It’s all in the sauce man…

Over the holidays I had a few discussions with various people about the failed buyout of Groupon by Google. Everyone was completely flabbergasted by the valuation the company was given, rumoured to be close to SIX BILLION DOLLARS (said in my best Dr. Evil voice). Interestingly just this week Goldman Sachs invested in Facebook putting their valuation close to FIFTY BILLION DOLLARS (again, with the Dr. Evil voice).

This got me to thinking. Where is this value really coming from? An accountant I am not, however from what I can tell, neither of these companies, can justify this valuation off of revenue alone. So there must be something else, something about their potential.

So here's a story…

I have a friend back home who is wildly successful. The root success is pizza. He started a local pizzeria many years ago and has since expended to having multiple locations and even franchised out other locations as well. If you ask him, the secret is in his sauce, some of family recipe. Although I swear I see it simply come out of a can. Nevertheless, I believe that his secret lies somewhere else.

Whenever I walk in to his restaurant (he still enjoys manning the counter at the place where it all started) he greets me by name. Not only that. Everyone who walks through the door is greeted by name. Even more, he still remembers most people's orders by heart. No onions for this guy, extra sauce for her, that ladies kids like the crust well done…

For me the personal touch that he brings and real relationships he has developed with his customers over the years is what has made him a success. It's what makes his customers come back over and over, and it's what makes us all recommend his restaurant for best pizza in the city whenever asked.

What if there was some way he could expand that personal touch outside of his neighbourhood? What if there was some way that he could create a global community where everyone could get to know him, interact with him, suggest things, or maybe even post a coupon or two…

AH HAH!!! Could that be the secret? I think so. Never before has it been so easy for customers and vendors to start a direct dialog. Social media, web 2.0, team buying, blah blah, blah. To me the core value of all of this is the internet's ability to break down the communication walls between buyers and sellers. The online world gives us all an ability to take the loyalty of the local pizza store and spread it to a global fan base. How much is this worth? Well apparently the financiers of the world have already valued it at BILLIONS OF DOLLARS (again Dr. Evil)!

And you thought it was all in the sauce…..