Upside, formerly GetUpside, is a cashback rewards app that helps shoppers save money on everyday purchases. It’s a digital rebate and coupon program available on iOS and Android platforms in the United States. In April 2022, GetUpside changed its name to Upside to reflect the company’s “upside” belief for businesses and consumers.
While it’s fascinating how the company ensures a win-win solution for businesses and consumers, what’s even more interesting is how does GetUpside make money.
The company started its operations in August 2016 by co-founders Alex Kinnier (CEO), Jan Rubio, Rick McPhee, Thomas Vaughan, Wayne Lin, and Joanna Kochoniak. The goal was to create a new way for people to save money while helping businesses increase sales and grow revenue.
Upside has a simple yet effective business model that allows it to generate revenue and grow its user base. There’s a reason why it raised $165 million from venture capitalists in its latest round of funding that also saw its valuation rise to $1.5 billion. This article explains Upside’s business model and how it makes money.
Bottom Line Up Front
Upside makes money through a profit-sharing agreement with its business partners. When a consumer makes a purchase through the app, he receives a cashback, and the business shares a percentage of the profit with Upside. This model ensures a win-win-win solution for businesses, consumers, and the company.
How Upside Works
To understand how Upside works, we need to view the platform from the perspective of two users; a business owner and a consumer.
As a business owner, you want to increase sales and grow revenue while reducing marketing expenses. By partnering with Upside, you can offer cashback rewards to consumers who shop at your store. This incentive encourages more people to visit your business and make purchases.
As a consumer, you want to save money on everyday purchases like gas, groceries, and restaurants. With Upside, you can earn cashback rewards every time you shop at one of the many participating businesses. The app allows you to save money on everyday purchases without changing your shopping habits.
To start enjoying the benefits of Upside, users first need to download the app available on the Android and iOS platforms. After creating an account, they can browse through the many businesses available, pick an offer and claim it.
They need to pay for the item purchased just like they usually do and upload a photo of the receipt to the app. After verifying the purchase, Upside transfers the cashback reward directly into the user’s linked bank account. Users can then withdraw their cashback earnings through PayPal, direct deposit, or a digital gift card.
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Upside Funding and Growth History
Alex Kinnier and Wayne Lin first met while working at Google serving on the Ad platforms team. They later met at Opower, a startup that Oracle acquired for $532 million in 2016. After their success at Google and Opower, the duo, alongside Jan Rubio, Rick McPhee, Thomas Vaughan, and Joanna Kochoniak, started Upside in 2016.
Through his contacts as a former venture capitalist, Kinnier was able to raise $6 million in seed funding. This amount facilitated the launch of GetUpside in August 2016 and is responsible for the company’s early success. In its early years, GetUpside focused on developing the supply side of the business by signing up merchants in the Washington, D.C., area.
The main aim was to get as many local businesses on board so that it would be easier to attract users. It’s a business model that other companies in the space, such as Ibotta and Rakuten, have used with great success. After signing up merchants, GetUpside started to attract users by offering cashback rewards on everyday purchases.
The company’s initial focus was on gas station purchases. In 2017, it introduced restaurants and later on expanded to grocery stores. It worked with brands like BP and Kmart to offer cashback rewards on fuel and groceries. Two years into the business, Upside managed to raise series B funding from Builders VC and Bienville Capital Management.
The company’s growth into the broader cashback market saw it sign deals with some of its biggest competitors like GasBuddy and Checkout51. The deal allowed Upside to promote personalized offers on their platforms and attract new users.
In 2020, the Covid-19 pandemic hit the economy hard, but it proved to be a tailwind for Upside. With financial constraints, people were looking for ways to save money, and Upside’s cashback rewards became an attractive proposition. Later, in September 2020, Upside raised $35 million in a Series C funding round by Bessemer Venture Partners.
On August 17, 2021, Upside announced a partnership with Uber, which will see the integration of Upside’s cashback rewards into the Uber app. This partnership allows Uber drivers to earn cashback rewards on fuel purchases from eligible gas stations. The company also partners with delivery companies like Instacart and Doordash for their drivers to earn cashback rewards.
As of July 2021, Upside had over 45,000 locations on its platform and over 30 million users. Its latest funding was in April 2022, when it raised $100 million in debt financing and $65 million in equity financing in Series D funding from General Catalyst, Builders VC, and Bessemer Ventures. This funding saw the company’s valuation increase to $1.5 billion.
How Does Upside (Formerly GetUpside) Make Money?
Like any platform that links businesses with consumers, you’d expect that Upside makes money by charging a commission or transaction fee from businesses. While that’s partially true, the company has a more unique and exciting business model that helps it generate revenue.
Upside Business Model
The company has a two-sided marketplace where it drives value to both businesses and consumers. On the business side, it offers a cost-effective way to acquire new customers. On the consumer side, it helps people save money on their everyday purchases.
The company makes money through a profit-sharing scheme with businesses. Essentially, when Upside brings a new customer to a business, and the business approves the customer’s purchase, Upside gets a percentage of the profit that the business makes from the sale. It’s a win-win situation for both parties because Upside doesn’t get paid until both the business and consumer are happy.
