Interview with Brian Magierski, Appconomy

In a world defined by smart phones and mobile devices, how can retailers and brands reach their customers best? Austin-based Appconomy ( think it has the answer, with its AppWallet platform, which helps developers to easily create apps and help merchants and consumers to connect via mobile devices. Appconomy is backed by Qiming Venture Partners and True Ventures. We spoke with spoke with Brian Magierski, co-CEO and President of Appconomy, about its platform, the opportunity he sees in the market, plus the company's somewhat unconventional plans to launch not here in the U.S. first, but in China.

What is Appconomy all about?

Brian Magierski: Appconomy is about driving what we think is going to be a big market opportunity in 2012, which is providing a marketplace and application for mobile marketing and commerce. Our top level proposition is to provide a way for merchants and consumers to connect directly through mobile device. There is now an opportunity for merchants to have a direct relationships with individuals who buy from them, and provide those consumers with rewards, incentives, deals, discounts, loyalty points, to incent users to buy from them. We're providing a marketplace where merchants can set up a storefront and run campaigns, run loyalty programs, and provide rewards. It's a toolbox which allows them to interact directly with consumers, directly down to an individual person.

For consumers, we allow them to receive very personalized, tailored offers from merchants. Unlike e-commerce, which is done over the web, and where you need a computer, the mobile market allows for commerce anytime and anywhere, whether you're in a store, on the street, or you're actually at home, and whether you're buying from a physical or virtual store. Our platform is all about connecting merchants and consumers directly, giving those merchants a toolbox for marketing to consumers.

How did the company started?

Brian Magierski: The company started a little over a year ago. We received a seed round of funding from individuals and True Ventures in Palo Alto. We have been building and testing pieces of the platform over the last year. We've constructed the platform to very deliberately go to market, and we're initially launching what will be our marketplace and app in China. Our go to market is to release first to the Chinese market, which has some unique characteristics of global markets. We thought it would be the best forum to launch this particular product and marketplace platform. What we've been doing, in the meantime, is setting up partnership in China, go-to-market, China operations, and building out the platform, and innovating at headquarters here in Austin. We're also testing out various markets in the U.S., testing things like loyalty points, daily deals, and coupons in Orange County and Los Angeles area, and testing out private messaging here in Austin, through an app we put out earlier this year. We're now ready to release Appwallet and our app in China early next year.

Why China as a first market?

Brian Magierski: We think we're being highly innovative and pioneering, by launching a tech product in China then going global. It's usually the other way around. China usually takes and replicates things in their home market. But, I think there's been a significant inflection in the global economy, and in China's growth as well. The appeal for this market for us, is the rapidly emerging middle class in China. There are hundreds of millions of consumers in the Chinese middle class, with disposable income and buying consumer and fashion goods. They're spending dollars on smartphones, and have a lot of disposable income. It's also about to accelerate, which makes it a very attractive market. The validation is that there are many companies that have been there for awhile--you have Yum Brands and KFC, Pizza Hut, Starbucks, and others who are all accelerating investments in China, because of that spending behavior.

The other factor in China, is that smartphones haven't taken off there yet, and they are about to. You are looking at smart phones going from 70 to 100 million units, to a couple of hundred million units in the next 12 months. In the last quarer, mobile shipments to China just exceeded the U.S. So it's the smart phone taking off in China, consumer spending, and markets in China. Plus, China doesn't have the legacy of the U.S. market. With mobile commerce and marketing, that means we're able to close the loop at the point of sale, in a physical store. Mobile payments and mobile point of sale are very important, and with China such a heavy cash economy right now, there is an opportunity for digital payments. Because of the lack of credit cards and sophisticated point of sale, there's an opportunity to leapfrog with mobile payments in China, to provide a more cost effective and better solution for taking payments in physical stores. That's a part of our platform which is more easily solved in China.

What was it about this opportunity which inspired you, personally, to start the firm?

Brian Magierski: We saw a market revolution happen with the launch of the iPad, when our ideas were germinating. Having spent significant time studying consumer loyalty and marketing automation in our past lives in business and prior technology companies, we had the revelation that the smartform, as a technology platform, is as big a shift as the PC was and the Internet was in its era. We saw that this was going to achieve massive adoption, and more so than either of those. That device was going to reach just about every consumer in the world, and it's personal. It's the most personal device we've ever seen. We had a light bulb moment. It's better than the Internet, because it's not just about e-commerce. It's better than the PC, because it's not a shared device, and the device is personal to each individual. Plus, you have it on all the time. It was one of those moments when we realized that all of the pieces were in place for merchants to have direct relationships, one-on-one, with consumers. The next question, was how do you do this, what do you build, and how do you launch it, and take it to market. My co-founder, Steve Papermaster, has tons of experience understanding the Chinese market. We had looked at China strategies for companies we'd built together, and we looked at this and said--this is the ideal time and offering to launch in China, so let's be bold, and go to China.

Finally, what's your next step for the company?

Brian Magierski: We're launching this product in China early next year (Editor's note: 2012, as we spoke with Brian at the tail end of 2011), and will be onboarding consumer merchants and scaling from there.