This week’s show guest is serial entrepreneur and startup veteran Rich Schmelzer. Rich is based out of Boulder, Colorado, and is currently the CEO of Commutifi, which is an exciting startup in the transportation technology niche. Commutifi aims to solve one of the world’s biggest problems that nearly all of us have to face every single day: commuting. The company has created a mobility-as-a-service platform, which basically helps companies and large organizations optimize commuting for their employees. The platform captures real-time commuting data and generates recommendations based on the most time, cost, and carbon-efficient ways to commute. The data can then be used to increase ride sharing, reduce traffic, parking, and emissions. This is a very exciting company that has the potential to solve a huge pain point in our lives. I think you’re going to really enjoy this episode I had with Rich. Let’s get on to the show.

Jay: Hi, Rich. How you doing? Thanks so much for coming on the show.

Rich: Hey, thanks having me.

Jay: I’m really looking forward to having a chat here with you today. I’ve heard a lot of good things about you, as an entrepreneur, and your company, the exciting work that you’re working on these days. So for the audience listening in, maybe you could give us a little bit of background first about yourself.

Rich: I’m what you call a serial startup entrepreneur. I’ve started over a dozen companies over the past couple of decades, and this is what I love.

Jay: That’s awesome. And you’re based out of Boulder. Is that right?

Rich: Yeah, I’m in Boulder, Colorado. I’m looking out over the Pearl Street Mall as we speak. It’s a beautiful day.

Jay: Nice. Is that where you’re from originally or did you just kind of find yourself relocated there?

Rich: It’s interesting. I grew up in the Washington, D.C. area and fell in love, as you do in high school. The girl I was dating came to college out here, and she soon left, and I decided that the city was more attractive than her. So I’ve been here ever since.

Jay: That’s awesome. I’ve actually never been to Boulder. I’ve been to Denver before, but I hear a lot of good things about that part of the world. I’m a finance-background type guy, so I know there’s a couple of funds that are based out in Colorado as well.

Rich: Yeah, very good funds. It’s a thriving community. First, you have the college here, so a lot of young tech guys here. But you have Techstars. I don’t know if you know what Techstars is, but basically they run a bunch of branded incubators around the globe, and they’re very successful. And then a gentleman by the name of Brad Feld is in this area as well, and he runs a group called the Foundry Group, and they’ve been very successful in a wide variety of categories for many years.

Jay: Absolutely. Brad is sort of a household name within the startup community and ecosystem.

Rich: A legend.

Jay: Absolutely. Huge. Being the serial entrepreneur that you are, are there a couple of startups that you are particularly proud of, that maybe you’ve had exits or just really enjoyed working on, in your past I mean?

Rich: Yeah. I’ll talk about a few. One of my first companies was a business called Global Entertainment Systems many years back. The theme there for Global Entertainment was, I kind of noticed that a lot of people that were renting videos — this goes way back — renting videos from like the Blockbuster Video chains always had complaints. First of all, they had to go find and rent the movie, and then they would have to return the movie. And then, if they didn’t return it on time, there would be late fees. Do you remember the video stores?

Jay: I do actually.

Rich: We just had this radical concept of doing kind of a dial tone video, a video on demand. You would just login with your computer and be able to get any video any time you want, straight through your phone line or cable line, what Netflix is today.

So we built a plan around that and started to raise some money and really started to architect it to figure out what it would take to get it done. As we were doing that, we realized that the novelty of the idea of doing dial tone video, it wasn’t that novel. But the video compression piece — what it took to get videos over phone lines — hadn’t been perfected.

So we started to fixate on that. We were like, if there’s going to be a lot of this dial tone video and things like that in the future, and there’s really no video compression out there, maybe we should use the compression that we’ve found and enhance that and then license it out to the world.

So we quickly adapted. We iterated fast, and we shifted. The money we raised, we just focused on perfecting that technology. We were actually the first company to actually digitally compress a video and send it up over satellite and actually bring it back down to the national cable television association way back when. So we were the first group to do that. That became kind of our core expertise. And then we eventually licensed it to Scientific Atlanta. I don’t know if you’re aware of them, but they basically make broadcast video equipment for the big television companies and the big cable TV companies. So we licensed, basically, the entire company off to them so they could go and build and sell our video compression technology.

So that was a pretty interesting company.

Jay: Wow. It sounds a little bit like the Pied Piper from Silicon Valley show.

