Is Jon Carder from Mars? The Contrarian Views of Mogl’s Founding CEO
The Mogl headquarters in San Diego is designed around two long tables with dozens of workstations, where staffers manage different aspects of the company’s business—a Web-based platform for cultivating customer loyalty.
In one corner, there is a game room with a foosball table and video games. Mogl founder and CEO Jon Carder, who is leading my tour, says employees give the foosball and video games a pretty good workout. In another corner, there’s a shiny bar with unopened bottles of liquor and magnums of lux champagne. In more than 30 years of reporting, I’ve never seen booze displayed so prominently in a workplace. On the other hand, it doesn’t seem to be getting much use. Carder explains it’s for celebrations. At the opposite end of the long central work space, there is a “crash” room for occasional all-nighters and a gathering spot for Mogl’s “virtual” meetings, conducted online every weekday morning with staffers working at Mogl outposts in Orange County, Los Angeles, Ventura, and San Francisco.
I make an observation: “This is so-o-o-o Silicon Valley.”
“You just made his day,” says Jenn Gartz, Mogl’s director of marketing & promotions, with a nod to Carder. Creating a sense of Silicon Valley in San Diego is exactly what he’s trying to accomplish.
As one of San Diego’s most-experienced Web entrepreneurs, Carder understands better than most what he’s up against. It’s not just that Mogl faces intense competition from venture-backed rivals in the Bay Area, such as Performance Marketing Brands, the San Francisco-based company that operates Ebates.com, FatWallet, and other online shopping programs. It’s the gravitational pull that Silicon Valley exerts on Web startups in general, and in particular on the West Coast startups that aren’t in the Bay Area.
The pull can be difficult for entrepreneurs and programmers to resist, which is one reason why Carder strives to emulate Northern California’s workplace culture at the Mogl headquarters. “I literally had Kleiner Perkins say if you move to the Bay Area, we may invest,” Carder told me during my visit. “But if you don’t move up, there’s no way we’ll invest.”
Carder might sound like he’s from another planet, but he says he loves the San Diego region, and he wants to keep his Web startup here. He must be doing some things right. He says Mogl, which now has about 70 employees, grew its revenue by 800 percent over the past year. Mogl also somehow managed to raise venture capital without Kleiner Perkins—a total of $14.5 million from Sigma Partners, Avalon Ventures, Austin Ventures, and other investors.
Carder told me he’s always wanted to be an entrepreneur, and he began by selling hot dogs on a street corner in Placentia, CA, as a 12-year-old. He said he started his first “legit business” while attending San Diego’s Point Loma Nazarene University, where he graduated in 2001, by selling baby products online. He quickly expanded his “Baby Heaven” business into eHeaven, an e-commerce dot-com that was on pace to generate $2 million in sales in its second year.
However, Carder said he was forced to sell eHeaven for “not very much” in 2002—after learning some painful but valuable lessons about consumer chargebacks, accrued liabilities, and the reserves that banks require of some businesses. Perhaps more importantly, Carder said he also learned a lot about e-commerce and online marketing. After selling eHeaven, he immediately started ClientShop.com, an Internet marketing business that matched prospective borrowers with lenders—much like Charlotte, NC-based LendingTree. Client Shop’s business model enabled consumers to compare several mortgage loans, while simultaneously providing new customer leads to financial service providers.
As Carder put it, “I went from eating Top Ramen and having hardly any money in the bank to a $100,000 profit in the second month.”
The San Diego Business Journal ranked Client Shop as San Diego’s fastest-growing company in 2005—and in 2006, El Segundo, CA-based Internet Brands acquired Client Shop for what Carder would describe only as an eight-figure deal. “It was great,” Carder reminisced. “I kind of retired, and went surfing in exotic locales.”
It was during one of these surfing expeditions that Carder experienced what he calls “my self-realization moment of Zen…I had been so focused on the destination, which was making money, that I really hadn’t been able to think about how much fun I had on the journey in building things.”
