Business
    Next Score View the next score

    BetaBoston

    LevelUp sees growth, but slowly

    Seth Priebatsch founded LevelUp.
    Erik Jacobs for The Boston Globe/File 2011
    Seth Priebatsch founded LevelUp.

    Longer versions of these stories and other coverage of Boston’s technology and biotech scene can be found at the Globe’s new betaboston.com site.

    LevelUp’s high-energy, twentysomething founder, Seth Priebatsch, would have liked his payment app to be a household name by now. Launched in mid-2011, LevelUp lets you pay via smartphone at participating businesses, mostly restaurants. Users can also earn loyalty rewards (money toward purchases) at many merchants.

    Boston-area residents have taken a liking to the service, a recent Yankee Group report said. But LevelUp use “remains negligible” outside the region — just 0.6 percent of survey respondents had used it in the prior month.

    That doesn’t mean it’s flailing. About a half-million users joined LevelUp over the past year. That was well below the nearly 1 million users added during the previous year, but it’s growth just the same. Matt Kiernan, director of marketing at LevelUp, calls the company’s trajectory “a nice, steady climb.”

    Advertisement

    LevelUp’s progress may not seem that impressive, but think about it: Priebatsch and his colleagues have spent three years trying to create a payment system, an almost preposterously difficult goal for an upstart. Yankee Group lists LevelUp as one of just five mobile payments vendors with any traction, and it’s the only vendor in the group solely devoted to mobile wallet technology.

    Get Talking Points in your inbox:
    An afternoon recap of the day’s most important business news, delivered weekdays.
    Thank you for signing up! Sign up for more newsletters here

    Gaining traction is “a big challenge for anybody in this space,” Kiernan said.

    Indeed, getting businesses up and running on LevelUp is tough.

    “It requires education of the merchants to understand the technology . . . and the benefits it brings and [requires them] to promote this to their customers,” Gartner Inc.’s research director, Sandy Shen, said in an e-mail.

    But the app has not found its way into restaurant chains in a big way. And “without a major merchant on its roster, LevelUp will face extreme difficulties broadening its reach,” said Yankee Group. Google, PayPal, and Square have made more headway in getting merchants to adopt their mobile wallets, according to Yankee Group.

    Advertisement

    No matter what happens — and failure is not a far-fetched notion — what LevelUp has done amounts to serious achievement.

    KYLE ALSPACH

    What RunKeeper and HubSpot can learn

    If you ask anyone which Boston tech companies might make it big, two are mentioned over and over: HubSpot and RunKeeper.

    RunKeeper, a fitness app with almost 30 million users, is part of a larger company called FitnessKeeper. RunKeeper’s team is building an online health brand, including HealthGraph API and other rumored projects, to fulfill founder Jason Jacobs’s vision of becoming one of the world’s most unusual health-focused companies.

    HubSpot, a Cambridge inbound-marketing start-up, doesn’t have problems attracting attention. The “Orange Giant’s” yearly INBOUND conference has gotten so big it’s moving from the Hynes Convention Center to the Boston Convention & Exhibition Center this year.

    Advertisement

    For all that these companies have going for them, they share a similar problem: perception.

    When you tell people that RunKeeper is headquartered steps from North Station, app users are surprised. And while the company has a monster international user base, Run-Keeper has growing competition for fitness buffs in places like California, Colorado, and Oregon, where Strava, Nike+, and MapMyRun have loyal user bases.

    There a few things RunKeeper could do that would go a long way toward making it one of the most recognizable brands in Boston.

    For that, we turn to HubSpot, one of a handful of local companies talked about as a candidate for the next big IPO.

    Brian Halligan and Dharmesh Shah have not only built one of the most successful online marketing platforms, they have created a tough-to-duplicate company culture that attracts top engineering and marketing talent and leaves other companies envious. Yet tech people in Boston often don’t seem impressed.

    This is HubSpot’s perception problem: People don’t realize there is some serious engineering going on within the orange-covered walls of The Davenport in Cambridge.

    Which is where HubSpot could learn a thing or two from RunKeeper.

    HubSpot has some in-house developed projects like Signals, and spin-outs like Josh Porter’s WhatToWear, bringing the company attention for creative engineering talent.

    HubSpot should focus on promoting the marketing platform, not the orange sprocket. You rarely see RunKeeper’s logo; the team is too busy pushing what it believes is the best product on the market.

    RunKeeper doesn’t need bells or whistles, just the app.

    The HubSpot hype has generated buzz. Now it’s time to cash in by owning the online marketing sector and wowing even its admiring fans with wave after wave of mind-blowing marketing tech. (And some innovation outside the companies’ marketing comfort zone wouldn’t hurt).

    So while HubSpot could learn from RunKeeper’s quiet persona, RunKeeper needs to break out of its shell a bit. It is somewhat of a problem that you don’t see the RunKeeper logo enough in Boston. Like Wayfair (until recently), the company has been hesitant to market itself. From what I hear, 2014 is the year RunKeeper makes its big marketing push.

    (Although it’s for a great cause and is definitely not a marketing ploy, the company’s #118forBoston campaign may be a taste, in terms of Jason Jacobs-led evangelism, of what we may be seeing more of from RunKeeper this year.)

    What it should do is mimic HubSpot.

    As far as I can tell, there is no major stand-alone conference for quantified self or fitness tech. (CES has a Fitness Tech conference as part of the larger Computer Electronics Show.) This is an opportunity for RunKeeper to create an event that could be a mix of the Sloan Sports Conference and INBOUND.

    Additionally, RunKeeper needs to be where its users are and build a more public brand culture.

    For HubSpot, marketers today spend a fair amount of time in their inbox. HubSpot also spends a fair amount of time in the marketers’ inbox with Signals as well as its plethora of daily content.

    RunKeeper needs to build a bigger presence among hard-core runners and occasional fitness folks. That means going to races and handing out branded swag like stickers and shirts, something the company has hesitated to do. Boston is a running mecca, with races nearly every weekend.

    RunKeeper needs to be a presence at community road races as well as ultra-marathons.