’ll give you the 30% discount that you requested, but it’s only good on weekdays”)

You may recognize this setup – it mimics an open stock market!

This model allows retailers to control their own destiny:

• Retailers can engage new customers that wouldn’t likely patronize their establishment if not for an attractive discount
• Retailers can control the discounting level by only accepting deal requests at discounting levels that are affordable for the retailer
• Retailers can control the risk of attracting too-thrifty customers by not accepting deal requests beneath an acceptable level at the judgement of the retailer, or by counter-offering with deal stipulations
• Retailers can control the timing and size of the spike in new customers by accepting a manageable number of deals at any given time

Ultimate Deal Site Example

Here is a theoretical small scale example of how the Ultimate Deal Site would progress:

Let’s assume first that 4 consumers request deals at Retailer X

• Consumer A requests 80% discount
• Consumer B requests 60% discount
• Consumer C requests 40% discount
• Consumer D requests 20% discount

Retailer X then decides that sales could use a boost and accepts Consumer D’s request!

Retailer X gets 80% of their normal price revenue (minus a fee to Ultimate Deal Site of course), and Consumer D gets a deal which she requested! Consumers A, B, and C continue waiting in hopes that Retailer X will soon get desperate for sales and accept their deal request. Retailer X can at any time go ahead and accept those deals… or not!

Of course Ultimate Deal Site would be attracting far more than 4 consumers and 1 retailer. Assuming Ultimate Deal Site was well managed, the benefits of network effect would begin to apply. This would lead to more complex consumer and retailer decisions.

Consumers would see that there are many other consumers requesting deep discounts and would be pressured to “win” the deal from the retailer by requesting a slightly smaller discount. This would develop a group of consumers requesting deals on a bell curve across the discount spectrum (1%-99%).

Retailers would then be able to review their discount request curve and take strategies such as “accept the top 100 deals” knowing ahead of time what the average discount of those 100 new customers would be. Or they could “accept all discount requests of less than 40%” knowing exactly how many new customers they would attract and that the average discount granted would be something like 30% off of their normal retail prices.

Challenges for Ultimate Deal Site Success

Why aren’t I out starting up the Ultimate Deal Site in hopes of striking it rich like the founders of Groupon or Living Social? After all, I did quit my job a few months ago to start my own business… Really there are 2 reasons:

1. I am not passionate about this concept, and am spending my time working on a business concept that I love.
2. The Ultimate Deal Site faces a number of challenges

The primary challenges I’ve already identified (surely there are others too) for anyone reading this post and thinking about running with it are as follows:

• Retailers loathe deal site sales people, and will be very difficult to convince of a “better concept on deal sites” – an after effect of their frustrations with Groupon / Living Social and the onslaught of copy-cat sales people that have followed since
• Retailers are incredibly fragmented – the largest retailers tend to manage deals in house, and the small guys are scattered all over the country – making them incredibly difficult to sell to. Indeed this has been one of the largest stock market hesitations in investing with Groupon… as well as one of their biggest competitive advantages as they have already created the sales force
• Consumers are hard to attract without premier deals in hand, and many consumers are scared to request discounts. For example, ask someone “how much discount would you request from Apple” and their knee jerk response is almost always “Apple doesn’t do discounts”…

Do you disagree? Have I missed Something?

I have a few old friends from college that work at Living Social – do you guys disagree with anything here?

Anybody at Bync care to add a hint about a super secret sauce that I am totally overlooking which will allow you to change the game?

As a consumer – what site is the most compelling for you – Groupon? Living Social? Bync? Ultimate Deal Site?

As a retailer – what site would be your preference?

My good buddy Nathan Whipple, and I were talking on New Year’s Eve about how wide a spectrum exists in terms of being “tech savvy.”

Tech savvy can mean a lot – but we were talking about how well people utilize the power of the hardware and software they use everyday. For example, the general population – of which the cutting-edge-tech-nerds are a sliver – have smartphones, use gmail, find quick facts online, and collect digital media.

