Prepared for: Communications 140 Prepared by: Kush Nijwahan ( kushn@stanford.edu )

Sophie Schulman ( soschul@stanford.edu ) Ashley Westhem ( awesthem@stanford.edu )

May 2015 shortnoticeapp.com

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Executive Summary

The Mission Our mission is to provide brick-­and-­mortar businesses an easy and quick way to reach customers by delivering direct messages to their mobile devices.

The Problem The problem we are solving for caters to the needs of small businesses to reach their customers. Most small businesses do not have many options to quickly and directly reach their customers. These businesses want to engage with customers without having to put much strategic thinking, resources, and manpower into getting acknowledged.

Currently, small businesses lack a means of customer engagement and continued follow-­up with their existing customers, especially those that are loyal to them. According to real business owners, imminent models do not work well to bring customers through the door for a variety of reasons;; emails are often marked as “spam” by customers and hence often go unopened, snail mail is simply outdated, and Facebook’s news feed function tends to hide their business pages. In general, businesses face too much noise in getting their customers’ attention. In addition, there are always pockets in the day where we want to do something fun and unplanned, yet we do not know who is free to hang out. This predicament highly limits spontaneity in our lives. Texting is too one-­on-­one, Facebook is too public, Twitter is too cluttered, Snapchat is not meant for textual content, LinkedIn is too professional, and email is too slow. None of the social media platforms that claim to solve this issue truly solve the issue at hand.

The Solution On the one hand, Shortnotice is a platform to tell your friends what you feel like doing in real time. When you post on Shortnotice about what you want to do, your friends can “nudge” you if they want to do the activity that you posted about. You can start a conversation with the friends that nudged you to set up the logistics of your meetup.

On the other hand, Shortnotice is a channel for businesses to send messages to customers that opt-­in to receive them. For example, frequenters of Oren’s Hummus would follow the business’ account on Shortnotice through a simple in-­app search. When Oren’s Hummus posts a message — say, “Pita bread and hummus half off tonight for you and a friend” — the follower will see it as a push notification that pops up on their locked home screen. Then customers can then post to their friends on Shortnotice that their going to Oren’s Hummus. Thus, businesses will benefit from Shortnotice through its inherent word of mouth marketing value.

With Shortnotice, all it takes is one tap for users to notify friends when they feel like doing something fun! All it takes is one tap for businesses to notify customers when they want to see them in the store! (See Appendix ( Exhibit 1 ) for screenshots of the Shortnotice app.)

Our primary goal is to increase engagement between small businesses and their existing customers by having 100% of users opt-­in to receive posts, such as the aforementioned Oren’s Hummus message. Messages like this encourage customers who are already familiar with the business to bring their friends with them on the next visit by posting in Shortnotice.

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Market Opportunity

The Customer We have identified the primary Shortnotice business user to be eateries that appeal to a particularly localized/region-­specific customer base. You can think of this user as a business owner or manager in the 30-­49 age range. Think of this user as your favorite bartender, baker, or butcher down the street from your house. We will prove that the Shortnotice concept works in these types of stores before we scale to businesses outside of the food/beverage service.

Cupcakin’ is a perfect application for Shortnotice. The manager at the Berkeley store mentioned in her interview that, “ A vacuum exists in terms of getting in touch with customers via social media since not everyone is guaranteed to see our posts on our Facebook, Twitter, and Instagram accounts.” She also mentioned, “I don’t have a way to assuredly notify all of my best customers that my store hours have changed and that certain flavors on specific days of the week haven’t sold out by closing time.” (See Exhibit 2 for more testimonials from our need-­finding interviews.) The Cupcakin’ manager is clearly frustrated by the void that exists in communicating with her customers — ways that traditional social media platforms cannot reach their customers. She is skeptical that her messages are getting through to the people she hopes will notice them, and that the messages will terminate in value after a short period of time before they are seen by customers. At Cupcakin’ this is a very small window of time — a matter of hours or even minutes — to successfully convert a casual customer to a purchaser.

