Woah social mobile gifting service Wrapp is really hot these days!
Did you know that in US only gift cards are an over $100B market annually (!) ?
Listen very carefully to this interview, full of insights and useful tips with Carl Fritjofsson COO of Wrapp.
The company was founded in Stockholm, Sweden, in early 2011 by a team of experienced entrepreneurs. Before starting Wrapp, these entrepreneurs helped build many other groundbreaking companies, including Spotify, Rebtel, Stardoll, Groupon and SoundCloud.
Wrapp’s board of directors include Niklas Zennström (Skype co-founder), Reid Hoffman (LinkedIn co-founder) and Fabian Månsson (former global CEO of H&M and Eddie Bauer).
About Carl Fritjofsson:
Carl is co-founder and COO of Wrapp, a social gifting service providing free and paid digital gift cards.
Wrapp is the first company in the world turning gifting into a social networking experience. Board of directors include Skype founder Niklas Zennstrom and LinkedIn founder Reid Hoffman. Previously, Carl worked with Nordic venture capital firm Creandum. Carl has also worked with AdProfit and numerous other firms.
Marco: Hello, everyone. Marco Montemagno here, the Tech Alchemist. Today with me, from Sweden, Carl Fritjofsson. Carl, how are you?
Carl: I am good. How are you doing, Marco?
Marco: We were talking before. I said, I have such a horrible surname that no one can say Montemagno. I created on SoundCloud how to pronounce my surname.
Carl: I should probably take you up on that. Yeah. Fritjofsson is a tough one.
Marco: For you Tech Alchemist guys, Carl, I think, will be a very interesting guest because as co-founder and CEO of Wrapp, which is going very well, we’ll talk about that. I think it’s a very interesting company to follow because it’s mixing mobile, online, offline, the retailing world, the gift card world. So many things on that and I think we can have a lot of tips and advice from Carl today. Carl, thank you so much for being here.
Before we begin, I want to tell you how I discovered Wrapp because that was really incredible for me. I was telling you before, I was a table tennis player, professorial table tennis player. Not an amateur. I was playing all over the world and Sweden has got most amazing table tennis player in the history of human beings, Jan-Ove Waldner. How do you say Jan-Ove Waldner?
Carl: Yeah. Jan-Ove Waldner. Yeah I think that’s a beautiful pronunciation. Yeah.
Marco: He is the Mozart of table tennis. All the people from around the world just went to Sweden to know and to meet this guy. What I started to think in this period was that Sweden was an amazing country, because so many times, let’s say, the black swan theory, so something incredible came out from Sweden, which is a small country. It’s not USA. Someone or something or a company came out and, surprisingly, they were worldwide and they were amazing. When I saw Wrapp, I thought, “Gosh, I think this will be another black swan thing.” Surprisingly, it started to grow and then everyone is talking about. I was really curious about this. My crazy theory is about this correlation between sport and business. I’ve no facts behind that.
Carl: Actually, I saw some statistics. I wish I remembered the exact numbers here but I saw some statistics way back about this proportionate performance of Sweden. When you put in comparison the size of the country and then in the number of Olympic medals that we’ve received throughout the years, we were pretty good in that. I wish I could say it was all because of table tennis, but I think it’s a lot because of the Winter Olympics statistics were also part of that. We get a lot of snow, so I think that’s one reason why we’re preforming relatively well.
Marco: I don’t want to talk with you about sports for 20 minutes but it’s interesting. Bjorn Borg, oh man. He was from nowhere and then he was an amazing player. In company business, I don’t want to say bullshit, but I think IKEA is a Swedish company, maybe.
Carl: It is.
Marco: It is. It’s a massive success everywhere. It is amazing how Sweden can come out with this phenomenon really. I think Wrapp will be something like that.
