STRATEGY

Noah Glass Has Built a Service That Lets You Order Coffee or Takeout Food Via Text Message.

To expand it, he needs $5 million.
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The Pitch: Think of Mobo Systems as a mobile phone version of PayPal. In 2006, we launched a pilot program with local Subway and Dunkin' Donuts franchises and some other restaurants in New York City. Our system lets a customer place an order from a set menu of options by text message. We automatically charge the buyer's credit card, collecting a 10 percent transaction fee from the restaurant. When the customer reaches the store, he can skip the line and pick up his order. Our average sale is $9.69.

So far, we've signed up 60 restaurants in the metropolitan area, and now we're opening the service to any restaurant in the country. A restaurant or coffee shop can simply sign up online. We're hoping that this concept will spread virally across college campuses the way Facebook did. Then, at the end of the year, we'll begin raising money to move into other verticals, going after accounts such as pharmacies, dry cleaners, and ballparks. We're in talks with several major drugstore chains, as well as a New York City sports venue that would use the system to allow fans to order hot dogs and other concession items from their seats.

This service has mainstream potential: Mobile payments are widely used in countries like South Africa and South Korea. Though they haven't taken off in the United States just yet, many banks and credit card companies are excited about the idea, and the only question is which app is going to be the killer app. We think ours is the best thing out there.


Company: Mobo Systems

Founder: Noah N. Glass, 26

Location: New York City

2006 Revenue: Approximately $70,000

2007 Projected Revenue: $2.9 million (Glass expects to break even this year, ending 2007 with $150,000 in profit.)

2009 Projected Revenue: $135 million

Investment Needed: $5 million, by early next year

Clients: Mobo is accepted in 60 restaurants and has several thousand regular customers. The average user places two text-message orders per week, according to Glass.

Recent Buzz: Good Morning America aired a segment in which Diane Sawyer drank a cup of coffee ordered via Mobo's service. The New York Daily News and The Wall Street Journal have also written about the company.


An Expert's Feedback

To build buzz, stay local

Glass needs to show investors that there are customers who are genuinely fanatical about the service. Obviously the demand isn't there yet, but consumer behavior can change.

I agree with Glass that the next big shift in retail is mobile ordering--we're developing it at 1-800-Flowers.com, too. The other day, we had 10 mobile orders, which sounds small but is actually fantastic considering that when I started selling flowers online in 1991, we had one or two Internet sales a day.

One risk that hits me in the gut is that Mobo has two sets of customers: the vendors and the retail consumers. It's great that restaurants can self-enroll, which could create a network effect, but I worry that the company could end up with too many restaurants and too few ordering consumers. There's a danger that a restaurant owner will say, "Yeah, I signed up for that and not a damn thing happened."

Another problem is that there's very little Glass has that some people with engineering talent couldn't duplicate. So it's all about building a brand. Glass is trying to get big fast. But instead, I would focus on a specific target audience--maybe a single community in New York City. Don't let every customer or every restaurant sign on--invite only a limited, exclusive group to participate. Create buzz before you expand.

Jim McCann
Founder
1-800-Flowers.com, and occasional angel investor
Carle Place, New York

Last updated: Sep 1, 2007




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