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Issues for GasBuddy Main Importance for GasBuddy: Customer Service How do they improve the customer experience? - Easy to replicate app - Google threats by purchase of Waze - Accuracy of data - customer trust - Low barrier to entry - external threats - How to create a brand beyond just cheap gas - How do create a new revenue stream other than from advertisers, specifically consumers and businesses - Dependent on enthusiastic users and finding new customers Solution Brainstorm -Easy to duplicate/ barrier to entry -- Attempt to create strong business relationships with gas station (ESSO, Irving, Texico…). Relationships like this will be much harder to duplicate. This will also provide a solution to accuracy of gas price data and other features that can be gathered directly from the gas stations Important notes for introduction - Rebranding in 2016 of app and company to more of a startup - Expected to lose 20% of customer base but only lost 5% 2 Main Issues - - Conflicting relationships between consumers and business partners (advertisers) - Solutions pay for app option (ad free) - Fewer ads more expensive with option to watch videos in exchange for reward points Competition in near term - Loyalty program with cash back/free gas - Create relationships with other businesses SWOT Weaknesses (Internal) - Gas prices are not always accurate, therefore, an internal issues with the company is how to improve the price accuracy. Low accuracy will lead to customer distrust and potential loss of customers to competitors. Threats (External) - GasBuddy’s company model has a low barrier of entry. Therefore, the key to staying a successful company is by creating strong relationships with both the consumers of gas and the gas stations themselves. By creating deep relationships with the gas stations, they can increase the barriers of entry. GasBuddy’s Future Success Group A Adam Cyr, Liam Finnegan, Nolan Gardiner, Shawn Sun, ___________ Background GasBuddy was incorporated in 2000 as a website dedicated to showing the price of gas at local gas stations across Canada and the United States. Consumers reported the prices manually in the website. GasBuddy’s main revenue stream was, and still is, from advertisements. The Company has since gained millions of loyal customers; 80% of their customers are daily users of their app or website, while the remaining 20% are less consistent users. By 2010, GasBuddy knew there was added value in creating a GasBuddy app. Thus, was born the GasBuddy app, creating an easier way to add prices to the system. Since the introduction of the GasBuddy app, the Company has added multiple layers to the app to give customers more than just gas prices. The app now includes information varying from bathroom cleanliness to carwash amenities. Moving forward, GasBuddy faces strong headwinds. Companies such as Google, have already entered the gas pricing market through their acquisition of Waze. With such a powerful company entering the playing field, GasBuddy must adapt and change their business model to ensure their future success. GasBuddy’s Issues The two areas we have identified as GasBuddy’s most vulnerable the following: Weakness (Internal) GasBuddy has two main relationships, one with the advertisers and one with the consumers of the app. Currently, there is a growing conflict between those two relationships; in order for the company to raise revenues they need more advertisements. An increase in the number of advertisements on the app will only deterring consumers from wanting to keep the app. Threats (External) GasBuddy has a business model with low barriers to entry. With Google entering the market, GasBuddy must adapt and push the boundaries of their business in order to stave off these external threats. They need to be more than a gas price app and develop tools to draw more customers to their app over using future competitors’. Table 1. Highlighted problems for GasBuddy This report will focus on these two vulnerabilities by outlining potential solutions GasBuddy can take to avoid them and how to best implement these solutions in order to maximize their utility. Alternative Solutions Through analyzing GasBuddy’s internal weaknesses and external threats, we were able to identify what we believe to be the two most relevant issues facing GasBuddy today. These issues are having to make trade offs between advertisers and users of the app and the threat of Google entering this marketplace and eventually absorbing market share. To address these issues headon, we have come up with an alternative solution to each issue. To address the internal issue of an increasing number of trade offs between app users and advertisers, we are proposing that GasBuddy releases an ad-free version of the app where the user must pay in order to download it. We also expanded on GasBuddy’s idea of less frequent, but more expensive advertisements. To address the external threat of competition from large companies like Google, we are suggesting that GasBuddy revamps their loyalty program to help their users save even more and to keep their users from switching to Google. The single largest issue GasBuddy is facing today is the ongoing and increasing number of trade offs being made between users of the app and advertisers. The problem is users want an experience with the fewest ads possible. However, for GasBuddy to operate at a profit as costs rise with growth, under their current platform they will need to start running more ads. The first solution we think GasBuddy should consider is releasing a paid version of the app for users that want a completely ad free experience. This way GasBuddy adds a new income stream to offset the revenue lost from advertisements, and satisfies users that are willing to pay for an ad free experience. This also keeps advertisers happy because their ads will still run on GasBuddy’s traditional free version of the app. The second solution we think will help GasBuddy is expanding on GasBuddy’s idea of less frequent but more expensive ads. The idea behind this is that each ad will mean more to the user if the ads appear less frequently. We want to take this a step further and offer users rewards in GasBuddy’s loyalty program for watching an extra advertisement. This strategy is currently used in a lot of mobile games where you are rewarded with extra points or lives if you agree to watch an advertisement. We think that this will lead to more expensive ad watches which satisfies advertisers and the users will also not feel slighted as they opted to watch the ad for GasBuddy rewards. GasBuddy is facing a new external threat. The threat of real competition. In 2013 Google made its intentions of entering GasBuddy’s territory know through their acquisition of Waze. Waze is essentially a mapping service with user submitted information about the amenities around you. This threat was something new to GasBuddy as they were the sole operator in that space before Google’s recent push. In addressing this threat, we have come up with a solution that we think will help GasBuddy maintain their current users and help them to continue to grow. The solution is to increase the rewards received for using GasBuddy’s loyalty program. The case explains that GasBuddy gamified its app, where the more you post and review different gas stations and convenience stores the more points you receive. This gamification was extremely popular amongst users to the point where people were reviewing everything they could. When they first released this point system, the user with the most points at the end of each month would receive a free electric scooter. GasBuddy stopped giving away scooters as the company grew, however they kept the point system in place. We think that in order to keep users loyal, GasBuddy should once again start rewarding their users for collecting points. For example once you get to 500,000 points you get a free tank of gas. Helping users save using the fun point system GasBuddy has implemented will help keep users loyal to GasBuddy and will incentivise them to use GasBuddy everytime they fill up. Implementation Skip ads for free The option to “skip all ads for free” will need to be presented to the consumers, most likely when an ad appears on the page. They will then click this link and it will deliver them to a page where their credit card details can be entered. This page could also offer various rates based on the length of the subscription they would like to have. Loyalty program In order to properly revamp the loyalty program this will require either additional staff in the tech department or perhaps a more efficient delegation of duties, with specialized tasks. The way this is communicated to advertisers is important because they need to be sold on the idea that the value of the ad time is greater since the price is going to be higher. The main idea is to build on the already successful plan that having less advertisements on the app will draw a larger audience to the ads that are there, this includes the idea of giving users extra loyalty points for watching the ads. In addition to getting points for watching an ad, GasBuddy is going to implement a strategy so that the ads are targeted to that user. Using this tactic will help satisfy our advertising customers since not only are they watching ads but the consumer is much more likely to be influenced by it. On the consumer side, they will hopefully be enticed by the rewards provided by the loyalty program and will opt to watch the ads. The key here is to provide a selection of prizes that catch the interest of the user. The best course of action would be to seek a business relationship with the Oil and Gas industry (gas stations), in at least a small capacity, so that they could assist in the “free gas” (or road trip snacks). The same approach as used with the advertisers should be attempted, GasBuddy needs to prove or convince them that there is value in pursuing this business venture. This is perhaps the hardest obstacle in the way but is in no way impossible. The pitch must hone in on details that can help the gas stations improve the service that they provide to their customers. The app already compiles a long list of data regarding the state of the gas stations and has recently opened up a rating feature in the app. The information provided by the app could prove to be very valuable to the gas station industry. For example, it could be used to help the gas stations identify weak management