In May this year, at one of their weekly ‘pivot or persevere’ meetings, the founders of StreetHawk decided to change tack and try a different business model for their startup. Founders Natasha Rawlings, David Jones and Sri Panyam decided to develop white-label apps for retailers, allowing any retailer to target promotions to relevant consumers, based on shopping preferences and location.
Natasha Rawlings, CEO of StreetHawk says although user feedback had been positive to that point, she found it difficult to convince retailers to pay for the service; which enabled them to market directly to consumers in a geographic location, interested in a particular product. After a year developing the business, marketing managers and CEOs told her they saw the potential of mobile technology, but wanted to launch their own, branded app. StreetHawk now provides exactly that.
Using a matching engine developed by Jones and Panyam (Jones is an experienced CTO and startup mentor with programs like Startmate); StreetHawk now provides a branded app, which allows you to alert consumers near your store, to specials on the products they are interested in.
The pivot seems to be paying off; StreetHawk is soon to release apps for Sheridan, Autograph, Peep Toe Shoes, and Ghermez Cupcakes. But it’s a long sales process, says Rawlings; you can be talking six months or more, from first introduction to signing a deal. She has a few tips on convincing a company to signup: understand what it is the company wants, and give them the data.
Rawlings loves numbers. While working for NewsCorp in London, she was responsible for devising ways to make money on content produced across the company’s various stables — publishing Soduku puzzles, selling consumer databases, and monetising the The Sun Punters Club. As a marketer, she says she was responsible for returning at least a 50% return on investment; for every dollar spent she needed to return $1.50. It’s a principle she is sticking to with StreetHawk, promising retailers a 50% return on their spend.
“I know their jobs — I’ve been responsible for the same things. You need to know their pain points.”
Like many of the B2B startups we’ve profiled have experienced, the decision makers in retail are a relatively small group. It’s based often on referrals, and retailers will copy strategies used by competitors. There is one Aussie retailer (probably more), that holds a meeting each Monday to review what competitors are doing, in order to copy them. Because of that, convincing the first few companies to signup is hard, but once there are case studies, it becomes much easier to sell. Rawlings tells me that Inside Retail magazine is almost gospel, and she’ll be pursuing editorials in the publication. Despite some good write-ups in national and metro media, the take-up was low. Retailers don’t read much else but the industry publications, she says.
You won’t find the marketing managers on LinkedIn forums either. Rawlings says the forums are dominated by salespeople, so the best way to contact decision makers is directly. Connecting via LinkedIn works most of the time. You need to use the intro text wisely though, as you’re limited to a few hundred characters. Usually, Rawlings will say she has some useful information on marketing to consumers, and to connect if they want some more information. It works in 80% of cases. “You’ve gotta hustle,” she laughs.
Rawlings wants to be a “thought-leader” in the mobile marketing space for retailers. She’s actively pursued write-ups in the Wall Street Journal, the Sydney Morning Herald and the Financial Review. The StreetHawk Blog is home to plenty of resources on mobile marketing. Rawlings uses the platform as a way to provide commentary on the latest trends.
The revenue model consists of an initial fee to build the app, an ongoing monthly subscription fee (per store) or commission per sale, and a cost per notification sent to consumers. The ongoing subscription will be less than $100 per store, and each notification will cost 7 cents.
StreetHawk will continue to focus on the Australian market for now, with plans to expand into Asia, early in the new year. It’s one of the fastest growing retail markets in the world, and also one of the most tech savvy, says Rawlings. Singapore, for example, has the highest number of smartphones per capita. The time zone and proximity also make it a sensible option.
At the moment, StreetHawk is focussed on building sales, and won’t be raising investment anytime soon. Rawlings had pitched at Innovation Bay and Sydney Angels, but says she feels it was time consuming and took time away from the business.
“We dipped our toe in the water last year. In this market though, unless you’ve got traction, it’s just not worth it. I’d suggest focussing on your business rather than spending time trying to raise investment, as it is unlikely to happen unless you have a business that is on its way.”
She says that now money is coming in, she’s saving herself equity she’d otherwise have had to offer at a lower valuation.
Rawlings says it was a mistake to try and offer all the “bells and whistles” with the first version. Several months were spent building a database of over 150,000 items and the technology which supported the app. Though in one respect, it has now paid off; it’s this IP which differentiates StreetHawk from other competitors.
Rawlings has spent time building a network with other Sydney-based startup founders. She regularly attends Heads over Heels, a network for women entrepreneurs, describing it as one of the most useful networks she has joined. The network hosts an event each quarter, where a number of women entrepreneurs can pitch their business, and ask for anything — connections, customers, funding or advice.
“It’s been a really helpful network. There are some incredible entrepreneurs and I’ve got some helpful introductions from it.”