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This tipping software startup nearly tapped out amid the pandemic — but now it’s growing

Determining employee hourly wages or salaries is relatively straight-forward. Determining tips, however, requires more nuance than calculating the difference…

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2 years ago

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Kirk Grogan (left) and Leif Magnuson working together. (Tiphaus Photo)

Determining employee hourly wages or salaries is relatively straight-forward. Determining tips, however, requires more nuance than calculating the difference between when a worker clocks in and out.

Leif Magnuson. (Tiphaus Photo)

Enter Tiphaus.

The Seattle-area startup just raised a $1.1 million pre-seed investment round from SeaChange Fund to help bolster its software used by more than 300 restaurants to automate tip distribution.

The investment and traction is a welcome sign for a company that nearly shuttered last year after the pandemic crushed the restaurant business.

After launching in 2018 and seeing steady growth, Tiphaus only earned one sale in 2020 and was at a breaking point. Its founders had burned through life savings and given up hundreds of thousands of dollars to go all-in on Tiphaus. They came close to calling it quits.

But by February of last year, the company saw sales come back as COVID-related restrictions loosened. It brought on more employees and now has 15 full-time workers.

“It’s amazing what you can overcome when you are in the trenches with people you respect and care for,” said CEO Leif Magnuson.

Before launching the company in 2018, Magnuson was consulting for restaurant groups and kept seeing a recurring trend: difficulty managing tips.

He couldn’t find existing software solutions to address that pain point. Thus, Tiphaus was born.

The software aims to help restaurants reduce errors related to tip distribution and increase transparency for employees. It also lets waiters send tips to hosts and others that helped them during the shift.

Tiphaus is preparing to launch an “earned tip access program” that immediately sends tips to direct deposit at the end of the night rather than at the end of a pay period.

The company’s other leaders include co-founders Taylor Birkeland and Kirk Grogan, chief operating officer.

“… it’s really the employees that love us and the employees that we try to satisfy because ultimately employee turnover is always an issue in the restaurant industry,” Grogan said.

Grogan previously worked in the service industry. He would go two weeks without seeing his tips, with little transparency on whether he got the correct amount during his pay period.

“It’s really the employees that love us and the employees that we try to satisfy, because ultimately employee turnover is always an issue in the restaurant industry,” Grogan said.

Tiphaus provides its software services for $99 per month, or $69 per month for quick service restaurants.

Taylor Birkeland. (Tiphaus Photo)

We caught up with Magnuson and Grogan to learn more about Tiphaus and what’s next for the company in the latest Startup Spotlight.

The biggest thing we look for when hiring is: Personality first and foremost. The tools can be taught, so we are looking for someone with a good cultural fit who has charisma and is enthusiastic to grow with the startup. A lot of empathy is required on the sales side.

We differentiate from our competitors by: Besides serving a fairly niche market, we differentiate ourselves by an employee-centered culture. The team is fully remote yet engages more than most offices I had previously worked in. The team is accommodating to employees that need to leave early or take care of their mental health. In return, we have a loyal employee team that is willing to work hard during important projects.

The biggest challenge facing our business is: COVID-19 was a near death sentence for us. There were months where the startup mentioned very little revenue when restaurants were not offering in-person service. Kirk left a high paying job to work on developing Tiphaus and Mac Gainor, chief technology officer, lost hundreds of thousands of dollars during this time to work with Tiphaus. API integration with the variety of point of sales systems used by restaurants is also a significant challenge we are working to overcome.

Mac Gainor. (Tiphaus Photo)

The smartest move we’ve made so far: Committing to developing talent and empowering employees. We spend an absurd amount of time making sure our employees are happy, informed, and always improving their own skills. Often companies fear training employees until they can leave, and we view that as a great thing. You want employees so talented they can leave, and it’s up to your leaders to create a culture they never would actually want to leave.

The biggest mistake we’ve made so far: Rushing some technology partnerships out of desperation. When COVID-19 hit, the service industry got turned upside down, and we spent a lot of time developing partnerships that ultimately didn’t lead to any results. Thankfully, we recognized this early by most standards, and were able to focus on core objectives and get more strategic with partnership choices.

