Kyle
Late last week we brought you the story about Baltimore startup BeerGivr which allows people to buy their friends beer using their mobile phone from a remote location, at participating beers. The concept is easy, if you can’t join your friends at the bar you can still pick up a round or buy the birthday girl/boy a shot or beer. You sign into the app, and let it know how many beers and voila its done. BeerGivr has partnered with bars in their hometown for testing. If you buy a friend a beer and they’re not at a participating bar or restaurant they can have that beer converted into Paypal dollars.
Well an Austin startup has taken a similar concept and expanded it to a wide variety of offerings primarily in the under $10 arena. With NOOM (Next One’s On Me), you can buy a gift for a friend using your mobile phone. Ideas include cupcakes,coffee, beers, lunch etc. You simply send your friend a virtual gift certificate through NOOM and they actually get the gift.
NOOM co-founder Sara Rodell gives us a great use case example in our interview below. Say you just met a great new friend or business colleague, it would be very awkward to shake hands and give them $5 or $10 and say “hey the next coffee is on me”, but with NOOM it’s a gesture appreciated, and used.
Right now NOOM is available in the Apple iTunes store and exclusively for Austin area merchants however they are expanding quickly and plan on bringing Houston on in the very near future. NOOM currently has 20 Austin area merchants participating including bakeries, ice cream shops, coffee shops, restaurants and bars.
Check out our interview with Rodell below
What is NOOM?
Next One’s On Me, or NOOM, is a mobile phone app that allows people to treat their friends to gifts like drinks, coffee, lunch, and other favorite eats and treats by using their phone. The main focus of NOOM is to facilitate the act of spontaneous giving and help people act on the impulse to treat someone. We focus on small denomination gifts which we term NOOMs. NOOMs are given in 3 different categories: Treats, Beer and Bar & Bites and function like open-ended gift certificates. When sending a NOOM the sender simply chooses the category. The recipient gets to choose where they want to go and what they want to get. Merchants curate the list of items that are offered in each category. For example, a user can redeem a Treat NOOM for a coffee at one merchant or an ice cream at another, depending on their mood.
Product-based gifting through NOOM allows users to exercise an impulse to give that’s often thwarted by social dynamics. It can feel awkward to give someone $5 and say, “It was great meeting you, I’d like to buy your coffee,” yet meaningful if you can simply buy their coffee. By leveraging mobile technology users can now treat friends by buying the actual product. Further, givers tend to directly correlate how meaningful their gift is with how much money is spent. As such, gifting is typically concentrated around occasions as it’s not feasible to spend a ton of money every time you want to send a gift. NOOM changes that. By focusing on the exchange of units rather than money these gifts are meaningful AND inexpensive and can be sent more often.
Who are the founders and what are their backgrounds?
Sara Rodell and Jeffrey Schwartz are the founders of NOOM, they’re both native Texans and have profess
ionalbackgrounds in the financial industry
Sara attended the University of Virginia where she received a B.A. in Economics with a minor in Anthropology. After graduating she worked for UBS in New York on the US Institutional Equity Sales desk. Sara thought about the idea for NOOM when she was studying for the CFA, an incredibly time-intensive process that she undertook shortly after her move to NYC. Finding herself short on time and needing extra favors from friends, she was frustrated that there wasn’t a great way to thank them. She didn’t just want to send a text or email every time, and didn’t have the money to send a nice bottle of wine, or more involved gift. Frankly even if she wasn’t strapped for cash, it would’ve been a bit overkill to send a bottle of wine just for picking up dry cleaning. She became interested in this dilemma because she saw an opportunity, there were a lack of items to give that were inexpensive AND meaningful. Items that had both traits typically came with a high time cost, which hindered their purchase. She started thinking of how she might solve the problem of giving something that was inexpensive, meaningful and easy to transact. The idea for NOOM was born.
Jeffrey graduated from the Business Honors program at the University of Texas at Austin with a major in Finance and a minor in Marketing. He began his career working in investment banking in New York for Jefferies & Co. As a member of the Restructuring and Recapitalization team, he completed multiple transactions totaling over $710 million in restructured debt, $55 million in loan arrangement and the syndication of $215 million in senior secured notes. Jeffrey then left to accept a position with Sony Pictures Home Entertainment where he was a Senior Analyst in the Business Development and Strategic Planning group. While at Sony, he worked to provide senior management strategic and financial guidance on a variety of internal projects. Jeffrey currently sits on the board of Texas 4000 for Cancer, an annual bike ride from Austin, Texas to Anchorage, Alaska to raise awareness and funds for cancer research.
Sara and Jeffrey met in August 2011 after a mutual friend introduced them. They were both in Austin and met over coffee for 30 minutes in August and that was all they needed. Instantly they knew they could work well together to build NOOM into a reality. Jeffrey left his job in September and was living in Austin by October.