in specific areas and improve the service they provide to customers. Taking this into consideration, this data might be valuable beyond just providing some free snacks and could very will be a way to help introduce an additional revenue stream for GasBuddys Inc. For the exclusive use of H. Sun, 2019. BAB420 / MARCH 2018 GasBuddy: Fueling Its Digital Platform for Agility and Growth Introduction The snow was now falling heavily against the long afternoon shadows. Walt Doyle knew that Boston’s financial district would soon become gridlocked. As he packed up his laptop and put on his coat, the phone rang; glancing out the window, Doyle hesitantly answered it. On the phone was the executive recruiter from UCG Holdings LP (UCG). UCG was in search of a new CEO for its holding GasBuddy, and they hoped to discuss the opportunity with Doyle. A serial entrepreneur and investor with several successful exits, Doyle was familiar with these types of recruiting calls but less familiar with GasBuddy. He knew that GasBuddy’s app and website were popular among price sensitive consumers looking for “cheap gas.” He also recalled that the company had been around “forever,” if measured in tech industry years. Doyle could not help but think that spending even a few minutes discussing the possibility of joining a 15-year-old company focused on cheap gas prices would be a few minutes too many, especially given the icy gauntlet he faced on his ride home. Just then, the recruiter said the magic word, “payments.” Doyle had come to know the payments industry well. Among his successful exits, Doyle, as then CEO, had sold a location-based media company, WHERE, Inc., to Paypal.1 As part of the deal, Doyle became the General Manager for PayPal Media and was responsible for integrating the WHERE technology and team into PayPal’s Retail Services Organization. In that position, he helped PayPal client Cumberland Farms bring SmartPay to market and had become keenly interested in the payments industry. From his work with Cumberland Farms, Doyle also knew that convenience stores (c-stores)— often co-located with fuel stations—represented a strong and rapidly growing opportunity. C-store retailers were desperate to boost pump-to-store traffic. Current attempts were largely fragmented by brand and by independent dealers within brands. If GasBuddy made good decisions and executed these well, it could evolve its popular app into a leading platform for the pit-stop ecosystem, serving consumers, gasoline suppliers, c-store chains, and beyond. 1 https://en.wikipedia.org/wiki/Where.com, accessed January 2018. This case was prepared by Clare M. Gillan Huang, Lecturer of Technology, Operations and Information Management at Babson College. It was developed as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. It is not intended to serve as an endorsement, source of primary data, or illustration of effective or ineffective management. Copyright © 2018 Babson College and licensed for publication to Harvard Business Publishing. All rights reserved. No part of this publication may be reproduced, stored, or transmitted in any form or by any means without prior written permission of Babson College. This document is authorized for use only by Huanning Sun in COMM/MGMT3511Winter2019 taught by BO YU, Dalhousie University from Jan 2019 to May 2019. For the exclusive use of H. Sun, 2019. GasBuddy: Fueling Its Digital Platform for Agility and Growth BAB420 – MARCH 2018 Doyle was also intrigued by the challenge of transforming a mature company into a startup, though one that would come with a large and passionate consumer base and a steady stream of revenue. As he hung up the phone to face his long ride home, Doyle wondered, “Could this 15year-old company be the next startup I was in search of?” GasBuddy Gets a New Executive Team In January 2016, just two months after that initial call, Doyle joined GasBuddy as its CEO and moved the company’s headquarters from Regina, Canada, to Boston, Massachusetts. 2 His transformation team would come to include executives who had spent time at PayPal, Cumberland Farms, Google, and Heartland Payment Systems. They brought experience in payments, convenience stores, social and mobile media, digital transformation, point-of-sale systems, modern technology platforms, agile development, and UI/UX.3 Though the majority of executive team members were new to GasBuddy, a number of them had worked with Doyle in a previous firm or on a previous project. Together this newly formed team set out to transform GasBuddy from an app-centric media company to an agile, scalable business that would create value across the pit-stop ecosystem and for drivers everywhere. GasBuddy, Inc. Background GasBuddy 1.0—GasBuddy Launches as a Company and Introduces Its Website GasBuddy was launched in 2000 as a web-based social network for consumers to share gas price information freely and easily. 4 GasBuddy’s growing community of consumers would spot gas prices, typically on their daily commutes. Once they had access to the internet and the GasBuddy website, they would report the prices they had spotted. In turn, consumers could visit GasBuddy.com and freely access the crowdsourced gas prices. To incent timely and accurate reporting of gas prices, GasBuddy held a quarterly electric scooter give-away. Each time a user reported gas prices, the user would earn points that would convert to chances on the scooter drawing. However, despite the incentive and the best of consumer intentions, there was a practical limitation to timely and accurate reporting. Most consumers did not have access to the GasBuddy website while in their cars, forcing a gas-price reporting delay. The reporting delay meant that some prices were outdated by the time they were reported or the prices were not reported at all. A website-centered approach also limited GasBuddy’s value to consumers. Consumers would have to plan ahead in order to take advantage of the competitive pricing information. GasBuddy also offered a range of free tools to help further engage consumers and build the GasBuddy brand:  Gas Price List—By far its most popular tool for both local drivers and those on road trips.  Trip Cost Calculator—More likely to be used by those planning road trips.  Heat Map—Popular with news outlets and price-sensitive travelers.  Gas Price Charts—Popular with news outlets and price-sensitive travelers. Sarah McCrary, “Response to Questions about Paper,” email message to Clare Gillan, October 7, 2017. https://www.gasbuddy.com/NewsRoom/PressRelease/9?fvm=1 , accessed January 2018. 4 https://en.wikipedia.org/wiki/GasBuddy, accessed October 2017. 2 3 2 This document is authorized for use only by Huanning Sun in COMM/MGMT3511Winter2019 taught by BO YU, Dalhousie University from Jan 2019 to May 2019. For the exclusive use of H. Sun, 2019. GasBuddy: Fueling Its Digital Platform for Agility and Growth BAB420 – MARCH 2018 In addition, GasBuddy built a team of well-regarded fuel analysts who studied fuel industry information, including the data reported by consumers. News outlets often quoted the analysts. With its free website tools and the brand exposure earned by its analysts, a growing number of consumers and companies came to rely upon the GasBuddy data. Within its first year, GasBuddy.com had spawned 110 regionally focused sites across the US and Canada that crowdsourced and reported gas price information within local markets. This number would eventually grow to more than 250 sites including bostongasprices.com, sanfransiscogasprices.com, and so on. 5 To sustain these websites and its free services to consumers, GasBuddy sold ads on its corporate and regional websites. In 2008, GasBuddy began using Google’s newly acquired programmatic ad exchange platform, DoublClick,6 to sell ads programmatically. With the addition of programmatic exchanges to the manual efforts of its sale team, GasBuddy’s ad business grew to new levels.7 In 2009, GasBuddy launched OpenStore, a white-label website and mobile app development and digital marketing service. Through OpenStore, GasBuddy helped convenience stores and chain brands reach and engage with consumers. Its first OpenStore business customer, Rutter’s, was also its first convenience store customer.8 GasBuddy 2.0—GasBuddy Introduces Its First Smartphone App In 2010, GasBuddy launched its first smartphone app. By this time, GasBuddy had developed several OpenStore apps for its convenience store customers and had a clear understanding about what it needed to do to be successful. It launched natively on both iOS and Android in order to take full advantage of each smartphone’s features, such as the location sensors. Though this decision improved customer experience, it presented development team challenges. According to AppStore HQ’s database of over 50,000 developers, less than 3% of iOS developers also developed for Android. 9 Therefore, GasBuddy was forced to find different developers for each operating system, increasing costs and development complexity. Support for Blackberry OS and Microsoft Window OS followed within a year. It would later add support for the Amazon Fire Phone, and bring the number of natively supported app platforms to five. Early Smartphone Success According to Hamilton, the GasBuddy app provided a convenient and dramatically improved consumer experience. Not only could consumers more easily contribute gas prices at the time the price was spotted, but consumers could more easily access location-relevant gas prices at the time of need. The location sensors within the phone also meant that GasBuddy would collect richer data on GasBuddy consumers. According to Levi Hamilton, GasBuddy’s VP of Product Management and General Manager of Canada, “The move to smartphone was a game changer. It opened new possibilities such as more convenient use and reporting for consumers. This improved the timeliness, accuracy, and volume of our data. We also gained location-based data, Levi Hamilton, GasBuddy Vice President of Product Management and General Manager of Canada, telephone interview by Clare Gillan, Babson College, August 8, 2017. 6 https://www.wired.com/2008/03/google-seals-do/, accessed October 2017. 7 Levi Hamilton, telephone interview by Clare Gillan, Babson College, August 8, 2017. 8 Ibid. 9 http://mashable.com/2010/07/02/ios-android-developer-stats/#n3Ztxwo9E5qu, accessed October 2017. 