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LevelUp is Down to Half Its Former Headcount, and Needs to Raise Money Fast

bostinno.streetwise.co

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Re: LevelUp is Down to Half Its Former Headcount, and Needs to Raise Money Fast

#21

Post by ben1040 »

mackey wrote: post #16
adamio wrote: post #12

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?

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…

>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.

Re: LevelUp is Down to Half Its Former Headcount, and Needs to Raise Money Fast

#22

Post by 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.

Re: LevelUp is Down to Half Its Former Headcount, and Needs to Raise Money Fast

#23

Post by paul9290 »

krschultz wrote: post #15

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...

Man I had no idea about his Dad.

My condolences!

Re: LevelUp is Down to Half Its Former Headcount, and Needs to Raise Money Fast

#24

Post by 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.

Re: LevelUp is Down to Half Its Former Headcount, and Needs to Raise Money Fast

#25

Post by 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.

Re: LevelUp is Down to Half Its Former Headcount, and Needs to Raise Money Fast

#26

Post by mackey »

ben1040 wrote: post #21
mackey wrote: post #16

Earlier quoted context omitted.

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…

>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…

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.

Re: LevelUp is Down to Half Its Former Headcount, and Needs to Raise Money Fast

#27

Post by 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.

Re: LevelUp is Down to Half Its Former Headcount, and Needs to Raise Money Fast

#28

Post by 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.

Re: LevelUp is Down to Half Its Former Headcount, and Needs to Raise Money Fast

#29

Post by burgreblast »

ry0ohki wrote: post #9

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. Fina…

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.

Re: LevelUp is Down to Half Its Former Headcount, and Needs to Raise Money Fast

#30

Post by rscale »

burgreblast wrote: post #29
ry0ohki wrote: post #9

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. Fina…

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.

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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