NY Launch Pod: Welcome to the New York Launch Pod, the New York Press Club award-winning podcast on the most interesting new startups, businesses, and openings in the New York City area. I’m your host and New York attorney, Hal Coopersmith. In this episode, we are speaking all about tipping. Our guest, Zach Colonder thinks tipping is broken, specifically cash tipping, and he wants people to tip through his app Grazzee. Here’s Zach:
Zach Colonder: We service all buildings. I’m in non doorman buildings, walkups that deal with a super and a porter. It doesn’t have to be a high volume building, it just has to be a building where people want to send money to staff members that if you’re in a non doorman building, you don’t see the super all the time. So now you can send a money and not even have to worry about it.
NY Launch Pod: Listen to the episode to find out how Zach is growing the app, how it even works, and what’s next for Grazzee. But before we go to the episode, we have a sponsor RezCue, New York State’s premier residential rental compliance platform for landlords. Rental laws in New York City are difficult to manage and RezCue helps you follow the law. If you are a landlord who wants to keep up with inflation, you need RezCue. For example, you may not be able to increase your rent by the amount you thought RezCue helps solve that problem and a whole lot more. Go to rezcueme.com and enter in some simple information and rescue will take care of the rest. That’s rezcue me.com or R E Z C U E M E.com. And with that, let’s go to the interview. So what’s wrong with tipping?
Zach Colonder: What’s wrong with tipping? Well tipping is an old school way where people still go to the bank, they get the cash, they go to Dwayne Reed and buy the cards. Then they go upstairs and they fill out the cards. They put the money that they take out of the bank and the cards, they seal them up and then they try and hand 10, 20, 30 cards down to one guy. Hope that it all goes to the same place. But who wants to go to the bank anymore? If I ever go to the bank, it’s one time. It’s for tipping only. That’s it. One time a year. That’s what’s wrong with tipping.
NY Launch Pod: And so you wanted to change what was wrong with tipping?
Zach Colonder: I wanted to make tipping as easy as possible for someone who wants to give money to the staff. That’s what I want do. And that’s what we did. Because I live in a residential doorman building and I am lazy and I didn’t wanna go to the bank, in the freezing cold, I didn’t wanna buy cards and I didn’t wanna have to fill out cards and I didn’t want to try and find everyone. It’s a pain. It’s an hour and a half to two hour process for something now where it takes one minute.
NY Launch Pod: And when you were looking at this, did you realize that other people had problems?
Zach Colonder: Yes. Everyone I talked to, it’s an issue. No one wants to do it. Now when I say no one, I shouldn’t say that. Most people don’t want to do that. Now there’s always gonna be the people that want to go to the bank. They want to get the cash, they wanna find their guy, they want to give him the big hug, give them their envelope. That will always be the case. But for a lot of people, especially the people that are out of town, people that order Uber eats for everything, they don’t wanna do that.
NY Launch Pod: I was gonna say, the big hug, that’s one of the best things.
Zach Colonder: Big hug. I know, I know. But you can’t hug 20 people in your building anyway. And you’ll still see your main guy downstairs and you can still hug him, Hey, did he get my Grazzee? And he’s going to say yes cause it’s immediate. They see it.
NY Launch Pod: Have you heard of people not receiving their cash?
Zach Colonder: It happens a lot. How about this? It happened one time to me where I handed I think 20 envelopes out. Cause I lived at a big building and like one of the guys came up to me and was like, “Hey, just to let you know, there was nothing in my envelope”. Now did I forget to put money in there? Probably, but it’s embarrassing for him to come ask me. It was embarrassing for me because I don’t know. I mean do people just go there and say “Hey, there was nothing in here”. Like did someone else go in his envelope and take it? That stuff happens all the time. Like all time.
NY Launch Pod: And this is a secure way of doing that, right?
Zach Colonder: My way is a secure way. The other way of handing the envelopes. 20 envelopes. Do you know how many envelopes end up at the front desk? Take a building of 400 units, say 200 units tip, cause not everyone tips, 200 units, 20 envelopes. It’s 4,000 cards with cash in them. It’s very tempting. People are going to take them.
NY Launch Pod: That’s a lot of cash. And you wanted to do something differently? Yes. Okay. So how does it work?
