FiveStars (YC W11) Picks Up $14 Million to Challenge the Loyalty Punch Card

http://allthingsd.com/20120802/exclusive-fivestars-picks-up-14-million-to-challenge-the-loyalty-punch-card/

by jingsong • 14 years ago

59 33 14 years ago

allthingsd.com

josh33• 14 years ago

Is Apple's Passbook a competitor?

theatrus2• 14 years ago

I have a bootstrapped service coming soon which hopes it will be:

http://stmpcrd.com

Passbook is nothing directly - it requires third parties to make the wheels turn.

bryanh• 14 years ago

You need a different name; don't fear the vowels.

jasondc• 14 years ago

Awesome company, actually the easiest reward card I've used. I use them at Rojoz in Palo Alto, give them my phone number, and the 7th wrap is free.

rabble• 14 years ago

55 employees before their A round? Either they raised a lot of money in a 'seed' round before this or they put a bunch of their own money in. Otherwise i don't see how they funded the growth to this stage on revenue.

binarysolo• 14 years ago

Knowing the space a bit, I'd guess most of the 55 people are a bunch of sales people on a commission-heavy structure, vs your 100k+stock devs.

dfriedmn• 14 years ago

Haven't we seen enough of these?

I'm thinking punchd, Belly, LevelUp, Plink, not to mention offerings from Groupon, foursquare... They may be able to profitably acquire businesses now, but isn't it a coinflip as to who will win in the long-term?

prezjordan• 14 years ago

The key here is that they are not introducing new technology. It's old school, and that appeals to local business quite a bit.

salman89• 14 years ago

I don't think this is a winner take all space. I am more interesting in understanding how these products are differentiating against each other, most importantly in how they plan to drive more sales for the business. I'm not sure how valuable social exposure is for businesses - do check-ins really drive more traffic through the door?

pclark2• 14 years ago

if by coin flip you mean whoever executes the best, yep. "haven't we seen enough of these" sounds extraordinarily condescending.

pbreit• 14 years ago

"but isn't it a coinflip as to who will win in the long-term?"

One of the more ill-informed questions I've heard in awhile. Do you have any idea how much energy, persistence and brains go in to creating a successful, winning service?

beedogs• 14 years ago

I'm guessing he does, which is why he's wondering exactly how there came to be a half dozen players in this incredibly tiny market niche.

fookyong• 14 years ago

This looks a lot different to the others out there.

Most of the startups you mentioned are trying to retrofit the loyalty card paradigm to smartphones. I'm not sure that's the right approach - time will tell.

It looks like FiveStar simply works with a business' existing POS / magnetic scanner - and is enhanced by social / mobile. I think that's a smarter, more frictionless approach.

The winner in this space will be the one that's easiest for a business to integrate. Both on a technical level via integrating with POS systems but on a human interaction level: if you're Starbucks you can't tell 17,000 stores that they have to faff with iPhones every time a customer wants to stamp their card.

akincisor• 14 years ago

You should take a look at https://cardspring.com/

larrys2• 14 years ago

"I think that's a smarter, more frictionless approach."

One thing though about Level up. It sits right on the counter and is a big ad for Level up. The reason I know about Level Up (don't use it just mentioning) is that I walked into the local coffee shop one day (in the middle of nowhere) and it was sitting plop on the counter with a smartphone lighted up in a cool color. It totally got my attention. So there is at least some value to that hardware in that it gets you "counter space" to promote Level Up.. That's not the same as a door label or cash register label (which is flat and doesn't really stand out much) which Five Stars will probably use. Of course nothing to prevent them from offering a gizmo to do a similar thing if they want (are you listening Five Stars?)

lachyg• 14 years ago

And they're looking for rockstar developers!

iamwil• 14 years ago

What does this add to the conversation?

dbcooper• 14 years ago

It's an entirely appropriate chastisement for their tacky, cliched, and rather lame corporate communication.

martey• 14 years ago

It's in reference to the YC job ad at https://news.ycombinator.com/item?id=4332117 posted an hour ago (after the AllThingsD article was submitted). The first paragraph claims that they "can't go into too many details about the exact features of [their] software".

EDIT: This might have been an old job ad that was reposted, as it claims the company has 8 employees, while AllThingsD states they now have 55.

tikhonj2• 14 years ago

On the front page, this article is directly above "FiveStars (YC W11) looking for software developers". Here's a screenshot for posterity: http://inst.eecs.berkeley.edu/~tikhon/img/fivestarRockstars....

It leads to this job ad: http://news.ycombinator.com/item?id=4332117

georgemcbay• 14 years ago

I was going to apply but I'm a ninja, not a rockstar. :(

aaronblohowiak• 14 years ago

I've seen quite a few companies in this space, and have never taken the leap. Maybe NFC will be the ticket..

larrys2• 14 years ago

What a fluff article.

You would think they have traction and tons of merchants on board. They don't.

Do a location search. Zoom out the map on http://www.fivestarscard.com/locations

There are only locations in Silicon Valley, Los Angeles and literally a smattering of other places.

Then there is this statement:

"Since officially launching in 2011, FiveStars has signed up 400,000 customers across 11 states; those customers have purchased 3.5 million items and are on track to spend more than $50 million at participating locations this year — those same customers are earning about $100,000 in free rewards every month."

But when speaking of the competitor, Level Up and Belly, it says this:

"A similar service, called LevelUp, claims to have about 200,000 active users, who are spending some $2 million a month on its network. And Chicago-based Belly, which has an iPad solution, recently claimed to have 1,400 merchants and more than 200,000 active users."

Why is Five Stars numbers referred to differently than the others whose numbers are "claimed" throwing doubt on those numbers. Aren't the Five Stars numbers also "claimed". Or are we to believe they were independently verified?

And lastly, from the Press release (repeated on allthingsd) "FiveStars cards are currently available at leading retailers and local merchants across the country."

Not true. It's not available "across the country" and "leading retailers" is certainly a stretch.

brianbreslin• 14 years ago

this looks a lot like a miami bootstrapped startup doing same thing http://freqent.com/

dinkumthinkum• 14 years ago

Shows FB info and email address, etc? I think this could only better if it included audio that let other customer's know the user's sexual preference, medical history, etc, etc. I think Richard Stallman is going to love this. :)

I actually like the punch card system better anyway. Besides the fact that I'm not adding yet another thing leak my identity all over the place, it is kind of more fun to have a visual representation, via the punches.

hncommenter13• 14 years ago

Broadly: Square, Punchcard, Stampt, PlacePop (dead?), Thumbpunch, Perka, Jodesco (dead), Paycloud, Loyalli, Key Ring App, Stampfeet, CardStar (Constant Contact), Cardmobili, Front Flip, Posiq.

1) Readily available angel financing makes it hard to rise above the noise of similar startups and results in fratricide.

2) The only way to escape the pack of other startups becomes to raise more money than one's competitors in order to outspend them on marketing, PR, hiring, product, etc. It's hard to be capital efficient when there's a winner-take-most competition, given the network effects.

3) Obviously, selling to small restaurants and retailers is a difficult, expensive proposition. Easier than it was a decide ago, no question. But still a costly slog. Most startups (and there aren't many) that have managed to acquire a large number of them as customers have spent a LOT of time and/or money doing it.

EDIT: The list above is in addition to the ones mentioned below.

ricksta• 14 years ago

$100k rewards per month / 400k customers is 25cents of rewards per customer per month.

FiveStars (YC W11) Picks Up $14 Million to Challenge the Loyalty Punch Card

Related Stories