Veteran-minded TroopSwap shifts from daily deals to digital identification


TroopSwap co-founders Blake Hall and Matthew Thompson. (Jeffrey MacMillan/JEFFREY MACMILLAN FOR WASHINGTON POST)
November 11, 2012

McLean-based TroopSwap is shifting focus from daily deals to digital identification as the founders continue to pursue a business that both improves the lives of current and former military personnel, and expands the company’s bottom line.

Co-founder Blake Hall, a veteran of the Iraq war, said service members often struggle to prove their status after exchanging an active-duty I.D. card for separation papers. The result is veteran benefits that go unclaimed and exposure to fraud for both the veteran and the businesses that aim to help, he said.

The firm’s Troop ID widget will provide online retailers and other Web sites with a window where veterans and active-duty military personnel can enter a unique user name and password. Doing so would then qualify them for discounts or other perks.

To set up an account, service members enter personal identification information through Troop ID’s Web site that is then verified against a government database. Troop ID acts as the intermediary so that other companies don’t directly access the data.

Hall said the verification technology was developed for the company’s daily deal platform, also called TroopSwap, that peddles special offers for military families.

Soon, though, the company began receiving weekly inquiries from firms as large as Microsoft and Home Depot about using the software to extend their in-store discounts to digital shoppers.

There’s also interest from the Department of Veterans Affairs and other agencies to use Troop ID to check that recipients of veteran benefits, such as education assistance or job training, are in fact eligible.

“A byproduct of delivering [discount programs] more efficiently and more securely is that more brands will actually set up military discounts because they see it can be done in a secure fashion,” Hall said.

Partner No. 1

The company has found its first partner in Under Armour. The Baltimore-based sports apparel outfitter has offered discounts to service members for more than a decade. The Navy SEALs were among the early buyers of the company’s clothes that are specifically designed for hot and cold weather.

But Dave Demsky, the vice president of e-commerce, said that the company had no way to verify the status of those asking for the military discount. So clerks would take in-store and phone customers at their word, and those who buy online were simply out of luck.

While Demsky doesn’t believe the discount was widely abused by those who have never served, the Troop ID widget allows the clothier to ensure the benefits go to the intended customer.

These retail partners may also become the company’s chief marketing engine, said Holly Tennant Billy, the firm’s newly hired vice president for business development. Billy previously held that title at District-based LivingSocial before being let go in an executive realignment earlier this year.

“We believe that it’s in the partners’ best interest to advertise that they are offering a military discount,” Billy said.

TroopSwap got its start in 2010 when the term “daily deal” was still golden in entrepreneurial and investment circles. The fledgling firm raised around $3.7 million to support its online vouchers and discount business.

But that craze has fallen out of favor with investors as growth has slowed at LivingSocial and market leader Groupon, pushing smaller players like TroopSwap to reevaluate.

Hall says the deals side of the business will continue for now, though the long-term vision is to create a Craigslist-like marketplace exclusive to military families who often relocate and have a need to sell their belongings.

Hall expects the firm to close on a round of institutional venture capital early next year, allowing the company to ramp up its sales effort and add to a head count that includes 15 employees.

Steven Overly covers the business of technology, biotechnology and venture capital in the Washington region for The Washington Post and its weekly Capital Business publication. In that capacity, he has written about start-up struggles, investment trends and major drug discoveries.
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