What is the startup culture/scene like in Austin?
We not only chose to launch NOOM in Austin because we are from and love Texas, but we knew we could be efficient and successful in building a company here. The startup culture in Austin in phenomenal. It’s growing rapidly and we’re excited to be a part it. It seems as if everyone here simply wants to help out. Any coffee or lunch meeting undoubtedly leads to 3 others as people are eager to help and tie you into their own networks. There are countless meet-up groups and other networking events all the time and the city has made it a focus to continue to nurture the startup culture by supporting co-working and collaboration.
The Austin Chamber of Commerce is involved in nurturing the start-up community. We had assumed that any city Chamber would have a greater focus on large companies, but not in Austin. Despite our size, we met with the Chamber as soon as we came to town and have found easy access to all the resources we need.
There are also a variety of incubators in town, we are affiliated with the Austin Technology Incubator, which is a part of the University of Texas.
Do you have access to the resources you need in your area?
Yes, the resources in Austin are plentiful. Full-time technical talent is difficult to come by, but that is a symptom of current market conditions and not something that is unique to the Austin area. Also, Austin may not have the breadth and depth of funding options available elsewhere or in Silicon Valley – but there is certainly money to be found here. The resources in Austin are particularly great for those new to being entrepreneurs. Efforts through the Chamber and organizations such as ATI (Austin Technology Incubator), CoSpace and CapitalFactory all aim to provide the education and guidance anyone may need as they attempt to turn their ideas into companies.
What problem does NOOM solve?
NOOM solves both a consumer and a merchant problem. Consumers have an impulse to gift that’s often thwarted by social stigma, such as a fear of appearing cheap, or buying the wrong thing. Additionally the effort involved in finding something that’s affordable and meaningful can be a deterrent. The common solution is to treat someone to a coffee, drink or food item. Yet these interactions could previously only be done in person and since they have a high time cost, they’re often not transacted.
From a merchant’s perspective, we’re a savvy way to address their need to increase sales, foot traffic and grow their social media presence. Currently, the most common solutions involve using price as an incentive. Discounting product may not be economically feasible for merchants, or may compete with their brand identity.
In creating a product to answer the consumer need, we also solve the merchant problem. Merchants control the products that are eligible for redemption at their establishment. We pay a set rate to each merchant when a redemption occurs. Merchants simply make themselves available to the potential customers who have prepaid funds and are deciding how to use them.
Who is your target user?
Very broadly speaking, every time we hear “thank you” we see a market opportunity. Core users are those who are strapped for time, who want to be able to treat someone, but may not be able to due to geography or scheduling. And this is not only limited to personal interactions. Businesses have also been using NOOMs to show appreciation for employees and to treat customers/clients.
What is your secret sauce?
Focusing on product gifting as opposed to sending money is what sets us apart. Our concentration on the form of gift delivery distinguishes us within the gifting space and makes NOOMing a superior method to treat those around you.
What is one dilemma you faced in the startup process?
The importance of finding the right people to be on your team is of paramount importance. It is a mix of finding the right skill set, attitude, personality, risk appetite…….etc. It has been difficult to find technical talent in today’s market, but we have not allowed this to deter us. We have been proactive in leveraging our networks and have been able to find great partners to develop what we currently have.
What is one challenge you’ve overcome in the startup process?
Coming from a corporate environment where roles are clearly defined and transitioning to a startup can be challenging. With a small number of employees, everyone has a wide range of responsibilities and much they have to accomplish. It’s both a fun and overwhelming transition and we think we were able to successfully complete it because of our passion for what we’re doing. It is a constant process of continually prioritizing our ever-evolving to-do list. We trust one another and can each focus on our own individual tasks, reassured that whatever the other is working on will be efficiently completed with accuracy. We’re both quick learners and are happier in an environment that, while less defined than your typical job, lets you stretch your mind and skills in exciting new ways.
Who are some of your business role models and mentors?
We have been fortunate to have a cast of talented mentors who are all overly generous with their time and advice. From our networks of past co-workers, friends we have met along the way and the professional advice we have received from members of the Austin tech community we have been able to form the foundation for a successful company. Additionally, our board of directors has provided instrumental strategy, financial and technological guidance during our growth.
We are also inspired by the strong examples and entrepreneurial spirit set forth by our families. They have instilled in us the importance of generosity and community values and we love that the success of our company means that more people are doing kind things for one another. Our families have also taught us the requirements for hard work, dedication, persistence and honesty and we know that these values will be the backbone to our success.
What’s next for NOOM?
We are excited to expand the NOOM offering to Houston We look forward to continuing to learn from our users ways in which we can improve our product and will drive our geographic expansion to additional markets based on demand.
Linkage:
Find out more about NOOM here at their website
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