Jake’s

When my kids were a bit younger and they brought home those straight A report cards we would always make a beeline for Jake's Ice Cream Midtown for a tasty treat. I would even indulge, which is quite the rarity. 

Jake's closed their Midtown and some other locations during the recession. Jake, he is a real guy, is back with a new model. Home delivery. They are extending their delivery area today from their Old Fourth Ward neighborhood to all of Atlanta. And they have chosen Half Off Depot as their launch partner.

I got to test the offer. Did not get bite of what they delivered. Kids devoured the stuff. Great flavors like Chocolate Slap Yo Mama, Brown Shugah Vanilla, Sin-oh-Man, Red Velvet Cakescream, and Coffee & Donuts.

Six pints of yummy Jake's Ice Cream for $15. Half Price. Delivered for free. And for every order Jake's is going to donate a scoop of ice cream to a child at Scottish Rite Hospital. 

Great product, great cause, great entrepreneur. I already bought mine. If you love ice cream, kids and entrepreneurs you should take advantage of this deal.

August 31, 2012  |  Comments  |  Tweet  |  Posted in Fun, Half Off Depot, Personal

More Deal Facts

Yesterday Groupon shares tumbled more than 10%. The stock is down 67% since the beginning of the year and 74% since its IPO last year. On top of this performance there are a mass of stories that question if offering a deal is good for small businesses. Mostly anecdotal stories such as Wafflegate. The end result is widespread concern about the viability of the online deal industry with dire predictions for the companies that participate in it. Predictions that are predominantly based on the performance of a single company that seems to have continual execution issues. However when the industry is put under more rigorous analysis, there are a number of positive signs for the market. 

Utpal Dholakia of Rice University recently published a follow up study to his June 2011 research. The new study, entitled "How Business Fare With Daily Deals As They Gain Experinece: A Multi-Time Period Study of Daily Deal Performance" is much more upbeat than what you might read in the popular press. Among the findings.

  • The percentage of merchants making money off a deal jumped 6 percentage points to 61.5%.
  • The percentage of new customers a deal attracts remains unchanged at 80%.
  • The deal site share of revenue increased by 2.5 percentage points to 45%.
  • The incidence of profitable daily deals increases with the merchants prior level of deal experience.
  • Deals appear to be sustainable online marketing programs for 30% of businesses.
  • Deal site loyalty levels are low (which is a positive if you are a challenger brand).

Some of Dholakia's conclusions from the data collected in the study.

On the whole these results are encouraging for the daily deal industry. They provide no evidence to support the conventional wisdom that daily deals are working less effectively for businesses than they did in the early stages of this industry's evolution. Nor do we find the daily deal industry to becoming weaker in its pricing power."

"Daily deals continue to remain effective with repeated use, and marks the first such evidence to our knowledge that daily deals can be sustainable marketing programs for at least some businesses that use them.

And he concludes with:

Our results find little or no evidence of deterioration in the performance of daily deal promotions over the past year for small and medium-sized businesses or with experience as the business operator runs multiple daily deals.

What I am seeing in the performance of Half Off Depots supports this conclusion. Sales are up, margins are not compressing, merchants come back to do more deals, and many merchants have made our program the core of their online marketing effort. 

The reports of the online deal industry's death have been greatly exaggerated.

July 31, 2012  |  Comments  |  Tweet  |  Posted in Deals, Half Off Depot

Get The Data

Great Jim Barksdale quote over on A VC today.

If we have data, let’s look at data. If all we have are opinions, let’s go with mine.

Seems like the right approach for anyone running a company to take. It is the approach that I have seen most of the CEOs that I work for take. Sometimes they believe in the data, sometimes they do not. If you are working for somebody that is running a company you only have one course of action.

Get the data.

July 17, 2012  |  Comments  |  Tweet  |  Posted in Business

My New Morning Routine

1. Brew coffee, take the high octane first eight ounces.

2. Check for website monitoring alerts.

3. Check server resource use.

4. Check eCommerce platform for successful order completion.

5. Check market web pages for proper rendering and responsiveness.

6. Take a shower.

Rinse and repeat. Whatever it takes.

July 13, 2012  |  Comments  |  Tweet  |  Posted in Entrepreneurship, Personal

Facebook’s Impact On Startup Valuations

Seems to be quite the subject these days.

Paul Graham says, or at least an investor does, that startup valuations are heading south. Fred Wilson pretty much agrees for later stage companies (and agrees that FB is overvalued).

My take. It does not matter. Unless your startup has over 50% of the U.S. using it, has raised hundreds of millions of dollars in venture capital, went public at a $100 billion valuation, shrewdly maximized the money put in its coffers by pushing its IPO price to the limit, and you have somehow managed to remain CEO while still controling the company. Then it matters. That has happened once in the history of the world. Facebook, like its purchase of Instagram, is an anomaly. It does not matter.