What one piece of advice would you give other entrepreneurs: As silly as it sounds, get good business insurance as soon as you can. You’ll know you made it when the billion-dollar competitors you are winning business from start coming at you in the courtroom. You have to remember, a lot of these companies know that you did nothing wrong, but still want to bury you in legal fees. Our business insurance has been 10x its weight in gold and were able to provide us a legal team that easily and clearly demonstrated we followed all the laws and didn’t infringe upon intellectual property. Without insurance, just defending ourselves would have bankrupted our company.

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International

WHO Official Admits Vaccine Passports May Have Been A Scam

WHO Official Admits Vaccine Passports May Have Been A Scam

Authored by Paul D. Thacker via The Disinformation Chronicle (subscribe here),

The…

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6 hours ago

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April 14, 2024

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WHO Official Admits Vaccine Passports May Have Been A Scam

Authored by Paul D. Thacker via The Disinformation Chronicle (subscribe here),

The World Health Organization’s Dr. Hanna Nohynek testified in court that she advised her government that vaccine passports were not needed but was ignored, despite explaining that the COVID vaccines did not stop virus transmission and the passports gave a false sense of security. The stunning revelations came to light in a Helsinki courtroom where Finnish citizen Mika Vauhkala is suing after he was denied entry to a café for not having a vaccine passport.

Dr. Nohynek is chief physician at the Finnish Institute for Health and Welfare and serves as the WHO’s chair of Strategic Group of Experts on immunization. Testifying yesterday, she stated that the Finnish Institute for Health knew by the summer of 2021 that the COVID-19 vaccines did not stop virus transmission

During that same 2021 time period, the WHO said it was working to "create an international trusted framework" for safe travel while EU members states began rolling out COVID passports. The EU Digital COVID Certificate Regulation passed in July 2021 and more than 2.3 billion certificates were later issued. Visitors to France were banned if they did not have a valid vaccine passport which citizens had to carry to buy food at stores or to use public transport.

But Dr. Nohynek testified yesterday that her institute advised the Finnish government in late 2021 that COVID passports no longer made sense, yet certificates continued to be required. Finnish journalist Ike Novikoff reported the news yesterday after leaving the Helsinki courtroom where Dr. Nohynek spoke.

Dr. Nohynek’s admission that the government ignored scientific advice to terminate vaccine passports proved shocking as she is widely embraced in global medical circles. Besides chairing the WHO’s strategic advisory group on immunizations, Dr. Nohynek is one of Finland’s top vaccine advisors and serves on the boards of Vaccines Together and the International Vaccine Institute.

The EU’s digital COVID-19 certification helped establish the WHO Global Digital Health Certification Network in July 2023. “By using European best practices we contribute to digital health standards and interoperability globally—to the benefit of those most in need,” stated one EU official.

Finnish citizen Mika Vauhkala created a website discussing his case against Finland’s government where he writes that he launched his lawsuit “to defend basic rights” after he was denied breakfast in December 2021 at a Helsinki café because he did not have a COVID passport even though he was healthy. “The constitution of Finland guarantees that any citizen should not be discriminated against based on health conditions among other things,” Vauhkala states on his website.

Vauhkala’s lawsuit continued today in Helsinki district court where British cardiologist Dr. Aseem Malhotra will testify that, during the COVID pandemic, some authorities and medical professionals supported unethical, coercive, and misinformed policies such as vaccine mandates and vaccine passports, which undermined informed patient consent and evidence-based medical practice.

You can read Dr. Malhotra’s testimony here.

Tyler Durden Sun, 04/14/2024 - 15:10

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International

Don’t wait for Prime Day, Amazon offers more big savings days

The online retailer is fighting to gain market share in an area it abandoned during the Covid pandemic.

Published

14 hours ago

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April 14, 2024

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During the darkest days of the Covid pandemic, Amazon experienced some of the same shortages that impacted brick-and-mortar grocery stores. The online giant struggled to keep its customers supplied with basic items, so it stopped taking deliveries of less essential items.

