Looking To Recommend a Restaurant? There’s an App For That
Interview with Matthew Woo and David Zhang, CEOs of ShoreUp App
By Luis Fernando Arce, Chief Interviewer, Arbitrage Magazine
A discussion about the new application called ShoreUp, as well as their experience becoming young entrepreneurs.
How old are you guys?
Have you graduated yet?
(M) Yeah, we just finished school three weeks ago from the School of Business, down at Weston.
(D) Both of us We actually went to the same high-school together a long time ago, as well.
… we focus on the business; we want to protect the business’ interests.
(M) Back in high school – in the last month – I went to David and said, ”Hey, we should do something to give back to the high-school….a leadership conference.” David looks at me and goes, “You realize there’s only a month left of school?” I said, ”Yeah, but let’s just do it.” So in one month we got sponsors, advertisement, speakers…
What made you want to do it then and not before?
(D) At that point we realized school is coming to an end and we didn’t really leave a mark. We wanted to do something cool before it came to an end, and the conference was something that neither of us had ever done. So it just made sense.
(M) It was really stressful, but we ended up putting over 200 people together, all from our school and couple of different schools in the Markham area. It was called the ”E-Fuse: A conference about emotional intelligence and passion coming together.” Because you need to be smart and passionate, but how you deal with people is imperative.
(D) And you won’t be successful in whatever you’re doing unless you have the passion for it.
How did you two organize that conference? Just you two, or did you have any outside help?
(M) We were a team of five people… from school. So there was no extra help really; I mean maybe the sponsors and Staples, which allows us to print stuff for free; Starbucks gave us gift baskets for us to auction off, too. We were able to raise up – after paying for costs to rights to some parts of the theatre – about $700, and we donated it to the Chinese Earthquake Relief Fund at the time…
Why ShoreUp App?
(M) We hadn’t really done anything outside of our comfort zone, we hadn’t made an impact, we hadn’t gotten recognized, as well, so we were thinking we should try something…Especially at this time, when we are at the lowest risk in our lives. We have a job. School doesn’t matter… So that’s why we came up with it. The most amazing thing is: the amount of faith we have in one another led to the point that, on October 31 at 2 am in the morning, I called David. He’s drunk with his girlfriend, and I’m like, ”Dude, I figured it out. I know what we’re going to do – what entrepreneurial venture we should do.” And he was just like, ”Matt can we talk about this in the morning?” But I just asked him, ”Are you in?” And without even knowing in what, he said yes.
(D) I just said “OK OK, let me sleep!” The next morning we talked about it. We played around with the idea and decided to go with it. And this was in November. So it’s taken us about six months for it to happen.
How does ShoreUp App work?
(D) The core concept is simply checking in somewhere. You like it, you recommend it to your friends, and when your friends go, I get rewarded for [having provided the reference]. That’s the most basic concept that you can think of.
So I come to this café, and I like it. I have the app on my phone. I download it for free and then?
(D) You check-in, but it’s not like Facebook. Then it loads up a list of your friends, and you think, Ok, I have these three friends who love coffee as much as I do, so I ”like” their names. And it’s not like a Facebook broadcast, where you publish it for everyone and hope that someone sees it. Or like a Foursquare where you broadcast and no one ever sees it. This is more regular. This is special: you pick the people and right away on their phone they get a message.
It’s kind of like BBM, kind of like instant messaging?
(M)…A little bit. It’s all through the application itself, but you do get a notification saying [in real time], ‘Hey, David thinks that Fahrenheit Café is really good, come check it out some time’. The point is…down the road, you come over. You come and check-in to the place that Dave recommended earlier, and our system records that David made a successful recommendation.
And how does he check-in or get his coins?
(D) As he opens his app, he clicks on check-in. When that happens the system says, David made a successful reference. We need to reward David for making that person happy. So I receive these things called ”points” and they are redeemable for a free something at the store.
Who are your business partners, the businesses that are going to agree to give out coins and goodies? How do you know they will give them out?
(D) We’re actually partnering with a lot of local businesses right now around Toronto. Fahrenheit is actually one of our first partners.
(M)Businesses are scared about technology to a certain extent. So you need to have something that they understand, something that they’ve always done – which are coupons. So once you collect enough coupons, there’s a page on our App that shows you which coupons you have available; you click on that and you click redeem. It asks if you’re sure you want to redeem it. You click yes and then the coupon expands onto the screen and you show it to the business owner. At that point they will register that into their own system and then you get the reward. As simple as that.
By the time that you redeem your coins or coupons and show them to the store owner, they have to already be partners, right? You guys are taking care of that yourselves? And how are you doing that?
(D) Do you remember Tupperware parties? We are almost trying to bring Tupperware parties into the digital world, because all we’re doing is we’re bringing two concepts: word of mouth/referrals and coupons…We bring those two age-old concepts together and create something that is incentive-based, which we know works. Look at Tupperware parties, for instance; referral-based report-programs also show positive results.
(M) This is some of the research that we’ve done: They did a study down in Germany, and this is in the Harvard Business Review, about referral programs at banks. They found out that people that came because of the referral were 18 per cent more likely to stay with that bank, and be 16 per cent on average more profitable than other people who join the bank because they use more of their products and services, for instance. And that profit increased more as they got to a younger demographic: for people between the ages of 24 and 35 it was up as high as 35.5 per cent (in increased profits).