Carl: I think if you go into the tech and internet space, I think that we’ve done relatively well in Sweden, as well. When you think of companies like Skype and a more recent one is, of course, Spotify, as well as the payment provided Klarna, which are a couple of really, really big companies that have spun out of Sweden. You had mentioned to me earlier about the SoundCloud and using SoundCloud to get people to pronounce your name correctly. SoundCloud happens to be another company which is founded by Swedes. They founded the company in Germany. I think both Germany and Sweden is trying to take credit for that company.
Marco: Do you think it’s because an ecosystem now that is developing after Skype success or something like that?
Carl: Yeah. I definitely think so. We may talk more about this during the interview, but we happen to be very proud that we have Niklas Zennström, as an investor and part of our board, the founder of Skype. Once again, using the sports metaphor here, I think that he has played a similar role to what Bjorn Borg did for Swedish tennis. He became that explicit role model. Everybody got a face about all this internet entrepreneurial success. You could kind of relate that to this specific individual. What happens in Swedish tennis, in the ’70s Bjorn Borg became very successful, and then we had a couple of generations afterward with continuous success on world tennis. I think that is really what has happened in the Swedish internet and start up space very much thanks to Niklas Zennström of Skype.
As well, I think in the late ’90s, I think broadband penetration was very rapidly adopted in Sweden, relative to other countries. I think that’s helped us a lot as well. I think there are numerous factors that play into it but I definitely think that we have a very nice and good ecosystem in Sweden at the moment. In the whole Nordic region, I would say. Not only Sweden.
Marco: Excellent. My missing link of my crazy theory is that if Niklas Zennstrom is a good table tennis player then it means that this is the answer to all the… I will check with him a little later.
Carl: I wouldn’t know that about him. I know he’s a good sailor. He sails a lot. Maybe he does table tennis as well. Let’s say he does. For the sake of this interview, I think that’s good.
Marco: All right, Carl. Stop talking about sport. My fault. Let’s talk about serious stuff. First, I would like to understand better this gift card business, in general. I think that many people and many companies are underestimating the size of the market. When I saw the size of the market that you are going to I thought, “Gosh, this is a huge market.” I thought it was not so big in so many countries. Can you elaborate a little bit about this gift cards business? What are you going for with Wrapp? What are you talking about?
Carl: Definitely. Just like you mentioned here, I was very surprised the first time I started doing research on statistics about the market, as well. That is such a massive market. The number that we usually use is a number which says that the gift market is more than a $100 billion industry, in the U.S. alone, per year. Each time you say a billion, it sounds like so much, and it is so much. To put that in comparison, I think, Spotify, once again, a Swedish startup example, has done tremendously well for itself. It’s attacking a market, the music market, that is roughly $17 billion annually, and that’s on a global scale. Gift card is $100 billion in the U.S. alone. It’s truly a massive market. It’s much bigger than we ever thought it was. Of course, that’s positive for us.
There’s a lot of statistics, as well. I think U.S. is really the whole market of gift card, for various reasons, and, of course, the size of the market tells you a lot. Also, the fact that gift card is the number one requested gift, like, five years in a row in the U.S. It’s the most desired gift to receive, as well. Not only the market is big in terms of financial, but it’s actually something that people really love to receive. It’s something that’s so appreciated as a gift.
Once again, in the U.S., it’s extremely big and very mature, the gift card market, but it exists, more or less, all over the world in various shapes and forms. We’ve tried to do some estimates about the global gift card market. How big is it if we aggregate everything? We haven’t been able to really dig up a good number but it’s still huge. We’re talking at least $150, maybe up to $200 billion globally. It’s massive, yeah.
Marco: Amazing. Everyone is doing gifts around the world.
Carl: Definitely. This is obviously one of the reasons we’re doing this with Wrapp, what Groupon did with coupons. One thing is online to offline, that whole marketing value proposition that they use, which we’re also trying to leverage. Secondly, digitalizing of what traditionally have been physical coupons. They made that digital. A gift card shares so many similarities to a coupon in the way that it’s packaged and how it’s used in terms of the redemption processes and all the backend systems.