People needed toilet paper, hand sanitizer, so Amazon  (AMZN)  had to make some difficult choices. The company explained its decision in an internal memo,

Related: Costco has a new way to make money members will love

"We are seeing increased online shopping, and as a result, some products such as household staples and medical supplies are out of stock. With this in mind, we are temporarily prioritizing household staples, medical supplies, and other high-demand products coming into our fulfillment centers so that we can more quickly receive, restock, and deliver these products to customers."

The move made sense for Amazon, but it also created opportunities for rival retailers. You could argue, in fact, that the short-term change opened a door for pet supply company Chewy  (CHWY) , as Amazon was not stocking many pet essentials during that period.

That forced people who were already Amazon customers, who may never have considered shopping anywhere else, to sign up for Chewy. Once that happened, they became satisfied customers, and there was no reason for them to return to Amazon. 

Amazon, however, wants to win some of that business back, and it's making another effort to do that by bringing back its "Pet Day" promotion.

Amazon wants to win over pet parents.

Image source: Getty Images

Amazon makes a bold offer to pet parents

Amazon Pet Day is essentially a massive sale on the online retailer's pet supplies inventory designed to win over pet parents.

"Amazon Pet Day is a 48-hour event for U.S. customers that features thousands of products on deal to help you feed, pamper, and play with the pets in your life," the company shared on its website.

It's basically a more focused version of its Prime Day promotions, except that it's open to all Amazon customers not just Prime members.

"Beginning May 7, pet lovers will have 48 hours to save on pet food, toys, apparel, pet care, home products, electronics, and more. Pet parents can start shopping early deals on April 23," Amazon shared. "During Amazon Pet Day, you’ll find deals on favorite brands including Purina, Merrick, Blue Buffalo, Petmate, HoppScotch.bun, Jinx Pet Food, Halo Collar, Bundle x Joy, Furbo, Genius Litter, and more."

Amazon is committed to pets

Amazon wants to make it clear to pet owners that it's committed to animals in a broad sense. The company shared that it offers pet-friendly workspaces.

"We even make it easy for pets to come to work at many of our offices. We have more than 14,000 registered dogs at over 135 Amazon offices across the U.S., Canada, and Australia thanks to our Dogs at Work program, which offers perks like designated spaces for dogs to play, dog-friendly events, discounted pet insurance, welcome packages for registered dogs, and of course, free treats. Dogs who come to work at Amazon even have their own badges," the company shared.

Amazon also offers a number of services specifically for pet owners including:

  • Amazon Pet Profiles which allows customers to receive personalized recommendations based on your pet’s size, breed, and preferences.
  • Subscribe and Save which helps people set up regularly scheduled deliveries and save on essentials like pet food, litter, toys, healthcare, and more.
  • The Pet Deals Amazon page offers coupons, Lightning Deals, and more. Savings can range from 10% to more than 70% off.

The online retailer will offer more special deals leading up to its Pet Day promotion.

Amazon is a formidable competitor. Shares, which closed Friday at $186.13, off 1.5% on the day's selloff, are up 22.5% this year. 

Chewy's shares fell 4.9% on Friday to $17.64. They are down 22% year to date. Founded in 2011, the company went public in 2019, and shares peaked at nearly $120 in early 2021 during the Covid-19 pandemic.

Revenue reached $11.1 billion in 2023. 

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Spread & Containment

Mall retailer considers Chapter 11 bankruptcy as cash dwindles

The popular retail chain has been delisted from the New York Stock Exchange and it has met with its lenders to explore a possible bankruptcy filing.

Published

15 hours ago

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April 14, 2024

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When retail chains show slowing chains they usually blame one of two boogeymen.

First, there's Amazon. The online retailer has changed how consumers shop, but it has not disrupted brick-and-mortar sales on the level most people believe. Online sales are still a relatively small piece of the overall retail market, according to data from the U.S. Bureau of Labor Statistics (BLS). 