Zach Colonder: So, how does it work? Well the resident, they log into the app and they search for their building. Once they pull in the building, you enter your apartment number and then you see a whole list of staff in a Venmo type fashion where you can send everyone money all in one transaction. So you can see all 20 employees. You put down whatever money you want to give them, 20 times, you know the different 20 people and hit send. You can pay with your credit card, you could pay with Apple Pay, which makes it super easy. You could pull it from your bank. So you could do it that way.
NY Launch Pod: And how does your platform make money?
Zach Colonder: So we charge a resident to use it, a small transactional fee. It comes out to a little bit less than the amount of money that you would spend at cards. Its Duane Reed. But if you want buy a generic, just happy holidays card, it’s probably $7 for 10. You get a big building that’s 14, $15 just in cards. So my fee is actually, it’s cheaper my way. Saves you two hours of time and everyone gets their money.
NY Launch Pod: And can I use this not for the holidays.
Zach Colonder: Yeah. So I have buildings that use it all the time. Obviously not everyone uses it. This is mainly for, it’s a one time during Christmas and the holidays people use it then. But I have buildings where people say they did so they snake the drain or they got the packages upstairs. I see, $5 here, $10 here again thrown around all the time.
NY Launch Pod: Right. And so how have you been able to get this into buildings?
Zach Colonder: It’s a little bit harder than I thought it was going to be, but it’s a lot of hustling. I go to most buildings in the city, I speak to everyone from the doorman to the supers, to the building managers. I try and find people on the co-op boards or the condo boards. I do shows. I, do a lot of stuff and eventually once they get on there, they see the value and they love it. You know we’re in almost a hundred buildings now. We haven’t lost one building. Everyone keeps on coming back because it’s easy. And since it doesn’t cost the building anything. So the residents pay a little bit of a fee. But for the building it’s free.
NY Launch Pod: Per year? The residents pay per year or per transaction?
Zach Colonder: No, the residents pay per transaction. So if they want to use it, they can pay. If they want to go to the bank and do it the old way and get the cash and the cards, then they have to spend their time. You know, I’m a convenience play but it’s free for the building, it’s free for the staff. If I want to send someone $50, it’s $50 into the staff’s account. Then there’s a couple ways for them to get the money per se. You could transfer to their bank and it’s free for them. You know, there are little fees involved but Grazzee takes care of that.
NY Launch Pod: Like an ach?
Zach Colonder: Like an ach. So their ach, transactional fees, 50 cents, 60 cents, whatever, it’s, we pay for that. So we want to make everything free for the staff. They can put it on a prepaid debit card. So the money actually never goes to the bank. It sits on their phone so they can use it. We can send them a check. You know, there’s different options for them to get their money.
NY Launch Pod: I was gonna ask, how can the staff get their money and how do the staff feel about this?
Zach Colonder: Well you know, some staff, most staff love it and there’s always a staff here and there that is an old school person that doesn’t like technology and, but they get used to it. And I have had buildings where 80% of the people will be a part of the app for Christmas or holidays and they get sent money and the people that didn’t wanna be on there end up calling me because they see all their colleagues getting money. They want to get involved because it doesn’t cost them anything. I don’t know why they don’t wanna do it, but some people are just such old school and they, they don’t wanna do it.
NY Launch Pod: How long have you been doing this for?
Zach Colonder: So we’re going on our fourth winner. So I created this in 2019.
NY Launch Pod: So you’ve been doing this for four years?
Zach Colonder: Yep.
NY Launch Pod: Four holiday seasons. Question everyone wants to know is we’re going into this holiday season, how much should people tip? And I think you probably have the data on that.
Zach Colonder: I do, but each building’s different.
NY Launch Pod: Okay.
Zach Colonder: You got the rental buildings, you got the condo, you got the co-ops, you got the five star gloves, you got everything. So it really is based on what people want to spend. It’s different. I’ve seen monster tips of thousands of dollars and I’ve seen the lowest is $5.
NY Launch Pod: Right.
Zach Colonder: It depends on what you feel like giving averages between a hundred, 150 per doorman. Supers obviously get more depending on what they’ve done for you that year. And the porters, I mean the porters and the handyman kind of get left out. They do most of the grunt work in your building that you don’t even know about. But they really make the building run. So I mean everyone should get the same amount but you know, obviously people have their favorites and they see people every day. But it takes a lot of people to make the buildings run that most people, especially myself included, had no idea.
