A Q&A with Pirq CEO James Sun. The Kirkland, Washington–based startup was founded in early 2011 and is in the process of closing a $1.2 million round of new funding from Rally Capital. The round brings the company’s total raised $3.2 million in outside funding.
SUB: Please describe Pirq, and the value proposition you offer to consumers and local businesses.
Sun: Pirq provides an intelligent mobile marketing platform called SmartYield for local merchants to increase customer loyalty, customer frequency and foot traffic during slow hours. It allows local businesses to essentially maximize revenue with their existing resources. Consumers love Pirq because they receive great location-based rewards and deals at their fingertips, and it allows them to manage all their punch cards through a smartphone app. The more they use the service, the more rewards they receive.
SUB: Who are your target users?
Sun: Our three main target user groups are students, young families, and young professionals. Pirq users tend to skew on the younger, tech-savvy side. However, we also have a lot of young families that use Pirq to quickly and conveniently find new, local places to eat and save money while dining out together.
SUB: Who do you consider to be your competition?
Sun: On a high level, our competition consists of anyone offering any type of mobile marketing service to local merchants. Services that compete with components of our SmartYield program include mobile deals and loyalty services.
SUB: What differentiates Pirq from the competition?
Sun: There’s an onslaught of deal companies out there that offer deals that are neither beneficial nor efficient to businesses and consumers. Many businesses that participate in daily deals get overwhelmed with too many deals being redeemed at one time, don’t see the customers return, or end up losing money on the deals. With Pirq’s three-step SmartYield program, we offer a one-stop solution for businesses to grow profits through a fully measurable, data-driven 12-month program that enhances customer loyalty, increases frequency of customer visits, and boosts off-peak business.
On the consumer side, there is no pre-payment for Pirq deals, which eliminates the headache of unused or wasted coupons. Pirq is also entirely mobile and hyperlocal, making everything seamless and extremely relevant for the consumer. Lastly, with Pirq’s new digital punch card component, all consumers with a phone—not just smartphone users—are able to accumulate loyalty punches and earn rewards. Essentially, our service allows text messaging as an integrated option to the downloaded app.
SUB: When was the company founded and what were the first steps you took in establishing it?
Sun: The company itself was incorporated in February 2011 and the Pirq app went live in September of 2011. The most important thing was to understand the problem we were solving as a company. So we set up focus groups with local merchants to understand their needs. Then we began to iterate the product with a continuous feedback loop with our local merchants. This is a completely different way to approach building products, but I believe it’s the right way.
SUB: What was the inspiration behind the idea for Pirq? Was there an ‘aha’ moment, or was the idea more gradual in developing?
Sun: We came up with the idea for Pirq out of wanting to help businesses increase their bottom line. My parents were small business owners and they even owned a restaurant while I was a kid. I remember the constant challenges of getting people in the door during slow hours.
So we spent a very long time evaluating all the challenges for merchants who ran unsuccessful promotions and daily deal programs, and we created a smart, yet simple solution that’s win-win for both the consumer and local business owner. It began with Pirq’s SmartYield program that automatically and intelligently adjusts mobile deals in real-time to maximize a business’s off-peak and peak hours, helping to deliver new customers and increase profit for the business. Now, our product has evolved into a comprehensive SmartYield solution suite for local merchants to 1.) increase loyalty, 2.) increase frequency of existing customer visits, and 3.) increase new customer visits during peak and off-peak hours.
SUB: How did you come up with the name? What is the story behind it?
Sun: In short, Pirq is simply just another more unique and fun way of spelling ‘perk.’ It began with our original one liner which was ‘quality perks in real-time.’ With our logo, you’ll also notice that the ‘p’ and the ‘q’ slightly resemble binoculars, which symbolizes searching for the best deals.
SUB: What have the most significant obstacles been so far to building the company?
Sun: I think the most difficult thing we tackled in the first year is expansion. Expanding to new markets is something that is very difficult. There’s a bit of a chicken-and-egg problem. If you want to expand to a new city, but currently don’t have any users there, why would a business want to sign up? On the other hand, if you have no merchants in the new city, why would a consumer want to download the app? However, with our new SmartYield program we’ve created a model that is not reliant on doing mass consumer marketing before we launch with merchants, which why we’re now deciding to go nationwide.
SUB: You just secured $1.2 million in additional funding. What do you plan to do with the new funds?
Sun: We are in the process of closing this transition round of $1.2 million to expand our product and services, including a new digital punch card and frequency component. The new components will all be integrated into a three-step SmartYield program that works together to add profit to the merchant’s bottom line. We’re currently working on completing our new SmartYield product and integrating it into our existing mobile app, which is scheduled to go live in mid-October 2012. We’re also using the new funding to hire more nationwide sales people.
SUB: Do you plan to raise additional outside funding in the near future?
Sun: Yes. We plan on raising another round in 2013.
SUB: How does the company generate revenue or plan to generate revenue?
Sun: Pirq generates revenue from our partnered merchants. For each deal that is redeemed, Pirq charges a small fee. However, merchants only pay Pirq a small fee for the yield management deals once we actually deliver them customers. Consumers never pay Pirq for deals, they pay the merchants directly, so we never hold the merchants money like many other daily deal companies out there. Many of our partnered merchants really appreciate that aspect of our business model.
We also just recently started to offer a new digital punch card—loyalty—component in our integrated SmartYield solution. This loyalty component will have a small monthly fee for vendors.
SUB: What are your goals for Pirq over the next year or so?
Sun: On a high level, we want to continue to exponentially grow our partnered merchants and users. For that to happen, we recognize that we have to continually deliver a high level of value to both businesses and consumers. A little over a year ago, we began with one product for our partnered merchants. That product has now evolved into a more comprehensive, three-step SmartYield program that delivers even more value to businesses. So a main goal of ours is to continue to build and develop a product that drives measurable results for business owners. It’s critical for us to keep evolving to stay ahead of the new market trends. One of the ways that we accomplish this is by meeting with our merchants on an ongoing basis to fully understand their needs and to get their feedback.
Pirq – www.pirq.com