For the moment, though, SCVNGR is focused on driving commerce. Let’s say I’m walking down Mass. Ave. and open up the SCVNGR app on my smartphone. The app figures out where I am and displays all the nearby dining deals. B.Good, for instance, would pop up as one option, and, if I selected it, the app would display several games I could play there to earn points toward discounts and free stuff. Just checking in — announcing to other SCVNGR users that I’m at B.Good — earns me one point. Checking in while with another SCVNGR user gets me two. It goes deeper from there: If I locate an employee named Jimmy and take a picture with him, that’s five points. Making up a name for a burger gets me two. Earning 25 total points earns me a free burger. If I want, I can even design my own games for other users to play. And if I’m doing that, then B.Good hopes it’s got a new regular.
Major corporations and institutions also contract with SCVNGR to design custom games. Jewelry stores have partnered with the company to lead couples on races to find diamond rings hidden in cities. The U.S. Navy, Warner Bros., Coca-Cola, the Patriots, the Celtics, and MIT are among SCVNGR’s 1,500-plus clients. The top ones pay the company $250,000 to $500,000 per year. (Full disclosure: This magazine’s marketing department has a SCVNGR challenge. I’ve never played it and can’t say whether it’s any good.)
The SCVNGR app has been downloaded more than a million times, and Priebatsch reports that revenue is increasing at a rate of about 20 percent per month. Tom Hopcroft, president of the Mass Technology Leadership Council, a sort of chamber of commerce for the tech set, says that what Priebatsch is doing is “a really clever idea. I don’t know if the gaming layer is the next big thing, but he’s certainly a presence.”
Indeed, for all the business’s promise, SCVNGR and its Chief Ninja face ever-larger problems. Ted Morgan is the CEO of Skyhook Wireless, a company that makes the technology by which mobile phones locate themselves. Skyhook is a third-party operative for many operators in the daily-deal tech sector. He says that for SCVNGR to really grow its business, it needs a large ad campaign. And it won’t have that until “it has 5 to 10 million downloads.” Complicating matters is the fate of the social-media/daily-deal sector itself. It is, many analysts believe, effectively sitting in the middle of an economic bubble. Umair Haque, director of the Havas Media Lab, wrote in the Harvard Business Review last year that any connection created over social media is weak and artificial, and not prone to prove a lasting relationship for either party. What’s worse, the quickly converging daily-deal space is overloaded with industry leader Groupon; wannabes such as Gowalla, LivingSocial, BuyWithMe, and ScoutMob; and initial forays into the market by behemoths Facebook and Google. All of these companies are dying to cash in with deals that are likely too good to be true: A recent study from Rice University found that 32 percent of Groupon’s vendors lost money and 40 percent of them said they wouldn’t partner with Groupon again. Even investors in mighty Facebook dumped more than $1 billion in shares off the secondary market in April, for fear that the company, and the sector it spawned, is overvalued. The consensus in the tech world is that if and when the bubble bursts, only a few of the current players will survive.
All of this uncertainty raises a very big question for SCVNGR: Can Seth Priebatsch, a guy who barely leaves the office and goes shopping only when he needs an orange T-shirt, get everyone else to spend their money the way he wants them to?