NY Launch Pod: And just going back to the resident experience, you are pricing this on a per transaction basis. Is that based off of how much someone is tipping?
Zach Colonder: Yes.
NY Launch Pod: Okay. And so based off of that, you’re calculating it should be about the same as what someone’s doing for
Zach Colonder: The cards? Yeah.
NY Launch Pod: For cards, everything else like that.
Zach Colonder: Listen, if you’re a big tipper, obviously you’re gonna spend more money on the app, but that’s the same type of fees as Uber Eats. You know, if you’re ordering a lot of food for seven people, the fees higher.
NY Launch Pod: Right.
Zach Colonder: You’re on StubHub, you know, it’s like one of the worst things out there. They crush you. But yeah, StubHub, you buy a ticket is $400. You’re spending a hundred dollars in fees. Now obviously our fees are way low than that, but it’s a percentage of what they spend.
NY Launch Pod: And if I pay by credit card, I reimburse you for the credit card processing plus your fee.
Zach Colonder: Yes. You’re paying for the credit card processing. The way we built the system is we wanted a hundred dollars to be a hundred dollars to the staff member. So with credit cards we’re not gonna pay it and I don’t think you want the staff to pay it so the people pay it. And I’d say about 70% of the people pay with credit cards. They get the points they put on their business. They have a record of it. Even though it’s, it’s cheaper to pay with their bank. They use a credit card. I don’t know why.
NY Launch Pod: And what’s been some of your biggest challenges?
Zach Colonder: My biggest challenge is to get more buildings. That’s it. I mean once I get a building on board and they use it, they love it. You know, I hope the word of mouth starts growing. Uh, so more people want to use it. But getting buildings on board, it’s hard. I deal with a lot of people. I deal with the staff, I deal with the supers, I deal with the building managers, I deal with the property managers, I deal with the board members and that’s a lot of moving parts and nothing gets done overnight and I wish it did.
NY Launch Pod: And once a building is signed up, how do you advertise it to all the unit owners?
Zach Colonder: So the building actually does it for me. There’s a couple ways. I have postcards that I hand the supers and the building managers. If the building is one of those buildings where they hand out cards during the holidays, we could attach our card to their card. If they don’t and they hand out a piece of paper, say all their staff list, we could put our website and a QR code on the bottom. If they use something like called Building link or some other portal for the buildings, they can send out an email saying, somebody asked for electronic tipping cause I’m away in Florida, how can I do it? Here’s the link. So all they would do is log into the website and find their building and send them money.
NY Launch Pod: Once you’re in a building. Have you seen usage increase over time?
Zach Colonder: I’ve seen tips increase over time in terms of usage. I guess I have. Yeah, it’s a lot. People use it the same people keep coming back and using it, which is great. I don’t really know. I don’t really have stats. If they were on it and didn’t use it and went and got to the bank, maybe one or two cause they didn’t want to pay the fee. But that’s in everything, if you don’t want to pay Uber Eats and you want to go downstairs and go to the restaurant and pick it up, people could do that too.
NY Launch Pod: What I love about your business is that it certainly solves a very New York problem.
Zach Colonder: New York it’s very niche.
NY Launch Pod: It’s very niche. What’s it like doing business in New York and growing your company in New York?
Zach Colonder: One of the good things is I could walk around to building, to building viewer at another city per se. It’s very hard and difficult to go to all the buildings. So here I can hit 20, 30, 40 buildings in, in, in a day just going around walking. So I’m not parking everywhere, I’m not driving. It’s, so that makes it easy. Also, the the, the volume of people that live in the, in the city. And if I get a building with 500 units, that’s, you know, that’s, that’s a nice building. We service all buildings. I’m in non dormant buildings. Walkups that deal with a super and a porter. It doesn’t have to be a high volume building, it just has to be a building where people want to send money to staff members that if you’re in a non dormant building, you don’t see the super all the time. So now you can send them money and not even have to worry about it.
NY Launch Pod: And what is the future of Grazzee? What do you want it to become?
Zach Colonder: I want every building to use it. I really think it’s gonna get
NY Launch Pod: Every building in New York City.
