Magazine Article | March 18, 2015

How Consumer Centricity Built An ISV

Matt Pillar

By Matt Pillar, chief editor

By focusing its tech development on its customers’ customers, hospitality VAR/ISV PointOS keeps on growing.

Photo By Angel Gray

Like most POS VARs, ISVs, and retail/hospitality technology vendors, you would likely classify your business as B2B. You are, after all, in the business of selling solutions to businesses that address those companies’ business problems. But retail and hospitality are changing fast, and the changes we’re seeing are predicated less on the needs of the businesses you sell to and more on the needs of their customers — the American consumer. From menu boards to CRM to payments, retail and hospitality technologies aren’t just inching ever closer to the consumer, they’re making giant leaps in that direction. Online and mobile ordering, Apple Pay, and any number of the self-service applications and hardware that have hit the market in recent years are proof positive that it’s anything but business as usual for retail and hospitality technology providers. To succeed in the new age of retail, VARs and ISVs must see beyond the immediate needs of their customers and become students of customers’ customer demands.

ISV Grows With Baked-In Customer Centricity
The growth experienced by ISV/VAR PointOS illustrates the power of consumer centricity in the development of hospitality technology solutions. Just seven years in business, the company has ballooned to 25 employees serving bars and restaurants nationwide, and since 2008 it’s consistently grown revenue between 40 percent and 50 percent year-over-year. But to do justice to the company’s story, we need to rewind to 1999 and provide an abbreviated history of brothers Daniel and Scott Kurland, PointOS CEO and CTO, respectively.

As Scott finished up his master’s in Computer Human Interaction at Carnegie Mellon and Daniel continued his business and psychology studies at Penn State, the duo launched their first start-up, a social media platform called MemberSites. The platform — best described as a precursor to Facebook — served as a private, password-protected online bulletin board for families, friends, and college organizations to share messages, calendars, photos, and events. Needless to say, the platform was slightly ahead of its time. “We went to a few trade shows and demonstrated the platform, but back then, not many people understood the Internet. We had more people interested in buying our demonstration monitor than the product,” he says. Soon, the fledgling start-up faced a double-whammy dilemma. “We were on the bleeding edge of innovation, charging private organizations for the platform before anyone realized that nobody wanted to pay for anything online,” he says. “We were also limited by a flat-file architecture, which worked great for 100 sites but wouldn’t scale for the mass market.” To fund the bootstrapped initiative, the Kurland brothers decided to give the platform away and tried to generate revenue through banner advertising sales. Again, the concept was ahead of its time, and the MemberSites user base was too small to support expensive banner ad sales. Then, inspiration hit the Kurland brothers from an unlikely source — the 1986 John Cusack and Demi Moore flick One Crazy Summer. “A character in the movie sits by the radio all summer long, waiting to be the caller who wins a million-dollar prize,” explains Kurland. “We were inspired by the idea that the early Internet created an attention-based economy, and that everyone wants to win a prize.” That inspiration served as the genesis of the Kurland Brothers’ next Internet foray, Windough. “We developed a small browser that stayed up on the user’s screen all the time, and every 30 seconds it showed the user a sweepstakes offer. It put eyes on ads, and at one point Windough was one of the 20 highest-traffic sites on the Internet.” The concept drew the attention of investors, and the young Kurland brothers soon found themselves flush with cash.

Then the dot.com bubble burst. “Internet marketing went the way of opt-in email, and virtually all of our advertisers went out of business when the bubble burst.”

What, you’re probably wondering, do two habitually entrepreneurial brothers and their two defunct Internet start-ups have to do with the birth of a hospitality software company? Well, in 2001, the then-20-something Kurland brothers took their wad of cash and did what felt right with it. They bought an old British pub in Fort Lauderdale and turned it into a grungy rock bar.

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Six months into the bar venture, Daniel bought his older brother out. Scott went on to apply his unique degree on the big business scene, landing lucrative usability designer gigs at Citrix and Time Warner Cable. Daniel spent the next five years primarily behind the bar, slinging drinks until 4 a.m. The business grew steadily and became profitable, but Kurland was growing restless. He had a new baby boy at home, and the nightlife wasn’t conducive to fatherhood. He was also growing discontented with the hospitality operations software market, having cycled through no fewer than five POS software applications during his tenure. “The bar software available then was rigid. It was all about business control, not serving customers and growing sales,” he says. In 2006, after unsuccessfully lobbying his POS software provider for the features he desired (“I was ignored,” laments Kurland), he decided to throw his experience as a bar owner and his high-tech entrepreneurial roots in a blender. He started writing bar software from the ground up. By 2008, Kurland was 30 years old. He had a marketable bar software product called BarOS, his own business in which to test it, and an Internet marketing strategy that had garnered him enough customers to exit the bar scene. He sold the business, earning five times what he paid for the establishment five years earlier. Later that year, as Kurland fielded growing interest from the restaurant community and rapidly built a customer base, PointOS Professionals was born. “Had I not been ignored by our software provider back in 2006, I wouldn’t be winning business away from them today,” he says.