5 3 This document is authorized for use only by Huanning Sun in COMM/MGMT3511Winter2019 taught by BO YU, Dalhousie University from Jan 2019 to May 2019. For the exclusive use of H. Sun, 2019. GasBuddy: Fueling Its Digital Platform for Agility and Growth BAB420 – MARCH 2018 which made the other data we were able to capture all that much more valuable to our business customers.”10 The popularity of the smartphone and the improved GasBuddy customer experience, combined with historically high growth in gasoline retail prices in North America (see Exhibit 1, Gas Retail Price History), pushed consumer interest in GasBuddy to new levels. By May 2011, six million people had downloaded the app and it was number two on the most popular list for the entire Google Android app store. 11 With its expanding consumer base, GasBuddy signed on a large banking client, securing its first multi-million dollar, multi-year advertising contract.12 During GasBuddy’s first six years in the app market, the GasBuddy app continued performing well, especially within travel app categories,13 and won several awards including Time Magazine’s Top 50 iPhone Apps.14 The company continued to add features to the app through occasional updates. The features better accommodated the ads business, and improved navigation and overall user experience. The app also began to capture and present information beyond gas prices. For instance, it included information on amenities, such as restrooms and coffee, that could be found at fuel station locations.15 Threats Loom As the app’s popularity and usage grew, it remained largely based upon the original design and infrastructure. During peak demand periods, the GasBuddy app could experience outages. It was not unusual for someone somewhere to complain that they were unable to access updated GasBuddy information.16 Also, competitive pressure was building from navigational services such as Google Maps. Google’s subsequent acquisition of Waze17 posed a serious threat. Not only were these services backed by deep development and marketing pockets, but they already had wider access to similar audiences. It was certain that these services would attempt to deepen engagement with GasBuddy consumers and compete with GasBuddy for its business customers as well. To secure its future, GasBuddy would need to stand for more than just cheap gas. GasBuddy 3.0—Brand, Platform, and Business Transformation The more Doyle learned during his early days at GasBuddy, the more certain he became about the company’s “start up again” opportunity and his vision for how the company would grow. According to National Associates of Convenience Stores Inc. (NACS), US convenience store instore sales reached $233.0B in 2016. Convenience store fuel sales were an additional $316.8B, for Levi Hamilton, telephone interview by Clare Gillan, Babson College, August 8, 2017. https://www.inc.com/articles/201105/small-business-success-stories-gasbuddy.html, accessed October 2017. 12 Levi Hamilton, telephone interview by Clare Gillan, Babson College, August 8, 2017. 13 AppAnnie, https://www.appannie.com/dashboard/home/, accessed October 2017. 14 https://archiveblog.gasbuddy.com/posts/Time-Magazine-GasBuddy-One-of-Top-50-Apps-for-iPhone/1715574036-2487.aspx, accessed October 2017. 15 Levi Hamilton, telephone interview by Clare Gillan, Babson College, August 8, 2017. 16 Levi Hamilton, telephone interview by Clare Gillan, Babson College, August 8, 2017. 17 https://techcrunch.com/2013/06/11/its-official-google-buys-waze-giving-a-social-data-boost-to-its-location-andmapping-business/, accessed January 2018. 10 11 4 This document is authorized for use only by Huanning Sun in COMM/MGMT3511Winter2019 taught by BO YU, Dalhousie University from Jan 2019 to May 2019. For the exclusive use of H. Sun, 2019. GasBuddy: Fueling Its Digital Platform for Agility and Growth BAB420 – MARCH 2018 a combined total of 549.8B. 18 By comparison, US online retail sales were $394.9B.19 Doyle aimed to play a more central role in this multi-sided opportunity, which spanned convenience stores, fuel suppliers, and consumers. In addition to boosting pump-to-store traffic, GasBuddy would collaborate with c-stores to improve the in-store consumer experience and collect valuable consumer intelligence related to overall pit-stop behavior and experience. In Doyle’s words, “We are going to take this company from Ted Nugent to Jimmy Neutron. What Yelp is to small business and hospitality, we will be to convenience stores and fuel.”20 To achieve this vision, Doyle determined that GasBuddy had to do five things: 1. Change the culture of GasBuddy from that of a 15-year-old, single-product company with a large and loyal customer base to a startup-minded company in pursuit of a new, multisided ecosystem-driving business model. 2. Rebrand the company to stand for more than cheap gas and redesign its aging app to keep its value to the consumer base strong and growing. 3. Drive business-side revenue through more efficient teams, a strong advertising business, and the addition of business-side products aligned with the pump-to-store pit-stop opportunity. 4. Update the aging digital platform for agility, scalability, and security. 5. Move to payments as quickly as possible to open up new consumer monetization possibilities. During his first several months, Doyle would focus on culture, organization, and building out the strategy behind his vision for the company. His near-term goals included having 80% of revenue coming from annual recurring revenue (ARR), multi-year agreements, and programmatic selling of ad inventory by the end of 2017. Then he would turn his attention towards building strategic partnerships in the areas of payments, data, and large c-store chains. Beyond this, his plans were less well-defined. According to Doyle, “This stuff is easy to white board, but hard to do. First we had to fix the culture and make sure our consumers are being well-served. Then we need to see. The decisions one makes for a sale in 1–2 years may be different than the decision one makes for a longer-term commitment.”21 Culture Doyle’s first priority was to transform the many layers of GasBuddy to be more like a startup, beginning with the company’s culture. He knew this could take a full year. The executives he brought in all had startup experience or had demonstrated a startup mindset within a larger company. However, many of GasBuddy’s employees had been with the company for more than a decade. For some it was the only company they ever knew. The development team would be responsible for an evolved digital platform that would support GasBuddy’s new phase of growth. The team also made up 55% of the company’s 70 employees. It was essential that the team become highly motivated, agile, and tuned for value creation. Doyle enlisted the assistance of Bob Breznak, who had joined GasBuddy as the Director of Engineering. Breznak had headed up engineering at Doyle’s previous startup, Where.com, and joined Doyle at http://www.convenience.org//Media/Press_Releases/2017/Pages/PR040517.aspx#.WnDFwqinE2x, accessed January 2018. 19 https://www.digitalcommerce360.com/2017/02/17/us-e-commerce-sales-grow-156-2016/, accessed January 2018. 20 Walt Doyle, GasBuddy CEO, interview by Clare Gillan, Babson College, Boston MA, August 9, 2017. 21 Ibid. 18 5 This document is authorized for use only by Huanning Sun in COMM/MGMT3511Winter2019 taught by BO YU, Dalhousie University from Jan 2019 to May 2019. For the exclusive use of H. Sun, 2019. GasBuddy: Fueling Its Digital Platform for Agility and Growth BAB420 – MARCH 2018 PayPal upon Paypal’s acquisition of Where.com. Doyle knew that Breznak would effectively lead the development team transformation. With the support of his new management team and influential GasBuddy employees who embraced the opportunity to be agents of change, Doyle was confident that the rest of the company would soon follow. Development Team Transition Outsourcing was common in development organizations, particularly among larger companies, but nearly all of GasBuddy’s development team was in-house and Breznak liked it this way. According to Breznak, Director of Engineering, “It is important for the engineers to feel ownership in the products they develop. We do not want the engineers to simply carry out plans. We want the engineers to help make the plans better.”22 Breznak encouraged his team to escalate ideas to improve the development process and results of their efforts. To improve the team’s agility and each developer’s level of engagement with project outcomes, he introduced a scrum-like approach, implementing the aspects of scrum that had worked well for him in the past. He organized what had been a few large teams into twelve teams of two to five people and organized projects into smaller, tightly scoped, and prioritized mini-projects. The teams worked off backlogs in two-week sprints, followed by retrospectives and sprint planning. Despite the startup-like pressure and pace of the business, some things were not rushed, particularly where the user experience was concerned. Heavily used were paper prototyping and end-user testing, among other lean23 disciplines. According to Breznak, Instinctively, people want to jump from business idea to coded deliverable, but that’s wrong. Paper is the fastest, cheapest way to fail. If you push back on paper, you push back on the process of getting to a clear idea and you set your project up to fail. You also have to reach beyond the customers who already like you. If you only test among your most loyal customers, you risk making decisions based upon your own echo chamber.24 New Company Brand and App To support GasBuddy’s new phase of growth and better defend its position in the face of growing competition, GasBuddy began working on a brand that would stand for more than cheap gas. Though GasBuddy continued to maintain its GasBuddy.com website and 250 satellite websites, the app was the company’s primary point of consumer engagement and was where the GasBuddy brand was most experienced. Since the app was overdue for a major new design, the branding and app redesign efforts were closely aligned. “What is our Business?” One of the first steps in rebranding the company was to ask: “What is our business?” GasBuddy was at a crossroads, and there was a difference of opinion about how growth would occur. 25 GasBuddy’s focus since the company was founded had been on helping consumers pay less for Bob Breznak, GasBuddy Director of Engineering, interview by Clare Gillan, Babson College, Boston MA, August 11, 2017. 23 Steve Blank, “Why the Lean Start-Up Changes Everything,” May 2013, https://hbr.org/2013/05/why-the-leanstart-up-changes-everything, accessed January 2018. 