The biggest innovation that the gift card market has seen is probably going from paper to plastic with a magnetic stripe. That’s the biggest innovation that the gift card market has seen in the past 10 years or so. It made so much sense when we started looking into the gift card space. Of course this is an industry that is going digital, just like so many others, and if we can be on top of that digitalization and also be able to take a slice of that pretty large pie, I think Wrapp will become a pretty successful company.
Marco: To recap to people that totally out of the gift card business and the gift card mechanism, if I want to give a present to someone, I just give them a card, or a company’s giving him a card, and you go with this physical card in the traditional business, in a shop, and you get the discount or whatever it is. It was working like that more or less.
Carl: Yeah, it does to a lot of extent. I think what a gift card really is, is that it’s a proof of purchase that is attached with a specific denominational value. It’s 100 euro to be used at a specific store, let’s say The Gap. It’s totally unconditional. A gift card should always be unconditional, meaning it’s not tied to any specific purchases, I don’t have to buy items A, B, Z, and it’s not attached to any minimum spent, like a coupon would be, like I have to spend a minimum of 100 and I can use this, whatever it is. A gift card is totally unconditional. It’s equivalent to cash but it’s restricted to the specific store or chain of stores. That’s really what a gift card is.
What it used to be, 20 years ago or something, when you went into a store to purchase a gift card, they would actually write a piece of paper with pretty nice handwriting and they would say this is worth 100 Euros and then you would give that to the consumer and they would have to save that. If he lost it somewhere then that 100 Euro was gone. What happened was, by leveraging the whole credit card and magnetic stripe ecosystem, gift cards went into plastic. Now, instead of writing a piece of paper, which, of course, has a lot of fraud risks attached to it with people copying this or whatever, what companies started to do is to use magnetic stripes and plastic cards, similar to a gift card. You would load that card with a specific value and you would have that in your wallet or whatever and you would go into the store and swipe that just like a regular credit card. Now we’re doing that digitally.
Marco: Can you elaborate a little bit on how Wrapp is working? What really changed? What’s the big change with the Wrapp and this gift card business?
Carl: Yeah. I think if we continue on the pure gift card product, which we’re digitalizing, what we are doing is that we are, of course, putting it into this thing where we have a mobile application, where you store all your digital gift cards in the mobile device.
If you’ve been familiar with gift cards before, what you would recognize is that you would get a gift card and you would put it in a drawer somewhere or you put it in your purse or whatever and then you forget about it. Then you find it X number of years later when you’re moving houses and you’re emptying that drawer, you say, “Aw, this old gift card.” They usually attached to an expiration term. Often, gift cards will expire for you, depending on the market and some regulations.
We put the digital gift cards in your mobile device. You have them with you at all times. Whenever you’re walking the streets and you walk by that store where you know that you have a gift card, you will remember that, “Hey, I have a gift card and by the way, I also have it with me because I never leave home without my smartphone.” That’s one of the benefits of digitalizing gift cards.
The other thing is that when you make it digital, you can also make it interactive. We, of course, are adding the social layer on top of the gift card product. We have integrated our platform into Facebook. When you give somebody a gift card you can, of course, leverage the social graph on your friends there and, at the same time, the communication that Facebook can enable. That whole communication can now be surrounded in the Wrapp product and for these different gift cards.
If I give you a gift card, Marco, I’d be very interested to understand, what do you think about this gift card? I chose this store for you. I chose this store The Gap and I gave this to you. Did you like The Gap? Was that something you wanted? Of course, there’s an instant feedback loop that I’m looking for. Are you happy for this gift? Then eventually, when you go and redeem this gift card, I’m, of course, very curious to understand, “Hey, what did you actually buy Marco?” Maybe I told you that, “Here’s a gift card at The Gap. I know you want this new shirt. I know they have it in your size,” or whatever, and then you go in and redeem it. I’m curious to understand if you actually purchased that specific item or not. We can facilitate that whole interactivity and that discussion within our application.
Marco: How do you collect all this information? Straight to the app because you record everything that is redeemed or if I am rating my purchases and you try to get that out of it?
