Adam Coomes didn’t know it when he sat down to consult Matthew Simrell about a month ago, but he was about to become a co-founder. He heard about Simrell’s startup, CouponCloud, and its intention to tackle what Simrell calls an “antiquated,” half-trillion-dollar industry: coupon processing, particularly for consumer packaged goods (CPG).
“It’s the most pure idea I’ve ever heard,” Coomes told Silicon Prairie News. “The problem and solution are so clear, it’s rare. I really wasn’t preparing to be in another startup.”
Simrell went to Coomes’ Salt Consulting for help after initially meeting last year during the startup party at 1 Week KC in June, an annual event Coomes helps organize. Coomes has been a major player in the KC startup scene for years, co-founding Infegy, helping Zaarly get off the ground and facilitating Startup Weekends, in addition to a number of other startups and “experiments” as he calls them.
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“I went in to talk with him as a client, and left as part of the company,” Coomes (right) said. “The best decisions I’ve made in my life I’ve made in two seconds.
“With all the industries that have been disrupted in the last 10 years, there are so few opportunities like this that exist anymore. I thought, ‘Wow, this is so big.’”
Simrell started off last summer trying to make a grocery list app that integrated with coupons to provide a better shopping experience for customers. He soon found that such an app was impossible. There wasn’t a database to pull from. So CouponCloud quickly scaled into a much different, larger company.
What its facing off against is a series of processes and steps that have been engrained within retailers, manufacturers and processors for what seems like ages.
Let’s say a customer brings a printed coupon for $1 off cereal to the grocery store. The retailer (grocer) adds that coupon to the rest of the stack and counts them, same as cash, before shipping pallets of coupons down to Texas for more counting, then on to Mexico to be sorted for arrival at the respective manufacturers. The coupons are shipped to the manufacturers’ processing facilities because manufacturers don’t trust the count and are then recounted.
“Retailers are essentially paying half of a coupon’s value for the entire process,” Coomes said. “We want to put the full value in retailers’ hands and improve the experience for everyone, on all sides. For consumers, a big pile of coupons deters people from using them. It’s all a big mess.”
In the end, retailers only get about half of that dollar’s value back, and have to wait months for payments to come through.
In brief, it’s a colossal waste of time for all involved, and one Simrell and Coomes believe they can put a dent in. By and large, they’re keeping the “how” under wraps, but have a team of seven working to create enterprise software with a consumer-friendly brand that “first and foremost handles all the processing on the back end,” Simrell said.
It will allow for paper or digital coupons, with the heft of its value in the “plethora of data” it can pull from consumers. Whereas now manufacturers often have to wait about a year to truly see whether a coupon campaign was successful, CouponCloud wants to give them real-time answers. The team sees potential for it to be a marketing platform for brands.
They also think they can do a lot to cut down on waste—about 315 billion CPG coupons were issued in 2013, but only about 3 billion were redeemed.
They’ll have to do all of this while building scalable databases built upon legacy processing systems, and with the ability to provide sub-second scanning at the register. Customers aren’t going to wait 10 seconds for each coupon to scan, Simrell said.
He realizes it’s bold to go after such a massive industry, but has the confidence they can get it done. It’s also why there aren’t many other competitors, he said.
“Everyone keeps trying to get a sliver of the industry, which only adds to the fragmentation of the market,” Simrell (left) said. “We’re coming in and trying to make the platter that the pie can sit on.”
What that would create is a foundation for developers to do what Simrell initially set out to do: integrate coupons into grocery lists and much more.
So what’s the biggest hurdle? Most likely, it’s getting all of the CPG manufacturers on board. If they can, there just might be a big winner in KC. Something both of them hope to see soon.
Coomes has played a role in organizing a lot of events around the city, but he said there comes a time when the most important thing is success.
“The real value for the community is to build something big,” he said. “Until you have big companies coming out of the city, we’re just not going to get recognized.”
The team has an immediate need for front- and back-end web developers and Simrell said that’s another issue he wants to help with.
“It’s hard to convince high-caliber talent to come work for your new, unproven startup versus salary and benefits of a Cerner or H&R Block. We don’t have that mentality here in KC yet. We don’t have that mentality to give that a shot here.”
Credits: Adam Coomes and Matthew Simrell photos from LinkedIn.
