For Ottawa entrepreneur Cassy Aite, the last two months have been a crash course in crisis management.
Aite is the co-founder of Hoppier, a local startup that began its corporate life in late 2016 as a platform to deliver healthy snacks to workplaces under the name Desk Nibbles. The fledgling firm quickly landed $350,000 in pre-seed funding from the Business Development Bank of Canada, the Capital Angel Network and other investors while building a base of more than 200 customers across North America, including Uber and video game platform Unity.
Last year, Aite and his business partners – brother Emil and friend Eric Kys – rebranded the company and added office supplies to the list of items it delivered through a partnership with Grand & Toy.
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The pivot was aimed at steering the firm on a path toward even greater growth, but in March Aite and his partners were dealt a blow they never saw coming.
When measures aimed at curbing the spread of the novel coronavirus forced most of its customers to shut their office doors, Hoppier had to dramatically rethink its business model practically overnight. It’s one of several Ottawa software companies catering to the food and beverage industry that have been forced to redraw their business plans in the wake of COVID-19.
“Being an entrepreneur is like being on a rollercoaster, but I think this is like being on a rollercoaster designed by some insane, maniacal engineer trying to make you sick,” says Aite. “It’s been an incredible learning experience the last couple of months.”
The startup first tried delivering care packages to workers at home, but Aite said customers overwhelmingly told the company they preferred to simply offer employees a monthly stipend to spend as they wished on perks such as fitness equipment or meal kits.
The result is a new-look Hoppier. The 11-person firm now offers customers a stipend management platform to help them control and track how much employees are spending on fringe benefits.
Aite says his firm is getting “a ton of interest” from customers eager to use the new service – it’s set up about half a dozen clients on the system so far, with nearly 70 more on a waiting list. In fact, Hoppier’s co-founder says revenues have jumped more in the past two weeks than in any previous 14-day stretch.
“We’re starting to pick up momentum again, which is great,” says Aite, whose company laid off eight employees at the start of the pandemic but is hoping to hire many of them back shortly.
Spoonity taps e-commerce ‘lifeline’
Hoppier isn’t the only Ottawa software company that had to retool its business on the fly after the pandemic struck.
Over at Spoonity, a nine-year-old enterprise that develops loyalty and payment programs for restaurants and grocers, chief executive Max Bailey says management started brainstorming alternative sources of income in early March.
They initially thought they might pivot the platform to a click-and-collect service that would allow shoppers to pre-order food and pick it up at an eatery’s door, but they quickly realized even that wouldn’t be an option for many of their customers.
“Things shut down much faster and much more dramatically than we had originally anticipated,” Bailey says.
“We anticipated that traffic would slow down, but we didn’t anticipate that the stores would shut completely. We ended up having to adjust and figure out how we can make this work.”
The company, which operates in 20 countries, eventually decided to shift to a food delivery model similar to Uber Eats, Skip the Dishes and the like. Bailey estimates about 80 per cent of his customers have adopted the service, and some are now racking up as much as $100,000 a month in online business.
“E-commerce is really a lifeline and a huge help for starting that revenue again,” he says.
Unlike most of the big names that charge restaurants up to 30 per cent per order, Spoonity takes just a five per cent commission fee.
“Our main thing is really just helping them to get up and running,” says Bailey, adding his company’s revenues have dropped 80 per cent since the pandemic began. “I think for us and for our merchants, there’s a long way to go to get back to where we were. It’s more about helping one another than it is about generating revenue for our companies.”
Bailey says the 24-person firm has had to lay off a couple of employees, while other workers have taken reduced shifts to help the firm conserve cash. He says federal relief programs such as the wage subsidy have also helped cushion the blow.
“It would be much harder on our team and everybody else if those weren’t available,” he concedes.
Back at Hoppier, Aite says the startup is close to landing a new round of venture financing, adding he expects to confirm a “decent-sized” injection of fresh capital by the end of the month. Just as the financial crash of 2008 spawned peer-to-peer services such as Uber and Airbnb, he says the COVID-19 crisis will give rise to a new wave of platforms catering to remote workforces, and Hoppier is poised to deliver.
“I think it’s just accelerated the different opportunities that are out there,” Aite says. “We’re definitely benefiting from that.”