Sure early stage valuations may come down. They should. What Facebook has shown is that private valuations are out of line with public valuations.

That does not mean startups can not raise good money or find good exits. While the argument can be made that the Facebook impact had not worked its way through the system yet, Oracle's purchase of Vitrue for a reported $300 million and Salesforce's purchase of Buddy Media for $689 million are exhibit A and B. Both companies in the social space. Both companies with solid exits for all involved. Both companies valued at north of 10x revenues. Everybody is happy.

For the vast majority of startups Facebook's impact on valuations does not matter. It is an externality that may not impact you and even if it does it is one that you can not control. Go build your business with a focus on getting to profitbility with as little investment as possible.

You do that and everything else will take care of itself.

June 6, 2012  |  Comments  |  Tweet  |  Posted in Entrepreneurship, Social, Stocks, Venture Capital

What It Feels Like To Be A Startup CEO

Over on Quora Paul DeJoe, the CEO at Ecquire (a lead management software company with the tag "data entry blows") and an Entrepreneur in Residence at Fairbridge Venture Partners, posed the perfect response to the question "What does it feel like to be the CEO of a start-up?" Something like 1,200 upvotes. It is republished here with permission. Great stuff.

Very tough to sleep most nights of the week.  Weekends don't mean anything to you anymore.  Closing a round of financing is not a relief.  It means more people are depending on you to turn their investment into 20 times what they gave you.  

It's very difficult to "turn it off". But at the same time, television, movies and vacations become so boring to you when your company's future might be sitting in your inbox or in the results of a new A/B test you decide to run.  

You feel guilty when you're doing something you like doing outside of the company.  Only through years of wrestling with this internal fight do you recognize how the word "balance" is an art that is just as important as any other skill set you could ever hope to have.  You begin to see how valuable creativity is and that you must think differently not only to win, but to see the biggest opportunity.  You recognize you get your best ideas when you're not staring at a screen.  You see immediate returns on healthy distractions.

You start to respect the Duck.  Paddle like hell under the water and be smooth and calm on top where everyone can see you.  You learn the hard way that if you lose your cool you lose.

You always ask yourself if I am changing the World in a good way?  Are people's lives better for having known me?  

You are creative and when you have an idea it has no filter before it becomes a reality.  This feeling is why you can't do anything else.   

You start to see that the word "entrepreneur" is a personality.  It's difficult to talk to your friends that are not risking the same things you are because they are content with not pushing themselves or putting it all out there in the public with the likelihood of failure staring at you everyday.  You start to turn a lot of your conversations with relatives into how they might exploit opportunities for profit.  Those close to you will view your focus as something completely different because they don't understand.  You don't blame them.  They can't understand if they haven't done it themselves.  It's why you will gravitate towards other entrepreneurs.  You will find reward in helping other entrepreneurs.  This is my email: paul@ecquire.com.  Let me know if I can help you with anything. 

Your job is to create a vision, a culture, to get the right people on the bus and to inspire.  When you look around at a team that believes in the vision as much as you do and trusts you will do the right thing all the time, it's a feeling that can't be explained.  The exponential productivity from great people will always amaze you.  It's why finding the right team is the most difficult thing you will do but the most important.  This learning will affect your life significantly.  You will not settle for things anymore because you will see what is possible when you hold out for the best and push to find people that are the best.  You don't have a problem anymore being honest with people about not cutting it. 

You start to see that you're a leader and you have to lead or you can't be involved with it at all.  You turn down acquisition offers because you need to run the show and you feel like your team is the best in the World and you can do anything with hard work.  Quitting is not an option. 

You have to be willing to sleep in your car and laugh about it.  You have to be able to laugh at many things because when you think of the worse things in the World that could happen to your company, they will happen.  Imagine working for something for two years and then have to throw it out completely because you see in one day that it's wrong.  You realize that if your team is having fun and can always laugh that you won't die, and in fact, the opposite will happen:  you will learn to love the journey and look forward to what you do everyday even at the lowest times.  You'll hear not to get too low when things are bad and not to get too high when things are good and you'll even give that advice.  But you'll never take it because being in the middle all the time isn't exciting and an even keel is never worth missing out on something worth celebrating.  You'll become addicted to finding the hardest challenges because there's a direct relationship between how difficult something is and the euphoria of a feeling when you do the impossible.    

You realize that it's much more fun when you didn't have money and that money might be the worse thing you could have as a personal goal.  If you're lucky enough to genuinely feel this way, it is a surreal feeling that is the closest thing to peace because you realize it's the challenges and the work that you love.  Your currencies are freedom, autonomy, responsibility and recognition.  Those happen to be the same currencies of the people you want around you. 

You feel like a parent to your customers in that they will never realize how much you love them and it is they who validate you are not crazy. You want to hug every one of them. They mean the World to you. 

