How Cell Phone Coupons Have Led to Success for this Internet Startup

3 Comments Topics: Business

Just because the dot-com bubble burst doesn’t mean the dot-com movement is over.

Startups are still going strong on the internet, just without the crazy extravagances of yesteryear. Gone are the lavish grand opening parties and the expensive high end offices. In is bootstrapping and cutting expenses down while keeping profits up. Most of the companies that went belly up in the dot-com burst had no control over lavish spending and that translated to enormous overhead – which severly crippled their growth and development as businesses.

8coupons.com, founded by Landy Ung, is part of the new-generation of dot-com startups, focused on development first, party later.

Landy Ung, along with her full-time programmer Wan Hsi Yuan (who is also Landy’s boyfriend) run their business from their 500 square foot studio apartment. The living room is, well, their office. That’s definitely a way to keep overhead down!

8coupons centers around a business model where they send users a text message to their cell phone with discounts to local New York businesses.

Browsing around their website, here are a few of the coupons I found:

“Pop Burger (Chelsea): Free fries with purchase (of lunch entree)”
“Groom-o-Rama (Petcare, Pet Supplies, Puppy Sale) (Greenwich & West Village): Doggie T-Shirts 25% Off Reg. Price (Includes sizes Xs-XL)”
“Birdies, Grandma’s Chicken for the people (East Village): $6.50 Lunch Special (2:30-5:30) (3 piece chicken & small ice tea)”
“Wild Gifts (souvenirs, jewelry repair, hookahs) (East Village): 88Â¢ body jewelry (OCHO LOCO DEAL! While Supplies Last)”
“Ronaldo’s Pizza Cafe (Lower East Side): 20% off check!”

So as you can see, they have pretty varied offerings there.

How do they get businesses to sign up and give them deals to offer?

They currently have more than 150 advertisers, who reside in New York. The way Landy Ung gets these businesses is by walking up to individual businesses on the streets of New York and starts talking to these business owners, trying to convince them to join the service. One of the hardest aspects of this is getting the advertisers to fall in line with the whole cell phone coupon thing. Since the typical 8coupons user doesn’t print the coupon, she has to be certain that the participating company will honor the coupons that the customers are bringing in on their cell phone screen. They also use flyers and word of mouth referrals in order to build their user base. The local company that wants their coupons on 8coupons start with a free trial then they pay $8.88 a day (comes out to about $3241 for a year).

These are the reasons they give for businesses to sign up with 8 coupons:

1. Attract new customers to your business
2. Maximize revenue with current customers
3. Edit, pause, or delete your coupons at anytime!
4. Generate more traffic to your website and storefront
5. Track your coupon’s performance with free coupon metrics
6. Improve your business’s online visibility in local search results
7. Profit from the growing numbers of ready-to-buy local internet searchers
8. It’s a highly targeted and effective way to reach your customers

How is the experience like for customers?

They have more than 1,700 users on the site – they pick a coupon on the 8coupons website and then enter their cell phone mobile telephone number. They then get sent a text message coupon which they then show to the participating businesses.

What’s with the obsession on the number 8 (ocho, eight)?

It’s both part of their business model and just a lucky charm of sorts. They like doing this ocho loco (crazy 8 in spanish; Landy was a Spanish major in college) thing where they have “ocho loco deals”. The 8coupons team goes to local businesses and gets them to do “ocho loco deals” with a lot of 8’s in it. This can be 8-cent burgers or 88-cent body jewelry. They also give you up to $88 if you refer a local NYC business to post a coupon on the website. Speaking of 8-cent burgers, The Twisted Burger in New York’s East Village ran an 8-cent burger with one-dollar beer promotion and the response was ridiculous. 500 customers overran the restaurant with an hour-and-a-half line. Founders Landy Ung and Wan Hsi Yuan became temporary servers and dish bussers. “Our goal was to do whatever it took to make the event successful,” said Ung.

Landy Ung also finds a lot of symbolism and significance in the number 8. It’s the luckiest number in many Asian countries. Also, flip the 8 on it’s side and you get the infinity symbol. Their mascot is the 88 butterfly, and it’s name is La Mariposa Ochenta Ocho Loco.

What have they invested into the business? Are they profitable? Any expansion plans?

Their outside funding comes from Landy Ung’s mother’s fried chicken restaurant. In total, they’ve put about $30,000 into the business. They have enough money to last a year and they’re hoping to get venture funding soon.They feel 8coupons should turn a profit by the first quarter of 2010. They are trying hard to pick up a business development person, a programmer to ease the burden on boyfriend Wan Hsi Yuan.

“We don’t go out anymore,” says Yuan. “For the past two years, all we do is work.”

The real goal is true business success for 8coupons. To Landy Ung this means that “when a customer thinks about local coupons, they’ll think about 8coupons.”