What’s powerful enough in the payments industry to keep a Chief Ninja up at night?
According to Seth Priebatsch, who claims that title over at the payments and advertising startup known as LevelUp, the answer involves two challenges that his company has managed to overcome so far: time and competition.
PYMNTS Summer School “Headmaster” Karen Webster had the chance to catch up with Priebatsch on a number of “little known facts” about LevelUp as part of the Summer School LevelUp Live Case preparation.
Some of what they discussed include his “aha” moment, what he wishes he knew two years ago about payments, and, yes, what keeps him awake at night.
Turns out some of his answers may surprise you!
PYMNTS.com: What was the original idea behind SCVNGR and what did you learn that motivated you to pivot to LevelUp?
Seth Priebatsch: We launched SCVNGR in 2008 with the goal of building the game layer on top of the world. It’s an awesome product, used by hundreds of merchants, and one that we're super proud of. (#humblebrag). But in 2011 we realized most merchants need something more than what SCVNGR was capable of providing. Our “aha!” moment happened during a Buffalo Wild Wings campaign, where SCVNGR drove 17 million social impressions, but we had no way of directly tying this activity to Buffalo Wild Wing’s transactions. It was obvious SCVNGR was generating revenue for Buffalo Wild Wings, but we couldn’t tell how much. We took a step back and realized what SCVNGR (and everyone else in the location-based space) was missing: a connection to the transaction.
After seeing the problem, the rest of our story is around how we capitalized on an opportunity. SCVNGR’s success made us confident we knew how to motivate consumer behavior with game dynamics and mobile location-based technology, but we still needed a way to prove how this was driving actual dollars at the cash register. It took tons of research and many sleepless nights, but in the summer of 2011, we finally launched LevelUp. The product has been an even bigger success than SCVNGR - LevelUp is now the nation’s largest payment network, with more than 1 million users and 5,000 merchants.
What is the one thing about the payments industry that you wish you would have known two years ago - and how would it have changed your thinking or direction?
How important POS integrations would be and how tough it would be to get them! When we started, we initially went with a standalone solution, for fast deployment to any merchant. We figured we would tackle POS integrations a bit later down the line. But about 9 months after launching LevelUp, we realized that POS integration was a key requirement for bringing larger merchants on board. At that point we started working towards integrating with a number of key partners; now, we've got 10 of the top 10 food-service POS providers on board, along with about 20 or 30 other POS partners, and more coming on board every day. I still think having a two-fold strategy (standalone for fast anywhere deployment, POS integrations where available) is important, but if I'd known how important and how difficult POS integration would be, I would have started it on Day 1.
What is the one thing that keeps Seth awake at night (recognizing that you sleep very little to begin with)?
It may not surprise you that I’m pretty much a work-until-you-crash kind of a ninja (er... CEO), so, I don’t do much lying awake. I'm generally too tired by the time I do get to sleep to worry all that much. That’s what the board is for, right? Har har har.
But in all seriousness, sure, I recognize that LevelUp faces some big challenges. Revolutionizing the way people pay is no small task. In reality, there are two things that scare me.
One is that we’re up against monsters. Our four biggest competitors (Google Wallet, ISIS, Square and PayPal) all have basically an infinite amount of money to throw at the problem. Square is actually the least well funded, with a paltry $350MM raised. We don't have that kind of money. We've raised $42MM. And yet, we're the largest mobile payments network out there, with the most merchants, the most users and (we believe) the best product. But when you're fighting giants like that, there’s always the chance a much larger company will just continuously throw money at the space and squash us. That’s a risk every startup faces; the payments space is particularly scary because the potential competitors are so well funded.
The second (and bigger) fear is that all this (scaling, changing consumer behavior) has to happen relatively quickly. Cultural attention spans go in cycles. I think there's interest in mobile payments right now, but there has been in the past, also. It comes and goes in waves. Now is a great opportunity, in the midst of a wave of interest, but at some point, it too will pass. If we can't prove to mainstream consumers and merchants that now is the time to adopt, that now mobile payments are finally real, this wave will pass by again without paying with your phone becoming a reality. My biggest fear is not moving fast enough. But, these worries also drive innovation and success. My job isn’t to worry about the unknowns, it’s to figure out how to build a product that consumers and merchants really love and get it into the hands of as many as possible.
Our strategy for building LevelUp has been the same since day one. We're small compared to our competitors, but we're open, meaning we’re seeking out partnerships that let us punch above our weight class. Integrations with our POS partners are one example of this. Our alliance with Heartland and their 800 sales reps is another great example, as it brings both scale and speed LevelUp could not have achieved on our own. We're inviting larger and larger merchants on board with our white-label platform and they're bringing massive amounts of consumers over, often porting their 100K-plus user strong loyalty programs to LevelUp’s platform en-masse. Things are heating up for sure, but there's clearly still lots to be done. That's why I try not to worry (or sleep) and just get back to work
Want to step into the shoes of Chief Ninja? Then, apply to PYMNTS Summer School on August 12-14, where LevelUp will be the focus of one of our 90- minute live case studies during our 2.5 day deep-dive course with industry trailblazers. Click here to see our faculty line-up. And apply today!