Most Disruptive MBA Startups of 2020: Tack, University of Virginia (Darden)
MBA program: University of Virginia, Darden School of Business
Industry: FinTech, Digital payments
Name (s) of the founding student: Alexander Spencer and Stephen Joy
Brief description of the solution: Tack is a payment platform that facilitates digital tip payments. Tack is partnering with companies to provide a platform where their customers can digitally tip their employees through a QR code / web / app based platform. Customers can tip through a variety of convenient payment methods such as Apple Pay, Google Pay, Paypal, credit cards, and ACH direct bank transfers.
Funding dollars: We received $ 2,500 from the VentureLab incubator at the University of Virginia as well as a summer living allowance.
What prompted you to embark on this adventure? I was (Alexander) on my honeymoon in Greece when I ran out of money to tip the various employees I interacted with. It was an embarrassing situation in front of my new wife, but I realized that I was definitely not the first person to have encountered this problem. Thinking more about tipping, I realized that there is a lot of inefficiency 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 this is where I saw that facilitating digital advice would help both the employee (who would understand better his financial resources and would receive a tip that he could not get if the client does not have cash) and the employer (who could better understand what behaviors lead to good performance and have some visibility on the compensation total of their employees). I’ve also seen that tips and gratuities are a fundamental part of the service economy and that intentional giving through tips creates a more empathetic world by allowing people to give. I met Stephen during business school and introduced him to the idea. Stephen was a software engineer and product manager before entering business school. Through our discussion, we started to really look at the tip issue in the service industry today and came up with a plan to start working together.
What has been your greatest success so far with venture? Stephen and I were ready to start Tack with a hotel for our alpha test in early March. However, the Covid-19 pandemic has struck. It was a difficult time to be a start-up because it would have been easy to give up. Our biggest achievement was getting through this difficult time and reaching out to churches and other small businesses that needed to facilitate rapid digital giving when their services went live. We have since rotated again to work with golf courses. Our ability to pivot early on and maintain momentum in sales and development 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 are able to balance ourselves. We are very rarely aware of our enthusiasm for the project, but it’s fantastic because it helps the other get out of their funk.
How has your MBA program helped you move this start-up business forward? Besides teaching us the basics to feel confident enough to start a business, our second year at Darden really sharpened our entrepreneurial spirit. Alexander’s second year courses focused on the new digital world, network effects, and what made businesses successful in the digital age. Stephen has a strong focus on finance and venture capital, helping him build a strong network of reliable mentors for our team.
Our team had started talking to potential clients and working on the business plan, but it wasn’t until the start of our second year that we really took the project seriously. It all started in the fall with venture capitalization with Professor John Glynn, a legendary Silicon Valley venture capitalist. He forced us to write a business plan and challenge us to call every hotel in Charlottesville to find out if they would be interested in our product. Professor Michael Lenox’s strategy in the digital age has 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 his ‘performing’ method, we started to create a pitch deck, participate in business discovery contests, interview friends and colleagues and start to network to help us launch the business. . The city of Charlottesville and the larger UVA Darden community have a pretty active venture capital community that really helps empower Darden students. It’s an ecosystem that has provided the mentorship, guidance, and confidence building that are essential to any early start.
Which founder or entrepreneur inspired you to start your own entrepreneurial journey? How did it prove to be motivating for you?
Surprisingly, two entrepreneurs named Steve inspired me to start my own entrepreneurial journey. The first is Steve Conine from Wayfair. I worked there before Darden and got to sit down with the co-founder. I asked him all kinds of questions about the founding of Wayfair, but what really hit me was when I asked him ‘when he realized this was a big deal’. He replied, “Honestly, I never really thought about it, I just kept going.” When I did my MBA internship at Toast last summer, I spoke to co-founder Steve Fredette with the same questions, and he got essentially the same answer. There is a certain feeling that I have as an entrepreneur that there will be a point where this ends, that you will be successful – but talking to these entrepreneurs made me realize that this is the journey. . If I’m not prepared for it, I should probably leave the entrepreneurial world.
The two most influential mentors in my entrepreneurial journey with Tack have been my CTO and career advisor at my pre-MBA company, Andrew Fedorchek, and Professor Darden Damon DeVito. Being a computer science graduate in the late 2000s, I had a lot of tech entrepreneurs to idolize. As I started undergraduate, I knew the ‘cool’ thing to do was start your own business, grow it as quickly as possible, and then go IPO or acquire. Andrew helped me realize what it takes to create successful technology products, and that starting a very successful business venture was not what the movies and reports claim to be. Damon made those points even stronger, but he really shed light on the entrepreneurial path. Damon made the process much more accessible. He’s introduced me and Alexander to countless mentors, and he’s given us the ultimate push to take Tack from an idea we had in mind to a real business with clients.
Which MBA class was the most valuable in building your startup and what was the biggest lesson you learned from it? Which teacher has made a significant contribution to your projects and why? The most important course we both took was Venture Velocity, taught by entrepreneur and teacher Damon DeVito. Venture Velocity is an 8-week course that aims to accelerate a business to a minimum viable product, introduce each business to a network of mentors, and prepare each business to have a viable pitch deck. Damon is not your typical teacher and he forces every entrepreneur to ask the most important question when starting a new business: are you playing a fake entrepreneur? He challenges us with this fundamental question because… playing a fake entrepreneur is more fun than doing real entrepreneurship. Real entrepreneurship requires commitment, courage and failure. It was with Damon’s help that we were able to rotate our business and move to the golf courses. Damon has been incredibly helpful in introducing us to his network and always finding a way for us to move forward – quickly.
How has the pandemic impacted your start-up projects? The original idea was for Tack to partner with hotels. (We always will, eventually). When the lockdowns hit in March, our beta test with a hotel was canceled and we were forced to switch to digital church donations, which was about the only thing that happened on a regular basis. However, with fully digital courses, we had more time to double the development, branding and vision of the company. Stephen was able to spend a little more time preparing our technology platform to attract a number of clients. Alexander was also able to use his network to find former undergraduate interns who worked with him at Toast last summer to help with the sales effort (they had their postgraduate projects impacted by COVID). Ultimately, the pandemic forced us to grow very quickly in 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 transparent process whereby any customer can easily tip an employee even if they have no money. . Most importantly, we’re looking to break down the barrier between digital tips and cash tips, allowing employees to access their tips sooner than two-week payroll. We not only want to increase the frequency with which customers tip service employees, but also increase the amount. Our vision is to empower workers in the service sector by ensuring transparency over their wages and helping them avoid financial bridges such as payday loans.
DON’T MISS: MEET THE MOST DISRUPTIVE MBA STARTUPS OF 2020