Wrong.  Samuel Adams beer was founded in 1984.  Clever marketing though.

Turns out it’s a familiar strategy for companies to play to our fond recollections of our founding fathers.

• John Hancock Insurance – founded in 1862, with no connection to John Hancock.
• The Paul Revere Corporation – founded in 1895, with no connection to Paul Revere.
• Ben Franklin stores – founded in 1877, with no connection to Ben Franklin.
• Ben Franklin Technology Partners – founded in the 1980s
• Franklin Templeton Investments – founded in 1947
• Jefferson Insurance Company – founded in 2007
• Nathan Hale Gardens – founded 1991
• Lincoln (car company) – founded in 1917

There are probably a lot more examples.  Patronize these companies and get in the American spirit!

I did find one company still in operation, Revere Copper Products, that was founded by Mr. Revere himself way back in 1801.  And apparently there is a George Washington Coffee company, founded by a George C. Washington, a distant relative of the first president who wanted to capitalize on the famous name.  And why not?  Not like he’s using it anymore.

In other news, I was really surprised during my time in Costa Rica to see the Jorge Washington elementary school in the small town of San Ramon.  I don’t believe Washington ever visited Costa Rica.  The world’s first international celebrity?

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“Whoa!” I said, “Four Jesus fish on one car.  I’ve never seen that before.”

“One for everyone in the family?” Bryn postulated.

“If Jesus is all-powerful, shouldn’t one be enough to protect the whole car?”

Let’s discuss.

First, a history lesson for those who, like me, have only a loose understanding of the fish symbolism.  The Jesus fish is officially known as an Ichthys, or ΙΧΘΥΣ, the Greek word for “fish.”  The word is also an acrostic:

• I – iota – Iēsous – Greek for “Jesus”
• X – chi – Christos – Greek for “anointed”
• Θ – theta – Theos – Greek for “God”
• Y – upsilon – yios – Greek for “son”
• Σ – sigma – sōtēr – Greek for “savior”

Beyond that, there are plenty of fish stories in the Bible so it seemed like a good fit.  The modern Jesus fish traces its origins to a remarkable guerrilla marketing effort from some Australian college students during the Vietnam War.  Today, the Jesus fish is a pervasive symbol of Christianity and a popular car-decoration, letting the world know the driver is Christian.

But typically one fish is enough to cover the whole car.  Our friends at Costco weren’t taking any chances though; they want everyone to know that the driver’s spouse and 2 kids are also Christian.  Since Jesus, being all-knowing, presumably already knows the family believes, the fish only serve the purpose of alerting other drivers.  On the road and in life, is it important and/or necessary to advertise your beliefs?  Or is it an insecurity?

Or do the parents believe the 4 Jesus fish will serve as a supernatural forcefield and protect the car and family on the road?  I think the makers and sellers of Jesus fish should propagate this belief to sell more fish.  It’s a small investment in safety, and better safe than sorry right?  And it appears to be a 5 or possibly 7-passenger car.  What about the non-family-members who might be riding along?  They could probably benefit from some Jesus protection too.

I think all this adds up to a huge business opportunity for the Jesus fish companies.  I mean why sell just one?  It’s the easiest upsell ever: Don’t you want everyone else in the car to go to heaven too?  They could literally triple or quadruple their business overnight if they could convince customers to abide by the 1-Jesus fish per passenger rule instead of the prevalent 1-Jesus fish per car rule.

Personally, I’m a fan of the Flying Spaghetti Monster car emblem.

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Restaurant.com sells gift certificates to local restaurants at deep discounts.  Their normal price is $10 for a $25 gift certificate, but they often run promotions where you can buy the same $25 gift certificate for just $2 or $3.

$25 worth of food for $2!  What’s the catch?

Each restaurant has their own set of restrictions.  Some of the most common Restaurant.com restrictions:

• Minimum purchase ($35 or $50)
• Dine-in only
• Not valid Friday or Saturday night
• Alcohol does not count toward minimum purchase
• Not valid toward tax or tip
• Limit 1 per table
• Not valid with any other offers
• Expires 1 year from date of issue (except in CA where apparently it is illegal for gift certificates to expire)

But abide by these rules and regulations, and the Restaurant.com gift certificates really do work!

The Business of Restaurant.com

I couldn’t find out for sure, but I don’t think Restaurant.com has a revenue-share agreement with the restaurants themselves.  Meaning whatever they charge for the gift certificate, Restaurant.com keeps 100% of the proceeds.  So restaurants are essentially “giving away” $25 gift certificates to get people in the door.  Why would a restaurant sign up for this “service?”

