Anybody operating their startup out of San Diego needs to pay attention to Michael Aleles and his company, Quippi. They’ve been featured in Forbes, The San Diego Union Tribune, they’re a fixture at EvoNexus, and they were recently selected by the San Diego Venture Group (SDVG) as one of San Diego’s Cool Companies for 2014.
Since its foundation, Quippi has been disrupting the gift card and money transfer services while not actually claiming a stake in either: it has elements of both worlds but isn’t defined by either. While paradoxical in nature, the platform is relatively straightforward and it obviously works for Aleles.
I sat down with Aleles over lunch and learned about the philosophies that have propelled Quippi to success, how they built a company around shopping cards, and why San Diego is a great city to build a company in.
Tech Cocktail: How did you come up with this idea?
Michael Aleles: I spent 10 years in Latin America and saw firsthand how consumers were getting ripped off by wire transfer services and banks. It got me thinking that we could gear Quippi towards the working class person who tends to get ripped off by these services when receiving money from relatives stateside.
One of my philosophies is to fish where nobody’s fishing: most tech startups in America tend to ignore the working classes or immigrants. That is, you have to examine the market opportunity, and in Mexico the market we’re tapping into is a $20 billion market. There aren’t that many good deals for that market segment in their back yard though.
So, we thought: what’s the least we could charge and get away with? Coincidentally, it happens to be $0.00 (no, that’s not a typo). But the real question is how you build a company around that.
Tech Cocktail: How did you build a company around it then?
Aleles: At a base level, Quippi offers shopping cards that are sold in the US and accepted at leading retailers throughout Mexico like Chedraui, Coppel, and Office Depot. The cards are sold to Quippi customers with no fee, no commission, and no hidden charges.
But somebody has to be charged that fee, so we charge the retailers. They’re happy to pay because our service drives business to them; it’s simply traffic in the form of a gift card instead of walk-ins. Buy a Quippi card, share the PIN code, and your relatives are ready to go shopping.
We also had to think about the recently arrive immigrants versus second or third generation immigrants. The former tends to be a cash-based consumer while the latter is more of an online consumer, so we knew it was crucial to support both markets with Quippi.
Our goal is to build a large, successful company by being disruptive, different, and offering the same message across audiences. Our message is that we never call ourselves a money transfer or gift card company: it just so happens that the gift cards we sell work across the border.
Tech Cocktail: How did you manage to bring capital down to San Diego?
Aleles: Our investors were attracted to us because, while I started the company in Silicon Valley, San Diego is the absolute best place to be located for Mexican business. There’s a great crop of bi-lingual talent here, and you literally can’t get much closer, geographically speaking, to Mexico.
Our investors are also based all around: San Diego, Washington DC, Mexico City, and Silicon Valley. To me, intelligent capital will always seek out and find a good deal.