Selling On Consumer-Centric Software Features
Today, PointOS sells complete POS software and hardware packages to bars and restaurants across the nation. At face value, the company looks much like any other hospitality POS VAR. But Daniel’s older brother is back, and he’s putting his experience in human computer interaction to good use. “Drawing on our collective experience, we’ve built unique features into our software offering that draws hospitality businesses closer to their customers,” says Kurland. The company’s built-in jukebox is a glowing case in point. “Consumers don’t choose the bars and restaurants they patronize based on the food and drinks alone. They choose them based on the experience they provide, and in a bar, music is central to the experience,” says Kurland. Thus, PointOS software features an integrated jukebox module that invites patrons to choose a song preference when they order a drink. Patrons can even build custom playlists. It’s like CRM for a bar.

An integrated customer management screen, sales history, and opt-in customer email newsletter integration further establish consumer loyalty. Kurland says he proved their value at his bar in Fort Lauderdale. “We were one of 12 drinking establishments on our street,” he says, “and our software-supported approach to customer centricity created differentiation.”

But customer service can’t be achieved by software alone. Applying and executing on feature-rich, customer-centric POS software require intuitive design that’s easily adopted by servers. That’s why touch screens from TouchDynamic are the Kurlands’ interface of choice. “Servers are the customer’s guide through the interface, and we make it fun for them to engage,” he says. “With an easy-to-navigate touch screen, the server or bartender can even play the DJ role by managing song requests. This is often by necessity, because as you can imagine, 20 Garth Brooks songs in row could clear the place out pretty fast.”

Rich Back-Office Functionality, Support
While customer-centric features are unique differentiators for PointOS, the company’s innovation doesn’t discriminate against hardcore business needs. “Every good bar proprietor keeps a log book of incidents, such as slip-and-fall accidents and breakage, because if you have no records, you have no case,” Kurland explains. “Most establishments rely on a pen and a notebook to record incidents, because software providers have ignored the need.” PointOS built incident reporting into the POS, allowing servers to create an incident report, if necessary, at checkout.

Support services were another point of contention when Kurland was a bar owner. “The old 9-to-5 POS support mentality is useless to a bar that’s open until 3 or 4 a.m. The fact that the average provider’s service model costs more than our whole package makes it even more audacious, so we offer 24-hour support at a reasonable cost. Reasonable cost of entry and support are absolute necessities in a market where more than half of the businesses that enter it go out of business within a few years.”

Kurland frequently calls on his experience as a bar owner to pitch the advantages of core POS functionality—like inventory control and reporting. For example, he successfully persuaded one customer to both move off a manual cash register and keep his business operating in legal fashion by demonstrating the inventory control features of PointOS. “This customer really liked our applications and interface, but he was married to his cash register for the same reason so many bar owners are: No paper trail means cash that can be hidden from the IRS,” says Kurland. To overcome the objection, Kurland asked him how much he figured he was “saving” by avoiding taxes. “The proprietor estimated about 10 percent, so I asked him how much his employees were stealing from him by giving away free drinks. He had no idea.” Kurland gave him a 30-day free trial of his software. “At the conclusion of the trial, the bar owner called to place his order. He discovered that 20 percent of his inventory was walking out the door. In the end, we saved him 10 percent and protected him from an audit.” Kurland says it was his ability to talk real shop with the customer that sealed the deal. “Bartenders like to take care of their patrons, and that means giving away a few free drinks. I always allowed room for this, but the rule was that it had to go through the register and we’d comp it. That way, nothing leaves the bar without going through the register, and I could manage free drinks within reason.”

Banking On Mobile For Continued Growth
In its first full year in business, PointOS sold about 100 licenses, almost all of which were derived from Internet marketing and direct download from the Internet. Since then, it’s opened a sales office in Boston; expanded its installation base as far as Kuwait and Kabul, Afghanistan; built its feature set considerably; and begun offering its software preloaded on Touch Dynamic touch screens. Last year, the company racked up sales at more than 1,500 locations.

Moving forward, PointOS is preparing for cloud delivery of its applications, for many reasons. “The future is in the cloud, so we’re going to market with MyPointOS. Among other advantages, it allows us to deliver our native iOS application, which hooks into the core software to allow serverfacing order at the table,” says Kurland.



“Until everyone has a highspeed Internet connection, running a completely Web-based POS isn’t all that practical.”

Daniel Kurland, CEO, PointOS

 

Kurland also likes that the cloud lends itself to a SaaS-based revenue model. “I sold software to a company seven years ago, and though that company is still running it, I never heard from them again. We’re not making money there, so we like the idea of a yearly access fee for recurring revenue.” Still, he admits that his customer base has some catching up to do before cloud delivery of PointOS is practical. “Cloud POS is a great idea if everyone’s running high-speed Internet, but we still have customers on dial-up, which limits the reality of the cloud. Until everyone has a high-speed Internet connection, running a completely Web-based POS isn’t all that practical.” For now, PointOS runs a hybrid SaaS model, whereby the software is hosted locally and backed up to the cloud. “We use the cloud backup to feed popular management features like local site reporting, software upgrades, and updating menu pricing from any Web browser.” Kurland is also quick to point out that offering cloud delivery and the mobile applications it supports gives PointOS a competitive leg up. “From a sales point of view, it means we can demonstrate that we can grow with our customers because these features are ready when they are.”