24 Bob Breznak, GasBuddy Director of Engineering, interview by Clare Gillan, Babson College, Boston MA, August 11, 2017. 25 Sarah McCrary, GasBuddy COO, telephone interview by Clare Gillan, Babson College, Boston MA, July 25, 2017. 22 6 This document is authorized for use only by Huanning Sun in COMM/MGMT3511Winter2019 taught by BO YU, Dalhousie University from Jan 2019 to May 2019. For the exclusive use of H. Sun, 2019. GasBuddy: Fueling Its Digital Platform for Agility and Growth BAB420 – MARCH 2018 gas. However, its services remained entirely free to consumer-side users. GasBuddy struggled to cover the cost of these free services through its advertising business, selling pricing data to a third party, and the bit of revenue it made though OpenStore. However, GasBuddy’s future growth would require both continued growth in consumers and stronger growth in business-side services in order to fund consumer expansion and sustain GasBuddy as a company. GasBuddy’s business customers were predominantly advertisers. While this business would no doubt grow as GasBuddy’s consumer base grew, the next game changer for GasBuddy would be in business intelligence products and helping to orchestrate the relationship between businesses and GasBuddy consumers. The new brand and the new app release would therefore need to represent the evolving interests of both consumers and business customers. The executive team was painfully aware that serving both consumer and business-side audiences meant that, from time to time, they would have to make difficult decisions at the intersection of competing interests. For instance, through programmatic selling and the efforts of its sales team, GasBuddy was selling an increasing number of ads. However, the company was in a dangerous cycle. The more ads the team sold, the more ads had to be accommodated in the app, and the more this encroached upon the app user experience, the more this could deter consumer use, and the less valuable GasBuddy’s consumer audience and related services could become to business customers. As part of the new brand and app launch, GasBuddy decided to reduce ad inventory while increasing the price per ad. By reducing ad inventory against the same audience, the value of impressions would grow, which GasBuddy would leverage to justify a rate increase. At the same time that GasBuddy moved to reduce the number of ads it would sell, it also had to tread carefully in terms of type of ads.26 According to Miri Bauman, Vice President of UI/UX, Our corporate advertisers loved video advertisements. However, these sometimes are a negative influence on the consumer experience, particularly on slower networks or for users on limited data plans. So we made a decision that favored the user experience. We would emphasize the use of ads that added value to the user experience and de-emphasize the use of ads that materially diminished that experience.27 Reducing product inventory is generally not welcomed news to a sales team. Could they really justify higher prices to offset fewer sales, especially while pushing back on formats loved by advertisers? Doyle calculated that this would become a win for all involved parties. By the end of 2016, increased ad revenues would prove him right. Another challenging decision was how to capture a widening range of information on consumers in order to build out its business-side services. Initially driven by business-side interests, GasBuddy decided it would add ratings to its app. Consumers would provide more information only if there were a strong return for them in doing so. When making feature and design recommendations, Bauman applies this principle: “To encourage app usage, the get has to be as good as the give.”28 Levi Hamilton, telephone interview by Clare Gillan, Babson College, August 8, 2017. Miri Bauman, GasBuddy Vice President UI/UX, interview by Clare Gillan, Babson College, Boston, MA, August 9, 2017. 28 Ibid. 26 27 7 This document is authorized for use only by Huanning Sun in COMM/MGMT3511Winter2019 taught by BO YU, Dalhousie University from Jan 2019 to May 2019. For the exclusive use of H. Sun, 2019. GasBuddy: Fueling Its Digital Platform for Agility and Growth BAB420 – MARCH 2018 Consumer-side advocates within GasBuddy were skeptical about the addition of ratings, expressing concerns that 90% of customers simply wanted gas prices. Even if consumers wanted this information, they added, the more information captured and provisioned within the app, the bigger the risks would be. Concerns included busy screens, slower-loading pages, possible data charges for consumers on limited data plans, and too many clicks for a user to get to the desired return. Nevertheless, GasBuddy decided it would move forward with its plans to add ratings, attempting to make the addition as valuable to consumers as to businesses through careful attention to UI/UX and attention to the types of information that users would also find valuable (see Exhibit 2, What Do GasBuddy Consumer Customers Care About?). New Brand To help the company unify under one strong brand that would convey GasBuddy’s strategic direction, GasBuddy hired an outside consultant. With the help of its consultant, GasBuddy eventually settled on the tagline “For the Road Ahead.” As explained in a GasBuddy press release announcing its new brand and focus, GasBuddy’s new brand, logo, and positioning reflects the evolution of the industry, where fuel retailers have greatly expanded their offerings, investing hundreds of millions of dollars modernizing the consumer experience at the pump and in the store. Consumers want to know about these additional services and the new GasBuddy connects them with these retailers and helps people everywhere fuel their journey.29 App Redesign Decisions In addition to a new logo and visual scheme to accommodate the new tagline, GasBuddy made the following changes to its app: Enhanced Filters To make it easier for consumers to find the fuel station that best fits his or her needs, GasBuddy introduced these filters: • • • SmartSort—In addition to the standard “Sort by Price” and “Sort by Distance,” a “SmartSort” feature was added, allowing consumers to group stations around the consumer’s current location by distance (half a mile, one mile, two miles, and three miles) and then by price. Brand—If a consumer prefers a certain brand of fuel or c-store, the consumer can filter it so only those will show up on their search list. Amenities—Consumers could now search for stations with specific amenities such as ATM machines, lottery ticket sales, bathrooms, and more. Fuel Station Ratings The new ratings feature allowed users to review various aspects of a station and convenience store in the following categories: cleanliness, coffee, customer service, outdoor lighting, and state of the restroom. GasBuddy, “After More Than 60 Million Downloads, GasBuddy Pivots to the Future with Reimagined Brand and Products,” press release, September 14, 2016, https://www.gasbuddy.com/NewsRoom/PressRelease/122?fvm=1, accessed October 2017. 29 8 This document is authorized for use only by Huanning Sun in COMM/MGMT3511Winter2019 taught by BO YU, Dalhousie University from Jan 2019 to May 2019. For the exclusive use of H. Sun, 2019. GasBuddy: Fueling Its Digital Platform for Agility and Growth BAB420 – MARCH 2018 Soon after, a feature was added enabling consumers to leave a comment. The comment would be shared with convenience store owners through a new product, Business Pages, that GasBuddy had in development. Through the integration of these efforts, consumers would now be empowered to share experiences they felt strongly about with other consumers, or privately with convenience store owners. In turn, owners would gain valuable information and a way to reply directly to unhappy customers, when permission to do so was granted. Cleaner Interface Accommodating the growing list of features within the app was challenging from a UI/UX design perspective. The design team spent countless hours reviewing the shapes, sizes, and placements of visual elements and testing designs with consumers. In the end, the new app offered a cleaner interface and icons allowing for easier viewing. Actionable information was easier to see, making it easier for consumers to navigate with fewer distractions. Home Screen The initial GasBuddy app had a home screen, but it was rarely used, often bypassed when users utilized the “favorites” option. Whether the new app should eliminate the home screen or not was one of the more challenging design decisions, being greatly debated within the company. On one side of the debate was the desire to help consumers access cheap gas prices as directly and efficiently as possible. Eighty percent of GasBuddy users were day-trippers who, at the time, seemed most interested in finding cheap gas. Plus, a home screen featuring content and services would add to the complexity of information GasBuddy was already struggling to present on small smartphone screens, most commonly navigated by a single thumb. On the other side of the debate was the desire to build awareness for and easy access to GasBuddy’s expanding services. Shortly before launch, designers decided to update the current home screen rather than eliminate it. It would be easier for GasBuddy users to acclimate to an updated home screen than to lose the home screen and have to re-acclimate later. As a placeholder for services to come, GasBuddy filled the home screen with content it hoped users would find valuable. For instance, it added a brand new My Community card to the home screen to let consumers know how many users were helped by that consumer’s price reporting. Within a few months of launch, the home screen offered the following features:     Find Gas Near You—access at-a-glance gas prices, still the most popular part of the app. My Favorites—access favorite fuel stations. Up for the Challenge—access the most important current challenge near consumers. Free Gas Drawings—redeem points and enter the daily prize drawing. To improve the user experience (often referred to as UI/UX), GasBuddy added home screen personalization. This enabled a consumer to access features from the home screen that he or she found to be most useful. Gamification From inception, GasBuddy depended on enthusiastic user loyalty to keep its gas price database up to date. Still a crowdsourced model, it would be nothing without the time and effort of its users. GasBuddy users were