Rich: So many of those things are so true, but that was a great first experience. And that led to another company called World Prints. World Prints had an interesting idea. This is when the consumer internet was kind of picking up. We decided it would be neat to license the best photographs in the world and make them available online and then kind of print on demand posters of prints. So we worked first with a company called National Geographic. They just had millions of images sitting there in their warehouse that no one had ever seen. So we started to digitize those images and stick them online and then started to work with other content guys to do the same. We built just a beautiful website, beautiful U.I. — and again, this is late ’90, so really kind of cutting edge on the internet — and launched the site and were very proud of it. And no one knew how to get to the site. How do you get the message out there about how to find all these beautiful things?

We started working with a group called Excite. Do you know Excite? Excite at Home?

Jay: Yeah. Of course.

Rich: Excite, we started to buy ads. I’ll just pick a number. It might have been like $20 per thousand eyeballs for one of those banner ads. Maybe only 20% of those people would click on it and actually go through to the website website and maybe only two of those would then make a purchase. So it would cost me $10 in banner ads to get two purchases. So we kind of quickly realized that we had a problem and had to figure out how to get customers there and retain them over time.

So we took what we learned, which is, if we kept using just advertising to get people to our website and once they were there, never went back to our website, we had to create a retention tool. So we created a little button on our website so when you exited, it said, “Would you like a free screen saver or your favorite images?”

Surprisingly, about 50% of the people that saw that we like, “Sure. I love Ansel Adams. I love National Geographic.”

So they clicked on it and then downloaded a screensaver, and then every day, we sent new images that they kind of opted in for. And we sent new images to them that were also available as printed posters. So basically, we took the website to the desktop and created a data acquisition and customer retention tool, and that became the thing that actually took off.

Jay: That’s incredible.

Rich: Just like in the previous company, we started with the concept of poster and prints, and we ended with a customer acquisition and retention tool. And within six months of launching that tool, we had millions of users that had downloaded it, and it was very “sticky,” was the word at the time. And people came back all the time now without clicking on ads. So we perfected that funnel. First get them in the door, then give them something they want, and then keep hitting them with information until they buy the product. So that was a pretty good company too. And we existed that one to Excite at Home.

Jay: That’s awesome. Talk about being on the cutting edge or bleeding edge, if you will, of that. I mean, people are still trying to optimize websites. There’s tools out there like OptinMonster and SumoMe and that sort of thing. But it’s almost exactly the same thing that you guys created. I love hearing about serial entrepreneurs and the businesses and concepts they have created and exited in the past because it kind of gets us, the listeners, behind the thought process.

I want to refocus or shift gears here and talk about, currently, the company that you’re working on, which is called Commutifi. Tell us about that company. How did you come up with the idea? What sort of problem are you trying to solve with this company?

Rich: Sure. The basic idea behind Commutifi is we want to help commuters get to and from work more easily and in a cost and energy-efficient manner. I came up with the idea because I was involved in a corporate wellness product. We were trying to get families working out more. So the concept with corporate wellness is, they carry your insurance policy, so they want to see the premiums be lower, so they’ll incent you to stop smoking — by giving you a hundred bucks or something. They’ll want to you to walk more. They’ll want you to lose weight if you’re at risk for diabetes. That model works really well. Today, it’s an $8-billion-a-year business, the corporate wellness business. I really liked what they were doing there. It has a clear ROI.

So Cummitifi is kind of the same thing. We do commuting wellness, so we analyze the same things. We look at how you get in and out of work and are you doing it in the most time and cost and energy efficient way. And if you’re not, we incent you to mode shift and try different things to improve your overall health score for your commute.

Jay: That’s very interesting.

Rich: You were in the fitness business.

Jay: That’s right.

Rich: I noticed that on your back… What side of the fitness business were you in?

Jay: I’m more of just a do it my own…solving my own pain points of trying to figure out how to be fit and trying to navigate through all the junk and the false misinformation that’s out there, readily for anyone that Google searches “how to get a six pack” or whatever. I kind of just, over years and years of struggling, figured out, really, what the truth was. And the sad reality is that there’s a lot of marketing behind fitness, as I’m sure you’re well aware of as well. And so it was really just kind of my personal that I documented. And so I wrote a book and have a little program. But it was more of a labor of love and something I just needed to get out on paper.

It’s fascinating hearing about Commutifi and learning about how… Honestly, commuting sucks. Everyone knows that. It’s one of the things that I think everyone dreads when they get up and have to get to work. It’s really interesting hearing about your company and how you plan on basically improving that process.

Rich: That’s the genesis. The idea was basically — much like for Nike did. By being able to attach real-time or near real-time data to your corporate wealth score, we’re doing the same thing with commuting modes. So whether you’re traveling on an Uber or a Lyft, or you’re driving your car and parking every day, or you’re jumping on your bike or taking a bike share, we aggregate those commuting modes, and then we normalize the data in a way that an enterprise can understand how these commuters are getting in and out and then really assign these commuter I.Q. scores to each employee and then improve it.

