Entrepreneur Turns Silent Auctions Into Game of Strategy

From Houston's Memorial Examiner:

Nonprofits hosting their fundraising galas typically face silent auction bidders who are easily distracted. Bidders wander. They mingle. They bid haphazardly and half-heartedly while socializing and networking at events. And, they often forget to check back at the bid sheets to up their antes on offered items. (But that doesn't bother them too much since they dislike the long line to pay at check-out.)

That's why entrepreneur and "dynamic pricing" consultant Stuart Maudlin of Silent Auction Services has stepped in. A game theorist and auction strategist, Maudlin has noticed how the traditional silent auction format "leaves money on the table."

Intrigued by the possibilities of a higher yield for charities, he developed a program of services for organizations that rely on their auction income.

His idea is to turn silent auctions into more of a game for guests, he said. That changes the energy level, which changes the guest experience, which changes the bottom line.

Suddenly, a bidder's "charity" budget becomes his "game" budget, Maudlin said. It becomes entertainment, not just philanthropy.

At the core of Maudlin's auction services is shifting - and "managing" - bidders' behavior.

"When we're finished with them, it's never about the item," he said, flashing a knowing grin.

In developing his system, Maudlin looked at more than a dozen bidding behaviors. Citing concepts like "social dynamics," "behavioral economics" and "error recovery issues," he charted the game theory that goes into managing silent auction bid outcomes.

"I can almost set the dials," he said, smiling once again.

His recently launched company's services are designed to keep bidders thinking about, engaged in and committed to auction items so they become "must-haves."

That's why Maudlin wants bidders to know exactly when they've been outbid. And he wants the check-out experience to be efficient and seamless.

While there are subtle differences in the how his company displays bid items and accrues bids, it's the small pager-like device bidders issued at check-in that's a tip-off there's a game's afoot.

The pager notifies a bidder if he or she has been outbid on an item. (This means that a bidder might be mid-conversation when he learns he is 1, a loser and 2, cheap, Maudlin said.) The pager summons a bidder's head back into the game and his or her wallet.

"The competitive part it really important," he said.

Maudlin has been developing and testing his silent auction services since 2005. He launched the company earlier this fall after gaining Emma Moon as a partner. Moon was banquet director at Brennan's.

Their fees, based on level of auction service, are typically more than covered by the increased yield, he said, claiming an average increase of nearly 30 percent over a previous year's event.

"It pays for itself," he said.

Actually, it makes money, said nonprofit client Becky McCullough, director of the marrow donor program at Gulf Coast Blood Center. "There were big jumps" in the bidding, she said.

The non-profit's annual gala has employed Maudlin's program three times and earned enough to continue to use the service, she said, calling Maudlin "well-versed in the art of auction."

Silent Auction Services is Maudlin's latest start-up, having founded and sold two technology companies. A consultant on management strategies, he has also been a lecturer at University of Houston's Bauer College of Business, University of Houston's Global Energy Management Institute and Rice University's Jones Graduate School of Management. He has also been active with the Houston Technology Center and Houston MIT Enterprise Forum.

Despite having cultivated a bit of professional distance as a silent auction "observer," Maudlin admitted that sometimes he is not immune to the call of an item if the opportunity is favorable.