Ibotta’s CEO Bryan Leach Opens Up About His Startup, Personal Pivot
(Page 2 of 2)
yes, to the tune of almost 100 million unique engagements in a year-and-a-half,” he said.
While the deals are great for Ibotta’s users, brands and retail chains are finding the app is reaching a demographic sweet spot. According to Leach, more than two-thirds of Ibotta’s users are women, and 90 percent are between the ages of 15 and 45. They’re engaged users too, with the typical regular user opening the app 25 out of every 30 days, Leach said.
Stats from outsiders back that claim up. Last year, Consumer Intelligence Research Partners found that Ibotta was the 16th most frequently used app.
Brand engagement has been a hot topic in advertising for years, and while Ibotta offers that to its business clients, it offers more. Brands know when an interaction through Ibotta results in a purchase because it is verified when the customer snaps a picture of the receipt. That gives them more information about how their campaigns are doing and a much better chance to close sales and create repeat customers.
Ibotta’s main way of making money is by charging a fee per unit sold, although it does resell data and analytics it compiles.
Recruiting an ever-growing number of users has helped Ibotta sign up more brands and vice versa. Leach said the startup is benefiting from a virtuous circle that’s fuelled Ibotta’s growth. Leach declined to get into specifics, but said the company’s revenue growth is outpacing its projections.
The national media has taken notice, and Ibotta has been featured on Good Morning America and Today. More importantly, investors have pumped $33 million into the company, including a $20 million Series B round this springs that was led by Netscape co-founder Jim Clark.
What they’re betting on is Ibotta’s ability to become an important conduit connecting brands to digital savvy consumers, especially millennials. That generation has proven notoriously hard for brands and advertisers to reach effectively through TV or print ads, so brands are turning to smartphones and tablets.
While Ibotta can give rebates to users who make purchases online (the app sends a link that directs users to a retailer’s website), it focuses on what Leach terms mobile-influenced in-store transactions. Those transactions are not about what people buy through smartphones or tablets, but what they buy at the store after doing research or seeing an ad on their device.
Using an app to get customers into stores might seem like a subtle distinction from apps customers use to buy things directly, but it’s a huge difference in the number of transactions and dollar amounts. In April, market research firm eMarketer estimated that mobile commerce sales will hit $57.8 billion this year and that total e-commerce sales will hit $304.1 billion. It’s a fast-growing market segment, but it is still dwarfed by the $4.4 trillion in sales expected from brick-and-mortar retailers.
But those “real world” transactions are increasingly being influenced by what shoppers do online, whether it’s reading reviews on their computers at work or using their smartphones to compare prices while in a supermarket aisle. A study published this spring by Deloitte found that digital research influenced 36 percent, or $1.1 trillion, of in-store sales, and that 19 percent of sales, which totaled $593 billion, were influenced by smart phones.
Both trends look sure to continue, and that presents a huge opportunity.
“The idea of being the most widely used pre-shopping tool for influencing in-store transactions is absolutely a multi-, multi-, multi-billion dollar opportunity, if you talk about the addressable market,” Leach said.
A market that big doesn’t go unnoticed, and Ibotta likely will have competitors. Leach, though, thinks the startup’s fast start dissuade rivals. For the idea to work, he said, a startup needs to both find millions of users and forge partnerships with major retailers, grocery stores, restaurants, and brands. Ibotta’s achieved that, and along with its VC reserves he believes it’s enough to protect the company from competitors.
That’s all why investors are betting big on Ibotta now, but when Ibotta launched in late 2011 following a $3 million angel round, what they really were betting on was Leach.
“I had $3 million, two paragraphs on a piece of paper, no prototype, no team, and no prior experience,” he said.
That’s all true, but it also was an understatement, as Leach had established an impressive resume outside the tech world.
Leach was born in Nairobi, Kenya, to a British father. When Leach was a child, the family moved to the U.S., and he would end up at Harvard. After graduating, he earned a prestigious Marshall Scholarship that enabled him to study at Oxford University.
But Leach didn’t spend his school and college years with his nose in a textbook.
“I was a semi-professional actor, a public speaker in debate, and I was a tour guide. That’s what I like—talking to people and convincing them of things. But I still didn’t realize I wanted to go into business,” he said.
When Leach returned to the U.S., he had to pick a career.
“I probably should have thought about what I wanted to do with my life a little more carefully, but I decided I wanted to go be a lawyer,” Leach said.
That led to Yale and a year as a clerk for Justice Souter. A coveted job as a Supreme Court clerk typically is the start of a sparkling legal career, and that was the trajectory Leach was on. At Bartlit Beck he made partner and helped build its international practice.
By his early 30s, Leach had a great career and was starting a family in a city he loved, but he discovered he wanted something different.
Law “was satisfying, but it was uni-dimensional. It was one set of challenges, over and over again,” he said. “It wasn’t inspiring to me, even though I loved my partners, and I really loved being able to try cases in Singapore and London, China and Japan, and yet live in Denver.”
During that time, Leach became increasingly interested in the possibilities of e-commerce and the ways mobile devices and data analysis about transactions could remake the retail industry. As he went through ideas for companies, he debated whether it was worth giving up his legal career for the risk that comes with being a tech entrepreneur.
But it was not a rash decision. Leach had some experience in tech companies and as a small-time entrepreneur. When he was growing up, he worked at his father’s tech company. That company was named Harbinger, an early e-Commerce firm that went public in the late 1990s before selling for $1.2 billion in 2000. Leach’s father was a co-founder and eventual CEO.
Leach got an up-close view of what it took to build a successful tech company, and the experience left a lasting imprint on him, even if he didn’t always know it.
“I worked there and got the bug. In the back of my mind, I always admired entrepreneurs, and I watched the company be built and pivot and evolve,” he said.
The bug never really left him. Leach started a few businesses in college, including one leading tours around Harvard’s campus. It was a pretty humble operation, but it worked.
“I would stand with a tripod and a plastic sign and sell people on the idea of coming on my tours,” Leach said. “I would literally pitch 500 people and get 50 of them to come on my tour, and they’d pay me at the end. I would pride myself on getting 90 percent retention.”
Leach’s career helped him build an extraordinary network of connections. His former legal partners and friends through the Marshall Scholars program would become angel investors. Family connections also proved important, as his father’s colleagues helped him raise money and invested.
But it was a connection through his wife that would be the most pivotal. Through her family, Leach was introduced to Larry Sonsini, a Silicon Valley lawyer who has represented a long list of top tech companies including Google and Apple. Sonsini’s behind-the-scene influence in the industry is so great he was once called “the most powerful person in Silicon Valley” in a New York Times profile.
Sonsini became a friend and mentor for Leach and would give him “the big push” to make the jump from law to a startup.
“I sat in his office and said, ‘Larry, I love my law partners, I love my practice… but I have this idea, and I think I’m going to go crazy if I don’t do it,’” Leach said.
According to Leach, Sonsini originally urged him to be cautious, but immediately changed his mind after Leach outlined his idea. Sonsini offered his help and through his connections Leach quickly raised the first million or so of what became Ibotta’s $3 million seed round.
Leach said that day marked the end of one promising career and the start of another.