Building an App That Partners With Billion-Dollar Brands—But Only Because They “Just Got Started”

J: Let’s welcome Wes and Tyler to the show, how you guys doing today?

Wes: Good.

Tyler: Doing great.

Wes: Thank you for having us.

J : Excellent, you guys are in Madison, Wisconsin, I believe? How’s the weather up there this afternoon?

Tyler: It’s gotten much colder, we woke up to, for me, unexpected snow, a good inch or two, the other morning, and have four to eight coming soon.

Carol: Whoa, are you part of that whole big arctic front thing that just dropped a bomb on everyone out there?

Tyler: Yeah, I think so, unfortunately.

Wes: I think we always are [inaudible 00:01:28] right in the middle of it.

Carol: You never know when it’s going to hit, I love it. Well, we are so looking forward to jumping into your story. I downloaded your awesome app today, but I would love to jump back to the beginning. Before we get there though, let’s set some context for our listeners. Wes, Tyler, establish some context. What is Fetch Rewards and what does that business focus on?

Wes: Yeah, so Fetch Rewards, it’s a completely free application from a consumer standpoint, the folks who are actually going to be using the application. It rewards them for buying hundreds of different name brands anywhere that they shop. Think name brands like Kraft, Heinz Ketchup, Dove, Miller, Coors, Kimberly Clark, we represent over 350 of them. The basic message is, if you buy any of these products, anywhere, take a picture of the receipt using your phone, and you’ll instantly get rewarded for doing that. Our goal is really to just drive loyalty to the brands and make it as easy, and fun, for the consumer as possible.

J: That’s really cool. Okay, so there’s a whole lot of stuff there. There’s the business model, there’s the relationship with the brands, it’s the relationship with the retailers, potentially. There’s the technology, which I’d love to dig in a little bit to there. Before we dig in, and before we go back to how you guys got started, tell us a little bit just about the makeup of the company. How many employees do you have? How many customers do you have? How many app downloads? How many people actually upload receipts in a given, or week, or month? What does that look like?

Tyler: Yeah, so we have about 120 full time employees scattered around different offices. As far as users go, we are processing close to a million receipts a day. That’s from a total of 1.6, a little over 1.6 million monthly active users.

Wes: The number changes every week.

Tyler: Yeah, yeah, it’s hard to keep up sometimes.

Wes: It’s hard to keep up with it sometimes.

J: Wow, so 120 employees, a million receipts, that’s … Okay, so now I’m really curious. Let’s go back to the beginning, I want to hear how we got to where you are today. Whose idea was this? Where the idea come from? How did you guys kind of incubate the idea? Just kind of give us the story from start to how we got to where we are today.

Wes: Yeah, so Tyler and I actually, we intersected our journey, and our story, probably only a couple months into when I had first come up with the original idea. The original idea had been as simple as I just moved out of my dorm, and into an apartment for the first time ever, meaning I had to go grocery shopping.

J: I want to interrupt for one quick second here, because a lot of our listeners aren’t watching this, they’re actually listening to this. The person that’s talking now is Wes, so I just wanted to point that out, that it’s wess that’s talking now.

Wes: Absolutely. When I had first actually had to go out and start doing grocery shopping, it was myself, and even later when I met Tyler, we would always talk about the fact that we’d go to different stores depending on either what day of the week it was, what transportation we had available, how lazy we were feeling, if we just wanted a convenience store. At the end of the day, every single one of them asked you to sign up for a loyalty program. We always found that interesting, because there was nothing specific about any of those retailers that really called for us to give them our loyalty and drive cross town just to go back to that single store, unless they were giving us a monetary discount.

Wes: Yet, when we’d go home and open up the cabinet, or the fridge, it’s the exact same brands, or at least categories, that we’re buying week in and week out. We couldn’t figure out, well, why aren’t those brands actually rewarding me directly? They shouldn’t care about where I buy this product, they should just care that I am loyal to Pepsi, and let’s connect that brand to be able to reach out and communicate to Tyler for the brands that he cares about, to Wes, the brands I care about, and really create something that was very dynamic. That was really where the idea started. Started working on a business plan and Tyler and I then crossed paths in an entrepreneurship class that we were both taking.

Carol: I have to ask this question. Okay, so you said you had just left your dorm room, you had just moved out of your dorm room, so you were in college when you realized this concept of brands needing to buy your loyalty? That is incredibly insightful. You are literally still a 20 year old and you figured this out, that’s amazing.

Wes: Well I think, you know, I was also … we’re fortunate that at that age you’re doing it for the first time ever. While people may have had this realization, or know it, in the back of their mind, it’s just the way things have been done for so long, you know? I talked with my mom, she’s like, “Yeah, that’s just the way it always has been.” It’s just we were lucky that we were coming into it very much how a foreigner views a new country that they’re traveling in. They’ll question things about it and they’ll look for new insights. I think we were very lucky that we just happened to be eager to look for opportunities, and we happened to be looking when we went on our first couple of shopping trips.

Carol: Well maybe a little bit lucky and fortunate, but you also had some awesome sensibility about you, so kudos to you for just figuring that out. That’s really just amazing. What year was this?

Tyler: It was 20 …

Carol: 13.

Tyler: 12?

Carol: 2012.

Tyler: 2012 initially, yeah. Then we met up and started working together in 2013.

Carol: That’s right, yeah.

J: This is really interesting, because brands, and I’m not telling you anything you don’t know, but for our audience, it’s interesting, because brands spend a whole lot of money, or at least certain brands, spend a whole lot of money to get certain product placement in retailers, to kind of get their message out. They’ve built signage. It’s not the retailer that’s actually providing all of this advertising within the store, it’s actually the brand that provides all this advertising, correct? What you’re doing is you’re saying, you’re telling the brands, “Instead of spending that money on your own advertising and on the retailers, funnel that money to your buyers as opposed to the people selling your product.” It’s more of a direct line of reward, it’s a reward, to your customers, as opposed to going through the retailer.