• Attract new customers.  Having a gift certificate mitigates risk for new customers to try a new restaurant.  Maybe they’ll become regulars.  Or maybe they’ll become regulars who always come armed with a Restaurant.com gift certificate.
• Fill empty tables.  Empty tables are a huge opportunity cost for restaurants.  Their overhead is the same whether the place is empty or packed, so might as well fill it, even if it is with low-profit-margin customers.
• Attract large parties.  Sometimes customers will come with a group of 4-6, which will more than make up for the discount given.
• Customer feedback.  Restaurant.com’s online system surveys each customer after they redeem their gift certificate.  While this feature is less valuable now that sites like Yelp are popular, it is still a chance for the restaurant to get candid feedback from customers.
• Gives the restaurant an online presence.  Obviously this feature was a bigger selling point back in 1999 before every restaurant had their own website, but is still preferable to have more web “real estate” than less.
• Cost-per-acquisition comparable or less than other advertising.  As far as I can tell, Restaurant.com is “free” for restaurants to sign up.  They just have to be willing to basically give discounts on customer checks, after certain criteria are met.  Relative to Val-Pak or other print, online, or radio advertising, Restaurant.com may actually be a cheaper method of customer acquisition.

So Restaurant.com makes their money selling gift certificates someone else has to honor.  I have to admire any business with a gross margin of 100%!  Clearly, they have some infrastructure costs, website maintenance, etc.  But their biggest cost has to be the sales staff required to sign up new restaurants and keep current accounts happy.

Restaurant.com Expert Tips

1. Read the fine print. Look for restaurants with a low minimum purchase, without day-of-week restrictions, and without exclusions on what you can order (alcohol, etc).
2. Check Yelp to see if the place is any good.  Getting a good deal on bad food isn’t really that good a deal.
3. Search for promo codes.  You can usually find one for 70-80% off — meaning your $25 gift certificate will only be $2 or $3 instead of the $10 regular price.

Here’s my “real life” example.  I searched our zip code on Restaurant.com and found a list of restaurants.  Some I’d heard of and some I’d even eaten at, but most were unfamiliar.  I was attracted to Mexxi’s Restaurant and Catering in nearby San Ramon.  Time to work the system.

1. Restrictions:  Minimum purchase $35, dine-in only, not valid toward tax or gratuity.  This means drinks count toward your $35, and you can go any day of the week.  Awesome.
2. Yelp. 4 Stars.  Also a 2009 “Best of the Bay” winner.  Score.
3. Promo code.  In under 5 seconds I found a code for 80% off.  Sweet.

So for $2, I acquired a $25 gift certificate to Mexxi’s.

Restaurant.com Cost Example

How will the math work once we go and eat?

Let’s say we order the minimum $35.  Add in tax (10%) and gratuity (18%) and the new total is $44.80… call it $45.  Knock off the $25 gift certificate and we owe $20.  Add in the $2 I paid for the gift certificate, and the out-of-pocket total is $22.  More than half off, not a bad deal!

For the restaurant though, maybe it’s not the greatest deal.  Of our $20 spent at the restaurant, $9.80 was tax and tip.  Not being familiar with typical margins at Mexican restaurants, I can’t say whether or not Mexxi’s will make money collecting $10.20 on a $35 check.  My guess is they at least break-even or else they wouldn’t be signed up with Restaurant.com.

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Delivering Happiness is part autobiography, part Zappos company history, and part human psychology study.  Hsieh (pronounced “Shay”) writes in down-to-earth prose with a dry sense of humor that makes his incredible story pretty fun to read.  He doesn’t come across as the rah-rah, rally-the-troops, vocal leader or figure-head, larger-than-life style CEO you might expect to set a 10-year goal of a billion dollars in sales.  In the middle of the dot.com crash.  In a lot of ways, he’s the anti-Mark Zuckerberg (of “I’m CEO … bitch” fame).

For me, the most interesting parts of the book were the sections Hsieh wrote about his life leading up to Zappos, and about Zappos’s struggle for survival its the early years.  Hsieh talks at length about his early entrepreneurial ventures, from worm farmer, to button-maker, to restaurateur.  He’s obviously an incredibly smart and talented person, but with trademark modesty just glosses over various details that might be construed as bragging: “I applied to Brown, UC Berkeley, Stanford, MIT, Princeton, Cornell, Yale, and Harvard.  I got into all of them,” he writes as if this were typical.  You didn’t?