Carl: At the moment, we are leveraging, basically, the interactivity between the sender and the giver. Whatever the giver wants to communicate back to the sender, that’s what the platform’s trying to facilitate. Let’s say you walked into The Gap and you bought something you didn’t want me to know that you bought, whatever reason that could be, then, of course, that information is not pushed back. It’s more about creating a dialogue between the sender and the giver.
What the application does, when you go into The Gap to redeem your gift card, I will instantly get a ping on my cellphone saying, “Hey, Marco just redeemed your gift card at The Gap. Are you curious what he purchased? Why don’t you ask him?” Then I could continue that dialogue within our application. I could ask you, “Hey, what did you get?” You could say, “I bought this,” and I could “like” that, etc.
From the traditional gift card industry, we are making it digital, interactive, and social. I think that’s one of the big innovations that we’re doing. I think another one that’s important to highlight is that we have also changed how retailers use gift cards. Retailers, historically, have been using gift cards because it’s been an attractive product to sell. The reason why it’s attractive is because I sell it to you today, you pay me today, but I don’t need to take up any costs for this purchase until you actually go in and redeem this, which is actually sometime in the future. It’s a positive cash flow effect from gift cards. I’m basically collecting cash and then I’m waiting, whatever it is, one day up to a year, up to five years depending on the market, when you go in and redeem this gift card. That’s when I need to take on the cost for it.
What we realized when we integrated and built our platform on Facebook in the graph there, we realized that one of the real strengths in social media and one of the core reasons why people communicate in Facebook or across Facebook and other social media is reasons they celebrate. Usually the communication is triggered by an event. Somebody may be changing their relationship status to be married, somebody uploads a picture of their newborn baby, or on Facebook, on the top, right hand side corner you would see this person has his birthday today. That’s one of the main triggers that why people then start talking. “Hey, Marco, Happy birthday! I haven’t spoken to you in a couple of months.” Now, I’m all of the sudden reminded that I should speak to you and the reminder to trigger that is a reason to celebrate.
We understood that one of the huge triggers and the reasons for people to interact on social media is reasons that they want to celebrate. We want to create Wrapp and make this a platform that you can celebrate any occasion. Our slogan is kind of “celebrate your friends every day.” That’s what Wrapp is really all about. We have made part of the gifting experience free. You could actually give a gift card for very prominent and well attracted retailers for free to your friends. This could be anything from maybe 5 euro up to 25, 30, depending on the retailer and the category that they’re in.
The reason why I’m able to give you, Marco, a gift card at The Gap for, let’s say, $15 for free, is that Gap uses Wrapp as a marketing platform as well as a distribution channel for gift cards. The way that the marketing platform works is that a retailer, they specify a campaign with Wrapp and decide the type of demographics, so the types of consumers that they want to attract and bring into their stores. They would target this based on age, gender, geographics, etc. The traditional demographics targeted.
Then retailers set a specific denomination and a value. How much am I willing to give this type of consumer if I can get him to come into our store and shop? They would say, “Marco, he fits into this type of demographical pattern. We’re willing to give this type of demographics 15 euros to come into our store because we know if these types of demographics come into our stores, they don’t only shop for 15 euro. They spend 1,000 euro or 100 euro.” They have a perception that some specific types of demographics are more profitable than others. They can then set incentives and triggers to get those types of consumers into the stores.
The clever thing with that is that the distribution of these incentives to get into the stores is done through friends. We call this friend-to-friend marketing. Let’s say, Marco, you’re over a certain age and gender, and most importantly you live in Italy. Me, being Swedish, the same gender, different age and definitely different geographics, if I would go in and say, “I want to celebrate Marco using Wrapp,” when I click on you, Wrapp then determines the demographical patterns of you it presents unique offers that are targeted to you. It’s not targeted to me. It’s not based on who I am. It’s only based on who you are.
