Once upon a time a group of fairly smart guys…

So this one time a fairly smart guy had an idea. He wrote up his idea as a business plan and showed it to other fairly smart guys.  Those other fairly smart guys liked his idea and offered him some money to get the idea off the ground in return for shares in a newly formed company. Suddenly, what was one fairly smart guy’s idea, is now owned by a bunch of fairly smart guys.

So our fairly smart guy (hereinafter FSG) took the invested money and built out a small team of developers and server architects and systems administrators and built a website.

Our FSG showed the group of other FSG’s the website they all owned together.  Our FSG had spent all the money on hiring this team to build his website and didn’t have any left over to take the website to market.

The other FSG’s didn’t like this too much.  So they decided they were going to take problem into their own hands and raise more money, and in the process they could sell off some of their shares and already get paid back their initial investment before the website even saw the light of day.  The other FSG’s didn’t sell off all their shares… just enough to pay them back their initial investment and earn them a good 20%.  Our FSG, meanwhile has seen his idea further diluted with a much larger group of owners who all have differing opinions on how his operation should be run.

This stresses our FSG out, but hey… he’s got a pretty big chunck of change to get this idea off the ground, right?

So he keeps paying his developers and server architects and systems administrators, and also hires some sales reps and marketing guys and some email delivery guys and some managers and their managers.  Oh, and he has to hire some accountants and bookkeepers because at this point there’s a huge mess of who owns what percentage and who is getting paid how much…

A few months go by and the company sees some revenue.  Not enough to pay all the salaries, and definitely not enough to repay investors, so our FSG’s idea is losing money.

All the other FSGs decide they need to recoup their investment because it’s getting dicey holding onto this company’s shares that loses money, so they put together another round of financing and sell off some of their own shares so they break even (plus 300%) and bring on a lot of new owners and a whole boatload of money…

Now, our FSG has a boatload of money to work with, and his website is driving revenue, but at this point he’d have to fire about 70% of his staff and it would STILL take 31.4 years to repay his investors from net profits…

This sounds crazy, right?

Well what if I told you that I’ve spoken or emailed hundreds of daily deal website owners who turn a profit and didn’t take on rounds of financing, and didn’t spend millions of dollars to get set up, and don’t even have to worry about servers and hosting and a large staff and that they therefore have a real business with no debt, little overhead, and pretty good returns. What would you think about them?

I think they’re Super Damn Smart Guys (SDSGs) for a few reasons:

1.  The business is theirs and not a bunch of other FSGs who don’t care about the idea

2.  They are not under water in terms of debt or owing money to investors

3.  They make actual profits… ie, they see net revenues

4.  They help provide a service to merchants and consumers where everyone wins.

How do these SDSGs do it?  Easy.  They bought a licencse to a white label daily deal software with viritually non-existent barriers to entry.  And because they did that they see real net revenues, which I equate with a real business.

And you want to know the best part?

Because our SDSGs don’t have so many costs and expenses (…and debt…) they are able to make deals with merchants that don’t either hurt the merchant financially, or worse put the merchant out of business (like our FSG’s company has done).  This breeds the development of trust and loyalty between our SDSGs and their merchants.

Now every time someone mentions the websites of our SDSGs, their merchants think fluffy, happy, cloud-shaped thoughts and are overwhelmed by a sense of well-being.  And what company doesn’t love that?