Wes: Exactly, how can you cut out the middleman, especially that middleman 20 years ago, the retailer. It looked very different than it started to look over the last 10 years, where private label became an increasingly strong competitor to these name brands. Yet, these brands would get charged an arm and a leg just for placement in the store, create the stands. Also, that a private label product that looks identical could be placed right to next to it, but slightly cheaper. There’s this natural tension that’s been building over the last couples of decades that the channels that they had traditionally been using are all the sudden becoming competitive, with the people who own that actual channel. They need to take back an ownership back to that customer if they want to survive in the long run.

Carol: Awesome, awesome, such amazing insight. Back in 2012, 13, whatever that year was, you were in college. How did you sync up and what did those first steps look like? You realized this need to start this business, what was the physical first step that you did to start bringing it to fruition?

Tyler: Yeah, so it started with some planning and Wes being a great people person, started connecting with folks in the industry, and learning as much as he could. We ultimately ended up starting to work together in January of 2013, like I said. It started in a class. For that class we had to write a business plan, but we said, “Well, there’s a business plan competition offered at our university.” We went to University of Wisconsin Madison, we said, “Well, let’s enter in that.” What that effectively meant is we basically had to write the business plan for the class, but in half the amount of time.

Tyler: We did that. We started working on it. While we were writing this, we said, “Well, why don’t we see what other competitions we can enter in to?” Just rinse and repeat, and just meet the criteria for this. Getting started was basically we got our first round of money by entering into about six business plan competitions, where we ended up winning just about all of them, and walked away with about $150,000 worth of office space and cash prizes. That allowed us to start to actually bring in some developers. When we were winning these, we didn’t have a line of code written. It was just telling the story, what we wanted to do. We started writing those, brought in some developers, and then started raising money, and actually building the product.

J: Wow, that’s …

Carol: Awesome.

J: Awesome. What was the division of responsibilities back then? What did Wes work on? What did Tyler work on? How did you guys kind of break up the roles?

Wes: I’d say it’s even still similar today. We’ve always had it. When we were sitting in a class, we didn’t really know each other at that time. The professor announced that, hey, we’re going to do … everyone needs to write a business plan. I turned over to him and I say, “Hey, I’ve been working on something for the last couple months. Do you want to use that?” He’s like, “Yeah, sure. Why not?” Right away, we just decided, okay, let’s start working together. As Tyler told me his story, and his background, of how he got up to that point, he was an entrepreneur from a young age. He had been running and managing his own yacht detailing company in Milwaukee, where he was able to pay for himself to go through school, pay for his car, pay for all of his living expenses. Also, the business he started when was 14, 15 …

Tyler: 15, yeah.

Wes: Right away I said, “Okay, this is someone who knows how to hustle. This is someone who pays attention to the details and can handle that.” I’m not good at the paying attention to the details part. What we were able to do for a division is let me figure out how to get out there and talk with industry vets, and executives, try to piece together the strategy, and the support, that we need. Tyler helped me then get the compelling story, the numbers behind it, the actual proof that would need to be in the pudding, typically fell on his shoulders.

J: Got it, and so it feels like there are two sides to this business. There’s the technology that handles your customers input, the receipts they send you, the app. Then there’s the other side, which is reaching out to the brands, to actually get them on board to hand money to your customers. Did you kind of approach both of those simultaneously? What were the logistics that got you from we have this great business plan, we got $150,000 worth of office space, and other stuff, to kind of launch the business, to actually getting your first customer? What was that process looking like?

Wes: Here starts the long and winding road. I’ll give you the kickoff and I’ll turn over to Tyler to tell the rest. Initially, the problem that we face as two college students, who don’t have a lot of experience in grocery or brands by anyone’s judgment, didn’t have enough credibility to be able to walk into the largest of the large brands, like P&G, and say, “You should work with us, we know how to get to your customer better than you do.” We’d get laughed out of those meetings. We also looked at the technology, and the technology wasn’t there to be able to create a really seamless user experience, for how to reward them. How do you confirm that that customer actually bought Pepsi in that store? Traditionally, they’ve used bottle caps. On the bottom of the bottle caps, you enter in a code, and that’s the only way you can actually confirm that they purchased it, and therefore the brand would reward you.

Wes: We figured that’s not a good user experience, so we figured how do we … We actually started the company with a pivot. We said, “How do we actually work with the retailers, who own the point of sale system, who own the transaction going through them? If we can find a way to work with those retailers, maybe we can stand up, get our feet underneath us, build enough credibility. And the technology, we’ll figure out the technology question later.” That introduced Shop Fetch, which you can have it.

Tyler: That was actually our first product, that was actually our first product, which we omitted initially, but Shop Fetch the in-store, working with retailers, working with customers, one on one, face to face. It had its own set of challenges. We figured that we could work with smaller grocery stores in West Side, build our credibility with that. You don’t have to go to the big brands right away, you can start with small grocery stores, build up a user base, and then start to go a larger scale from there.

Tyler: We did a couple iterations on the technology and improved the technology, but ultimately ended up transitioning over to the receipt scanning as our mode of rewarding customers, and recognizing what people purchased, rather than identifying as they’re scanning, and processing the whole check out. Then the potential security risks, you know, data breeches, and credit card breeches, and everything. We wanted to stay away from that, so made the transition over to the receipt scanning, which is a lot less of a security risk for the business, and transitioned that way.

Carol: Cool, so did you say Shop Fetch was that original venture? Was that the correct name?

Wes: It was the product.

Carol: Was the product, was the product. Just out of curiosity, that original business plan that with which you won the six competitions, and so on, did it follow more of the model of what Shop Fetch became?

Wes: it was a hybrid actually.

Carol: it was a hybrid?

Wes: It was at the point where we already strategically realized that the core fetch rewards vision that we had, what we do today, where the idea initially came from, had this poof magic cloud associated with it. The poof magic cloud was how do you go from a customer buying a product in store to then being rewarded? It was always just a we’d tie into their credit card, or some … we never really knew how we would do that.

