Last week, Los Angeles-based Bevvy (www.bevvy.com) launched on online site aimed at deals and offers for nightlife and nightclubs. In an interesting twist to the daily deals model, the site does not use printable coupons, but instead uses "secret passwords" to provide people with special deals at venues, is squarely aiming at high end nightclubs, and is striving to be venue friendly to bar and club owners. To hear more about the firm's unique take on deals for nightlife, we caught up with Niall Donnelly, the firm's founder, who--not coincidentally--runs the Rolling Stone nightclub venue at Hollywood and Highland:
Describe what Bevvy is all about?
Niall Donnelly: Bevvy is a private reservation site. We offer insider access and ongoing, preferred pricing to top end, exclusive venues, currently in Los Angeles The main problem we are solving is excess capacity issues for venue owners. I have lots of past experience in that area, as I owned a group of nightlife venues in Europe, and also have done some big nightlife venues here in Hollywood and Los Angeles. Excess capacity has always been an issue in this industry, and there has never been a way to fix this until Groupon and other bigger companies paved the way. But, what they offer is not ideal for the industry.
You mention you've run nightlife venues before this?
Niall Donnelly: I've been owning and operating them for 12 to 14 years now, very successfully in Europe. I owned one of the biggest clubs in London, and I currently own a number of venues in London. About a year and a half ago, I approached Rolling Stone, and we did the first ever licensing deal with Rolling Stone worldwide, where we're opening up Rolling Stone restaurants and nightclub venues. We opened up our first on in Hollywood at the start of this year, which was a pretty big deal. It's been a roaring success.
How did a nightclub owner like you end up crossing over into creating a technology startup?
Niall Donnelly: I come from a multi-sector background. I had dot coms before, I had fashion companies, and I have been very successful in real estate. It's just a business background, and it's just a natural progression. I took the dot com experience I had, blended my nightlife experience into that technology, and then it only made sense to start this when Groupon paved the way to solve the excess capacity issue for nightlife venues. What happens is, Group and other companies are not solving the problem and issues to do with nightlife. What we're doing with our reservation system, is we're able to drive customers at non-peak times, which is what venues, bars, and nightclubs need.
What are the issues you see with Groupon?
Niall Donnelly: Groupon and LivingSocial are incredible companies, and their growth rates are unsurpassed. However, for the nightlife industry, if you do a daily deal that is something like 2000 to 3000 people showing up in the space of a week, which is detrimental to your business. It's creates a problem with service and staffing levels. Everything about it is wrong. What happens, is you just piss your customers off. Because deals are valid over 90 days, and because you as a venue owner don't know when people will walk through your door, you end up pissing off your regular customers with mobs of coupon chasers. What you need, is you want to know when people are coming, and you don't want them to come when you're busy or at peak times. We're trying to solve that. Another problem with regular daily deals, is they're just taking too much money from the merchants. They take 75 percent. After the 50 percent discount, they still take half of the money, so the merchant maybe gets 25 percent, which is maybe, maybe, breakeven, but usually not. We leave them with the full percentage, and they get their payment immediately, where sites like Groupon pay in 45 to 60 days. They get paid by customer, we don't hold any money, and all we do is take a reservation fee from the customer. Another major thing, as well, is if you're bringing a girlfriend out or going on a date, the last thing you want to do is pull out a coupon. Nightlife is built inherently on the cool factor. We just found out that coupons just weren't working. So, we've eliminated that with the Bevvy reservation system. What we've done is we pre-generate lists, that go out to venues every morning, plus a pre-generated speakeasy password. They are cooler, easier to get away with, and takes away the embarrassment of handing over a coupon.
Do you have plans to expand this beyond LA?
Niall Donnelly: It's just LA for a moment, because it's where I've been based with my company. But, absolutely, the next area will be New York. We've just raised a seed round from a venture capital firm, and are going for a bigger angel round, to expand into New York, San Francisco, and Vegas.
Finally, what's been the toughest part so far of starting up the business?
Niall Donnelly: The way I see it, personally, it's convincing the venue owner that this is good for them, and that we're merchant friendly. We started with a beta testing with a slightly different model, and have refined it. We've found that the toughest part is the acquisition of the high end venues. The high end ones will never work with a Groupon or a LivingSocial, but we've found that we're able to sight up the highest end ones with our model. That's probably the hardest part for any competitor to do what we're doing. It's the acquisition of the venues. And, speaking for myself as a nightclub owner, I'd never do a LivingSocial or Groupon, and they've approached me for all of my venues. It doesn't work, and it just devalues what I have. I'm finding that with our current model we're signing up nightclubs about five times quicker than with other coupon models. We're much more merchant friendly, and we still offer great deals to customer. At the end of day, who is going to win this, is the sites who have the best nightlife venues. Whoever has the best venues wins.