Ideal Network: social marketing, with a societal purpose

A Seattle startup is tying a deal-of-the-day discount to raising money for good causes. Can the company make money for itself, too?

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Ideal Network co-founder Ronny Bell.

A Seattle startup is tying a deal-of-the-day discount to raising money for good causes. Can the company make money for itself, too?

Ronny Bell is a web entrepreneur in a city with plenty of them. He keeps his dark, curly hair long and as such is told he resembles his dog, a lanky retriever-poodle mix named Mika who, because his owner is the boss of the company, spends each day at work with Bell.

Bell’s office — most of the space belongs to a company specializing in cloud computing — is not far from Union Station and the offices of established companies once considered innovative start-ups, like Amazon, Blue Nile, and Vulcan. Bell’s building is on the other side of South Dearborn Street, a grittier quadrant where the structures tend to be more concrete than glass. Bell shares his work space, which is as plain as a dorm room, with his vice president of marketing Curtis Vredenburg.

Long ago, Bell, who grew up on Long Island, promised himself he would never write a resume, wear a tie, or wear a watch, virtually requiring him to run his own company.

In the mid-1990s, at the start of the high-tech boom, he would have seemed an unlikely future founder of a web start-up. Back then he was something of a hippy, enamored with the virtues of composting and organic produce, and therefore slightly ahead of his time. After graduating from the University of Wisconsin, he moved to Seattle, working briefly for a now-defunct chain of vegan, fast-food restaurants. He got the job by offering to work for free.

In 1997, he started Pioneer Organics by single-handedly loading organic produce into his Subaru station wagon, and delivering it to customers. After a painful and protracted dispute with his business partner, Bell sold the company in March 2008. By then, it had 14 trucks, 60 employees in Seattle and Portland, and annual revenues of $7 million.

“I never wanted to sell just a product,” Bell said.

Last year, through a series of unintended events, Bell, 38, became the CEO of a new company called Ideal Network that is trying to carve out its share of the red-hot, group buying industry dominated by Groupon and Living Social, two national giants (from Chicago and Washington D.C. respectively) that offer deep, online discounts on goods and services by harnessing the power of group buying and social media.

Ideal Network, which counted a modest 3,000 members a little more than a week after its Feb. 1 launch, added a twist to the Groupon business model by creating a provision that gives 25 percent of proceeds generated by its online deals to a local non-profit of the member’s choosing, a practice referred to as cause marketing. The charity must be among the more than a dozen registered with Ideal Network, but the company intends to grow that list, which now includes causes like breast cancer, schools, wildlife conservation, and housing. The product or service offered each day or each week is called “today’s ideal” and is typically discounted by 50 percent. Bell and his co-founder Jon Ramer described Ideal Network as a win-win-win, meaning it benefits not just the seller and buyer but a third-party charity as well.

“When the offer ends,” Bell said, “you (the merchant) can continue to build your brand for months and years.”

That is the hook of the company’s business plan, to give merchants the opportunity to earn a customer’s goodwill over time by appealing to his sense of personal ethics. By doing so, Ideal Network and its handful of employees attract merchants who might not otherwise offer their products at a steep discount. That was true of Theo Chocolate, the first company to offer a deal through Ideal Network’s website, $20 worth of chocolate for $10. Of that amount, Theo keeps $5. The charity and Ideal Network splits the remaining $5.

Most of Ideal Network’s merchants sell food; others sell clothing or services related to fitness and beauty. Among the early merchants offering "today's ideal" have been the DeLuxe Bar and Grill, Beecher’s Cheese, and Paglicacci Pizza. Like Theo, none previously participated in an online coupon program.

“We never saw the value of [traditional] group buying,” said Theo’s founder Joe Whinney. “It’s an interesting way to get some new attention, but in the case of Theo, it was not something we needed. The reason we participated in Ideal Network is we liked their ideals.

“Internally we saw it as a way of saying ‘thank you’ to our customers. It also reinforces our bond with them and it helps build our brand.”

Based in Fremont, Theo markets itself as an organic, fair-trade chocolate maker who cares about the social and environmental benefits of its craft. Theo claims to take care of its suppliers and to make a minimal impact on the environment. Offering its chocolate at a 50 percent discount eats up Theo’s profit margin, but Whinney considers it a worthwhile cost of doing business, an organic form of advertising a merchant’s good intentions.

“If this helps to remind consumers of what our business values are,” Whinney said, “that’s a goal worth spending money on.”

The same day Theo’s offer went online, customers came into the Fremont store to redeem their coupons. Members have 72 hours to purchase a deal (some deals will be available for only 24 or 48 hours), but up to six months to redeem them.

The deals are intended to raise modest amounts of money, $2,000 or $5,000 perhaps, for local causes with measurable needs. Members might help buy siding for a house Habitat for Humanity is building in Burien, or purchase 100 bags of pet food for a local chapter of the Humane Society. Recently, the company has signed up about 40 merchants — most are small businesses — to participate in the “today’s ideal” program.

Because the goals are attainable and the beneficiaries are local organizations, Ideal Network’s fundraising is both “tangible and measurable,” Bell said.

He and Ramer plan to expand Ideal Network into cities all over the country and are actively raising more capital to do that. The company was funded initially with investments from friends and relatives of Bell and Ramer, who met when Bell joined the board of Ramer’s non-profit, called the Interra Project.

Interra similarly attempted to divert money from members to charities through its members’ everyday purchases. Interra “died a slow death,” Bell said. Disillusioned after the sale of Pioneer Organics, Bell spent a year traveling in India and Vietnam, and got married upon his return home.

He described the conception of Ideal Network as a Reese’s peanut-butter-cup moment in which the two men combined Interra’s cause-funding model with the group buying model pioneered by Groupon.

“(We) were looking to reimagine the Interra Project as a for-profit social venture,” Bell said. “Our experience with Interra was like the chocolate, and once we fully appreciated the power of the daily-deal space, that became the peanut butter. Jon connected the two.”


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About the Authors & Contributors

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Hugo Kugiya

A former national correspondent for The Associated Press and Newsday, freelance writer Hugo Kugiya has written about the Northwest for the Puget Sound Business Journal, The Seattle Times, the Los Angeles Times, and The New York Times. His book, 58 Degrees North, about the sinking of the Arctic Rose fishing vessel, was a finalist for the 2006 Washington State Book Award. You can reach him at