Carol: It just [inaudible 00:15:03]

Wes: That’s where it introduced, look, the low hanging fruit here is if we work with retailers, and we slightly make it a little harder for the user to use, so they can scan barcodes as they go through the store, then at least we know what they bought when they checked out. As Tyler said, if we could get enough small retailers in a geography on board, hey, local brands wanted to start working with us. We did start working with local brands. That, again, over the two years, two and a half years, that we were working on Shop Fetch, gave us the seat at the table with brands, where they would take us seriously, where we had interesting data. Then that gave us the chance, about three years ago now, to sit down and pitch to the largest brands. “We want to run a loyalty program. We want to do it in the form of the coalition and here’s why we’re the right company to do this.”

Tyler: Right.

Carol: That’s really cool. I wanted to get into a little bit more though. Three years prior, so you said three years ago you were able to go to these larger brands, and that type of thing, but I still think there is so much value in exploring even more that first venture that you realized needed a pivot, right? You just mentioned how you, at the beginning, you had just come out of college, you just had this business plan, you didn’t know exactly what you were doing. You didn’t have a ton of credibility yet, but you still realized that you had to go after these different names. You had to go after the retailers. Do you have any pro tips about doing that? I mean, frankly, plenty of people with lots of experience, who have been running businesses for a long time, are fearful, and have no idea how to even go about getting into those types of … into the meetings, get with the right people. Do you have any pro tips about how you made that happen back in the beginning?

Tyler: I think one thing that helped us, I mean, getting that first say is obviously the hardest. Everybody says that, right? For us, I think, we were fortunate that there a retailer in town where we lived, in Madison, who had recently started, in the previous five or so years, had recently started his grocery store on campus. He understood the challenges that came with start a business. When we went to that retailer with that owner, and presented the idea of what we wanted to do, I think he was a lot more understanding of, “Okay, these people want to make something happen.” I think that that’s what really got us that store. From there, we were able to … they allowed us to do different things to test, and make sure the systems were ready to launch. We were there overnight a couple of nights. They’d lock us in the store to be able to play around on their cash registers, everything that they used for their business, and see if we could hopefully not break the system in order to figure out how to make Shop Fetch work. That was really what got our foot in the door to be able to launch.

Wes: Yeah, so I think if you had to boil it down to what the advice would be, would be don’t necessarily go after your dream client right away. Realize that any new idea and new product is going to have a ton of things that need to be worked through. Typically, it’s better to lower your initial bar and just find a partner who genuinely believes in the vision, and you as a person. They will give you way more flexibility. With that flexibility, you’ll be able to iterate, pivot around, make sure that the product fits, and then you can start generating data off of the app when it’s work.

Wes: Then you can go and talk with anyone and show them it’s not a, “Hey, this is a cool idea.” It’s, “Hey, here’s what this idea and product has done for this store.” I would say a lot of people typically go out swinging, saying, “Our perfect partner would have been Kroger.” Then we’d go in there, Kroger just sees all the ideas, and they can take it and run with it if they want, versus just go find a local single store, independent owner, and just work through the problems, work through the kinks, and then expand.

J: Yeah, and there’s so many, you hit on this big thing that’s so important when it comes to entrepreneurs, and people that want to start businesses. Too often we go out and we say, “We need all the stars to align before we’re going to take that first step.” You said earlier that there was this whole part of your business, this whole magic cloud part of your business, that you didn’t know how you were going to actually collect this data from the customer. That didn’t stop you from taking the first step. You realized, this is an interim process, and we can take that first step, and we can try different things, and we’ll eventually get there. Same with the brands, we can start with the smaller brands and we’ll figure out how to build. Basically, the whole idea of iteration, and pivoting, and just keep making steps forward in the right direction, you’ll eventually get there. As opposed to waiting until you have everything lined up, all the stars aligned, before you ever take that first step.

Wes: Yeah.

Tyler: Absolutely.

Wes: Do it in small, bite sized pieces. Right? As you were saying, failure early on, especially in small, little ways, is really good and healthy. One of the things when I talk with entrepreneurs that they always are afraid to do is go out there and look at competition. If it’s a good idea, chances are someone is already doing it, or something similar to it.

Tyler: Yeah.

Wes: That’s not a bad thing. That actually just tells you that you’re on to something. That fact that you haven’t heard about it means that there’s an opportunity. Go look at those things. It’s painful, but swallow the pill of pride, and be able to just say, “Okay, what are they doing? What’s working? What’s not working? How could I do this better? Why would it be better for whoever the end consumer is?”

J: Yeah, I mean it’s the cliché that we always talk about in business. If you wait to get in your car … if you don’t get in your car until all the lights are green between where you’re starting and where you’re going, you’re never going to leave your house. You have to be willing to get in and just start driving. That’s awesome. Okay, so now we’ve pivoted a couple times, we’ve figured out what that magic cloud is going to be, the scanning of the receipts. What were the steps to actually get this app built, in the hands of consumers, and what challenges did you have with your brands? Was there any pushback from retailers? Did you have to overcome any major issues on the brand and retailer side?

Tyler: Definitely. As we were getting started, with Shop Fetch, we started out partnering with local brands, and then we started working with some distributors. Somewhere along the way we got connected with Kraft Heinz. They have an innovation team at corporate. We were working with them. That’s really where we started to hone in a little bit more on the receipt scanning side of it, and looping in multiple brands, and really build it larger than just more localized product. As we started to do that, and look into the receipt scanning, there were technologies that we had to pull together, some that we built, some that purchasing, kind of went down that buy verse build decision process with a variety of those.

Tyler: Ultimately came up with receipt scanning as the method of doing it, but that is not easy. If you think about receipts, and the receipts you get from stores, and I’m getting a little tactical here, but the receipts that you get from stores, they’re crinkled, they’re faded, sometimes you spill on them. The descriptions on them, oftentimes, can’t be read by anybody. Understanding from that, what the customer actually purchased in order to be able to reward them is definitely a challenge. It’s something that we’ve been working on, improving, and perfecting, over the last three years, and still have a ways to go on that. That comes back to the point earlier that was made is being able to solve the problems. If you wait until you have a perfect plan, you’re never going to get started.

Tyler: We didn’t have a perfect technology, but we rolled it out to customers, got the feedback of what they liked, what they didn’t like, and figured out how to improve upon it. You’ll see that when you download the app and you scan a receipt, we know that it’s not perfect, we know that some merchants don’t have a perfect description of exactly what size product, and flavor product, you purchased, but we allow all of our users to correct their receipt after they scan it in case the system missed something, in case it was too faded, things that are inevitably going to be problems. We didn’t know that that was going to be a solution that we had to come up with when we launched the Fetch Rewards app with the receipt scanning, but eventually had to go down that path to solve that problem.

