The full story of Pushpins acquisition by Ebates parent Performance Marketing Brands
It was reported over the weekend that Lightspeed-backed mobile grocery shopping startup Pushpins was acquired by Ebates parent company Performance Marketing Brands (PMB). But there’s far more than initially meets the eye in this deal that closed shortly before the Christmas holiday.
[Disclosure: PandoDaily Chairman Andrew Anker is also Chairman of PMB]
First and foremost, Pushpins is more than just a mobile couponing app. The little known crown jewel of the acquisition is the company’s grocery product API, SimpleUPC. Launched in partnership with MultiAd-owned Kwikee in December 2011, SimpleUPC offers a rich source of consumer packaged goods (CPG) product information database, including images, descriptions, nutritional information, ingredients, and related content.
The service covers 250,000 products from more than 15,000 brands across the food, beverage, health and beauty, personal care, and baby product categories. SimpleUPC is used by many of Pushpins' largest competitors in the industry, including Coupons.com, SAP, Atkins, Everyday Health, and OutofMilk.
This shouldn’t discount the value of Pushpins' consumer mobile platform. The free mobile app (iOS only, currently), which integrates with customer loyalty cards, offers grocery shoppers digital coupons at over 6,000 stores – soon to be 10,000 according to its CEO – and weekly specials at over 50,000 stores. Consumers unlock these digital coupons and rewards by scanning UPC barcodes at the grocery store. Users also get access to digital shopping lists sharable among multiple users and a record of their shopping history.
“People generally underestimate the difficulty of doing this – the frictionless-ness of it all,” says CEO and co-founder Jason Gurwin. “They think it’s just a mobile app, but really there’s this whole train station going on in the background that the system needs to know which of a few dozen channels to route each action to.”
Lightspeed partner and Pushpins investor and board member John Vrionis agrees, telling me:
The addition of Pushpins allows PMB to move into offline coupons for the first time, while also expanding its presence in the attractive grocery category. In addition to Ebates, the acquirer also owns the mobile and online shopping app, FatWallet, and personal finance app OneReceipt.
“What these guys accomplished on a scale of one to 10 was an eight or nine. That’s because they were totally dependent on cooperation from a bunch of constituents that don’t move very fast – dinosaurs really. One day they had to deal with Safeway, the next with CPGs, not to mention integrate with dozens of payment systems.
“I don’t know what’s going on with Shopkick, but they have a similar problem. They need to stitch together difficult to work with constituents. I don’t know that they’re much further along despite raising a ton more money.”
“Expanding into grocery categories is a great way for us to expand opportunities for our members to save with coupons, deals and cashback every time they shop,” says PMB CEO Kevin H. Johnson.
Pushpins was founded by two Harvard MBA’s, Gurwin and Peter Michailidis, for a 2010 MIT business pitch contest. After winning the $5,000 grand prize (how’s that for sticking it to your brainy cross-town rivals?), Gurwin and Michailidis received a $50,000 fellowship from Lightspeed Venture Partners between their first and second year at HBS. The company later raised a “sub $1 million” seed round from Lightspeed and Archimedes Capital, according to Gurwin, its only outside financing to date.
Remarkably, the company’s lead mobile developer Neil Daniels joined the day after graduating high school and built the mobile app through the acquisition while attending school at Cal Poly-San Louis Obispo (he dropped out of school following the acquisition). The company’s tech team totaled four people at the time of its acquisition, which was paired with what Gurwin describes as a “small sales team.”
Despite its small team and limited financial resources, Pushpins managed to compete impressively against far larger challengers. When it entered the market, the majority innovation in couponing centered on the ability to search for deals online and print out your own coupons to bring with you and present in store. Since their launch three years ago, others giants have entered the space with a vengeance.
Most notably, Coupons.com, which controls 90 percent of online couponing and aims to extend this dominance to mobile, has been investing heavily into its GroceryIQ product. Others, such as publishing giant Condé Nast-owned Ziplist have expanded beyond recipe and list-making to offer savings via its partnership with supermarket deal giant Grocery Server.
The decision to accept the acquisition wasn’t a foregone conclusion, nor was PMB the only suitor. “We had to ask ourselves whether to go at it alone, or find a partner,” says Pushpins CEO Jason Gurwin. “We had the traction and could have gone out and raised a big round of financing. But PMB, through Ebates and FatWallet, had tons of very similar users to us – tons of women shoppers.” The fact that the companies shared very similar visions of where mobile shopping is going didn’t hurt either.
While neither the company nor Lightspeed’s Vrionis were able to disclose the exact transaction terms, the investor did say that it was structured as “cash with some earn-out targets based on product and business incentives. It was a really nice exit for them, and we supported them all the way. Everyone was quite happy and made healthy multiples on their money (and time).”
All members of the Pushpins team have stayed aboard through the acquisition, with the company moving its operations into PMB’s San Francisco’s offices. Pushpins and SimpleUPC will continue to operate as standalone businesses, though will have access to the full resources of their well-heeled acquirer.
The goal for Pushpins remains the same – to be the way that people grocery shop – but the timeline for getting there has been accelerated post-acquisition. Pushpins has already begun growing its team and now has access to an enormous salesforce inside PMB. The immediate roadmap is to roll out Web and Android products, with Windows Phone a wait and see. Then, it’s all about adding new tools for brands and retail partners to access and deliver value to consumers.
Amazon, Coupons.com, and others may have something to say about the company’s goal of grocery shopping ubiquity, but there’s no arguing that it’s in a far better position to exert its will than it was prior to the year-end acquisition.