Everyone loves a good coupon or discount. This explains the amazing success of online group buying companies like LivingSocial and Groupon.
These companies operate with a simple model: you buy a “daily deal” from the online company, and then you get a discount or perk from a local merchant. The online company then splits the profit with the local merchant according to the agreed-upon system.
For example, an $80 manicure and pedicure could be purchased by the consumer for $40 through Groupon, and then Groupon and the retailer would split the $40. That is, the retailer gives a massage valued at $80 and gets approximately $20 from Groupon for it (under a 50%/50% split). The consumer gets the massage, in this example, from the retailer for which they have paid $40 to Groupon. The concept is that Groupon is bringing new customers to the salon that would not have bought from the salon otherwise.
Group buying companies like LivingSocial and Groupon have experienced significant success with this business model. Founded a mere five years ago, LivingSocial for example has grown into a $3 billion enterprise. Based on its monthly active users, it is one of the largest applications on Facebook, getting millions of visitors a month.
Inspired by clean water
Taking cues from this group buying phenomenon, a new startup company in Eugene hopes to make its own mark in this industry. givacause, founded by Eugene resident John Romito, hopes to take the online discount fad and harness it with a focus on local charities.
givacause was conceived when John Romito, the company’s CEO, read a statistic. He read that currently 1 billion people in the world live without clean water. Stunned by this number, he started thinking of ways to bring viral awareness, funding, and solutions to address this crisis. A few weeks later, Romito bought his first e-coupon — and he connected the dots.
The idea of givacause is simple. The company finds the best deals offered by local merchants — anything from 60% off a massage to 50% of an oven-baked pizza. Customers purchase these deals from givacause’s website. Every time a customer buys a deal from a merchant through givacause, the local merchant donates 5% to their own supported charitable cause. In addition, 10% of the proceeds are donated to an available local cause or charity chosen by the individual customer. And finally, as Romito’s passion is providing clean water around the world, givacause itself donates 2% of every purchase to charity:water, a non-profit organization bringing clean and safe drinking water to people in developing nations.
In summary, 17% of every purchase goes to charity, particularly local but also global through charity:water.
The company explains this model:
“In a nutshell: givacause works similarly to other eCoupons being provided from companies such as Groupon and LivingSocial. The one distinction is that a large portion of their revenues received get poured back into local causes. In this way, everyone wins! Users save money, businesses get continual marketing and more business, and causes get financial support.”
The four core leaders of givacause hail from Lane County. Romito, the CEO, has worked in the mortgage and real estate profession since 2005. Sky Stebnicki, CIO, has 11 years experience in Information Systems and business management. Ethan Holub, CRO, has over 10 years of international missionary, humanitarian and education experience in more than 60 countries. He is part owner of Oregon Taxi LLC, Morningstar LLC and HMH Vapor LLC, as well the founder of We Love the Nations, a non-profit organization that equips and provides for people and projects around the world. And Aaron Stansbury, Director of NW Relations, graduated from the University of Oregon in the Family and Human Service Program in 2011, where he was recognized by the Holden Leadership Center as one of the most outstanding leaders in Oregon.
These four individuals have teamed up to create this new business venture. They are hoping that their variety of professional experiences — ranging from business management to non-profits to humanitarian efforts — can coalesce in such a way that makes a lasting change to both marketing and charity. Romito says,
“Social media is definitely the means for marketing and bringing social awareness to local and global causes. givacause wants to bridge both of these into a winnable, sustainable solution. Our goal from day one was to not just be ‘last Tuesday’s mass email,’ that no one remembers what business marketed. We’ve developed and are continuing to develop various avenues that will bring constant exposure to causes in everyone’s community as well as continual marketing to the businesses that support them.”
The problem of standing out
The idea of givacause sounds not only innovative but energizing. But it is a startup company. Not only that, it faces significant competition. Online group buying is a multi-billion-dollar industry. Giants like LivingSocial and Groupon have substantial cash flow, name recognition, and are loved by users of social media sites like Facebook. Breaking through those obstacles will be key to this Eugene company’s success.
Romito explains this difficulty:
“We are competing against some giant gorillas in the industry, who have exuberant cash flow that they use to stick their name constantly in front of everyone. Not being able to land a home-run with an angel investor or venture capital quite yet has forced us to go very lean and very grassroots.”
But these challenges do not faze Romito and his company. If anything, they have inspired Romito to think creatively. He believes his company’s uniqueness can be a great strength:
“We believe givacause sets itself apart in two ways: One, for the business, we really want to be a sustainable marketing solution for them that is able to continually market them and brand their name as a business, that not only gives great services, but that gives back. Two, we vision ourselves as being a great source and tool for causes to utilize to bring awareness to the average Joe who gets so entwined with the busy-ness of life, that they just don’t know what needs are out there in their community.”
Looking to the future
As givacause was founded by Eugene residents, Lane County is the base of operations. However, the company has set its sights on expanding in the future. Like LivingSocial and Groupon, givacause hopes to connect merchants with customers — and both of those to local charities — not only in Eugene, but all over the country.
Romito says that Eugene is the beta project for givacause. The local community and loyal fans have helped him and his team fine-tune their methods and improve how services are delivered. And they are not content with standing still. Romito says,
“Our next goal is to get into 4 counties up north in the Salem and Portland area — then into the Seattle area — and then start expanding throughout the nation, state by state, region by region.”
For the time being, though, there is plenty still to do in Eugene.
Romito has loved the experience of working with local businesses.
“Local companies here in Eugene have been phenomenal! I would say that 85% are positive with what we’re doing and also have a desire to be a part of community support. Some are currently committed and tied to other marketing ventures, but many are giving us their contact information and dates to connect with them in the near future.”
The real eye opener, though, has been Romito’s experience with finding local charities. Charities are hurting, he says, and it is the charities — as opposed to the businesses — that have been most enthusiastic.
“The amount of charities that have contacted us has been an eye opener to the needs in our communities. As our demand increases, we really want to expand and finanically assist a variety of these causes.”
givacause has high hopes for providing assistance for local causes. This recession has hit everyone hard. Not only charities but businesses themselves have struggled. Romito understands this and was clear that businesses do not necessarily have a responsibility to local charities. But what he also understands is how easy it can be if businesses have that little bit extra and want to give back to the community. He says,
“We realize that there are many, many businesses are out there just trying to figure out how to meet next week’s payroll. But for those businesses who want to and have the sustainability to be a bigger part of the community — we simply want to be a convenient, successful and effective tool for them.”
For givacause, being that tool, or connection, between businesses and communities is what it is all about—making a business of empowering groups of people to better themselves and those around them. And it is the company’s hope that their message and model for charity can reach around the country.
“It’s empowering. I want to think that I am just like everyone else. That I have passions and concerns and that my passions and concerns may not be the same as my neighbor’s. And that’s what makes this all beautiful — because together, if we all focus on a variety of issues that need attention, we truly can make a difference.“