J: Did you find that that actually made your app a little stickier? You have people that are now forced to interact with you, because instead of just scanning their receipt, and going on about their day, they’re going to scan their receipt, they’re going to look and make sure everything is correct. They’re actually spending more time looking at your app, they see something that’s wrong, they go in, they fix it, they’re spending more time with your app. You’re creating brand recognition there, because they’re being forced to interact with you more than just doing a quick snapshot and move on with their day.

Wes: I think we’d certainly rather it be right the first time around. I’ve always been more amazed that our … it just speaks to the testament to how much people really like the product and the rewards that they’re able to get, that they’re willing to go through that extra work. I hate it, I feel terrible every time I see a report of how they have to be corrected, and I’d rather reinforce it with a better, positive experience, but at the end of the day, as you said, it speaks volumes to obviously the level that they want to engage with the app, and with the brands. I think that’s definitely important.

Carol: Awesome, so you were talking about the customers who downloaded the app, back in the beginning, so over the, whatever the metric is, over the first six months, or year, or whatever, how many people had downloaded that app right away? How did you market it to people and get them to sign up?

Tyler: Yeah, so we are almost done with the full third year of Fetch Rewards. At the end of year one, we ramped up to 100,000 monthly active users.

Carol: Year one?

Tyler: Yeah, in one year.

Carol: Great.

Tyler: From January to December. Year two, we ended about 400,000, 416,000, I think, monthly active users. Now, of course, we’re at 1.6, 1.7 million.

Carol: How? How do you get those numbers? Those are huge numbers. Not only that, are they huge numbers, but it’s grown so exponentially. What’s some of the marketing that you’ve used to get it in people’s hands.

Wes: I think one of the things that we’re most excited about is similar to just the level of engagement that we have in consumers, that they’re willing to go and correct a receipt, they want to go and actually tell people about it. If you look at our entire user base, out of the four million plus downloads, over 50% of them have come by users telling other users about it.

Carol: That’s great.

Wes: We have a very successful referral program. We try to pride ourselves on making it as easy as possible and as fun as possible for the customers. If you do those two things right, people will want to talk about it. At the end of the day, that’s what we focus on. I think just the results is it results in a high growth rate. We also have our brands helping us. Funny story, when we first launched, since you were asking about how we got users on board, we started with just people in the office. Then we started by telling other friends and family, all the sudden we’re getting 20 receipts a day. At that point, the receipt reading wasn’t very good. That’s 20 receipts we had to go in there and manually make sure were doing well. Then later that month, we invited a couple other partner companies, they started using it, our friends started using it. Then on month two, we said, “Kraft Heinz, can you deliver some users for us?” They sent out a single email to a set of their CRM that they have. All the sudden, we had 10,000 user sign ups.

Carol: Whoa.

Wes: We had a couple hundred receipts a day coming in. We completely fell over. We had no idea how to handle that velocity and volume, we were down for five weeks, I think?

Tyler: Yeah.

Wes: Where we were trying to process receipts and I think that our backlog got up to 42,000. We were manually going through and just staring at them every night, just trying to get as many done as we could. We could just never imagine how we would un-bury ourselves from 40,000. We were working on the technology at the same time. We didn’t try to just solve the problem with throwing humans at it, but we also then found a technical solution. Then all the sudden, we were able to have something could do it, do it at a high caliber, and a class that we want. Where we can now, as Tyler was saying, process almost a million a day and not have any issues, or hiccups, from a customer perspective.

J: Awesome, so can you walk us through as, let’s say I’m a customer, I use the app, I scan a receipt, how am I getting rewards? What kind of rewards am I getting? Then, I think a lot of our listeners will be interested knowing how are you guys making money every time somebody scans a receipt, or every time something happens?

Wes: Do you want to handle the first part?

Tyler: Yeah, I’ll the user experience. From a user’s perspective, you sign up, you download the app, and the first screen you see after signing in, and signing up, is basically the list of rewards. There’s two ways to earn points and earn those points. First is a list of brands. We have over 200 brands that every time you buy those brands, and you buy those products, you get points, you get a percentage back, basically, on the amount that you spent on those. The second way then is special offers. People think of them as coupons, we call them special offers, same concept. If you buy a product that a special offer is available for, you get a bonus number of points. Those the two primary ways of earning points. Wes also alluded to the referral program that we have. If you refer somebody else, then you can earn additional points.

Tyler: In order to earn those, when you buy the products, you get your receipt. We have a scanning solution. It has different guides on there to try and help you take a good photo so that we can be as successful as possible. You take the photo, if you have a really long receipt, you can take multiple photos, and it will stitch them together, and identify how many items of each were purchased. We’ll process it in just about five seconds or so, and tell you what products you have purchased, digitized the receipt, and award the points, all in that timeframe for what you purchased. From the user’s perspective, that’s the general workflow that they go through most of the time.

Tyler: Now, we have different rewards redemption levels, so you can redeem with as little as 3,000 points for a $3 gift card. We have gift cards available for Walmart, Amazon, over 100 merchants, that you can redeem your gift cards for, from $3 up to $50. You can also redeem for sweepstakes to try and get for 10 points, or 50 points, you can redeem for a chance to win a $100 Visa gift card, or a $500 Visa gift card sometimes. That’s the high level workflow, process flow, that a customer would go through using the app.

Carol: Cool. Then, how do, so that we know how the … I think you’ve explained really well how the customers get rewarded, how does your company pull in revenue from those retailer, from those brands?

Wes: Yeah, so what I really love about our business model is it’s actually directly tied to the same incentives that we give our customers. We’re completely aligned and our brands are aligned. The basic premise is, we want customers to … we understand that it’s not always plausible for a customer to just spend more money, you know? They have only a certain amount that they can spend on food. We want them to make sure within categories that we have a brand that they’re already spending, say, $10 a month in. Let’s make sure that $10 is spent on our brand versus the other one. In return, we’ll give you a bunch of points as a thank you for doing that. For our user, they tell us a lot of the times, it helps them simplify down choices. They walk into the barbecue aisle, and there’s 75 different barbecue sauces. We now narrow it down so, hey, these are the 10 that will reward you, no matter where you buy it, no matter when you buy, guaranteed.

