Trillion Dollar Platinum coin (however ridiculous it sounded)? Rejected as a plan under consideration.
Plan to selectively pay certain bills? No way, not easy to prioritize and cherry pick bills to pay (besides the computer systems are not set up to do this).
He wasn’t willing to let congressional Republicans use the debt limit as leverage in negotiations over spending cuts.
It will hurt the economy
All these meaning? Plan B? The president has clearly stated, “I don’t have any Plan B”. And to the congress that is playing a game of chicken he has essentially ripped out his car’s steering wheel and tossed it out the window for them to see.
That is another powerful tactic in negotiation, convincing the opponents that you are willing to take a hit and don’t even have the option to swerve.
What’s the next move from the congress going to be?
Plug for my book: To Group Coupon Or Not: Small Business Guide to Groupon, LivingSocial and Others is now available!
Two weeks back it was LivingSocial that captured the attention cycles of social media with its Amazon deal – they gave away $20 worth Amazon gift card for $10. When it all ended, in less than 24 hours they sold 1.2 million gift cards. Potentially many of them are new subscribers – I was one of them.
Not to be outdone, two days back it was Groupon’s turn to run very similar campaign but with Barnes & Noble (competitor to Amazon in books, eBooks and eBook readers). Very similar deal. I cannot tell the number of coupons sold from the deal web page.
Here is a completely hypothetical description of how the deal conversation between the Groupon and Barnes&Noble business development managers would have went (B&N conversation assumes I am their biz dev guy):
Groupon: You saw the great deal Amazon did? They did $10 million in gift card sales in one day.
B&N: Yes, we were wondering about that.
Groupon: Think of how many of your sales they probabaly took because of that.
B&N: Well, we don’t think so. Those could all be Amazon customers already.
Groupon: But you can do just that to them, you can take away their sales.
B&N: How is that?
Groupon: Give away $20 worth of products for $10 with us. We have lot more subscribers, your deal will could sell lot more than 1.2 million.
B&N: Would that not cost $10 to $12 million for us and not to mention your fee.
Groupon: Customers who buy the gift cards usually spend more.
B&N: How much more will they spend? Can you give us 90% confidence interval estimates what percentage spend at least $20 more?
Groupon: It has worked for many of our customers, more than 90% say they will try again.
B&N: So we read a theory by Iterative Path that Amazon did not have to pay some or all of the $10 discount and the same for the fee to LivingSocial.
Groupon: But that is just a hypothesis, there is no evidence.
B&N: Very true. But it is likely. Didn’t LivingSocial gain more from the deal? Is it not the same case here? You will get many new subscribers or at least big visibility in media. We are not convinced we get much out of a $15 million spend. If you paid for the deal completely and pay us $5 for every new subscriber you get, we will do the deal.
Could this have happened?
There was an interesting story on multi-party negotiations in the WSJ, “Environmentalists Oppose Clean Air Plan“. It is not that they are against clean air but object to a plan that disallowed big trucking companies and instead encouraged owner-operators. On the surface it would look like the environmentalists support the big trucking companies, but it is only because the workers of these companies are the members of the union that supports the environmentalists. The union is against the plan as well and favored the trucking companies.
The Mayor of the City, Villaraigosa, is for the trucking companies as well. He couches his argument with environmental concerns by saying, “Right now, the burden to clean up and retrofit the trucks is on an independent contractor who makes $11 an hour and has no benefits. They are never going to have the resources to do that.”
Only the Port Officials seem to support the poor independent truck operators. That is again not out of the concern for them but from the fear that the union will end up unionizing the port workers.
Do environmentalists care more about the environment or union jobs? Why do the unions support the cause of environmentalists? Why do unions sometime side with management? Does the mayor of a city care about protecting jobs or the environment?
The answer is, it is a package. An individual issue matters only to the extent it adds to the total value of the package. If winning one issue would add more to the package than losing or compromising on another, the parties would do just that. Sometimes the issues are hidden and are based on long term concerns than what is currently at play. For example, the environmentalists want the union support in all their battles, port officials are afraid of unionization, etc.
This is a text book case of multi-party negotiations. Everyone is trying to maximize their share of the pie and have more riding on this negotiation that it meets the eye. They all will be willing to trade one for the other as long their share keeps increasing.