{"id":2839,"date":"2018-07-26T12:34:04","date_gmt":"2018-07-26T12:34:04","guid":{"rendered":"http:\/\/reformingretail.com\/?p=2839"},"modified":"2019-01-23T10:00:16","modified_gmt":"2019-01-23T16:00:16","slug":"building-a-cloud-pos-with-no-vc-money-and-100-channel-distribution-mobilebytes-did","status":"publish","type":"post","link":"https:\/\/reformingretail.com\/index.php\/2018\/07\/26\/building-a-cloud-pos-with-no-vc-money-and-100-channel-distribution-mobilebytes-did\/","title":{"rendered":"Building A Cloud POS with No VC Money And 100% Channel Distribution? MobileBytes Did"},"content":{"rendered":"

We often read about yet another investment into a POS company, usually involving eye-popping sums of money and valuations. It makes one wonder if it\u2019s even possible to build businesses anymore without investor dollars, or at the very least payments companies subsidizing products to lock down the processing revenue.<\/span><\/p>\n

That\u2019s why the story of MobileBytes is refreshing. It gives the little entrepreneur hope that, if you have a good enough idea and work hard enough to see it through, there\u2019s a chance you will find some success.<\/span><\/p>\n

\"\"<\/p>\n

In November 2012 Dan Calderone, founder and now CEO of MobileBytes, set out to build a restaurant POS company. \u201cWe saw that the market was moving to cloud and it became less taboo each year. We wanted to be a player in the market but we didn\u2019t want to raise capital. When you set out to build a business like a POS company that can have a channel component and you have no money, guess which path you take?\u201d<\/span><\/p>\n

Given these constraints Dan started working with Brad Holaway, CEO of Copperstate Restaurant Technologies, a respected Micros reseller in Phoenix. \u201cWe learned a lot from Brad; he was very generous with his time and experience. By 2013 we had a few direct installations ourselves, we had a working product, and with Brad\u2019s help we felt we knew how we could scale a channel business.\u201d<\/span><\/p>\n

Brad, being a board member of RSPA, helped recruit an initial group of resellers. These initial resellers helped recruit and train other resellers. Before long, MobileBytes had a dependable group of resellers that were consistently producing results. While other POS companies have struggled to grow using a reseller channel, Dan was able to make the model work surprisingly well.<\/span><\/p>\n

\u201cFirst you have to understand SaaS is a quirky animal. It has fundamentally different economics so we were very careful to only take on dealers that knew how to make this model work. We also needed resellers that could support their own merchants. This weeds out a lot of referral models you see gaining popularity today. Ultimately these choices kept our channel stocked with experienced resellers, many of whom also sell Micros and Aloha.\u201d <\/span><\/p>\n

Why are so many resellers interested in MobileBytes? After talking with Dan further we think we can take a stab at it.<\/span><\/p>\n

First, the reseller does all the programming, installation, training and level 1 support. MobileBytes is very responsive with software updates and bug fixes but the reseller really feels like they own the merchant.<\/span><\/p>\n

Second, MobileBytes does not sell direct,<\/span> competing against their resellers<\/span><\/a>. They do have a few direct accounts but these are beta sites from years ago. Resellers don\u2019t have exclusive territories, but MobileBytes doesn\u2019t overlap resellers on top of each other either. <\/span><\/p>\n

Third, MobileBytes is an open API system that any third parties can integrate into. There are no walled gardens like legacy POS companies have had, nor do they charge a $20\/mo integration fee like Toast does. Any third party revenue share is struck between the reseller and the third party: MobileBytes has zero commercial involvement.<\/span><\/p>\n

Fourth, MobileBytes doesn\u2019t demand resellers sell MobileBytes exclusively. In fact many of their dealers sell other products. Dan has enough self-awareness to recognize MobileBytes won\u2019t be the perfect solution for every situation so why punish his biggest advocates?<\/span><\/p>\n

Fifth, there is no processing lock-in for merchants using MobileBytes. Resellers can bring whatever processing they want and MobileBytes doesn\u2019t demand revenue shares. <\/span><\/p>\n

Sixth, MobileBytes has spent a good amount of engineering time building \u201ctable stakes\u201d features seamlessly within the POS. Solutions like wait lists and mobile ordering are typically additional costs on other POS systems but Dan was aware that merchants are squeezed for technology budgets. \u201cUltimately having these additional features makes the product stickier and less expensive for the merchant so we felt it was the right thing to do.\u201d<\/span><\/p>\n

Seventh, the channel helps guide the solution set. They discuss features, bugs, and direction of the product. They also decide what not to build, since resellers are astutely aware that they cannot be expected to know and support an infinite list of things.<\/span><\/p>\n

Lastly, MobileBytes gives dealers equity in the business. Yes, you read that right. \u201cThe reseller channel made Micros and Aloha, yet when Micros sold to Oracle for $5.3B the resellers saw nothing.\u201d Resellers with over 100 merchants get rights to a pool of equity that has been set aside. The amount of equity a reseller gets is based upon their <\/span>pro rata<\/span><\/a> contribution to the total merchant base. <\/span><\/p>\n

So what about the POS product itself? <\/span><\/p>\n

MobileBytes currently operates in the US but is actively working on a Canadian feature set. MobileBytes targets restaurants doing more than $700K in annual revenue and they support multi-store locations in both full service and quick service segments.<\/span><\/p>\n

In some MobileBytes products, like kiosk, guest display and mobile ordering, the codebase is written in React Native which means it can be ported across operating systems (iOS, Android) but the POS currently works on iOS. Dan chose iOS because Apple hardware is very robust and has tens of millions of deployed devices. The hardware and software is very consistent and in the event of a failure a new iPad can be purchased from any retailer for around $300. \u201cThe failure rate for iPads is very low. Our second beta site has been working on the same iPad 2s for 4.5 years\u201d<\/span><\/p>\n

Unlike first generation cloud POS systems MobileBytes is not reliant on the internet for success. Dan designed the system so in-store communication happens on a peer-to-peer (P2P), local area network (LAN). Once an order is taken it is synced to all devices and the Kitchen Display System and a background thread then pushes the data to the cloud. \u201cWe have a three-layer redundancy built in. First is a local socket where one iPad is designated as the relay to synchronize local iPads and manage print spools. Our second layer syncs each iPad to the cloud, which then pushes a notification to all the iPads. Lastly, every 60 seconds each iPad makes requests to the cloud to ask if there are any unknown data.\u201d<\/span><\/p>\n

On the integration front MobileBytes uses Swagger for its open API integrations. They are currently working on a two-way integration but a one-way integration has been up and running and is nearly <\/span>entirely hands-off<\/span><\/a>, as we\u2019ve discussed as best-practice.<\/span><\/p>\n

MobileBytes is seeking resellers in new markets where they don\u2019t have a presence. There are quotas and resellers are mostly responsible for own leads (MobileBytes will send out what leads they do get based upon geography and performance). Dan asked us to close with a few more miscellaneous items:<\/span><\/p>\n