Trench Fighting

How does one know if the job is right? You go on and on, and you haven't fired each other. How does one know if the girl is right? That's just a subset of the first problem. So while I recuperate between meetings, I find myself hurling poetry into a text box... where it travels across straits and seas and mountains only to be read by creatures ancient and droll, dredged up from the earlier days of my youth. Why are we still here? ;)

April 2016 - Investor Relations

Embargoed from April 2016 to 16 Dec 2019.

I've read your thoughts, about 15 hours after you wrote them.

My thoughts on your thoughts are:

• I think we understand the gamble. It is risk capital. That is to say, we know it can be lost from day-one. The question now is whether it is prudent to gamble on the initial strategy until it is burnt out, or to change strategies halfway. It depends on the objective of the investors, of course. A "startup style" investor would test the business model until it burns out (me); an investor "expecting not to lose money" might shut everything down and liquidate (no one yet) - and everyone else is somewhere in between.
  
• The reason people go to cafes is to loiter (chit chat, wifi, study, etc.); if you discourage loitering then it is a fundamental decision to get out of the cafe business; a cafe is not a kiosk.
  
• You may charge for wifi (downgrading ourselves to the local practice of Starbucks; discarding our value proposition) or have a minimum spend for seating (discarding our value proposition AND changing our revenue model - basically turning into a co-location/co-working space business);
  
• but I don't know how to implement it without special software and/or retraining the entire staff (and possibly losing staff who don't want to do it); for example, if you have time limits on seating, then someone needs some sort of an alarm clock per hour (certainly not per-minute?), to go around and check on the validity of a seated visitor; how does this affect the workflow of a staff who is already running a till, explaining how coffee is grown to customers, making drinks, clearing dishes, and cleaning toilets? What if staff currently have no such thing as an hourly-cadence - how does the addition of an hourly cadence to work change the existing cadences in their minute-to-minute thought process? These, for example, remain unanswered until experimented.
  
• it is not clear what the price elasticity of demand will be (we don't know that people will actually buy it instead of just walking out), until we actually try it (or do a survey, which is we are currently doing).
  
• We have invested in machines, staff, and operational setups for a food and beverage business. If you wish to sell space, you need to ask how many units of space are available for sale, and whether sale of those units will be sufficient to run the business; you must further gamble that efforts to liquidate investments in F&B-ops in order to support the new space-for-sale model can potentially be more profitable. The arguments for new models must therefore be in the form of financial projections. The arguments for switching to alternative revenue models should be provided by the proposers of these models, or explicitly assigned to me as a service towards the administration of the partnership - for example, once assigned, recently I have been happy to design and issue a survey of investor interest, and to design and issue a survey of customer interest. But to-date no financial models have been forthcoming to support the idea of switching revenue models... and I have not been explicitly assigned the task of creating those models.
  
  Since I've brought it up, I might as well swing in a few extra minutes to compose a model of space sales. In the interest of giving the proposal a fair consideration after all that has been put into it. Maybe we can make money from this. Let's find out.  Let's classify the sorts of seats that we have as:
  
  Grade A seats: carrels - 4 units - RM10/hour
  Grade B seats: bar tables - 12 units - RM5/hour
  Grade C seats: some sort of shared table - 38 units indoor (we can ignore outdoor seating for a moment) - RM2/hour (Come on, a cybercafe charges RM2.5/hour and gives you a free computer...)
  Grade D seats: some sort of armchair - 4 units - RM6/hour
  Grade E seats: some other sort of couch seat - 1 unit of 2 seats - RM10/hour for the whole thing
  Grade F seats: some sort of lounge chair - 2 units - RM3/hour as they're not very comfy
  
  Ok, so no bulk discounts... just every-day-low-prices as the strategy (a simplifying assumption).
  
  That gives us:
  
  

  Revenue?	Indoor Seating Capacity	RM/hour	Max RM/hour	Mean Occupancy Rate	Hours/Day	Mean RM/day	Mean RM/month
  A	4	10	40	Based on the assumption that consumers have no problem with the pricing.
  B	12	5	60
  C	38	2	76
  D	4	6	24
  E	1	10	10
  F	2	3	6
  Total	61		216	35%	24	1814.4	54432

  
  This would be based on (partner) C's request to ask staff what they see at the cafe; I am a staff, and that is my estimate of the current 24-hour occupancy rate given that seating is free of charge.
  
  This is actually not half bad - we don't even have to sell F&B, and we can get RM54,000/month on space rentals. Well perhaps we can axe F&B completely to shred costs. But what if F&B is a defining component of the experience-per-hour that people occupy our space for? How will taking away F&B change the customer's experience, and alter their degree of preference for occupying our space? We don't know... and in case we want to charge for both, we also don't know the price elasticity of demand for the combined cost of (F&B and space rental). 
  
• Given the investments in the operation-to-date, could  it be unreasonable to focus on the core competencies and ongoing revenue generators of the business?
  
  Namely
  (a) food (explicitly charged)
  (b) beverage (explicitly charged)
  (c) hospitality (wifi, seating, service) (explicitly gratis)
  
  It is hard enough to get 25 operations staff to focus on those items... they are not yet the best in class... but to now pivot to a different focus and value proposition, would not bother me much. But it might be mind boggling to them, if it wasn't just insulting to those who take pride in their work (I suppose that this sort of thing motivates people who are career F&B-ers; I personally don't really care for food - I just like it as an investment vehicle).

At the moment, my thoughts are:

• Given that our main value proposition is to give a lot of free stuff with the reasonably priced F&B, reducing the amount of free stuff that we give away is simply discarding our value proposition. We should be instead increasing our value proposition by increasing the value of F&B (since we can't reasonably increase the freebies).
  
• Ok, so back to the survey! I will compile and distribute feedback from customers after we have 100 responses. Please remember that surveys regarding intangibles are also rarely accurate representations of what customers will do in practice. We bear in mind that it is not possible to make tangible through surveys the exact difference in customer experience between (a) a cafe and (b) a co-working space. So while we do ask the customer about their preference between (a) and (b) we can't be sure that they really understand the difference until we actually operationalise the new revenue model.
  
• Meanwhile, I do need to
• clean up the old accounting system
• coach the new staff in migration of the old accounting system to the new system
• remind (exec / kitchen / bar) staff to stay aligned and communicative with each other, and to strive daily for legal compliance
• after that groundwork is done, to focus on the sales & marketing opportunities relevant to a specialty coffee and cafe business; unless I receive a vote to the contrary...

Havoc

Well, thanks to recent media coverage, the business is BEGINNING to look viable. We have monitored different growth factors from October to April, and it looks like April growth is landing just on time after about seven weeks of stagnance. Budget tweaks will happen soon, meanwhile, it seems that dishwashing duty is on the cards along with 2:26 recent sleeping to waking ratio. If we actually make enough money to survive the year, I am interested in hiring myself out of all roles except dishwashing. But then, I am interested in too many things...

Customer: Do you have children?
Me: Why are you asking me that? I'm not sure I want to talk about that part of my life.
Customer: Your children must miss you so much.
Me: These are my children. *gestures towards a half-dozen staff* This is the closest I get to taking care of a group of small animals...

Customer was very cute. But I passed her to a staff, telling her to impress him if she wanted more free coffee. ‪#‎winginIt‬