Tastebud Acquires SocialCrunch In All-Stock Deal To Further Its Mobile Push Into Physical Retail

Posted 1 hour ago by Alex Wilhelm (@alex)

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Tastebud, a company that builds mobile loyalty applications for retailers, has acquiredSocialCrunch. Both firms hail from Chicago. SocialCrunch was a graduate of TechStars in 2013, raising $785,000 in its lifetime. The deal was an all-stock transaction.

SocialCrunch, for those unfamiliar, collected data on consumer sentiment through quizzes, allowing the firm to track trends. One report on the company called its product “gamified big data.” Tastebud itself is best known for its product StyleSeek, which TechCrunch called a “Pandora for E-Commerce” at the time of its last capital event. The company has raised a total of $1.75 million to date, making the all-stock deal sensible — given the relatively low capitalization of both firms, cash is likely quite dear.

(For whatever it might be worth, former SocialCrunch and now Tastebud denizen Alex Griffiths is someone with whom I have spent some time with in social settings, usually involving a pint or two.)

Tastebud has combined the most popular part of StyleSeek — its game to help you discover your fashion tastes — and the quiz tools of Social Crunch, creating a mobile, white label-friendly product that it intends to sell to physical stores to help them track consumers, discover their tastes and offer them on-site deals.

Malls, to be specific. I didn’t understand it either, so I asked the company why it would go after not merely the physical realm, but the mall space specifically, which we have all read is doing somewhat poorly in recent years. Amazon, and all that.

According to Tastebud, the physical retail space is perhaps more healthy than you would think. The lesser end of the mall world is indeed having issues, the company confirmed, but the more affluent malls are doing just fine.

The company is currently working with a mall in Nebraska. It intends to expand to other locations this year, with increasing tempo. Given that I am in malls roughly never, I asked the company for data about how its product works. According to Tastebud, one “time-sensitive offer” had a conversion rate of 36 percent, which meant that “in-mall shoppers that received the offer literally went to the store and bought something.” Tastebud claims that it accumulated more than $5 million in “coupon redemptions” in its first half year at the Nebraska location.

The two questions that Tastebud faces now is when it will seek additional capital, and how quickly it can grow its customer base. It seems reasonable to think that the sales process of landing a large mall isn’t short, so how fast the firm can ramp up its sales team will be interesting to watch. And sales isn’t cheap, bringing us back to the first question.

For now, two Chicago firms have come together to bring mobile apps to old-school malls. Who wants to guess which venture firm they are going to raise from?

1871, TECHSTARS AND SOCIAL CRUNCH INCLUDED IN 3 SEGMENTS OF EPISODE 5 OF CHICAGOLAND

SEGMENT ONE




SEGMENT TWO



SEGMENT THREE

1871 CEO HOWARD TULLMAN SPEAKS AT IBM GLOBAL ENTREPRENEUR DAY - CHICAGO

Crain's Blogs John Pletz On Technology

Howard Tullman's next big adventure in technology

Howard Tullman

When Howard Tullman stepped back from the day-to-day operations of Tribeca Flashpoint Academy after selling a majority interest to Chicago-based Sterling Partners, he had no intention of slowing down.


The 68-year-old serial entrepreneur was just gearing up for his next act: a $2 million venture fund called G2T3V LLC.


“We started G2T3V because people saw this new technology being created at the school and asked, 'What are you doing to commercialize it?' ” he said. "We didn't feel like the school could really do it and take on the risk. And it plays to my interests. We'll do investments of $25,000 to $50,000, but we have partners who can do up to $250,000.”


The fund has just five investors, whom he declines to name other than himself.


He takes the Warren Buffett approach, investing in what he knows. What makes Mr.Tullman so interesting is that, after more than three decades as an entrepreneur, he knows a lot more than most. He's been involved in insurance, technology, education, film and gaming. He got his start as a lawyer.


Just look at his portfolio: PackBack, a digital textbook-rental startup created by some Illinois State University graduates; Chicago-based augmented-reality startup MagicTags; BCV, a Chicago-based social media services provider SnapSheet Inc., which uses mobile phones to enable insurance repair estimates; Paris-based Sketchfab, a web-sharing service for interactive 3-D models; Chicago-based Philo Broadcasting Inc., which provides custom mobile-video content for advertisers; Chicago-based social media data miner Social Crunch;  Denver-based online pawn lender Pawngo; San Francisco-based crowdfunding startup IndieGoGo Inc. and Atlanta-based Vehcon Inc., which provides vehicle data to insurers. He's also contemplating an investment in Pathful, a Vancouver-based startup, that provides website analytics, and he recently completed the TechStars Chicago accelerator.


“This is an opportunity to solve problems in industries where I've got 20 or 30 years experience,” he said.

Mr. Tullman also had been at Tribeca Flashpoint about five years, which is sort of his limit for any single endeavor. “I wasn't that interested in taking attendance,” he said.


G2T3V is his second venture fund. The first, Chicago High-Tech Investment Partners LLC, was launched 11 years ago and is winding down, though it still has three active investments.


He has boundless energy. When I caught up with Mr. Tullman one morning last week at about 8 a.m. for breakfast, he'd already been up since 4. And few people know as much about tech as Mr. Tullman. Sitting down with him is like touring the chocolate factory with Willy Wonka.


He was carrying three cellphones:


• A Moto X. He likes the voice-recognition software, Google Now, and the feature that launches the phone's camera with a flick of the wrist;


• An iPhone, which he uses to demonstrate MagicTags, augmented-reality software from a Chicago startup that allows you to superimpose a photo or video onto a picture. So if you take a picture of a product such as a cereal box with your phone's camera, you also would see photo or video. The image of a Beach Boys album cover automatically pulls up a video.


• A BlackBerry. It's his primary phone because he can type faster with a physical keyboard. He's a prolific blogger and writes columns for Inc. magazine on his phone.


“No one keeps up (with tech) the way Howard does, and no one connects the dots the way he does,” said Ed LaHood, a longtime friend, founder of MagicTags and CEO of Chicago-based startup MainCloud LLC.


Mr. Tullman is one of the thousand or so techies that Google chose to test out its Glass product. (He's known Eric Schmidt for a long time).


He relays a recent conversation with Vincent D'Onofrio about doing a web-video series set in Chicago, capitalizing on the next big trend, TV and films made for the web. “(Kevin) Spacey set the curve with House of Cards.” Tribeca Flashpoint counted Robert DeNiro among its investors.


Mr. Tullman is jazzed about Sketchfab, which he came across while working in France on an environmental project. The company later participated in TechStars New York. When the new Xbox came out, Sketchfab launched an interactive 3-D model of the gaming system on YouTube that got millions of views.


“It's all about how to capitalize not just on the hours in the day, relationships, but also mistakes I've seen before and how not to make them again,” he says.


His advice to entrepreneurs is simple and grounded in decades of experience as an entrepreneur that includes CCC Information Services, Tunes.com, Cobalt Group, Kendall College and Tribeca Flashpoint.


“Slow down, find a way to pay the bills,” he said. “A lot of companies don't want to do B2B. Everyone wants a home run, but that's a really bad strategy because it rarely happens."


It's a hard message to sell, though.


“Once a year, there's an Instagram that perpetuates (the dream),” he said.



(Editor's note: Sterling Partners' headquarters location has been corrected to Chicago in this updated story.)

Follow John on Twitter at @JohnPletz.