After Harvard, Hsieh got a job at Oracle, but quickly became bored.  With a friend, he started a company called LinkExchange, which Microsoft bought 3 years later for $265 million.  Hsieh was 24.

With his newfound millions, Hsieh started his own venture capital firm in San Francisco.  One of the companies the firm invested in was Zappos.com, which had the preposterous idea of selling shoes over the Internet.  Those who’ve taken the Zappos tour in Henderson, NV, will have already learned that catalog shoe sales were a $2 billion business at the time, so the Zappos founders were onto something, and maybe not as crazy as everyone thought.

Ultimately Hsieh came on board the Zappos team as CEO and helped fuel their crazy growth and even crazier culture.  I feel like I’m pretty close to Zappos and have a good relationship with the company having worked with them as an affiliate for several years.  I’ve read a lot about them, visited their headquarters, and sold a ton of shoes for them.  What I didn’t realize was how close the company came to bankruptcy early on.  At one point they were within a couple weeks of running out of cash and going under.  Pretty stressful stuff.

Some people describe Zappos’ culture as cult-ish, and there’s certainly some truth to that.  But whatever.  You can’t knock it because it’s clearly working great.  Employees love it, customers love it, and investors loved it.  Win-win-win.  Well some investors didn’t love it, but they made a great return so it was probably ok.  This was one reason for last year’s sale to Amazon.  Why is culture so important at Zappos?  Because culture = brand, and every other element of a successful company’s business can and eventually will be copied.

All in all, good book.  Especially for free.  If you want to learn more about Tony Hsieh and the history of Zappos, it’s definitely worthwhile.  But if you want to learn more about really “delivering happiness” in the workplace, I think Peak by Chip Conley packs more substance.

FTC Disclosure: If you buy Delivering Happiness through the above link, Amazon will pay me 4% of the purchase price.

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Bryn recently returned from a business trip to the UK.  Originally the trip was scheduled for early May, and I planned to tag along and play tourist.  After I bought my ticket, the date for her trip was pushed back a month.  So I call United and the fun begins.

I ask if I can change my ticket to the new dates (same flights, same days of the week, just a month later.)  No, it is non-transferable and non-refundable, but out of the goodness of their hearts they understand plans change so for a $250 change fee plus the difference in fare, I could change my ticket.  June is apparently a more popular time to go to London so the total extra cost to change was over $500.  No thanks.

I don’t have a problem with any of this, I understand the risks of buying of plane tickets.  United simply followed their policy.  However, if the phone reservation agent had been granted the leeway to bend the policy to be more customer-friendly, she could have created a Raving Fan.  That was opportunity #1.

Then the Iceland volcano blew up, and grounded all air traffic to Europe.  While this was terrible news for thousands of stranded travelers, I thought it could be a golden opportunity for me.  Even though my scheduled flight was still a couple weeks out, I called United and said I was scared to fly because of the ash cloud, and asked if I could cancel and get a refund.  Maybe the agent called my bluff, or maybe he saw a record of my previous call, but he wasn’t having it.  I could cancel but I’d still eat the $250 change fee.  That was opportunity #2.

Finally I bite the bullet and cancel the flight, leaving a credit of several hundred dollars on my account I have 12 months to use.  This credit is not visible online, and I have to call United back when I want to redeem it.  I’d always prefer to see it in writing, so I’m going to say missed opportunity #3.

Fast forward a couple months and I want to redeem it for flights for Bryn and I to Mexico.  So I call and explain what I want, and I’m told that because my original London ticket was non-transferable, I could only buy a ticket for me, but not for Bryn.  Seriously.  Missed opportunity #4.

I get transferred to a supervisor because I’m in disbelief.  The United reservations supervisor explains to me about a ticketing loophole that will allow me to use my credit to buy Bryn’s ticket, BUT I’ll have to physically go to the airport to do it.  Seriously.  Missed opportunity #5.

The next day I go to the airport to buy the tickets.  The United agent at the ticket counter doesn’t know what the International change fee is, and instead of typing in $0 (like I suggest), she literally calls the same 800-number I’ve been talking to and (after waiting on hold 5 minutes) finds out it’s $250.  Apparently she had the freedom to charge me whatever she wanted and deliberately opted for the maximum sentence.  Big missed opportunity #6!

Either way, I get the tickets and go on my way.  Vamos a Mexico!

Why They Don’t Care

On the way home I was thinking about the kind of company that can be that unfriendly and inflexible to customers, and could really only come up with two: monopolies and sellers of commodities.  Unfortunately for travelers, airplane tickets have become a commodity.

