They Might Be Giants

From Google to startups like Square, a look at seven would-be mobile titans

Seth Priebatsch
Founder, CEO and chief ninja

Two years ago, wearing his signature neon orange polo shirt and matching sunglasses perched on top of his head, Seth Priebatsch captivated 11,000 attendees at SXSW Interactive with a keynote on mobile-social gamification—a key feature to his then-No. 1 priority, the app Scvngr. A born marketer, the 24-year-old also leveraged the speaking gig to announce his new mobile app, called LevelUp. It was a turning point for the digital wunderkind; Scvngr has taken a backseat as LevelUp has steadily gained a foothold in the mobile payments niche.

“The vast majority of the business these days is on LevelUp,” Priebatsch recently told Adweek. “We use the same game mechanics that are in Scvngr and the same mobile tie-ins to motivate consumer transactions. But at the end of the day, if you are pitching a local business and cannot show them how it will make them money—they are not interested in generating tweets—they are just not going to care about the product.”

In fact, 5,000 merchants have implemented LevelUp, whereby users don’t merely show they are at a location with a tweet or check-in, as is the case with other social-mobile apps. Rather, small businesses set up rewards to entice customers to pay with the app—awarding a $5 credit for buying anything, for example, or encouraging loyalty by offering a $10 credit per $100 spent. Merchants also get analytics from LevelUp. “They can track customers to see real ROI [stats],” Priebatsch explains.

LevelUp has achieved more than 500,000 users, typically professionals age 23-35, but many of them are also college students, per Priebatsch. “It’s almost a perfect split male-female,” he reports. “They are highly concentrated in urban markets, primarily because that’s where our merchant partners mostly do their business. In the early days, they were mostly smartphone users who owned the latest iPhone and Android devices. Now our users skew toward a wide variety of smartphones, showing that we are growing among a more mainstream crowd.”

The startup has grown from 30 to 100 employees in the last two years, and last July got a $12 million infusion from investors. Its leader—who goes by the title “chief ninja”—has a take-all-comers attitude about a mobile payment and deals space that includes much bigger names like American Express, Google Wallet, PayPal, Isis and Square.

“It’s not actually that there’s too much noise in this space—it’s that there’s not enough,” Priebatsch contends. “It’s like there’s 150 people in a conference center shouting at each other while the rest of the world outside that building doesn’t notice. And that’s the problem we are still trying to break out of.”

He adds, “The message we have to get out there is that it’s not about paying with your phone. Who cares about that? You have to have more value. It’s about paying in a slightly different way that’s better.” —Christopher Heine

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