Franki is an app that connects consumers with local businesses through verified recommendations and video reviews. Pulse 2.0 interviewed Franki CEO Eugene Varricchio to learn more about the company.
Eugene Varricchio’s Background
What is Eugene Varricchio’s background? Varricchio said:
“In simple terms, I’ve been in roles where, at one end, you’re servicing the customer, and at the other end, you’re developing the products that meet their needs. I started my career in retail, working my way up to senior management. Then I moved over to the supply side, predominantly in sales and marketing for consumer packaged goods at Nestle. Then, I worked in print media at Bauer Media Group, a worldwide multimedia conglomerate, before coming to Franki. The common thread through each of these roles and industries is the necessity of understanding your business’s value chain and being able to optimize distribution channels so as to deliver the final product — whether that’s a physical product, a service, or an experience — efficiently and cost-effectively while delighting the customer and remaining competitive. This is fundamental. I also have a host of learnings from outside of hospitality that I’m finding very useful in this industry and as CEO of Franki.”
“At a higher level, I consider myself a builder. I’ve been brought into companies to fix existing problems, build effective teams, and drive profitability. One of the ways I do this is by approaching challenges through the lens of the customer, which I’ve learned to do throughout my career. There’s no point in producing something and putting it out there and hoping it sells. I am fanatically customer-centric and data-driven, and I’ve brought that mindset to every org that I’ve built because it’s proven to be the key to understanding the market, the key to delivering the right product, and the key to business growth.”
Formation Of Franki
How did the idea for Franki come together? Varricchio shared:
“People use review sites to find where they’ll share their next meal or have their next drink, but they don’t fully trust the information on these sites. They often need to rely on the ‘wisdom of the crowd’ to decide where to go. That is, if 1,129 people rated this place 4.5 stars, then it must be better than the one with 4.3 stars from 982 people, and the chances of it being to my liking are high. In the absence of a personal recommendation, review sites are the best option for finding a place to go out. We consistently see this in our research, that there’s a lack of trust but reliance on these sites.”
“We’ve identified the problem, so what’s the solution? Franki was born out of a combination of three things: learning what consumers want when it comes to reviews, figuring out how to achieve that and make it accessible, and understanding where technology is headed and how to use it to help us meet the needs of the consumer. Franki got its name because our platform provides the transparent, honest, candid, frank video recommendations that people are looking for. We exist so people can spend less time searching online and more time experiencing offline.”
Core Products
What are the company’s core products and features? Varricchio explained:
“Franki serves three audiences — consumers, creators, and businesses — and we have different features for each. We give content creators space to build and grow a community and engage with travelers or other locals who are looking for recommendations. Those recommendation seekers can find transparent reviews from real people who are passionate about sharing their local experiences. Consumers can also engage with Franki Locals (our creators) by asking them for a specific recommendation based on their interests. And for businesses, we offer conversion-focused advertising and the ability to see direct ROI from our platform through to their point-of-sale system.”
Differentiation From The Competition
What differentiates the company from its competition? Varricchio affirmed:
“We’re still a young company with an aggressive product road map — and I’m excited about how we’ll be using generative AI in the future — but our key differentiator right now is delivering video-based recommendations from a vetted community of local content creators, versus traditional, text-based reviews, and the ability for consumers to engage with Franki creators through the Ask a Local feature. Our product vision is to be more than a review app or search engine for consumers. We will be moving to more personalized video recommendations as we build out those AI capabilities so we can connect people with the right restaurant or experience for them.”
“It’s important to note why video-based recommendations are more powerful than reviews, and I’ll try to do it as succinctly as possible. If you’re looking for an Italian restaurant for dinner and I’m a friend who knows your tastes, you’re highly likely to take my word-of-mouth recommendation. If you don’t have a friend who knows you and can make a personalized recommendation, then reviews are the next best thing. But as I mentioned earlier, people don’t fully trust these sites and, therefore, need multiple data points to come to a conclusion. Based on our research, they wade through an average of 3.5 sources of information and 2.5 platforms to find, evaluate, and choose an experience. The only way to scale a word-of-mouth recommendation is to move it from in-person to online and use AI to personalize it to individual preferences. At Franki, we call this e-word of mouth.”
Evolution Of Franki’s Technology
How has the company’s technology evolved since launching? Varricchio noted:
“The technology and product have been evolving hand in hand, and 2023 was an especially exciting year of growth for the business. But as any founder of a new business knows, it’s really about testing and learning and the ongoing process of understanding your customers and solving their problems. So, at first, we focused on building a platform where creators could post their content and grow an audience. This would help us address the consumer’s problem of needing a place to go for local recommendations that they could trust.”