So let’s say somebody has got a 53 out of 100. We know that that’s because maybe his cost is high or his carbon footprint is high. We then can tailor recommendations specifically to those two areas and incent them either through a subsidy, like I said earlier — if you quit smoking, you get a hundred bucks… Maybe for this guy, it’s get out of your 1983 Cadillac and switch over to a carpool or switch over to a bus line or take an Uber to work and improve your cost and your efficiency score, as one abstract example.

Jay: I think data is very key, and just to draw a parallel with the fitness stuff we were talking about earlier, one of the most important things that people don’t know or that they don’t do is track their data, when it comes down to just calories in, calories out and simple stuff like that. And I think in the same way, the power of collecting that sort of data, even on, say, your commute is very important. It allows you to improve your experience.

First of all, your team there at Commutifi, how did you pull your team together? Are they people you’ve worked with previously on other companies?

Rich: Yeah. My lead tech guy, Esteban Sanchez, I’ve been working with for — gosh — I can’t believe how quick the times passed, but it’s been about five years now. We met on the family activity wellness company we were working on before. Tomas Jablonski, he’s been my in-and-out CTO for going on 20 years now. Brady Becker, my UI-UX guy, through Techstars, I invested in two of his companies and was just fascinated with him. He ended a thing when I was starting this, so we were able to actually work together on this. Joel Christensen is transportation and parking background, because we need that expertise. Just like you need with a corporate wellness company, you need health expertise; we have people that really understand transportation and parking. So we’ve got a lot of disciplines there, and then we have a bunch of programmers and designers that are junior to that that kind of get it all done.

Jay: Cool. Let’s talk a little bit about the actual user experience, if you will. Commutifi is, I guess, an enterprise level solution. Is that right?

Rich: Yes, it is.

Jay: So let’s say I’m a company. I’m a corporation that wants to sign up and use Commutifi. Walk us through that process of basically onboarding. And then how does that get implemented within the corporate structure? And then how does that start improving my employees commutes?

Rich: Sure. A lot of times we get inbound calls, which is great, because then we know who needs it within the company. But when we don’t know who the right person is, we typically look for somebody that’s involved on the corporate wellness side — so whoever is in charge of the corporate wellness plan at the company or, most likely… There’s a big trend here with chief sustainability officers and corporate social responsibility officers, CSRs. And those people really get what we’re trying to do and want to focus through the lens of sustainability. So whoever we deal with, we go in and show them the tool. They then push out our tool for free to all of their employees, and their employees answers a few quick questions, and then we render a score for the enterprise and bring that score back to that CSR and say, “We see that you have a 53 out of 100. Here’s why. Here’s where we think you can save time, cost, and energy to improve this score.”

We then ask to sign a contract with them. So it’s a freemium model. It’s a SaaS model of a few bucks a head per month. Once they say yes, they push out a series of recommendations that are mostly automated through our system. And each employee gets their own dashboard, including the maps on how they get to and from work and all the plans that they could sign up to to actually improve their score. We give them a wide variety of options to improve the score.

And if there’s any subsidies from the enterprise — again, they might say, “Mode shift, and we’ll give you $100” — all those subsidies are baked into the plans so that they can easily just click a button and switch their plan over.

Jay: Wow. That’s incredible. Is the actual dashboard, is that on a third-party website, like a Commutifi login, a separate page?

Rich: Yeah. It’s a separate page. So there’s no app to download. I guess I should have started with this. We don’t believe the employee should ever have to download an app because they have too many. I don’t know what it’s like in Asia, but there’s app fatigue here. There’s too many things.

Because we integrate in the background with our partner companies — again, that could be Uber, Lyft, or a bike share company — then if they’ve selected one of those modes, that data is automated, and we see that mode as they travel in and out of work that day. While some of the fitness things failed on the corporate wellness side is people would leave their Fitbit at home, as an example. Or they forgot to log their calories that day.

With commuting, you have to go in and out of work. And if you’re attaching to one of the modes that we’ve provided, all that data is live. So you can’t forget this device at home, because you have to come to and from work. That’s why this one will have a pretty successful outcome.

Jay: That’s pretty cool. Let’s say I’m XYZ Corporation, and I sign up with Commutifi. On the subsidy side, that’s up to me. Right? That’s for me to be like, I want to incent my employees to rideshare more, so I’m going to give them $50 if they rideshare. That sort of thing. And so that gets implemented then within the specific plan for my company. Right?

