
LevelUp is Down to Half Its Former Headcount, and Needs to Raise Money Fast - smit
http://bostinno.streetwise.co/2013/04/02/levelup-is-down-to-half-its-former-headcount-and-needs-to-raise-money-fast/
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ry0ohki
This to me was an example of too many pivots. First a FourSquare clone, then a
Groupon clone, now a Square clone. Seth seems like an interesting guy, but
it's hard to feel the company doesn't have the right focus, always hopping to
the next thing without perfecting the last one.

I remember I went to a bar that actually had LevelUp when it first launched in
Philadelphia, and no one there had any idea what it was. Finally they got the
manager on the phone and he had a vague recollection of talking to some rep
about signing up. That just showed me how the marketing/education aspect was
completely missing, despite their slow thorough rollout.

~~~
burgreblast
LevelUp has commented in the past how store employees were driving sales (and
everyone gets/got $5 credit to try.) So it seems LU has been burning $5 of VC
money to inflate revenues, but guests didn't repeat.

I guess the lesson is: no matter how much you raise, it's never enough if you
keep firing in different directions.

~~~
rscale
I became concerned for LevelUp when I saw this graphic in a recent marketing
email: <http://i.imgur.com/QC0PEDk.png>

Here's to hoping it all ends well for them.

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mpayments
Interchange zero was such a weird move. They were losing money on every
transaction and they decided to get to scale by losing even more money on even
more transactions!

When SCVNGR pivoted from daily deals to this it seems they forgot to pick up a
business model on the way.

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krschultz
I don't know much about the startup, but I was definitely rooting for the
founder Seth after his father died in a skiing accident last year on Mt
Washington (with Seth present). Tough year for sure, hoping things work out
for him and everyone else at LevelUp.