intrinsically motivated by a shared passion to help one another avoid overpaying at the pump and putting pressure on stations to charge fair prices by fueling price competition via community-wide price reporting and sharing. However, while gas prices can vary 9 This document is authorized for use only by Huanning Sun in COMM/MGMT3511Winter2019 taught by BO YU, Dalhousie University from Jan 2019 to May 2019. For the exclusive use of H. Sun, 2019. GasBuddy: Fueling Its Digital Platform for Agility and Growth BAB420 – MARCH 2018 by as much as 10–20% from station to station, they tend not to change wildly from day to day within a commutable region unless there is an unusual crisis—such as a storm, operational issue, or political development—that influences the fuel supply chain. Since the majority of GasBuddy users are daily commuters, and familiar with the stations along their commute, the majority of them would not be compelled to post daily if it were not for the strength of its Gamification (see Exhibit 3 for an example of a gamification challenge). One reviewer wrote the following: Since I’m familiar with prices in my immediate area, I don’t really use the app on a daily basis. I find it most valuable when I need to fill-up in an unfamiliar area. Using the location feature, it’s easy to see what the prices are around me, and the map feature shows you which stations are closest and how to get to them. It’s really useful when you are on a business trip or vacation and need to return a rental car. The app can help you avoid those high-priced stations around the airport that feed on uninformed tourists.30 The success of its gamification, however, introduced a quandary. The users went crazy for the leader board and challenges. Points grew into the millions for some users, beyond what could be translated into daily gas card drawings in one’s lifetime. With the new app release, GasBuddy introduced the offer of achievements that could be earned by completing daily, weekly, and monthly challenges. Unlike points, achievements offered recognition but no expectation for infinite growth of value. According to Hamilton, “We found that users just like to collect things, which is why adding achievements was a logical move.”31 Engaging Consumers in the App Redesign and Testing As a standard practice, GasBuddy conducted 2–3 consumer user phone interviews per day. People from across the company had a standing invitation to listen in on the calls and hear the “voice of the customer” directly. To determine priorities for the app redesign, the product team began by interviewing the 10–15 people inside the company who could best represent the interests of GasBuddy’s consumer users.32 Beta Forum In addition, GasBuddy created a beta forum consisting of 5,000 of GasBuddy’s most dedicated users. Together these users submitted nearly half of the gas price information. The forum was an opportunity for these active and influential users to provide advice but also to complain about planned changes they did not like. This gave GasBuddy the chance to explain the rationale behind the changes, such as the benefit of a home screen, as the company added consumer services. Winning support prior to launch proved to be valuable. At the time of roll out, beta forum participants often defended against complaints made in public forums.33 A/B Testing Heavy use of A/B testing fine-tuned the new design and solved the occasional internal debate involving an app decision. For its A/B tests, GasBuddy would create two experiences within a beta version of its app and then watch the data. For example, in test A, one version of the beta app forced one set of new users to fill out three screens of registration information. In test B, another https://www.aumnia.com/blog/mobile-app-reviews/app-review-gasbuddy/, accessed October 2017. Levi Hamilton, telephone interview by Clare Gillan, Babson College, August 8, 2017. 32 Ibid. 33 Levi Hamilton, telephone interview by Clare Gillan, Babson College, August 8, 2017. 30 31 10 This document is authorized for use only by Huanning Sun in COMM/MGMT3511Winter2019 taught by BO YU, Dalhousie University from Jan 2019 to May 2019. For the exclusive use of H. Sun, 2019. GasBuddy: Fueling Its Digital Platform for Agility and Growth BAB420 – MARCH 2018 version of the beta app allowed a different set of new users to skip the three screens. Registrations to downloads was 26% in test A and 19% in test B, so GasBuddy decided to continue with the required three-screen registration. Panel Testing GasBuddy also put beta versions of its new app onto usertesting.com, which provides access to a large panel of user-experience app testers. Using usertesting.com, GasBuddy was able to understand the experience of first-time GasBuddy app users as well as that of GasBuddy users who would be simply upgrading to the new app. Launching the New App and Brand On September 14, 2016, GasBuddy unveiled its new branding with the tagline “For the Road Ahead,” and released a completely redesigned app available for iOS and Android devices.34 An automatic update pushed out the new app to users, one batch of users at a time. This way, if anything were to go wrong, it would have a chance to correct the issue for the next batch. It pushed the updates out to 10% of users on day one and 20% of users on day two, increasing the volume each day. By the end of one week, it had pushed the update out to 100% of users.35 Prior to the new launch, nearly 100% of GasBuddy’s brand-building with consumers had been through earned media generated by its fuel industry analyst, visibility in app stores for the smartphones it supported, and word of mouth. The ad model alone could not justify the additional acquisition costs to acquire additional non-paying consumers. However, with the addition of GasBuddy for Business and the expectation that consumer retention would grow with the addition of services within the app, GasBuddy bought access to new audiences and digital ads for the first time in its history. Though the plan was to move all of GasBuddy’s brand-building efforts and assets to the new “For the Road Ahead” tagline, GasBuddy would continue to use the old tagline “Find Cheap Gas” for search engine optimization (SEO) purposes. Launch Results GasBuddy expected it would lose 20% of its audience upon the transition to the new app. However, the loss of monthly mobile active users, a key measure for GasBuddy, was less than 5%. Though its monthly mobile active users (MMAUs) continued to trail downward, after February 2017, with some additional updates, its MMAUs rebounded. By September 2017, it had achieved over 70 million downloads of the GasBuddy app and regained its pre-launch MMAU levels of over five million monthly active users. In 2017, these users contributed 665 million fuel price reports and 2,900 daily ratings.36 (See Exhibit 4 for GasBuddy MMAUs and Downloads; see Exhibit 5 for GasBuddy’s Consumer Mix and App Metrics.)37 GasBuddy, “After More Than 60 Million Downloads, GasBuddy Pivots to the Future with Reimagined Brand and Products,” press release, September 14, 2016, https://www.gasbuddy.com/NewsRoom/PressRelease/122?fvm=1, accessed October 2017. 35 Levi Hamilton, telephone interview by Clare Gillan, Babson College, August 8, 2017. 36 Sarah McCrary, “Response to Questions about Paper,” email message to Clare Gillan, February 27, 2018. 37 Levi Hamilton, interview by Clare Gillan, Babson College, Boston MA, September 22, 2017. 34 11 This document is authorized for use only by Huanning Sun in COMM/MGMT3511Winter2019 taught by BO YU, Dalhousie University from Jan 2019 to May 2019. For the exclusive use of H. Sun, 2019. GasBuddy: Fueling Its Digital Platform for Agility and Growth BAB420 – MARCH 2018 Business Pages: Big Data for Business Customers Doyle knew that data and helping to orchestrate the relationships between consumers and businesses would be at the heart of GasBuddy’s pit-stop Yelp-like strategy. This would require further investments in data collection, a data science team, and software as a service (SaaS) delivered business intelligence (BI) tools for business customers. On October 12, 2016, just one month following the launch of the new app and brand, GasBuddy introduced Business Pages for fuel retailers and convenience stores. 38 The SaaS-based service provided the following:     Marketshare intelligence Reputation management Loyalty promotion and integration Listings management Because of its independent position, GasBuddy had the potential to gather more data and insights than any single fuel or convenience store brand. Business Pages would give fuel retailers and convenience store owners access to real-time immediate, accurate, and actionable insights in an easy-to-use dashboard. For instance, Business Pages used precise location data to show where customers were moving within stores, allowing managers to optimize their product layout. To help the brands continue to feel connected to actual people, the platform would also provide direct communications with an individual or select groups of consumers, though access and permissions would be managed by GasBuddy to assure individuals did not receive unwanted communication. Over time, the new platform would be capable of processing payments. By the end of 2017, Doyle expected 20 to 25 percent of fuel station convenience stores in North America to be on the Business Pages platform. 39 According to NACS, more than 122,000 convenience stores sell fuel and represent and estimated 80% of all the fuel purchased in the United States.40 GasBuddy advertising offers and Business Pages services were both designed for corporate customers. However, GasBuddy determined that the buyers of Business Pages and future business-to-business (B2B) platform services would be different than buyers of advertising and brand sponsorships within GasBuddy’s web and mobile experiences. To support its evolving business-side strategy, GasBuddy created two divisions within the sales team. One division was dedicated to ad sales, which continued to grow. A second division was dedicated to Business Pages and creating services and products from its rich and expanding base of consumer data. To better align with its emerging multi-sided business, GasBuddy evolved its branding to “GasBuddy for the Perfect Pit Stop.” http://www.gasbuddy.com/NewsRoom/PressRelease/161?fvm=1, accessed October 2017. Walt Doyle, interview by Clare Gillan, Babson College, Boston MA, August 9, 2017. 