Rich: Yeah. That’s one answer. But keep in mind that the enterprise also pays for your parking, as an example. So they might put in $200 a month or $2400 a year into your parking pass. So they’re already subsidizing you. But now they’ve realized you live two and a half miles from work, and if you jump in an Uber, the $2400 a year goes down to $1200. So leave your car at home. Don’t even take up the parking. So that’s another example. They’re already subsidizing.

Then for employees that aren’t subsidized — let’s call this minimum-wage employees that are going in and out of an office park, they may have to pay for their own parking, but they didn’t realize that the IRS will subsidize your commute if you pay for your parking out of your paycheck. So we align that employee and allow them to or show them how to pay for their parking or their commuting — like a Lyft line or Uber pool. And if they pay for it out of their paycheck, they can do that with pre-tax dollars. Just like in the fitness space, you can buy your Fitbit out of your paycheck as opposed to out-of-pocket dollars. We save you the same money by paying for commute plans out of your paycheck.

Jay: Oh, that’s fantastic.

Rich: That’s why I keep saying it parallels that corporate wellness industry. We’re using that very successful model and just applying it to commuting and putting the expertise in place to help them, just like the wellness companies do with on-staff doctors and things. We’re doing the same thing by bringing in a series of commuting experts.

Jay: I noticed when doing a bit of background research before this call that your company is what you call “mode and provider agnostic,” which means that you’ll just make the best recommendation, not tilted or biased to any one of the service providers. Right?

Rich: That’s right. We’re not owned by Uber. We’re not owned by Lyft. We’re allowed to show both fares, and we’re completely [un]biased. We don’t care if it’s Lyft or Uber, nor do we care if it’s bike share versus rideshare versus shuttle versus walking. We kind of show you everything and let the commuter pick the best plan for their particular use case.

Jay: Right. So let’s say it’s my first day of XYZ Corporation. I come in. I’m delighted to find out that XYZ Corp is using Commutifi. So I sit down, and I login. My corporate wellness person walks me through the program and the platform, the interface and this sort of thing. Based on where I live and this sort of thing, I’m given a handful of options. Is that right?

Rich: Yeah. What happens, you had that right. A commuter wellness person… So typically, your HR person would say, “For your parking or mobility pass, login to this address,” which is Commutifi. You fill out a few brief things. We dynamically, as you’re typing in your address of where you live and which office building you work at, we’ve dynamically looked at every single route instantly, and we’re already starting to build the plan for you. And if the corporation has already decided that you qualify as a parking pass or a mobility pass, we know what dollars are available to apply to each of these plans so that there’s no hunting and pecking for it. It’s click and go.

Jay: That’s fascinating. Do these plans, they’re dynamically updated based on, I guess, real-time data and this sort of this?

Rich: That’s the cognitive pieces, is that sense it’s real time — number one — and new services are coming online every day — new rideshare companies, new bike share companies, electric scooters, etc. — And lots of times, enterprises will even put in their own shuttle services. So we’re always looking for the new services that are available, and if there is an improvement that can be had in your plan, we’ll surface it and alert you to then come back and take a look to see if you want to switch to that plan to improve your score even more.

Jay: I see. Very interesting, actually. And I think that there’s huge, huge potential here. So you mentioned, Rich, earlier, that it was a freemium model. Is that right?

Rich: Yeah. It’s free for an enterprise to send out the survey and get all this rich data from their employees. So if you’ve already… Let’s say you’re an employer group with 100,000 employees, and you’re trying to figure out how you can either save time, money, or reduce carbon output, you would just send the survey out to all 100,000 employees, and within a week, we’d come back and say, here’s the insight. Here’s where you can save.

If they then decide to implement a plan, they start paying us on a monthly basis for each employee.

Jay: I see. Okay.

Rich: What we’ve found is you really need to see the data. It’s almost embarrassing sometimes. When we ask these guys, “How do your employees get to and from work?” they have no idea. And you’d think they’d know, but they really have… Does this guy live an hour and a half away? Or does he live across the street, and he walks? They do not have a good idea on how this happens. So giving them that insight is kind of like an ah-ha. Wow. Now I can see why this set of people, maybe we should mode shift them or build a shuttle service out in this region to bring them to and from work more efficiently.

So it’s pretty fun to see the customer wake up in that meeting and then decide to press “go” for all their employees.

Jay: Absolutely. As you said, referenced to earlier, this is such a huge space now within corporate America or corporate “the world,” if you will. Who are your competitors, if there are any?

