Smorgads, a business born in a coffee shop

It was this time of season several years ago when I visited a small independent coffee operator, near my home, in South Mississauga. A “large dark-roast,” I exclaimed to the barista, who quickly poured my fix and pushed it across the counter.

Having paid for the coffee, I took the full cup across the store to the small counter that had lids, napkins, cream and sugar.

After snapping on my lid, I glanced around for the standard, slip-on, cardboard coffee sleeve, which would protect my hand from the piping hot, black coffee. To my chagrin, there were no sleeves to be seen or had.

I walked back to the main counter and told the barista that they were out of cup sleeves. He quizzically looked at me as if he didn’t register what I was saying. “You know, the little cardboard sleeve that fits over the cup to keep from burning your hand,” I described to him, as I mimicked the motion of placing of the sleeve on the cup with my right hand.

Without saying anything further, he reached below the cash terminal and pulled out said sleeve, placing it on the counter in front of me, with a noticeable look of disdain on his face as if I had just insulted his coffee.

Without immediately thinking more of it, and content in the knowledge my hand would now be spared from a hot coffee scalding, I placed the sleeve on the cup and walked out into the cold December morn. It was only in driving away that I started to think about the whole experience.

Why did the barista keep his sleeves beneath the counter, hidden from view like some prized possession? Why did he look frustrated when I actually had the audacity to ask for one?

It soon hit me why…because the coffee cup sleeve was a COST!

He was probably paying 5 to 10 cents per sleeve, and when you’re an independent operator, who runs a low margin business in a very competitive space, those nickels and dimes add up to some decent coin over the course of weeks, months, or years.

The barista (who I later found out was the proprietor) probably counted on 9 out of 10 customers walking out of the store without asking, if they didn’t see the sleeves on the counter for the taking. I happened to be the 1 out of 10 who asked and received the sleeve…along with a frown.

This experience quickly got the gerbil wheel in my head spinning with ideas. What could he do to avoid that cost? What about his other costs? The cups themselves, napkins, muffin wrapper, paper bags?

Then, it struck me. The solution to the proprietor’s dilemma was seeing all those confectionary supplies, not as costs, but as media. And media can make money!

In other words, every sleeve, every cup, every napkin he hands out, is actually valuable real estate as a medium for advertising. After all, if he has 250 customers in a day, that’s 250 people, to whom some other business would like to communicate a message. Further, those sleeves, cups, and napkins, sit on people’s desks in offices, on boardroom tables, on job sites, in lecture halls, all in view of dozens or hundreds of others.

But who would want to advertise on those items? In this case, the coffee shop was in a strip mall with a couple dozen other stores, almost all of which were non-competitive businesses. Perhaps the florist would want to print a Valentine’s Day coupon special on the sleeves…or the pharmacy might want to advertise their newly extended business hours…or, the jeweler might like to advertise a special Christmas sale.

Certainly most of the people who buy coffee are the same type of people who patronize those other types of businesses.

The math can be worked out simply. If the unit cost of the sleeves was 10 cents, and the unit cost for printing was 5 cents, then, if the proprietor charged 15 cents per sleeve to another business to advertise, suddenly he has eliminated any cost. If he charged 20 cents per cup, he’s now making 5 cents on each, and has now turned a cost into revenue! Bingo!

Great, but how would he find these other businesses who might want to advertise on his material? Well, he could always pound the street himself, knocking on each business’ door. Of course, no small business has time to do that, and, even if they did, the time/opportunity cost would exceed any cost saving they might achieve. Sigh :-(.

After discussing these thoughts with Smorgads co-founder, Garry Courville, we distilled an idea, a solution, and, a new business.

Enter Smorgads…a powerful media marketplace where buyers and sellers of advertising and sponsorship meet, and where any media can make money!

Now the coffee proprietor can post their newly realized media on Smorgads and have it bid on by other non-competing businesses that may want to communicate a marketing message to their customers. It’s as simple as signing up, creating a listing, and making money when your media opportunity sells.

Likewise, other businesses who buy media on Smorgads, can now benefit from truly being able to target their communications at very specific groups. This ability, formerly only in the domain of big business, is now available for all – effectively democratizing media buying and advertising.

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Smorgads was conceived of small business, and it’s still small business and organizations that continue to inspire us. It doesn’t matter if you’re a retailer, real-estate agent, recreational sports team, or a niche publication. You all have media that can be commercialized, even if you have never thought of it before.
Smorgads is your new tool to Make Media Make Money.

Please signup (http://www.smorgads.com), browse the site, and consider any opportunities you may have to either commercialize your media, or purchase media that may provide a very efficient and targeted path for marketing to your customers.

I thank you for helping make our vision a reality by being one of our first users.

Sincerely,

Joe Krupa (co-founder)

PS. In case you were wondering about the coffee shop that inspired Smorgads, I regret to say they are no longer in business. I always hoped for the opportunity to show the proprietor what his cost woes spawned, however it was not to be. I continue to wonder, if he was able to eliminate many of his costs through Smorgads, might he have stood a better chance of surviving in a world dominated by massive coffee chain conglomerates?

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