MBA Program: University of Virginia, Darden School of Business
Industry: FinTech, Digital Payments
Founding Student Name(s): Alexander Spencer and Stephen Joy
Brief Description of Solution: Tack is a payments platform that helps facilitate digital tipping payments. Tack partners with companies to provide a platform where their customers can digital tip their employees through a QR code / web / app based platform. Customers can tip through various different convenient payment methods such as Apple Pay, Google Pay, Paypal, Credit Cards, and ACH Direct Bank Transfers.
Funding Dollars: We have received $2,500 from the University of Virginia VentureLab Incubator along with a summer living stipend.
What led you to launch this venture? I (Alexander) was on my honeymoon in Greece when I ran out of cash to tip the various employees that I interacted with. It was an embarrassing situation in front of my new wife, but I realized I was certainly not the first person who had encountered this problem. Thinking more about tipping, I realized that there were plenty of inefficiencies in the way tipping is done in the service industry today.
Before business school, I worked for a growing chain of high end beauty salons and that’s where I saw that facilitating digital tips would help both the employee (who would better understand their financial resources and receive a tip they would not be able to if the customer has no cash) and the employer (who could better understand what behaviors drive great performance and have some line of sight into their employees total compensation). I also saw that tipping and gratuity are a fundamental part of the service economy and that intentional giving through tipping creates a more empathic world by empowering people to give. I met Stephen during business school and pitched him the idea. Stephen was a software engineer and product manager prior to business school. Through our discussion, we started to really dive into the problem with tipping in the service industry today, and hashed out a plan to start working together.
What has been your biggest accomplishment so far with venture? Stephen and I were set up to start Tack with a hotel for our alpha test in early March. However, the Covid-19 pandemic hit. It was a tough time to be an early stage start up because it would have been easy to give up. Our biggest accomplishment was pushing through that tough time and pivoting to churches, and other small businesses that needed to facilitate quick digital donations when their services were put online. We have since pivoted again to work with golf courses. Our ability to pivot early on and maintain both sales and development momentum has been critical to our success. My Co-founder Stephen Joy recently said, “We go through these weird cycles where one of us is very high and the other is very low and we’re able to balance each other out. We are very rarely in sync on how excited we are about the project but it’s fantastic because it helps the other one get out of their funk.”
How has your MBA program helped you further this startup venture? Besides teaching us the fundamentals to feel confident enough about starting a business, our second year at Darden really honed our entrepreneurial drive. Alexander’s second-year classes emphasized the new digital world, network effects, and what has made companies successful in the digital age. Stephen focused heavily on finance and venture capital, helping him to build a strong network of reliable mentors for our team.
Our team had started to talk with potential customers, and worked on the business plan, but it wasn’t until the beginning of our second year when we really got serious about the project. It started in the fall with taking Venture Capital with Professor John Glynn, a legendary Silicon Valley venture capitalist. He forced us to write out a business plan and challenge ourselves with calling every single hotel in Charlottesville about whether they would be interested in our product. Professor Michael Lenox’s Strategy in the Digital Age helped us understand our digital value proposition and the value of customer and employee data to employers. We then worked on an independent study throughout the winter with Professor Saras Sarasvathy. Using her “effectuation” method, we began to build a pitch deck, enter into some venture discovery competitions, interview friends and colleagues, and start building out a network to help us launch the venture. The city of Charlottesville, and the larger UVA Darden community, has quite an active venture capital community that really helps to empower Darden students. It’s an ecosystem that has provided mentorship, advice, and confidence building that is essential to any early stage start up.
What founder or entrepreneur inspired you to start your own entrepreneurial journey? How did he or she prove motivational to you?
Surprisingly, two entrepreneurs named Steve inspired me to start my own entrepreneurial journey. The first is Steve Conine of Wayfair. I worked there before Darden and got to sit down with the co-founder. I asked him all sorts of questions about founding Wayfair, but what really struck me was when I asked him about “when he realized that this was a big deal.” He answered, “Honestly, I never really thought about it, I just kept going.” When I did my MBA internship at Toast this past summer, I spoke to co-founder Steve Fredette with the same questions, and he had essentially the same answer. There is a certain feeling that I have as an entrepreneur that there will be some moment when it ends, that you will have succeeded – but talking to these entrepreneurs made me realize that it’s about the journey. If I’m not prepared for that, I probably should leave the entrepreneurial world.
The two most influential mentors for my entrepreneurial journey with Tack have been my CTO and career advisor at my company pre-MBA, Andrew Fedorchek, and Darden professor Damon DeVito. Being a computer science major in the late 2000’s, I had plenty of tech entrepreneurs to idolize. Starting undergrad, I knew that the “cool” thing to do was to start your own company, grow it as fast as possible, then IPO or get acquired. Andrew helped me realize what it required to create successful technology products, and that starting a highly successful business venture was not what movies and news reports make it out to be. Damon further reinforced these points, but he really brought the entrepreneurial path to light. Damon made the process much more approachable. He introduced me and Alexander to countless mentors, and he gave us the ultimate kick in the pants to move Tack from an idea we’d been workshopping in our heads to an actual company with customers.
Which MBA class has been most valuable in building your startup and what was the biggest lesson you gained from it? What professor made a significant contribution to your plans and why? The most important class that both of us took was Venture Velocity, taught by entrepreneur and Professor Damon DeVito. Venture Velocity is an 8-week course that aims to accelerate a venture to a minimum viable product, introduce each venture to a network of mentors, and prepare every venture to have a viable pitch deck. Damon is not your typical professor and he forces every entrepreneur to confront the most important question when starting a new venture: Are you playing a pretend entrepreneur? He challenges us with this fundamental question because…playing a pretend entrepreneur is more fun than doing actual entrepreneurship. Actual entrepreneurship requires commitment, grit, and failure. It was with Damon’s help that we were able to pivot our venture and move into golf courses. Damon was incredibly helpful with introducing us to his network and always finding a way for us to push forward – fast.
How did the pandemic impact your startup plans? The original idea was for Tack to partner with hotels. (We still will, eventually). When lockdowns happened in March, our beta test with a hotel was cancelled and we were forced to pivot to digital church donations, which was about the only thing happening on a regular basis. However, with classes completely digital, we had more time to double down on the development, branding, and vision for the company. Stephen was able to spend some additional time really getting our technology platform ready to bring on a number of clients. Alexander was also able to use his network to find some former undergraduate interns who worked with him at Toast last summer to help with the sales effort (they had their post-graduate plans impacted by COVID). Ultimately, the pandemic forced us to grow up very quickly on our entrepreneurial journey.
What is your long-term goal with your startup? Our long-term goal is to partner with golf clubs, tour operators, and hotels and create a seamless process at which any customer can easily tip an employee, even if they have no cash. More importantly though, we are looking to break down the barrier between digital tips and cash tips, allowing employees to access their tips earlier than the two-week payroll. We want to not only increase the frequency at which patrons’ tips service workers, but increase the amount as well. Our vision is to empower workers in the service industry by having some transparency into their wages as well as helping them avoid financial bridges such as payday loans.
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