[http://www.bostonglobe.com/metro/2012/04/05/adventurer-
prieb...](http://www.bostonglobe.com/metro/2012/04/05/adventurer-priebatsch-
dies-fall-during-hike/w7xqgv7wvwgSoRwXHPZOMP/story.html)

~~~
paul9290
Man I had no idea about his Dad.

My condolences!

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nym
They should integrate bitcoin, I stopped using levelup after a little while,
but I would like to pay with bitcoin everywhere where levelup is accepted.

Just my 2 cents :)

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potatolicious
This isn't a good idea.

1 - Merchants don't take Bitcoin. LevelUp would have to convert BTC to USD for
the merchant, and swallow any exchange rate fluctuations that may have
occurred in the meantime (the value of BTC is, after all, far from stable).
Even highly stable currencies are not completely free to exchange due to minor
fluctuations in value over time. This is a money-losing proposition for
LevelUp. This is part of why if you're spending GBP with your USD credit card
the fees start piling up.

2 - Who would use it? Bitcoin has basically no presence outside of the tech
community - and even there it's a _tiny corner_ of the tech community (it's
also the corner that thinks it's larger than it actually is). It would be
nonsensical to invest that much effort doing such a niche thing in a product
that is intended to be mass-market.

3 - Opportunity cost. LevelUp is in a do-or-die situation, there is no way
they should do this over the thousands of other things they can do to save
their company.

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mikestew
It seems at least some on here know a bit about the company, and seem
impressed by the concept at least. I know next to nothing about them, so let
me give you the view of the proverbial "Joe Sixpack". Summary: I know of only
one vendor that uses it, and LevelUp has to overcome my objections to using it
right there at the point-of-sale.

There's one restaurant that my wife and I go to that has the POS thingy. We
live in Redmond, not exactly a town full of tech-averse folk. So problem #1
is: is it worth the trouble of signing up, dealing with one more daily email
newsletter (because I forgot to uncheck the box), and having to get my phone
out and find the app every time we eat there? Answer: a resounding "no".

Problem #2: you have to sell me at the point-of-sale, because I frankly don't
care enough to go look it up. What does LevelUp do, other than having a
glowing thing that wants to have something to do with my phone? I have no
idea, probably something to do with paying for my meal. If that's the only
answer I can come with at the time of sale, I refer you to Problem #1.

Problem #3: I know of only one vendor in tech-savvy Redmond, WA that uses it.
Why even bother to dirty my inbox and the app screen of my phone?

Problem #4: how's the user experience? Does it suck? Do rainbows and unicorns
sprout from my phone when I use it? I have no idea. What I do know is that
whipping out my credit card is quick and easy, and everyone involved in the
transaction knows how to go through the motions. LevelUp competes against a
known quantity, and that known quantity is actually pretty good.

From reading the comments, I gather that there's some kind of rewards system.
Hmm, first I knew of it (see POS sales problem). Not exactly a positive for
me, as I'm growing tired of loyalty cards and variations thereof.

So that's the view of a guy who knows almost nothing about LevelUp. Too much
to fiddle with, and no perceived value for me.

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malandrew
TBH I only ever use LevelUp when I think I might shop at a place a few times
and get a few bucks of credit from LevelUp's investors. Never once have I used
LevelUp because it's a more convenient form of payment. If I want to pay for
something, I flip open my wallet and pull a credit card out because it's right
out in front. With LevelUp, I need to look through multiple pages worth of app
icons to find my payment options. No thanks. Yeah, a user could organize their
apps, but why would they do so for your benefit. They will just use a credit
card or cash because it's the path of least resistance. The truth is that this
will only ever change once we reach the point that I only carry around a cell
phone and never carry around a wallet. As long as the wallet is in my back
pocket, I have a path of least resistance that will beat my phone every time
and that is really unlikely to change until cell phones never fail. i.e.
phones will need days worth of battery life, be water proof or at least water
resistant and everything in my wallet can exist on my phone, including
government issued identification.

If you want to make payment apps gain widespread adoption then campaign to get
governments to let my put my ID on my phone, until then I will carry around a
wallet and a credit card will be sitting there right next to the ID.

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dmd
LevelUp has their devices in dozens of merchants in my area (Brookline MA),
and as an experiment, I tried using it in as many of them as I could.

So far I have been unable to pay using LevelUp _even once_. The cashier
doesn't know how to use it, or it doesn't have a signal, or it's not turned
on, or someone's put a sticker over the camera, or ...

I'd say I've tried 20 or 30 times and had zero successes.

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TimPC
I've got to say the 'facebook deployment strategy' for LevelUp is really
solid. I was at a conference in Boston and near campuses all the employees at
restaurants I went to knew what it was and had people using it. The problem is
people are used to thinking of this as an online payments problem, instead of
a ubiquitous solution -- the average region will have isolated stores with no
adoption, but there are pockets where the solution works really well and has
widespread usage. Density is really important to the consumer value
proposition, as are having the right demographics in your early regions. From
what I saw in Boston they got it right. It will be interesting to see how that
plays out with expansion through channel sales with Heartland. I think LevelUp
is different enough from Square that there is room in the market for both of
them. Also, Seth is a really great guy who's easy to root for. A lot of the
problems that got mentioned in this thread are being solved for instance
reducing hardware fees reduces the chances of a retailer pulling the platform.

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jefflinwood
At SXSW Interactive this year, LevelUp was pushing big for its mobile app
payment technology.

I'm curious about the market for payments with mobile apps - to me it seems
similar to QR Codes, where pundits get excited over the possibilities, but
users just aren't interested. I'm guessing this is different outside the US,
where credit and debit cards are extremely popular.

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tibbon
Yea, they did a killer job at SXSW this year getting in front of a lot of
people and making real transactions. The hardware is great, but getting stuff
into vendors is hard.

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ben1040
I've used LevelUp a few times when it seemed novel to me, but that's about it.
Just last week I got an email from them offering me a $2 credit to a frozen
yogurt shop near my office, and I figured I'll stop in for a froyo for next-
to-nothing. I get there and they don't even have the scanner on the counter
anymore. Oops.

Honestly I think Square, with their auto-tab functionality, is the only mobile
payment system I find myself consistently using as it is the only option that
_reduces_ the amount of work I do. Google Wallet, LevelUp, and friends require
that I hold up the line to dig out my phone, unlock it, open an app, and
present it to some reader. That's _more_ work than just pulling out my wallet
and giving them a card out of it.

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paborden
LevelUp's problems come (mostly) down to product.

Merchants - Don't know how to use LevelUp. Don't have it displayed. User
experience for merchants is wonky and unintuitive to boot.

Customers - Also have a strange, unintuitive user experience. Paying via "QR
Code" scares some. Many consumers would much rather pay by handing over their
card, as "antiquated" as that may be.

These issues combined mean that paying via LevelUp is slow and annoying.

The pivot to white label makes sense - except for the fact that their sales
team seemingly doesn't understand complex enterprise sales. So, success there
seem unlikely as well.

Do I like the idea of LevelUp? Yes. Would I ever use LevelUp? No.

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xoail
Mobile payments is such a hard push right now. It might be useful to both
merchants and consumers to jump on board but man the technology barrier is the
killer in getting anyone comfortable using it. We are toying around the idea
of mobile payments at carddrop running some pilots and I admit its
disappointing despite the advantages advertised. The only company that could
find Okay success is Starbucks through their prepaid mobile card. Even Google
wallet seems to be struggling. I've seen LevelUp in couple of stores and I
made sure to ask how often people use it to pay and the answer is always
almost never.

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hkmurakami
I remember hearing about SCVNGR back in 2010 before the pivot to LevelUp (I
think it caught my eye since I'm a Princeton grad). Back then the company
really seemed to be touting allowing brands to let people have fun with their
friends through various location based things, and it seemed pretty appealing
to me especially if I lived in a city like SF, NYC, or Boston.

Seems like with each pivot, they've shifted from the social/fun side to the
business/profit side, which parallels the way the startup trend as a whole has
moved over the past few years. That kind of followership is a bit eyebrow
raising.

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adamio
What service is LevelUp providing? A loyalty club and CRM for only customers
that use LevelUp? It seems that shop owners are either town between forcing a
major change on customers or just having a LevelUp POS incase a customer wants
to use his phone to pay for stuff. For this to be sustainable, shop owners
should have incentive to go LevelUp only. Also are the reduced merchant fees
contracted?

