The other evening I was at a cookout and I ran into a well-known local venture capitalist. I don’t really know him that well, but I seized the opportunity to give him our company’s “elevator pitch.” (An “elevator pitch” is a brief description of a product and its value proposition, so called because it should only take as long as an elevator ride.)
I quickly had to decide which “elevator pitch” to give. Since he is a VC, I thought I should focus on our innovative technologies rather than our office products company. But just to be safe, I mentioned Group Office Buys and then quickly turned to Dynamic Bundles.
So here’s the elevator pitch: (Tell us what you think!) Dynamic Bundles is a pricing engine that determines the pricing of a bundle of goods, using our proprietary algorithms. Merchants can “tune” the engine to accomplish various objectives. Maybe they want to promote particular products. Maybe they want to drive profit margin on particular items. Maybe they want to reward a faithful customer. The control panel assesses how aggressive the bundle prices will be relative to a market basket of the same goods. The merchant can create bundles, and the customer can modify an existing bundle or create a new bundle. In each case, the price changes on a real-time basis.
The VC seemed interested in the product or at least, not uninterested. (Having given many elevator pitches over the years, I can tell when an investor is clearly not interested.) At the end of the pitch, he said, “So you are going to sell this to Amazon, right?”
I found this to be fascinating on many levels. First, it was interesting that my new friend, after three minutes hearing our story, moved immediately to our exit strategy. After digesting this, I concluded that this shouldn’t have come as a surprise. Although it may be difficult to wade through stacks of business plans, at the end of the day it’s easy to invest money. What’s hard is getting your money out, with acceptable returns. So, with apologies to Willie Nelson, exits are always on their minds.
But more interesting is his suggested exit. I have always thought that Google would buy us out, as a competitive move against Amazon. Maybe it’s because of my perception that Google is much more active in buying companies and technologies than Amazon, which tends to build everything internally. Maybe it’s because of our long-term technology roadmap, not described above, which appears to fit in more with Google.
At the end of the day, who am I to be picky about possible exits, when the software for our core product is being developed even as we speak?
We could do worse than selling out to Amazon. It’s a great company. Jeff Bezos is uniformly praised as one of the country’s best CEOs. Amazon is famous for its focus on customer service. (Bezos used to have an empty chair in internal meetings to symbolize the customer.) Most relevant to us, Amazon is known for its customer analytics that enable it to sell more to its customers.
Nevertheless, maybe we could teach Amazon a few tricks, with our focus on the purchase and sale of multiple items at a time. We like to joke about Amazon’s bundling: “People who buy this Malcom Gladwell book also buy this Malcom Gladwell book. And the price for the two Malcom Gladwell books is twice the price of one Malcom Gladwell book.” I could make fun of Amazon’s bundling but they are the ones with the $95.91 billion market cap.