Rich: So we don’t have any. That’s kind of a great spot. We’re announcing this at SXSW. We’ve been working in this space for years, just like I described with my other companies. It’s an iterative process. For me, it’s a sandbox. We keep on building it up and seeing what does the customer think. If they don’t like it, we iterate, and we start again. It’s just a wash, rinse, repeat. We’re finally to the point where we know what the customers want, and it’s this particular product. We started in the mixed-mobility space in parking, really trying to optimize parking. Believe it or not, there’s no enterprise dashboard for parking. So when you go into a large corporation and say, “Tell me how many people park. And are they using their spaces?” They cannot give you that answer. There’s no data on it.

So from there, we kind of built this wellness model to incorporate not just parking but all modes of transportation in and out of work. And we just happened to be first.

Jay: That’s awesome. That’s exciting.

Rich: It is.

Jay: It’s really quite interesting. I’ve talked to a lot of startup founders, and there are these niches. They’re huge, and people just haven’t figured it out. This sounds exactly like one of them because when I hear about these ideas, they come up, and it’s like, how come no one’s come up with this idea before? That sort of thing. Commutifi definitely sounds like one of them.

Rich, for 2018, what are you excited about? You mentioned SXSW. I guess you guys are presenting there, which is very exciting. What are you particularly excited about for this year? What are your goals for the company for this year?

Rich: Now that we’re done iterating about what the product needs to look like, we’re finally ready to dig in and perfect the product, perfect our experience with engagement with these enterprises and how the enterprises engage with their employees. So we’re kind of in that dug-in mode now, launching the product, and kind of iterating along the way. But no longer do we think it’s a product iteration. We think it’s a point release. It’s small releases now to kind of get to perfection.

I’m really excited about the SXSW thing as well. We’re honored that out of the six or seven hundred companies that were interviewed, we’re one of 50 that get to speak down there and one of only five in the transportation category. So that, for sure, is going to bring some interesting things our way. So just really looking forward to digging in.

Jay: That’s so exciting. We’re definitely going to keep our eyes on you and follow your progress. I think you’re in such a unique and huge, huge, potentially huge space.

Rich: 128 million commuters a day, literally, are going in and out of work, just in the United States alone.

Jay: Incredible. And most of their employers don’t know what their commute is like.

Rich: They do not know at all.

Jay: That’s so incredible. Rich, thank you so much for your time. It’s been fascinating learning about what you’re doing there. Just the last couple of questions that I have for you… Second to last one, we have a lot of young startup founders that follow my podcast. I always try to leave them with one lesson. You mentioned that you do some metric work with Techstars, so if there was one entrepreneur or startup/founder-type piece of advice or lesson that you’ve learned along the way that maybe you wish you had learned a little bit earlier that you could leave for our audience of young entrepreneurs, what would that be?

Rich: I guess advice that I give people that are trying to start a company is really look at where the trends are headed, figure out what life will look like once that trend sets in, and then look for the missing piece, and build on that piece. You don’t have to build the entire thing. So let the market move and then identify the things that are missing. That’s how I’ve found the most success.

If you’ve already started a company around the specific idea, I would say, iterate. Just be nimble. Launch your idea with small groups of people; let them tell you why it works or why it doesn’t work; build it again; relaunch it. Just keep going and keep going until they say, “Hey, this is perfect.” So don’t invest your marketing dollars; don’t invest in salespeople that are flying around the country. Just invest in the idea, and once it’s right, then you dig in. Then you set your goals, and you hire your sales and marketing team to take advantage of it.

I see a lot of companies fail by putting everything into just the launch. They’ve spent their marketing budget. They’ve hired up a full sales team. Then they push the product out for the first time, and it doesn’t work. And they’re like, “Oh, crap. Now I’ve got a $200,000 a month burn, and I don’t have a product to sell.”

So I see that a lot, and it’s unfortunate. But the second time around, the CEO then knows. I would prefer to teach them, from the beginning, don’t get too big too quick.

Jay: It’s a tough lesson that many, many have learned the hard way, unfortunately. Sound piece of advice, Rich. Thanks for that.

Last question is, where can people find you, follow you, connect with you, maybe learn a little bit more about your company?

Rich: Sure. Actually, at the bottom of our website, it’s Commutifi.com, we’ve got social channels there, and I think there’s a LinkedIn profile. So pretty much there. We’re not a consumer company, so it’s not that interesting to follow us on Instagram, but for enterprise, it’s pretty sexy, and you can follow us on their social channels.

Jay: Absolutely. I think we’re going to hear a lot more about your company coming up this year. So I’m looking forward to seeing how. Best of luck at SXSW. For those listeners that are able to make the trip out to Texas, I think you should definitely tune in on the transportation stage. Rich, thanks again for your time. It’s been awesome learning about your company, and we wish you the best of luck.

Rich: Thanks for having me. It’s been a pleasure.

Jay: No problem. Take care.