Our second user is the customer in the 18-­24 age range, and is a full-­time student or a recent college graduate making a yearly income of $60,000 to $90,000 and works 60-­80 hours per week. He or she typically spends most of his or her free time on college campuses, in the one to three radius of the metropolitan area surrounding the college campus, or in a major city. He or she ventures around and off campus, and is a socialite — in his or her spare time, the user enjoys hanging out with friends.

The Market Size & Key Metrics For the purposes of our financial projections, we use simple census data to extrapolate the Shortnotice market size and revenue per customer that we will garner.

Below are the major assumptions we made to arrive at our final numbers:

-­ The average mall size is 114 storefronts with 18 of those stores constituting “Food”. We envision a 1

75% Shortnotice penetration rate among these “Food” stores year over year. Every college town has two of these medium-­sized malls/shopping areas. Shortnotice will be adopted by 14 of these “Food” stores per mall, or 28 per city.

-­ In first year, we will launch in U.S. cities because the markets are most familiar to us and make the most sense with regard to our primary customer profile. We will focus our efforts on five cities throughout the U.S.: Berkeley, CA;; Boulder, CO;; Louisville, KY (launched in January 2015);; Portland, OR;; and, Seattle, WA. These cities were chosen based on a number of factors, namely 2

the extent of their vibrant local culture and appreciation for homegrown businesses as well as population demographics. Not only do college towns/cities readily provide us with large Generation Y and Z populations, but they also facilitate higher churn among their communities than others, enabling businesses to reach new waves of customers frequently with the movement of students that move to and from campus upon graduation.

The Financials

Given the aforementioned assumptions, Shortnotice will be adopted by 140 “Food” businesses within 2015 with costs overriding revenues at $7,324.56. We are prepared to bootstrap this amount due to the high overhead and upstart costs that we will face, and only three months of subscription sales (not inclusive of 1 “The Average American Mall Explained in 6 Charts.” Bloomberg. February 10, 2015. http://www.bloomberg.com/news/features/2015-­02-­10/the-­all-­american-­mall-­explained-­in-­six-­charts-­i5zjlzrt 2 “17 Best U.S. Cities for Hippies.” July 31, 2013. Estately. http://blog.estately.com/2013/07/17-­best-­u-­s-­cities-­for-­hippies/

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merchandise sales). Year 2 we expect a 200% increase in growth among “Food” businesses alone by expanding to 15 cities with projected revenues of $653.51 from monthly subscriptions. This increasing trend slows by half each year thereafter with revenues jumping to $15,721.94 in Year 3. Revenues continue to increase as a result of steady subscription sales in year 4, resulting in $30,737.80 of annual revenues. Year 5 will see the slowest user growth at 25% from the previous year, so revenues will be $41,747.69. See Appendix ( Exhibit 3 ) for balance sheet for Year 1 through Year 5.

Competition

Social Marketing Competitors A business could post on their Facebook page, however, only a small percentage of followers end up seeing a given post through “organic” search on the news feed. Indeed, According to Forrester Research this number is at about 2 percent due to Facebook’s mood manipulation of user feeds.

In addition, the price per ad on Facebook increased by 247% in 2014 as compared to previous years. Thus, tangible results on Facebook demand some skilled handling to strike the right balance between paid and organic content.

Another option is for businesses to send out an email to potential customers in order to share a message. However, according to the results of our need-­finding interviews, most people will not open the email sent or perceive it as spam.

Shortnotice is differentiated from platforms like Twitter because a Shortnotice message is temporary — it disappears after 24 hours, allowing for a fresh, clutter-­free feed at any moment. In general, users indicated that Twitter has lots of messages that they will never see or that they simply do not care about.

