WInner Winner Chicken dinner.
My childhood intro to unit economics.
💡 🍺 When I was a kid, my Mum owned a pub in a small town in North Rhine-Westphalia, the industrial heart of Germany. I would spend some of my school breaks there and obviously hung out in the pub, kinda cool when you are 13.
🎰 In the corner of the pub there was a Slot machine, which had a constant stream of people playing it. Of course, I was always asking for a Deutsche Mark so I could play, and occasionally I got one and popped it in. But here is what I noticed, in the middle of the machine there was a small sign that read, loose translation of what I remember, "this machine pays out 73% overtime."
🤔 Now after reading this my little head went ... WTF or back then probably "Wirklich? Das ist Scheiße." 😲
So for every Mark I put in this thing is keeping 27 Pfennigs!, what a stupid game, forget about that one person might take out 100 marks, it keeps 27% of what is put in, that's a great business and it is so upfront about saying it on the front of the machine. 💡
🔭 Looking back I now clearly see,
➡️ CAC was super low, stick it in a pub with some flashing lights and silly tunes to grab attention.
➡️ Split the profits with the landlord. ( I found this bit out after which I will explain in a moment)
➡️ LTV is super predictable. What great unit economics and brilliant biz model. 📈
🤔 So I got to thinking, how can I put the odds in my favour, (this is not business advice and I didn't know the machine was not owned by my Mum.) I came up with a plan to win by changing the rules.
Now I had noticed that a 5 pence piece was almost the same size as a 1 mark coin, (and sticking them in the freezer made them the same size) so this was brilliant, if I could cut my input cost it could keep 27% of that, no probs, the payout was still 73 Pfennigs for a cost of 17 Pfennigs. Essentially getting a 4.5x return on each "win." 💰
✅ Getting 5p pieces in Germany might sound like a challenge, but with lots of Brits around and asking outright if they had any 5p pieces they could give me reaped results. So armed with a slush puppy full of 5p pieces in one hand, I stationed myself at the machine on the wall, and set off to play with the odds firmly in my favour, and it worked, loaded up it started paying, Winner Winner, Chicken Dinner. 🎉
Obviously when the person came to empty the machine ... the proverbial **it hit the fan and I was caught, I did honestly think it was my Mums machine . I spent the rest of that summer washing up. 😬
So what are the takeaways that I carry with me:
✅ Don't cross my Mum 😅
✅ Know the playing field and more importantly the rules of the game, great mentors and advice are necessary and wonderful asset. 🌟
✅ Business is also about trying to efficiently maximise margins from start to finish. 📚
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