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Veteran marketing pros and serial entrepreneurs Gary Slack and Lou Friedmann are bringing daily deals to the b-to-b marketplace on March 28 with the launch of their Chicago-based startup Bizy. Slack took time out of the pre-launch preparations to tell SmartBrief about the new business.
How did you come up with this idea?
It was the work we did circa 2002 to 2004 helping launch eBay Business, eBay’s small-business portal. Until then, eBay had been a purely consumer marketplace, but they started noticing small businesses coming to the platform to list and buy stuff — mostly IT equipment in the early days, but later, restaurant, farming and construction equipment.
Today, small-business buying and selling reportedly represents around 10% of all activity on eBay. So when I became familiar with Groupon and started to follow its progress, it dawned on me that businesses, especially small businesses, could be the next logical step for Groupon, too. I actually e-mailed this thought to Groupon CEO Andrew Mason a year ago, and he responded saying they’d thought about it, too.
While I’m glad we’re starting Bizy a year later, I wish I’d done it sooner. I sort of feel like the two guys at the end of the movie “Dumb and Dumber,” who missed out on a wonderful bus ride, saying there were “two lucky guys” out there somewhere. Fortunately, I came to my senses and realized I could start such a business and, so to speak, chartered my own bus!
How are you planning to use social media to build your list of subscribers?
We’ve been actively tweeting — pretty intelligently, I think — via three accounts: mine, Slack and Company’s and Bizy’s. We’re on Facebook and contributing to conversations in relevant small-business groups on LinkedIn and other communities and forums. I’ve used LinkedIn to broadcast the news about Bizy to my 3,000-person network — all people I know, I’m proud to say, none of this LION stuff. We’re also communicating as best we can with bloggers and other influencers. We’ll have a YouTube channel up soon and will be running a “Who is the Biziest Small Business Person” video contest.
We’re supplementing our social-media efforts with traditional public relations, which has been very successful, and some limited but very targeted online advertising. We also just brought Rieva Lesonsky on to our team to head up our social media efforts. Rieva is the former editor of Entrepreneur, and for several years has run a bustling business managing social media outreach to the small-business community for a variety of top brands. She knows everybody in the world of small business, and everyone knows her.
Do you see these e-mails as a social channel? Are you planning to have a vehicle for creating a community among your users?
You know, there are so many communities out there for small-business owners. All the big enterprises firms have built them. A small-business owner — and I am one, by the way — could spend his or her entire existence checking them for advice and trading notes with peers. For the time being, we’ve decided to be more “Googly,” if you will, by concentrating very single-mindedly on doing one thing extremely well — bringing exciting, compelling deals to small-business owners. We think there’s a plus side in not trying to be everything to everybody, but simply being known as an e-mail you want to open every day to quickly see what’s new.
What’s your content strategy? How are you approaching the copy for your daily e-mails?
As good as Groupon’s copywriting is, ours will be better, as helping make our clients’ products and services stand out and grab attention and purchase interest is at the core of what my agency does. Our copy for our first deal, Ford’s Transit Connect van — designed for and marketed to small businesses — will make everyone who reads it want one!
Great copy, compelling and relevant deals and reputable deal sources are our content strategy. We’re not going to be a b-to-b deal site that focuses just on pencils, pens, paper and other fairly mundane basics for small businesses. We’re going to mix it up a lot, posting deals, yes, for very basic, frequently purchased items some days but also posting deals for less expected but still relevant deals other days — from pens and pencils to small-business vans, and everything in between.
Exploration, and not just savings, is a big part of the Groupon experience. That will be true with Bizy, too. To keep people opening our e-mails, we’ve got to have them wondering, “What will Bizy offer me next?”
How are you getting b-to-b companies to sign on to offer deals?
From our years of work helping many companies market to small businesses, we are very fortunate to have numerous contacts at large enterprise, middle market and even smaller companies whose jobs are to grow their small-business customer and revenue bases. We have had great success thus far in contacting many of these people and scheduling meetings and calls. Even in a robust economy, they all want more customers, and that’s our primary value proposition to seller partners — the ability to get introduced, especially as we grow our subscriber base, to hundreds, thousands and even tens of thousands of small businesses.
