In anticipation of the September 12 Techonomy Detroit conference, we profiled six Detroit tech startups driving the city’s re-emergence as a center of innovation.
Investors like Detroit Venture Partners and Bizdom Detroit have sought to rebuild the city through entrepreneurship, financing successful tech-focused efforts, including Detroit Labs’ web, iOS, and Android applications. And also now in Detroit is TechShop, the Silicon Valley innovation incubator where people of all skill levels can use industrial tools and equipment to build their own products.
FlockTAG, a universal, NFC-powered loyalty card and mobile application, is one of the latest Detroit area tech startups. It gives consumers a centralized loyalty card for a wide variety of transactions with merchants, and serves as a marketing tool for independent business owners. I spoke with FlockTAG’s co-founder Adrian Fortino about his company and why it’s following Facebook’s model by building first at universities.
What is FlockTAG?
It is a combination universal loyalty card system and automated deal engine. We’ve built a system that allows you to have all your stamps and rewards from your favorite buy-5-get-1 free coffee shop and sandwich stores in one card with an NFC (near field communication chip) chip, in a single iOS and Android compatible app. We’re pulling in a great deal of purchase data and purchase behavior and putting it into an analytical engine we’ve built to create personalized and targeted deals that are customized for people. We currently primarily servicing independent and quick-service restaurants, and growing mainly in the Big 10 university cities—Ann Arbor, Columbus, East Lansing, and Champaign.
A lot of our users tend to be college kids, but you don’t have to have a smartphone to use this system. You can get deals via text message. There’s a lot of value driven in the smartphone apps, and college cities tend to be a little bit more fluent in that technology, so smartphone usage and adoption is usually higher. So far that has driven higher adoption rates, and that’s why initially we’ve targeted large college towns. In time we’ll broaden out to larger metro areas.
Are there any criteria businesses have to meet to work with FlockTAG?
We’re going to be very strategic about which areas we go into. We’re not really tackling big chains. We want to allow independent and small regional players to fight the big guys. It’s getting tough because the big chains are equipped with better technology that the independents don’t really have.
What are the biggest challenges you’ve faced launching FlockTAG?
It’s a very fragmented market since many of these are mom-and-pop shops. That’s a sale challenge that everybody in our industry is faced with. It’s also a fairly noisy space right now. There’s a lot of people looking at rewards and doing things with loyalty and deals. So in trying to pull out of the noise, we position ourselves as driving true value where some of the competition does not.
What’s your background as a tech entrepreneur, and how did FlockTAG come into being?
This is my third tech start-up. I launched a company called Shepherd Intelligent Systems back in 2009 that did fleet management for limos, taxis, and public transit using Android phones as a data source. We then turned that into a company called SideCar, which we launched back in June. It’s an instant ride-share system operating in the Bay Area right now.
My partner Dave Lin owns a couple of bubble tea shops in East Lansing and Ann Arbor he’s had for 10 years. He’s an independent storeowner who has built up two highly profitable operations through a lot of hard work, and despite dealing with a lot of bad marketing tools.
Back in early 2011 we had this epiphany—what if we were able to build a closed-loop tracking and marketing system for independent cafés and restaurants that actually shows owners what kind of business they’re getting? If you do a Groupon, you don’t know how many of the people buying the deal are already your customers. With a lot of these marketing tools, there was never any visibility. Well, we’ve created that. Businesses know what they’re spending with us, and they know what they’re getting out of it because we’re tracking people’s behavior using their FlockTAG. We know what they buy, when they buy, where they buy. There are opportunities in these microeconomies, these small cities, and that’s what we’re building. We have about 45,000 people using the system now in the four cities I mentioned, and we have 75 businesses contracted with about 55 businesses operating.
What is the atmosphere like in Detroit for tech start-ups?
People who haven’t been to Detroit have a picture of it being a sort of desolate wasteland. And, it’s not. Detroit is booming when it comes to tech start-ups. We’re getting more and more activity there so the infrastructure is being cultivated real-time as we speak. There are venture funds that are started and headquartered down there, and a number of incubators. Funds like The First Step Fund, specifically aimed at early stage businesses, are based in downtown Detroit. It’s really going through a true renaissance right now and it’s super exciting. I wanted to really be active and participate in the rebirth of primarily Detroit, because Ann Arbor has always been vibrant with tech start-ups. Detroit is just doing a complete re-phase, and there are all kinds of new businesses coming to town.
For complete coverage of the September 12, 2012, Techonomy Detroit conference, click here.