However, I have all of my contacts synced across all of my devices and gmail account, important files saved in the cloud, digital media available on my HDTV, sleep easy when a big website gets hacked, and can keep up with the cool kids while chatting about the latest hot app. Meanwhile, my parents and most of my friends tend to use their smartphones pretty much as they used their cell phone 5 years ago, would be lost if not for Verizon’s contact transfer service, have overflowing disorganized gmail inboxes, can’t play their media across devices, and confusingly brag that they don’t “get it” in regards to buzzworthy apps and websites.

Key Mindsets to Realize the Benefits of Your Technology

After that chat with Nathan, I decided that one of my resolutions for 2013 would be to help people close to me get more out of tech. In my opinion it all comes down to 2 key mindsets:

1. The super early adopters are the power users. They sort out what is useful and valuable from what is just chaff or a fleeting fad, and they’re generally real good at it. They are trustworthy.
2. An upfront investment will yield a fast and huge return in benefits. Usually this means taking some time to identify and set up the features available beyond the core basic set-up. But, it is indeed an upfront investment.

First Steps to Move From Tech Average to Tech Savvy

I recommend you do these in the following order, and commit to sticking with it!

1. Secure your online accounts! If you know the password for any of your website logins, you’re doing it wrong. Even worse, if you are using the same couple passwords for every site, you’re asking for a major nightmare of identity theft. Use LastPass, and read this LifeHacker article for some honest, smart, simple explanation. Costs: Make no mistake, this will take a pretty serious upfront effort to change your old crappy passwords to secure ones, and to get used to using LastPass to handle your logins. Benefits: You are VERY secure, and can rest easy as websites announce that they have been hacked.
2. Use Gmail (seriously – if you’re still on Hotmail or Yahoo, welcome to the 90′s – time to move to gmail). And use it effectively. First, unsubscribe to mailing lists that aren’t worth your time. Second, follow this article to set up labels and filters. Then get to know the Inbox Zero methodology and USE IT. Costs: Unsubscribing and setting up filters are EASY! Transitioning to Inbox Zero takes very little effort but usually will be a few weeks in transition. Benefits: You’ll never stress about email again!
3. Sync your whole Gmail account to your smartphone – not just your email. Gmail provides excellent email, but their contact manager and calendar system can save you major headaches of lost contact information or scattered calendar items. Start here.

Those are the first three steps that I would take. Each of those have a few layers of potential, so keep an eye out for a more detailed post about them in the future. Good luck!

Yikes – It’s been far too long between updates on this site. My sincere apologies for that.

It’s 2013 and I’m ready to get back to it this year, but I’m hoping to slightly change the tone.

The Old Rick Maher .info

The original purpose of this site was to grab search results for Rick Maher – my name. As it turns out, there are a few Rick Maher’s kicking around and I’d like to make sure that I’m not misrepresented.

The New Rick Maher .info

From here on, the primary purpose of this site will be to add value to you readers! …Assuming of course that you readers are interested professionally in similar topics as I am. For example, I’ll try to provide content, ideas, links, and opinions on healthcare innovation, operations management, entrepreneurship, tech, business strategies, personal productivity, and so on…

Onward!

A couple months ago, I left my stable, high paying, highly engaging job as a management consultant to start my own business.

Why Leave A Perfectly Good Job?

I’ve been asked over and over, why would I want to leave my job… “especially in this economy.” Two reasons:

1. I loved my job and my employer, but I feel I can make a greater impact on the world by creating something new
2. I have confidence in the risk / reward bet that I am making

What Business Are You Starting?

It’s funny how curious people are about what I am going to do next. It’s even funnier how confused people are when I tell them that I have no freaking clue.

When I quit my job I did have a clue – I planned to start an online business improvement program (to over-simplify). In fact, my business partner and I spent lots of time working through this concept. But ultimately we decided to put it on pause for two reasons:

1. We weren’t passionate about it
2. We had some significant questions of the concept’s potential to “go gangbusters”

So WTF Are You Going To Do?

I’m going to go through a series of steps that I believe are far more logical of a process than the process most commonly assumed when entrepreneurs try to startup!

