Mobile app company Validated aims to reward consumers for getting out of the house and using alernative transportation.
"If you're on a date you're not going to bring a Groupon, but validation, no one minds that," says Alex Wilhelm, head software developer at Validated, a Portland-based company.
Wilhelm has a point. Americans love getting their parking validated — or paid for by the merchant. But there's still something a bit off about discounted goods. Save $10 on garage parking? Smart. $10 off a $100 meal? Chintzy.
That's what the foursome who make up startup Validated are banking on.
Validated's app works at shops, bars and restaurants in Portland and Seattle, where merchants have signed up for the free service. It's a way of offering validation not just for parking but alternative transportation options. They cover Uber, Lyft, ReachNow (BMW's car sharing service) and Biketown (the orange rental bikes).
Say you spend $100 at a bar. Your bartender will alert you that you as a phone-carrying member of Validate you just earned a $5 Lyft credit to make your barhopping or your journey home a little more palatable.
The owner sets the validation credit percentage, but Validate recommends something between 7 and 10 percent.
Validated's team are in talks with the City of Portland in the hopes of adding the Portland Streetcar and on-street parking meters to the "transportation ecosystem" as they call it.
Wilhelm is from Austria but spent 10 years in Japan working in finance. Cofounders Ian Lyman and Tov Arneson worked on Validated in the Seattle TechStars incubator. Arneson had run a valet parking operation there and wanted to improve the business model, but to add transportation networks to the mix they needed a tecchie who knew about banking software. This is Wilhelm's role.
"It's a universal currency for transportation," says Wilhelm. "There could be a day when our app goes away but our platform runs in the background and Lyft and Uber are integrating our validation platform into their app."
Public facing secret sauce
"If there is a secret sauce to what we do, it's that we've come up with a scheme to work with multiple transportation partners," says Lyman. "It's a combination of technology and clever thinking on our part, and Alex came from financial services. We had to build a financial platform." The complex part is linking merchants, transportation providers such as Lyft and Uber who have huge back ends, and consumers' phones, and then sending credits between them.
Credits accrue, they don't expire. If you rack up $30 up Validated credits in one day of shopping and partying, they can be spent or saved as preferred. Keeping track of all that, between multiple moving (often impatient) targets is the definition of a platform.
The company sits at an interesting intersection of transportation providers, city dwellers and brick-and-mortar businesses. In fact co-founder Ian Lyman says the trends in brick and mortar are fascinating.
One less car
Part of their story is the vaguely altruistic aim to get cars off the streets. They say they are close to signing up GetAround, a service which lets private car owners rent out their own car by the hour or day.
"I am an Amazon addict and feel bad about it," says Lyman about the temptations of ordering in. "I want to get out, I'm a car guy but I hate driving." He has a Land Rover Defender and had a 1982 Delorean from 2000 to 2016.
He corrects himself: "I love driving, but I hate driving downtown — even in Portland."
A serial entrepreneur, and the team's product designer, Lyman founded MP3 player Sonique, back in the day (1998). He also used to live in Los Angeles, so he's serious when he says he feels Portlanders' transportation pain.
"Even in Portland at the thought of driving you feel, ugh!"
Wilhelm adds. "Say you wake up and you want to go to brunch at Screen Door. You know parking would be hard to find, so you call a Lyft. It's the convenience factor, there's no going to the ticket machine in the rain. You get a Validated credit for spending a certain amount and you jump in another Lyft and go home. You're like 'I had a nice experience, I'm not stressed.' It leaves you with the feeling that this was nice."
If customer convenience is one leg of the tripod, they believe Validated can do the same and more for merchants. "Merchants don't want to train staff to scan codes," says Lyman. Validated works by scanning paper or digital receipts, which can be done at home or the next day. (Customers can go too far. One woman uploaded pages of screen grabs of her banks statements in a futile attempt to back-validate months of consumer purchases.)
"When we went to the receipt-scanning model, merchants were happy. They don't have to do anything except tell their customer. The onus is on us and the users."'
Merchants also like the fact that shoppers, in trying to hit a minimum spending level, usually overspend.
Party like it's 1998
"Tov and I love to go out on the town — bars and shopping — we like the cities we live in: Seattle, Portland, L.A… Validated came form our experience that to get around, parking is always a nightmare."