To put things into perspective, let’s say Upside brings a new customer to a gas station that makes $0.05 per gallon in profit. If the average customer buys 10 gallons of gas, the business will make $0.5 in profit. Depending on the profit-sharing agreement with the gas station, Upside would get a percentage of the $0.5 in profit that the gas station makes.
In this case, the cashback incentivizes the consumer to shop from the business. As such, it’s a cost on the business’ part. However, the acquisition cost is lower than if the business had to acquire the customer independently. For example, if the business were to acquire a customer through an advertisement, it would have to spend $5 to $10 to get the customer to visit its gas station once.
In contrast, if the business were to use Upside, it would only have to share a percentage of the profit it makes from the customer. In our example, if Upside were to take a 20% cut of the gas station’s profits, the gas station would only have to give Upside $0.1 in commission. In the long run, this is a much more sustainable and profitable way for businesses to acquire new customers.
Let’s look at it beyond the financial aspect. The company empowers traditional brick-and-mortar businesses by layering a digital personalization and rewards component on top of their existing offering. This model aligns Upside’s interests with that of the businesses and consumers on its platform, which helps to create a sustainable and mutually beneficial ecosystem.
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Upside Business Strategy
The Upside algorithm uses various anonymous data sources such as credit/debit card transactions, GPS data, and mobile app usage to identify consumer spending patterns. It then uses this data to design personalized cashback offers for each consumer. For instance, it could customize and display an offer a consumer hasn’t thought of but would be interested in, based on her past purchase history.
This data-driven approach is Upside’s key differentiating factor. It allows the company to design targeted and personalized offers for each consumer. The result is a better user experience for consumers and a more cost-effective way for businesses to acquire new customers.
Another reason why brands would want to partner with Upside is exclusivity. For instance, if three groceries within a certain radius are part of the same loyalty program, a consumer might not be incentivized to choose one over the other.
Upside will only display one offer per category at a time, so businesses can be sure that they’re the exclusive provider of cashback rewards in their category.
This exclusivity gives businesses a competitive edge and helps to drive more customers to their stores. What’s more, Upside is constantly expanding its merchant network. It has partnerships with major brands such as Exxon, Safeway, and Starbucks. As its merchant network grows, Upside can offer cashback rewards for a wider range of categories, appealing to an even larger group of consumers.
Upside also allows businesses to promote specific products by raising the cashback rate for those items. For example, a grocery store could increase the cashback rate for milk from 2% to 5% to encourage customers to buy it.
While it’s not a direct form of advertising, it’s a more subtle way for businesses to nudge customers towards certain products. In addition, Upside doesn’t charge businesses any monthly or sign-up fees.
Other Ways Upside Makes Money
You’d expect a cashback company like Upside to use advertising as a way to monetize its platform fully. However, it’s important to note that the company has no banner ads or pop-ups on its app or website. While this might seem counterintuitive, it’s a deliberate choice.
Upside’s mission is to help businesses acquire new customers more cost-effectively. If the company were to bombard its users with ads, it would defeat the purpose of its platform. Users would be less likely to use Upside if they were constantly being interrupted by ads while trying to find cashback offers.
Instead, it has a white label software for its partners that helps them run their cashback programs. While this is a less visible form of monetization, it’s an important revenue stream for Upside. Uber and GasBuddy are two examples of companies using this software.
How Does GetUpside Make Money? (FAQs)
Question: What is the Catch with the Upside App?
Answer: For consumers, there’s no catch. You download the app, find cashback offers near you, and use your linked card to activate the offer. When you make a qualifying purchase, the cashback will show up in your account within a few days. The profit sharing happens between the business and Upside behind the scenes, so consumers don’t need to worry about it.
Question: Does Upside Sell Your Data?
Answer: Upside doesn’t sell your data. Its privacy policy statement notes that the data collected is crucial in the relationship between Upside and consumers and that the company isn’t in the business of selling data. The company only uses anonymized and aggregated data to design targeted cashback offers for each consumer.
Question: Can You Use Cash with Upside?
Answer: You can’t use cash with Upside. The app only works with credit and debit cards. When you find an offer you want to activate, you’ll need to use your linked card to make the purchase. The cashback will then be deposited into your account within a few days. Others not accepted include prepaid credit debit cash, gift cards, and EBT.
Question: What is the Downside of Upside?
Answer: Using Upside is free, so consumers have no major downside. The only potential downside for businesses is that they might lose out on customers who prefer to use cash or gift cards instead of debit or credit cards. However, this is a small minority of consumers, and businesses are still likely to see an increase in customers thanks to Upside.
Question: Why did GetUpside Change Its Name?
Answer: On April 26, 2022, the company announced rebranding from GetUpside to Upside. The name change reflects the belief that it offers “upside” for both businesses and consumers. This branding strategy also aligns with the company’s objectives of positively impacting the community and economy.
Conclusion
Looking at the bigger picture, we can see that Upside’s business model is built around creating a win-win situation for businesses and consumers. While it doesn’t have a complicated business model, it’s a sustainable and effective way for the company to make money. And as its merchant network grows, we can expect Upside to become an even more popular cashback platform.
If an IPO is in Upside’s future, it would be interesting to see how the company plans to use the cash infusion to grow its business. Given its focus on data-driven marketing and expansion into new categories, it’s likely that the company will continue to invest in these areas. Whatever the case, we’ll keep an eye on Upside to see how it fares in the competitive cashback space.
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