A New Slant On Group Buying (Slightly Changing The Groupon Model)

Last year I stumbled upon Groupon and with it on the new model of group buying that they seem to have perfected. I have been doing business online and offline for the past 25 years and I can say from experience that this kind of model is rare. I won't go into the details since there is a ton of material online explaining exactly why its such a win-win-win model (for business partners, for customers and for Groupon). I will just mention that one of the pieces of the puzzle that makes this work is that a customer who just bought one of the coupons has a vested interest in spreading the word about that same coupon. For each daily deal, if there isn't a minimum number of buyers the deal is off and no one gets the coupon or the discount.

I liked the whole model so much that I launched a similar company in Hungary. I was surprised (actually shocked) by the scale and speed at which we have grown since we started offering daily deals. In the first 4 months we have helped our customers save around 1 million US dollars. That's from scratch to one million in just 4 months and in just one city of a small country.

Its all just wonderful and I am giddy with joy - really, I am :-)

However (here it comes)... There is this one little quirk I found. It might be unique to the Hungarian market. You see, here in Hungary, when you order online you have to complete the order BEFORE you can pay. It's very different than what is common in most other countries. When I order online at Amazon, I provide the merchant with my credit card number and when I complete the order the merchant takes care of the transaction - they charge my card. Basically when I have finished ordering I have also committed my money - I have paid.

Not so in Hungary. The payment happens as a separate process AFTER the order, and that means anyone can order and not pay. That in itself is not such a big problem as the overwhelming majority of orders do get paid.

The only reason I mention this difference is because I think it influences the social aspect of group buying, something that helps Groupon grow at a very fast rate. In Hungary, because the buyer's money is not committed when he (or more likely she) orders, his mental commitment to the "cause" of getting lots of his friends to buy (so the deal will proceed and he will get the big discount) has diminished. No money committed = less commitment to the whole "game" of group buying.

I set out to find a solution to this and I think I found one.

We will be launching this new model for group buying in a couple of months. I have not seen this implemented anywhere or by anyone in our field (not by Groupon, Living Social or anyone else we could find online).

Watch this space for more information as we prepare and then launch this new model. Its an experiment and I look forward to seeing the results :-)

Update on Thursday, February 24, 2011 at 7:04 PM by Haim Schlesinger

We have finished the implementation of my new model a lot faster than I anticipated, so our new group buying system will go online tomorrow at www.napitipp.hu for the first time :-)

We will not use this model for every deal we offer, but start testing it on a few deals in the following few weeks.

And now to the actual explanation of this new model!

The basic change to the model, and the one we hope will change the behavior of our customers is very simple: instead of having a minimum number of buyers for the deal to be on, our deal is on from the first second, but with every new buyer the discount amount for all buyers will increase (and the price will decrease.) Very simple isn't it :-)

So the normal (Groupon kind of) group buying a deal might look like this:
Get $20 worth of food and drinks at your local coffee shop for $6 (a 70% discount) with a minimum of 50 buyers for the deal to be on.

With my new model it will look like this:
Get $20 worth of food and drinks at your local coffee shop for $10 (current discount of 50%), but the more coupons bought the higher the discount and the lower the price - up to 80% discount (and a price of $4.) The final discount is for ALL buyers, even the ones that ordered for the starting higher price! So if you bought at $10 and at the end the final price went down to $5, that is what you will pay - not the initial price of $10.

That is it - simple, and I hope very successful :-)

Update on Wednesday, March 2, 2011 at 9:26 PM by Haim Schlesinger

Now after the first deal implementing our new sliding discount model has ended and we analysed the results, I can declare it a success :-)

I did not expect such a flood of buyers. We have sold over 200 coupons in the first 10 hours and peaked at 496 coupons at the time the deal ended. The discount started at 50% and went up to the maximum of 80% after 210 coupons were sold!

We are planing on trying the same sliding discount model in the next couple of months with different types of deals and using different parameters (starting discount, maximum discount etc.)

Watch this place to get more updates on this new model, or follow me/us here:

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Cooking Coq Au Vin

Coq Au Vin is one of my favorite recipes. Its delicious (and very fitting the weather here now), but it is also a fun memory for me - the first French dish I learned to prepare.

Yesterday after a long time I cooked it again for lunch. Here is the recipe I used:

• 6 chicken legs (about 1.5 kg/3 pounds)
• 1 bottle good red wine (don't go overboard with this, just use wine you would happily drink)
• 150 gr. (about 5 ounces) bacon slices cut into narrow strips
• 1 sliced carrot
• 1 medium bulb of celery cut into cubes
• 12 small onions (or 3 medium ones quartered)
• 3-5 garlic cloves
• 2 tablespoons flour
• 1/3 cup  Cognac or Brandy
• 6-8 sprigs of  parsley
• 1-2 bay leaves
• 2-3 sprigs of thyme
• 250 gr. mushrooms (around 1/2 pound)

Soak the chicken legs in the wine overnight.

Take the legs out and pat them dry. Keep the wine!

Use a large (and preferably heavy) pot. With some butter start sauteing the bacon until you have some more fat in the pot. Add the sliced carrot, onions and celery and saute for a few minutes until they get some color, then add the sliced garlic and stir for another few of minutes.

Take the vegetables out of the pot (you'll need them at the end).

You should have enough fat in the pot now to saute the chicken legs (if not add some butter.) Do both sides until the start getting brownish (and don't forget to sprinkle with salt and black pepper.) You might need to do this in 2-3 turns if your pot is not wide enough.

Put all the chicken legs in the pot and pour the Cognac over them. Carefully light the boiling Cognac and wait until the flames go out. Now stir in 2 tablespoons of flour. Keep stirring to avoid burning and after everything is covered in flour and the flour has a nice fat-dowsed color, pour the wine in.

