The idea of offering a discount to attract new users has been around since the 1800s, when Coca Cola offered paper tickets for free soda fountain drinks. With the rise of players like LivingSocial and Groupon, the economics of the coupon changed. Businesses saw coupon-crazed customers come in and scoop up deals, never to return (unless another deal came up), but deal-savvy shoppers valued the easy chance to save a buck.
Hotspot, a Seattle-based startup, aims to bring that easy-to-use, centralized deal platform to businesses who want to build up a customer base, not just offer one-time deals. The ambitious plan from co-founders Jasjit Singh, Jared Jones and William Xu combines social scheduling with drink specials and a happy hour directory, and recently brought in $200,000 in pre-seed funding.
“We’re really, really focused on this one vertical that we call social venues. So bars, bowling alleys, nightclubs, places like that,” Singh said. “By doing that, we can create a more optimal, end-to-end experience for users for that particular use-case. Whereas a lot of the deals sites like Groupon or LivingSocial provide deals across a variety of verticals, which dilutes the quality of the user experience for those types of use cases.”
The app currently shows happy hours around Seattle and is partnered with more than 40 venues in the city to offer drink deals. Customers can pay for discounted drinks through the app, which they show to the bartender when obtaining the drink. Discounts often range from $2 to $4 for many bars, on items like beers, cocktails and well drinks.
“What we’re really excited about is creating a persistent connection between a business and their customers, both new and existing,” Singh said.
Hotspot helps to build a community around a favorite venue by letting users follow their favorite establishment to get notified about upcoming deals. And these deals, along with other personal factors, are what Singh says get people to show up at a venue.
“The factors that drive a decision about where you want go out to have drinks with friends is a very different kind of decision than where you go to a restaurant,” Singh said. “A Yelp review doesn’t mean that much for a bar, because it’s very subjective. A lot is based on who’s there right now, what events are going on, your familiarity with the place.”
Hotspot recently secured about $200,000 in funding from the Yale Entrepreneurial Institute and other investors to build out their team and expand the drink deals across Seattle. Right now, the company is staffed solely by the co-founders, but they’ve built up a following of 400 weekly active users in Seattle, with 60 percent of users having a credit card on file.