40 Ibid. 38 39 12 This document is authorized for use only by Huanning Sun in COMM/MGMT3511Winter2019 taught by BO YU, Dalhousie University from Jan 2019 to May 2019. For the exclusive use of H. Sun, 2019. GasBuddy: Fueling Its Digital Platform for Agility and Growth BAB420 – MARCH 2018 Though not yet at the scale of what industry pundits would consider to be “big data,” GasBuddy would continue to accumulate data directly and through strategic relationships.41 In August of 2017, GasBuddy announced new Business Pages contracts with Gulf Oil42 and Philips66,43 and a strategic alliance with ZenDrive, a mobile driver analytics company.44 ZenDrive would be the first in a series of partnerships GasBuddy would develop to further monetize consumer relationships and leverage its consumer base. At the time of the announced alliance, ZenDrive had analyzed more than 15 billion miles and millions of drivers to understand dangerous driving habits such as hard braking, fast acceleration, speeding, and others. Its customers would use this data to better understand driver safety, risk, and cost savings. For instance, business fleets used ZenDrive to better protect drivers and lower insurance costs. The strategic alliance between GasBuddy and ZenDrive would focus on saving consumers money, the first time that ZenDrive data would be used in this way. The deal not only aligned with GasBuddy’s commitment to helping millions of drivers save money and align with another source of data, it allowed GasBuddy to explore advanced technologies, such as artificial intelligence, that could help unlock additional value for its consumer and business customers. According to Sarah McCrary, GasBuddy’s Chief Operating Officer, “The team’s ability to integrate with a third-party technology partner like ZenDrive, was proof that previous investment in the consumer mobile app technology and design upgrades directly enabled GasBuddy to begin expanding the value we offer to our consumer base, resulting in new monetization possibilities that we will focus [on developing] in 2018 and beyond.”45 Modernizing Its Digital Platform GasBuddy’s vision for the future called for a modernized digital platform that would deliver the following:  Agility: The app needed to be agile. GasBuddy consumer and business customer expectations would continue to evolve. Therefore, the app needed the agility to adapt efficiently to changing requirements.  Scalability: Another significant driver behind the redesign decision was scalability and related costs. Events such as a significant change in gas prices often drove GasBuddy app usage. It needed to be prepared to handle periods of sudden peak usage, as well as accommodate its growing consumer base. Since GasBuddy did not charge consumers for usage, controlling costs was imperative.  Security: Finally, in preparation for its future expansion into mobile payments and generally to maintain trust among GasBuddy consumers and its growing list of business customers, GasBuddy needed to increase the level of security within its app, business offers, and infrastructure. According to McCrary, GasBuddy has transformed over the past two years from a single-purpose app built on a rigid back-end to a more dynamic platform that is becoming the only platform of scale in the convenience and fuel retail market that connects and serves value to consumers, brands, and retailers. With the http://business.gasbuddy.com/for_business/business-pages/, accessed October 2017. http://business.gasbuddy.com/gulf-oil-drives-traffic-with-gasbuddy/, accessed October 2017. 43 http://business.gasbuddy.com/phillips-66-selects-gasbuddy-business-pages-to-transform-digital-insights-intothe-best-customer-experience/, accessed October 2017. 44 https://www.gasbuddy.com/NewsRoom/PressRelease/454, accessed October 2017. 45 Sarah McCrary, “Response to Questions about Paper,” email message to Clare Gillan, October 7, 2017. 41 42 13 This document is authorized for use only by Huanning Sun in COMM/MGMT3511Winter2019 taught by BO YU, Dalhousie University from Jan 2019 to May 2019. For the exclusive use of H. Sun, 2019. GasBuddy: Fueling Its Digital Platform for Agility and Growth BAB420 – MARCH 2018 addition of pay capabilities, GasBuddy can directly link the consumer and their purchases with the retailers, and help those retailers compete more effectively for the consumer business. We are stepping up to be critical digital connective tissue in this marketplace.46 Max Metral, GasBuddy’s Chief Technology Officer, would lead this digital transformation. He and Doyle met when they were together at PayPal. In April 2011, shortly after acquiring Doyle’s company, PayPal acquired Fig Card, a mobile payments company that Metral had founded. The two men worked together on a number of projects, including Cumberland Farms SmartPay. When Doyle left PayPal to join GasBuddy, Metral soon followed. Metral’s immediate goal was building GasBuddy’s path towards a modernized digital platform for GasBuddy products and services.47 At the core of this strategy was a new stack, that is, a set of integrated technologies that GasBuddy would use to power a new microservices-based architecture. The current stack scaled vertically, meaning that capacity was increased by adding more resources such as additional CPU or memory. This often required downtime, and the capacity that could be added was limited by the hardware. The primary goal of the new stack was efficiency and the ability to scale horizontally, enabling GasBuddy to increase computing capacity by adding smaller machines as needed and, theoretically, without downtime or limits to capacity. Metral estimated that if GasBuddy were to pick up its infrastructure and place it in Amazon Web Services (AWS), it could cost $80,000 per month.48 In Metral’s opinion, this would not be good value for the money, given the company’s existing workload and scaling plans.49 Also, GasBuddy usage would occasionally spike, for instance, in the case of significant fuel price changes or fuel shortages. In the current scenario, costs could unexpectedly jump to $250,000 or more.50 A bigger problem was that GasBuddy’s product line depended upon a non-horizontally scalable Microsoft SQL Server database. Without major application changes, GasBuddy could not scale to the level it would soon need to scale to, even with big money. Max and his team settled on a set of core components and patterns that they hoped would set GasBuddy up for long-term success, while providing a path for short-term improvement. According to GasBuddy CTO Max Metral, “It is not a goal or a reasonable expectation to just ‘change everything.’ We will continue to improve our existing services but look for opportunities to gain meaningful production experience with what we believe to be the right long-term platform choices.”51 New Stack Decisions Microservices Metral began moving GasBuddy away from monolithic services to small, composable services. Over time, and with the right amount of engineering discipline, the microservices approach would yield significantly more flexible components with frequent releases and better code quality maintained by smaller teams. Sarah McCrary, “Response to Questions about Paper,” email message to Clare Gillan, October 7, 2017. Metral, “Technologies for GasBuddy’s Future,” Aug 16, 2016, post on blog “Hackernoon,” https://hackernoon.com/@djmax, accessed October 2017. 48 Ibid. 49 Ibid. 50 Ibid. 51 Ibid. 46 47 Max 14 This document is authorized for use only by Huanning Sun in COMM/MGMT3511Winter2019 taught by BO YU, Dalhousie University from Jan 2019 to May 2019. For the exclusive use of H. Sun, 2019. GasBuddy: Fueling Its Digital Platform for Agility and Growth BAB420 – MARCH 2018 Containers A container platform would enable the development team to orchestrate the microservices as very small and manageable deployment units. Using Docker, Kubernetes (aka k8s), and additional tools, GasBuddy would be able to version all its infrastructure, making it easier to spin-up more accurate production-like environments for the purpose of quality assurance and more. AWS was selected as the company’s cloud services provider. According to Metral, “They used to say ‘nobody gets fired for choosing IBM.’ I think that’s Amazon’s position in cloud infrastructure at the moment. It’s not the cheapest hosting option by any stretch, and it probably doesn’t even perform the best (Joyent and GCE claim to be a lot better); but pretty much anything you want to do with AWS has been done by someone else already.”52 Postgres would replace Microsoft SQLServer, though the database continued to serve GasBuddy’s technical needs. At a time when GasBuddy was building efficiencies throughout its organization, Microsoft SQLServer was simply too expensive when compared to other options. Postgres was a free, open-sourced, object-relational database management system (ORDBMS). It also helped that Postgres was offered by AWS as a service, enabling GasBuddy to off-load some related management responsibilities. Kong would be used as the single “gatekeeper” for all public APIs built on the new stack. As GasBuddy built relationships across the pit-stop ecosystem, the number of applications integrating with its environment would grow. Kong would handle various aspects of authentication, rate limiting, logging, and more. Metral advised his team, “Have passionate beliefs, loosely held. Things change and that’s ok, but our overall architectural philosophy and development practices should endure.”53 As part of GasBuddy’s move to a new digital platform and development culture, Metral and Breznak worked with team members to publish a “Developer Manifesto,” documenting expectations of GasBuddy’s infrastructure in making lives easier for team members and the responsibilities to one another in making that a reality. Entering the Payments Industry When at PayPal together, Doyle and Metral collaborated with Cumberland Farm’s CIO, David Banks, to build what became Cumberland Farms SmartPay. SmartPay allows customers to pay for gas using the SmartPay card or mobile app, receive 10 cents off per gallon, and receive in-store promotions on products such as coffee to drive pump-to-store traffic and overall pit-stop spending.54 According to Doyle, since Cumberland Farms owned the pumps, stores, and payment service, it did not need to worry about payment reconciliation across buyers, merchants, issuing banks, and merchant banks. It simply used the Automated Clearing House (ACH) Network to clear the payments, paying a modest fee. In its first year, SmartPay, available as both a mobile payment app and credit card, had been used to purchase over one billion dollars’ worth of gas at Cumberland Farms stations. 