With parking at $20 an hour in San Francisco, and valet service everywhere in LA (usually costing $6 to $12 a car) they wanted to crack the valet system. That's when they realized that barhopping in a Lyft can get expensive too. Lyman asks, "If I spend $200 in a bar, why can't the bar toss me $5 back toward a ride, for being a good customer?" (Bars can run promotions like ladies' night and happy hour but they can't usually discount alcohol.)
So in Seattle, at Arcteryx, one of their partners, the outdoor apparel store will cover the $20 parking garage fee in Validated credits if the customer spends at least $250.
"They are really smart, they know their numbers well and you can't spend $250 in Arcteryx. You can spend under, or $275. They set it so it's really easy for people to blow past it."
The retailer sees it as a way of combating showrooming, where people try on clothes then go home and buy them cheaper online. "It's like a reward, buy it here now with us and we'll take care of that pain point, the garage parking," says Lyman.
One time e-tailers such as Warby Parker (eyewear), Trunk Club and Bonobos (menswear) are opening brick and mortar stores to lure people in and have them repeat buy online.
Getting a meeting at a big company Uber is like trying to pitch a movie to a Hollywood executive.
"We're tried pitching to a higher level but they know we're too small," says Lyman. "The success we've had is by going through developer relations or operations."
Wilhelm did the legwork.
"It's about finding a person who works at these bigger companies and making a relationship." These platform companies all have APIs and reach out to developers to get them to use their software — to form an ecosystem.
In his case, Wilhelm talked to another tecchie at Lyft about something he couldn't find in their public documents. He wanted to know
Wilhelm says, "I called in and applied for a Lyft For Work account, and we to talking an I asked would it be possible to leverage promotional codes, and he said 'Yeah, I can issue that.' It was internal, and they said 'Let's just do this!' It wasn't in the public facing documents."
Distribution is the problem. Validated can't keep going door-to-door getting stores to display the pink Validated sticker. They hope the Lyft and Uber drivers will spread the word.
They give drivers decks of cards with QR codes that customers can used to download the app and get an extra discount, in this case $5. They have 10 driver ambassadors signed up in Portland, and 50 considering it.
"Every driver I've talked to, they get it," says Lyman. "They're like, 'Why wouldn't I hand out these cards? People like them." While the merchant usually pays (not Lyft or the driver) in this case the $5, plus $1 for the Lyft driver, is eaten by Validated as marketing.
"If I can get a new customer for $6, that's worth it," says Lyman.
The card says 'Thanks for driving with me, let's knock $5 off!' So it looks like the $5 is coming from the driver.
They are also hoping for bulk buying from the transportation network companies, trying to get credits at a discount. But that's ongoing hard work.
"All the partners have been very cooperative," says Wilhelm diplomatically. Although the bigger they are the slower they move. Even disrupters get stuck in traffic.
Being part of the Jaguar Land Rover incubator has its perks.
"Having a luxury car brand behind you really helps with transportation partners and with the merchants," says Lyman.
Jaguar land Rover has s stake in the company, but Lyman says JLR would be fine with others investing. "If someone buys us out it benefits them." Ultimately though car companies are in flux, and he says JLR are looking to diversify beyond traditional auto sales.
"They see the future changing so drastically, and they're looking for every way to embed in the emerging mobility ecosystem."
Validate's Lyman and Wilhelm stress that the firm is about more than parking, it's about getting into all the different modes of transport.
"The whole point of transportation is to feed commerce, and we're straddling transportation and commerce. We're trying to exchange value through that platform. And that's complicated."
Proof of Concept
To show the service in action, Validated principals Ian Lyman and Alex Wilhelm take a Lyft to Deadstock Coffee, a partner coffee shop at 408 NW Couch St. in Old Town. It's a hip hole-in-the-wall frequented by sneakerheads and apparel industry staff.
Ian Williams, the owner, says he met the Validated team at a conference on craft beverages when he was on a panel.
"They were running a promotion that day for $10 in Validated credits, and I invited them to come by the shop. It kind of makes sense. I just started pushing it hard again when they added the (Biketown) bikes.
WIlliams sees some customers come in two or three times a week and get Validated. But he keeps this thresholds low: $1 credit if you spend $5, $2 if you spend $10.
"I do it to encourage people to spend a little more, but I don't want to cut out people who don't get much."'
For Validated, it's just more marketing: on the return leg they pitched their Lyft driver about becoming a Validated ambassador and he was all in.
Transportation validation app for IOS and Android, based in the JLR (Jaguar Land Rover) Tech Incubator
1450 NW 18th Ave. Portland
Web: validated.co (not .com)