"Fourth quarter 2023 e-commerce estimate increased 7.5% (±1.2%) from the fourth quarter of 2022 while total retail sales increased 2.8% (±0.4%) in the same period. E-commerce sales in the fourth quarter of 2023 accounted for 15.6% of total sales," the BLS shared in its quarterly report.

Related: Failed Chapter 11 bankruptcy puts fast food chain in final days

That number has been steady for years, climbing to about 20% during the lockdown period of the pandemic, but never reaching those levels again.

In addition to Amazon and the internet, failing retailers often blame falling mall traffic and that's not really a major issue either.

"Shopping mall foot traffic is nearing pre-pandemic levels, but not everything is the same — that’s a main takeaway from a new white paper by foot traffic analytics firm Placer.ai, titled 'The Comeback of the Mall in 2024.' The white paper finds that during 2023, visits at indoor malls were down 5.8% compared to 2019 — a dramatic improvement from being down more than 15% in 2021," Placer.ai shared.

Open-air shopping centers have done even better as traffic dropped only 1% last year compared to 2019.

"Visits for the shopping center industry at large were down 2.3%, and “foot traffic may yet pick up again in 2024,” according to the report.

Malls have seen their traffic go back to around pre-pandemic levels.

Image source: Getty Images

Retail chain faces a cash crunch

Express (EXPR) has struggled and the company had a net loss of $36.8 million in the third quarter, which is a similar number to its $34.4 million net loss in the same quarter a year ago. The company has nearly $500 million in inventory, but only $34.6 million cash and cash equivalents totaled $34.6 million. That's actually an improvement of $10 million from the same period a year ago.

Rapid Ratings, a company which uses publicly-available data to track a company's financial health, has called the company a "high default risk," and has warned its customers "begin mitigating risk."

Express has been working to cut its expenses to preserve liquidity."

"The company is continuing to conduct a comprehensive review of its business model to identify actions that are expected to meaningfully reduce pre-tax costs and enable a more efficient and effective organization and has engaged external advisors to assist in this effort. The company is reiterating its stated goal to deliver over $200 million in annualized savings by 2025 versus 2022," Express shared in its third quarter earnings report.

RapidRatings data, however, does show the company remains at risk for a default, but also had some potentially encouraging remarks. 

"Express Inc is situated in our High Risk group, displays weakness in three of our seven performance categories and demonstrates significant underperformance in ROCE. If current trends persist it would be logical to expect that Express Inc will face serious default risk this coming year although prospects for sustainable efficiency and competitiveness are promising over the medium-term; thus, the outlook is mixed," the service shared.

Express explores potential Chapter 11 filing

Express, which sells mid-priced men's and women's clothing, has been meeting with its lenders about funding a potential Chapter 11 bankruptcy filing Bloomberg reported. The company operates 530 Express retail and Express Factory Outlet stores in the United States and Puerto Rico, the Express.com online store and the Express mobile app, approximately 60 Bonobos Guideshop locations and the Bonobos.com online store,and 12 UpWest retail stores and the UpWest.com online store.

The retail chain has roughly $300 million in debt and expects to lose about $120 million for the full year. Express management has not made any public comment on a potential chapter 11 filing.

Express has not had an earnings call with analysts since Nov. 2023. CEO Stewart Glendinning, who joined the company in August 2023, tried to remain optimistic during that call.

"Our third quarter sales and diluted loss per share came in below the low end of our outlook ranges. The macroeconomic environment remains challenging and the consumer and competitive landscapes were highly promotional," he said.

The CEO was honest about the state of the company and its sales efforts.

"In the Express brand, unit sales were consistent with our expectations. However, moving through this inventory required more extensive discounting and led to greater gross margin erosion," he added.

Glendinning admitted that the company made some merchandise and operating mistakes.

"Across the Board, we have opportunities to improve our operating execution. This includes cycle times, in-store execution, sourcing logistics, all parts of our business which allow us to serve customers, lower our cost base and beat the competition. As part of this effort, we expect some rationalization of our store count as we close high effort, unprofitable stores," he shared.

 

 

 

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