Then it’s up to the friends, me or any of your other friends, to basically decide which of these brands should I celebrate Marco with today and what is the reason for that? The decision is always made by your friends. A brand using Wrapp will never be able to get to you and target you unless you have a friend that, basically, vouches for this brand and says, “This is a brand I want to give Marco because I know that Marco likes this.”
Marco: Let me focus on this card because I think it’s very interesting. Number one, a brand is not pushy. Also the perception of a brand is not invasive but is your friend sending you a gift. The brand is perfect because it’s word of mouth, so it’s friend to friend marketing so it’s great. Also, I’m thinking that it’s very useful because I never know what kind of gift or present to do. If I have an app that helps me choose that is not based on my taste… I would only give table tennis things. It’s very good to have an app that helps you based on the demographic of your friends. I think this is also excellent. I see a lot of advantages.
My question is, now it’s probably much easier for you guys to go there to retailers and say, “Look, why don’t we do a partnership? Why don’t you want to do a deal with Wrapp? We have great investors, we have tons of users, we have tons of previous deals, and so on.” Now, I think it’s much easier. When you started, when you just begun and went to, I don’t know, Gap, and said, “Hello, we’re Wrapp. Why don’t you run a campaign with us?” I don’t think it was so easy to explain how it works. How did you close the first deals with the first retailers? What was the key to go further?
Carl: Yeah, this is the traditional chicken and an egg situation. If we don’t have the users maybe the retails aren’t interested and without the retailers we wouldn’t be able to get the users. I think, luckily for us, the timing for Wrapp is right now. When we meet with a retailer and explain the value proposition of Wrapp, the one thing is that we sell their gift cards. We’re doing that in a digital channel. That’s like, “Nice. Fine. Maybe some incremental sales you can generate for us.” The cool thing is really the marketing platform and the aspect of using Wrapp as a non-intrusive channel to reach your potential desired consumers.
What we do is we leverage the social graph and the social media, as well as smartphones. Basically what we are, we are a very explicit social media mobile marketing channel that creates real value and drives real performances for them.
It’s all about buzz words here but, I think, the retail is an industry that is struggling for various reasons. Recession is one. The whole kind of e-commerce versus offline brick and mortar space, who’s winning, and how should we treat that. The whole cost structures of the traditional retail industry is being challenged. They are, of course, looking for innovative solutions and reasons to continue succeeding in this space.
I think that we have provided a very explicit tool that uses two of the biggest trends that the world has seen in the past years, which is social media innovations as well as the smartphone ecosystem. It fits the timing right now. I think that’s one of the benefits.
The second thing is that our business model behind that is 100% performance based. Our incentives are 100% aligned with our retailers that are partnering with us. They only pay for our services if we’re actually able to deliver a consumer into their store that opens up their wallet and purchases something. Only if a successful redemption of these promotional gift cards is happening, that’s when we charge the retailers. We have very aligned incentives which means that it’s an honest way to do business with them. There’s very little risk involved for the retailer. Then, of course, from a technical perspective, we’re trying to make it as simple as possible, minimum integration, and whatnot.
I think we have really tried to package this according to the needs the industry’s looking for and then we have lowered the thresholds of all different components possible to make sure that it’s easy for them to try it out and see if it works. Luckily for us we’ve been able to attract quite a few retailers.
Marco: Are you trying to find only, let’s say, big retailers, that they have shops everywhere so it’s easy to handle the purchases? Then again, the person has to go with the gift to redeem it somewhere. By the way, this is another amazing advantage that I think Wrapp is bringing to retailers. You bring people in the shop and this has really no value in this moment, I think. You’re only closing deals with huge retailers or are you trying to find also the small, medium retailers? Do you try to also include them?
Carl: At the moment, our vision of what Wrapp is, is really kind of the traditional mall metaphor, the shopping mall. When you go into a shopping mall, it’s dominated by big brands, big chains that you would see in each shopping mall, and then there sometimes are some cooler, smaller brands that are available in the shopping mall as well, which gives it a bit of flavor and style to it. That’s really what we’re trying to do here at the moment as well.
For us, the primary reason for this is due to resource allocation. If we can sign a deal with The Gap that has, whatever it is, 1,000 stores across the U.S. and we can roll this out with one sales process rather than signing up this small local place here in Boston and then this other small local one in St. Louis, etc… Obviously the implementation aspects of Wrapp is equivalent for us if we’re rolling out Gap with 1,000 stores as if we’re rolling out Joe’s Mom and Pop stores with only one location. From a resource application, it just makes sense for us to go after the big brands.
Then I think, thirdly, is from our user perspective as well. We are a relatively new service, right? It’s about building trust with our users and getting them to understand what Wrapp is really about and showing the value of it. I think that is easily done and we can more easily communicate our proposition if we partner with big brands that they are familiar with before. They have some kind of familiarity with their application when they come into it.
Marco: How about the users, Carl? In the beginning, it was the same chicken/egg problem because you said users can’t come to me and use Wrapp if I don’t have retailers. You first focused on finding good retailers, good brands, and good offers and then you started to marketing your app? How did you solve this problem in beginning?
Carl: Yeah, I think we were lucky. We launched in Sweden first. We launched kind of nationwide in Sweden in November last year. I think one of the benefits we received in Sweden was that we were able to make somewhat of a big bang in this little, small local market. We raised money from Niklas Zennström. Obviously, we got a lot of press coverage for that. Then, me and my fellow co- founders, especially our CEO Hjalmar, he has somewhat of a brand from before and is somewhat a well-known serial entrepreneur, so he could also stir some attention around this new venture he was involved in. I think that we came over that initial threshold quite quickly in Sweden because of that kind of critical mass of users. We reached that quite quickly because we were able to get some attention.
Then, of course, when we launched in Sweden, we launched with some of the biggest nationwide retail chains. We have really strong brands from day one and free gift cards from really big retailers. That is attractive to a lot of users. Once you get that critical mass… Everything about Wrapp is really viral. I give you a gift. In order for you to receive that gift, the gift is stored within the Wrapp application. You sign up to our application and then you will be reminded and prompted to send gifts to your friends. It really spreads layer over layer over layer. That’s really how our growth looks like. Once we reached that critical mass, I think it was easier to continue our growth.
Marco: I don’t remember the name, the title, of the book. I read a book a few years ago, Viral Loop Inside, and if I think about Wrapp it’s exactly like that. It’s viral by default. To work, it has to be viral so it will spread.
Marco: You don’t really have, in this moment, a marketing campaign running. You just go viral or you also support your growth with traditional advertising or whatever?
Carl: No, we actually do very little traditional advertisement. We focus quite a lot on PR. We try to be active in PR and be heard that way. Other than that, we are really leveraging our user base and growing with them as well as using our retailers that we are partnered with.
What Wrapp is for retailers, it’s also kind of a tool to give their brand ambassador something exclusive to share with their friends. Let’s say I’m a huge fan of H&M, a Swedish fashion chain. If I’m a huge fan of H&M, I would be probably be more likely to give you a gift card for H&M because I’m kind of trying to convert you and convince you that, “Hey, this is such an amazing store. I love this store. You should come with me to the store.” That’s why I’m giving you this gift card. We’re also using our retailers to reach their brand ambassadors and, through that, being able to leverage whatever followers they have and get new users that way.
Marco: Few minutes more and I’ll let you go, Carl. Gift cards business, checked. Everything clear? Huge business and great feeling by you guys. Congrats to intercept this trend and it’s a huge business. Wrapp, how it works, okay. I would like you to help with some tips and advice about a few topics. The first one is mobile app. Wrapp is basically a mobile app. It works also on a website, but basically it has been designed to work as a mobile app, right? What’s your top tip or what are your top 3 tips to create a mobile app that works in a moment where you have an app store with kazillions of mobile apps so it’s very difficult to be on the screen of the user? What are your top advice on this topic?
Carl: Yeah. You’re touching upon one of the core concepts that we have discussed with Wrapp. It’s just like you mentioned, being on the home screen of a mobile app. That’s prime real estate location. If you’re on that home screen, there are scarce resources. There are only a number of apps that can be there and there are so many that are forgotten.
I think what we have been bouncing back and forth is two things. One is frequency and the other this is virality. Those are the two core concepts that we have tried to design our whole product around. What could be the reasons why people would share these applications to any other of their friends? The virality aspect. The second is frequency. How often could a user use this? Is this a one off or is this on a continuous basis? Is it monthly? Is it weekly? Is it daily? How can we increase that frequency? What can we create and design within our product to remind our users to use this more frequently and create a good value proposition and reasons to do that?
I think creating a mobile app today is difficult. It’s difficult because there’s so much competition now. There are so many apps out there. It’s also difficult because of the fact that it’s costly if you want to be cross platform. You cannot only design for iOS. You have to design for Android as well. People are expecting it and soon they may be expecting it for Windows mobile, as well. If you then want a web application on top of that, obviously you need to create that also.
There are so many startups out there that are talking about the lean startup mentality, which I’m very much a fan of. In Wrapp’s instance, we have actually raised $10.5 million USD in our CSA which was quite a big round of money in relations to how far we were with our company at that point in time. We have invested quite significantly and aggressively into our development team because we see that there is so much that we want to do. There are so many things that need to be done because we’re working on these three platforms, web, Android, and iOS, in parallel. It’s complex.
I think going back to the core, if you want to create a mobile app, if you want to try and create a successful mobile app, you really need to think through how often will a user use this, why will a user want to use this more often than once, and what aspects of this application could be reasons for me to share this with other people. It’s really vitality. That’s the key growth driver to your application. If you’re in the business of marketing spend, there will always be one competitor that tries to outbid you on Google AdWords or whatever it is. If it’s American Idol, TV ads or something. You don’t want to become addicted by marketing. It’s nothing wrong to use marketing but you should make sure that the core of your product is something that can grow virally. I think that’s key.
Marco: Frequency and virality. I will write it somewhere, like your quote “frequency and virality.” I like it a lot.
Carl: My co-founders at Wrapp would be very happy if they saw that in writing. I know they’ve heard that many, many times.
Marco: I’m just curious, you’ve been mentioning Niklas Zennström and great round of investment. I saw Greylock Partners. I saw Reid Hoffman. You get funded by great investors. What was the key to get such important investors to funding your company?
Carl: Yeah, as always with fundraising, you have to understand it takes a lot of time. You usually see the press release, “This fundraising is now completed.” Hooray for this company. There’s a lot of work behind that and it takes a lot of time. Both Reid and Niklas were actually involved in Wrapp from a very early stage in a sense that they were providing us with feedback and we were bouncing our ideas with them. I think, for Wrapp, one of the benefits for us was the fact that the co-founding team at Wrapp had a network, an access, to some of these prominent investors so we could get that first meeting, which of course is crucial.
Really, I think that we are tackling a huge market that we already discussed. The total size of your market needs to be tremendously big in order for you to have a shot at creating a company that’s valuable enough. Let’s say, in our instance, we raised $10.5 million USD. Our investors, I don’t know what multiple they’re expecting, whatever it is, if it’s 5, 10, 20, 50, 100 times that money, but of course the valuation increase of Wrapp is expected to be significantly higher. In order for a company to actually be able to reach those type of absolute numbers in valuation, it needs to be in a market which is big enough. It needs to be attacking a problem that is big enough to appeal to those types of financials.
Marco: Carl, I ask this to all the Tech Alchemist guests, your top two or top three tools, websites, or apps you absolutely suggest to use if someone is in the digital business. You say, “You can’t live without these tools.” It can be whatever you want. Someone says, “Oh, analytics,” whatever, from positioning, promoting, or partnership point of view. Your two or three tools. The apps that you have on your screen or the ones that you can’t live without.
Carl: I like that question. It’s a good one. The boring answer is Google Apps, but I don’t want to say that. I’ll take that back.
Marco: You can’t say any table tennis apps because I already said that.
Carl: Got it. I have one awesome app which is on my smart phone, and I’m just going to make sure I have the name right because I think they changed the name. It’s caleld Sign Easy. It’s basically an application to sign documents on your smartphone when you’re on the go. You sign on the screen here. Printing is a hassle, then you need to scan it and then you’re emailing it back. The more you can avoid printing, the better the world is, from all aspects of it, environmentally and management wise, security wise and all that kind of stuff. Storing it in the cloud is much better than having it in some kind of folder here. Sign Easy I think is a great recommendation.
The other tool that we use quite frequently here at Wrapp is a tool called Asana, which is a project management tool. It’s actually founded by one of the early guys of Facebook. I can’t remember which one it is. Anyway, they raised quite a significant round. It’s a really good project management tool when you’re working in teams, you have a lot of tasks that need to be completed, and they are intermingling with each other and that complexity that could happen. With Wrapp, we’re working across multiple markets. We have people spread out over the world, so there’s a lot of stuff that needs to happen that are linked to each other.
Marco: Kind of Base Camp but more evolved.
Carl: Yes, exactly. It’s definitely a couple of notches more advanced than Base Camp. I love Base Camp as well, but the simple and the consumerization of software sometimes only gets you that far. At some point in time you need a little more sophisticated tool. Asana, I think is perfect. Once you’re done with Base Camp you can go to Asana. It’s a good extension of it.
Marco: All right. Last question, Carl. What’s next? If you tried to open your crystal ball and think, “What would happen in the next two years in my market? It will happen this.” You bet 100% on the digitalization of the gift cards market and that only Wrapp will exist in the world? What will happen? What’s your vision?
Carl: That would be nice.
Marco: Yeah. That would be cool.
Carl: Yeah. That would be. I think that, for us, in the very near term is Christmas. Everything is about Christmas and the holiday season. The holiday season is one of the biggest gifting occasions globally. We, of course, want to be one the default ways to celebrate your friends during the holiday season. You can’t be there with everyone. You can only give a physical present to so many people because you can only be in one location at a time. I think Wrapp can facilitate a lot of those gifting needs that you can use.
I think if you look a little further ahead, I think one aspect, like you mentioned, is digitalization of gift cards. That is happening. We’re not the only people focusing on that. There are a lot of people trying to be part of that innovation. I think what really touches upon the gift cards space and the digitalization of that is also the whole digital wallet war, if you may say. What will happen with the digital wallets? With the Wrapp application we have a digital wallet as well where you store your digital gift cards. We’re not trying to become a digital wallet in the general purpose. We’re only doing gift cards.
I think that whole ecosystem around… Apple released its Passbook and what will happen and what is the extension of that. There are so many other players out there in the market as well that are trying to revolutionize the wallet space. I think we are scratching that surface from our little gift card angle to some extent. It’s going to be very interesting to see that whole ecosystem evolve and see what will happen there. I’m not sure who will be the winner and what will happen but it’s definitely going to be interesting. I think that we could actually be impacted by that to a certain extent.
Marco: You’ve been talking a lot about celebration, which is good. It’s a very positive value. I’m waiting for a worldwide celebration day from Wrapp if you haven’t organized yet, where you celebrate, everyone celebrating, and Wrapp will be the one.
Carl: Yeah, definitely. That’s something lovely. Also, I think it’s important to highlight that. Wrapp is all about gifting and celebrating friends but actually we’re also working with non- profit organizations. You can actually donate to charity on behalf of your friends. The core of Wrapp is really about that whole gifting and the nature of gifting, giving to someone else rather than yourself.
Marco: Thank you so much, Carl Fritjofsson, co-founder of Wrapp. Carl, really, you are very gentle to share all these tips and keep in touch for everything. Good luck.
Carl: Thank you, Marco. It was lovely. Thank you. Good luck with the table tennis.