Airlines today basically sell only a service, a promise to get you safely to your destination.  The level of comfort, service, and safety is nearly identical among all major carriers, so price becomes the only point of differentiation.  When the perceived “product” is the same (the destination) why not buy from the “store” (airline) with the lowest price?  As someone who makes their living from comparison shopping, I can tell you this is a very powerful philosophy.

What’s interesting is that United could use superior customer service as a competitive advantage (a la Zappos), but they’ve clearly decided it’s not worth it.

I’m a frequent flier, but not in the eyes of any one airline.  I pick my flights based on flight times and price, and I believe the majority of fliers are just like me.  In the past 12 months, I’ve flown Alaska, JetBlue, Delta, Continental, Southwest, American, Virgin, and Frontier.  Go back a little farther and I can add in United, LAN, US Airways, AirTran, and Northwest.

At one point I had achieved Premier status with United (made good use of their Dulles hub when I was in VA), but I’ve since lost it, and I’m certainly no million-miler.  And they know it.  Why bend the rules to help me when I definitely don’t do the same in return?

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Gyms can only successfully exist in a society where four historically rare criteria exist:

• A decent amount of disposable income
• A gross excess of food
• A sedentary workforce
• A culture obsessed with body image

We live in the golden age for gyms, fitness centers, and health clubs.  In fact, gym membership is at it’s highest level in the history of the world.  But, in a seeming paradox, obesity rates (at least in the US) have reached “epidemic” levels.  We’re fitter than ever before and also fatter than ever before.  How is this possible?

The answer lies in the sinfully sweet business model of the gym.  They sell memberships for $5-200 a month, with assorted “initiation” or start-up fees tacked on as well.  Some get creative and sell lifetime memberships ranging from a few hundred to a few thousand dollars.  They’re selling access to their state-of-the-art facilities and equipment, to their exercise classes, and to their personal trainers.

But the best gyms are really selling the dream.  The dream of a healthier life and a better body.  And the dirty part is they know the truth: that most new gym members stop coming regularly after as little as two months.  How quickly the dream fades!  Because of this, membership sales staffs are tasked with creating a membership roll that is 1000-3000% the capacity of the gym, meaning if the facility has a 100 person capacity, 3000 people could be members at any given time.

Much like satellite radio, the incremental cost of one additional gym customer is nearly nothing.  They’ll still have to maintain the equipment, pay the same staff, keep the building clean, etc, but as long as all 3000 don’t show up to workout at the same time, each additional membership is almost all profit.

They scan my card every time I go in, tracking me in their system.  Multiply that times hundreds or maybe even thousands of members, and the gym has years of historical data that show how much use the average customer gets out of his membership.  Will you be the outlier that goes 4 days a week for 10 years?  Or will your resolute workout plan taper off after a few months?

Everyone intends to get their money’s worth, otherwise they wouldn’t sign up.  But so few do.  Instead of trying to beat the gym at their own game, you might consider asking what their rates are like for single-visits.  Rather than signing up for a monthly membership charge, you can pay just when you go in.  Or, you can always find ways to workout without the gym: running, walking, hiking, or biking in the great outdoors.

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In December, mom gifted me an old XM radio receiver, and I signed up for the special they were running: 5 months for $20.  During my set-up call, I specifically asked not to be put on any sort of auto-renewal plan.

Fast forward 5 months.  I check my credit card statement this week, and notice a $34 charge from XM.  No email, no opt-in, no nothing.  That’s nice.  I like XM/Sirius.  It just seems like an unnecessary luxury in a “rebuilding year” for the biz.  I’ll miss my Radio Margaritaville but obviously I’ll survive.

I go to their website, create an account, and find out I’ve been auto-charged for a 3 month extension.  Like any good company, there is no way to correct this online; you have to call them.  So I do.

I give the XM representative all my account information and verify my identity.  She’s not a native English speaker but that’s fine, we’re communicating ok.  At some point I swear she says, “Ok I’ve cancelled your account.”  But then she explains she does not have the authority to cancel my account and must transfer me to someone higher up the food chain.  Fine.  I prepare myself for the imminent sales pitch by the higher-paid, escalated XM phone representative.

She is a native English speaker, although with a certain dialect and attitude.  If you’ve called them you know what I’m talking about.  I ask her to cancel my account, and she counters with the familiar 5 months for $20 deal.  I say, “No, it’s fine, please just cancel my account.”  No rebuttal, just a standard, “Thanks for calling XM, have a nice day sir.”  That’s it?  Before I can get any sort of confirmation from her, she hangs up.

