
FiveStars (YC W11) Picks Up $14 Million to Challenge the Loyalty Punch Card - jingsong
http://allthingsd.com/20120802/exclusive-fivestars-picks-up-14-million-to-challenge-the-loyalty-punch-card/
======
larrys
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.

------
dfriedmn
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?

~~~
fookyong
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.

~~~
larrys
"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
And they're looking for rockstar developers!

~~~
iamwil
What does this add to the conversation?

~~~
tikhonj
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....](http://inst.eecs.berkeley.edu/~tikhon/img/fivestarRockstars.png)

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

~~~
nandemo
There's no reference to "rockstar" in that ad. They seem to have set a
somewhat high bar, but I can't see how that equates to looking for
"rockstars".

~~~
tkahn6
They edited the title.

~~~
nandemo
I see. Thanks.

------
jasondc
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
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
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.

------
dinkumthinkum
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
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.

------
josh33
Is Apple's Passbook a competitor?

~~~
theatrus2
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
You need a different name; don't fear the vowels.

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

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

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