Have you had any hits or market runs? How successful has it been so far?
(D) The application itself we [launched] on December 28. We’ve done some testing among our developing team and some of our friends, just to make sure the app works. On this side the two of us, especially, have been going around getting all the businesses partnered up like we were just talking about….
How are you guys going to do it? What’s your plan?
(M) Well first we’re launching at this Canadian Undergraduate Technology Conference. It’s a large undergraduate tech conference, it’s been around for about 13 years.
What has been the most difficult aspect of coming up with the app itself?
(D) There are a lot of elements. What makes this different really from apps like Foursquare, for example, was our main concern, because a lot of these apps focus on the “end-user” experience. But we focus on the business; we want to protect the business’ interests. For example, with Foursquare you could be down the street but you could still check-in to the place. With our app you can’t do that. Our theory is this: if you can make the business owner happy, he’ll make the customers happy. Everyone’s like, ”Hey, we’ll make the customer happy.” But without protecting the businesses’ interests, the business won’t have incentive to reward those customers. So we have to get them to stop at our partners’….When you check into a restaurant, they’ll have to stay for 20 minutes, which is reasonable, if they’re eating. Then they get rewarded. Instead of Foursquare, where they just check-in and they get rewarded.
Does the APP cost anything?
(M) It’s a pay as you go service, so there is no sell-fee, no maintenance cost, just once someone arrives and makes a purchase then you are given these points.
How do you guys make money off of it?
(D) I guess the first answer is, in terms of the users’ side, we don’t charge anything. It’s a free to download application. We want as many people as possible using it. The way we actually make money, first and foremost, is by charging a renter’s fee, only on pay-as-you-go service. So the quick answer is we charge them zero dollars to download it. So really, for most businesses, there is no set up fee, and no fee unless there’s direct gain. Every-time a customer does something beneficial to the business they get rewarded for it through our application with coins, and these coins are only issued through us. When they come in and they make a purchase, they stay 20 minutes, or they come in here and bring a bunch of their friends. Every time a coin is issued, we charge the business a small fee just for issuing the coin.
For each coin there is a fixed fee?
(D) The fee changes depending on the type business and the price-ranges between similar stores.
And what kind of businesses are you guys hooking up with?
(M) We’re really focusing on the local businesses right now: coffee shops, local restaurants, bars…
Have you planned on taking the product to larger businesses?
(M) It isn’t something that we want to reveal now, but we do have some potential clients with large chains. But sometimes it does become a conflict of interest. You want the local scene and at the same time you have the live scene. We almost want to see… something like Foursquare, where you see it as a service, not necessarily associated with any type of restaurant or coffee shop, which is a little difficult. The hard part is to dish out and really serve a whole bunch of different markets in different ways.
(D) For example, for local restaurants or boutiques, it’s really rewarding to see loyal customers return. On the other side of the chain, there’s that whole rewards audience, where people will want to make recommendations based on the best rewards. And those types of rewards are more in gear towards the large type chains, where they actually benefit from people just literally bringing traffic and then rewarding customers. So there are two [ideologues] we are battling with right now, and ideally what Matt is trying to say is he wants to make our brand a two-market agnostic, we don’t want to specialize in one or the other market, but we might have to make a choice.
You guys will decide that later on, down the road?
(M) Yeah, to see if people are using it because they are value-conscious or are they using it because they have these personalized interactions?
(D) Once we get the launch going and a couple months of data, then we’ll really be able to look at the data and say, ”This is how the customers are behaving. Where are they most often used?” And we will then make an educated decision at that point.
How long do you think you’ll need to have it out on the market before you can have a clearer idea?
(M) I wish we could know. Hard [thing] is because we both still have full-time jobs. So that’s been tough deciding whether to give up our full time jobs for this.
(D) Off the top of my head, I’d say we could make a decision within the first few months (maybe 3).
Have you guys been putting your own money into this, or gotten it from your parents, loans?
(M) Some of it is shared money. So I’ve paid at least $1,000 or $2,000 straight out of my pocket.
(D) So far we haven’t really required that much money. We have three engineers, all part of the founding team, all from Western U – The tech department. So for them, the reward is the same as for us, is about just being part of the founding team.
(M) What we’ve been doing in terms of marketing – that’s been the largest cost – we’ve been funding a large part of it by ourselves, but also getting a little bit of support from some of the local businesses incubators…Tech Alliance has been helping us out (based in London, On) with funding for legal services, so that way we’re incorporated. (M) Before we continue, I’d just like to say this: if there is something about Shoreup [that really represents us] is our team…You know you have a great team when you have a team member working on it at four in the morning. Another thing is – and David’s girl gets really jealous of this – I spend 6 days out of the week with him, and then one day he is devoted to her…And we’re balancing school too, so it’s really amazing to see our team working together….
So the total team consists of five people then. What is the hardest thing about being an entrepreneur – being a 21-year-old entrepreneur – that you guys are finding?
(D) Like we said, one of the hardest things is the juggling all the projects together – school, work, family, app, social life, etc… And I think that is the main problem with many young entrepreneurs: even their parents tell them go the safe way, with safe jobs…
This has all been tremendous advice. And on behalf of our readers and the ARB, I thank you very much for your time.
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