Update: The Spring Shuts Down Its App For Funding Social Good And Earning Cash Back By Dining Out

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[Update 1/13/2014: The Spring is shutting down. The startup says it has run out of money, didn’t see enough traction, was threatened with a trademark infringement suit, didn’t expect to be able to raise more cash, and it leader founder is burned out…amongst other problems. You can read co-founder Brent Schulkin’s detailed post-mortem blog post here.

As I wrote in The Spring’s launch story below, failure to gain traction and sign up businesses were two of its biggest threats, and ultimately they did derail the company. Even with a solid social mission and value proposition to users, it’s an extraordinarily crowded competitive landscape out there. Another issue is that as more restaurants signed up for The Spring, the new customer discovery and loyalty benefit it provides them is splintered — a reverse network effect.

To build the marketing and sales team to make The Spring succeed like Yelp or OpenTable in the local business space, it would take a lot of money. Investors simply weren’t willing to gamble on it with so many challenges to face. You can read our unedited launch story on The Spring below.]

The Spring lets you save the world without doing anything. You connect your credit card to The Spring, pay with it at local restaurants, and automatically trigger donations to needy neighborhood causes while also earning yourself cash back. There are no check-ins or pay-up-front coupons. Just eat at great local restaurants like you normally would and you make a positive impact in your community.

The Spring launches today in San Francisco at a dozen restaurants, including local favorites Dosa and Gracias Madre, and has plans to expand to other cities eventually. Its iOS app and site have a Yelp-like guide for finding participating restaurants, and it even pulls in Yelp reviews to help you discover top eateries.

The Spring is totally free, so there’s little reason not to sign up and punch in your credit card info. Even if you forget about it, you might happen to eat at a Spring-equipped spot and do some good accidentally. That might mean funding a soup kitchen, an education garden at an inner city school, or technology training at the local women’s center.

Do Good, Pay Less

Here how founder Brent Schulkin describes The Spring:

The Spring App Screenshots_projects_list“The story is, you’re Josh. You live in San Francisco’s Mission District. You love your neighborhood, and love the idea of supporting it. But in reality, you don’t really do much volunteering or donate to every little thing. Although those are your values, you want to do something that’s easy. You’re busy and don’t want to be inconvenienced. I’m the same way. Most people are. And we can all use The Spring.”

When you pay your normally priced bill with your Spring-connected credit card at a partnered restaurant, 3 percent goes to local causes, 3 percent goes back to you which you can cash out through PayPal, and 3 percent goes to The Spring to expand the service so it can fund more causes. You get an email thanking you for triggering the donation, with info about the project you funded, and sharing buttons to tell friends how they can help.

A Loyalty App With Heart

The Spring App Screenshots_logged_in_homeWhy would a restaurant pay 9 percent of their revenue to be part of The Spring? Because the donations create an emotional connection between the customer and the business. The Spring incentivizes people to try out an eatery, to keep coming back, and to tell their friends. It will take time to prove, but the theory is that a windfall of customers will handily make up for the 9 percent.

It’s simple for businesses to sign up, too. There’s no hardware, iPads, or clumsy point-of-sale systems to integrate or train employees on. As long as they use a reasonably modern credit card system, everything happens quietly in the background after the check is paid thanks to The Spring’s payment processing partner.

Even with this value proposition, The Spring will still have a tough time gaining traction. There are plenty of restaurant finders, loyalty apps, and ways to donate money. Mogl gets you more cash back, but doesn’t help anyone but you. eGood gives 10 percent to causes, but requires cumbersome tablet use at checkout and doesn’t get you any discount. Then there’s Belly, Flip, Pirq…but The Spring hopes its combination of social good and rewards will win out.

Another issue will be trying to convince Bay Area restaurants to come aboard — businesses that are constantly hammered by startups trying to “help.” It only has 13 signed up right now, so that will have to grow. Luckily The Spring has a former head of sales from Groupon leading its on-boarding charge, and this time he has something positive to push.

Frictionless Activism

Schulkin’s been looking for a better way to make a difference for 10 years. He led protests in college but saw no effect, then started Carrotmob to harness collective buying power to push local businesses to give back. But Carrotmob was too complicated, so he raised money from some angels and worked with eco-design studio Greenstart to make social good as simple as possible.

Out flowed The Spring. You do good and feel good while actually paying less for food. Schulkin concludes, “This is a total no-brainer. Why wouldn’t you sign up?”

The Spring team photo