But, a small-business daily-deal site like Bizy is still just a concept, and there is not yet a lot of proof of concept, so every seller we’re talking to and contracting with to do early deals — and there are now about 10 in all — looks at these deals as an experiment or a pilot. They’re intrigued by the promise of this new kind of aggregated group-buying channel, and they want to get their feet or just their toes wet.
How much can small businesses expect to save with Bizy’s deals?
We think the discount will be around 50%, similar to the discounts on Groupon and other more niched consumer-deal sites. We buy into the idea that there is something in the psychology of deal-buying that almost requires the discount to be at that level.
What percentage of a deal’s value will Bizy keep?
Because, over time, our deal sizes — both in the discounted value and the minimums — will be tend to be larger in dollar value than consumer-focused deals, we expect our revenue share of consummated deals to be less, but not a lot less, than Groupon’s reported 50% share. The exact percentage probably will vary depending on several factors, including the seller’s own margins on the product or service offer.
Groupon seems to at least somewhat thrive on people making impulse purchases, but businesses, and particularly CFOs, tend to be more prudent about purchases. How are you handling this difference in your approach to your deals?
With our goal of wanting people to open the Bizy e-mail every day to see what’s new, we plan to showcase a mix of deals that satisfy very basic small-business purchasing needs but that also are aspirational and, even in some cases, impulse-type purchases. So, while one day there may be a great deal for a$100 worth of goods at an office-supply store at a 50% discount, the next day there could be a similar 50% discounted deal for an ergonomic chair or a virtual assistant, something that could capture a business owner’s imagination and interest as a way to save money, make employees happy or improve efficiency.
A lot of entrepreneurs start businesses to strike out on their own and run the show, but you’re moving forward with a co-founder. How will the two of you share responsibility and authority?
Actually, I’ve always had a partner in every business I’ve started. Bizy will be number four, if you count a fine-art-paper business I started in high school with an artist friend. It’s just more fun and prudent to start with a partner or two, especially if they have slightly different skill sets. It’s the rare entrepreneur who’s going to be good at everything, so, frankly, you hedge your bets by starting with partners. Plus, it’s more fun and less lonely.
I’ve read that in addition to your co-founder, you will start up with three employees. It’s frequently said that the first employees you hire shape the culture of the business for years to come. How did you decide on these employees and what sort of culture are you trying to build with them?
We’re incubating Bizy inside of Slack and Company, so we already have a pretty well understood and established company culture based on collaboration and civility. In fact, we ask all new co-workers to read a book called “Choosing Civility: The Twenty-Five Rules of Considerate Conduct,” by P.M. Forni, as a guide to how to behave and interact with co-workers, suppliers, partners and, of course, clients. Like Slack and Company, Bizy will be a fast-paced, can-do, leave-your-ego-at-the-door culture.
What made you decide to bootstrap this venture instead of seeking outside funding?
While I like to start with business partners, I’m wary of starting too early with outside investors, whether they be angels, venture capitalists or private equity. And, likewise, even though we already are getting calls, outside funding sources are often wary, too, generally preferring to see some traction or market promise before coming on board. As we see traction, we probably will need outside funding at some point soon because early positive cash flow may not be enough to help us expand to the next level, meaning other markets, platform enhancements and more deals.
You’re starting out in Chicago; where will you go from there? What are your plans for scaling this business?
While most of our paid media dollars are being invested in the Chicago area initially, all of our social media and public relations efforts are reaching a national audience. So it’s going to be interesting, and we’ll know pretty quickly, where our shoppers and buyers are located. As cash flow grows, and if we attract and accept outside funding, we’ll expand Bizy to other major small-business hubs, most likely major DMAs, similar to how Groupon scaled.
Could the business become international, as Groupon has? Yes, I suppose, but we aren’t thinking about that now. A more immediate goal and key to future growth is to quickly become adept at targeting specific kinds of deals to the right people in our subscriber base, so as to maximize relevancy and actual sales and minimize irrelevance and unsubscribes. That means creating vertical industry/profession-specific deals and producing vertical deal e-mails that many small-business owners may prefer to receive over a horizontal e-mail that goes to all subscribers.