~~~
mackey
As a consumer, if you use LevelUp at the merchant, you get x dollar credit for
every y dollars you spend. For the merchant, you aren't paying any credit card
fees on that y amount. For LevelUp, they take a cut from the x dollar credit
amount.

I assume that LevelUp must batch credit card transactions in order to make the
fees cheap for them, and that probably requires floating a good amount of
money on a daily/weekly basis.

I use LevelUp almost everyday, sometimes multiple times a day. A lot of places
in downtown Boston take it, and it seems like it's great for both the merchant
and the consumer.

~~~
ben1040
>I assume that LevelUp must batch credit card transactions in order to make
the fees cheap for them,

Interestingly enough it was only this past week that they mentioned they were
going to start doing this (at least going off the email I got from them). They
sent the message to advise customers that they'll start batching up
transactions across a few days' span and then sending a second email when they
settle them all at once.

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mackey
I did notice the email saying that I had been charged ~30 dollars for a bunch
of purchases I made but I probably deleted the message about the change. I
figured they were always doing this, but now it makes sense.

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ghc
It surprises me to read about all these negative experiences people have
trying to use level up. I've had only one experience where the machine was
broken, and I use it to pay for everything from groceries to bowling. Where I
live about 2/3 of businesses I frequent accept level up and they all offer
great discounts, so I would be sad to see them go under.

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mikec3k
Sad, I use it all the time since most of my favorite places use it and they
don't support Square Wallet.

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dannowatts
judging by the response of the tweets from seth himself, maybe this is just a
hit piece? if it's sensational, let's let level heads prevail :)

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bigsteve122
it all starts with thinking a green, bizarre little troll could actually build
a profitable company that is easily repeatable by anyone with 2 years of
university

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zaidf
Leading with the words "LevelUp is Down..." is not the smartest choice for a
headline.