Loyalty & Rewards Programs/Promotions Competitors Shortnotice is fundamentally different from existing competitors such as FiveStars, GroupOn and Rain for a number of reasons. Those businesses only provide redeemable benefits for customers once they have decided to walk through the door and, most likely, after making their purchasing decision while they are in the store already seeing what is available for purchase. At that point, these businesses have missed a big 3

opportunity. Such is the paradox of loyalty programs: many of us belong to half a dozen or more, in many cases without attachment. We collect points, perks, and discounts by purchasing nothing more, in many cases, than we would have purchased, even in the absence of points or discounts. 4

Shortnotice is a way for businesses to keep customers’ interest piqued when they are not in the store in a quick and easy-­to-­use way for businesses and customers. Direct messaging within the Shortnotice app beats the cadence of traditional loyalty programs which reward customers well into the future from the point of purchase. Thus, Shortnotice means instant happiness for the business and the customer.

Value Proposition Because 100% of users see Shortnotice messages from businesses, there is a higher conversion rate among users. In a small test program that we conducted with a business in Kentucky, they have experienced higher conversion rates among their customers as a result of direct messaging. Thus, we believe that this method will scale well.

Additionally, we will offer analytics for businesses so that they can gauge the impact of their messages, and thus understand how they can improve their own marketing and messaging strategies through Shortnotice.

3 Why Loyalty Programs Alienate Great Customers. Harvard Business Review. July-­August 2012. https://hbr.org/2012/07/why-­loyalty-­programs-­alienate-­great-­customers 4 Customers Don't Care About Loyalty Programs As Much As Brands Think They Do. April 4, 2013. http://www.businessinsider.com/the-­problem-­with-­loyalty-­programs-­2013-­4

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Lastly, one of our core values as a company is defining and respecting a strict and true definition of simplistic “opt-­in” for every user. (See Exhibit 4 for an analysis of how opt-­in varies across social media platforms, especially email.)

Business Model Our main monetization strategy is a freemium model that offers Shortnotice to businesses for free for a three-­month trial period with access to all functions in the app. After 90 days of usage, a business will be asked to pay for continued use of Shortnotice at a monthly fee of $3.99. Two additional revenue streams that we will pursue as the product matures include big data analytics and a commission/referral fee that will negotiated with business users.

Marketing Strategy

Word of mouth Our best marketers will be the end-­users themselves;; fortunately for us, there are two communities of end-­users — the businesses and their customers — who can maximize the word of mouth marketing value that Shortnotice boasts. Rather than focusing on hunting down new customers, we would much rather create a valued environment that benefits the existing customers and keeps pulling them back. Businesses should not have to advertise in the traditional sense;; instead, our users do a great job of “spreading the word” for our business users.

Word of mouth marketing works when there is an incentive to do so, i.e. not wanting to go to Oren’s Hummus to take advantage of the promotion alone;; or businesses can incentivize word of mouth marketing by giving 10% off to customers who show that they reposted in Shortnotice.

According to Nielsen, 92% of consumers believe recommendations from friends and family over all forms of advertising and that’s why word of mouth marketing is the most viable form of social marketing. Additionally, in a recent study, 64% of marketing executives indicated that they believe word of mouth is the most effective form of marketing. However, only 6% say they have mastered it. According to Forbes: “The problem is that for the last few years, marketers have been focused on ‘collecting’ instead of ‘connecting.’ In other words, brands are too caught up in collecting social media fans and they are forgetting to actually connect with them.”

Why will people be compelled to post in Shortnotice? We believe, as did Aristotle, in the desire of people to be social: “Man is by nature a social animal;; an individual who is unsocial naturally and not accidentally is either beneath our notice or more than human. Society is something that precedes the individual. Anyone who either cannot lead the common life or is so self-­sufficient as not to need to, and therefore does not partake of society, is either a beast or a god.”

Campus representatives The extreme users will be sought out as unpaid brand ambassadors on their respective campuses. We have and continue to venture to various greek organizations on college campuses across the nation to speak to them in person about Shortnotice during their chapter meetings (high attendance equals high brand exposure). We gift them with swag after the pitch, and they usually download Shortnotice on the spot and begin using it immediately.