Wes: A lot of customers like that. They don’t have to worry about shopping around for price. They can just say, “Okay, well I give my loyalty, I’m going to be actively rewarded for it. Hey, there’s some brands maybe I’ll never switch off of. Maybe I’m a Coke diehard, I’ll never switch over to Pepsi, even though Pepsi is being rewarded on Fetch,” but then maybe you do switch over to all the Frito Lay products, and start buying Frito Lay products because you get rewarded, and PepsiCo loves that. At the end of the day, we then, essentially, have a markup when customers are buying more of their products. The brands are happy with that, because they’re only paying when people are buying more. Customers like it, because just by shifting their spend to brands and categories that they may have been flip floppers on, they’re going to maximize the savings that they can get. Then Fetch gets the direct reward too by sitting in the middle.

Carol: Cool.

J: Cool, so you said something interesting. You said they may walk down the barbecue aisle, where there’s 75 barbecue sauces, and they may get rewarded for buying 10 of them. What is your relationship with the 10 barbecue brands? Is there one brand that’s saying, “I don’t want you to reward nine other of my competition?” Or are they all kind of in the same boat, and they say, “No, we understand, you guys have a business model.” What’s your relationship with your brands? Do you ever have to be careful about exclusivity, or just upsetting a brand, because you’re working a competitor?

Wes: It’s a little of both. We basically target the top one or two brands in any given category. We’ll go and partner with them. We do give them exclusivity. We have Miller Coors on board, we don’t have Budweiser on board. We have Pepsi on board, we don’t have Coke. What that allows them to do though is, again, be able to truly be the partner in that space that will reward the customers. The other thing is we partner at a CPG level, consumer packaged goods, so the parent, so Kraft Heinz might be our partner, and they may represent 10 different barbecue sauces, all under different brand names. Now, from a customer’s perspective, they don’t really care who owns it, they just know that these are the 10 that will reward me.

J: That makes sense.

Carol: Very cool. Really cool. It sounds like so much of this is very data heavy, right? It sounds like just from analyzing all the brands, analyzing consumer loyalty within the brands, that I would suspect, that your business is so heavily data drive, what are your best practices around analyzing that data? Do you have a team that specifically does it? Is it one of you? How dependent is your company on data? How do you approach it?

Wes: Do you want to handle this first one?

Tyler: Sure. Fill in the gaps. Basically, yeah, we have a team that looks at data, and tries to understand are customers buying more of the brand, as Wes was saying? If somebody switched from Coke to Pepsi, then we’re keeping eyes on that to know how successful the program is in that regard. We have a team that reports that, works directly with each of our clients to understand what their goals are, and make sure that our strategy in representing the brands in the right light, and to get the right target customers, is aligned, and that we’re approaching it the right way, with the right special offers.

Tyler: That’s one interesting thing. You were talking earlier about how a lot of brands pay the retailers for shelf space and things like that, and offer discounts, en masse across the whole customer portfolio. The same thing with paper coupons is it’s not very smart about, well, if this person was buying it anyways, we have the opportunity to recognize that, hey, Carol is always buying Pepsi, and she never switches from Pepsi. She doesn’t need any additional incentive to do so. We try and make sure that we’re smart about how we’re offering rewards to different users.

Wes: Yeah, so maybe in that case, you just get a little thank you, a little boost every tenth two liter that you’re buying, or whatever the case is. At the end of the day, we believe it’s important to be a data driven organization. We think that everything could be anonymized though, so in those cases, we’ll never necessarily know who the exact customer is that’s getting this offer, but we just know that, hey, these are their behaviors, and therefore we think this is relevant to them. We always try to play that matchmaker. I think it’s fine for us to obfuscate who that customer is and then internally we use data heavily to determine what new features do we roll out, which features are working, how are customers flowing through the application. We try to use data to help bring a lens of understanding to the why behind people using it and the what that they’re actually doing.

Tyler: It’s one area that I focus in is looking at … Potential issues we look are user acquisition trends. Trying to understand and slice the data in different ways just to see where are potential opportunities where maybe there’s a weakness in the user onboarding. Maybe there’s a particular week in the month where people aren’t scanning as many receipts. We’ll dig into that and try and understand, is it for a particular set of retailers, is it for a particular type of user, maybe they’re the person who only shops at convenience stores, maybe is suddenly not scanning in a given week. Why is that? Is there something that we can do to try and provide more value to those people?

Tyler: We want to make sure, we’re very much a customer first business, and want to make sure that we understand what people want, and what people find valuable in the app, and make sure that we do the best we can to deliver that as efficiently as we can. That’s where the data really comes into play is understanding our users, what their needs are, whether they know those or not, it’s evident in how much they’re using the application. Then make sure that we deliver the value, which obviously then is shown in how often people are using it.

J: That’s awesome. Okay, so I want to kind of step back, and I want to look at the company a little bit more, because you mentioned earlier that you have 120 employees across three offices, which is mind boggling. I know a lot of people are sitting there thinking, “Well, they have an app, why do they need 120 people? It’s all automated.” Let’s talk about this a little bit. Of those 120 people, three offices across the country, what’s the break down of responsibilities for those employees? What do you do differently at different offices? What does your company look like from an organizational structure?

Tyler: Yeah, I’ll jump in and talk a little bit about the technology side, the data side, since we were just talking about that. On the data said, we have about a handful of people who are focused on our user focused data. What I mean by that is how is the app performing in the eyes of a customer, of a shopper, and identifying ways to continually improve that. We have a handful of people who are looking at the data, but then maybe five or six times that number of people who are identifying what the actual improvements to the product are, and implementing those product improvements to try and optimize the system. That probably in total comes out to be about 25 or 30 people focused on just product focused improvements.