He returned to San Diego in 2006 and started Mojo Pages, an Internet business that combined a directory of local businesses with online comments that enabled users to share their experience with each business. “Little did I know that the day we launched, Yelp had raised $10 million,” Carder recalled. “So I learned a valuable lesson about speed with that one.”
It’s a lesson he thinks a lot of other startups in San Diego still need to learn. Carder said he doesn’t see the same work ethic in laid-back San Diego that he’s experienced in Silicon Valley and other tech hubs. Web entrepreneurs here haven’t yet grasped it’s not just a competition—it’s survival of the fittest.
Mogl began within Mojo Pages as an expanded service offering for restaurants, but strong user demand led Carder to spin the business out as a separate company. “I came across this concept of game mechanics,” Carder said, “and why people are so fascinated with games—why they play and how challenges, the scoreboard, and rewards feed into it.”
With some 998,000 restaurants nationwide, and an estimated $760 billion spent in them annually, Carder said he reasoned, “If you could gamify the experience of eating out, you could create the most compelling loyalty program ever.”
He officially founded Mogl in 2011, incorporating gamification into a loyalty rewards program for restaurants by adding bigger incentives for those who use the program the most. Consumers who sign up for Mogl’s free rewards program can automatically get a 10 percent cashback reward by using a Mogl-registered credit or debit card to buy a meal at a participating Mogl restaurant. Users also are automatically enrolled in a contest that awards a monthly “jackpot” cash prize for the top three spenders at each participating restaurant. In September, Mogl said its members had earned more than $1 million in accumulated cash-back payments.
Carder said he also adopted the “one for one” business model made famous by Toms Shoes, so Mogl donates one meal to Feeding America for every $20 Mogl members spend at a Mogl restaurant. Mogl tracks the transactions and has gamified the results—so Mogl members can see how much cash back they have accrued in comparison to other Mogl members in general. Mogl members also can download a mobile app for iPhone or Android to track how well they’re racking up Mogl rewards, and to locate participating restaurants. Conversely, Mogl also offers data about customers to participating restaurants.
To enlist in the Mogl rewards program, Carder said restaurants agree to pay 15 percent of each Mogl user’s tab—10 percent goes to the customer’s automatic cashback reward, 1 percent is used to fund the cash prize jackpots awarded to the top three Mogl customers each month, ½ percent goes to buy meals at Feeding America, and Mogl keeps 3½ percent as its fee.
“Initially, the restaurants are the hardest part,” Carder said. “We’re kind of the Lamborghini of restaurant reward programs. We’re expensive, but it works well. It works really well.”
In the San Diego area, more than 800 restaurants have enlisted since Mogl rolled out its rewards program over two years ago.
After raising $10 million in venture capital just over a year ago, Mogl has expanded into San Francisco, where there are more than 300 participating restaurants, as well as Los Angeles, Orange County, and Ventura County. Altogether, Mogl now has almost 2,000 participating restaurants, “which makes us the largest restaurant coupon or rewards program in California,” Carder said.
With its strong California base, Carder said Mogl is ramping up for a major nationwide expansion by the middle of next year. “We’re really starting to crank things,” he said. “We’ve got the venue acquisition dialed in, and we’re now starting to focus on expanding our member acquisition.”
As part of that effort, Mogl and California-based Virgin America announced a strategic partnership last month that ties Mogl’s restaurant rewards into Virgin America’s Elevate frequent flyer program. Carder said Mogl will be announcing more “huge partnerships” over the next few months, along with a new initiative that calls for installing thousands of iPads in restaurants, with a new imbedded Mogl app that gamifies the “fighting hunger” piece of Mogl’s business.
Expanding nationwide also would involve taking on more rivals, including LevelUp of Boston, Belly of Chicago, and Pirq of Kirkland, WA—along with the well-established loyalty reward programs of American Express and other credit card companies. Yet Carder remains confident in Mogl’s core strategy, citing the “annoying” features of other programs, and the rules and restrictions imposed by other cash-back programs.
“With Mogl, its any time and every time and there is no limit to the cash back you can earn,” Carder says. “One customer has earned almost $10,000 back.”
In other words, there is nothing else out there like Mogl—at least not to Carder.