Zach Colonder: Why not? Why not? Here’s, how I equate it. I don’t know if you remember this, but you remember back in when cabs were cash cabs, do you remember you had to pay cash for cabs? Yeah.
NY Launch Pod: Yeah.
Zach Colonder: And there was a time where it went from cash to credit cards and the cab drivers wouldn’t pick you up if you didn’t have cash. Do you remember that? There was like one year where they all got angry, I’m only taking you if you have cash. Do you remember that?
NY Launch Pod: I also remember just as an aside, when the credit card receipt, when you paid, listed the full credit card number in cabs.
Zach Colonder: Oh, I don’t remember that.
NY Launch Pod: Okay.
Zach Colonder: Yeah.
NY Launch Pod: But I do remember when they said cash only
Zach Colonder: Cash only. I’m not picking you up. My machine’s broken. They would always say my machine’s broken.
NY Launch Pod: Right? Yeah.
Zach Colonder: And then you know what happened? They got used to the credit card fees. They’re all making way more money cause they see people on there oh, 20%, 30% people don’t care. And half these guys are a corporate anyway and they’re just putting on there. They don’t care what they tip, they’re not paying it. They’re making more money now and they love it. They probably don’t even want cash. So the same thing’s happening with this. This was a cash business. Once these guys, once the staff members realized they’re gonna make more money because to take out a thousand dollars of the bank, first of all it’s a process, but it hurts. It hurts for me. It hurts. Giving a thousand dollars out a thousand dollars on my credit card feels like nothing, right? It doesn’t even feel like anything. So it’s easier to give money on a credit card when you don’t see it and feel it. So people give more.
NY Launch Pod: Do you have to report these transactions?
Zach Colonder: Great question. We don’t 10 99, we don’t K one. But if you really think about, and I’ve talked to accounts before we even started this company, these aren’t tips. So we’ve all been calling it tips forever. Christmas tips, whatever, holiday tips. Oh, you’re my doorman, here’s a tip. A tip is a bartender, a waiter, someone providing an exact service. And usually the tip is a percentage of that service. I like my doorman, I like my super during the holiday times. If I give him money, they didn’t do anything. I like you, here’s a hundred dollars. Did I tip you?
NY Launch Pod: Well? You could call it a gift.
Zach Colonder: Call it a gift.
NY Launch Pod: Is that what you’re calling them?
Zach Colonder: We call them gifts. So these are the holiday gifts, cash gifts. Now the gift tax law, if you look@theirs.gov says you can give up to $16,000 per person per year. So technically I can give you 16 grand. I can give her 16 grand, a million people, $16,000 and it’s tax free. So we’ve all been calling it the wrong thing. Everyone thinks it’s a tip. In reality it’s not. And I have to educate people on that. And that’s a holiday, cash gifting.
NY Launch Pod: Holiday Gifting.
Zach Colonder: Yeah.
NY Launch Pod: That is a wonderful note to end things on. How do people find out more about you and Grazeee?
Zach Colonder: Then go to the website, uh, G R A Z Z E E. So that’s two Zs and two E’s. So it’s grazzee.com. Download our app on the app store or Samsung store, Android store. And that’s it. If you don’t have your building signed up, send me an email to support S U P P O RT @grazzee.com. I’ll try and get your building on board. If you’re a condo member or a super, contact me immediately. It takes very short time to get you guys on board. But you’ll see an increase in tips in your staff. You’ll make your residents really happy cause it’s a good option for them to use it. And again, it does. They don’t have to use it. They can still go the old school way. We’re just trying to appease the people that want the new school way.
NY Launch Pod: Well, Zach Colonder, thank you for stepping onto the New York Launch Pod and sharing our time with us.
Zach Colonder: Thank you very much.
NY Launch Pod: And if you wanna find out more about the New York Launch Pod, you could visit nylaunchpod.com for transcripts of every episode, including this one. And follow us on social media @nylaunchpod. And if you’re a super fan of the podcast, Zach, are you a super fan of the New York Launch pod?
Zach Colonder: Oh yeah. I’m a super fan.
NY Launch Pod: If you’re a super fan like Zach, please leave your review on Apple Podcast. It is greatly appreciated and does help people discover the show.
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