Category Archives: Consulting

June 21, 2019 · 10:41 am

No Strings

It’s Foodie Friday and it’s also the first day of Summer. Actually, it’s felt like July down here in the Carolinas since May, but I digress. In honor of the day, Dairy Queen is giving out coupons for a free soft serve ice cream cone. Yum! What better way to celebrate the new season?

Well, not to be the one to look a gift horse in the mouth, but of course, there are strings attached. You see, in order to get said free cone you need to purchase something else at DQ. Not that I’d generally mind doing so but that little bit of fine print sort of chills my enthusiasm (see what I did there?). Oh yeah, one other thing – in order to get the coupon you need to have installed the DQ app on your phone. I mean, who doesn’t want yet another app tracking you, sending data to who knows where, taking up room on your phone and hitting you up with “big announcements” every hour or so?

My point is a broader one that just beating up on Dairy Queen. I’ve always had an issue with seemingly benevolent marketing or charitable offers that are really self-serving. You know what I mean. How many offers have you seen for “buy this and we’ll make a donation to this worthy cause”? If the cause is so great, why don’t you just make the donation? Then there are those “free” offers that cost you in other ways. Opera, the browser company, offered “free” VPN a couple of years ago. Of course, you had to agree to let them track your usage and share the data with third parties.  Sure, it’s supposedly completely anonymized but if it includes a device identifier of any sort or location data, it’s not hard to merge it with other data.

Gift horses may, in fact, be Trojan Horses too. There are way too many “free” offers that are really scams. We’ve all seen the “free” product that involved paying shipping and handling charges that are detailed in tiny print and quite costly. Then there are the “free” products that require you to hand over a credit card, ostensibly so that if you make any “optional” purchases it’s a seamless transaction or maybe they’ve enrolled you in something that will charge you monthly once your “free” period is up. Illegal? Actually no, if it’s disclosed (you read all the mouse-type every time, don’t you). Shady as hell? You bet.

If you’re going to make free offers or do something nice for your customer, do so without strings. A gift involves altruism. If there is an ulterior motive lying within, it’s not a gift, right?

 

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June 17, 2019 · 3:48 pm

Vendors And Partners

President Reagan has been quoted as saying “I’m from the government and I’m here to help” are the most terrifying words in the English language. One phrase I used to hear a lot that was just as terrifying to me was “we want to be your (fill in the blank) partner.” That could be a tech partner or a marketing partner or whatever. The thing was that most people have a tremendous amount of difficulty distinguishing between a partner and a vendor. The sad truth is that very few people or organizations that you’re in business with want to be the former and that’s a shame. Vendors are a dime a dozen while good partners are rare.

How do I distinguish between the two? Vendors send you bills while you usually end up sending a partner their share of your joint profits. Vendors come into your office and tell you how great their product or service is, even if you’re using it or them. They tell you their story and ignore yours.  Instead of telling you what they are doing for you specifically, they tell you about the latest success story they’ve had, usually with some other “partner” of theirs.

It’s always easy to spot the vendors and the potential partners almost from the second they walk in the door. Partners will talk about you and your situation and tell you specifically how they can help. They’ll ask for reasonable compensation but also volunteer to share in the upside because they believe in their product and its ability to help you. Vendors come in with a canned, generic pitch. Their rates are fixed in stone and they don’t share the risk and so don’t have any interest in sharing the rewards.

I’ve always felt that my goals and those of my business partners were very much aligned. I can’t say the same of many of the vendors I’ve worked with over the years. I’ve also always tried to do business with my consulting clients and franchise candidates in that way – as a good partner and resource rather than as a vendor. Is that a difference without a distinction? Not in my book. How about in yours?

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June 5, 2019 · 12:53 pm

Shared Interests

You can call shared interests believing your own BS or you can call them eating your own dog food. I like to think of it as having skin in the game, a phrase coined by Warren Buffet referring to a situation in which high-ranking insiders use their own money to buy stock in the company they are running. I use it in a much broader context and it’s something you should be looking for at every turn.

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I can’t tell you how many companies paraded into my office when I was in corporate life promising to solve issues we might be having with revenue generation, audience measurement, or dozens of other common problems. Many of the offerings were actually quite interesting although not yet deployed in the real world to any extent. If I was interested but skeptical, I’d usually make an offer somewhat akin to this:

I like your product but it’s awfully difficult for me to stroke out a check on something that is promising but unproven. So let’s do this. You provide the product and service as you say and I will pay you a much lower fee (or nothing!). However, if you deliver the results you say you will deliver, we’ll set up a success fee that will pay you more than you’re currently asking. In fact, if your numbers are right, you’ll earn double what you are charging.

In other words, I wanted them to have skin in the game. I wanted our interests to be perfectly aligned and I wanted there to be consequences for us both if we didn’t achieve what we set out to do. The reality is that you should always ask yourself who has what skin where because most businesses do their damnedest to avoid any sort of risk by putting in some skin. Sure, they pay lip-service to the notion of entrepreneurship but there are few who have put their money where their mouth is and invested into the tech ecosystem or directly into startups. Pay attention – much of the time the investment comes only after the product has proven itself or is a direct ripoff of something that’s already successful. I call this the second penguin strategy (you don’t want to be the first penguin that jumps in the water since there may be predators lurking).

If you’ve ever played cards, inevitably there is a kibitzer around. You know – the person who looks on and often offers unwanted advice or comment. They have no skin in the game. There are kibitzers in business too – you can find them writing for many trade publications – and you might even have some in your company as partners or clients or even employees. Not many companies took me up on my offer to make them more money. The few that did were fantastic partners and I still speak with some of the executives from those firms almost 20 years later. Having skin in the game made all the difference. What do you think?

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