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Comment by vnorby | Hacker News Reader

Are we sure these are lessons we want to take? Forcing a user to pay with currency (let alone foreign) makes accounting harder, and renders their shop useless to compete with other shops that do have card readers for a very large percentage of people. Then he moved the cash only sign inside instead of realizing that customers want to pay with their cards and adapting to his customers' needs. Lastly, he decided on taking the easy, low-quality route with his baked goods. Is that really future proof? I don't think he's acquiring any new customers by reselling boxed donuts - and his margins are very low. Why is he getting into the competitive baked goods market in the first place? Why not partner with a local bakery that produces high quality food stuffs as a barter?

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I think you are missing a very significant point: without doing these things, he wouldn't survive. The article suggests that he couldn't afford the new cash register at the time, so he made the best of his situation.

Future-proofing your business is great, but if you can't hold on long enough to even exist in the future, then it's premature optimization.

1. He only loses to other shops in the case where customers dan't or won't pay with cash (this is a subset, and probably a minority, of customers). In return he saves money on a computer kiosk and the merchant fees on his transactions.

2. If he does not take plastic, then people who only pay with plastic are not his customers. Their needs are consequently irrelevant.

3. the $.25 donut is a loss-leader to sell the $4 cup of coffee. Or you could look at it as a bonus of sorts. Compare: "Buy a $4.25 cup of coffee" with "Buy a $4.25 cup of coffee, get a free donut."

You missed one:

4. It's generally an (illegal, yet surprisingly common) way to avoid taxes.

Guarantee you this guy is not making money hand over fist; any business is paying far more in hidden taxes than you would expect, including taxes on all forms of energy, telecom, property taxes, etc.

For 1, I guess we need to know what % of consumers use credit cards/would prefer to use credit cards vs. cash only. With 600m CCs in circulation in the US, I do not think it's fair to say that customers who pay with credit/debit cards is a minority. For 2, like I said, by moving the sign inside, he may get a customer once who pays with cash, but who knows if they will return to pay with cash a second time knowing that they don't accept a CC? 3rd, the donut being a loss leader is a well taken point - depends what his target market is though. My point in raising these concerns is just that we shouldn't look at these lessons blindly, they need real economic analysis and probably some financial data to understand how well they are working vs. other options the owner could have taken.

According to John, the customers always returned. This coffee shop is not located in the center of downtown, but rather sits nicely next to the ship canal in Ballard. The people who come through are very often locals and they value their ethics and reputations, thus return to pay back. A buddy of mine, who lives 30 minutes away, once forgot his wallet and had to pay $2.50 with the IOU. He returned a week later and payed back. This approach would never work in Manhattan, but Seattle folks are much friendlier and value small businesses over large chains.

In terms of baked goods, they weren't low quality, they were just home baked. John used to work with a local bakery, but no one particularly cared to get their slightly above average quality.

Poster above claims Manhattan takes IOUs but SF doesn't.

Accepting credit cards is done almost everywhere, but I wouldn't say that it's so assumed that not advertising that you don't take them is "tricking" customers. He offers a 100% interest free no collateral loan as an alternative.

I check for the Visa/MC stickers on my way into every establishment I visit. People tend to ignore them, but there's a vanishingly small percentage of stores that take credit cards and don't have the stickers.

You are making predictions about the future based on opinions that have not been verified.

The whole point of the article is that your intuitions about what is true or false is unreliable. Instead it is better to experiment with different options and measure the results. Choose the best option based on real data rather than unreliable intuitions.

Believe it or not, the donuts were sold out. In fact, locals started to come in just to get these donuts, while of course also buying coffee, beer, and whatever else was available. Nobody could turn down 25-cent pastry!

Article says it all really. Don't assume.

It doesn't say much without knowing how many were sold. Maybe he sold only the 6 or 10 from the box. Why assume either way?

>he decided on taking the easy, low-quality route with his baked goods.

They were homemade for Stallman's sake!

It was not clear from the article whether the homemade baked goods were being "eaten up" by his customers, or just the donuts.

Which, at least in my state, is now illegal to sell (home-made). Unless your kitchen was inspected. Which nobody's is.

I hadn't thought about that; I'm sure it's the same across all 50 states. Wonder if baking them in the coffee shop itself would get around that: I assume they need a health inspection/certificate to sell coffee.

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