Grapeword | Only $1 For an Automated Re-Marketing Channel
Three years in the making, Grapeword 3.0 gives you access to your city like never before. Discover local hot spots, attend awesome events, and earn Karma Points for supporting the places you love. The risk of receiving an obnoxious number of emails each week may be your first hesitation, but rather than spamming you with daily emails and shoving offers down your throat, Grapeword lets you customize what you receive. Pretty cool, huh?
We connected with President/CEO Paul Nichols to get the inside scoop on the nuts and bolts of the company:
Year/Date Founded:
April 20, 2011
Number of Employees:
4
Core Team :
Paul Nichols (Radiant Systems, Pardot, Wavee)
Erica DeJaegher (New Balance, 360 Imaging)
Lynn Lilly (LivingSocial, Craft Box Girls)
Mikhail Yerganjiev (Q100)
Funding or bootstrapped:
Both. We've raised just north of $200K in external funding over the past three years. But I still feel bootstrapped... all of my personal savings, earnings from contract jobs, credit cards, and personal loans have kept the lights on when cash is tight.
Your Pitch:
Grapeword connects consumers with local merchants via our mobile app. Once a consumer checks in at a local business or uses a special offer, they become an insider at that merchant. That's when the magic begins... we leverage customer behavior and marketing automation to turn infrequent visitors into regulars and encourage regulars to increase frequency and spend. Ultimately, consumers enjoy supporting local merchants, and our platform gives them an engaging, hassle-free way of doing just that.
Revenue Model:
$1 per enrollment. For $1 our clients get an automated re-marketing channel to a customer for years to come. The attractive pricing for such a valuable offering is one of the reasons we almost never hear "no" . If you look at the numbers, our sales task is kind of like selling machines that, for every $1 put in, it prints $5/mo for years. It's hard to say no to that. The cool thing is, merchants are motivated to get every customer they have to download and use our app or risk losing a connection, so they heavily promote us. This rapidly builds our user base for free which opens up additional monetization opportunities.
How'd You Get The Idea For It?
My last startup Wavee, for which I was CTO, achieved a $30MM run rate in less than a year. Despite the impressive growth, we had a dismal profit margin and caught some bad (and misinformed) press. After that, I wanted to create a company that was an indisputable force of good in the community, and I saw how badly merchants were getting beat up by daily deals. It was a tough problem to solve, but after more than three years of struggle we've finally done it.
Who are your competitors and how do you stand out?
Our competitors come in two flavors:
- Customer acquisition plays (daily deals). Most of these are disastrous for local merchants due to the deep discounts combined with dismal return customer rates (hovering at around 1% industry average). ScoutMob (local) is much better but still has fairly low retention rates. Their platform can actually serve as a great compliment to ours, so they're really not a competitor at all. If you're going to use a deal platform to flood yourself with customers, you'd be crazy not to have Grapeword in place before you do.
- Loyalty solutions. The worst ones involve perpetual discounts... imagine giving away a discount to customers (even regulars) every single time they visit. They're great for revenue but not so great for profitability, and with full service restaurants averaging 2-4% profit margins, it's something you have to watch closely. The tablet-based plays, on the other hand, are actually valuable. We tell our prospective clients that if they don't go with us, they should go with a solution such as SpotOn, Belly, or an internal membership card because they work. Fortunately, so far nearly every single one of them has chosen to go with us instead due to our richer marketing automation capabilities and our obsessive focus on their profitability.
How does ATL weave into your story?I came to Atlanta in 1996 to attend Georgia Tech. I received both my Bachelors and Masters in Electrical & Computer Engineering from Tech and never left ATL. I've been fortunate enough to have had a lot of exposure to some of Atlanta's heavy hitters like David Cummings while I was with Pardot in 2009, and then Dave Williams, Lance Weatherby, Ken Gavranovic, and Jon Birdsong while at my previous startup.
As for Grapeword's ties, Atlanta is our home, and we give back whenever we can. Last December, we raised over $5,000 for charities through our platform and have continued to raise money year round for local causes such as The Atlanta Humane Society, PAWS Atlanta, Multiple Sclerosis Center of Atlanta, ALS Association of Georgia, Beautiful Beyond the Pain, A Wish for Wendy, and Operation Celebration. We're also grateful for the support we've received from local merchants all around the metro area that believe in what we do.
If you could have one mulligan (do-over) in the process of launching and running this startup what would it be?
Not much. Sure, we've made plenty of mistakes, and there has been 10X more pain than gain, but it's all worth it. Those 3+ years of hard knocks have given us the domain knowledge and expertise to be where we are today, and I couldn't be more excited for where this company is going next. Some advice though that would have made it easier: keep things simple. They say you can rarely meet all three: budget, deadline, and scope on a project. In the beginning I flexed deadline, now I flex scope.
What kind of mentor could you use the most right now?
I've had the opportunity to speak with all of the folks I previously mentioned about Grapeword except David Cummings... tough man to reach. I'd love to have the chance to speak with all of the above more often as well as anyone else who's achieved success in the world of ATL startups. Specifically, experts on capital and growth would be most helpful.
Is there anything else you need that money can’t buy?
More hours in the day? Honestly, no... we've got everything we need in place: product/market fit, a repeatable sales process, an amazing product and brand, happy clients with virtually no churn, and most importantly great people. Whether we raise another dime or not, there's no doubt in my mind that we're going to be one of Atlanta's next big wins. But I'll tell you this... more capital would cut the time it's going to take us to dominate the industry down significantly. All of our capital to date has, unfortunately, been raised far outside the city limits. I'd love to get some help from the home team. So if you're reading this and want to get involved, please find us on LinkedIn, Twitter, or Facebook, and reach out!
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