The
Entrepreneurial
Code
Lessons from an
Ivy League Entrepreneur
Chapter Six
Based on their analysis, the group believed there was strong demand from students for the idea. Unlike the school cafeteria, the Bullfrog Card was available 24/7 and there were no missed meals. If a student didn’t spend his cash balance on the card, he got a full refund. With such obvious benefits, the idea’s success largely depended on how well Johnny and his group delivered their marketing message. They envisioned the Bullfrog Card as an “alternative meal plan,” not as a generic debit card. From their perspective, the idea just happened to use debit card technology to link restaurants together, but that wasn’t the value the idea offered.
The school cafeteria required students to prepay for the semester for a designated number of weekly meals. Therefore, if a student missed a meal, he was still charged for it. The school didn't offer refunds and unused meals didn’t accumulate for later use. Most students missed several meals per week, so the money was wasted. By using Bullfrog Card, students would be able to eat whenever they wanted, and any unused balance would be refunded back to them.
The first step in positioning the Bullfrog Card as a viable alternative to the cafeteria was offering suggested “deposit amounts,” so students could sign up for fully-refundable “meal plans.” They hoped parents would gladly fund the account, because it was only for food purchases. It was also a way to help students budget their dining expenses.
The breakdown of their meal plans was as follows:
|
Plan type |
Description |
Suggested deposit |
|
Plan 1 |
Our “safety plans” just for emergencies and added convenience. |
$100 |
|
Plan 2 |
For those occasional snackers and “once-a-weekers.” |
$325 |
|
Plan 3 |
A good plan for weekend warriors. |
$550 |
|
Plan 4 |
Perfect for weekend meals, study breaks, and occasional snacks. |
$995 |
|
Plan 5 |
The right choice for daily dinner without the cafeteria plan. |
$1,550 |
|
Plan 6 |
Ultimate in safety and convenience! Never need cash…ever! |
$1,950 |
In their sample brochures, they showed that by eating at local restaurants students benefited from more variety, and it cost them less money than did the cafeteria plan. In addition, the cafeteria wasn’t open on the weekends. This left a void that the Bullfrog Card could easily fill. After all, students were going to be eating at the restaurants anyway, so this was a way for their parents to pay for the meals. It was especially appealing to freshmen parents, who wanted to know their students had enough money set aside for food, and any deposits would be used exclusively for that purpose.
The importance of achieving a high penetration rate with the freshmen class was enormous. Each student represented a potential four-year customer. It was because of the freshmen class that they came up with the idea of the “safety” and “snack” plans. They wanted to give freshmen parents a reason to try our program. Once a student used the Bullfrog Card, they were confident he would be hooked.
The four group members began to think ahead, and explore their personal contacts. Abe’s girlfriend’s father was an attorney. He offered to draw up their merchant contracts and customer agreements for free. Joe’s mother was a CPA, and she offered to assist them with their accounting system. She also suggested that her firm hold the deposits in trust for cardholders, in case people were wary about sending money to a student-run company.
Soon, the business plan was finished. The mission statement was simple: “To honorably serve the needs of the University community by providing a quality dining alternative, linking students to restaurants, while promoting safety.” By the end of the semester, Johnny, Maverock, Abe, and Joe were proud of their work. They believed the Bullfrog Card was a viable business opportunity.
Copyright 2005 by Chris
Cononico
All rights reserved. No part of this manuscript may be reproduced in any
form or by any electronic or mechanical means, including information
storage and retrieval systems, without permission in writing from the
author, except by a reviewer who may quote brief passages in a review.