Seeking closure, I call back.  I give all my information again to a new entry-level rep.  I explain that his friendly co-worker had hung up on me before I could verify the account had been canceled, and he now informs me I am the proud owner of a new 5-month subscription.  Shady!  She must have had selective hearing: “No, it’s fine, please just cancel my account.”  And while I guess “it’s fine” is technically an affirmative, everyone knows it still means “no thanks.”

The new rep doesn’t have the authority to correct this mistake (surprise!) so he transfers me upstairs.  Different escalated rep than before.  Promises to have canceled the account for real this time and to have the money refunded to my credit card.  I ask for and receive a confirmation number.  No email.  By putting nothing in writing, XM always leaves themselves an out.  Reminds me of an email signature from an old Ford engineer: “Never write what you can say, and never say what you can imply.”  I’ll have to keep a close eye on my statement to see what happens.

But the moral of the story is if you want to save money on your XM satellite radio subscription, all you have to is call and try and cancel.  Since the incremental cost of keeping you as a customer is essentially $0, use that fact to negotiate a lower rate.  Even if you paid just a dollar a year, XM would probably be better off than if you canceled.  If their first offer was to go from $11/month to $4/month — a 60% discount — I wonder how low they would go if you pushed back!

UPDATE 6/2/10: XM has called me 12 times in the past week trying to win me back.  They never leave a message.  If you get a call from 888-245-4396, it’s XM!  So desperate!

UPDATE 7/15/10: On July 2nd, XM sent me a “Last Chance Offer” via email for a 3 month, $4.99/mo subscription.  Since then they’ve called me 13 times and never left a message.  Why even pretend “Last chance” when we both know it isn’t true?

UPDATE 7/25/10: Today I received a “Very last chance!” email from XM.  The offer remains the same; $4.99/mo for 3 months or $4/mo for 5 months.  Thankfully the phone calls have stopped though.  Knock on wood.

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The enigma of Netflix pop-ups has inspired numerous forum posts, including one on the official Netflix site, an eHow article, and even a twitter account.  Some people are amazingly bitter over something that takes a split second to close.

But does anyone really ever see a Netflix pop-up and think, “well now that you mention it, I think I’ll stop whatever I was doing and sign up for Netflix?”  It seems crazy but enough people must sign-up to make it worthwhile.

It reminds me of a comedy show we saw where the comedian talked about how the used car lots are always tying balloons to the cars.  Who drives past, sees the balloons, and says I must have that car?  But it must work, or else why would they do it?

I bet Netflix or their ad agency could license whatever technology they’re using to bypass the pop-up blockers and make way more than renting DVDs.

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Busted! Well, partially.

There are real baby carrots!  Aren’t they cute?  You can find them in the grocery store next to the baby corn and mini-bananas.

But the part about baby carrots being created from larger carrots is also true.  And it turns out the “manufactured” baby carrots are far more popular, and their story is a great business lesson.

In the 1980s, California carrot farmer Mike Yurosek grew sick of throwing away thousands of pounds of un-sellable (bent, twisted, knobby, partially rotted) carrots.  This waste was common; Mike and other farmers would routinely scrap a third of their carrot crop or more.

Yurosek figured if he could salvage any part of these wasted carrots, it would all be gravy.  He cut the reject carrots into 2 inch pieces, peeled them, packed them in plastic bags, and branded them Bunny-Luv.

And the rest is history.  Today baby carrots are a $400 million business and outsell regular carrots 4 to 1.  Not bad for a little side project aimed at reducing waste!  What other “baby carrot” opportunities might we be sitting on right now?

Did You Know?

• Carrots are now grown specifically for the purpose of making them into baby carrots.  Farmers are actually breeding them to grow longer to increase their per-carrot yield.
• Baby carrots are somewhat less nutritious than regular carrots, because the skin and nearby surface lost in the manufacturing process are very nutrient-rich.
• Overall carrot consumption has increased 33-50% since the introduction of baby carrots.
• Bakersfield, CA is the carrot-capital of the US.

Source: http://www.carrotmuseum.co.uk

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Having no experience in judging these sorts of things, it was a pretty cool experience.  I was impressed with the analysis and insight offered by the competing teams, as well as their presentation skills.  The case study was on Italian sausage, and I can safely say I learned more about marketing sausage than I ever thought I’d know.

It was also cool to connect with other alumni from the Bay Area and beyond.

I think I’ll have to present a case competition to some local chapter and see what suggestions they have on how to sell more shoes!

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