Tyler: Then we have customer service. Like I said, we’re a customer first company through and through, from the day we started, trying to make things easy. Easy and fun. People like easy and fun. Our customer support team, if you email our support team, we have about 25 people who are responding to emails, and then another about 40 people who are reviewing any of those changes that our users make to the receipts, if they have any updates. We have quite a few people looking at that to make sure that they’re accurate and see if anything was missed, those types of things. On the client facing side …

Wes: Yeah, you have your typical client support that we provide to make sure that the brands are represented well and have their questions answered. Typical finance marketing team as well, who is driving a lot of the growth of brand identity. Yeah, we’re across Madison, Chicago, New York, and actually just opening up San Francisco right now. We like having multiple offices, because it gives us more access to talent. We believe that every office should have all functions there represented, so that we’re fully distributed, and no team is centrally located in only one location. At the end of the day, the vast majority of people are in between the Chicago and Madison office. That also puts us because we started here in Madison, so that’s logical. Then Chicago is a good place for us to expand, because it’s very close to our partners like Kraft Heinz, Miller Coors, Kimberly Clark is up here, so it’s nice to be centrally located.

J: Okay, so if my math is correct, of your 120 employees, it sounds like you’ve got about a quarter of them are engineering, operations, about a quarter of them are focused on your clients, your brands, and probably management. Then about half your company is customer focused. That, to me, says a lot about your company. Can you tell us a little bit about your corporate culture and how that whole attitude of customer first, and you’ve actually used the term customer first a couple times, can you tell us a little bit about your corporate culture, and how that’s kind of infused throughout your culture?

Wes: Yeah, one of the things we’re just working as a leadership team yesterday to kind of crystallize these and a set of principals that we as a leadership team stand for, and therefore the rest of the company does too. You can tell that it’s a very customer centric mindset where the very first one is if it makes it easier for the user, or if it’s better for the user and hard on us, do it. We like to try and remove as many of those hurdles as we can. We like, internally, we want to challenge ideas and not people, so we believe that’s really important to be a team that understands that your team is made up of other people, and you have to appreciate that, and know that people are complex, and have a lot of things going on that you can fully disagree with an idea, and we actively encourage that sort of disagreement.

Wes: We want people arguing over what they think the customer wants more. That’s a really healthy debate, but as long as you’re not challenging the actual individual, we think that that’s really healthy. In general, we just try to also make sure that we also stay very connected and transparent. We do company updates with the entire staff there where we’ll share, you can ask basically any question you want, and we will do our best to answer it. We try to push information out so everyone in the staff knows what’s going on. The good and the bad. We think if we have an entire village working on things, especially when it’s bad, then we’ll get a better solution, and get one faster.

Carol: Cool, so … go ahead.

Tyler: I was going to say, I think a lot of people on the team are coming together, right? I think that those statements that Wes was making, it kind of representing our culture when you put it down on paper come to life in a variety of ways. We have, just two examples off the top of my head. We have the support team, for example, has a potluck. At least once a month they just get together, bring stuff in, and share, converse, have a good time, and get back to it, helping people. We have a run club. This morning a couple of us went and ran up and down a hill in Madison in 32 degree weather.

Wes: Which there’s only one of, by the way. There’s not many hills here.

Tyler: Yeah. Run club. The team really comes together, and it’s about basically being one, and figuring out what’s best for the team, and for the user.

Carol: Very cool. I think it really shines through. When you download the app, it’s very clear, just like you’re talking about. You create this culture of fun. You create this culture of easy. You create this culture of just what’s best for everybody. The app shows that too. The app feels very fun. The app is just you can tell that your corporate culture has that ingrained in it, to be able to produce that on the outside. I’m wondering, you’re talking about all these ideas, all these collaboration, all this teamwork, how people are encouraged to have a healthy debate. What is your whole take on engaging and empowering employees? It sounds like, from a leadership perspective, that’s really a big focus of yours, is that accurate?

Wes: I’d say it’s an even bigger focus of ours, especially as we close our most recent round of funding, which has allowed us to really accelerate growth. Not only on the user side, but on the company side, so we’re going to go from 120 people to well over 200 by the end of next year. We think culture is something very organic. It changes, it grows, it needs to be nurtured, it’s a living thing within a company. As long as we’re very clear on some of the stances that we have of how we want people to be treated, how people should be treated equally, should always feel safe and comfortable in their environment to have their voices heard, if we hire people who think like that, then that will percolate. They’ll hire more people who think like that and it kind of grows from there.

Wes: One of the other things, even with culture we try to empower people to influence culture. It’s the exact same way that we’re pivoting, or moving, the company more and more to, which is just empower the teams to make the decisions. They don’t need a sign off, they don’t need either of us involved. If they have a hunch, go tackle it down. Go do what you think it is right for the consumer, come back to us and say, “Hey, this works, this didn’t.” Just be honest with yourself of what works and what doesn’t, but if we have a collective group who is all going out there, finding problems, solving the problems, that’s going to be what allows us to move as fast as possible.

Carol: Good.

J: Wow, absolutely love that. Okay, a couple more questions before we get into the final segment. I want to touch a little bit more. You just mentioned raising money. I want to talk a little bit about how you guys have grown, you’re up to 120 people, you mention you’re going to kit over 200, I’m sure a lot of that is organic, and you’ve obviously done a great job growing the company. I also imagine, and it sounds like you’ve taken some outside funding as well, can you talk to us a little bit about what you’re funding sources have been, and how you’ve grown inorganically through outside funding?

Wes: Yeah, at a high level we’ve raised almost $50 million to date across the six years of the business. When we started the company, as Tyler was saying, we were very scrappy, where we were earning a lot of that ourselves through competitions, and the creative ways that we were able to find, as students, that were available to us, to get our feet off the ground. I think that was really important, because that allowed us to get the business further on our own, before we had to take a bunch of dilution. The later you can postpone raising to with the more progress you have, an actual product, and a team, the better off you’re going to be, because it’s less theoretical and vision based, and more actual results. People then will trust you more, especially if you put some of your own capital on the line.