1. Determine my passion

Before I do anything else, I’m going to spend some time deciding exactly what I really care about. Maybe it will be a particular industry (hospitals come to mind). Maybe it will be a particular business model (software vs service vs retail…). Or maybe it will be something else …

What I know for sure is that I’m going to pick something that I can get really excited about spending at least the next few years of my life on.

2. Hypothesize some opportunities, and research them by talking to people

It’s been written that successful businesses “solve problems,” but being the optimist that I am, I’ll aim to “address an opportunity.” Once I’ve narrowed in on a passion, I’ll try to identify some opportunities that I can work to solve. And once I’ve got a decent list of potential opportunities, I’ll learn which ones are most pressing and why by talking to people who know them best. I imagine this will be the hard part.  I’ll have to harass my network for insights, and even tougher – meet people that I don’t know and convince them to tell me about all of their problems.

3. Develop some potential solutions using Lean Startup methodology

After I have a good grasp of opportunities that exist and are in need of a solution according to people who know, I’ll start to hash out some ideas of how I would address the opportunities. This part might be tough too. I imagine that my business will include some sort of software or tech product, but I’m not a software programmer or an adept engineer. To avoid pitfalls here, I’ll keep things conceptual at first and spend some time seeing if potential customers are interested in the concept.

I learned this approach after reading The Lean Startup by Eric Ries. While I was reading the book, I understood the book’s content to be focused on product development, but as I’m writing this I’m wondering if Mr. Ries was thinking more generally about this whole process of starting not with a pre-conceived business idea, but rather with a general area of focus and working towards hypotheses as in steps 1 and 2 above… Cool.

4. Outline a potential business model using Business Model Generation methodology

In tandem with developing and testing potential solutions I’ll be considering how I might structure a business model so as to optimize the product and market fit for a successful business. What I’m trying to say here, is that I’ll consider things like customer segments, my best value proposition, cost structures, revenue models and the like.

This approach is from another recent favorite book – Business Model Generation by Alexander Osterwalder. The essence of Business Model Generation is that while Michael Porter’s assertion that businesses must compete using a strategy of either Market Segmentation, Product Differentiation, or Cost Leadership is still true, a business can achieve or maximize the benefits of any of those strategies by tailoring it’s full business model to match the needs of the market which it serves.

Obviously building a business model won’t be easy, but I’m hoping that I have an advantage here based on my 6years of management consulting and opportunity to work with many different business models from the inside. Exciting!

 5. Finally launch the business!

Five steps and I’ll have a business – seems simple as I type this. Maybe all those consulting presentations where I’ve illustrated paths to solutions to complex business problems in short practical steps has gone to my head.

Five steps or five-thousand, with a tailored business model in mind, positively reviewed solution concept in mind, thorough opportunity defined, and passion at my back, I’ll launch my startup business.

I’ll try to keep my progress up to date here, but look forward to my frantic calls in the middle of the night begging you to be my first user, first customer, first investor / adviser, and my first employee!

Thanks for reading, Rick

I just came across the video below lauding the WP Carey School of Business at Arizona State University and in particular the Supply Chain Management program. I happen to have a Bachelor of Science in Supply Chain Management from this very program. Of course it is good to hear that the program is maintaining it’s top rankings that existed while I was in school!

I’m also happy, and not in the slightest concern to be going against the trend, that top B-Schools admittance rates are nudging up a tad – I’ll be applying in the next few weeks.

If you’re like most and think “supply chain management” sounds like some corporate mumbo-jumbo, click the link below to read a little more and see some quick clear videos on what it means.

What is Supply Chain Management?

I think one of my former professors sums it up best in this video:

While I earned – and very much value – the specific degree of Supply Chain Management, my work since school has been more of a mix of a slice of SCM mixed with a healthy dose of business management fundamentals. The slice of SCM that I use most, I generally refer to as “Operations Management.” Think of it more in terms of optimizing the processes that businesses use to make sure they are able to convert all the materials into sell-able products. That is, as opposed to negotiating the contracts with vendors for the materials or arranging the transportation of materials to the factory or distribution to sales channels.

I have put together some posts (rather lengthy start here: Part I – 3 Pillars of Operations Improvement – Introduction) that try to summarize the work I do, but here is the closest video to what I do for my clients: