Inspiring Loyalty: Alborz Toofani, Founder And CEO Of Snappcard Alborz Toofani, founder and CEO of Snappcard, looks back at his entrepreneurial journey over the last five years.
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Alborz Toofani's entrepreneurial journey started in July 2012, which was when he -23 years of age at the time- moved from Germany, where he was born and raised, to Dubai where he started up Snappcard, a mobile customer loyalty app, after spotting a gap in the market for a digital loyalty program catering for the region's tech savvy population. Five years later, Snappcard has evolved into a business intelligence and consumer engagement digital platform that now covers about 700 locations in three markets -UAE, Kuwait, and Bahrain- in addition to a few clients in Saudi Arabia, Turkey and Germany. The Snappcard app has been downloaded 200,000 times, of which 100,000 have turned into active users, collecting close to 4,000 snaps or points per day, which has resulted in US$2.2 million worth of rewards to date.
However, there is much more to this story than meets the eye. "As an entrepreneur, I am now more drawn towards things that have an impact," Toofani says. "I started Snappcard based on an opportunity. I have always been very good at spotting opportunities as well as dealing with people. When I started, I didn't have a passion for customer loyalty, but for building a business. I was 23, and I wanted to build something that created value. However, I'm now more interested in making an impact. Giving back is very important to me now. I was lucky enough to be mentored by people, such as Roland Daher, Head of Dubai 100, and Will Hutson, founder of LMTD, and now I'm trying to pass that on. I'm also very drawn to seeing whether there is an angle where we [Snappcard] can make more social impact. Before, my goal was to create purpose for myself, now my vision is to create purpose for other people."
Before buying a one-way ticket to Dubai, Toofani had graduated from Cologne Business School, started a real estate business, using profits to purchase five real estate units and eventually becoming a rentier, and -also in Germany- spent two years working for a boutique angel fund, focusing on different aspects of its investment process, from sourcing the deals to post-investment support.
In 2012, digitalizing loyalty cards, he says, seemed an idea worth pursuing since "it was not about trying to reinvent the wheel." With $120,000 in his pocket, having sold one of his apartments in Germany, Toofani headed to Dubai. "The reason was that I had a friend who had sold a business in Germany and moved to Abu Dhabi," he says. "I knew I wanted to do something towards loyalty and retail, and I thought Dubai would be a great place for that. So, I did market research, deciding between Istanbul and Dubai. The reason I chose Dubai was because the city has the highest smart phone penetration in the world, the highest spa per square meter density and one of the highest restaurant per square meter density in the world, in addition to a huge eating out culture, and no taxes. So, it was the aggregation of those facts that made me choose Dubai."
Toofani's aim with Snappcard was to capture the complexity of customers' everyday purchasing decisions and simplify it for businesses, but only those which already have a customer base and can embrace high-quality, actionable customer loyalty data. "We don't refer to markets as countries but cities, because we are looking at network effects, and the most important factor for a city is the density of good merchants," he says. "What constitutes a good merchant is yet to be defined, but the point is that if you have a coffee shop and your coffee is not good, Snappcard can't help you. We have a lot of people approaching us, but we don't sign them up because we they come with wrong expectations. If you have a good business, we can help you make it great, but if you don't have a customer base, we can't help you. We have a vetting process in place for that reason."
The Snappcard app was officially launched - first on iOS and later on Android- in July 2013, after Toofani registered a British Virgin Islands holding company that is today the umbrella entity for the three sister companies in the UAE, Kuwait and Bahrain. In the UAE, Snappcard was a part of the first batch of startups in the in5 incubator. The geographical expansion started in the summer of 2014, with Turkey being the first international market they entered but also exited. "We started very slowly in Turkey," Toofani says.
"The way I launch markets is very lean. We hire one person, we test it, and if it goes well, we allocate a bigger budget. We have a four-stage growth plan for each market. In Turkey, we had eight employees at one point and 120 customers, but when the coup [the failed coup d'etat against Turkish president Recep Tayyip Erdogan attempted in Istanbul on July 15, 2016] happened, half of them closed their businesses. During the following six months, many small retailers there were struggling a lot because they lost revenue from tourism and even the locals started going out less. We downsized from eight to four people, and our last employee left two months ago. So, we took a year to downsize Turkey, although we still have about 15 bigger customers there who are being serviced from here."
Over the same time, Snappcard's mission has become clear to Toofani. "We are all about enabling the merchant," he says. "Too many times in history it happened that a new or tech player came, disrupted a market, and left the merchant bleeding. So, for all those merchants who might be left out, we give them an amazing piece of technology, and if they utilize it correctly, they can compete in the digital world. If you look at retail, they have hundreds of customers every day and they have no clue who those customers are. The reason why they are losing from online stores is because e-commerce tells you how much traffic you are getting, what your conversion rates are, and so on. Therefore, our solution enables o ine stores with the exact same tools. We are enabling brick and mortar businesses to compete in the digital world."
Describing Snappcard as a technology enabler, Toofani says that they charge a fixed fee of AED800 per month for a full-service solution package, which includes consultations, setting up a system, creating and producing the artwork, and regular visits by the Snappcard team to firstly train the client's staff, and secondly, review the collected data on a quarterly basis. "So, we are a SaaS, but it is a handhold, ongoing solution. We are constantly in touch with our clients since self-service solutions don't work in this region," he adds.
This steeled determination to empower technologically challenged business owners has led the Snappcard team to develop four additional verticals, namely CRM, customer feedback, ordering for delivery and pickup, and campaigns, having realized that businesses needed a clear road map for how to cater for their customers' needs. "We started as a loyalty program, but we have expanded to include much more than that, because we realized that loyalty itself is good but not good enough for merchants," Toofani says. "What we are focusing on now is customer engagement. For the consumer side, it is about loyalty rewards, getting extra points for giving feedback every month, getting extra points if you share it on social media, and so on. For the merchants, it is about business intelligence and consumer engagement."
Since we are on the topic of empowering others, Toofani adds that he is as big a supporter of his 18-strong team, as he is of his clients. He says that there are lots of considerations that tend to lead to him hiring a candidate, but key among them is assessing the candidate's cultural fit. "I follow the rule that I will never hire somebody to do something new," he says. "I have always hired to increase efficiency, so it has been either hiring for something I was doing or somebody on my team was doing, but it grew. I do a lot based on the need and because of that my role has changed multiple times. Finding talent is one of the biggest challenges. Only one person on my team was hired through a job post. I rely on recommendations from my existing employees or my network."
"The hardest position to fulfill, and even to understand, was COO. I wanted to move out of day-to-day, but it was hard for me to even define that role. For example, we moved from six different platforms to Salesforce three months ago. That's what the COO role is about- looking at existing processes and optimizing them by hiring somebody or by driving more technology. I hired somebody for that one and a half years ago, and it didn't work out. One of my major lessons is that I tend to try to fix people, and I should have let go of that person after two months, but I tried for five months. Then I realized that I had somebody internally who could fulfill that role. Over the last nine months, I've had the management team in place, who all have equity in the company, and we make every decision together. I have one vote only. That has helped me in terms of leadership, but also in not needing to be involved in day-to-day. It was crucial for me that after some time, it would evolve beyond me."
For many startup founders, less time spent solving the company's everyday problems means more hours of being glued to their laptops working on investor pitch decks and other fundraising-related requests. Not for Toofani- following his initial capital injection, Snappcard has raised about $2.5 million in eight angel rounds. "Fundraising is the hardest part of starting up a business in this region," he says. "Angels are good, but there is another side of the coin to that as well, especially for first-time angels. Although it is easier to get money from them, some of them want to be involved too much, get emotional and don't know where the boundaries are."
However, talking with Toofani gets particularly interesting when he expands on the region's investment landscape. "I know all the VCs here, and I respect them. Many of them don't waste your time, but some do end up dragging you along. As a sole founder, when I go into fundraising, it means that the company is not growing. The VCs here take a really big pride in saying that they met with 400 startups and invested in only four. It feels like that they all get credibility because they are so amazing that they only chose four. I understand that it is one of their requirements to report to their LPs, but for a fact, out of 400 they met, they knew that they would not invest in 200 of them, even before meeting them. I don't agree with that, and choose to put more effort into growing my business and trying to raise from people who make more sense. All my investors add value. Raising from angels is easier in a sense that you know where you are standing, it's their own money."
As for Snappcard itself, the path ahead is two-fold: raising a $3 to $5 million investment round, or being acquired (or acqui-hired) by a larger corporation which "can give it that exponential growth that it needs." Toofani adds: "If we go for an M&A,I don't need to go out, I don't need to sell my shares. The people on the management team still have about 60% of the company, so we can convert it into the new shares of the new entity because we believe in the business. That makes a deal much easier. Some of our investors think the same, especially the bigger ones who would prefer to be a part of a bigger thing. So, it should be an M&A that makes sense."
While it seems that he could potentially be getting close to the end of one stage of his entrepreneurial journey, Toofani exudes calmness and confidence when talking about the choice he made five years ago. "I always say it's tough, but it is worth it if you do it well," he says. "Some businesses, you cannot start from here. The likes of Instagram, meaning any business that does not have revenue, or does not have short-term revenue goals, will never come out of the region, because the funding ecosystem will not fund it for a year or two, not knowing whether or when it will make money. The education in this area is improving now, but still, if there is no revenue, there is no funding. So, certain business models you cannot start from here, but from London, Berlin, the US, and so on. Then, they wonder why there is no startup that starts in the Middle East and goes globally- it is because the funding ecosystem does not allow it, not yet at least."