The

Entrepreneurial

Code

Lessons from an

Ivy League Entrepreneur

Chapter Thirteen

“A leader is a dealer in hope.” – Napoleon Bonaparte

Maverock, Abe, and Johnny caught the “entrepreneurial fever.”  They spent all of their free time in the office, shooting ideas at each other about the potential for the business.  Maverock was convinced there was a market for their “off-campus meal plan” at other schools.  He talked about how much money they could generate if they expanded to the 10 largest campuses in the country.  Johnny and his partners started to get excited about the possibilities.

The challenge with expanding was that they had too many advantages on their own campus that couldn’t be transferred to other schools.  As students, they recruited a lot of free help from classmates, they knew how to navigate the campus, they had access to campus buildings, and they knew how to customize their marketing message to their peers.  They wouldn’t have these home field advantages elsewhere.    

However, if Johnny and his partners could work with other schools, they potentially could create programs that were even more successful than the Bullfrog Card, because every incoming freshman automatically would be a customer.  Being the school-sanctioned program would allow them to focus more on managing the system and less on recruiting new customers.  Since they had been exerting so much energy fighting the University, working with the schools seemed too easy.  Johnny and his partners agreed the future growth of their company depended on moving in this direction.  

Unfortunately, the best selling point to a new school was the endorsement of another university that was a satisfied partner. Although Johnny and his partners already had a successful business, they had no reference they could use from the school.  So, they reasoned they needed to leverage their local popularity, and approach other colleges in Philadelphia.  Drucker University was in close proximity and an obvious starting point. 

It was possible the administrators at Drucker would consider working with Johnny and his partners.  After all, someone from Drucker could walk over to the campus and observe the program in operation.  He could talk to the local merchants and interview students.  Johnny was confident they would get great feedback from the community.  He hoped that Drucker would realize they were a good company to partner with. 

Establishing a card system on Drucker’s campus would fix many of the young company’s problems.  If they did a great job, Drucker could be a reference.  Even better, it was proof that they could be successful at a second school.  So, they began planning to contact Drucker to pitch the company’s services.

Unfortunately, if someone at Drucker read the Bullfrog Card marketing materials, he would think they cannibalized the school’s cafeteria business.  In many ways, the “alternative meal plan” was not “university-friendly.”  It was possible that Drucker would be freaked out because the Bullfrog Card took money away from the cafeteria business.  So, Johnny and his partners decided to change their marketing strategy.  Since they wanted to make the business attractive to potential school partners, they needed the marketing to be more subtle. 

Johnny thought back on his early conversation with Mr. Bureaucracy.  Although the majority of their merchants were going to be restaurants, recruiting a few additional services (pharmacies, taxis, etc.) made it less obvious that programs like the Bullfrog Card might compete with the cafeteria.  Instead of an alternative meal plan, they could present the program as targeting “meals and campus essentials.” 

In order to take further emphasis away from the “alternative meal plan” aspect of their services, Maverock wanted to add new functionality to the Bullfrog Card by also making it a student discount card.  It was just one more service that benefitted students, and one more advantage to pitch to schools. 

Maverock immediately made calls to all of the restaurants and negotiated special Bullfrog Card discounts.  Some vendors offered 10% discounts and others gave special “buy one, get one free offers.”  Inspired by Maverock’s success, Johnny began calling regional vendors such as Amtrak and local museums to secure other types of student discounts for cardholders.

As they scrambled to expand their program, Johnny and his partners had their first backlash from a Bullfrog Card restaurant about the fee they charged.  One of the merchants, Saladworks Café, threatened to quit the program if the company didn’t lower the 11.8% fee.  Out of the 40 merchants on the plan, this was the first time anyone approached them about cutting fees.  It was a big concern to Johnny, because if they showed flexibility and word got out, everyone would want to renegotiate. 

Unfortunately, Saladworks Café was one of their most popular restaurants, and the owner knew it.  Johnny and his partners were too scared of losing it, so they lowered the fee to 7%.  By succumbing to pressure, they risked having more restaurants trying to renegotiate.  However, the partners were willing to take that risk because their priorities had changed.  They were keen to show a 100% merchant retention rate and a happy merchant community to prospective university clients, even if it meant making less money.  They were ready to sacrifice some of the profitability of the Bullfrog Card, if the “window dressing” helped them partner with other schools. 

Suddenly, Johnny and his partners became more focused on the “big picture” because they believed their company’s growth depended on partnering with schools, not just on the profitability of the Bullfrog Card system.   

 

Copyright  2005 by Chris Cononico
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