You learn the most about yourself more than any other vocation as an entrepreneur.  You learn what you do when you get punched in the face many many times.  You learn what you do when no one is looking and when no one would find out.  You learn that you are bad at many things, lucky if you're good at a handful of things and the only thing you can ever be great at is being yourself which is why you can never compromise it.  You learn how power and recognition can be addicting and see how it could corrupt so many.  

You become incredibly grateful for the times that things were going as bad as they possibly could.  Most people won't get to see this in any other calling.  When things are really bad, there are people that come running to help and don't think twice about it.  Tal Raviv, Gary Smith, Joe Reyes, Toan Dang, Vincent Cheung, Eric Elinow, Abe Marciano are some of them. I will forever be in their debt and I could never repay them nor would they want or expect to be repaid. 

You begin to realize that in life, the luckiest people in the World only get one shot at being a part of something great.  Knowing this helps you make sense of your commitment.  

Of all the things said though, it's exciting.  Every day is different and so exciting.  Even when it's bad it's exciting.  Knowing that your decisions will not only affect you but many others is a weight that I would rather have any day than the weight of not controlling my future.  That's why I could not do anything else.

June 4, 2012  |  Comments  |  Tweet  |  Posted in Entrepreneurship, Startups

One Year Later

Last week I celebrated my first full year at Half Off Depot.  It has been a pretty amazing first year. Some of the stuff we have accomplished, purposely partially masked through statistics.

We raised $7 million via venture capital and $1.5 via venture debt.

Subscribers have grown by 450%. Over 200% in 2011 and over 150% YTD in 2012.

We expanded from two MSAs in which we are actively marketing local deals to nine today. We also extended into national product deals.

Revenues doubled in 2011 from 2010 and are a pretty solid growth path for 2012.

Employees went from 21 then to forty something. The employee growth was not smooth. I fired a founder, an interesting experience. Our VP of Marketng and CTO left the team and I had to step in to lead those groups directly. Truth be told I terminated more people in the last year than in the previous ten. Startups are not all fun.

Half Off Depot turned cash flow positive. A heroic feat if you saw our financials in the fall of 2011.

Began a pretty large scale technology transition.

Made two asset acquisitions. One for a company called Dealster and one that has yet to be announced. There is a good path here for a well funded cash flow positive company.

So money in the bank, a rapidly growing member base, which brings about big revenue increases, employee growth, and a healthy bottom line in a mode to play consolidator.

A good first year.

May 21, 2012  |  Comments  |  Tweet  |  Posted in Half Off Depot, Personal

Facebook Is Overvalued

Before I go any further I want to give some kudos to Facebook. More than half the people in the United States use the social network. I think the number something is like 900 million worldwide. Facebook is an important consideration for any marketer. And you have to give it to Zuck. Despite donning a hoodie at inappropriate times he has matured as a business leader. He is completely in control of Facebook. And a billionaire before 30. 

So great job to all the good folks that work at Facebook, their investors, and the founders. At 11:00am today Facebook is going to go public and their life will change forever. Congratulations.

With that said, Facebook is going public at $38 a share. That $38 puts the company's market cap at $104 billon. That is the biggest IPO valuation ever by an American company. It will make Facebook the 23rd largest US company by market cap (larger than Amazon) while being beyond the 900 mark in terms of annual revenue. 

Last year Facebook had $3.7 billion in revenue and generated an even $1 billion in earnings. The valuation is 28x revenue and 104x income. The P/E is 106 compared to Google's 18. The stock may pop today in a frenzy, driving these multiples and ratios even higher. Seems a little rich. 

Facebook, my friends, is overvalued.

May 18, 2012  |  Comments  |  Tweet  |  Posted in Social, Stocks

Buying

About a month ago Half Off Depot announced that it had acquired Dealster. To quote the release:

“Dealster marks the first acquisition for Half Off Depot. In addition to its membership base, Dealster’s value to Half Off Depot lies in its proprietary platform, which includes social elements for customers and merchants as well as other features currently on the Half Off Depot product roadmap.”

The key word being first.

One of the big outcomes of Groupon mishandling its IPO process was that the financial community lost interest in the entire online deal space. As I wrote at the time, “(the) Groupon IPO is good for Half Off Depot as it will make it harder for smaller underfunded companies to remain viable and they validated the market in which we participate.” 

At Half Off Depot we decided we needed to do two things.

The first was to get cash flow positive. We did this back in March and can continue to operate the business with a healthy bottom line while still growing at a nice pace.

The second was to go out and find smaller companies whose access to capital has been cut off but need more money to survive. Dealster was one of these companies. There are lots of companies like Dealster and I am spending lots of time talking to them. I believe that Half Off Depot will be able to efficiently grow its member base, and in turn revenues via acquisitions. We are going down that path. It will be interesting to see where it leads.

May 14, 2012  |  Comments  |  Tweet  |  Posted in Business, Half Off Depot