Unpaid Influencers These are both planned and unplanned ambassadors. When we find an opportunity to pitch Shortnotice, we do, and this has led to a number of high profile people downloading the app and sharing it with their friends and fans. We already have a stellar roster of Shortnotice fans including Russ Smith (NBA rookie of the Memphis Grizzlies), Rashad Jennings (NFL runningback of the New York Giants), Luke Hancock (of the

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2013 NCAA basketball national championship Louisville team), and Prince Ea (YouTube celebrity). These high profile ambassadors have proven to be a valuable (and free) marketing tool for Shortnotice.

Experiential marketing Puppy outings The puppy is the Shortnotice logo because it lives a carefree, easy life — the life that Shortnotice strives to provide users! We bring puppies to target user “hotspots” — that is, areas with a high potential user base. These include college campuses, outdoor malls/shopping centers, streets with main attractions, etc. The dogs wear Shortnotice t-­shirts, people see the t-­shirts, ask who we are, and we tell them about Shortnotice. In this face-­to-­face experience, we demo the app and facilitate sign-­ups with individuals and groups.

Earned media We expect sharing to drive traffic to the app through social media mentions, reposts, and reviews.

Risks

Being a lifestyle brand To become embedded in the user’s life, we need a high volume of downloads;; more specifically, we need downloads from the user’s primary network. Similarly, we need to achieve continued monetization.

Our goal is to get enough customers and get enough businesses to keep each other sustainable. Yelp addresses this problem by channeling the “network effect” — when a product or service becomes more valuable the more people using it. Shortnotice helps people learn about great local businesses offerings that might enhance their day, customer experience, and even quality of life. As more people use our platform they are helping to expand the breadth and depth of the reach and benefits of Shortnotice. This increase in consumer traffic improves our value proposition to local businesses as they seek low-­cost, easy-­to-­use, and effective advertising solutions to target a large number of intent-­driven consumers. The social engagement side of Shortnotice through customer’s reposting business posts creates a “network effect.”

Population seasonality Populations in certain cities are “seasonal”, such as in college towns and in politically-­centric cities. In a small town like Burlingame, there is almost no population churn. In these cities, businesses may care about new customer growth. How and when will Shortnotice expand its value proposition in order to encompass new customers?

Some businesses are so well established they don’t need to promote themselves and did not express a desire to do so. Greater emphasis and focus will be placed on newer businesses and ones that are in the habit of running messaging on short notice and that cater to younger generation.

Management The Team The Shortnotice team has a diverse and broad skill set. Team members’ backgrounds include computer science, marketing, journalism, and public relations. Currently the team is composed of one engineer, one business development manager, and one content manager, all of whom illustrate management skills developed from starting and/or managing previous small, early-­stage companies. Finally, and most importantly, the team has a lot of passion and heart for the Shortnotice philosophy.

Kush Nijhawan Kush is a Computer Science major and one of the co-­founders of Shortnotice alongside his twin brother. He believes it is vital for startups to remain true to their original purpose rather than chase fads.

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Sophie Schulman Sophie is completing a B.S. in Science, Technology & Society this spring. Starting in August, she will enter Visa as an Associate in their New Graduate rotational program in San Francisco. She spends her spare time exercising and experimenting with as many gluten-­free, chocolate-­y Pinterest-­inspired recipes that she can find while listening to country and rap music on repeat.

Ashley Westhem Ashley is an American Studies major and the incoming Editor-­in-­Chief of The Stanford Daily. She is pre-­law, a tour guide on campus and broadcaster for Stanford women’s basketball. She will be interning for Bryan Cave law firm this summer in their Colorado Springs Sports Division.