Add the bay leaves, parsley and thyme, bring to boil, cover and lower the heat to the minimum (I usually use the smallest flame on the smallest burner), and cook for an hour and 15 minutes. Stir every 20-30 minutes.

(The original French Coq Au Vin is cooked for longer as they use a whole cock. That results in a much drier meet. I like to use chicken and the meet to be less dry. If you want it like the French do, just cook it for another 15-30 minutes.)

Take the legs out of the stew and keep them warm. Increase the heat and pour in the sauteeed vegetables and mushrooms, and cook for another 10 minutes.

Put the legs back in and cook for another 5-10 minutes.

Coq Au Vin is a basic food originating from Burgundy, and I like to serve it in a very basic manner - I just put the pot on the table.

I hope you enjoy this very tasty winter dish. Comment below and let me know how yours came out.

Do You Really Want A 4 Hour Work Week?

About a year ago I heard about the book The 4 Hour Work Week by Tim Ferris. First I was skeptical, then intrigued, and finally I read it. You should look beyond the sensational title (he claims he originally wanted to call it Drug Dealing For Fun And Profits) and get the gist of it. Look through the hype and listen to some good advice. That is if this is what you really want. Is it? It seems like a dream to do little work and live life as you want it most of the time. For me it proved to be not exactly what I wanted, or more precisely not anymore.

Let me explain. As I read the book I thought to myself - this is kind of the way I live my life. I have built my businesses as systems that work without me for long periods of time. I did that starting in 1993 and from 1996 I have been living a very fulfilling life doing stuff I like. And I like to do lots of things: business, technology, photography, cooking, wine, magic, mentalism and TV consulting to name a few. For years my family and I divided our time between two countries, living half of the year abroad, while my businesses were still running and providing for us the means to do it. So reading the book made me feel quite satisfied. Here I was living the life of the "new rich" as Tim called it. I have made the decision a long time ago that my time was more valuable right now and used it to enjoy life and do what excited me.

Recently Tim has released his updated version of the book and I started reading it. This got me thinking and I realized I did not want to do this anymore. I did not want to "not work" so much and so hard. You see, I have being doing it for the past 15 years and it was and still is a great way to live. Don't get me wrong, I would not want to start a 9 to 5 job. Waht I do want is to do something I can sink my teeth into and commit myself to in a different manner than what you can do when you are jumping from one subject to the other. What I want to do is build my personal brand. I did do a couple of things very seriously and achieved a lot in them, but in none did I commit myself fully and publicly. I think I wanted to keep my "freedom" a little too much. Now I think I am ready for a different approach. I want to put myself out there and today's tools allow you to do it like never before.

Here is where Gary Vaynerchuk comes into the picture (though he is not aware of it - yet ;). I stumbled upon him because I love wine. He is a character doing exactly what I am talking about: being fully out there, using the tools available and committing himself to it. You might not like his style or even him personally (I think he is great and full of energy) but you have to respect his openness, commitment and drive. He has built a personal brand and went in the opposite direction from The 4 Hour Work Week (although he seems to be trying to go in different directions now and I am wondering how long before he has to have someone else replace him in WineLibrary TV). He does not outsource everything,  instead he works hours upon hours every day building and keeping his personal brand. Now I'm not sure I want to go to such extremes and its still hard for me to decide what field should I build my personal brand in (maybe I should just follow him and do the wine thing here in Hungary - hey Gary care to help me do WineLibrary TV here in Hungary?), but I know I want to be more out there, more exposed, interacting with others online and offline, instead of doing it all from behind the scenes.

I realize that most would love to have the opportunity to do just what I have been doing for a large part of my adult life, but I give you this to consider: will you be truely happy doing the 4 Hour Work Week lifestyle?

I think for me its time for a change. What would you do?

Be Very Afraid

Ever wondered if someone else can read your mind? How come you can't do the same?

Even if you don't you want to take a look at this t-shirt. Apart from having a brain unwrapping in the center it has that exact fear written all over it: "Everybody can read minds except you!"

Don't forget that the easiest way to read minds is just to listen, most people do let some of their thoughts out verbally ;-)

Marley & Me: The Wrong Kind Of Love

First the film, then the love ;-)

There are two kind of films: those that I enjoy watching - they give you some pleasure, and those that are interesting. Some times I get lucky and I see a film that is both and that is really a great experience.

It used to be a rare occurrence that I saw a film that has nothing interesting or is at least pleasurable in some way. In the past few years I have watched more and more such films, and I am aware it might just be me getting old, but I have a feeling that its not.

Marley & Me falls into that category. Its has nothing interesting in it, just a banal story of an average family with a dog, I just waited and waited for something interesting or even vaguely entertaining to happen - all in vain. Its supposed to be about the guy and the dog, but the dog only gets mentioned from time to time as the banality of an average family unravels, and mostly as a nuisance - the worst dog ever.

Then at the end the dog dies - what a surprise. No, really, I was surprised. Not by the dog dying, but that they cared so much - it doesn't show during the film. It was more like: this is the worst dog in history, but we are so lost we rather continue and suffer.

Finally there is that message (I am paraphrasing): dogs are great, they love you if you are poor or rich, smart or stupid, they love you unconditionally it doesn't matter who you are - where can you find that in todays world.

Well, I ask you: why would you want such love. It means they love you just because you are there, the fact that its you is irrelevant - it could be anyone!

I want the people who love me for who I am, otherwise they don't love ME, they just love someone and that could be anyone.

This message also assumes that if you are poor or stupid no one will truly love you (except a dog maybe). That is so condescending. I find that most poor or stupid people I know are loved by someone. And that some one loves them and it has everything to do with them.

So, don't watch the film its true crap, and don't wish for such love - you can do better, yes, even you ;-)