Wes: Early on we did that ourselves, we were able to deploy that, get a product up and running. We then found angel investors locally who came in and were putting in seed checks into the business. Then we actually attracted the attention of Great Oaks Venture Capital, which is a group, a VC group out of New York, who primarily just plays in seed stage companies, so came in at the same stage of a lot of the angels, but came with deeper pockets. Which is something that’s obviously important. Then that allowed us to continue accelerating, that got us through to basically Shop Fetch, and what we were doing on that.

Wes: Then we were able to, as we were continuing to pivot the business, and showing that, hey, a lot of the barriers that had held back Shop Fetch, which was slow growth, because you had to partner with retailers, it was a three legged stool versus a two legged. We were able to come in and say, “Hey, here’s how we’re solving all those major problems that were holding us back.” Then that attracted the attention of Greycroft and E Ventures, two amazing blue class, blue chip funds, that came in and lead our series A, and then just closed our series B funding. Again, money, honestly, gets easier to raise the further you go along because it’s less … it’s more about just numbers, and performance, and if you have success, and you’re showing a great track record, that’s a lot easier. Definitely early on we had to get scrappy, and had to just prove ourselves time and time again.

J: That’s awesome. Yeah, one of the little talked about secrets of raising money, especially in the venture world, is that nobody likes to be the first to go. Everybody wants evrybody else to do the due dilligence, and as soon as one person kind of invests money, it’s like, “Oh, they’ve been … ”

Wes: Feeding frenzy.

J: Yeah, “They’ve been endorsed. I trust them, I’m sure they’ve done the math so that everybody comes on.” It sounds like you guys have got that momentum going. I know that because you have investors, you’re a private company, you can’t talk a whole lot about your revenue, and your financials, and your margins, but what can you tell us in terms of maybe just general idea of what your top like looks like, what your margins look like, whatever you’re comfortable talking about?

Wes: Yeah, high level since Inc 5000 did a piece on us and published some of the revenue numbers. We were the fastest growing technology company in the US this past year.

J: Wow.

Wes: Number 61 on the list?

Tyler: 67.

Wes: 67 on the list.

J: That’s awesome.

Wes: Which was great, but in 2017 we did just over $2 million in revenue. In 2018 that number was just shy of $10 million. This year it’s over 20.

J: Wow.

Wes: It was a four X, four X, two X, and we’re going to continue on a, we think, even slightly higher than a 2X rating going into next year.

Carol: That’s a good year. That’s a really good year.

J: That’s awesome. We have a lot of getting started entrepreneurs in our audience. Some people that are running small businesses and are looking to grow. What kind of tips do you have based on your experience, what would you have done differently if you were starting over? What are just some tips that you can give our listeners and just things that you’ve learned over the years?

Wes: You want to go first?

Tyler: Yeah, we’ve talked about a couple of things, but I think it’s important to highlight is have a plan, but you don’t have to have the whole plan, and every step along the way, figured out. That’s where really one key lesson comes in, which is be a problem solver. Wes kind of described his role versus my role, and he’s kind of the ideas guy, and I figure out how to actually make it happen in the business. That comes in with obviously new ideas don’t have plans, and so figuring that out, solving the problems, and when people’s receipts aren’t being processed accurately, you have to kind of change how the technology works, and low them to correct their own receipt. Figuring out how to solve problems and solve problems elegantly, I think, is a big piece.

Tyler: The other thing that I think came out of Wes’s description of his role versus my role is talking with people. I mean, don’t be afraid of rejection. Many people want to help you, especially if you can find that almost mentor who wants to … who sees the value and sees the drive, as we found in our first grocery store partner. Find somebody, ask them questions, ask them dumb questions. They might not be dumb, they might be problems that that business is currently facing. Then you uncover a new opportunity. I think reaching out to people that are in your network, but also outside of your network, in the business that you’re trying to break into, in the category that you’re trying to break into, ask them questions. Hopefully, they’ll give you a couple of minutes of their time to answer any of those questions, and kind of guide you in the right direction. Definitely people and problem solving are two big things that go a long way in starting any business, I would say.

Carol: Very cool.

Wes: I think, for me, it would be plan for adversity. A path to a startup is going to be a winding road that’s going to have all kinds of turns here and there. I think it’s really important that you’ll have days, and hours in a day even, that you feel high and on top of the world, because, hey, someone just called and gave you good news, and you’ve been dying for good news. Then very next hour, the app falls over, and nothing is working. You’re going to go from the highest of highs to the lowest of lows. You’re going to want to say that this is a billion dollar company, just all the way down to, “We’re going out of business.”

Wes: It’s important to just know that that’s okay, that’s natural. You’re going to have those emotional swings, but try to find a way to keep yourself steady. If that’s through exercise, if that’s through sharing the experience with a co-founder, find ways to level yourself out, because that’s what’s going to make it, so you can be persistent, that you can get through it, and continue to just focus on growth. You sometimes have to zoom out to see the growth, but again, find ways to mitigate the ups and downs that you go through.

Carol: Good.

J: That’s awesome, I love it. Okay, this has been fantastic, but we are getting to that point in the show where we’re going to jump into our final segment, the four more, where we ask you four rapid fire questions. Then we jump into the more. You guys ready for the questions?

Tyler: Let’s do it.

J: Fantastic. I’m going to take the first one. I’ll let each of you answer this. What was your first or your worst job, and what lessons did you learn from it?

Tyler: I’ll start. My first job was mowing lawns. That was a great start, kind of that entrepreneurial step one, I guess. There just wasn’t a ton of opportunity to grow there. I’d say one of the bigger challenges was in my next job where I was a cart boy at Target.

Carol: Nice.

Tyler: Pushing carts from the parking lot back inside. I’ll describe it. I think Target is a great place to work, but it’s just, for me, having kind of that entrepreneurial spirit, doesn’t allow quite as much freedom to figure out things out, and grow, and kind of do it at your own pace.

Wes: Similar on that side. I think I started with a bunch off little ventures of washing cars, and collecting golf balls, and all kind of weird things. My first one that I can remember that I was working for someone else was working at a basketball clinic for young kids. I think I was in high school and we were working mostly with grade school kids. I absolutely loved the chance to work with and mentor individuals, watch them get better over a time period, and do that coaching. That part meant a lot to me and I still try to find aspects of that in what I do day in and day out today. The schedule sucked. It was definitely like you were there and you had to go from the very beginning, and be on, and ready, and have energy for the kids, and be able to handle all of their nonsense of little sugar balls running around. That was definitely something that was more draining, I think.