Next Steps/Timeline Our first milestone will occur during Month 0 with prototype testing;; we will pursue the current leads that we have with local businesses (in the foodservice industry) with whom we interviewed during the need-­finding phase. We will market on college campuses, specifically speaking to greek organizations in order to infiltrate the student user base. The second milestone will occur during Months 1 through 3 with more testing and promotion, increasing the amount of individual and business users and targeting the users that meet the college age, eateries categories. We will continue engaging the brand with students on college campuses, with expectation being that the product will spread into the corporate, working world when the college age users mature and achieve employment.The third milestone will occur during Months 4 through 6 when we ramp up marketing efforts to potential Shortnotice businesses and start planning to expand outside of the eateries and college towns that we have been targeting.

In summary: Milestone 1, Month 0: Prototyping with business leads Milestone 2, Months 1-­3: App update;; testing stage;; adding on more businesses and individual users Milestone 3, Months 4-­6: Increase marketing to potential Shortnotice businesses

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Appendix Exhibit 1 : Screenshots from Shortnotice mobile app

1. Login screen 2. Home page 3. Settings page

4. “your fans” page 5. “post a message” page 6. “view active message” page

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Exhibit 2 : Need-­finding interview testimonials Businesses Customers to those

businesses Other potential buy-­ins to

wave

Malia Mills Boutique Customer: Instead of yelling down the hall or clogging people's’ inboxes with messages, could imagine an app that does this for her

Groups/Organizations

Kara’s Kupcakes Owner: expressed that on days when they overbake a certain flavor, they’d appreciate a way to let customers know on short notice that they are half off, etc. or could use wave to alert customers what flavors are available for the day

Sports teams

Halo Dry Bar Customer: Would use wãve for go-­to restaurants that she already frequents, but would want to know what the specials are, especially for happy hour

Greenpeace

Bar Method Fitness Studio Customer: Gets too many emails from businesses that she doesn’t read, which motivates her to discontinue subscribing to more email lists, so she ends up forgetting about certain stores

Sororities/Fraternities

Dyptique Fragrance Shop Customer: Would only use wãve for places she frequents and is really invested in, as well as places that aren’t always on your mind but are ‘need-­to-­use’ types of service, but not for places that she’s just the casual customer

Business associates bosses → employees

Ambassador Toy Store Customer: One concern is that some people don’t have smartphones or don’t want to add another app to their menu

Toss Boutique Customer: Sorority girls and social customers would probably be the super users from the consumer side

2Bella Clothing Boutique Customer: Would want to use wãve when she wants some retail therapy

King Pin Donuts Owner: having to post in social media all of the time is time-­consuming and taking out ads in yellow pages is outdated and expensive, yet a lot of small, older established businesses are slow and unmotivated to make the shift to get customers through the door

Cupcakin’ Customer: Places like Cupcakin’ would be good to add as contacts on wãve because it’s not somewhere you’d think to go to unless you get a reminder from a notification Owner: a young business (less than a year from opening) and trying to increase presence on UC Berkeley campus;; right now just relying on location and word of mouth

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Exhibit 3 : Financial projections, 2015-­2019

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Exhibit 4 : Explanation of “opt-­in” strategy

The advantages of allowing customers to opt-­in is that it shows customers that the business respects their privacy;; helps businesses contact people who are interested in what they are offering, saves time and money by micro-­focusing the list, lets businesses be more targeted in their marketing, builds long-­term, trust-­based relationships with customers, and boosts sales and product interest.

The disadvantage we see with with email opt-­in in comparison is that the subscriber might not connect registering for the subsequent email list;; if the recipient is not expecting the business' email, the business may not be building trusted engagement;; the business oftentimes will be wasting time sending to an unresponsive audience. Open and click-­through rates then decrease over time the more emails that are sent. Additionally, there is a greater chance and more opportunities/reasons for emails to be perceived as spam (any email they do not expect, any email they do not want, any email they might have signed up for but later decide they do not want), which leads to less trust in the brand. Our users will only be sending short messages that do not clog an inbox or a feed due to the nature of the 40 character limit, thus, promoting trust in the business.

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