55 Though a promising start for Cumberland Farms, Doyle speculated that the strategy’s success would be Ibid. Ibid. 54 https://www.cumberlandfarms.com/smartpay/checklink, accessed January 2018. 55 http://www.nacsonline.com/Media/daily/pages/nd1008153.aspx#.WdAQwmhSzzA, accessed January 2018. 52 53 15 This document is authorized for use only by Huanning Sun in COMM/MGMT3511Winter2019 taught by BO YU, Dalhousie University from Jan 2019 to May 2019. For the exclusive use of H. Sun, 2019. GasBuddy: Fueling Its Digital Platform for Agility and Growth BAB420 – MARCH 2018 limited by the single brand. A brand-independent solution, funded by the c-store industry and collecting consumer data across brands, would give drivers more choice and c-stores—including Cumberland Farms—more reach, and more insights. From GasBuddy’s perspective, earning just a few cents per gallon on each gas fill-up charged to a credit card would be a nice business. The opportunity to build deeper relationships with consumers and collecting more data on them and their behaviors was even more enticing. The timing for a new payments offer was also good. A few well-entrenched credit card companies and their many bank relationships, supported by the ACH federated payment system, continued to dominate the payments industry. 56 Retailers, with their own store-branded credit cards, continued to chip away at the market share held by these few brand-name credit card companies. However, the payments industry and the process by which it served its customers, remained largely unchanged. Moreover, payment services were complex, expensive, and lacked the agility to support innovation. Due to these factors, the payments industry was ripe for disruption. Nonbank digital startups and established companies, such as Apple Inc. and Google Inc., had begun pushing into payments and challenging incumbent approaches. Mobile Payment App vs. Card Mobile payments would be a natural extension to the GasBuddy app, but the company faced some substantial barriers. Processing payments for gasoline would require pump activation, money authorization, and money movement. The requirement for pump activation meant that a mobile app would have to integrate with the fuel station and c-store point-of-sales systems. Unfortunately, there was little standardization when it came to such systems. These varied across fuel and c-store brands and sometimes within brands, especially when retail locations were independently owned. Considering the obstacles to mobile payments, GasBuddy pursued a card-first strategy that it would simply promote within the mobile app (see Exhibit 6 for an image of the card and its promotion within the GasBuddy app). This allowed GasBuddy to get into the payments game and establish a bridge to mobile payments later. Having established the entry approach, GasBuddy set out to find a payments partner that would help keep fees low, enabling GasBuddy to deliver a value-based incentive to consumers. High on Doyle’s prospective partner list was WEX Inc., a provider of payment processing and information management services to the United States’ commercial and government vehicle fleet industry. According to Doyle, WEX owned its own payments stack so it would have flexibility in the terms it could offer GasBuddy. In addition, over 90% of US fuel stations already accepted the WEX card.57 Pump activation would not be an issue. Fortuitously for GasBuddy, WEX’s bank-risk rating prevented it from taking on consumer risk directly. Just a few months after Doyle called WEX, GasBuddy and WEX Inc. struck a deal. WEX agreed to rent out its payments network to GasBuddy with favorable terms. In return, GasBuddy agreed to take on the consumer risk and would deliver a new stream of revenue to WEX.58 https://www.nilsonreport.com/publication_special_feature_article.php, accessed January 2018. https://wexcard.com/small-business/fuel-locator/, accessed January 2018. 58 Walt Doyle, interview by Clare Gillan, Babson College, Boston MA, August 9, 2017. 56 57 16 This document is authorized for use only by Huanning Sun in COMM/MGMT3511Winter2019 taught by BO YU, Dalhousie University from Jan 2019 to May 2019. For the exclusive use of H. Sun, 2019. GasBuddy: Fueling Its Digital Platform for Agility and Growth BAB420 – MARCH 2018 “Pay with GasBuddy” Is Born In August of 2017, GasBuddy announced “Pay with GasBuddy” as the first-of-its-kind gasoline savings program giving US drivers a discount on virtually every gallon of gas they buy. The program was free to join and gave drivers 15 cents per gallon off their first purchase and a minimum of 5 cents off every subsequent fuel purchase. Pay with GasBuddy was promised to work at stations nationwide, be completely secure, and require no credit card application.59 According to GasBuddy’s press release, there are more than 200 million drivers in the US, spending more than $315 billion on gasoline each year. Using Pay with GasBuddy, these US consumers can collectively save $7.2 billion on the approximately 143.4 billion gallons of gas they will pump in 2017.60 According to Doyle, the launch was well received. “So far, it’s paying off,” Doyle said. “We reached 80,000 enrollments in the four weeks following our general availability launch. The real payoff from payments, however, isn’t financial, at least not directly. The churn rate is low in payments. If we get people to use us for that, then we’re stickier.”61 Regarding the company’s plans for the future, Doyle added, “The GasBuddy card is an easy workaround to the gnarly point-ofsale integration block. Moving forward, GasBuddy is going full-on mobile.”62 Hurricanes Harvey and Irma Put GasBuddy’s Agility and Scalability to the Test In September 2017, GasBuddy’s app became one of the three most popular apps in the country.63 It was not unusual for GasBuddy to achieve a top-three daily downloads ranking within the travel apps category from the app tracker AppAnnie. However, on September 8, GasBuddy was the number one downloaded app in Apple’s AppStore travel apps category and number three across all app categories.64 On September 10, AppAnnie ranked GasBuddy app downloads as one among travel apps and ten overall in the GooglePlay Store.65 While the company was in final stages of preparing for its most exciting product roll-out since its move to the smartphone—Pay with GasBuddy—the National Hurricane Center was tracking tropical storm Harvey. In anticipation of landfall, Texas Governor Rick Abbott declared a state of disaster for 30 counties. In the days that followed, Texas and parts of Louisiana would be ravaged by catastrophic flooding. The number of counties on Texas’s state of disaster would grow to fiftyfour.66 Following Harvey, Hurricanes Irma and Maria would ravage parts of Florida, the US Virgin Islands, and all of Puerto Rico. https://www.appannie.com/apps/ios/app/gasbuddy-find-cheap-gas-prices/details/, accessed October 2017. https://www.gasbuddy.com/NewsRoom/PressRelease/456, accessed October 2017. 61 https://www.pymnts.com/news/payment-methods/2017/gasbuddy-retail-convenience-store-hurricane-harvey/, accessed October 2017. 62 Walt Doyle, GasBuddy CEO, interview by Clare Gillan, Babson College, Boston MA, August 9, 2017. 63 http://mashable.com/2017/09/07/hurricane-irma-zello-gasbuddy-app-store/#f4VZNZ1orOqr, accessed October 2017. 64 https://www.appannie.com/apps/ios/app/gasbuddy-find-cheap-gas-prices/rankhistory/?vtype=day&countries=US&device=iphone&view=rank&legends=22&date=2010-12-17~2017-10-02, accessed October 2017. 65 https://www.appannie.com/apps/google-play/app/gbis.gbandroid/rankhistory/?vtype=day&countries=US&view=rank&legends=222&date=2012-01-01~2017-10-02, accessed October 2017. 66 http://www.statesman.com/news/local/state-disaster-declaration-expanded-counties-includingbastrop/t5dqocvWCH3BNptuODNNSK/, accessed October 2017. 59 60 17 This document is authorized for use only by Huanning Sun in COMM/MGMT3511Winter2019 taught by BO YU, Dalhousie University from Jan 2019 to May 2019. For the exclusive use of H. Sun, 2019. GasBuddy: Fueling Its Digital Platform for Agility and Growth BAB420 – MARCH 2018 GasBuddy was closely monitoring fuel supply implications as Harvey headed towards Corpus Christie, Texas.67 In the days that followed, all of GasBuddy’s new agility was put to the test. In the affected regions, fuel stations were running out of gas. Consumers were spending the little gas they had driving to stations that could not help them, or worse, spending more time than necessary on dangerous roads. Many of the fuel stations that had fuel began to price gouge, an illegal practice in the United States. Recognizing several opportunities to help those within the ravaged regions and additional regions affected by interrupted supply chains, GasBuddy called on large fuel retail chains in the southeast to actively update their critical station information.68 It also called Apple. It can take weeks for a new version of an app to be posted in the AppStore. GasBuddy needed a fast-track within Apple, and Apple obliged. During the days that followed, GasBuddy released several new versions of its app, addressing needs such as the ability to report “Has Fuel” or “No Fuel” as applicable, enabling drivers to report price gouging and to upload a photo that could be used later by prosecutors, and adding diesel as a fuel type within the app. In addition to assisting drivers on the ground, GasBuddy made key functions of GasBuddy Business Pages available for free during hurricanes Harvey and Irma so that retail chains could accurately manage and maintain information and data about their stations. Through Business Pages, retailers were able to update hours of operation, availability of fuel, fuel prices, power outages, and information on other essential services. To support these emergency support activities, GasBuddy flew two of its media analysts to Florida to work from a FEMA response center and act as liaisons back to GasBuddy’s operations and engineering teams. On site with emergency services, the team could more quickly accommodate the most urgent needs for information. For two weeks, GasBuddy employees worked around the clock to support emergency services and help news stations and government officials get the word out on where and how to find gas. By that time, the company knew how to work efficiently with coordinated agility and those services available on the new stack were able to accommodate the explosive demand.69 GasBuddy’s Road Ahead For GasBuddy, helping drivers make smarter decisions and save money would continue to be a guiding mission. However, the company would need to build deeper relationships with business customers in order to fund this mission and sustain a strong future for the company. Already the company had encountered difficult decisions that forced trade-offs when trying to create value for both sets of customers. They would undoubtedly encounter more trade-offs. Despite the obstacles that were already visible, GasBuddy’s road ahead was clear. It would navigate obstacles with its newly acquired agility and build a sustainable business, serving the needs of all who would benefit from a perfect pit stop. http://business.gasbuddy.com/tropical-storm-harvey-threatens-the-gulf-coast/, accessed October 2017. http://www.businesswire.com/news/home/20170907006314/en/HURRICANE-IRMA-GasBuddy-Calls-LargeGas-Retail, accessed October 2017. 