E-commerce has not always been kind to the D.C. area’s start-up community, especially since locally based daily-deals giant LivingSocial was sold to a competitor for zero dollars after collecting $900 million from investors.
clarification
After this story was published on washingtonpost.com, company co-founder Wayne Lin contacted the reporter to say Upside had recently rebranded as GetUpside. This story has been updated.
Customers get cash back directly from GetUpside, which extracts a small fee from each deal it facilitates.
An initial test-run that was limited to D.C.-area gas stations has worked well enough that the company recently expanded its app to include grocery stores and restaurants.
“We’re seeing early signs that this could work in a big way,” said GetUpside co-founder Wayne Lin.
The brains behind GetUpside come from Google and Facebook. Lin and fellow founder Alex Kinnier are former Google employees who also worked at Opower, a local tech firm that was bought by Oracle for $532 million. GetUpside got some of its first seed capital from Formation 8, a technology investment fund founded by Gideon Yu, the former chief technology officer of Facebook. And Hal Varian, a widely published academic who is Google’s chief economist, is an investor and close adviser.
The discounts GetUpside offers can be pretty steep: up to 35 percent off for some restaurants, up to 25 cents cash back per gallon of gas for people using the app.
Such large discounts are made possible by the way GetUpside plays retailers off each other. In its gasoline app, the firm offers its services to just one station within each competitive cluster (whichever signs up with GetUpside first), shutting out its street-corner competitors.
Each consumer gets a different cash-back deal for a given location, making it impossible for that retailer’s competitors to find out the average price the retailer is getting through the app. Retailers can effectively lower their prices without their competitors finding out by exactly how much they are being undercut — effectively allowing the chosen gas stations to sidestep natural price competition, obscuring the “true price” of gas through the app.
GetUpside is far from a household name, but there are initial signs that it is gaining market traction. In late 2016, for instance, the app had only 5,000 downloads. Deals were limited to a few hundred D.C.-area gas stations, and the firm’s user base was mainly Uber drivers.
Now the app has 100,000 downloads and claims a total of 257,000 users in 10 cities. It employs about two dozen people, most of them working from home or from a WeWork co-working space in Chinatown. Lin says the business is growing quickly, although he declined to share revenue figures.
GetUpside has also been courting a different sort of investor. It recently raised $11 million from a group of investors that includes an oil company and a large financial-services firm, Lin says, declining to name them because of nondisclosure agreements.
The undisclosed petroleum company gets “some preference, but the preferences aren’t very strong” in terms of choosing which gas stations get to sign onto the app, Lin says. The gas company does not have access to GetUpside’s trove of vendor and customer data, something that could be meant to allay competitors’ concerns.
“They’re seeing an opportunity for them where we can help their stations make money at a regional and local level,” Lin said.
As the firm expands to grocery stores, it plans to apply that competitive dynamic, picking winners on individual blocks when stores compete for the same customers.
So far, the firm’s foothold in the grocery market is small. Just 15 D.C.-area grocery stores, including Harris Teeter and Streets Market & Cafe, display on the app.
GetUpside’s founders say they want to differentiate themselves from the daily-deals business by sticking to products that people absolutely need, such as food and fuel. But the difference is really in the data, they say.
Because discounts are processed by GetUpside and not the retailers, the company is able to show retailers exactly how much extra money they made through the partnership, managers say.
“Every customer gives incremental profit and we can prove that through the data that we use,” Lin said.