Mayo Clinic neurosurgery resident Brandon McCutcheon and business partner Constantine Chen are developing a mobile application, called Zerda, that allows small businesses to leverage dynamic pricing to gain customers and enables consumers to discover competitively priced services and offers. The team won the Ignite Cup startup competition in April and has moved on to the semifinalist round of the MN Cup in the High Tech Division.
During his time as a medical student at the University of California, San Diego School of Medicine, Brandon McCutcheon became aware of a problem. He was very interested in fitness and wanted to work with a personal trainer. However, the service was way too expensive, especially on a medical student budget. He would find online deals for personal training through things like Groupon, where he could receive as much as 90% off sessions. However, this price dipping was just not sustainable for the personal trainers and customers like himself had little incentive to repeat purchase once the deal was over. Even though the personal training services were normally way out of his budget, he discovered that trainers often had entire afternoons with un-booked sessions, causing them to lose high amounts of potential income.
“There was just this disconnect between what [personal trainers] were charging and the demand that was being placed for their services,” he explained.
The airline industry figured out a solution to this problem years ago: dynamic pricing. With dynamic, or surge pricing, businesses alter their pricing scheme to meet the market demand at that particular time.
“So right now, people offer one price, regardless of the demand. And so that’s kind of their average price. But sometimes, it would make sense for that price to be more if it’s a particularly high demand time. …At other times during low demand, it actually makes sense to have that price be lower. And then during times of average demand, it makes sense to have the price that you currently have.”
Brandon applied this logic to small, appointment based business with Zerda. Zerda offers a win-win situation for both parties. Businesses can fill open appointments when market demand is low and customers can find reasonably priced deals, which they otherwise might not be able to afford.
Brandon and the Zerda team began developing the app about one year ago. The ever evolving product has been available in the AppStore for Apple products since January.
So how exactly do businesses use Zerda?
Say you are the owner of a hair salon and you have an open appointment at 2PM this afternoon. You just go into the app, enter some basic information about your business, and indicate that you are advertising an “opening”. You can then choose to only make the opening reservable, meaning that no money is exchanged through Zerda. Or you can complete both the booking and money transaction in Zerda through a secure third party service provider. Next, indicate how long the listed deal will run for and finally hit publish. You’re done. Zerda will send a push notification when a customer books the opening.
For the user, the first time you open Zerda, you are directed to a map where you can search for deals around you or in another specified location. “And then it’s a simple as a two click reserve,” Brandon explained.
Right now, the Zerda duo is figuring out the best type of business that would fit and benefit from the Zerda model. They initially believed that appointment based businesses would be the ideal users. But Zerda has become more versatile and additional features have enabled the app to be used by a wider range of non-appointment based retailers.
The Zerda team has a fruitful partnership with the Red Wing Ignite business accelerator, which has signed up several different businesses in Red Wing to try out Zerda, from hair salons like Shear Perfection to coffee shops like Mandy’s. Retails shops can use Zerda to advertise offerings like “buy one get one free” and restaurants can push happy hour notifications to drive in traffic when business is slow.
Zerda isn’t Brandon’s only dabble into entrepreneurship. He co-founded another mobile app called Mobiome. Brandon views entrepreneurship as “a space to be creative and be innovative and bring something new that nobody has done before.”
It is challenging to balance entrepreneurship with neurosurgery residency, but Brandon has one key ingredient: a very supportive and understanding spouse, who herself is a medical resident. He has also been fortunate enough to have some pretty competent help along the way.
“None of the projects that I’m working on are alone. I think that the focus for me is building smart teams and working with good people. And I think that’s been a huge part of it, is finding the right people to bring ideas to life.”
Zerda was founded by Brandon and Constantine Chen, a programmer with a master’s degree in computer science. The pair met during their time at the UC San Diego School of Medicine and have had a dream partnership since that time. They recently brought a third person onto the Zerda team, Josh Askin, to handle marketing and advertising.
Zerda won the Ignite Cup, a business pitch competition run out of the Red Wing Ignite accelerator, this past April. That win guaranteed them an entry into the semifinalist round of MN Cup, the staple startup business competition in the state of Minnesota. MN Cup focuses on very early stage startups, those with access to the least amount of resources, and will award over $400K in seed money to participating startups this year.
The 2016 MN Cup competition began on March 21st and lasts until September. Interested startups submitted applications to any one of eight categories including: Energy/Clean Tech/Water, Food/Agriculture/Beverage, General, Student, High Tech, Life Science/Health IT, Social Entrepreneurship, and newly added Youth Divisions. By June 6th, the competition was narrowed down to ten semifinalists in each division. Around mid-June, the remaining startups were paired with industry leaders and mentors to perfect their business plan. And finally this month, one winner and one runner up will be selected in each division.
Finalists from each of the eight divisions will compete for the Grand Prize of $50K in capital funds at the Final Awards Event on September 22nd on the University of Minnesota campus.
Zerda was one of only three startups from Olmsted country to advance to the MN Cup semifinals. You can catch them at the free MN Cup High Tech Division Reception this Tuesday August 9th at Lurie in Minneapolis. The MN Cup High Tech division finalist will be announced by the end of the night.