69 Levi Hamilton, interview by Clare Gillan, Babson College, Boston MA, September 22, 2017. 67 68 18 This document is authorized for use only by Huanning Sun in COMM/MGMT3511Winter2019 taught by BO YU, Dalhousie University from Jan 2019 to May 2019. For the exclusive use of H. Sun, 2019. GasBuddy: Fueling Its Digital Platform for Agility and Growth BAB420 – MARCH 2018 Discussion Questions 1. What additional obstacles might GasBuddy encounter in its pursuit of both consumers and business customers? How should GasBuddy address these obstacles? 2. Competition will grow over time. How can GasBuddy keep its consumers engaged and working to make the GasBuddy data better? 3. How much rebuilding should a company in GasBuddy’s situation do? Given the uncertainty of an exit, should the company rebuild for two years or ten years? 4. Is a publisher with a strong audience, such as GasBuddy, better or worse served by allowing a middleman or retailer to handle payments? Consider this question within the context of a payments industry that is undergoing great change, including the rise of Venmo and other peer-to-peer options. Who wins: the publisher, the middleman payments service provider, or the retailer? 5. What are GasBuddy’s chances of evolving from a mobile app-centered company to a successful multi-sided platform business70 or “ecosystem driver”?71 What more should it do to improve its chances of success? Prepare to defend your argument. 6. How should success be managed and measured during a heavily invasive corporate transition that spans digital platform, team, and direction? Note: For a high-level view of GasBuddy’s evolution, see Exhibit 7. Marshall W. Van Alstyne, Geoffrey Parker, and Sangeet Paul Choudary, “Pipelines, Platforms, and the New Rules of Strategy,” Harvard Business Review (Apr 01, 2016), pp. 1–8. 71 Peter Weill and Stephanie Woerner, “Thriving in an Increasingly Digital Ecosystem,” MIT Sloan Management Review 56, no. 4 (July 1, 2015), pp. 27–34. 70 19 This document is authorized for use only by Huanning Sun in COMM/MGMT3511Winter2019 taught by BO YU, Dalhousie University from Jan 2019 to May 2019. For the exclusive use of H. Sun, 2019. GasBuddy: Fueling Its Digital Platform for Agility and Growth BAB420 – MARCH 2018 Exhibit 1 Gas Retail Price History Source: GasBuddy, Sarah McCrary, “Response to Questions about Paper.” Email message to Clare Gillan, October 7, 2017. Used with permission. 20 This document is authorized for use only by Huanning Sun in COMM/MGMT3511Winter2019 taught by BO YU, Dalhousie University from Jan 2019 to May 2019. For the exclusive use of H. Sun, 2019. GasBuddy: Fueling Its Digital Platform for Agility and Growth BAB420 – MARCH 2018 Exhibit 2 What Do GasBuddy Consumer Customers Care About? Source: GasBuddy. Sarah McCrary, “GasBuddy Guide Book for New Employees.” Email message to Clare Gillan, July 27, 2017. Used with permission. Exhibit 3 GasBuddy Gamification Example Source: GasBuddy blog, https://business.gasbuddy.com/blog-your-may-challenge-roadmap/, accessed October 2017. Used with permission. 21 This document is authorized for use only by Huanning Sun in COMM/MGMT3511Winter2019 taught by BO YU, Dalhousie University from Jan 2019 to May 2019. For the exclusive use of H. Sun, 2019. GasBuddy: Fueling Its Digital Platform for Agility and Growth BAB420 – MARCH 2018 Exhibit 4 GasBuddy Downloads and MMAUs Source: GasBuddy, Levi Hamilton, provided during interview by Clare Gillan, Babson College, Boston MA, September 22, 2017. Used with permission. 22 This document is authorized for use only by Huanning Sun in COMM/MGMT3511Winter2019 taught by BO YU, Dalhousie University from Jan 2019 to May 2019. For the exclusive use of H. Sun, 2019. GasBuddy: Fueling Its Digital Platform for Agility and Growth BAB420 – MARCH 2018 Exhibit 5 GasBuddy Consumer Mix and App Metrics As of 2017, GasBuddy segmented its consumers as follows: • 80% were commuters or daily drivers, though some users were more active than others. 20% were road trippers and, by definition, occasional users. • They further segment their users into a funnel with Seekers (searching for data) at the top, Players (giving data) in the middle, and Payers (using payments product[s]) at the bottom. Many metrics are used to track the business, but its two most important metrics are as follows:  Monthly Mobile Active Users (MMAUs)  Monthly Downloads Note: Daily metrics will become more important as user base and speed of new user acquisitions increase. Other important metrics include the following:  Session time by screen—how long a user spends on a given screen.  Session frequency—how often a user returns to the app.  Session intervals—the length of laps and lags between app sessions.  Downloads to registrations—an especially important ratio because registration allows GasBuddy to contact the user outside of the app. Note: GasBuddy also looks at metrics tracked against gas prices. Price changes in either direction tend to drive download and engagement activity. GasBuddy Analytics Tools  Localytics—to understand user movement through the app.  Google Analytics—to understand web traffic.  Third party app tracking sites (such as AppAnnie and Domo) for general business intelligence. Source: GasBuddy, Levi Hamilton, interview by Clare Gillan, Babson College, Boston MA, September 22, 2017. 23 This document is authorized for use only by Huanning Sun in COMM/MGMT3511Winter2019 taught by BO YU, Dalhousie University from Jan 2019 to May 2019. For the exclusive use of H. Sun, 2019. GasBuddy: Fueling Its Digital Platform for Agility and Growth BAB420 – MARCH 2018 Exhibit 6 GasBuddy Launches “Pay with GasBuddy” Source: GasBuddy website, https://www.gasbuddy.com/NewsRoom/PressRelease/456?fvm=1, accessed October 2017. Used with permission. 24 This document is authorized for use only by Huanning Sun in COMM/MGMT3511Winter2019 taught by BO YU, Dalhousie University from Jan 2019 to May 2019. For the exclusive use of H. Sun, 2019. GasBuddy: Fueling Its Digital Platform for Agility and Growth BAB420 – MARCH 2018 Exhibit 7 GasBuddy Timeline of Major Events Discussed within This Case Source: Babson College based upon GasBuddy published information. (1) https://en.wikipedia.org/wiki/GasBuddy, accessed January 2018. (2) http://then.gasbuddy.com/Announce.aspx, accessed January 2018. (3) https://www.gasbuddy.com/NewsRoom/PressRelease/9?fvm=1, accessed January 2018. (4) http://then.gasbuddy.com/Announce.aspx, accessed January 2018. (5) http://www.gasbuddy.com/NewsRoom/PressRelease/161?fvm=1, accessed October 2017. (6) https://www.gasbuddy.com/NewsRoom/PressRelease/456, accessed October 2017. (7) http://www.businesswire.com/news/home/20170907006314/en/HURRICANE-IRMAGasBuddy-Calls-Large-Gas-Retail, accessed October 2017 and Levi Hamilton, interview by Clare Gillan, Babson College, Boston MA, September 22, 2017. 25 This document is authorized for use only by Huanning Sun in COMM/MGMT3511Winter2019 taught by BO YU, Dalhousie University from Jan 2019 to May 2019. Case Presentation & Report (15%) Four case studies will be assigned as class readings. Each case will be presented in class by 1-2 groups, consistin of 4-5 students each. Each group should present an in-depth analysis of the situation, explore different alternative to address the problem / situation and make a final recommendation (the grading rubric will be posted). Each groi is expected to integrate material from the course into its presentation and be ready to answer students' questions. Each presentation should last around 10 – 15 minutes and all team members are expected to present and be ready answer questions. In-class role playing can be expected (E.g., presenting as business consultants). Each group wil also submit a 5-page report about the case before the class. This 5- page report should include all components you presented with in-depth explanation of your presentation. Format: No cover page, member's full names on the header of the page, times new roman 12, single spaced with ‘O'spacing before and after, and normal margin everywhere (2.45cm), Max/Min 5 pages, the tables/figures/references are excluded in the 5 page limit, and saved pdf (There will be a penalty for not conforming the formatting requirement). All teams share the same drop-box f their case analysis reports. Please make sure you submit your report before the class in which present. your team Team: Date: Click or tap to enter a date. /2 Background and Issues: Topic description Important key issues identified Discussion of key issues Key characteristics Use of frameworks and other course material Comments: 73 Identification of Alternative Solutions: Alternatives / action plans identified Explain how proposed alternatives / action plans will solve the problems Discussion of alternatives (action plans) Proposed solutions are realistic Analysis utilizes relevant information Comments: Recommendations and Implementation: Evaluation criteria are developed Recommendation is specific enough Recommendation addresses the underlying problem Detailed implementation plan Comments: /2 Overall Impression of the Report: Nice structure and flow Well written Few spelling grammatical errors Comments: 75 Evaluation of Presentation: | The presentation does not exceed the time limit of 15 minutes The presentation flows logically, or is easy to understand. The presentation was creative and engaging. Answers were clear enough. Answers addresses question/issue. The presentation was well prepared Comments:
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