Carol: Take a big old nap afterward, right?

Wes: Yeah, exactly.

Carol: You’re just like, “Done.” That’s awesome. Okay, so you mentioned a few little adventures that you had along the way, growing up, and so on and so forth, but I’m curious to know, from each of you, what is that one specific, defining moment when you just knew you were going to be an entrepreneur for life? You just had the entrepreneurial edge and that was your path.

Tyler: I’d say for me, Wes mentioned a little bit of my background prior to us meeting. I started a boat cleaning business in Milwaukee, and had four people working for me, and started to build that up to the point where when I sold it, had, like I said, four people working for me, we were working on about 30 to 40 boats a week, depending on the week. That just inspired me. My family wanted me to go to professional school and be a doctor, or something. I was down there, I was like, “But, I like this boat, and he owns a business so … ” I think it kind of reinforced the whole concept. I like boats and a lot of them owned businesses.

Wes: Mine was back in fourth grade. My brother, who is two years older than me, is much more creative, and skillful than I am at doing things with his hands. He had created, we’d gotten two, two dollar bills from the bank. My brother had created them into a wallet using see through tape.

Carol: Oh cool.

Wes: Kind of put them together so you could open it up and put your actual money in between. He gave it to me and I later sold it on the bus for $26 to an other kid.

Carol: What?

Wes: I was hooked right there. That, “Oh my gosh, you can take something that’s worth $4, put some sort of unique spin on it, and all the sudden it’s going to be worth 26.” The unfortunate part of that is the school did send me home that day. They were not happy with me for apparently ripping the person off, but I thought it was a valuable learning experience. Only time I’ve ever been sent home from school.

Carol: Know what? If our kids would have been sent home from school, it would have been like, “Yes! Go back and do it again tomorrow.”

Wes: I know, good job, good sale.

Carol: So proud of you, totally, yeah.

J: Awesome, question number three. There is a lot of bad advice that floats around in the business world and the entrepreneur world. What’s some of the worst advice you guys have heard? How would you turn that into better advice?

Wes: I hate when people talk about work-life balance. I do not believe in work-life balance whatsoever, especially if you’re an entrepreneur. It is all your life and you have to figure out how to work it together. There’s no concept of, “Well I need to be off on weekends so I can recharge.” It’s like, you’re not going to ever recharge again, you need your phone on you, because checking those emails and falling behind isn’t an option. You just have to be okay with that and surround yourself with people who understand the commitment that you have to wanting to be successful with your business and will be supportive of that.

Wes: Don’t fall into the needing to meditate, or all these little one off things that people swear by that’s the one thing you need to do. No, I just think you could figure out how to make your work and your life come together into one thing, where you treat it all as your life, and do things that make you happy, and that you are happy spending your hours on this Earth doing. You’ll be a heck of a lot happier then trying to make some sort of false distinction.

Tyler: I agree with and I think I’ll add that making your work something that you enjoy doing, and surrounding yourself with people who inspire you, and bring you joy at your work, I think, is key as well. If you do that, then it isn’t as stressful. Yeah, you’ll have the ups and downs, but you’ll have somebody else to kind of buffer those. I think making work a place of pride, and enjoyment, I think, is key to that.

Carol: Awesome. Okay, here’s the fourth question, which is always my favorite. What is something in either your personal or professional lives that you’ve splurged on along the way? You just spent way too much money on it, but it was totally worth it.

Wes: My great dane.

Carol: I love that. What’s your great dane’s name?

Wes: His name is Picasso, he is white and black like a spotted cow, and he looks like a cow. He has two different colored eyes, a brown and a blue one, and nothing matched on him, so I thought Picasso was a very fitting name.

Carol: That is a … how old is he?

Wes: Yeah, he was way too expensive. I shouldn’t have done it, but I love him to death.

Carol: Absolutely, yes. Totally worth it and then some.

Tyler: Yeah, and his name is Pico for short, which is obviously in contrast to the great dane.

J: How about you Tyler?

Tyler: Shoot, I’m … gosh-

Wes: He’s conservative [inaudible 00:59:10]

Tyler: I try and be so frugal, yeah.

Wes: He bought some cheese curds the other day he probably didn’t need.

Carol: That was a big day. And I got 2,000 points when I bought them, it was great all the way around.

Tyler: I did. I know it’s hard for me, because I do try and be frugal. I guess sometimes you don’t need a new phone, but you upgrade it, you justify it because you work for a tech company.

Wes: Well you and your wife do vacations.

Tyler: Yeah, I do like to go on a road trip. My wife and I argue because, not argue, but we’ve come to an agreement that we do one sit on the beach vacation a year, and one more adventurous vacation a year. From going out and touring some national parks, that’s what we’ve done. Otherwise, going in and just sitting on the beach, and relaxing for a little while. We just got back from actually our honeymoon in Hawaii. That was a great time.

Carol: Oh, congratulations.

J: Awesome, congrats.

Tyler: It’s time splurging less than money splurging.

Carol: There you go.

J: We hear that a lot. That’s awesome. Okay, so now that brings us to the more part of the four more. Can you tell our listeners a little bit more about where they can find out about your company, where they can download your app, where they can connect with you, and anything else you want to talk about.

Tyler: Sure, you can learn more at FetchRewards.com, or download it from the Google Play store, or the Apple App store, name is Fetch Rewards. As far as learning more about myself, happy to connect on Linked In, or shoot me a message there. Also, Instagram, both of our accounts are public. The_Tyler_Kennedy and …

Wes: Mine’s @WesSchroll, I think. Yeah, simple.

J: Awesome. Guys, this was fantastic. Thank you so much for sharing. Love the story, love the app, love the business. I look forward to having you back in a couple years to get an update and hear about all the new awesome stuff that’s going on. Thank you so much.

Tyler: Sounds great, thank you.

Wes: Yeah, thank you guys. Really appreciate it.

Carol: Thank you.

J: Talk to you soon.

Wes: Take care.

Tyler: Yeah, bye.