“That gave us our MVP, or minimum viable product, and from there we sought the right tech partners to ensure we’re providing a seamless solution. A good example of that is our partnership with OpenTable. They’re the experts at the bottom of the funnel and can help us facilitate that part of the experience so that customers don’t need to leave Franki to go from restaurant search to booking confirmation. We’re also honing in on the personalization element of the platform, and our OpenAI partnership is helping us build out our recommendation engine. We have a lot of exciting features in the works thanks to the opportunities that partnership opens up.”
Significant Milestones
What have been some of the company’s most significant milestones? Varricchio cited:
“We’re just getting started! But I’m very proud of the team for their agility and dedication during the height of the COVID-19 pandemic. We were able to beta test the first version of the app in November 2020. It was challenging, but we learned a lot and were able to launch our MVP in Q3 2021 in LA. And in June last year, we started to commercialize the product. We have a lot of growth in our future, and next year should be another exciting one.”
Total Addressable Market
What total addressable market (TAM) size is the company pursuing? Varricchio assessed:
“Right now we are focused on the hospitality space within the US, though we will be growing more broadly into the experience space, which includes businesses like hotels, clubs, and entertainment venues. The total addressable market for the U.S. hospitality space is $9.2 billion. However, the broader experience market that we will compete in is more than $100 billion.”
Challenges Faced
Have you faced any specific bottlenecks in your sector of work recently? Varricchio acknowledged:
“There is no one specific bottleneck. We have the typical challenges of a young company and small team of less than 40 employees. There’s a bit more of a hurdle since we are building three products to serve three separate audiences, which are consumers, creators, and businesses. So we are continually assessing the space to find the right balance between building solutions for these separate audiences, launching new features as quickly as possible, and using the capital we have in the most effective way.”
Funding
After asking about funding and revenue information, Varricchio revealed:
“We have a solid base of seed funding and will raise our Series A in the first half of 2024 to keep us on track to hit our product and revenue goals.”
Favorite Memory
What has been Varricchio’s favorite memory working for the company so far? Varricchio reflected:
“As I mentioned earlier, I’m a builder. I just love the fact that we’ve taken a product to market that didn’t exist and that consumers enjoy using it. Heading up Franki, I get to watch people at all levels grow in their role and see the passion they bring to their work. For me, my favorite, most fulfilling moments at Franki are these ongoing, everyday experiences.”
Customer Success Stories
After asking about specific customer success stories, Varricchio highlighted:
“The businesses advertising in Franki are seeing phenomenal results on multiple levels. I’ll explain why and how, but first you have to understand that consumers are not coming to Franki to pass the time scrolling. They’re launching the app with purpose: to figure out where they’re going to eat, drink, or have fun. Because of that, Franki offers businesses a community of engaged, high-intent consumers. High-intent is the keyword.”
“To show businesses the power of advertising in Franki, we provide a suite of tools that not only close the acquisition loop but also help them build their own growth loop.”
“It starts with targeted, conversion-focused advertising, which enables businesses to ensure they get in front of high-quality local consumers. Franki users then visit the establishment and make trackable purchases because we’re able to make the connection from ad click-through to the restaurant’s point of sale. These visitors may become repeat customers and are also incentivized to post a video about their experience on Franki, which we enable businesses to share across their own social channels. This video content becomes part of Franki’s recommendation engine and serves as social proof to drive more business through the growth loop.”
“Now, with that context, I can share our strongest success story, which is one of a Japanese restaurant that realized an ROI of more than 10x and gained eight new videos from Franki creators within one month. The reason we can confidently say that they saw a 10x ROI is because Franki closed the acquisition loop. This is one of the most exciting parts of the platform for businesses.”
Future Company Goals
What are some of the company’s future goals? Varricchio concluded:
“As mentioned, we are preparing to raise our Series A. This will enable us to accelerate our tech development timeline and achieve our most pressing goals for each of our three audiences. Building an AI-powered recommendation engine is a core goal, as it supports one of our key differentiators, which is to provide consumers with helpful recommendations that are tailored to their personal preferences and past behavior (e-word of mouth) so they can stop trying to decipher biased reviews to make a decision. This also ties into our creators, as we need to ensure we’re connecting them and their content to the right consumers, while providing the data they need to grow their community. And it all feeds into growth loops for individual businesses, which we need to enable at scale.”
